Thursday, June 14, 2018
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Court of Appeal:
Trust Can Be Amended to Permit Gift of John Muir Papers to University
Opinion Says This Is in Accord With Settlors’ Desires Notwithstanding Declaration That Trust Was Created for ‘Sole Benefit of Family Members’
By a MetNews Staff Writer
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JOHN MUIR Naturalist |
The Third District Court of Appeal has affirmed a judgment authorizing an amendment to a trust to permit the papers and other belongings of naturalist John Muir, founder of the Sierra Club, to be donated to a university, despite a declaration by the settlors that the trust “is created in the best interest and for the sole benefit of the family members who are beneficiaries of the trust.”
Four beneficiaries, holding a cumulative 1/9th interest in the trust, opposed the gift, arguing that it would contravene the stated purpose that the assets remain held by the family until an ultimate distribution to the beneficiaries.
The trust, set up in 1984, provides:
“Upon termination, the trust estate then remaining shall be distributed to the descendants of Thomas R. Hanna and Wanda Muir Hanna who are living at the termination, by representation.”
Wanda Muir was the older daughter of John Muir, who died in 1914. In 1906, she married Thomas Hanna, and they had six sons and one daughter.
Petition for Modification
Two great-grandsons of John Muir, Ross E. de Lipkau and William T. Hanna, in 2014 petitioned the San Joaquin Superior Court, as co-trustees, for an amendment to the trust to permit donation of the materials to the University of the Pacific, located in Stockton. The collection—which includes 6,700 letters, both to and from Muir, 78 journals from trips around the world, and in excess of 3,000 photographs and drawings—has been there, on loan, since 1970.
The petitioners explained that the settlors “did not know or anticipate that properly showcasing the Collection in the long run would not be feasible for the trustees” but would be for the university.
The objectors stressed the settlors’ statement of intent and argued that “any concern that the Collection will be divided upon termination of the Trust can easily by allayed or mitigated by the University” through a purchase of the collection from the beneficiaries.
Lipkau testified that giving the collection to the university “will preserve the intention of our parents, which is to forever preserve the Muiriana for posterity, with no member or individual being capable of selling any part of it for personal gain.”
San Joaquin Superior Court Judge Lesley Holland granted the petition.
Appeals Court Decision
The appeals panel agreed with the trial court that the settlors’ true desires were other than as stated in the trust instrument.
Justice Kathleen Butz wrote, in an opinion filed Tuesday and not certified for publication:
“[T]hough the trust does indicate that it was ‘created in the best interest and for the sole benefit’ of its beneficiaries, it also grants broad discretion to the trustees, up to and including amendment of its terms by the original trustees. It further permits the trustees to maintain the trust assets without liability for any loss or depreciation in value resulting from retention of the assets, and specifically authorizes the trustees to hold real property without the need “to make such real estate a productive asset of this trust.” Thus, the trust contains language suggesting that the trustees do not in all respects have to act in the best interest of or for the sole benefit of the beneficiaries. Neither does the trust expressly preclude a transfer of the trust’s assets, even donation. Indeed, the trustees are granted ‘complete power to administer the trust,’ and are expressly permitted to ‘abandon, charge off, or otherwise dispose of any property which is of no value or of insufficient value to justify collection, care, administration, or protection.’ While there is no contention that the collection lacks value, this demonstrates that, contrary to the objecting beneficiaries’ interpretation, the trust instrument does not unambiguously prevent the trustees from donating assets to a third party as conflicting with the beneficiaries’ interests. Thus, we are not persuaded that the trial court’s interpretation is disallowed by the trust language.”
Sufficiency of Evidence
She continued:
“Neither are we persuaded by the objecting beneficiaries’ claim that there was insufficient evidence to support the trial court’s conclusion that the settlors would have intended for donation of the collection to the University. In considering the trust agreement in the context of the circumstances in which it was entered into by the settlors, we conclude the trial court did not err in concluding that the purpose of the trust and the settlors’ intent, at least with respect to the collection, was to preserve and protect the collection as a unified asset for altruistic purposes. There was evidence presented that John Muir himself disdained greed and believed that his works should be shared with the rest of humanity rather than sold for profit. Additionally, ample evidence demonstrated that at the time the loan was made and continuing thereafter, the family members viewed themselves as stewards of the collection and of other inherited assets. The family members viewed the collection as highly important, sacred, and for posterity. They had taken care to gather the collection and loan it to a university, where it could be protected and shared with the scholarly world, though at that time a gift was not contemplated because of concerns that have since been alleviated. Extrinsic evidence also showed they treated the University as the final repository for the collection and donated their own personal Muir memorabilia to the University to be stored, cataloged, and shared along with the collection.”
Government ‘Taking’
Butz rejected the appellants’ contention that the trial court’s action constituted a “taking” by government “without just compensation,” in violation of the Fifth Amendment. The jurist reasoned:
“[T]he trial court did not direct or compel donation of the trust assets, otherwise transfer or in any way diminish the existing property rights of the objecting beneficiaries to any of the trust assets, or affect any of their rights under the loan agreement. Neither is the value of any trust asset affected by the trial court’s judgment. Accordingly, the objecting beneficiaries have not shown any unconstitutional taking.”
The contentions that the trial court’s action defied substantive due process, impaired the obligation of contracts, and created unjust enrichment for the university, were also spurned.
The case is de Lipkau v. Hanna, C080555.
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