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Iowa Code § 633A.5102 (2007) effectively establishes a presumption that cy pres should apply if the trust does not state to the contrary. The common law has never required a charitable trust to specifically indicate cy pres should apply. In fact, the common law has always required a similar inquiry. Under the common law courts must ask whether the settlor anticipated the possible failure of the trust and if he or she has made alternative disposition of his or her property to meet that contingency. If so, cy pres could not be applied because in the words of the statute, the trust stated "to the contrary."
In this case a charitable trust was established by an altruistic and benevolent family to maintain a flower garden at a designated location in a city park for the enjoyment of the public in the memory of a family member whose young life was tragically cut short. The trustee filed an action to prevent the City from modifying a trust by destroying a memorial flower garden and fountain in a city park and moving the memorial to another location. The Iowa District Court for Buena Vista County found that the charitable trust failed and could not be modified under cy pres because the memorial was for a specific plot in the park and found that the trust had become a resulting trust. The City appealed.
Could the trust be modified under Iowa Code § 633A.5102 (2007) to permit expenditures by the trust to maintain the garden at a different location in the park, after the City removed the garden to make room for a major economic development project?
The supreme court believed § 633A.5102 applied, and the court modified the trust as requested. The supreme court concluded that the settlors' general charitable intentions were to memorialize a family member by maintaining a flower garden for the enjoyment of the public, and that that charitable purpose was superior to the specific language of the trust regarding where the funds were to be spent. In addition, because changed circumstances made it impracticable, if not impossible, to continue to carry out the trust at its original location, the supreme court concluded that the trust could be modified to fund the garden at its new location. The evidence and arguments against the continuation of the trust were moving and substantial, but, in the end, the supreme court thought it was clear that the settlors would have wanted the trust to continue, and such a result was consistent and appropriate under Iowa law.