THE
YALE
LAW
JOURNAL
VOLUME
66
JUNE,
1957
NUMBER
7
CHARITABLE
TRUSTS,
THE FOURTEENTH
AMENDMENT
AND
THE
WILL
OF
STEPHEN
GIRARD
ELIAS
CLARK-
A
charitable
trust
serves
two
masters-the
property
owner
who
created
it
and
society
which
is
its
beneficiary.
On
the
initial
assumption
that
the
interests
of
each
coincide,
the
law
guarantees
the
trust
enforcement,
perpetual
existence
and
tax
immunity.
But
aware
that
the
harmony
in
any
partnership
is
some-
times
disrupted,
it
has
also
evolved
methods
of
adjusting
the
two
interests
when
they
diverge.
The
process
has
been
criticized
as
hesitant
in
application
and
over-solicitous
to
the
demands
of
the
settlor.1
Yet
one
has
come
to
expect
few
surprises
by
way
of
doctrinal
innovations.
Now,
however,
a
challenge
has
arisen from
a wholly
new
and
unexpected
quarter. The
attack
is levelled
at
the
trust
which
makes
race
the
criterion
for
benefit,
and
the
challenge
stems
from
the
equal
protection
clause
of
the
Fourteenth
Amendment.
2
THE
GIRARD
CASE:
AN
INCOMPLETE
SOLUTION
On
April
29
of
this
year, the
Supreme
Court
took
the
first
step
toward
de-
segregation
of
charitable
trusts.
3
Without
dissent,
it
held
in
a
per
curiam
decision
tAssociate
Professor
of
Law,
Yale
Law
School.
1.
Two
basic
devices
are
used
to
protect
the
public
interest:
first,
before
the
trusf
becomes
operative,
a
court
may
withhold
the
charitable
designation
and
all
the
privileges
which accompany
that
characterization;
and,
second,
if a
valid
over-all
charitable
purpose
is
present,
a court
may
remove
particular
provisions
which
are
obsolete,
impossible
or
illegal
by
applying
the
doctrine
of
cy
pres.
These
devices
are
administered
in
a
manner
which
makes
the
settlor's
intent
primary
and
the
public
interest
subordinate.
See
text
at
note
S1
infra.
For
criticism
of
the
inevitable
abuses,
see
TAYLOR,
PUBLIC
AccouNTA-
IILITY
OF
FOUNDATIONS
AND
CHARITABLE
TRUSTS
(1953).
On
the
possibility
of
tax
advantages
to
the
settlor
and
his
family,
see
MACDONALD,
THE
FORD
FOUNDATION
132-37
(1956)
;
Eaton,
Charitable
Foundations
and
Related
Matters
Under
the
1950
Revenue
Act,
37
VA.
L.
REv.
1,
253
(1951)
;
Latcham,
Private
Charitable
Foundations:
Some
Tax
and
Policy
Implications,
98
U.
PA.
L.
Rxv.
617
(1950)
(written
prior
to
the
1950
amendments
to
the
Internal
Revenue
Code)
;
Comment,
Colleges,
Charities
and
the
Revenue
Act
of
1950,
60
YALE
L.J.
851
(1951).
For
discussion
of
the
continuance
of
obsolete
trusts,
see
FiscH.
THE
CY
PREs
DOCTRINE
IN
THE
UNITED
STATES
(1950);
SIIES,
PUBLIC
POLICY
AND
THE
DEAD
HAND,
110-40
(1955)
;
Cooper,
Charitable
Community
Trusts,
25
CONN.
B.J.
17
(1951)
;
Comment,
A
Revaluation
of
Cy
Pres.
49
YALE
L.J.
303
(1939).
On
the
prob-
lems
of
uncontrolled
wealth
and
power,
see
Friedmann,
Corporate
Power,
Government
by
Private
Groups,
and
the
Law,
57
COLUM.
L.
REv.
155
(1957).
2.
U.S.
CONST.
amend.
XIV,
§
1.
3.
Pennsylvania
v.
Board
of
Directors,
77
Sup.
Ct.
806
(1957).
