How to Determine Whether Someone Has ''Special Interest'' In Enforcement of a Charitable Trust ?
In Valley Forge Historical Society v. Washington Memorial Chapel, 493 Pa. 491, 426 A.2d 1123 (1981), the Supreme Court elaborated on the circumstances contemplated under the special interest doctrine that allows parties other than the attorney general to enforce a charitable trust.
In that case, the Historical Society sought to restrain the trustees of the Memorial Chapel from evicting the Society from its quarters in the Chapel.
The Society and the Chapel had a common settlor.
Under the deed of trust, the Chapel acquired the land upon which the Society also maintained its quarters, and the land was donated to be used to advance "religious and patriotic purposes," thereby creating a charitable trust.
Responding to the Society's request for equitable relief, the Chapel argued that the Society lacked standing to enforce the charitable trust because the attorney general did not participate, and he alone was the only party with standing to enforce the trust.
Noting that only the attorney general, a member of the charitable organization (i.e., a member of the Chapel), or one with a "special interest" in the trust could enforce its provisions, and noting that the Society was neither the attorney general nor a member of the charitable organization, the Court held that the Society had a special interest in the trust and had standing to petition the court for equitable relief.
The Court reasoned as follows:
(1) the Society and the Chapel had a close, cordial relationship, both having occupied the same building for many years;
(2) the common founder of both organizations intended for both to "aid in the development of patriotism" in a religious and educational manner;
(3) the Society made significant monetary contributions to the Chapel;
(4) the Society, by its origins, its link to the Chapel and its professed purpose, distinguished it from any other historical society;
(5) there was no risk of vexatious and unreasonable litigation by the Society.
Based on a review of other jurisdictions that have reached this issue, a multi-factor approach, an approach that was presaged by our Supreme Court in Valley Forge, is used by courts to determine whether a party has a "special interest" in the enforcement of a charitable trust:
It is clear that courts often use the "special interest" doctrine to ensure that charities are subject to some form of effective scrutiny, especially on important issues.
This mechanism will increase in fairness and predictability, and consequently in value, if courts adhere to a specific formulation of the doctrine.
The multi-factor test used so far by only a few courts seems to be an effective approach.
It is flexible and can readily accommodate factual variations such as the level of activity of the relevant attorney general or the crucial quality of the complained-of actions.
Certain factors should always play important roles.
In particular, the presence of sincere allegations of managerial bad faith, and a request for a limited remedy should favor a grant of standing to private parties.
A claim that the complained-of acts will have an extraordinary impact on the charity should be especially persuasive in the plaintiffs' favor.
On the other hand, the authors hope that the influence of subjective social factors will wither away.
The nature of the relationship between the charity and the plaintiffs probably will remain a less easily measured factor, but the existence of a well-defined and limited group of plaintiffs who have a clear interest in the operation of the charity should favor a grant of standing.
If courts allow suits by larger groups of plaintiffs with more vague interests, they should understand that this could substantially expand the range of potential plaintiffs in charitable abuse cases.