UPDATE: Fisk appeal could mean it ends up with nothing

I guess I spoke too soon when I posted that the fate of the Stieglitz Collection (and Fisk University) was finally resolved. Fisk University has announced that it will appeal the Chancery Court's decision allowing it to sell a stake in the Collection subject to Fisk having discretionary use of only $10 million of the proceeds and the balance being placed in an endowment fund to be used solely for the costs of displaying and maintaining the art. I agree with Fisk that the $20 million endowment is excessive for purposes of maintaining the 101-piece Collection (as mentioned in my previous post and now confirmed by Fisk's estimate of annual costs at $130,000). Surely the Court can come up with a plan that makes far better (and more logical) use of the proceeds. But appealing the decision does of course mean that Fisk is taking the risk of being left with nothing, a very real risk in fact given how erratic and unpredictable the Chancery Court's decisions have been since the summer.

Finally, the fate of the Stieglitz Collection (and Fisk) are resolved

Of all the Chancery Court's rulings over the past few months in the ongoing Fisk litigation, the latest ruling this week was no less shocking. First, the Chancellor rejected the Crystal Bridges agreement as then-written and invited the Tennessee Attorney General to come up with a more donor-friendly alternative, which he did in accordance with the Court's decipherment at the time of the "donor's intent." Then, she rejected that proposal and instead embraced the Crystal Bridges agreement in an unexpected reinterpretation of the donor's intent (turned out Georgia O'Keeffe did actually care about Fisk) but requested it be revised as per the Court's explicit instructions. That the parties did (the Attorney General made a second proposal but to no avail) and now the Court has approved the terms of the revised agreement and thrown in one major revision of its own for good measure. The Bentonville, Arkansas, museum "will pay the financially troubled university $30 million to acquire a one-half interest in the Collection... but Fisk may have discretionary use of only $10 million of the proceeds [Chancellor Lyle's newest twist to this saga]... The rest is to be placed in an endowment fund and used solely for the costs of displaying and maintaining the art." $20 million to cover the costs of displaying and maintaining a 101-piece collection?!! The reason for the split is none other than the ever-elusive notion of "donor intent." The problem of donor intent is a recurring theme in this kind of litigation but this week's ruling apportioning actual percentages between the donor's intended beneficiaries is pure guess work. Having decided that O'Keeffe did care about Fisk in a prior ruling, the Court has now gone one step too far into the abyss of "donor intent" by stating that the "role" (yes, "role" believe it or not) the donor intended for Fisk was exactly one third of the "total roles" for the gift. Pure guess work I tell you.

UPDATE: the Fisk saga continues

The Tennessee Attorney General filed last Friday a second proposal regarding the future of the Stieglitz collection. Background to and the Chancery Court's rejection of his first proposal can be found here and here (Fisk went on to revise its prospective agreement with the Crystal Bridges Museum in light of the Court's ruling). The AG's latest filing is the product of the establishment of a fund by Fisk alumna Carol Creswell-Betsch that has already received commitments sufficient to "allow Fisk University to keep its Stieglitz art collection and display the works on campus at no cost to the school" (approx. $130,000 a year). Assuming Judge Lyle is still of the view that the winning proposal must secure the long-term financial health of Fisk, I, like Donn Zaretsky of The Art Law Blog, suspect the AG's second proposal will be rejected. However, given Judge Lyle's past record and the ever-illusive notion of "donor intent," of course, who knows what the next installment of Fisk news will bring. Meanwhile, Fisk University has already knocked-down the AG's second proposal.

UPDATE: latest Fisk court filing

The New York Times has reported that Fisk University has revised the terms of the agreement with the Crystal Bridges Museum in relation to the Stieglitz Collection to address some of the concerns voiced by the Chancery Court in Nashville, Tennessee. Notably, "Fisk and Crystal Bridges have agreed that the art will remain at Fisk, in Nashville, until 2013, then be exhibited at Crystal Bridges for two years and returned to Fisk between 2015 and 2017. After that, the art will be on a two-year rotation unless the committee established to oversee the art “has a good reason to make a change,” the university said." A case example of how "the future will be shared," as the opinion section of The Art Newspaper so eloquently put it recently.

For background on the ongoing Fisk litigation see here, here  and here. For a good analysis of the latest Fisk news see Donn Zaretsky's commentary on The Art Law Blog, which also includes a link to Fisk's court filing.

LINKS

• UPDATE. Tennessee AG asks Judge Lyle to clarify her latest Fisk ruling. No wonder he's confused.
• LONDON. Christie's names Steven P. Murphy (formerly of Rodale Inc. and EMI) as new Chief Executive Officer in move to "mix the gene pool." Further commentary can be found here.
• SYDNEY. The market, already heated by the introduction of a resale royalty scheme, successfully unites against a proposal to close Self-Managed Superannuation Funds.
• Bank of America becomes Boston MFA's largest corporate donor after $10m gift to the museum.
• "World’s Most Expensive Book to Hit the Auction Block"

UPDATE: "Judge rejects AG's plan for Fisk art"

How did this happen, you might ask, given that AG Cooper did pretty much exactly what Chancellor Lyle told him to do? She'd previously rejected the Crystal Bridges Agreement as written and instructed the Tennessee Attorney General to come up with an alternative that would "enable the public- in Nashville and the South- to have the opportunity to study the Collection...," which the Court of Appeals had determined was O'Keeffe's intent and the Chancery Court had subsequently adopted. Apparently Fisk just happened to be the Nashville institution randomly chosen as the recipient and it was never O'Keeffe's intention to actually benefit Fisk itself. The proposal to relocate the Collection to the Frist Center in Nashville should therefore have been music to the Chancellor's ears.