HeinOnline -- 66 Yale L.J. 979 1956-1957
THE
YALE
LAW
JOURNAL
that
the
Board
of
Directors
of City
Trustees
in
Philadelphia,
while
exercising
its
obligation
as
trustee
to
deny
Negroes
admission
to the
college
created
under
the
will
of
Stephen
Girard,
was
engaged
in
state
action
proscribed
by
the
Four-
teenth
Amendment.
4
On
its
face
the
decision
does
not
pose
a
threat
to
charitable
trusts
generally;
for
it
applies
only
to
the
unusual
trust
which
by
its
terms
requires
both
discrimination
and
a
governmental
trustee.
But
the
pattern
of
race
problems
in
the
past
demonstrates
that,
once
the
door
has
been
pushed
ajar,
attempts
will
be
made
to
widen
the
opening.
And the
Girard
case
may
yet provide
the
impetus.
The
Supreme
Court
remanded
"for
further
proceed-
ings
not inconsistent
with this
opinion."
As
if
anticipating
this
development,
the Supreme
Court
of
Pennsylvania
had
indicated
that
if
the
identity
of
the
trustee
required
a
finding
of
state
action,
the
proper
remedy
would
be
substi-
tution
of
a
private
trustee,
not
excision
of
the
limitation
to whites.
5
Should
this
remedy
be
effected,
the
United
States
Supreme
Court
will
be
confronted
with
a
difficult
choice
if
it
again
reviews
the
case.
It
must
then
either
ap-
prove
the
discrimination
so
returned
to
a
private
form,
thereby
bolstering
the
determination
of
the Southern
states
to
preserve
school
segregation,
or
it
must
hold
all
charitable
trusts
subject
to
the
standards
of
the Fourteenth
Amendment.
Even
before
the
Supreme
Court
took
action,
the
Girard
case
had
attracted
widespread
attention.
6
At
first
glance,
this interest
is difficult
to
understand.
In
the
complex
of
Negro-white
relations,
the
maliciously
discriminatory
trust
is
only
of
peripheral
importance.
To
the
relatively
few
now
in
existence,
the
addition
of
many
more
is unlikely.
7
Established
institutions
cannot
afford,
4.
The
decision
has
attracted
attention
notonlybecauseof
its
implications
but
also
because
of
the
manner
in
which
it
was
rendered.
Seemingly
equating
Girard
with
the
more
routine
segregation
cases,
the
Court
passed
judgment
on
the
petition
for certiorari
without
hearing
oral
argument.
See
note
38
infra.
The brevity
of
the
decision
also
indicates
that
the
Justices
considered
the
case
of
routine
significance.
It
has
been
suggested
that
a
fuller
airing
of
the
matter
was
in
order.
New
Republic,
June
3,
1957,
p. 7.
5.
Girard
W\ill
Case,
386
Pa.
548,
566,
127
A.2d
287,
295
(1956)
;
see
text
at
note
49
infra.
6.
See
Gordon,
The
Girard
College
Case:
Desegregation
and
a
Municipal
Trust,
304
ANNALS
53
(1956)
(discussion
of
the
use
of
sociological
testimony)
;
Miller,
Racial
Dis-
crimination
and
Private
Schools,
41
MINN.
L.
REv.
145,
245,
266-76
(1957)
;
Shanks,
"State
Action" and
the
Girard
Estate
Case,
105
U.
PA.
L.
REv.
213
(1956)
;
Notes,
56
COLutI.
L.
REv.
285
(1956),
104
U.
PA.
L.
REv.
547
(1956),
3
WAYNE
L.
REv.
143
(1957).
7.
No
compilation
of
such
trusts
has
been
found.
The
digests
list
the
few
which
have
been
litigated
on
any
ground.
A
sampling
includes:
Averill
v.
Lewis,
106
Conn.
582,
138
Atl.
815 (1927)
(trust
for
maintenance
of
free
rest
for
white,
Protestant,
female
teachers)
;
Beardsley
v. Selectmen,
53
Conn.
489,
3
Atl.
557
(1885)
(bequest
for
worthy,
deserving,
poor,
white,
An-erican,
Protestant,
Democratic
widows
and
orphans
residing
in
Bridge-
port)
;
Woodstown
Nat'l
Bank
&
Trust
Co.
v.
