Bonus Episode: Update on the Berkshire Museum Saga – the AG and Museum Agree to Sales

Katie and Steve give listeners an update on the Berkshire Museum deaccessioning controversy.  The Massachusetts Attorney General and the Museum have reached an agreement, pending approval by the Supreme Judicial Court, permitting sales of up to $55 million with the famous Norman Rockwell painting Shuffleton’s Barbershop going to an undisclosed museum.  The Rockwell sons have dropped out of the litigation, but the other plaintiffs oppose the compromise and are still fighting.

Berkshire Museum Cy Pres Complaint in Massachusetts Supreme Judicial Court

Bonus Episode Transcription

Katie Wilson-Milne:  So, we’re back with a bonus episode.  We will be releasing short 5 to 10 minute episodes from time to time updating our listeners on developments related to prior full-length episodes or any current events we think will be interesting to our audience.

Steven Schindler:  So, for those of you who remember the last episode, we were here with the journalist Felix Simon talking about the saga of the Berkshire Museum and its attempt to deaccession 40 of its most valuable works of art.  And there have been some developments that we want to tell you about.

Katie Wilson-Milne:  The Attorney General of Massachusetts and the Berkshire Museum came to an agreement basically about the sale of the 40 works of art from the Berkshire Museum’s permanent collection whereby they agreed to go to the Supreme Court and the Supreme Court’s permission to apply two equitable doctrines called deviation and cy près to the sale of these works.  The museum did not admit that they couldn’t sell these works unrestricted anyway.

But they said even if we can, even if there are restrictions, the court should intervene and waive those restrictions because we really need to sell these works of art to support ourself and to build an endowment so the museum doesn’t go under.  And they filed a petition with the Supreme Court saying that – and the Attorney General did not oppose that in light of the specific requirements for the sale that the museum proposed.

Steven Schindler:  So, just to be clear of the Supreme Court that you’re referring to is the Supreme Judicial Court of Massachusetts.

Katie Wilson-Milne:  Right.

Steven Schindler:  And it’s the highest court in the State of Massachusetts.  It’s a little bit unusual to have the Supreme Court of Massachusetts or the highest court in any state hear what’s essentially a case in the first instance, which is what’s being done here.

Katie Wilson-Milne:  Yeah.  And we should add that the two appeals that we told our listeners about in our full length episode are still ongoing.  The appeals from the Rockwell Brothers’ case and the members of the museum case, those two separate litigations are still up on appeal in the appellate division which is the division below the Supreme Court that those cases haven’t gone away.

What we understand from lawyers working on this case is that those plaintiffs have been given permission to file amicus briefs in the Supreme Judicial Court to make comments on the AG and Museum’s joint proposal or petition.  They are opposing that compromise.  They still don’t want the sale to go forward.  But that doesn’t moot their appeals.  Their appeals are still on the docket in the court below.  So, it remains to be seen whether the Supreme Court will bring those appeals up or if they’ll somehow be consolidated.

We should say that the Rockwell Brothers, not all plaintiffs in the Rockwell case – the Rockwell Brothers dropped out and they dropped out of the case because the terms of the compromise between the AG and the Museum were satisfactory to them.  Steve, do you want to – let us know what those are?

Steven Schindler:   But let’s – I think I would just add a little side bar on this ancient doctrine of cy près.  Cy près is from the Norman-French “Cy près comme possible,” as near as possible.  And it’s an equitable doctrine that has been fashioned by courts for hundreds of years to try to deal with situations where somebody gives something to a charitable institution and expresses an intent that their gift be used for, particularly, a charitable purpose.

And then something happens along the way to make that impossible.  And this really first came into existence in the Middle Ages and particularly in England under Henry VIII when a lot of the institutions connected to the Catholic Church began to be dismembered.  So, over the years, it has been used, for example, to redirect money that may have been used prior to the abolition of slavery in this country.  There were organizations that were established to promote the abolition of slavery.  Once that happened, those funds and those institutions had to be changed.

And the way you do that is you go to court and you ask the court to exercise its equitable jurisdiction under the doctrine of cy près.  Another variation of cy près is called deviation which is also one of the remedies here which the museum is seeking and that the Attorney General I guess is endorsing.  But unlike cy près which deals with a – trying to match a donative intent with a situation has become impossible, deviation usually deals with restrictions that have been placed on gifts that also are being asked to be removed for various reasons of either impracticality or impossibility.

And this case, these would be the restrictions that certain gifts that were given before the museum was founded and that were given to the athenaeum, as we discussed in the last podcast, that those restrictions are alleged to prohibit any of those objects from leaving the Berkshires.

Katie Wilson-Milne:  Right.  There’s a statutory restriction and then maybe Norman Rockwell restricted his gift of these two famous paintings in the 50s and 60s.

