Estate of McKenzie
38 Cal. Rptr. 496, 227 Cal. App. 2d 167 (1964)
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Rule of Law:
A testamentary trust providing a reward for the discovery of the cause and cure of a disease constitutes a valid charitable trust, even if the reward is paid to an individual, because its ultimate purpose is to benefit the public by stimulating beneficial research.
Facts:
- Robert O. McKenzie died testate, leaving a holographic will.
- McKenzie's will contained a provision stating: "I want a trust to be formed payable as a reward to the person who decides the cause of Rhomatoid [sic] Arthritis and a cure for the same to the satisfaction of the Medical Board of the University of Calif. at L.A."
- Marian Shepard, identified as McKenzie's niece and heir-at-law, contended that the above-quoted provision of the will was invalid.
Procedural Posture:
- United California Bank, as executor of Robert O. McKenzie's estate, filed a petition for a decree determining interests in the estate and for instructions to the executor in a California trial court.
- The Attorney General of the State of California filed a statement of interest asserting the will's provision established a valid charitable trust.
- The Regents of the University of California filed a statement regarding their qualifications and willingness to serve as testamentary trustee.
- Marian Shepard, McKenzie's niece and heir-at-law, filed a statement of interest contending the will provision was invalid and that the residuary estate should pass by intestacy to the heirs-at-law.
- The trial court heard the petition, where evidence was presented only on the relationship of persons claiming to be heirs-at-law.
- The trial court found that the will provision did not qualify as a charitable trust and failed as a private trust for lack of an identifiable beneficiary and violation of the rule against perpetuities.
- The trial court entered a decree declaring the residuary clause invalid and ordering the residue of the estate distributed in equal shares to McKenzie's five heirs-at-law.
- The Attorney General appealed this determination to the California Court of Appeals.
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Issue:
Does a testamentary provision creating a trust to offer a reward to the person who discovers the cause and cure for rheumatoid arthritis qualify as a valid charitable trust, despite specifying payment to an individual and not explicitly naming a trustee?
Opinions:
Majority - Kingsley, J.
Yes, a testamentary provision creating a trust to offer a reward for the discovery of the cause and cure for rheumatoid arthritis qualifies as a valid charitable trust, despite specifying payment to an individual and not explicitly naming a trustee. The court held that a trust for the prevention, cure, or treatment of diseases or for the promotion of health is inherently charitable (Restatement (Second) of Trusts § 372). A bequest is charitable if it serves a charitable purpose (e.g., educational, general social interest) and its ultimate recipients are the community as a whole or an unascertainable, indefinite portion thereof (Estate of Henderson; Estate of Robbins). The fact that the trust assets may eventually be paid to a single individual does not negate its charitable character if the ultimate result aligns with a charitable purpose. Citing In re Judd's Estate and Sheen v. Sheen, the court emphasized that the purpose of such a trust is to encourage research and advancement that benefits mankind, not merely to enrich the individual recipient. The individual is merely an 'instrumentality' through which public benefits are brought about. The court reasoned that considering the individual as the beneficiary would confuse the trust's purpose with the means of achieving that purpose. Furthermore, the trust does not fail for want of a named trustee, as the court has the power to appoint one, nor does it fail due to potential issues with accumulated income or future interpretive problems, as charitable trusts are exempt from certain restrictions and subject to judicial supervision.
Analysis:
This case significantly clarifies the definition of a charitable trust, especially in the context of scientific or medical advancements. It establishes that a trust offering a monetary reward to a specific, identifiable individual for a discovery can still be considered charitable if its fundamental purpose is to benefit the broader public. This precedent provides testators with greater flexibility in structuring bequests aimed at encouraging research and innovation, assuring that such trusts will not fail solely because of an individual reward component. The decision underscores the judiciary's role in interpreting the 'true beneficiary' and purpose of a trust, allowing for judicial intervention to ensure the trust's validity and proper administration even if it lacks a named trustee or specific instructions for future contingencies.