Snelbaker,
136
N.J.
Eq.
62,
40
A.2d
222
(Ch.
1944)
; Humphrey
v.
Board
of
Trustees,
203
N.C.
201,
165
S.E.
547
(1932)
(income
of
trust
to
be
used
for
education
of
white
girl
orphan
selected
from
specified
orphanage
each
year
by
Board
of
Trustees)
;
Hass
v.
Hass,
195
N.C.
734,
143
S.E.
541
(1928)
(trust
for
benefit
of
indigent,
blind,
caucasian
children)
;
Columbia
v.
Monteith,
139
S.C.
262,
137
S.E.
727
(1926)
(trust
to establish
industrial
school
for
children
of
indigent
white
persons).
The
Girard
disposition
has
apparently
served
as
a
prototype
for
other
trusts.
Two
[Vol.66:
979
HeinOnline -- 66 Yale L.J. 980 1956-1957
CHARITABLE
TRUSTS
from
a
public
relations
standpoint,
to
accept
money
with
this
taint
upon
it.,
Moreover,
it
was
apparent
from
the
outset
that
the
two
Negro
boys
who
had
suffered
the
discrimination
in
Girard
would
never
personally
benefit
from
the
action.
By
the
time
the
litigation
is
ended,
their
age
will
probably
foreclose
any
opportunity
to
enroll
in
the
schoolY
Fascination
in
the
case
stems
not
so
much
from
the
immediate
solution
as
from
what
that
solution
portends
for
the
future.
And
because
the
present
Supreme
Court
pronouncement
is
only
a
prelude
to
the
broader
consideration
of
charitable
trusts,
the
interest
remains
undiminished.
First,
the
case
highlights
the
uncertain
definition
of
state
action
under
the
Fourteenth
Amendment
created
by
past
decisions.
In
Brown
v.
Board
of
Edu-
cation,
the
Court,
speaking
the
conscience
of
a
majority
of
the
nation,
took
a
giant
step
in
the
evolution
of
full
equality
for
the
Negro.
10
But
the
force
of
this
bold
thrust
may
be
lost
in
the
welter
of
confusion
attending
its
implemen-
tation.
Today
Southern
states
are
reconstituting
their
schools
in
a
form
super-
ficially
private."
Their
efforts
would
be
valueless,
even
as a
basis
for
argument,
if
the
Court's
occasional
ambiguity
concerning
the state-private
dichotomy
did
not
give
the
various
schemes
a
semblance
of
legality.
citizens of
Philadelphia,
Robert
N.
Carson
who
died
in
1907
and
Charles
E.
Ellis
who
died
in
1909,
established
by
their
respective
wills
separate
institutions
under
the
trusteeship
of
corporate
fiduciaries
setting out
the
qualifications
for
admission
in
language
very
similar
to
that
of
the
Girard
will
except
that
the limitations
were
to
girls
instead
of
boys.
Both
wills
were
litigated,
but not
on
the
ground
of
racial
restrictions.
See
Carson's
Estate,
244
Pa.
401,
90
Atl.
719
(1914)
; Ellis's
Estate,
12
Pa.
D.
&
C.
213
(1929).
These
trusts,
along
with
the
Girard
trust,
are
discussed
in
CLAGUE,
CHARITABLE
TRUSTS
81-97
(1935).
Not
every
trust
spawned
by
the
Girard
will
has
been
racially
restricted.
See
McKee
Estate,
378
Pa.
607,
108
A.2d
214
(1954)
(trust
to
establish
school
for
"poor
colored
male
orphan
children
and
poor
white
male
orphan
children,"
the
number
to
be
kept
as
nearly
equal
as
possible).
8. The
most
sensational
example
of
bigoted
giving
was
the
offer
of
George
W.
Arm-
strong
to
establish
a
$50,000,000
endowment
for
Jefferson
Military
College
of
Natchez,
,Mississippi.
The
gift
was
conditional
upon
the
exclusion
of
Jews
and
Negroes
and the
teaching
of
the
"true
principles
of
Jeffersonian
Democracy
and
the
Constitution,
Christianity
and the
superiority
of
Anglo-Saxon
and
Latin-American
races."
