No. 14670
I N T H E SUPREME COURT O F THE S T A T E O F MONTANA
1979
I N THE MATTER O F THE T R U S T
CREATED UNDER T H E W I L L O F :
ROYALSTON HEYWOOD CRAM, a/k/a
R o y a l s t o n H. C r a m , and a s
Re H. CRAM,
Deceased.
A p p e a l from: D i s t r i c t C o u r t of t h e E i g h t h J u d i c i a l D i s t r i c t ,
H o n o r a b l e J o e l G. R o t h , Judge p r e s i d i n g .
C o u n s e l of R e c o r d :
For A p p e l l a n t :
B o t t o m l y and G a b r i e l , G r e a t F a l l s , M o n t a n a
R . V. B o t t o m l y argued, G r e a t F a l l s , M o n t a n a
Fredrick S h e r w o o d , H e l e n a , M o n t a n a
For R e s p o n d e n t :
C h u r c h , H a r r i s , Johnson & W i l l i a m s , G r e a t F a l l s , M o n t a n a
R. K e i t h S t r o n g a r g u e d , G r e a t F a l l s , M o n t a n a
C a n n o n and G i l l e s p i e , H e l e n a , M o n t a n a
For A m i c u s C u r i a e :
Hon. M i k e G r e e l y , A t t o r n e y G e n e r a l , H e l e n a , M o n t a n a
Sheri Sprigg, A s s i s t a n t A t t o r n e y G e n e r a l , H e l e n a , M o n t a n a
Submitted: September 17, 1979
Decided:
Filed:
Mr. Chief Justice Frank I. Haswell delivered the Opinion of
the Court.
Appellant Donna Bottomly appeals from a memorandum
decision and order of the Cascade County District Court
denying her petition in which she claimed to be a beneficiary
under the trust of Royalston Heywood Cram; and granting North-
western Union Trust Company's petition for instructions which
resulted in a modification of the trust instrument.
Royalston Heywood Cram was a sheep rancher and resident
of Cascade County. On March 30, 1948, he executed his Last
Will and Testament. He died on January 13, 1954. His Will
was admitted to probate on February 17, 1954. The parties do
not dispute the validity of Cram's 1948 Will.
Cram's Will provided for a trust with the Union Bank and
Trust of Helena, Montana, named as trustee. On March 9,
1955, the Northwestern Union Trust Company of Helena, Montana,
successor to the named trustee in the Will, received the estate
as trustee pursuant to the terms of the Will. The trustee has
ever since that time administered the trust in accordance with
the terms of the instrument.
The trust was created for the benefit of members of the
Future Farmers of America of Montana and the 4-H Club of
Montana. The purpose of the Cram trust, as recited in the
instrument, is:
". .
. to encourage and assist youths of the state
interested in the woolgrowing and sheep raising
industry of the state, and it is expected the
leaders or heads of the two organizations will
supervise and assist the various certified youths
of their respective organizations, qualified to
and receiving benefits, in the purchase of sheep
to the best advantage to the end that these youths
may get started in the sheep and wool raising
industry.. . ."
The trust instrument contains detailed instructions
relating to those youths who qualify as eligible recipients of
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the trust funds, which creates the problem in the instant
case. Those instructions are as follows:
"This trust is to be perpetual and is created
for the benefit of members of organizations
known as the FUTURE FARMERS OF AMERICA OF
MONTANA and the 4-H CLUB OF MONTANA. Persons
receiving benefits under the trust shall be
members, in good standing, of one of these
organizations and bona fide residents of the
State of Montana, residents of the County of
Cascade to be excluded, however. They shall
be boys between the ages of fourteen (14) and
eighteen (18) years, both inclusive, of American
born parents and such beneficiaries shall be of
honest and upright character, worthy of such
assistance, and without financial means of his
own, and manifest an interest in the sheep raising
business."
The instrument provides that on or about September 15
of each year, after $100 has accumulated, the trustee shall
determine and notify the state leaders of FFA and 4-H of
the number of $100 stipends available to members of those
organizations. The FFA and 4-H Club leaders are employees
of the State of Montana, and they perform their duties as
leaders as a part of their official duties with the University
system and the Office of Superintendent of Public Instruction.
The instrument then provides for the certification of
names of members of the two organizations who are eligible
to receive the stipends. That provision, which prompted the
involvement in this proceeding of the Office of Public
Instruction and the Montana Human Rights Division, is as
follows:
"Whereupon, such head or leader of the respective
organizations shall certify to the Trustee the
names of youths having the qualifications mentioned
above, eligible to receive benefits hereunder, and,
if the Trustee and its officers are satisfied, the
Trustee will, thereupon, issue a check, drawn upon
Heywood Foundation fund, payable to the head or
leader of the Future Farmers of America in Montana
and one of the members of this organization so
certified for, in the sum of $100.00 for the
purchase of sheep, and then issue a check to the
head or leader of the State 4-H Club of Montana and
one of the members of this organization so certified
for the purchase of sheep.. . ."
