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ESTATE RUTH D. JOHNSON (11/07/85)

November 7, 1985

ESTATE OF RUTH D. JOHNSON, DECEASED


COUNSEL

Mary G. Lawler, Esquire, and Norman H. Brown, Esquire, for the Exceptant

Henry I. Einbinder, Esquire, for the Trustees

Duffield Ashmead III, Esquire, for the Trustees of the University of Pennsylvania

Lawrence Barth, Esquire, for the Commonwealth of Pennsylvania, parens patriae

Barry S. Augenbraun, Esquire, amicus curiae

Pawelec, Adm. J., Bruno, Silverstein and Jamison, JJ.

Author: Jamison

[13 Phila. 569 Page 569]

SUMMARY OF CASE

Ruth D. Johnson, the decedent, left a will which gave the residue of her estate, in trust, for the benefit

[13 Phila. 569 Page 570]

    of her aunt and provided that upon the death of her aunt the principal and any undistributed income of the trust should be paid over in equal one-half shares to the University of Pennsylvania and to Temple University to establish scholarship funds in the memory of her parents. She requested that the scholarship or scholarships be awarded "to worthy medical students, male or female, and the preference for such awards first be given to medical students of the Jewish faith residing in Philadelphia, Pa., and thereafter, to Jewish medical students from other areas, and thereafter to medical students of any other faith from Philadelphia or elsewhere."

At the audit of the trustees' account Temple University asked the court to delete the religious preference provision. The auditing judge refused to change the terms of the will and he awarded Temple's share of the trust back to the trustees pending a decision by Temple either to accept or reject the gift on the terms provided in the will. Temple took exceptions to the adjudication and the court en banc, in an opinion of Judge JAMISON, dismissed the exceptions, Judge BRUNO concurring in the result.

The court determined that the testatrix's primary intent was to provide scholarships for men and women medical students, preferably of the Jewish faith from Philadelphia. It rejected Temple's argument that the testatrix's primary intent was to benefit the two medical schools.

Reviewing cases from Pennsylvania and other jurisdictions, the court concluded that the policy against discrimination on the basis of religion was not as strong as the policy against discrimination on the basis of race. The court cited cases where racial or gender-based restrictions had been deleted from trust instruments but religious restrictions had been retained.

[13 Phila. 569 Page 571]

The court also considered whether its refusal to delete religious restrictions would constitute judicial state action that violated the Equal Protection Clause of the Fourteenth Amendment. The court concluded that its application of the trust laws was by itself neutral and did not constitute impermissible discrimination. It distinguished the opinion of the Court of Appeals for the Third Circuit in Pennsylvania v. Brown, 392 F.2d 120 (3rd Cir. 1968), cert. denied 391 U.S. 921 (1968).

Ultimately the court determined that reformation of the testatrix's will was not appropriate since her intent was clear, feasible and not contrary to public policy.

In a concurring opinion Judge BRUNO stated that the court's refusal to delete the religious preference provision did not constitute sponsorship of a religion and, therefore, did not violate the Establishment Clause of the First Amendment. The holding of the court en banc protected the testatrix's constitutionally guaranteed right to freely exercise her religious faith.

Opinion SUR EXCEPTIONS

Temple University has filed exceptions to the Adjudication of BRUNO, J., wherein he denied the University's request that he remove the condition in a gift for scholarships to medical students that preference be given to young men and women of the Jewish faith. For the reasons set forth below, the exceptions are dismissed and the Adjudication of the Learned Auditing Judge is affirmed.

Ruth Johnson died on July 16, 1960, unmarried, and without issue. In her will, dated November 18, 1959, and codicil dated January 24, 1960, she made several gifts totaling less than $5,000 to various friends; directed that perpetual memorial plaques be established for her family at Congregation Keneseth Israel, Elkins Park, Pa., and bequeathed $15,000 to the

[13 Phila. 569 Page 572]

Trustees of the Hebrew University in Israel to establish a Nathan and Tillie Johnson Memorial Scholarship Fund for worthy medical students. She gave the residue of her estate, in trust, for the benefit of her aunt, Hortense Wilson, and provided that upon the death of her aunt, the principal and any undistributed income of the trust should be paid over in equal one-half shares to the University of Pennsylvania and to Temple University to establish a scholarship fund in memory of her mother and father, to be known as the Nathan and Tillie Johnson Memorial Scholarship Fund for scholarships for medical students "giving preference to persons of the Jewish faith residing in Philadelphia . . ." She requested: "in the awarding of said scholarship or scholarships, that the same be awarded to worthy medical students, male or female, and the preference for such awards first be given to medical students of the Jewish faith residing in Philadelphia, Pa., and thereafter, to Jewish medical students from other areas, and thereafter to medical students of any other faith from Philadelphia or elsewhere."

Testatrix' aunt, Hortense Wilson, the life income beneficiary, died on August 25, 1979. At the audit of the Trustee's account, counsel for the University of Pennsylvania agreed to accept its share of the remainder subject to the conditions imposed by the testatrix.*fn1

Temple University (hereinafter "Temple") which asked the court to delete the religious preference has taken exceptions to the Auditing Judge's refusal to change the terms of the will and his award of Temple's share back to the accountants pending a decision by Temple either to accept or reject the gift, with the understanding that "if Temple rejects the gift, the

[13 Phila. 569 Page 573]

    court will entertain any petition filed by a properly interested party which lays claim to the gift."

