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Judge: Doll museum trust fund must be used for same type of facility

A circuit court judge has thrown a twist into the dispute over a $200,000 trust fund left over from the closure of the Enchanted World Doll Museum in Mitchell.

A circuit court judge has thrown a twist into the dispute over a $200,000 trust fund left over from the closure of the Enchanted World Doll Museum in Mitchell.

Judge Vince Foley recently issued an opinion stating that the trust fund should be handed over to the Mitchell Area Charitable Foundation Endowed Fund. The twist came when he said subsequent distributions from the fund must be "for the purpose of establishing and operating a museum for the display of dolls having historical, artistic or other value."

CorTrust Bank, which manages the trust fund, had suggested that the money go to the Mitchell Area Charitable Foundation but had not suggested that the disbursement be limited to doll museums. The Mitchell Area Charitable Foundation supports an array of charities and service groups in the Mitchell area.

The nonprofit board of the Enchanted World Doll Museum wants to give the money to the United Federation of Doll Clubs, which operates a museum in Kansas City.

Mitchell Area Charitable Foundation board member Jean Koehler said the board has not yet discussed the judge's opinion. She said the foundation could possibly establish a fund to receive the doll museum money and then make disbursements to organizations such as the Dakota Discovery Museum, for doll displays.

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"I think the judge wants to make sure the original purpose of the trust stays true," Koehler said, "and I think we can do that locally."

The next step in the case is the drafting of findings and an order by the attorneys for CorTrust Bank. Based on those items, which are expected to mirror the judge's opinion, the museum board will decide whether to appeal. Dennis Padrnos, the attorney for the doll museum, declined further comment on the judge's opinion.

The Enchanted World Doll Museum, which was located across from the Corn Palace on Main Street in Mitchell, announced its closure in February 2008. The castle-like structure that housed the museum has since been sold to a California entrepreneur but is still vacant, and Padrnos said the board is still in the process of selling dolls. Money generated by the liquidation of those assets will eventually be donated to other charities, he said.

The museum's trust fund was established by its late co-founder, Eunice Thomas Reese. Its value was most recently listed at nearly $200,000.

The dispute over the trust fund began with numerous legal filings last year and climaxed with oral arguments last month in Beadle County, where Padrnos said the bank that originally held the trust fund was located.

The judge framed his task this way in his Feb. 5 opinion:

"In a nutshell, the Court must distribute to an entity having a similar purpose and mission as the Museum that is created or organized and operated exclusively for educational or charitable purposes."

Foley considered the museum board's request to give the money to the United Federation of Doll Clubs, but he identified a problem with the federation's articles of incorporation. Instead of containing language about establishing and operating a museum, the articles say the federation is organized "to promote and stimulate interest in the establishment and maintenance of museum doll collections ..."

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Foley opined that "Promotion and stimulation of interest is not the same purpose as establishing and operating a museum."

Foley noted an objection from Padrnos, who argued that the federation does in fact operate a museum and therefore is qualified to receive the trust fund. Foley was not swayed. There was no evidence, Foley wrote, to suggest that the federation would be required to protect the principal in the trust or comply with the intended use of the trust money.

Conversely, Foley noted, there was testimony indicating that the Mitchell Area Charitable Foundation could place restrictions on the money. That distinction proved important to his opinion.

"Such deposit with restriction," Foley wrote, "allows for the trustor's intent to be honored."

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