In the fall of 1977, appellant Donna Bottomly, a member
in good standing of F F A , applied for a Cram trust stipend.
When the F F A refused to provide any further lists, the trustee
petitioned the District Court for instructions. Donna
Bottomly, the Montana Human Rights Commission and the Super-
intendent of Public Instruction all appeared and requested the
District Court to reform the trust in order to eliminate the
discriminatory provisions.
On October 24, 1978, the District Court entered a
memorandum decision and order. The Court found that the
discrimination involved in the Cram trust was clear, and that
it was not the F F A or the 4-H Club or their respective state
leaders who had created the discriminatory guidelines con-
cerning the eligibility of prospective trust beneficiaries.
The District Court found that Cram had established the dis-
criminatory guidelines, and that he had clearly intended to
do so. The District Court further found that the only
involvement of the F F A and 4-H Club was that Cram had selected
a limited group of favored members of those organizations to
receive trust property.
The District Court modified the Cram Will by: (1)
removing the provision that the state leaders of the F F A and
the 4-H Club be notified of the number of $100 stipends to
be made; (2) removing the provision requiring the state leaders
to certify a list of names of eligible recipients to the
trustee; and (3) removing the provision requiring the trustee
to make the state leader a co-payee of the trust checks issued.
The District Court instructed the trustee to continue its
administration of the Cram trust, as modified. The ~istrict
Court further instructed the trustee to seek the assistance of
other persons from which to obtain the necessary list of names
of eligible recipients under the trust, and to make them
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co-payees on trust checks issued if the state leaders of
the FFA and 4-H Club refused to furnish a list of names
of eligible recipients.
The District Court denied appellant's petition, and
granted Northwestern Union Trust Company's petition for
instructions. Appellant Bottomly now appeals; the
Montana Human Rights Commission and the Superintendent of
Public Instruction have not appealed.
Appellant Bottomly raises three issues on appeal:
(1) Is the Cram Will, as modified by the District Court,
discriminatory?
(2) Can the modified Cram trust be enforced in its
present form?
(3) Can the Cram Will be reformed so as to be enforce-
able?
The first issue is whether the Cram Will, as modified by
the District Court, is discriminatory. The parties agree
that the modified Cram Will is discriminatory; however, the
trustee contends that the discrimination is not unlawful, but
permissible. We hold that the trust provision of the Cram
Will as modified by the District Court is discriminatory.
The language contained in the instrument clearly excludes
female members of FFA or 4-H from becoming eligible recipients
under the Cram trust.
The second issue is whether the modified Cram trust can
be enforced in its present form. The District Court modified
the original instrument, and the parties agree that the
District Court possesses the power to apply deviation and cy
pres principles in order to modify a Will. These powers
were recognized, though not applied in the case of In Re
Swayze's Estate (1948), 120 Mont. 546, 551, 191 P.2d 322,
325. Accordingly, this Court's scope of review is limited
to an examination of the Cram trust as modified by the
District Court.
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The precise issue, as we perceive it, is whether "state
action" is involved in the terms and operation of the modified
Cram trust rendering it unlawful as a denial of equal protection
of the law. Appellant contends that the FFA and 4-H Club
are integral parts of the Montana educational system and
as such they enjoy a wide variety of federal, state and
local financing, assistance and participation. The appellant
further contends that by virtue of the organizations' heavy
involvement with, and dependence upon federal, state and
local assistance, "state action" is present; and it is
impossible for the organizations and their members to continue
to participate in the benefits derived from the modified
Cram trust because it is unlawful discrimination. The
trustee contends that the District Court, in modifying the
Cram trust, removed the FFA and 4-H organizations from the
mechanics of the trust selection process. The trustee
further contends that with the removal of the FFA and 4-H
state leaders from the mechanics of the Cram trust, "state
action" was also removed.
There is an essential dichotomy between discrimination
by the State, which is prohibited by the Equal Protection
Clause, and private discriminatory conduct, against which
that clause erects no shield. Moose Lodge No. 107 v. Irvis
(1972), 407 U.S. 163, 172, 92 S.Ct. 1965, 1971, 32 L.Ed.2d
627, 637; Burton v. Wilmington Parking Authority (19611, 365
U.S. 715, 721, 81 S.Ct. 856, 860, 6 L.Ed.2d 45, 50; Shelley
v. Kraemer (1948), 334 U.S. 1,13, 68 S.Ct. 836, 842, 92
L.Ed. 1161, 1180. It has long been established that private
conduct abridging individual rights does not violate the
Equal Protection Clause of the Fourteenth Amendment to the
United States Constitution. Civil Rights Cases (1883), 109
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U.S. 3, 3 S.Ct. 18, 27 L.Ed. 835. In deciding whether the
conduct under attack is governmental or private in nature,
the United States Supreme Court has never adopted a precise,
rigid test but has relied on a case-by-case approach.
