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05/05/60 Teachers Annuity and Aid v. Riggs National Bank of

May 5, 1960

COLUMBIA, A CORPORATION, APPELLANT

v.

RIGGS NATIONAL BANK OF WASHINGTON, D. C., TRUSTEE, APPELLEE.



Before WILBUR K. MILLER, BAZELON and DANAHER, Circuit Judges.

UNITED STATES COURT OF APPEALS DISTRICT OF COLUMBIA CIRCUIT. 1960.CDC.60

TEACHERS ANNUITY AND AID ASSOCIATION of the District of

May 5, 1960. Decided

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MILLER

WILBUR K. MILLER, Circuit Judge.

The principal question presented by this appeal is whether an irrevocable trust was established when Teachers Annuity and Aid Association executed to Washington Loan and Trust Company a declaration of trust providing that the sum of $121,500 then deposited with that institution should be held in perpetuity by it as trustee, the income therefrom to be used in the payment of annuities to its members (the membership having been closed) and, after the death of the last annuitant, to be used for the benefit and relief of non-member "white teachers of the Public Schools of the District of Columbia."

The Association insists the instrument it executed merely created an arrangement which it had the right to modify, and therefore its corporate action in 1957 purporting to increase the annuities of members and to authorize the invasion of the corpus for that purpose was proper and should be given effect. The trustee *fn1 contends the declaration of June 26, 1928, created an irrevocable trust in favor of the Association members and the designated ultimate charitable beneficiaries; it doubts the validity of the Association's 1957 action which it says would impair and perhaps finally destroy the interest of the ultimate beneficiaries.

Teachers Annuity and Aid Association was incorporated November 7, 1894, to form and accrue "a fund for the allowance of annuities to retired and to permanently disabled teachers who are members of the Association . . .." It established what it called a Permanent Fund, the income from which was to be used to supplement dues received from members in the formation of an annuity fund for the payment of benefits and expenses. After a government-sponsored retirement program for teachers was established in 1920, there was little need for an organization such as the Teachers Annuity Association and thereafter it attracted fewer new members each year.

In recognition of this fact, the Association on January 21, 1928, adopted a revised "constitution" which provided that no new members should be admitted after January 1, 1928, and that, after the Association's full obligation to all its members had been discharged, its income "shall be used for relief or benefit of the white teachers of the Public Schools of the District of Columbia for such purposes and in such manner as its board of trustees shall direct." It was also provided that the funds of the Association should be divided into a Trust Fund and an Annuity Fund.The Trust Fund was to consist of $121,500 to be paid to and held in perpetuity by the Washington Loan and Trust Company and its successors, as trustee, with full power and management and control. No provision was made for disbursement from the corpus of the Trust Fund. The income therefrom, together with dues of members, was to constitute the Annuity Fund, to be used "to pay annuities, death benefits, and all other expenses."

The constitution fixed the amount of the annuities payable to members in Article IX:

"Section 1. No annuity shall exceed the sum of six hundred dollars ($600). Whenever the annuity fund shall be insufficient to pay in full all annuitants and other beneficiaries, the whole of the said fund, less the current expenses, shall be divided equally among the annuitants and other beneficiaries; and every payment made to an annuitant or other beneficiary under the provisions of this section shall be considered as having been made in full of all claims to the date of said payment.

"Section 2. Annuities shall be paid in ten (10) installments as early as practicable in each month except August and September.

"Section 3. No annuity shall be paid for less than a full month."

Pursuant to the newly adopted constitution, the Association executed June 28, 1928, to Washington Loan and Trust Company a declaration of trust which provided that the sum of $121,500 which had accumulated in what was originally called the Permanent Fund, and was then being deposited with the trustee, should be held perpetually by it, "in and upon the trusts" therein described. Again, no provision was made for invasion of the corpus of the Trust Fund. The income therefrom was to form a part of the Annuity Fund for the payment of annuities to members, death benefits and expenses. It was further provided that "when all annuitants are deceased the entire income" from the Trust Fund "shall be used for relief or benefit of ...


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