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In re Gonzalez

Decided: December 1, 1992.

IN THE MATTER OF MARIBEL GONZALEZ, DECEASED


Kleiner, J.s.c.

Kleiner

[262 NJSuper Page 457] The very common factual background of this contested motion surprisingly has not been addressed in any prior reported New Jersey opinion. The application before this court has been initiated by Israel Gonzalez, Co-Trustee, albeit without judicial appointment, of the "Maribel Gonzalez Fund" presently on deposit in the New Jersey National Bank (hereafter Respondent), which is the Co-Trustee, albeit, also, without judicial appointment, of the same fund. Israel Gonzalez (hereafter Petitioner) seeks the entry of an order declaring that the

balance on deposit be paid to him as the widower of Maribel Gonzalez, deceased.

In 1987, Maribel Gonzalez, was diagnosed as suffering from acute leukemia. After chemotherapy proved unsuccessful in treating this malady, her physicians recommended a bone marrow transplant. Although Maribel was a named insured under her husband's medical insurance provided to the Gonzalez family through his employment, the insurer denied coverage on the basis that a bone marrow transplant was experimental surgery.

The Gonzalez family, with the assistance of the NAACP, undertook fund raising efforts seeking private donors to defray the anticipated medical expenses of the proposed transplant. The campaign included advertisements in newspapers circulated in the Vineland, New Jersey geographical area, where the Gonzalez family resided. Donors were requested to mail contributions to the "Maribel Gonzalez Fund" in care of the New Jersey National Bank. Upon receipt, these funds were deposited in an account bearing the designation, "Maribel Gonzalez Fund," Israel Gonzalez and New Jersey National Bank, Co-Trustees. Ultimately $21,000 was collected and deposited. These funds were partially expended for medical expenses incurred by the intended beneficiary. Unfortunately, on April 14, 1989, prior to the anticipated bone marrow transplant, Maribel Gonzalez died from leukemia. The existing balance of the fund was $7,700. Since her death, this fund has remained on deposit and has yielded interest. The only withdrawal has been a yearly checking account service fee paid to the bank.

Faced with some personal financial needs, Israel Gonzalez sought to withdraw the existing balance. The bank refused to permit this withdrawal and the litigation ensued.

The novel question presented is what Disposition is to be made of the surplus monies of a fund created by public donation when the purpose for the fund cannot be accomplished.

Although the fund was not created by a formal trust agreement or by a testamentary bequest pursuant to an instrument

admitted to probate, all of the elements of a valid trust are nonetheless present: (1) settlor; (2) res; (3) beneficiary; (4) trustee; (5) specific fiduciary duty between trustee and beneficiary. Parties engaging in conduct indicative of a purpose to create a trust relationship will invite the application of the law of trusts to their transaction, notwithstanding the lack of an express declaration of a trust. Trenton Times Corp. v. United States, 361 F. Supp. 222, 226 (D.C.N.J.1973).

Predicated upon this concept both parties argue that the doctrine of cy pres should be utilized to determine the Disposition of the unconsumed portion of the fund. Petitioner contends the cy pres doctrine permits the distribution of corpus to the Gonzalez family. Respondent contends the cy pres doctrine compels the distribution of the corpus to the National Leukemia Foundation. For the reasons expressed, this court finds that the cy pres doctrine is not the appropriate mechanism to resolve the question posed. "The doctrine of cy pres is a judicial mechanism for the preservation of a charitable trust when accomplishment of the particular purpose of the trust becomes impossible, impracticable, or illegal." Howard Savings Inst. v. Peep, 34 N.J. 494, 500, 170 A.2d 39 (1961). The doctrine may only be applied to a charitable trust. Sharpless v. Religious Soc., 228 N.J. Super. 68, 548 A.2d 1157 (App.Div.1988); Howard, supra at 500, 170 A.2d 39.

In analyzing the elements of a charitable trust, 4A William F. Fratcher, Scott on Trusts, § 375, (4th Ed.1989), provides:

A trust will not be upheld as charitable unless the accomplishment of the trust is of benefit or supposed benefit to the community. A trust may fail because the class of persons who are to benefit is so narrow that the community has no interest in the performance of the trust. It is a question of degree whether the class is large enough to make the performance of the trust of sufficient benefit to the community so that it will be held as a charitable trust. If the purpose of the trust is to relieve poverty, promote education, advance religion, or protect health, the class need not be as broad as it must be where the ...


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