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In re Trust Created Under Will of Cohen

Superior Court of Pennsylvania

May 25, 2018


          Appeal from the Order Entered August 9, 2017 In the Court of Common Pleas of Delaware County Orphans' Court at No(s): 0274-2017

          BEFORE: SHOGAN, J., NICHOLS, J., and STEVENS, [*] P.J.E.


          SHOGAN, J.

         Bible Presbyterian Church of Chester ("Bible Church") appeals from the order entered August 9, 2017, in the Court of Common Pleas of Delaware County, overruling its objections to the cy pres petition of Crozer-Chester Medical Center, Inc. ("CCMC, Inc."). We affirm.

         The orphans' court provided the following summary of this case:

On August 7, 2017, this court convened a hearing to dispose of a cy pres petition arising from a Trust created under the residuary clause of the Will of William J. Cohen dated October 18, 1946 and of the Trust Agreement of February 24, 1947 ["Cohen Trust"]. The designated Trust beneficiaries (Third Presbyterian Church of Chester, [Bible Church] (also located in Chester), Church of the Open Door (located on York Road in Philadelphia) and Chester Hospital) were to split equally the net income derived from the residue of the decedent's estate.
The matter came before this court based upon a Petition of CCMC, Inc. formerly known as Crozer-Chester Medical Center [s]eeking [r]elief [p]ursuant to the Doctrine of Cy Pres. By way of background, CCMC, Inc. was the late operator of Crozer-Chester Medical Center which, in turn, based upon an adjudication of the court back in 1964, succeeded to the interests of Chester Hospital. Over the intervening years, CCMC, Inc., acquired interests in other medical facilities around Delaware County. Most recently, effective on or about July 1, 2016, a sale of the assets of CCMC, Inc., to a for-profit entity, Prospect Health, resulted in a reincarnation of a non-profit, Crozer Chester Foundation into Crozer Keystone Community Foundation ("CKCF") which is now using the former's tax identification number. At the same time, CKCF absorbed Delaware County Memorial Hospital Foundation. CKCF was identified as the principal recipient of the proceeds from the asset sale.
* * *
The issue presented for disposition derives from the changed circumstances. Chester Hospital, one of this trust's original beneficiaries has long been in the rearview mirror. But the vision of the deceased was carried forward through CCMC, Inc. The cy pres petition seeks to allow CKCF to continue the legacy of Chester Hospital and CCMC, Inc.
* * *
However, while two of the three other beneficiaries of the Cohen Trust posed no objection to the cy pres petition, one of the other Trust beneficiaries, [Bible Church], contested the proposed application of the cy pres doctrine which would permit the change of beneficiary to the newly created entity, CKCF. Instead, [Bible Church] asserted that the termination of the eligibility of CCMC, Inc. to receive the largesse from the Trust constituted a lapse thereby requiring the Trust to divide the one-quarter share originally allocable to Chester Hospital, among the other three entities.

         Orphans' Court Opinion, 11/20/17, at unnumbered 1, 2. The orphans' court overruled Bible Church's objections and granted the cy pres petition, thereby allowing CKCF to receive the one-quarter share of net income originally allocated to Chester Hospital in 1946 and 1947 and distributed to CCMC, Inc. since 1964. Bible Church appealed. The orphans' court and Bible Church complied with Pa.R.A.P. 1925.

         Bible Church states the questions involved as follows:

1) May the court award a residuary share in trusts to an independent charitable corporation with different functions rather than to the remaining residuary beneficiaries when the charity originally named as one of four residuary beneficiaries no longer qualifies to receive such funds?
2) Did the Trial Court err in granting the Petition Seeking Relief Under the Doctrine of Cy Pres and modifying the Trust to provide that the bequest to Chester Hospital now may go to [CKCF] rather than the remaining beneficiaries[?]

         Bible Church's Brief at 8.[1]

         Well-settled standards guide our review. "When reviewing a decree entered by the [o]rphans' [c]ourt, this Court must determine whether the record is free from legal error and the court's factual findings are supported by the evidence." In re Shoemaker, 115 A.3d 347, 354 (Pa. Super. 2015) (quoting In re Estate of Whitley, 50 A.3d 203, 206 (Pa. Super. 2012) (citation omitted)). Because the orphans' court sits as the fact-finder, it determines the credibility of the witnesses, and on review, we will not reverse the orphans' court's credibility determinations absent an abuse of discretion. Id. at 354-355 (citation omitted). "However, we are not constrained to give the same deference to any resulting legal conclusions." Id. at 355 (quoting Whitley, 50 A.3d at 207 (citations omitted)). "The [o]rphans' [c]ourt decision will not be reversed unless there has been an abuse of discretion or a fundamental error in applying the correct principles of law." Id. (quoting Whitley, 50 A.3d at 207 (citation omitted)).

         Bible Church first argues that the orphans' court abused its discretion by awarding Chester Hospital's residuary share of the Cohen Trust to an independent charitable corporation with non-hospital functions. Bible Church's Brief at 13. Specifically, Bible Church contends that, because Chester Hospital no longer exists and CCMC, Inc. is an ineligible beneficiary, the residual one-quarter share of the Cohen Trust should have been distributed equally to the three remaining beneficiaries. Id. at 15. In support of its position, Bible Church relies on Pennsylvania's Decedents, Estates and Fiduciaries ("DEF") Code, 20 Pa.C.S. §§ 101-8815, specifically, Section 2514(9), (10), and (11).[2] Bible Church further argues that Mr. Cohen's purposes are not frustrated by the fact that Chester Hospital no longer exists. Bible Church's Brief at 16. According to Bible Church:

what is clear from the Will and Trust under Agreement is that Cohen intended the gift to go to four specific beneficiaries. It is logical, therefore, and required by Section 2514, that if one of the beneficiaries is no longer able to accept the gift the gift should be distributed to the remaining beneficiaries equally.

Id. at 17.

         In response, CCMC, Inc. contends that Section 2514:

could not be clearer in its mandate that none of the three [sub]sections applies to the Cohen [Trust]. 20 [Pa.C.S.] §2514(9) applies only to individuals; §2514(10) applies to bequests which are not part of the residuary estate; and §2514(11) applies where the disposition in question shall not be otherwise expressly provided for by law. In the Cohen [Trust], the relevant beneficiaries are charitable institutions, not individuals, and therefore the distribution scheme described in §2514(9) does not apply. Likewise, the Cohen [Trust] bequests are residuary, and therefore are not subject to §2514(10). Finally, the requirements of §2514(11) are also not applicable here, because the Cohen Trust bequests are already otherwise expressly provided for by law, namely 20 [Pa.C.S.] § 7740.3, which articulates the doctrine of cy pres.

         CCMC, Inc.'s Brief at 10.

         Agreeing with CCMC, Inc., the orphans' court rejected Bible ...

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