In Re Fisk University - Concurring in Part and Dissenting in Part

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
June 28, 2011 Session
IN RE FISK UNIVERSITY
Appeal from the Chancery Court for Davidson County
No. 052994III Ellen H. Lyle, Chancellor
No. M2010-02615-COA-R3-CV - Filed November 29, 2011
F RANK G. C LEMENT, J R., J., concurring in part and dissenting in part.
I concur with the majority’s decision to affirm the trial court’s grant of cy pres relief.
I write separately to state that I respectfully disagree with the majority’s decision to reverse
the trial court’s limitation of the funds awarded to Fisk University to $10 million and the
corresponding requirement that the University establish an endowment with the remaining
$20 million.
As we explained in our opinion in the first appeal of this matter, Georgia O’Keeffe
Foundation (Museum) v. Fisk University, 312 S.W.3d 1 (Tenn. Ct. App. 2009), we concluded
that it was premature for this court to determine what, if any, cy pres relief Fisk University
may be entitled to receive. This conclusion was based on the fact that the University had
established two of the three essential prongs of the cy pres analysis; however, the University
had not yet established whether “the change of circumstances subsequent to the gift render
literal compliance with the conditions impossible or impracticable.” Id. at 19-20. For that
reason we remanded the case with the following instructions:
Accordingly, a determination of whether any form of cy pres relief is available
must be held in abeyance unless and until the trial court, on remand, finds that
literal compliance with the conditions imposed by Ms. O’Keeffe are
impossible or impracticable. If cy pres relief is available to the University, then
the trial court is to fashion a form of relief that most closely approximates Ms.
O’Keeffe’s charitable intent.
Id. (emphasis added).
On remand, the trial court correctly determined that, due to the University’s apparently
dire financial condition, it was impracticable for the University to comply with all of the
conditions imposed by Ms. O’Keeffe. Based upon this finding of fact, the trial court
considered the various options presented by the parties. Thereafter, in the exercise of its
discretion, the trial court fashioned relief it believed to closely resemble Ms. O’Keeffe’s
general intent. I am of the opinion the trial court did just that, thus it did not abuse its
discretion by fashioning the relief as it did. Accordingly, I would affirm the trial court in all
respects.
As the trial court explained in its November 3, 2010 Memorandum and Order, it
approved the Revised Sharing Agreement between the University and the Crystal Bridges
Museum, explaining that the agreement was consistent with Ms. O’Keeffe’s general intent,
which was to provide Nashville and the South access to the Collection in order to promote
the study of art and the placement of the Collection at Fisk University. As the trial court
further explained, if Fisk University were to close, “it would frustrate a unique aspect of the
O’Keeffe donation.” It was for these reasons that the court approved the sale of a one-half
interest in the Collection and required that $20 million of the $30 million to be paid by
Crystal Bridges be placed into an endowment for the benefit of the Stieglitz Collection and
the promotion and study of art and, specifically, the art of the Collection. The remaining $10
million would be paid to the University to use at its discretion in order to keep the University
open.
Although the University makes an earnest argument that it needs the entire $30
million to be financially viable, the cy pres doctrine “may not be employed simply to promote
what the court views as a worthy charitable agenda; . . .” Bd. of Trustees of Museum of
American Indian, Heye Found. v. Bd. of Trustees of Huntington Free Library and Reading
Room, 610 N.Y.S.2d 488, 499 (N.Y. App. Div. 1994). As that court further explained, cy
pres is:
[A] power whose permissible use is confined to the perpetuation and
advancement, to the extent possible, of the particular dispositional agenda
prescribed in the dispositional instrument. Thus, while a court in the exercise
of the cy pres power may disregard specifically prescribed restrictions,
limitations or directions respecting the way in the (sic) which the dispositional
purposes are to be achieved, it may do so only insofar as such variance
facilitates or is at least compatible with the realization of the full dispositional
design; it may not do so where the result would be a dilution of any significant
and practicable dispositional purpose.
Id. (internal citations omitted).
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As the Heye court further explained:
[I]t is not within the cy pres power simply to release dispositional assets from
the constraints of a dispositional design; indeed, it is the very essence of cy
pres that any deviation from the original dispositional plan be pursuant to an
alternate plan of disposition sufficiently detailed to provide the necessary
assurance that the original dispositional design will be, to the extent
practicable, effectively carried forward.
Id. at 500.
