Matter of Uris

[*1] Matter of Uris 2010 NY Slip Op 50552(U) [27 Misc 3d 1205(A)] Decided on March 31, 2010 Sur Ct, Nassau County Riordan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 31, 2010
Sur Ct, Nassau County

In the Matter of the Application of THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK, for Modification of a Charitable Bequest under the Last Will and Testament of Joanne Uris, Deceased.



235876



Patterson, Belknap, Webb & Tyler, LLP(attorneys for Petitioner)

1133 Avenue of the Americas

New York, NY 10036-6710

Andrew M. Cuomo(attorney for Ultimate Charitable Beneficiaries)

Attorney General of the State of New York

Charities Bureau

120 Broadway

New York, NY 10271

John B. Riordan, J.

This is a petition to modify restrictions on an endowment fund, pursuant to section 8-1.1 of the Estates, Powers and Trusts Law or, in the alternative, section 522 of the Not-for-Profit Corporation Law. Petitioners, Trustees of Columbia University, seek an order authorizing the subdivision of an endowment fund created by a testamentary bequest to the College of Medicine (College of Physicians and Surgeons). The Attorney General of the State of New York (on behalf of ultimate charitable beneficiaries) has reviewed the current audit of the fund and raises no objection to the relief requested in the petition.

Joanne Uris died on March 9, 1985. Her last will and testament was admitted to probate by a decree of this court dated April 5, 1985. Article "THIRD" of the will provides in part:

"(C) I give to COLUMBIA UNIVERSITY the sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000). The gift provided in this paragraph (C) of Article THIRD shall be set aside as an endowment fund for the College of Medicine the income from which is to be used to fund The Percy and Joanne Uris Chair of Clinical Medicine.'"

Percy Uris was a graduate of Columbia University, a member of the Board of Trustees and a benefactor of the University. In September 1986, Columbia University received $1,500,000 from the estate of Joanne Uris. The University established the Percy and Joanne Uris Professorship ("Chair") for Clinical Medicine. As of September 30, 2009, the value of the endowment fund had increased to over $5,000,000.

The University states that the income from the fund exceeds the amount required to fund [*2]a chair in clinical medicine. Specifically, the income exceeds the amount that can be utilized under the University's guidelines. The guidelines for endowment funds provide payment of a salary to the professor appointed to the professorship and expenses including laboratory space and research services. Beginning in 2007, the University has required $2.5 million to fund an endowment for a full professorship and $1.5 million to fund an endowed associate or an assistant professorship. The currently expendable income from the Uris professorship generates annual expendable income of $242,284. A current endowment of $2.5 million generates expendable income of $107,500.

The University states that the spending guidelines for endowments limit the amount of funds paid to professors in order to encourage the faculty to obtain research grants and maintain a medical practice. The University contends that the application of the entire fund in the endowment to one professorship would discourage a faculty member from seeking government and industry grants and engaging in patient care.

The University requests permission to subdivide the endowment fund into one endowment account with principal in the amount of $2.5 million, and the remaining principal would be placed in a new account and used to establish one or more additional professorships as the value of the fund allows. Each new professorship would bear the title, "Percy and Joanne Uris Professorship of Clinical Medicine."

The petition seeks to modify the terms of the bequest pursuant to section 8-1.1 of the Estates, Powers and Trusts Law or, in the alternative, pursuant to section 522 of the Not-for-Profit Corporation Law. A charitable corporation may apply for the release of a restriction imposed by a gift instrument as to the use or investment of the fund (N-PCL 522). There is a co-existing right to seek modification pursuant to EPTL 8-1.1. The focus of the Not-for-Profit Corporation Law is the construction and administration of the charitable corporation. The emphasis under cy pres is equally concerned with the intent of the donor (Matter of Zielinski, NYLJ, Apr. 29, 1999, at 33, col 2 [Sur Ct, Nassau County]).

EPTL 8-1.1 subdivision [c] provides:

"[W]henever . . . circumstances have so changed since the execution of an instrument making a disposition for religious charitable, educational or benevolent purposes as to render impracticable or impossible a literal compliance with the terms of the disposition, the court may . . . direct, or make an order or decree directing that such disposition be administered and applied in such a manner as in the judgment of the court will most effectively accomplish its general purposes, free from any specific restriction, limitation or direction contained therein . . ."

EPTL 8-1.1 applies to all charitable dispositions including absolute gifts (Lefkowitz v Lebensfeld, 51 NY2d 442 [1980]). This statute embraces both the doctrine of equitable deviation and the doctrine of cy pres (Board of Trustees of Museum of Am. Indian v Board of Trustees of Huntington Free Library and Reading Room,197 AD2d 64 [1st Dept 1994]; Application of Trustees of Diocesan Convention of New York, 126 Misc 2d 860 [Sur Ct, New York County 1984]). Equitable deviation under EPTL 8-1.1 is the equivalent of modification pursuant to

N-PCL 522. Equitable deviation is utilized to alter or amend an administrative provision (Matter of Wilson, 59 NY2d 461 [1983]. The doctrine of cy pres is utilized to effect a substantive change. [*3]

The court is mindful of the concern that equitable deviation may be employed to modify a charitable disposition where a substantive change is requested but the higher standard for cy pres cannot be met (see Reforming the Reform of Cy Pres Doctrine: A Proposal to Protect Testator Intent, 90 Marq. L. Rev. 127 [2006]; Protecting "Donor Intent" in Charitable Foundations; Wayward Trusteeship and the Barnes Foundation, 145 U. Pa L. Rev. 665 [1997]).

