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In re Edward Wisner Donation
Citations: 150 So. 3d 391; 2014 La.App. 4 Cir. 0027; 2014 La. App. LEXIS 2246; 2014 La. App. Unpub. LEXIS 484; 2014 WL 4678296Docket: Nos. 2014-CA-0027, 2014-CA-0028
Court: Louisiana Court of Appeal; September 18, 2014; Louisiana; State Appellate Court
The civil appeal focuses on whether a donation made by Edward Wisner to the City of New Orleans in 1914 constitutes a perpetual trust. Wisner, a philanthropist and banker from Michigan, relocated to Louisiana for health reasons and settled in New Orleans around the early 1900s. He was inspired by the region's swamps, which reminded him of the reclaimed lands of the Netherlands. Over several years, Wisner acquired over one million acres of marshland, transforming it into productive farmland through modern engineering techniques, including the construction of canals and steam pumping stations. He envisioned enhancing the area’s agricultural potential, asserting that the soil was rich enough to sustain crops for centuries. Known as "The Father of Reclamation," Wisner actively promoted his efforts and the region's agricultural viability, even sending a large cabbage to a local newspaper to showcase his success. The Wisner family was also engaged in community service, with family members holding positions in local organizations and contributing to civic development. Notably, Wisner advocated for ecological measures, such as inviting storks to Louisiana to control crawfish populations that threatened levees. In 1909, Mr. Wisner hosted President Taft in New Orleans, demonstrating his status as more than just a real estate developer; he was a visionary focused on transforming marshland into fertile farmland capable of supporting three million people. He viewed land reclamation as a humanitarian duty, especially during times of food scarcity, and was committed to the welfare of his city. In August 1914, he donated 52,000 acres of marshland, part of which is now known as Port Fourchon, placing it into a 100-year trust for the benefit of the City of New Orleans, the Salvation Army, Charity Hospital, and Tulane University. This donation was crucial for Charity Hospital, which faced a budget crisis. The trust included provisions for convalescent homes for retired public servants and recreational spaces for youth, reflecting Wisner's intent to enhance the city’s education, health, and beauty. Despite his health struggles, including an amputation and subsequent cancer diagnosis, Wisner remained dedicated to his vision until his death in 1915. Following his passing, a hurricane devastated much of his reclaimed land, which was eventually sold to H.H. Timken. Reclamation efforts in St. Charles Parish ceased between 1916 and 1925 due to the unsustainable nature of peat-like soils, which became increasingly acidic and compacted over time, rendering future farming impractical. Mr. Wisner's donation of approximately 50,000 acres to the City of New Orleans in 1914 has significantly contributed to the city's financial landscape, with current benefits arising from offshore oil and gas royalties rather than agriculture. His legacy is commemorated by a fountain in a park reclaimed from Lake Pontchartrain. Key events include: - **August 4, 1914**: Mr. Wisner executed an inter vivos donation for charitable purposes. - **March 8, 1915**: Mr. Wisner passed away. - **July 8, 1920**: Louisiana's Act 167 made charitable trusts perpetual unless contrary provisions existed in the trust instrument. - **December 26, 1928**: The Wisner Ladies filed a lawsuit to annul the donation. - **September 17, 1929**: A compromise was reached between the Wisner Ladies and trust beneficiaries. - **April 1, 1930**: A final consent judgment was signed, affirming the validity of the donation and adjusting trust beneficiary interests. - **March 12, 1931**: The Edward Wisner Donation Advisory Committee was established by the City Council. - **April 29, 2003**: Current by-laws were signed. In a procedural history starting December 10, 2012, Mayor Landrieu sought clarification on the Advisory Committee's status and its role in fund allocation. On January 14, 2013, the Wisner heirs raised similar concerns and questioned the trust's perpetuity. After a trial, the court ruled that the Wisner trust was not perpetual and expired in August 2014, the Mayor did not need to consult the Advisory Committee for fund use, and the Advisory Committee was recognized as a public body subject to Louisiana's Open Meetings Law. The trial court declared the remaining summary judgment issues moot, prompting appeals from the Wisner heirs, the Salvation Army, and LSU. The standard of review for appellate courts involves a manifest error standard for factual findings and de novo review for legal questions. The appellants raised four errors: 1. The trial court's refusal to issue a declaratory judgment affirming the trust's perpetual status under Act 167 of 1920. 