COURT OF APPEALS
DATED AND FILED
November 16, 2010
A. John Voelker
Acting Clerk of Court of Appeals
This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports.
A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
IN COURT OF APPEALS
Conserve Community, LLC, Julie Leizerman, Patricia A.
Ackerman, Juely K. Bartholomew, Timothy J. Bartholomew,
Joan Krull, Kenneth Alan Bussart, Robert Colme Bourgeois,
Sharon Kyle Bourgeois, Mary Hermes, Sarah Weitz Klammer,
John S. Klammer, Thomas Korinek, Dawn Korinek, Colin
Crawford, Deb Crawford, Mary Elizabeth Boswell, Steve
Danelski, Michael Macy, Marguerite Macy, William R. Meier,
Jr., Katrina Maria Billin, Jeffrey Lee Billin, Veronica
Flores, Nicholas Flores, Jeff R. Dohl, Angela P. Dohl,
Charles Sauter and Denise Sauter,
J. B. Van Hollen, in his capacity as the Attorney General
of the State of
Conserve School Trust, James Rinn and Stefan Anderson, in
his official capacity as Conserve School Headmaster,
John F. Calhoun, Michael J. Sullivan, Ronald V. Kazmar,
Christopher Rodgers and Michael X. Cronin,
Conserve School Corporation,
The Culver Educational Foundation,
from a judgment of the circuit court for
¶1 PER CURIAM. The Culver Educational Foundation appeals a summary judgment granted to the Conserve School Corporation and its primary funding source, the Conserve School Trust and its trustees (collectively, Conserve). The circuit court concluded a trust instrument unambiguously permits Conserve to transition from a four-year preparatory boarding school to a semester-away program without triggering an alternate distribution plan under which Culver would receive most of the trust assets. We agree with the circuit court, and affirm.
¶2 On September 19, 1995, James Lowenstine, now deceased, executed a “Second Restatement of James R. Lowenstine Trust Dated August 17, 1981.” The trust instrument provides for specific pre-residuary distributions upon Lowenstine’s death. The residuum is held in a separate trust, known as the Conserve School Trust.
¶3 The distribution plan for the Conserve School Trust directs that
the trustees establish and operate a nonsectarian school named the
¶4 The trust instrument addresses student access to the
¶5 Lowenstine provided an alternate distribution plan for the
Conserve School Trust if the Internal Revenue Service denied the trust
charitable status or if it became “legally impossible or otherwise impractical
to operate the
¶6 After Lowenstine’s death, the trustees spent $60 million to
¶7 In 2009, the global economic downturn forced the trustees to reconsider
the school’s model. On January 30, 2009,
the trustees and the headmaster of the
¶8 A group of Conserve parents formed Conserve Community, LLC and filed suit to stop the school’s transition to the semester-away program. The circuit court concluded the parents lacked standing and dismissed their claims. The court, however, permitted Culver to intervene as a designated contingent beneficiary under the trust instrument. Culver then filed an Amended Cross-Claim and Counterclaim for Declaratory Relief and Damages against Conserve, alleging the trustees’ adoption of the semester-away program violated the trust instrument and triggered the alternate distribution plan.
¶9 Seeking evidence of Lowenstine’s intent, Culver moved to compel production of the drafting law firm’s estate planning files. The circuit court denied Culver’s motion, noting that the meaning of a trust instrument is ordinarily discerned from the document itself. The court reserved the right to revisit the ruling if it determined the trust instrument was ambiguous.
¶10 The parties then filed cross-motions for summary judgment. During a hearing on the motions, Culver and
Conserve agreed that the central issue was Lowenstine’s intent, as reflected in
the language of the trust instrument. Culver
argued the instrument required the
¶11 The circuit court agreed with Conserve. It interpreted the phrase “regular enrollment” to include the semester model adopted by the school:
So now we fall into this question of what does regular enrollment of students mean within [Paragraph B(10)]. [Conserve’s attorney] argues that that is a term of legal art. And it may very well be, because as I have indicated, the draftsman of this document could hardly have been expected to sit down and write it without having cracked the Internal Revenue Code, and taken at least a peek at Section 170, which defines an educational organization as a place that maintains a regular faculty and curriculum, and normally has a regularly enrolled body of pupils. So it would be natural to derive from that the term “regular enrollment.”
And so regular, would seem to me to mean usual, and enrollment would mean that the people who come to class every day are those who have been admitted and are on a list constituting the class. That’s the way we would use that term in any of the alternative type of schools that the IRS has already recognized under the tax exemption rulings.
¶12 The circuit court next addressed the significance of Paragraph
K. It determined the language of
Paragraph K “is clearly not mandatory, it’s precatory if you will, wishful,
that … his Trustees, … if they deem it feasible, [may permit] students who are
enrolled somewhere else … to come to Conserve [during specified times] ….” The circuit court did not read Paragraph K as
the exclusive means by which students from other institutions may attend
¶13 We review a summary judgment ruling de novo, employing the same
methodology as the circuit court. Green
Spring Farms v. Kersten, 136
¶14 The primary issue in this appeal is whether the trust
instrument permits the trustees to establish the semester-away program. Culver contends the semester-away program
contravenes Paragraph B(10)’s “regular enrollment” requirement because “the
¶15 Culver’s argument requires interpretation of the trust
instrument. We interpret the trust in
accordance with the rules of construction of the state designated in the
instrument. Restatement (Second) of Conflict of Laws §§ 268(1), 277(1) (1971). The trust provides, and the parties
¶16 Trusts in
¶17 The circuit court read “regular enrollment” to mean that the trustees may establish a school at which students regularly attend class. The circuit court’s interpretation was based on its reading of the instrument’s plain language and section 170 of the Internal Revenue Code, which is cited in Article VI, Paragraph L of the trust instrument. Paragraph L expresses Lowenstine’s intention that the trust comply with various Code provisions governing charitable organizations, including section 170 “and the rulings and regulations thereunder.”