Lockwood v. Killian (1977), 172 Conn. 496, , 375 A.2d
998, 1002. Private conduct abridging individual rights does
no violence to the Equal Protection Clause unless the state
in any of its manifestations has been found to have become
involved in such conduct to a significant extent. Burton
v. Wilmington Parking Authority, supra, 365 U.S. at 722, 81
S.Ct. at 860, 6 L.Ed.2d at 50; Kotch v. Pilot Comrn'rs (19471,
330 U.S. 552, 556, 67 S.Ct. 910, 912, 91 L.Ed. 1093, 1096. It
is only when the State "so far" insinuates itself into a
"position of interdependence" that it becomes a "joint
participant" in the challenged activity or where private
conduct becomes "so entwined" with governmental policies
that a constitutional violation occurs. Evans v. Newton
(1966), 382 U.S. 296, 299, 86 S.Ct. 486, 488, 15 L.Ed.2d
373, 375; Burton v. Wilmington Parking Authority, supra,
365 U.S. at 725, 81 S.Ct. at 862.
In First National Bank of Kansas City v. Danforth
(Mo. 1975), 523 S.W.2d 808, cert.den. 95 S.Ct. 1999, 2424,
the Missouri Supreme Court held that there was no invidious
discrimination or state action where Homer McWilliams established
the "McWilliams Memorial Hospital Trust" and directed that
the net income from the trust be used annually for the
maintenance, support and care of sick and infirm patients
"born of white parents in the United States of America."
McWilliams was a private individual; the corpus of the trust
was derived solely from his private funds; and the trustee
was a privately owned bank. The Court determined that no
public body was involved, and found no entwinement by the State.
The Court held there was no state action and accordingly no denial
of equal protection.
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In Shapiro v. Columbia Un. Nat. Bk. & Tr. Co, (Mo.
19781, 576 S.W.2d 310, Victor Wilson established a private
charitable trust to assist deserving resident "boys" in
obtaining university educations. A female law student brought
an action alleging that she was denied an opportunity to
apply for and be considered for financial aid from the trust
established by Wilson. The University of Missouri at Kansas
City, a public institution, accepted and processed the
applications of prospective recipients for financial aid
from the Wilson trust. Agents of the University nominated
qualified male students and forwarded those names to a
private trustee who approved the names of the male students
and then awarded the scholarship funds. The private trustee
had the ultimate and final power to determine which qualified
boys would finally be awarded scholarship funds. The Missouri
Supreme Court determined that the participation by the
agents of the State University was not of such a significant
extent in any of its manifestations or so entwined with
private conduct that state action resulted. In Shapiro,
a private individual established a trust with his private
funds, appointed a bank as private trustee, established in
his will a procedure by which the recipients of the trust
funds would be selected, and the private trustee had the
final power to approve the selection of trust fund recipients.
The Court held that neither the Equal Protection Clause nor
Civil Rights Act were violated, affirming the trial court's
dismissal of the female law student's petition.
From the principles discussed in the authorities summarized
above, and from all the facts and circumstances as developed
in this particular case, we cannot conclude that there is
"state action" involved in the modified Cram trust.
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The intent of Cram to provide stipends to boys between
the ages of 14 and 18 is clear and unambiguous. The District
Court modified the Cram trust so as to remove the F F A and 4-
H Club state leaders from the mechanics of the trust. The
District Court modified the Cram trust as nearly in conformity
with the intent of the testator as was practicable. With
the removal of the F F A and 4-H Club state leaders, "state
action" is no longer involved.
Cram established a private trust for the benefit of
deserving boys to encourage and assist them so that they
could get a start in the sheep and wool raising industry.
Cram was a private individual, established the trust with
his private funds, appointed a bank as private trustee, and
established in his Will a procedure by which the recipients
of the trust funds would be selected. Under the modified
Cram trust, the F F A and 4-H Club organizations have no
involvement in the operation of the trust nor in the beneficiary
selection process. The modified Cram trust requires the
private trustee to obtain the names of eligible recipients,
select the beneficiaries, and to award the stipends. The
important distinction is that the modified Cram trust requires
the private trustee to award stipends to individual boys who
are members of either the F F A or 4-H Club, and not to the
organizations as entities. The fact that the modified Cram
trust requires eligible recipients to be F F A or 4-H Club
members does not in our opinion rise to the level of "state
action." Mere membership and participation in F F A and 4-H
Club by eligible boys does not constitute the requisite
entwinement between the state and private conduct from which
"state action" results.
We hold that the modified Cram trust is enforceable in
its present form. A private person has the right to dispose
of his money or property as he wishes and in so doing may
lawfully discriminate in regard to the beneficiaries of his
largess without offending the equal protection clause as
long as the State and its instrumentalities are not involved,
and unless the trust is unlawful, private trusts are to be
encouraged. Our resolution of the second issue renders
consideration of the third issue unnecessary. Affirmed.
Chief Justice
We Concur:
/
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Justices 7
Mr. Justice Daniel J. Shea dissents and will file a written
dissent later.