The balance for distribution in 1979 totaled $135,000. Thus, the one-half share held by the Trustees for Temple should, with interest, now be approximately $85,000. The 1982-1984 Bulletin of Temple University School of Medicine states, at page 26, that the 1981-1982 annual cost of medical education to Temple University School of Medicine to educate a medical student was $23,652. The expenses for a single student during the 1982-1983 academic year were estimated to be $15,991 for a state resident and $18,991 for an out-of-state resident.

The 1984-86 Bulletin estimates expenses during the 1983-84 academic year as $17,309, including tuition of $9,198 for Pennsylvanians and $20,599, including tuition of $12,488, for out of state residents. A footnote states that the 1984-85 tuition is $9,888 for Pennsylvania residents and $13,426 for out of state residents. Since the costs of medical education are continuously increasing, it appears that Temple's total share of the principal amount of the Johnson Fund is scarcely sufficient to educate one student for his or her entire medical education.

[13 Phila. 569 Page 574]

The significance of the amount, however, pales before the need to reconcile or choose between two basic, but potentially conflicting public policies. These principles are freedom of testation (i.e. the individual's right to leave his or her estate for the benefit of any favored individual, class, or religious group) and the policy of promoting equal opportunity for all, regardless of race, gender, origin or creed. Further, these policies must be weighted with the policy that encourages charitable contributions and the duty of this court to carry out the intentions of the testatrix, as long as those directions are not illegal, impractical or incapable of fulfillment. (See generally, Restatement (Second) Page 574} of Trusts § 368 et seq., § 399 (1959); Clark, Charitable Trusts, The Fourteenth Amendment and the Will of Stephen Girard, 66 Yale L.J. 979 (1957); Note, A Future for Girard's Dream, 10 Vill. L.Rev. 679 (1965); Annot., 25 A.L.R. 3d 736 (1969).)

Temple urges that the primary intention of the testatrix was to benefit the medical schools, rather than medical students of the Jewish faith. It further contends that it is impermissible for the court to enforce the religious preference because of limitations upon Temple under the Fourteenth Amendment, Federal and State Civil Rights Statutes, Federal and State funding regulations and various other restrictions, including those imposed by local redevelopment authorities, the Pennsylvania Human Relations Act and the Pennsylvania Fair Educational Opportunities Act. Temple also avers that the requirement for it to favor one religious group over another is contrary to its own governing principles and those of its students, faculty and personnel. Although acknowledging that the University was declared by statute to be "an instrumentality of the Commonwealth to serve as a state-related institution in the Commonwealth's system of higher education" 24 P.S. 2510-2 (1965), Temple did not concede that administration by the University of the Johnson Scholarship Fund would constitute state action. However, Temple questions its own position by citing the decision of the United States Court of Appeals for the Third Circuit in Krynicky v. University of Pittsburgh and Schier v. Temple University, 742 F.2d 94, 103 (3d Cir. 1984), cert. denied, 105 S.Ct. 2018, 85 L.Ed. 2d 300 (U.S. 1985), wherein it was held in matters alleging employment discrimination on the basis of gender, that "a symbiotic relationship exists between the Commonwealth of Pennsylvania on the one hand and . . . Temple on the other" and therefore actions taken by the University are "actions taken under color

[13 Phila. 569 Page 575]

    of state law and are subject to scrutiny under [42 U.S.C.] section 1983" and the mandates of the Fourteenth Amendment.

It does not follow from a finding that a university is a state actor under 42 U.S.C. § 1983, that the academic institution is a state actor when it recognizes a religious preference in awarding scholarships pursuant to the wishes of a private benefactor. Despite the finding in Rackin v. University of Pennsylvania, 386 F. Supp. 992 (E.D. Pa. 1974), that the University of Pennsylvania, a state aided institution, was a "state actor" within the meaning of the Equal Protection Clause and 42 U.S.C. § 1983, the University of Pennsylvania did not affirmatively seek to vary the terms of Miss Johnson's will.

Temple, however, would have the court alter the clear meaning of the will. Although an educational trust which is not restrictive as to religion may be preferable on public policy grounds to one which states a preference, this court may not exercise its cy pres powers according to its perception of current public policy, rather than in accordance with the intent of the testatrix. The Orphans' Court's power over distribution of a charitable trust is limited to removing restrictions only if they are incompatible with the testator's dominant purpose.*fn2

[13 Phila. 569 Page 576]

In Weaver Trust, 43 Pa. D. & C. 2d 245 (1967), Gettysburg College sought to have a racial restriction removed from a scholarship fund. The Court refused to do so and held that it would accept an alternative plan for selection of students, reasoning that:

[T]he eligibility criterion . . . is clearly and unmistakably declared and can be literally and lawfully carried out. Cy pres is never applicable to destroy a charitable trust or to . . . defeat a settlor's dominant intent. . . .

43 Pa. D. & C. 2d at 254.

Similarly, in Connecticut College v. United States, 276 F.2d 491, 497 (D.C. Cir. 1960), the court held that cy pres cannot be used to vary the terms of a bequest "merely because the variation will meet ...


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