¶18 Section 170 allows, as a general rule, a deduction for charitable contributions. 26 U.S.C. § 170(a)(1) (1994). Charitable contributions include those to “an educational organization which normally maintains a regular faculty and cirriculum and normally has a regularly enrolled body of pupils or students ….” 26 U.S.C. § 170(b)(1)(A)(ii). The IRS has further clarified the meaning of section 170(b)(1)(A)(ii) in a treasury regulation tracking the language of the statute, see Treas. Reg. § 1.170A-9(c)(1) (1973), and a series of Revenue Rulings. Those Revenue Rulings are consistent with the circuit court’s interpretation of “regular enrollment.” For example, the IRS has determined that nonregistered participants were not “regularly enrolled” in yoga classes open to the public, but that registered students in an eight-week course were, Rev. Rul. 79-130, 1979-1 C.B. 332; that students who were admitted for an initial three-month probationary period, and thereafter indefinitely, were “regularly enrolled” in martial arts classes, Rev. Rul. 78-309, 1978-2 C.B. 123; and that a group of scholars and government officials invited to attend conferences did not constitute a “regularly enrolled” body of students, Rev. Rul. 64-128, 1964-1 C.B. 191.
¶19 We agree with the circuit court that Paragraph B(10)’s “regular
enrollment” requirement adopts the meaning of the similar phrase “regularly
enrolled” under the Internal Revenue Code.
The trust instrument indicates that Lowenstine intended to establish a
tax-exempt charitable trust which would, in turn, establish a conservation
school. The two designated events
triggering the alternative distribution plan—denial of charitable trust status
or impracticality of operating the
¶20 The meaning of “regularly enrolled” under the Internal Revenue
Code is also consistent with the plain meaning of “regular enrollment” outside
the taxation context. Again, we agree
with the circuit court’s analysis: “And so regular, would seem to me
to mean usual, and enrollment would mean that people who come to class every
day are those who have been admitted and are on a list constituting the
class.” Culver’s interpretation—that
“regular enrollment” means
¶21 Culver also asserts the semester-away program violates
Paragraph B(10)’s requirement that
¶22 Assuming, however, that Paragraph B(10) incorporates a full grade requirement, we conclude the semester-away program satisfies it. Although the school’s new program is undisputedly semester-based, the program provides a full academic year of instruction. According to a January 14, 2008 memorandum by Conserve’s headmaster, the academic year is broken into two semesters. Students take six regular courses each semester, including three core courses, two “progression” courses that allow students to keep up with courses at their sending schools, and one of eight different elective courses. The core courses include English, science, and history, and students may choose one of two courses satisfying the English and science requirements. The “progressive” courses feature an advancement scheme common of schools teaching multiple grades; for example, the Conserve School will teach algebra II, trigonometry, precalculus, and calculus. We conclude the school’s curriculum, which must be flexible enough to accommodate high-school sophomores, juniors, seniors, and postgraduate students, is consistent with a school providing a full “grade” of education.
¶23 Culver also claims the semester-away program violates Paragraph
K, which it contends is the exclusive method by which a secondary population of
students from other institutions may attend
¶24 Paragraph K does not implicitly prohibit the semester-away
program adopted by the trustees.
Expressio unius “is a rule of common sense.” Gekas v. Williamson, 912 N.E.2d 347,
359 (Ill. Ct. App. 2009). “The force of
the inference from silence depends on whether, under the circumstances, some
further expression would have been expected.”
¶25 Paragraph K does not expressly prohibit the semester-away
program either. Paragraph K gives the
trustees discretion to admit a secondary group of students who may attend the
school during specified times. This
group does not include students attending
¶26 Culver contends the trial court’s interpretation renders
Paragraph K mere surplusage, contrary to
¶27 In the alternative, Culver argues the circuit court should have determined that the trust instrument is ambiguous. “Whether a trust provision is ambiguous is a question of law to be determined by the court, and ambiguity can be found only if the language is reasonably or fairly susceptible to more than one interpretation.” Espevik v. Kaye, 660 N.E.2d 1309, 1313 (Ill. App. Ct. 1996). We have already concluded Culver’s reading of the phrase “regular enrollment” is unreasonable. In addition, we have concluded that any full grade requirement is satisfied even if we accept Culver’s interpretation. The trust instrument unambiguously permits the semester-away program adopted by the trustees.
¶28 Culver nonetheless argues the circuit court should have
permitted discovery of the drafting law firm’s estate planning files. Parties may obtain discovery regarding any
matter, not privileged, which is relevant to the subject matter involved in the
action. Wis. Stat. § 804.01(2)(a). We review a circuit court’s decision to
prohibit discovery for an erroneous exercise of discretion. See
& Vincent, Inc. v. Spacek, 102
¶29 Finally, Culver claims the trustees’ adoption of the semester-away
program reflects a finding that it is impractical to operate the
By the Court.—Judgment affirmed.
This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.
 The circuit court questioned whether the
semester-away program could be characterized as “dual enrollment,” noting that
students would regularly attend classes at
 Although the trustees’ decision arguably
conflicts with Paragraph B(10)’s direction that instruction begin in the
seventh grade, the parties appear to agree that this requirement gives the
trustees discretion to begin instruction at later grade levels. In its reply brief, Culver contends,
apparently for the first time, that the inclusion of postgraduate students in
the semester-away program violates Paragraph B(10). We generally do not address arguments first
raised in a reply brief. See Northwest
Wholesale Lumber, Inc. v. Anderson, 191
 For this reason, we refuse to consider various statements individual trustees made to newspapers and other media outlets as evidence of the trust instrument’s meaning.