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In re Mary Holbrook Russell Memorial Scholarship Fund

Other Lower Courts

September 12, 2001

In the Matter of Mary Holbrook Russell Memorial Scholarship Fund.

COUNSEL

Sieratzki, Ceccarelli & Weprin, L. L. P., New York City, for petitioners.

OPINION

John B. Riordan, S.

This is a petition by the settlors/trustees of an inter vivos

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charitable trust for an order permitting them to terminate the trust under powers granted in an amendment. This case presents the fairly unusual situation where public funds were donated to an express charitable trust.

By instrument dated April 2, 1969 the settlors created a trust, the Mary Holbrook Russell Memorial Scholarship Fund, to provide scholarships to students at the Cathedral School of St. Mary, a school operated by the Cathedral of the Incarnation in the Episcopal Diocese of Long Island. The trust was named in honor of a former dean and teacher at the Cathedral School of St. Mary. The settlors/trustees established the trust with a minimum fund and the balance of the fund is apparently comprised of public gifts.

Article FIRST provides in part:

" The trust is organized, and shall be operated, exclusively for educational purposes; in particular, to provide total or partial scholarships for worthy students at The Cathedral School of St. Mary, Garden City, New York ('the School'), an organization exempt from Federal income tax under section 501(c)(3) of the Internal Revenue Code of 1954, as amended. Such scholarships may include payment of or contributions toward room and board, as well as tuition. The students for whom scholarships shall be provided shall be selected by the Trustees from among lists submitted to the Trustees by the School designating students at, or applicants for admission as students to, the School who require financial assistance, total or partial, in order to attend the School."

An amendment dated September 15, 1969 provides:

" In the event of dissolution of the Trust for any reason, the Trustees shall distribute the entire trust estate to an organization or organizations exempt from taxation under, or in accordance with the purposes recited in, the provisions of Section 501 (c) (3) of the Internal Revenue Code of 1954 or corresponding provisions of future revenue laws."

In 1989 the school merged with the Cathedral School of St. Paul and scholarships continued to be paid to female students attending the merged school. By 1991 the school had incurred substantial debt. It was announced that the school was closing. The Attorney General of the State of New York commenced a

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proceeding in Supreme Court, Nassau County, to determine whether the doctrine of cy pres should be applied to permit leasing of the real property (the land upon which the school was built was transferred by deed of gift in 1885).T he court determined that the property could be leased to generate income and that the school ...


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