Steven Schindler:  And at least in terms of the petition that has now been filed by the museum with the Supreme Judicial Court of Massachusetts, the museum has indicated that the Attorney General still is of the belief that these restrictions apply to some of the works in the collection and therefore, they’re asking the court to either exercise the equitable relief of cy près or deviation in order to allow the sale of these objects to happen.

Katie Wilson-Milne:  They basically agreed to disagree and then they come to a compromise.  So, what’s that compromise, Steve?

Steven Schindler:  Well, some of the compromise seems a little bit murky.  But the center piece of it seems to be that both the museum and the Attorney General have agreed that Rockwell Shuffleton’s Barbershop

Katie Wilson-Milne:  The most famous work at issue in the controversy.

Steven Schindler:  There is an indication that another museum has made an offer for this work.  It’s not disclosed and the petition – which museum that is and it’s not disclosed how much that museum is offering to pay for it.  But there are some conditions that are put on the sale to the museum which include a loan to the Rockwell Museum and some promise that the work will be displayed publically in the Berkshires for some amount of time and then will also be on display in public at an undisclosed location.  We’re presuming it’s the United States Institution because it’s described as a 501(C)(3) charitable institution.

Katie Wilson-Milne:  The AG and the museum have also agreed to cap the amount the museum can receive through the sale of these 40 works at $55 million.  That includes the Shuffleton’s Barbershop sale, whatever that is for.  So, after Shuffleton’s gets sold, the museum can then arrange in three tranches different groups of the rest of the works, the 39 works that are remaining, and they will style the first tranche of works to go up for sale through Sotheby’s in order to meet the difference between the amount of the sale of Shuffleton’s Barbershop and $55 million.

So, they’re allowed to bridge that gap, and they’re going to do it in baby steps.  So, they’re going to sell one group of art to try to get there, but no more than is necessary to get to $55 million.  And if they don’t breach the goal on that group, they can sell one more group of works in order to get to $55 million.  And if that doesn’t work, there’s a third group and they can sell that to get to $55 million.  The proceeds are restricted in the following way.

So, the museum can use $50 million of that $55 million in unrestricted manner, for capital costs, renovations, its New Vision Plan, whatever it wants as long as it meets the museum’s general charitable purpose.  That extra $5 million can only be used to benefit the museum’s collection acquiring new works, by taking care of works and that can be works in a science or natural history exhibits, not just art.

If in the sale of one of these tranches, the museum takes in more than $55 million, then that excess above $55 million can only be used for the art collection, to acquire works of art or to care for existing works of art.  So, that’s the scheme under which the museum and the AG have come to an agreement.  So, Steve who gets to decide what’s in these tranches?  Is that clear in the petition?

Steven Schindler:  Yes.  First of all, let’s just talk about the word tranche which seems to have migrated itself into this particular petition that was filed with the court.  We associated tranches usually with financial instruments and other types of things.  But really, what we’re talking about are three groups of works of art.

Katie Wilson-Milne:  Tranche is a fancy word for group.

Steven Schindler:  Right.  So, it’s very clear that the Attorney General is signing on to a plan that gives the museum’s board complete discretion to decide what is going to be in each tranche, what price to sell works at and what order to sell them at.  And as long as the museum proceeds along the lines that you just outlined, Katie, the Attorney General is going to take a very hands off approach to this.

Katie Wilson-Milne:   So, why did then the Attorney General change his mind, Steve?  When we talked in the last episode about the fact they filed this lengthy court filing asking for a preliminary injunction setting for several merits based arguments why the museum wasn’t allowed to sell this work including insinuating the museum really didn’t need the money.

Steven Schindler:  Well, that’s a hard question to answer.  And the petition which was filed by the museum doesn’t shine a lot of light on it.  But I think one conclusion that we can reach is that the Attorney General after conducting its investigation at least agrees with the museum that they are in serious financial difficulty and that this is perhaps the only way out.  The problem that I have with this deal and the problem that I’ve had all long – a part from the ethics of whether or not a museum should deaccession its major works – is really the lack of transparency.  And that’s one of the things that we spoke about with Felix.

Katie Wilson-Milne:  And it’s still the case here.

Steven Schindler:  We still know very little.  We don’t know which museum is buying the work.  We don’t know how much is being purchased for.  The only thing we know is that the museum is now seeking permission with the consent of the Attorney General to sell 40 of its most valuable works in his collection.

Katie Wilson-Milne:  And the AG’s stated reason for agreeing is that somehow through their yearlong investigation and interviews and document collection, they’ve come to the conclusion that the museum is in as bad financial shape as they say they are.

Steven Schindler:  So, I guess this means – if in fact the museum is successful, it does give a green light to museums, at least ones in Massachusetts to consider using its art collection as an asset.

Katie Wilson-Milne:  Yeah.  The court still has to approve this deal and they may or may not.  We don’t know what’s going to happen to the two appeals still pending in the appellate division, below the Supreme Judicial Court.  So, we will keep you posted.

Produced by Jackie Santos