2. The court's determination that the Mayor did not need the Advisory Committee's advice before distributing trust funds. 3. The classification of the Advisory Committee as a public body. 4. The failure to declare the Mayor in breach of fiduciary duty as trustee and to order his removal. In arguing the trust’s perpetuity, the appellants contend the trial court misapplied Act 167, incorrectly interpreting the trust's 100-year term as an express right to terminate. The appellants assert that the trust lacks an express revocation right, implying it remains perpetual. The legal issue centers on statutory interpretation, particularly whether the terms "abolish," "dissolve," or "destroy" encompass termination. The judiciary's role is to ascertain legislative intent, guided by the statute's language, which must be applied as written unless ambiguous. If ambiguous, the interpretation should align with the law's purpose. When interpreting ambiguous legal terms, courts must consider the context and the entirety of the law, as established by La. C.C. art. 10 and art. 12. The Legislature is presumed to enact statutes deliberately, with awareness of existing laws, as highlighted in Johnson and Campbell cases. Courts have a duty to harmonize interpretations of statutes that address similar subjects, per La. C.C. art. 13. Dictionaries aid in understanding the common meanings of terms; for instance, "dissolve," "abolish," and "destroy" all imply ending something, indicating the Legislature's intention to include both revocation and termination in its language. The Salvation Army's claim that the Legislature intended to make trusts perpetual is incorrect. Legislative history shows that Act 107 limited trust terms while Act 167 specifically addressed charitable trusts, indicating that charitable trusts are perpetual unless explicitly stated otherwise. The trust in question, which has a defined term of one hundred years, will end on August 4, 2014, reflecting the Legislature's intention to reserve the right to terminate the trust under Act 167. Furthermore, the trial court's ruling that the Mayor was not obligated to seek the Advisory Committee's consent before distributing trust proceeds is contested by the Wisner heirs and the Salvation Army. The Mayor argues that other beneficiaries are not required to obtain pre-approval for fund distribution. The trial court's conclusion regarding the trust's expiration and the Mayor's authority stands affirmed. The trial court ruled that the Advisory Committee's role regarding the trust corpus was limited to advisory functions, concluding that the Mayor did not need the Committee's permission for distributing trust proceeds. This interpretation conflicts with the terms set forth in the Consent Judgment, which mandated the creation of the Advisory Committee by City Council ordinance and required the Mayor, as Trustee, to obtain majority approval from the Committee before binding the parties. The ordinance established the Committee's authority to oversee all aspects of the Wisner Donation trust and required the Mayor to consult with it on trust matters. The Mayor has questioned the validity of the Compromise and Consent Judgment, suggesting they are invalid and that previous agreements should be disregarded. However, such claims are inappropriate in a summary proceeding and were not raised at the trial court level, which limits the appellate court's review to established facts. Moreover, any challenge regarding the Advisory Committee's by-laws and their applicability to the trust corpus was not specifically ruled on at the trial level. The evidence presented confirms that the Mayor must seek the Advisory Committee's advice and consent on trust matters, acting only with a majority vote. This aligns with case law stating that the Mayor's actions regarding the trust require the Committee's approval. A lease signed by the Mayor, acting as trustee without Advisory Committee approval, was deemed invalid based on La. Atty. Gen. Op. 1986-0036. Although the trial court found that no pre-approval was required for fund distribution from the trust, it overlooked that the 2003 by-laws assigned this responsibility to the Advisory Committee. Previous practices also supported this delegation. Thus, the trial court erred in concluding that the Mayor was not obligated to consult the Advisory Committee before distributing the trust proceeds to grant recipients under Article I, Section 5 of the 2003 by-laws. The Wisner heirs and Salvation Army argued that the trial court incorrectly classified the Advisory Committee as a public body under the Open Meetings Law, claiming the court failed to apply