Although
the
school
was
alleged
to
be
operating
at
a
deficit,
the
trustees
refused
the
offer.
N.Y.
Times,
Nov.
13,
1949,
p.
64,
col.
1.
Armstrong
then
avowed
to
carry
out his
program
through
the
Judge
Armstrong
Foundation,
but
his
trust
tax
exemption
was
revoked.
N.Y.
Times,
Dec.
13,
1949,
p.
28,
col.
6.
9.
The
will
stipulates
that
the
boys
must
be
between
the
ages
of
six
and
ten
to
be
eligible
for
admission.
At
the
date
of
the
decision
one
boy
was
already
over
the maximum
age,
and
the
other
close
to
it.
See
Philadelphia
Evening
Bulletin,
April
30,
1957,
p.
3,
col.
4.
10.
Brown
v.
Board
of
Education,
347
U.S.
483
(1954).
11.
The
statutes
are
collected
in
1
RACE
RE.
L.
REP.
422
(Miss.)
;
728,
927-28
(La.);
730
(S.C.)
;
924
(Fla.)
;
930-40
(N.C.)
;
1091-1112
(Va.)
;
2
id.
at
215-22,
455
(Tenn.);
453
(Ark.);
453-55
(Ga.).
The
purpose
is
to
stall
and
confuse
implementation
of
the
decision
by
endless
litigation.
The
statutes
are,
of
course,
of
dubious
constitutionality,
but
absent
action
by
the
President
or
Congress,
they may
well
produce
serious
delay.
Leflar
&
Davis,
Segregation
in
the
Public
Schools-1953,
67
HARV.
L.
REv.
377
(1954)
;
Nicholson,
The
Legal
Standing
of the
South's
School
Resistance
Proposals,
7
S.C.L.Q.
1
(1954).
1957]
HeinOnline -- 66 Yale L.J. 981 1956-1957
THE
YALE
LAW
JOURNAL
State
action
cases
involving
such
basic
rights
of
citizenship
as
voting
and
housing
have
followed
a
pattern
of
development.'
2
A
discriminatory
statute
is
first
invalidated,
only
to
be
replaced
by
the
same
discrimination
ostensibly
in
private
form.
The
Court
has
resolutely
held
to substance,
prohibiting
the
discrimination
regardless
of
the
agency
producing
it.
As
a
result,
the
language
in
the
end
decision
of
each
sequence
provides
a definition
of
state
action
suffici-
ently
broad
to cover
almost
any
type
of
human
activity.'
3
Nevertheless,
a
handful
of
state
decisions,
which,
despite
proof
of
the
same
elements
of
govern-
mental
participation,
have
found
no
state
action,
and
which
the
Court
has
refused,
on
one
ground
or
another,
to
set
aside,
prevents
the
definition
from
assuming
all
inclusive
proportions.'
4
Except
in
the
primary
areas
of
govern-
12.
Many
of
the
cases
are
collected
in
EMERSON
&
HABER,
POLITICAL
AND
CIVIL
RIGHTS
IN
THE
UNITED
STATES,
993-1172
(1952)
;
State
Action:
A
Study
of
Requirements
Under
the
Fourteenth
Amend-nent,
1
RACE
REL.
L.
REP.
613
(1956).
13.
The
sequence
in
the
area
of
voting
in
primaries
moves
from
Nixon
v.
Herndon,
273
U.S.
536
(1927)
(Texas
statute
making
Negroes
ineligible
to
vote
in
Democratic
primary
a
violation
of
the
Fourteenth
Amendment)
;
through
Nixon
v.
Condon,
286
U.S.
73
(1932)
(determination
of
qualifications
for voting
by
state
executive
committee
of
the
Democratic
Party
under
permission
of
statute
also
unconstitutional)
;
Grovey
v.
Townsend,
295
U.S.
45
(1935)
(qualifications
set
by
the
party
in
convention
under
permission
of
statute
constitutional)
;
Smith
v.
Allwright,
321
U.S.
649
(1944)
(Grovey
v.
Townsend
overruled):
Elmore
v.
Rice,
72
F.
Supp.
516
(D.S.C.
1947),
aff'd,
165
F.2d
387
(4th
Cir.
