DATELINE, October 31, 2007, Chicago
On October 22, 2007, the Court of Appeal, Fourth Circuit, in the State of Louisiana issued its opinion in the ongoing dispute between Tulane University and two descendants of Josephine Louise Newcomb. Newcomb made a gift in 1886 to Tulane University to establish the H. Sophie Newcomb Memorial College. Yes, that is 1886, not 1986. The descendants are unhappy that after more than...
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100 years, Tulane University decided to combine Newcomb College and Tulane College pursuant to Tulane's post-Katrina renewal plan.
On May 16, 2006, Ms. Howard and Ms. Smith, two great-great-nieces of Louise Newcomb, sued Tulane to stop the closing and consolidation of Newcomb College into a unified Newcomb-Tulane College. The district court that heard the request for a preliminary injunction denied the request. The court of appeals in a 2 to 1 decision upheld the denial.
At the outset, we note that in principle, we are troubled by restricted gifts, which should be apparent to our regular readers. In this case, the plaintiffs are telling us that someone who lived in 1886 could predict the future 120 years out. Do you think Louise Newcomb ever contemplated the civil rights movement? How about co-ed dorms? What about television, the Internet, telephones, computers, airplanes, or 100-story buildings? As a matter of policy, we need some limitations on restricted gifts, much like the once formidable rule against perpetuities. At some point, the dead shouldn't have a say. It is time that policymakers and legislators visit this question in a meaningful manner. We don't know the ages of these two great-great-nieces, but we would be very surprised if they were even alive when Louise Newcomb died in 1901. Yet, they somehow believe they have a right to intervene.
Not surprisingly, the appeals court's decision is a highly technical one. Louise Newcomb bequeathed the bulk of her estate to Tulane. According to Tulane, the two nieces therefore lacked standing because they were not legatees under Newcomb's will. The nieces argued that notwithstanding their status as non-legatees, they still have the right as would-be heirs (those who take pursuant to intestate succession) to sue on behalf of the Louise Newcomb to enforce a conditional gift. It is at this point that the court implicitly draws a distinction between a conditional gift and a restricted one. Here the opinion falls apart from a technical standpoint because the court looks to language in the gift instrument stating that Louise Newcomb did not intend to:
impose upon you restrictions which allow the intervention of any person or persons to control, regulate, or interfere with your disposition of this fund, which is committed fully and solely to your care and discretion with entire confidence in your fidelity and wisdom.
Taken literally, this language means that the gift did not impose restrictions. Immediately before this quote, the court rejects the notion that the gift provided for its revocation if the conditions/restrictions were not satisfied.
Under our analysis, the question is not whether there are conditions or restrictions on the use of the gift, but rather whether there are what we term requirements on how the funds are to be used (use requirements). We use the term requirements to free the analysis from the conditions/restrictions rubric which causes so much trouble. The fundamental question: What happens if the use requirements are not honored? Here is where the distinction between conditional and restricted gifts comes into play. If the failure to adhere to the requirements results under the terms of the gift in it being returned or revoked, then it is a conditional gift. If not, then the gift is a restricted gift. At that point, the charity must request either cy pres or equitable deviation from a court. If the charity decides to move forward without such a request, then it is up to the state's attorney general to contest the violations of the use requirements. In short, the distinction between conditional and restricted gifts is not one based on the existence of use requirements, but rather on what happens when those requirements are violated or must be altered. If the gift is conditional, the gift is either returned to the donor or some other specified person. On the other hand, if the gift is restricted, the donor and people other than the state's attorney general lack standing to enforce the use requirements.
Where the court's opinion becomes truly twisted is when the court refuses to apply the cy pres doctrine to the gift. Here the court returns to the conditional language because the Louisiana cy pres statute refers to "conditional" bequests or donations. But what the court is really saying is that the nieces lack standing because the terms of the gift do not provide for its revocation if the use requirements go unsatisfied. In short, we suspect that the result would have been different had the Louisiana attorney general (or equivalent) brought the action. To summarize, this was a case about standing that was couched in terms of conditional gifts.
The problem for the courts is deciding what to do when the donor fails to clearly state that the donor does not expect the funds to be returned in the event the use requirements are violated or cannot be adhere to. We would argue that there should be a strong presumption that the gift is, using the common parlance, a restricted rather than a conditional gift, with the result that the donor's descendants lack standing.
What is particularly troubling to us about this case is the fiction that Sophie Necomb College, in its most recent incarnation, constituted a women's college as Louis Newcomb would have contemplated it. We addressed this in an earlier post so we will simply quote from that post at this point:
Moreover, the facts pose a problem for anyone who wants to argue that the purpose was a freestanding college. First, even Mrs. Newcomb anticipated that Newcomb College would be a part of Tulane University, undercutting the very notion that a freestanding college was the primary purpose. Second, the deed of gift originally spoke of "white" women. A 1962 attempt to invalidate that provision in federal court failed. See Guillory v. Administrators of Tulane University, 212 F. Supp. 674 (E.D. La. 1962). However, at some point later on, the "white" limitation was removed. We might add that in the much celebrated case of Evans v. Abbney, 382 U.S. 296 (1966), the United States Supreme Court ordered the return of a city park that had been donated to a city subject to a restriction that it be for whites only. Although there are differences between the two situations, the eventual "removal" of the "white" restriction on women indicates that Mrs. Newcomb's original intent has been ignored before, at least suggesting that someone believes that the doctrine of cy pres is available to modernize Mrs. Newcomb's purposes clause.
We spoke with a representative from Newcomb College and were informed that women who in recent years wanted to pursue a letters and science program at Tulane University matriculated to Newcomb College and men seeking a similar degree matriculated to Tulane University. When women receive a degree, they receive a letters and sciences degree from "Newcomb College of Tulane University" and men receive a letters and sciences degree from Tulane University.
Newcomb College does offer several separate programs for women. One of these provides grant money permitting women to pursue special study projects. Newcomb also has its own library. However, in recent years, the separation has largely ended there. Newcomb students can live in co-ed dorm building which also house their male counterparts from Tulane. They share libraries with male Tulane students. Both share one core curriculum, taught by the same teachers in the same classrooms. In short, Newcomb College long ago ceased to be a freestanding college, if it ever truly was one. Men and women have had a shared educational experience for some time.
It is these facts that make the entire exercise ridiculous, futile, meaningless, and wasteful. Notwithstanding that fact, the plaintiffs have already announced an appeal to the Louisiana Supreme Court. We are willing to bet that the Louisiana Supreme Court will reach the same result as the district and appeals courts, relying on wooden legal doctrine to get there.
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