The Supreme Judicial Court of Massachusetts held that the principal donation from Andrew Carnegie could not be used to pay salaries or other current expenses of the Franklin Technical Institute. The court found no evidence that Carnegie intended the principal to be used for anything other than extensions to the Institute. As the Franklin Fund principal also could not be used for salaries, the court ruled the Carnegie donation principal should be treated the same as the Franklin Fund and preserved as capital.

1. Lorraine Frigoletto
CASE CITATION: Franklin Foundation v. City of Boston, 336 Mass. 39 (1957)
COURT OF DECISION: Supreme Judicial Court of Massachusetts, Suffolk
JUDICIAL HISTORY: A bill was reported without decision by a single justice of the
Superior Court, Suffolk County, on the bill and answers. The Supreme Judicial Court, held that
the principal donation could not be used for payment of salaries or other current expenses or
repayment of money borrowed by the plaintiff for the institute’s benefit.
KEY FACTS: Benjamin Franklin, who died on April 17, 1790, by codicil to his will
bequeathed 1000 pounds to the inhabitants of the town of Boston to be let out at interest to young
married artificers, the capital to increase by the accumulated interest; set up a board of Managers
and succeeds as projected without interruption for one hundred years, at which point the
Managers will lay out their discretion to the Public Works which may be judged of most general
utility to the inhabitants.
In March of 1905, after a board meeting of the managers of the Franklin Fund of Boston,
and after researching other technical in institutes in New York, agreed that a similar school
would benefit Boston as well. (The board, however wanted more time to research how the
interpretation of Franklins will related to the donation.) In April 1905, a letter from Mr. Carnegie
was presented to the board members stating that “a suitable building should be provided at the
start, and by all means spare room be kept around it for extensions.” The manager’s board
adopted two resolutions; that the Franklin Fund (now the ‘Franklin Union’) be expended in the
establishment of an institute in Boston and that Mr. Carnegies offer be accepted. In July of 1905,
the manager’s board informed Mr. Carnegie that Chapter 448 of the Massachusetts Legislature of
the current year, authorized the city to maintain the ‘Franklin Union’ and to appropriate an
amount not to exceed $100,000 for the site of the institute. In September 1908 the ‘Franklin
Union,’ now the Franklin Technical Institute, opened its doors to students.
The institute was built on land purchased by the city with the proceeds of a bond issue
authorized by St.1905, c. 448, and the building and initial equipment were paid for out of
Franklins bequest. No part of the principal of the Carnegie donation was used to build or fund
spent directly for the benefit of the institute. The principal has been invested and the income has
been paid out for the benefit of the Institute as directed by the plaintiff. On June 19, 1956, the
plaintiff, by a majority of its members, voted that the collector-treasurer be "authorized and
directed to use any cash in his hands forming part of the Carnegie Fund, as may from time to
time be necessary, for the payment of requisitions of this corporation for payroll or other
expenses of Franklin Technical Institute." The collector-treasurer refused. In consequence, the
plaintiff was compelled to borrow money to meet the payrolls. The book value of the principal
on June 30, 1956, was $496,343.

2. Lorraine Frigoletto
ISSUE: Whether the principal amount in result of Mr. Carnegie’s donation, could be used
for payments of salaries or other current expenses or repayment of money borrowed by the
plaintiff for the institutes benefit.
HOLDING: The principal amount, in result of Mr. Carnegie’s donation, cannot be used for
payments of salaries or other current expenses or repayment of money borrowed by the plaintiff
for the institutes benefit.
REASONING: Because the cashier's letter of transmittal from Mr. Carnegie's letter of
August 5, 1905, said to have contained a letter of instructions to the cashier, had not been
preserved, the Court was unable to look at the documents accompanying the gift, or to accept the
contention that the whole correspondence did not contain specific limitations of the use of the
principal of the gift; and because the Court had no way of knowing what Mr. Carnegie meant by
the ‘division of expenditure’ they formed a reasonable interpretation that it meant a division
between present building and a fund for future extensions. From these facts and discussions the
Court concluded that Mr. Carnegie intended to double the amount of the capital in the Franklin
Fund and it to be available to be used for the school.
There was no suggestion that any part could be expended for current expenses or ordinary
maintenance. Permissible expenditures would include, as the managers (now the Foundation)
might decide, the "extensions" anticipated in Mr. Carnegie's memorandum, but would not
include the payment of salaries or the repayment of loans incurred to pay salaries. "The Carnegie
donation is to be treated in the same way as the Franklin fund. It is to be presumed in the absence
of any indication to the contrary that its title and management follow the same course as that of
the Franklin fund and payment of salaries and current expenses out of capita, were subject to the
same principle and, specific language as the Franklin Fund.” Chief Justice Rugg in Boston v.
Curley, 276 Mass. 549 , 564-565.
Pursuant to St.1908, c. 569, as amended by St.1927, c. 40, and St.1953, c. 77, which on
behalf of the city has the sole care, custody, management, and control of the institution Franklin
Technical Institute (formerly Franklin Union), and is charged with the expenditure of any money
or estate given to the city for the benefit of that institution.
A charitable trust is a trust in which the property held by the trustee must be used for
public charitable purposes. A charitable trust is created for the benefit of a part of the general
public rather than for an individual or designated group of individual persons. Because no
particular individual can benefit from a charitable trust, no one person can bring suit to enforce
the trust. Administration of Wills, Trusts and Estates Fifth Edition; Gordon Brown & Scott
Myers.
DISPOSITION: Decree in accordance with opinion.