News

Gray will sue over Pennell
By Elizabeth Prata

Pennell: It's ba-ack
The Town of Gray received a written response from the Attorney General's office regarding the issues raised by the Town of Gray and presented in November 2004 concerning Gray's pending superior court litigation over the Pennell trust and property.

Gray had argued before the Attorney General that the 1954 deed transfer of Pennell action by Selectmen out from the SAD trust and failure to put the building and land back into the tust extinquished it and that Gray now owns the building free and clear.

The Attorney General's office concluded that the Pennell Institute property is still subject to trust, and that the court order and deed of 1954 did not extinguish the original Pennell trust created in the 1880's.Below, Gray's Pennell Institute

The Council met in executive session Tuesday, January 4, 2005 to review the legal implications of the opinion, and in the executive session, decided to take the following actions:

--to write a letter to the Attorney General requesting a review of the opinion just rendered. The Council will ask for that to be done within two weeks.
--If the AG declines or the opinion is the same, the Council will petition Superior Court. The Council will ask for an expedited two-month court process. The AG would be the entity arguing for the SAD Trust since the AG handles all trusts in the State of Maine.

The Council reported these items to the SAD 15 Chair Dr. Alan Rich and Superintendent VIctoria Burns, New Gloucester Manager Rosemary Kulow and Selectmen Chair Steve Libby at the Joint Leaders meeting on Wednsday morning.

This latest chapter is part of a long line of controversy and litigation over the hundred-and-twenty year-old building in Gray Village. The most recent question concerns how to dispose of the property, for which, there is a legal process outlined under Maine Statute. The controversy has stemmed from the trust that is attached to the building. Gray had objected to the SD's query to the Attorney General in 2003 asking how it may dispose of the building. The answer came that the SAD may dispose of it for fair market value, either in sale or swap.

Gray was aggrieved, and stated that their interest wasn't appropriately or fully represented to the AG when the SAD made the query. Gray officials strenuously objected to the insertion of "fair market value," a term that dashed their hopes of receiving the building back for free. They sued the SAD.
The AG requested that Gray and the SAD to work together on solving their issue and hoped that a suit could be avoided. Gray had been claiming to need larger office space, and although it asked the Townspeople to purchase the adjacent building next to Town Offices for an expansion, it lay empty, its promise of an expansion unfulfilled. When the SAD moved to dispose of Pennell, Gray officials and Manager thought that Pennell would make an better office instead of their original plan, which was already by this time mostly paid for.

So for eighteen months the Town and the SAD worked toward a situation where both entities would share their building. Those discussions were fraught with their own complications and the going was not easy. Officials were hopeful that a compromise lease arrangement (Memo of Understanding, or MOU) could be forged, and at one point the Gray Town manager even drew up blueprints specific enough to delineate who was to get which office and who was to have access to their own private bathroom. The School Board voted for the lease arrangement in a split vote, but the Gray Council ultimately voted the issue down. Left, Pennell Lab.

State of Maine Office of the Attorney General: the opinion

Assistant AG, Christina Moylan, and Linda Conti, Chief of Consumer Protection Division, rendered their opinion as to the status of Gray's request regarding the legal effect under charitable trust law of a 1954 Final Decree of the Maine Supreme Judicial Court and subsequent deed, by which the Inhabitants of Gray as trustees conveyed to the Inhabitants of Gray the so-called Pennell lot property. "Our opinion is that that property is still subject to trust, and that the order and deed did not extinguish the trust," the Assistant AG wrote.

Their decision included a chronology of their understanding of the Pennell litigation history, which is excerpted below.

"The parcel was the original gift, by testamentary trust, of Henry Pennell in 1876, to the Town of Gray as trustee to establish an education institution (later to be known as the Pennell Institute).

In 1953, the Town needed to borrow funds to expand the school. According to a complaint filed by the Town of Gray against heirs of Henry Pennell and the Attorney General, the Legislature in 1953 established a School District in the Town of Gray to enable the town to raise enough money to make necessary alterations, since the trust did not have sufficient funds. The apparent purpose of the complaint was to facilitate borrowing money to fund the expansion.
In April 1954, the Maine supreme Judicial Court in equity issued a Final Decree ordering that the Inhabitants of the Town of Gray as Trustees convey the parcel in question to the Inhabitants of the town of Gray.