1947),
cert.
denied,
333
U.S.
875
(1948)
(Democratic
Party's
continued
exclusion
of
Negroes
after
all
statutes
on
primaries
repealed
unconstitutional)
;
to
Terry
v.
Adams,
345
U.S.
461
(1953)
(exclusion
of
Negroes
from
club
which
held
pre-primary
elections
to
determine
candidates
for
state
primaries
held
prohibited
state
action).
For
a
discussion
of
the
white
primary
cases,
see
HALE,
FREEDOM
THROUGH
LAw
335-49
(1952)
;
Note,
47
COLum.
L.
REV.
76
(1947).
The
sequence
in
the
area
of
occupancy
of
real
property
has
a
less
compre-
hensive
history
starting
with
Buchanan
v.
Warley,
245
U.S.
60
(1917)
(city
ordinance
for-
bidding
Negroes
to
occupy
houses
in
white
neighborhoods
unconstitutional)
;
and
ending
with
Shelley
v.
Kraemer,
334
U.S.
1
(1948)
(private
restrictive
covenants
cannot
be
enforced
by
injunction)
;
and
Barrows
v.
Jackson,
346
U.S.
249
(1953)
(nor
by
damages).
14.
The
more
prominent
examples
include
Dorsey
v.
Stuyvesant
Town
Corp.,
299
N.Y.
512,
87
N.E.2d
541
(1949),
cert.
denied,
339
U.S.
981
(1950)
(the
Metropolitan
Life
Insurance
Company
could
constitutionally
exercise
the
privilege
as
landlord
to
refuse
to
lease
to
Negroes
although
it
had
constructed
the
25,000-person
housing
development
with
the
help
of
New
York
City
through
tax
exemptions
and
powers
of
condemnation);
Rice
v.
Sioux
City
Memorial
Park
Cemetery,
Inc.,
245
Ia.
147,
60
N.W"r.2d
110
(1953)
(upholding
restriction
in
contract
for purchase
of
burial
lot
to
members
of
caucasian
race),
aff'd
per
curiam,
348
U.S.
880
(1954),
judgement
of
afrnzance
vacated,
cert.
dismissed,
349
U.S.
70
(1955)
(original
grant
improvident
because
enactment
by
Iowa
legislature
of
statute
which
forbids
such
clauses
in
the
future
made
question
moot);
Charlotte
Park
and
Recreation
Comm'n
v.
Barringer,
242
N.C.
311,
88
S.E.2d
114
(1955),
cert.
denied,
350
U.S.
983
(1956)
(gift
to
city
of
land
on
condition
that
premises
not
to
be
used
by
Negroes
created
possibility
of
reverter
which
could
operate
without
state
action)
;
Naim
v.
Naim,
197
Va.
80,
87
S.E.2d
749
(1955)
(Virginia
miscegenation
statute
up-
held
as
legitimate
objective
of
state
government),
350
U.S.
891
(1956)
(matter
returned
for
clarificaton
of
conflicts
of
law
point),
197
Va.
734,
90
S.E.2d
849
(1956)
(state
court
refused
invitation
to
clarify),
350
U.S.
985
(1956)
(case
dismissed
for
want
of
a
properly
presented
federal
question).
The
Girard
case
indicates
the
difficulties
in
drawing
conclusions
from
previous
refusals
to
review.
Involving
the
sensitive
and
highly
per-
[Vol.6:
979
HeinOnline -- 66 Yale L.J. 982 1956-1957
CHARITABLE
TRUSTS
mental
service,
no one
can
predict
the
reach
of
the
Fourteenth
Amendment.
Must
Shelley
v.
Kraemer,
for
example,
be
confined
to
the
area
of
restrictive
covenants,
or
is
it
to
stand
for
the broader
proposition
that
any
form
of
judicial
action
in aid
of
private
discrimination
is
prohibited
state
action
?15
The
Girard
case
has
the
necessary
ingredients
to
supply
some
of
the
answers.
It
already
stands
as
additional
proof
that
the
Court
will
not
tolerate
any
form
of
assistance
by
a
state
agency
in
a
discriminatory
scheme.
