A deal's a deal, even when it's a gift. At least that's what a Chancery Court in Tennessee has found in the case of The Georgia O'Keeffe Foundation v. Fisk University, Part III, No. 05-2994-III (2007).
On March 6, 2008, Chancellor Ellen Hobbs Lyle issued a final order in the case concluding that Fisk University had violated a condition imposed on a charitable gift. But Lyle didn't give the donor's representative everything it wanted: She declined to return the collection to the Georgia O'Keeffe Museum - at least for now. Instead, she imposed a permanent injunction on the university: Fisk must display the collection within seven months and comply with all of the injunction requirements or risk losing the collection to the O'Keeffe museum in Santa Fe, N.M.
Across the country, donors who make charitable gifts are seeking to enforce the restrictions they made on those gifts. (See "Power to the Donors," Trusts & Estates, October 2007, at pp. 66-71; available at www.trustsandestates.com.
In New York, the family of Avery Fisher is fighting Lincoln Center's attempt to change the name of Avery Fisher Hall.
Some have gone so far as to file suit. The Robertson family sued Princeton University over alleged misuse of a restricted gift to the Woodrow Wilson School of Public and International Affairs. The heirs of Josephine Louise Newcomb are suing to enforce the terms of Newcomb's gifts to Tulane University. Randolph-Macon Women's College alumnae and donors have sued based on the generosity of many large and small donors who made gifts to the college for a specific charitable purpose. Donors sued Vanderbilt University alleging a violation of a gift restriction involving the name of a building. And donors successfully sued the University of California Los Angeles Foundation, establishing that a restricted gift was not used for its specific purpose.
The decision this month in Fisk University v. Georgia O'Keeffe Foundation highlights the critical issues in this type of case. Fisk filed a cy pres suit seeking judicial approval of the sale of two paintings in The Alfred Stieglitz Collection of Modern American and European Art. In 1949, O'Keeffe, as executor of Stieglitz's will, gave Fisk University 101 pieces from his art collection. The university received paintings, sculpture, prints and photographs by 29 acclaimed American and European artists, including Pablo Picasso, Paul Cezanne, Pierre-Auguste Renoir, Diego Rivera, Arthur Dove, Henri Toulouse-Lautrec and, of course, O'Keeffe.
Fisk announced its desire to sell O'Keeffe's "Radiator Building – Night New York" and Marsden Hartley's "Painting No. 3," two of the most valuable paintings in the collection.
The George O'Keeffe Foundation intervened, asking the court to impose a reversion of the collection to the Georgia O'Keeffe Museum. The court found that Fisk had breached a condition of the gift by declaring that the university could not care for and display the collection.
But the court is giving the university a second chance.
Chancellor Lyle found that Fisk's breach did not justify the immediate removal of the collection from the university. Instead, she said that the remedy that fits the circumstances is injunctive relief. A permanent mandatory injunction prevents Fisk from selling the collection, sets a deadline for the university to display the collection, and imposes notice requirements on the university concerning loans of the collection and its ability to care for it.
Lyle emphasized that non-compliance with the injunction could result in a finding of contempt punishable by fines, payment of damages and attorneys' fees - as well as forfeiture of the collection. She noted that a practical effect of injunctive relief is that it provides the Georgia O'Keeffe Museum, the Tennessee Attorney General, and others with standing to obtain the summary relief of a contempt hearing - which is a shorter and more straightforward proceeding than a cy pres case.
In other cases over charitable gift restrictions, courts have held that the relevant state attorney general was the only one who had the authority to enforce charitable gift restrictions. Donors, these courts found, simply did not have standing to enforce charitable gift restrictions.
Now, a string of cases suggest there's an erosion of the common law rule that prevents donors from protecting their legacies. All these cases are going forward:
- The Robertson suit against Princeton is set for trial Oct. 1, 2008. This may be the largest donor intent lawsuit in U.S. history. Robertson v. Princeton University, No. C-99-02 (N.J. Super. Ct. Ch. Div. 2006).
- Josephine Louise Newcomb's great-great nieces have appealed Howard v. Tulane University to the Louisiana Supreme Court. The nieces allege that Tulane violated the terms of Newcomb's gifts when the university dissolved Newcomb College as part of its post-Katrina recovery plan in 2006. Howard v. Administrators of the Tulane Educational Fund, 2006 CA 1276 (La. Ct. App. Oct. 22, 2007).
- The Randolph-Macon suit is scheduled to go before the Virginia Supreme Court the week of April 14, 2008. The plaintiffs are challenging the board of trustees'' right to end 115 years of single-sex education at Randolph Macon Women's College. Dodge v. Trustees of Randolph-Macon Woman's College, No. CL6000894-00 (Lynchburg Cir. 2007); Jena Dodge v. The Trustees of Randolph Macon Woman's College D/B/A Randolph-Macon Woman's College, No. 071248 (Va. Sup. Ct. 2007).
As far as we know, there's no actual lawsuit over Avery Fisher Hall. Although the dispute apparently is unresolved, so far (at least) the concert space at Lincoln Center goes by the name of Avery Fisher Hall.
