In Re the Estate of Beekman

Gerard Beekman, a bachelor, died on November 9th, 1918, at the age of seventy-five. His only near relatives living at the time of his death were his sister, Mrs. Hoppin, and her descendants. There were no other kinsmen of nearer relationship than second cousin, one degree removed. Mr. Beekman stated in his will that his sister and her family had been amply provided for by the will of his father. By his will, dated May 23d 1917, he gave all of his residuary estate, amounting to nearly one million dollars, to the Beekman Family Association, a corporation organized in January, 1910, under the laws of the state of New York, "to have and to hold to the said Association, its successors and assigns forever." The corporation having duly accepted the bequest, an order of the surrogate of Nassau county was duly made and entered imposing a tax upon the transfer thus made *Page 368 pursuant to article X of the Tax Law. (Cons. Laws, ch. 60.) The Beekman Family Association claiming that it was a charitable corporation and entitled to an exemption under section 221 of the Tax Law appealed to the Appellate Division which sustained this claim and reversed the order of the surrogate. It remains for us, therefore, to determine on this appeal which court has been correct, the Surrogate's Court or the Appellate Division, the former holding that the association is not a charitable corporation and the latter that it is. Section 221 of the Tax Law in so far as applicable to this case enacts that any property devised or bequeathed to any religious, educational, library, charitable, missionary, benevolent, hospital or infirmary corporation wherever incorporated shall be exempt from and not subject to the transfer tax. The articles of incorporation alone must determine whether a corporation comes within the exemption. (Matter of De Peyster,210 N.Y. 216; People ex rel. Wall H. St. R. Co. v. Miller,181 N.Y. 328; Matter of McCormick, 206 N.Y. 100.) The Beekman Family Association was incorporated under the Membership Corporations Law (Cons. Laws, ch. 35) by articles of incorporation dated the 20th day of September, 1909, the seven directors named therein being all members of the Beekman family. The principal objects for which the corporation was formed are stated in these articles to be as follows: "1. To pay the expense of preparatory, collegiate, and professional education or other suitable education for such members of the Beekman family as may be designated and approved by at least five directors of the corporation. "2. To furnish pecuniary aid, exclusive of loans, to such poor and needy members of the Beekman family as may be designated and approved by at least five directors of the corporation. *Page 369 "3. To receive and hold, collect and preserve family portraits and heirlooms of the Beekman family, and matter connected with the history of that family; and documents and books relating to the family, with power to add to and publish the same; and to designate and maintain a place of deposit for receiving, holding, collecting, preserving and exhibiting these portraits, heirlooms and matter connected with the history of the family, and documents and books as an undivided collection. "4. To care for and maintain, improve and embellish such burial lots or places in cemeteries, including the walks, fences, monuments, structures, and tombs thereon, in which are interred members of the Beekman family as shall be designated and approved by at least five directors of the corporation, provided that at least one such burial lot or place shall always be cared for, maintained, improved and embellished by the corporation. "5. To support, maintain and educate a person or persons other than a member or members of the Beekman family, and to contribute towards the maintenance of educational institutions otherwise than for the education of members of the Beekman family, and to contribute to charitable and benevolent uses and to religious purposes, as from time to time the Board of Directors shall deem proper and desirable; provided, however, that no such action as specified in this Section 5 shall be taken unless expressly authorized by the by-laws of the corporation and then only by the concurring vote of all and at least seven directors. "Third. All lineal descendants of William Beekman, who became, in 1647, a resident of New Amsterdam, now New York City, shall be eligible to membership in the corporation if approved by a concurring vote of not less than five directors. All such lineal descendants and the wives and widows of any of them shall be included in the term `The Beekman Family' wherever used in this instrument." *Page 370 The test of a charitable gift or use and a charitable corporation is the same. (Matter of Rockefeller, 177 App. Div. 786,791; affd., 223 N.Y. 563.) In determining whether or not a gift is for a charitable purpose the question is whether the trustee or the corporation is bound to apply it to charitable purposes only. (Adye v.Smith, 44 Conn. 60.) Whether the inclusion of a non-charitable purpose would invalidate the trust depends upon the purpose which runs through, permeates and colors the whole scheme of disposition. (Nichols v. Allen, 130 Mass. 211.) If one or more of the purposes for which the gift may be used is not charitable or benevolent, the corporation is not a charitable corporation and the gift not a charitable gift. "The principle of all these cases is, that the portion of the trust that might otherwise be construed as charitable cannot be sustained, because the trustees have an election to apply the fund to purposes not technically charitable and as to the gifts to purposes not charitable, they are held void, because too vague and indefinite to be administered by a court of equity." (Saltonstall v. Sanders, 93 Mass. 446, 451.) The only persons to be benefited by this corporation are the members of the Beekman family. To me it seems apparent that a corporation formed for the purpose of educating the members of the testator's family or aiding his poor descendants or ancestors is not a charitable corporation. (Matter of MacDowell, 217 N.Y. 454;Matter of Shattuck, 193 N.Y. 446; Kent v. Dunham,142 Mass. 216; Paschal v. Acklin, 27 Tex. 173; Norris v.Thomson's Executors, 19 N.J. Eq. 307.) My associates, however, think it is unnecessary for us to decide this question at this time. One of the purposes for which the funds of the corporation may be used is: "5. To care for and maintain, improve and embellish *Page 371 such burial lots or places in cemeteries, including the walks, fences, monuments, structures and tombs thereon, in which are interred members of the Beekman family as shall be designated and approved by at least five directors of the corporation, provided that at least one such burial lot or place shall always be cared for, maintained, improved and embellished by the corporation." Such a purpose is not a charity and a corporation formed with this as one of its objects, ceases to be a charitable corporation. (Bates v. Bates, 134 Mass. 110; Coit v.Comstock, 51 Conn. 352; Piper v. Moulton, 72 Me. 155;Detwiller v. Hartman, 37 N.J. Eq. 347; Hartson v. Elden,50 N.J. Eq. 522; Kelly v. Nichols, 17 R.I. 306; Jarman on Wills, p. 167; Perry on Trusts, § 706; Buchanan v. Kennard, 37 L.R.A. [N.S.] 993.) The articles of incorporation provide that at least one burial lot or place shall always be cared for, but within the discretion of five directors any number of such lots or places may be cared for, embellished or maintained. The amount of corporate funds which may be expended for such purposes is unlimited. Such a discretion, as well as such a purpose destroys all elements which might otherwise make the Beekman Family Association a charitable corporation. (Norris v. Thomson's Executors, 19 N.J. Eq. 307;Nichols v. Allen, supra.) The order of the Appellate Division must, therefore, be reversed and that of the Surrogate's Court affirmed, with costs in this court and in the Appellate Division. HISCOCK, Ch. J., HOGAN, CARDOZO, POUND, McLAUGHLIN and ANDREWS, JJ., concur. Ordered accordingly.