Here, the record reveals no intent on the part of Ms. O’Keeffe to fund the general
operations of Fisk University or the costs of maintaining the Collection. Instead, the clear and
expressed intent of Ms. O’Keeffe was to bestow upon the University the unique opportunity
“to expose Nashville and the South to the art,” meaning her art and that of her husband,
Alfred Stieglitz. As the majority correctly noted, “a secondary consideration and motivating
factor in Ms. O’Keeffe’s dispositional design was the placement of the Collection at Fisk.”
As the majority states in the opinion:
In making gifts of the entire Stieglitz artwork to various institutions, Ms.
O’Keeffe exercised a general charitable intent; she made the conscious
decision that exposure to the Collection in the South would be at Fisk. There
is no doubt that placing the art at Fisk was a strong social statement and
integral to Ms. O’Keeffe’s general intent to expose Nashville and the South to
the art. The trial court’s finding that the art would not be in Nashville, or the
South, but for Fisk is fully supported by the evidence.
I fully agree with the majority’s holding that the trial court properly considered this
factor in fashioning the appropriate cy pres relief. I further submit that this finding by the
trial court is a key element that justifies the relief as fashioned by the trial court, especially
the decision to award the University $10 million to address its current financial predicament
and to place the remaining $20 million in a restricted endowment to fund the cost of
maintaining the Collection in the future.
The Attorney General asserts that Fisk University is not entitled to receive any of the
proceeds from this sale. For reasons stated above, inter alia, I find merit to this argument;
however, depriving the University of any of the proceeds may result in the University closing
its doors, which would be contrary to Ms. O’Keeffe’s intentions. The trial court made the
finding that the University could not afford to currently maintain the Collection. This fact is
admitted by the University and the Attorney General did not dispute the University’s inability
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to fund the cost of maintaining the Collection. The record reveals the current cost to maintain
the Collection is approximately $131,000 a year. The record also reveals that the cost to
maintain the Collection in the future will likely be substantially greater, perhaps in excess of
$1 million a year. As the majority noted, the University’s costs to maintain the Collection in
the future may not be as much as $1 million a year; nevertheless, the record convinces me
that it will be substantially greater that $131,000 a year, an amount the University cannot
presently afford. Thus, it is apparent that the University will not be able to maintain the
Collection in the future, at least not without financial assistance.
As I noted above, in the exercise of its cy pres powers the courts may, to some degree,
revise specific limitations or directions regarding the way in which the dispositional purposes
are to be achieved; however, the courts “may do so only insofar as such variance facilitates
or is at least compatible with the realization of the full dispositional design.” Heye, 610
N.Y.S.2d at 499 (emphasis added). As the Heye court explained in detail:
What the law recognizes in its imposition of far more stringent, dispositionally
based conditions on the use of the cy pres power, is that the consequence of so
easily dispensing with a grantor’s directions would be to discourage charitable
giving and to rob charitable institutions of the stability necessary to the
discharge of their purposes. Doubtless it is better in the end for society to reap
the benefit of charitable giving even in the form of dispositions imperfectly
suited to the achievement of their purposes, than to forego the benefits of
charity altogether in the course of pursuing by judicial means some almost
certainly elusive ideal reallocation of charitable resources.
Id. at 501.
Based upon the record before us, I submit that giving the entire $30 million to Fisk
University to be used as it deems necessary, albeit for a very worthy cause, cannot be
justified under the restraints of cy pres. Speaking bluntly, the University seeks to monetize
the Collection, as President O’Leary testified, in order to infuse much needed capital. To do
so would change the form of the conditional charitable gift by converting the Collection into
money, which is in direct conflict with Ms. O’Keeffe’s expressed intent. The record clearly
reveals that Ms. O’Keeffe never intended for the Collection to be sold or otherwise
monetized in order for Fisk University to pay its general operating expenses. Ms. O’Keeffe’s
stated intent was to expose the Collection to the South by having it exhibited at Fisk
University. However, due to the University’s apparently dire financial condition, it is no
longer practicable for the University to bear the entire financial burden to exhibit the
Collection. This is why approving the Revised Sharing Agreement with Crystal Bridges,
placing $20 million in a restricted endowment to assure the future maintenance of the
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Collection at Fisk or, if not Fisk, at another custodial institution in the Nashville area, and
awarding Fisk University $10 million to rise above its current financial predicament is a form
of relief that closely approximates Ms. O’Keeffe’s charitable intent and, thus, is permissible
under cy pres principles.
For the above reasons, I would affirm the cy pres relief as granted, including
specifically the trial court’s requirement that a $20 million endowment be established to
assure the future maintenance of the Collection.
______________________________
FRANK G. CLEMENT, JR., JUDGE
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