Additional litigation surrounding ownership of the Pennell Institute property occurred in 1961 and 1965. In 1961, the newly formed MSAD 15 commenced a Superior Court equity action seeking to have the property conveyed form the town to the district since the district was now responsible for educating the children of Gray.

The 1965 declaratory judgment action authorized two parcels of the property not subject to trust to be transferred from the town to the district.

The collective property is currently the subject of litigation lodged by the Town of Gray, pending in Cumberland County Superior Court. MSAD 15 is longer able to maintain the property for educational purposes and has sought court approval, under the doctrine of cy pres, to sell the property and retain the proceeds in trust to be used for educational purposes. After the court entered an order (with our acquiescence) approving the proposal in June 2003, the Town of Gray filed a request to set aside the order and to intervene on the basis that it has an interest in the property under the School Closing Statute."

Does the SAD have a comment?

The Monument asked Superintendent Victoria Burns or Board Chair Alan Rich to comment on the AG decision and press release that Gray immediately issued. The Monument asked, "You know that the Town is having an executive session Tuesday to mull impacts of AG decision and to determine whether to move forward with litigation. Do you have a comment in response to the Town's issuance of a press release and/or their upcoming discussion of possible litigation?"

Burns answered: "The office of the Attorney General gave its opinion that the Pennell property is still subject to the trust, and that MSAD #15 is the trustee. This opinion supports the view of the School Board. The Pennell building and land belongs to the Trust not the School Board and not the Town of Gray.

The School Board has consistently said that they felt that they were responsible for the Pennell Trust, and this belief has been the foundation of its decisions regarding Pennell for the years that I have been Superintendent. Since the Board could not "give the Pennell building" and land to the Town of Gray without finding a way to put value back in the Trust, the Board has worked with the Town for the past year and a half to find a way to uphold its duty as the Trustee and still ensure that the buildings and property would go to the Town.

The School Board did vote on a Memorandum of Understanding that could have provided a tentative solution that would work for both parties.
Since there is pending litigation, the School Board will wait to hear from the Town of Gray regarding its next step in response to the Attorney General's Office opinion. Of course, the School Board would like to find a solution without additional legal fees."

The Monument also asked, "Is Pennell to be considered for maintenance in the upcoming bond the SAD is putting together?"

Burns responded, "At this time, the maintenance of the Pennell building is not included in our bond proposal."

What happens to the trust if the building is sold?

The Monument asked Burns, "The SAD has declared that they no longer need the building and the AG has accepted the SAD's statement, and will allow the disposal without having to go thru the School Closure Act. The AG has also declared that the SAD may dispose of the building by swap or sale for fair market value. But, let's say that the SAD readies to sell the building to whomever, how is the trust maintained? What happens to it then?"

Burns answered, "If there was a swap or a sale for fair market value, then the trust goes on. It does not dissolve. The Board does not dispose of the Trust even though it may dispose of the building. The Pennell Trust will have value placed in it in exchange for the Pennell property. This is why the Board worked with the Town of Gray to find a way to keep the integrity of the Pennell Trust.

It is their responsibility as trustees. The Board cannot advocate that it be dissolved. If the buildings and property were given to the Town of Gray, the trust would be dissolved and, as trustees, the Board cannot advocate for that. The Board can, however, work within the boundaries of the June 13 judgment, to find a way to hand over the property to the Town. The lease was an attempt to do that.

If there was a sale or a swap of property, the Board would decide how that value added to the Trust could best benefit the education of the students of Gray and honor Mr. Pennell's original intention. I'm am sure that the Board would always welcome public feedback if and when that decision needed to be made. For now, the Board will wait to see what the Town of Gray wishes to do."

Are there other options besides a lawsuit from Gray?

The Monument approached Council Chair Pam Wilkinson with questions as well. We asked, "Now that Pennell has come back to us as an issue facing the public, my questions are:

--When do you plan to release the material that was generated by Lynn (Vice Chair Lynn Olson) and Mitch (Town Manager Mitchell Berkowitz) regarding cost-benefit analysis of all the town office options?

--Is the Council considering Pennell only as a Town Office?

--Is a lawsuit the only option the Council is considering as a method to acquire the building?"

Wilkinson responded:
"After Council has had its review with our town attorney I will be able to answer these questions for you. The material for the cost benefit analysis will be presented when Council decides to schedule it for a workshop. Your second and third questions are premature."

 

 

 

 

 

 

 

 

 

 

 

http://www.MonumentNews.com/2005/news/106/106a.shtml