a two-part test from the LHSAA decision. They contended that the Advisory Committee does not fit the definition of a public body since it was not established as a committee of a public body. However, the court found that the City Council, a recognized public body, created the Advisory Committee and assigned it oversight of trust matters, including supervision and administration. The court concluded that the Advisory Committee meets the criteria for a public body under the Open Meetings Law. Lastly, the Wisner heirs and Salvation Army claimed the district court erred by not recognizing the Mayor’s breach of fiduciary duty as trustee, asserting he overstepped by transferring grant-making authority to his appointees without the Advisory Committee's consent. The Mayor’s actions are characterized as a collateral attack on the validity of a Consent Judgment, reflecting hostility towards the beneficiaries he was meant to protect. Under Louisiana law, trustees must administer trusts impartially in the interest of all beneficiaries (La. R.S. 9:2082). Trustee removal is governed by La. R.S. 9:1789, which requires sufficient cause, beyond mere technical violations or personal animosity. The case cites Fertel v. Brooks, asserting that contentious disagreements over trust management do not constitute sufficient cause for removal. Evidence shows the Mayor bypassed the Advisory Committee during the grant-making process by distributing trust proceeds without their consent, breaching by-laws rather than the trust or Consent Judgment. The Mayor, serving as both Trustee and beneficiary, received trust proceeds in his role as Chief Executive Officer, not as Trustee, indicating that he, as Trustee, did not misappropriate trust assets or breach fiduciary duties. The trial court found no grounds to remove the Mayor as Trustee, and its ruling that the Mayor did not need Advisory Committee approval for distributions was reversed, while the remainder of the ruling was affirmed. Additionally, the land in question, located in three parishes and leased for oil exploration, generated significant revenue. The legal distinctions between the Ordinance and the Consent Judgment regarding advisory committees are deemed inconsequential, as their functions were aligned. Wendell Cook, Jr., Richard Peneguy, Jr., Edward Peneguy, Jr., and Mark Peneguy are involved in a legal matter where Tulane University did not file an appeal. Act 167 of 1920 is relevant as it retroactively established that charitable trusts are perpetual unless expressly stated otherwise. The trust in question includes provisions where the donor irrevocably transfers property to the City of New Orleans, intended for the benefit of specified beneficiaries. The trust is set to last for 100 years, with a stipulation that the City cannot alienate any part of the conveyed lands during this period, except as specified in the trust document. After one hundred years, the City of New Orleans may dispose of the lands in question, with proceeds designated for specified purposes. The distinction between termination and revocation of trusts was highlighted in 1964 comments to the Louisiana Trust Code, which occurred long after the trust's execution. A trust typically expires ten years after the donor's death or when the beneficiary reaches majority. Despite the first assignment of error being decisive regarding trust termination, other assignments relating to dissolution are also addressed. The Consent Judgment mandates the creation of a five-member advisory committee known as the "Edward Wisner Donation Advisory Commission," which provides criteria for its formation. The Judgment allows the Mayor, with the Commission Council's approval, to act as Trustee with the Advisory Commission's advice and consent, indicating the importance of the Commission over the City Council in this context. The 2003 bylaws, adopted by the Advisory Committee, state that the committee will advise the Mayor on funding projects from the Donation for municipal, charitable, and educational purposes. However, the City did not adhere to the bylaws and instead focused on the Compromise and Ordinance, which required Advisory Committee approval and delegated rule-making authority on trust matters to the Committee. The validity of the bylaws was not challenged, leaving the issue outside of the Court's consideration. Appellants argued that the City Council's creation of the Advisory Committee was merely a ministerial act, but the motivations behind this creation do not affect its status as a public body. Furthermore, the notion that the City Council could evade the Open Meetings Law through the creation of a non-public body is problematic. The trial court's lack of a ruling on this matter implies a tacit denial of the claim, as established in Louisiana jurisprudence.