Davis Adv. Sh. No. 1
THE STATE OF SOUTH CAROLINA
In The Supreme Court
Society of Charleston,
South Carolina (Franke
Home) and Newberry
The South Carolina
National Bank (n/k/a
Wachovia Bank of
South Carolina, N.A.),
as Trustee of the
Created Under the Last
Will and Testament of
John D. Muller, Jr.,
Appeal From Charleston County
William L. Howard, Sr., Judge
Opinion No. 24729
Heard June 17, 1997 - Filed December 29, 1997
REVERSED IN PART; AFFIRMED IN PART
Donald B. Meyer, Scott W. Pitts, both of Moore and Van Allen,
and William C. Cleveland, of Haynsworth, Marion, McKay &
Guerard, of Charleston, for the Appellant-Respondent, The
South Carolina National Bank (n/k/a Wachovia Bank of South
Jacquelyn L. Bartley, David W. Robinson, II, both of Robinson,
McFadden & Moore, P.C., of Columbia, for Respondent-
Appellant Franke Home.
Robert M. Hollings, F. Truett Nettles, II, both of Hollings &
Nettles, P.A., of Charleston, for Respondent-Appellant
FINNEY, C.J.: This is an action construing a testamentary
trust. The circuit court first held that historic preservation of the
exteriors of certain properties in the City of Charleston did not confer a
sufficient public benefit so as to render a trust established for this purpose
a charitable trust. In a second order, the court construed the trust and
held that the Trustee had properly managed its assets. We reverse the
first order, and affirm the second.
Respondents-Appellants (Beneficiaries) are the charitable
beneficiaries of a testamentary trust created under John Muller's will.
Appellant-respondent (Trustee) is the Trustee. Beneficiaries brought this
action challenging certain provisions of the will, alleging they do not create
a charitable trust, and claiming Trustee breached its fiduciary duty in
administering the trust. Trustee appeals an order finding no charitable
trust; Beneficiaries appeal an order finding no breach of fiduciary duty.
The appeals have been consolidated.
Mr. Muller, a lifelong Charleston resident, was well known for
his efforts to preserve historic homes in the city. Mr. Muller acquired
nine continuous properties, most on Archdale Street (the Archdale
Properties) in the 1950's and 1960's, and began restoring them. Under
Muller's will, the Archdale Properties and Laurel Hill Plantation1 were the
corpus of the charitable trust, and Trustee was directed to "hold such
properties ... to comprise the corpus of the ... Muller Trust in
perpetuity. . . ." [Will, art. IV(b)]. The will directed the net income from
the corpus "[F]irst be applied by my Trustee to the care, upkeep and
maintenance of my said real properties ...... [(Will, art (b)(1)]. It then
solely by my Trustee, of monies from which repairs, insurance,
taxes and other, contingencies can be paid, all of the
remainder of the net income which .remains from time to time
... if any, shall be distributed by my Trustee to the
[(Will, Article (b)(2))].
At the time of Muller's death in 1984, the Properties were still
in a state of disrepair. Since that time, the Trustee has fully restored the
exterior of the Properties, created 27 separate apartments, and rented
them. The expenses incurred in renovating the Properties have
consistently exceeded the Trust's net income, and the Beneficiaries have
received only one distribution, that from interest generated by insurance
proceeds paid after Hurricane Hugo severely damaged the Properties.
The trial court found the exterior of the Archdale Properties
had been "preserved and returned to their original splendor with
substantial education benefit to those who may view them. It also
found the fact the Properties share a common owner is important in
preserving and maintaining them, and "(t)hey have historical significance
as a unit which transcends their individual parts." He held the Properties
had significant public value because they constitute the northern boundary
of historic preservation in this part of Charleston, and as such "(t)heir
continued preservation is important as a bastion against insipid
deterioration. " Finally, the trial judge found the restored and preserved
Properties "are a monument to [Muller's] ideas, and a model to be
The trial judge held, none-the-less, that the purpose of
the Muller Trust as it relates to the Archdale Properties did not provide a
sufficient public benefit so as to render it a proper charitable trust.
Trustee appeals this order.
A court of equity takes a sympathetic view of attempts to
create a charitable trust, and will go to great lengths to try to sustain
such an attempt. Medical Society of South Carolina v. SC Nat'l Bank of
Charleston, 197 S.C. 96, 14 S.E.2d 577 (1941); Porcher v. Cappelmann, 187
S.C. 491, 198 S.E. 8 (1938)(charitable trusts "are entitled to peculiar
favor"). No general rule can be laid down as to what benefits constitute a
public charity, and each case must be judged on its own facts. Medical
Society, supra. "Courts, on the whole, are kindly disposed towards
preservation of the settings and trappings of historical events and of
remnants of a departed culture, and trusts to that end are generally
upheld." Annot., Validity, as for a charitable purpose, of trust for
dissemination or preservation of material of historical or other educational
interest or value, 12 ALR 2d 849, 893 (1950).
The trial judge's conclusions appear to rest on two grounds:
(1) the Properties' interiors are not open to the public on a regular basis;
and (2) the Properties are rented to private individuals who receive a
greater benefit (albeit at a greater cost) than the public at large. In our
opinion, the fact the Trustee utilized the properties themselves to generate
the income necessary to achieve the trust's purpose does not convert the
benefit conferred from public to private. See The Preservation Society-of
NemMort County v. Assessor of Taxes of the City of Newport, 247 A.2d 430
(R.I. 1968). Further, the fact that the renters are more able to enjoy the
Properties than the public at large does not alter the trust's charitable
character. It is true in almost all public trusts that some individuals
receive more direct benefit than others, but the purpose is charitable so
long as societal interests are furthered. §54 Bogert on Trusts (6th Ed.
The trial judge also relied on Smith v. Heyward, 115 S.C. 145,
104 S.E. 473 (1920). In Smith, the testatrix established a fund to
maintain her family home and its extensive grounds, none of which were
open to the public. The Court held there was no charity involved, but
that the bequest was "purely private and personal." Unlike Smith, the
trust here is not "purely private and personal", but, as even the trial judge
held, "clearly bestow[s] a public benefit
.... Smith is clearly distinguishable.
The Beneficiaries rely not only on Smith, supra, to support
their position but also on the Medical Society decision. In Medical Society,
the testatrix left her home and its contents to be used as a museum. The
evidence showed the contents had little or no value as museum pieces, and
that the exhibition of these items would constitute a public detriment, not
a public benefit. Id. Medical Society supports the position of the Trustee
here since the Muller Trust confers a public benefit.
We reverse the first order and find for the historic
preservation of the Archdale Properties because this confers a sufficient
public benefit to render it a charitable trust.
In a subsequent order, the trial court construed the will and
granted Trustee summary judgment on the Beneficiaries' claims that
Trustee had breached its fiduciary duties in managing the Muller Trust.
Beneficiaries have appealed this order, essentially contending the trial
court erred in determining Muller's intent, and that Trustee's management
was deficient. We affirm this order. Germann v. New York Life Ins. Co.,
286 S.C. 24, 331 S.E.2d 385 (Ct. App. 1985).
Accordingly, these appeals are
REVERSED IN PART: AFFIRMED IN PART.
MOORE, WALLER, JJ., and Acting Associate Justices Thomas
J. Ervin and Casey L. Manning concur.