And,
should
further
developments
put
all
charitable
trusts
in issue,
the
inextricable
combination
of
the
elements
of
private
and
public
action
inherent
in
such
trusts
will
force
the
court
to
consider
the
over-all
scope
of
the
Fourteenth
Amendment.
In
the
possibility
of
a
challenge
to
long-established
principles
of
charitable
trusts
lies
a
second
point
of
interest.
It
has
been
suggested
that
application
of
the
Fourteenth
Amendment
through
a
finding
of
state
action
would
make
a
shambles
of
the
law of
charitable
trusts.
16
If
a property
owner
cannot
make
race
the
basis
of
selection,
what
of
the
religious
trust;
the
private
school
and
uni-
versity;
and
ironically,
the
trust
for
the
exclusive
benefit
of
the Negro
?17
The
argument,
so
cynically
made
in
other
areas
of
race
conflict,
that
segregation
benefits
both
races,
has
a
ring
of
truth
in
this
context.
Although
no
statistical
proof
is
available,
it might
fairly
be
assumed
that
there
are
more
trusts
favoring
Negroes-their
depressed
position
has
traditionally
been of
major
concern--
than
of
a
converse
type.
Parenthetically,
scholarship
funds
limited
to
Negroes
sonal
area
of
testamentary
power,
it
seemed,
in
light
of
the
above
cases,
to
be
a
fit
subject
for
refusal.
For
view
that
a
denial
of
certiorari
makes
law
and
national
policy,
see
Harper
&
Rosenthal,
W
hat
the
Supreme
Court
Did
Not
Do
in
the
1949
Tern-An
Appraisal
of Certiorari,
99
U.
PA.
L.
REv.
293
(1950).
15.
Shelley
v.
Kraemer,
334
U.S.
1
(1948).
For
the
implications
of
this
case,
see
HALE,
FREEDOm
THROUGH
LAW
366-82
(1952)
;
Note,
The
Distintegration
of
a
Concept-State
Action
Under
the 14th
and
15th
Amendments,
96
U.
PA.
L.
Rm.
402
(1948).
16.
See
notes
86,
92
infra.
17.
As
indicated
in
note
7
supra,
many
trusts
with
discriminatory
restrictions
are
dedicated
to
quaint
purposes
popular
in
the
philanthropy
of
earlier
years.
They
are
of
slight
social
importance.
If
the
Fourteenth
Amendment
is
extended
into
the
area
of
charitable
trusts,
its
greatest
effect
will
undoubtedly
be
in
the
field
of
private
education.
The
funds
(other
than
tuition
fees)
by
which
such
institutions
are
supported
may
take
a
variety
of
forms
including
outright
gifts,
income
from
trusts
or
endowments,
and
special
purpose
funds.
Orthodox
doctrine,
however,
treats
them
all,
for
most
purposes,
as
trusts.
Thus
the
enforcement
procedures
described
herein
are
available
to
police
the
use
of such
funds
by
charitable
corporations,
and
a state's
attorney
general
is
recognized
as
the
proper
party
to initiate
any
necessary
actions.
4
Scorr,
TRUSTS
§
348.1
(2d
ed.
1956);
Taylor,
A
New
Chapter
in
the
New
York
Law
of
Charitable
Corporations,
25
CORNELL
L.Q.
382,
396-400
(1940)
;
Blackwell,
The
Charitable
Corporation
and
tire
Charitable
Trust,
24
WASH.
U.L.Q.
1,
31
n.102
(1938).
A
few
private
schools
have
already
engaged
in
a
measure
of
voluntary
desegregation.
For
an
invaluable
study
in
this
area,
see
Miller,
Racial
Discrimination
and
Private
Schools,
41
MINN.
L.
REv.
145,
175
(1956).
The
United
Negro
College
Fund
with
an
annual
fund-raising
goal
in
the
neighborhood
of
two
million
dollars
announced
that
all
thirty-one
Negro
colleges
(all
but
one
in
the
South)
which
it
helps
to
support
were
open
to
white
students
following
the
Court's
desegregation
decision.
N.Y.
Times,
April
2,
1956,
p.
22,
col.
3.
1957]
HeinOnline -- 66 Yale L.J. 983 1956-1957