Trusts and Estates
Breathe So. Cal. v. Am. Lung Ass’n
Cite as A160785
Filed March 3, 2023
First District, Div. Five
By Michelle Barnett Batista
Aaron, Riechert, Carpol & Riffle, APC
www.arcr.com
Headnote: Charitable Bequests – Extrinsic Evidence – Testator Intent
Summary: Where there is no extrinsic evidence regarding the testators’ intent, courts exercise their independent judgment in interpreting bequests.
Breathe Southern California (Breathe) and American Lung Association (ALA) entered into an affiliate agreement which required income sharing between the entities, but specifically exempted certain income categories, including “funds restricted in writing by the donor … to exclude or limit sharing.” In subsequent litigation, ALA sought an order compelling Breathe to share the proceeds of three bequests made prior to disaffiliation. The trial court ruled in favor of ALA and concluded that the restricted funds exception was inapplicable because the donors did not use express language prohibiting income sharing.
The appellate court reversed. The purpose of the restricted funds provision is to effectuate donor intent. Thus, where income sharing would be inconsistent with the donor’s intent, the bequest restricts sharing within the meaning of the affiliate agreement. The plain language of the bequests restrict sharing with ALA because one bequest made clear that the testator intended the funds to be used entirely at the former affiliate and other bequests indicated the testators intended the income to create a singular fund.