The requirements for cy pres are: "1) the trust must be charitable in nature; 2) the language when read in light of all the attendant circumstances must indicate general rather than specific charitable intent; and 3) the particular purpose for which the trust was created has failed or become impossible or impracticable to achieve" (Matter of Mary Holbrook Russell Mem. Scholarship Fund, 189 Misc 2d 198, 201 [Sur Ct, Nassau County 2001]).

The bequest to Columbia University has several charitable purposes: (1) the advancement of education (Russell v Allen, 107 US 163 [1883]; Matter of Wilson, 59 NY2d 461 [1983]); and (2) the advancement of medical research (Matter of Hendricks, 4 NY2d 744 [1958]).

Generally, in the application of cy pres there is a further requirement that the donor have a general charitable intent with respect to trusts. The current Restatement of Trusts provides that in the application of cy pres a general charitable intent is presumed unless the donor expresses a contrary intent (Restatement [Third] of Trusts, §67, comment [b]). The courts in this state still require evidence of general charitable intent in addition to specific charitable intent (Matter of Othmer, 12 Misc 3d 414 [Sur Ct, Kings County 2006]).

The question of general charitable intent is not so much an issue here, as petitioners do not seek to substitute the charitable institution selected by the testator (cf. Matter of Mary Holbrook Russell Mem. Scholarship Fund, 189 Misc 2d 198 [Sur Ct, Nassau County 2001]; Matter of Bowne, 11 Misc 2d 597 [Sur Ct, New York County 1958]), modify the charitable purpose, or extend the category of recipients of the award. The court notes, nevertheless, that the bequests in the last will and testament to the Presbyterian Hospital and the Whitney Museum in addition to Columbia University evidence a general charitable intent (Matter of Othmer, 12 Misc 3d 414 [Sur Ct, Kings County 2006]; Bogert, Law of Trusts & Trustees, §437 [2009]). Thus, the court is convinced that the petitioners have satisfied the requirements for application of cy pres.

Cy pres can be applied to modify a charitable disposition where the change in circumstances is the creation of a surplus fund (Matter of Post, 2 AD3d 1091 [3d Dept 2003]; Camp v Presbyterian Soc. of Sackets Harbor, 105 Misc 139 [Sup Ct, Jefferson County 1918]). A surplus exists where the fund exceeds the amount necessary or appropriate to accomplish the charitable purpose (6 Scott and Ascher on Trusts, §39.5.2 [5th ed]). The Restatement [Third] of Trusts adds a new provision permitting modification where an expenditure of funds would be wasteful (Restatement [Third] of Trusts, §67, comment [c] [1]).

This case involves the uncommon situation where utilization of a surplus fund would not only be wasteful but would be counterproductive.

In United States on Behalf of U.S. Coast Guard v Cerio (831 F Supp 530 [ED Va 1993]), the Coast Guard Academy sought modification of a testamentary trust that provided for an award to the cadet attaining the highest grade point average in chemistry. The corpus had reached $1 million with the result that the proposed gift would range from $65,000 to $130,000. The Academy contended that the literal compliance with the award would disrupt its operations and [*4]interfere with its goals. The Academy alleged that a large annual award would engender unhealthy competition, spawn honor code offenses and would be in conflict with the concept of public service.

Similarly, in Matter of Koch (NYLJ, June 14, 1991, at 23, col 2 [Sur Ct, New York County]), the Manhattan School of Music requested modification of a testamentary bequest for scholarships. The school argued that compliance with the terms of the bequest would defeat the testator's purpose as it would require awards of scholarships to less-than-deserving students.

In this case, the University contends that application of the full endowment to fund a professorship in clinical medicine would eliminate the incentive to (1) obtain grants and (2) provide patient care. The first point relates to the financial impact to the University and the second concerns impairment of the University's commitment to patient care.

Under cy pres, the test to determine whether the proposed change is consistent with the intention of the testator is ascertained from the language of the last will and testament and facts not in dispute (Matter of Scott, 8 NY2d 419 [1960]). Here, to the extent that the proposed modification benefits the University's program in medical research, it will also advance the charitable intention of the testator. In addition, the testator's legitimate desire to perpetuate her name and her husband's name will be effectuated (Matter of Scott, 8 NY2d 419 [1960]). Further, the presence of a distinguished faculty at this institution ensures that the prestige of the original professorship in clinical medicine will not be diminished by the creation of additional professorships.

The court, therefore, grants the petition. The University is authorized to create an endowment fund of $2.5 million and additional endowment funds to support professorships, as the value of the remaining funds permit. The trustees are authorized, in their discretion, to reduce the number of additional professorships if the income from the funds decrease. Each endowment fund will be used to support a full professorship and each fund will be entitled "Percy and Joanne Uris Professorship of Clinical Medicine."

Settle decree.

Dated: March 31, 2010

John B. Riordan

Judge of the

Surrogate's Court