Not so.

In yet another turn of events in the ongoing saga, it now appears that O'Keeffe did care about Fisk after all (!) and that by not mentioning Fisk the Court of Appeals had not necessarily meant to imply that O'Keeffe's intention was solely to benefit Nashville and the South. I'm glad to see that the Court has come to its senses and acknowledged that O'Keeffe didn't randomly choose Fisk as the recipient of a collection estimated to be worth $74 million simply because it was in Nashville. But I'm amazed at the Court's reluctance to admit its change of heart and the fact that it is exceedingly difficult for courts to determine a donor's intent with any kind of certainty. The latest decision states that the Court of Appeals had not decided or instructed the Chancery Court on "what the donor's intent was with respect to Fisk" (pages 4-5) which completely contradicts what the Chancellor said in her previous decision at page 13: "the Court has been instructed by the Court of Appeals that the purpose of the gift is clear. That purpose is to "enable the public- in Nashville and the South- to have the opportunity to study the Collection [....] Using this purpose as the benchmark, the Court must next compare the Crystal Bridges solution to see if it closely approximates Ms. O'Keeffe's purpose." The Fisk saga is now the perfect case example for illustrating the shortcomings of cy-près relief and the evidentiary issues related to donor intent.

In practical terms, this means it's back to the drawing board with respect to the Crystal Bridges Agreement which needs to be revised to more closely approximate O'Keeffe's purpose. At least the Chancellor was proactive and instructed the parties as to what revisions are required (see pages 2-4 and Exhibit 2 of the decision). Essentially, the proposed revisions to the Joint Ownership Agreement between Fisk and Crystal Bridges boil down to minimizing the risk of divesting Fisk and Nashville of the Collection. The Collection will go to Arkansas for 6 months of the year but there's little doubt it's coming back to Nashville for the other six.

Fisk and the perennial problem of "donor intent"

Donn Zaretsky recently posted that he couldn't get his head around how moving the Stieglitz Collection to the Frist Center as per the Attorney General's proposal announced last Friday would more closely approximate O'Keeffe's purported intent than keeping it at Fisk six months of the year in accordance with the Crystal Bridges arrangement. The real problem, however, is not determining which of the two alternatives is closer to O'Keeffe's charitable "intent." Rather, the problem as I see it is the fact that cy-près relief is grounded in a notion as malleable as "donor intent" (especially a late donor's intent) and that donors freely and frequently attach a plethora of conditions to their public donations.

Tennessee AG's Nashvillian proposal for the O'Keeffe donation to Fisk University comes as no surprise

At the end of last month, the Chancery Court for the State of Tennessee denied Fisk cy-près relief in respect of the Alfred Stieglitz Collection donated to the University by Georgia O'Keeffe because the proposed sale to the Crystal Bridges Museum in Bentonville, Arkansas, did not "closely approximate" O'Keeffe's intent for making the charitable gift. However, the Court did not rule out the sale all together- it merely rejected the Crystal Bridges Agreement as written at the time and ordered the Attorney General "to file a proposal with the Court for the display and maintenance of the Alfred Stieglitz Collection." Fisk would then be given an opportunity to respond and/or make any additional proposals.

Friday saw the deadline for the submission of the AG's proposal which called for the Collection to remain in Nashville and be displayed at the Frist Center for the Visual Arts until Fisk is in a financial position to care for and display the Collection. Given the Court of Appeals' instruction that the purpose of O'Keeffe's gift was to "enable the public- in Nashville and the South- to have the opportunity to study the Collection..." and the Chancery Court's finding that Bentoville fell outside the definition of "the South," it's hardly surprising that Attorney General Cooper's proposal is Nashville-based.

Much as I hate to admit it, this may well be as good as it gets for the 101-piece Collection. If Chancellor Ellen Hobbs Lyle were to decide the fate of the Collection on behalf of art lovers (we should be so lucky), I'd expect she'd go for the Crystal Bridges sale over Cooper's plan: the $30 million deal would rescue Fisk from the brink of closure and allow a far wider audience to view the Collection in a state-of-the-art museum while still partially complying with O'Keeffe's wishes by displaying the Collection in Nashville six months of the year. But she's not "free to move charitable assets from one institution to the next to maximize the utility of those assets in some broad sense." Oh no. She has to comply as closely as possible with the wishes of the late O'Keeffe, whatever they may actually be, even if it means perpetuating the current trend of only 10,000 visitors viewing the Collection in a typical year.

I get it- courts have fashioned cy-près so that it affords some relief without discouraging charitable donations. It is for the "greater good," the Chancellor said, that the law allows donors to tie-up cultural assets in this way. So I'm buying my ticket to Nashville to go see the gifted works because as long as the law lets donors control their donations indefinitely from their graves (others think this is fine), I can't imagine how the Crystal Bridges Agreement can possibly be revised to triumph over the Frist alternative. I just hope it is ultimately all about art as donors rejoice and make generous donations to celebrate.