ALI-ABA Course of Study Legal Issues in Museum Administration
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1 137 ALI-ABA Course of Study Legal Issues in Museum Administration Cosponsored by The Smithsonian Institution with the cooperation of the American Association of Museums April 1-3, 2009 Boston, Massachusetts Exclusive Standing of the Attorney General To Enforce Charitable Gifts A Massachusetts Regulator's View By Johanna Soris Office of the Massachusetts Attorney General Boston, Massachusetts
2 138 2
3 139 EXCLUSIVE STANDING OF THE ATTORNEY GENERAL TO ENFORCE CHARITABLE GIFTS A MASSACHUSETTS REGULATOR S VIEW The first part of this study outline discusses cases addressing the Attorney General s exclusive standing in Massachusetts including efforts by the Office of the Attorney General to maintain its exclusive jurisdiction while accommodating those individuals or groups without standing to make their views heard by the court. The second part of the outline is intended to provide readers with insight into the Massachusetts Attorney General s office decisions to affirmatively litigate enforcement actions and to contrast affirmative litigation with cases in which the Attorney General is named as a necessary party, but does not take an active role. I. Donor and Private Party Standing To Enforce Restricted Gifts to Charitable Organizations. A. Massachusetts law follows the traditional rule that the Attorney General has exclusive standing to enforce the public interest in seeing that charitable beneficial interests are properly carried out. Yeshiva Achei Tmimim Lubavitz of Worcester, Inc. et. al. and Thomas F. Reilly, Attorney General for the Commonwealth of Massachusetts v. Carl Baylis, Trustee of the Max Fallman Revocable Trust 66 Mass.App.Ct. 1103, 2006 WL (Mass.App.Ct.) 845 N.E.2d 1223, 2006 WL (Mass.App.Ct.) In this case the donor created a trust under a will for the purpose of granting scholarships to graduates of Yeshiva Achei Tmimim Lubavitz of Worcester, Inc. ( Yeshiva ). Yeshiva brought suit against the trustee of the Max Fallman Revocable Trust (trust) alleging that the trustee had impermissibly limited the class of beneficiaries entitled to scholarships by inserting language that limited recipients to those Yeshiva students who had first obtained a bachelor s degree and were pursuing graduate studies. Yeshiva filed a complaint for declaratory judgment asking the Superior Court for a declaration that the trust unambiguously contained no requirement for obtaining a bachelor s degree. The Superior court held a trial. At end of trial the Court dismissed Yeshiva for lack of standing to pursue the case on behalf of the beneficiaries. Yeshiva asked that the Attorney General to be joined as a party under MRCP 19a. The Attorney General requested joinder as a necessary party and stated that he would take no further action until the judge concluded his finding of facts and rulings of law. The Superior Court substituted the Attorney General as a party plaintiff and ruled in favor of the Attorney General on the proper trust language. The Trustee appealed. The Appeals Court stated: The Superior court was without jurisdiction to hear the case brought by Yeshiva; Yeshiva and its officers were not the beneficiaries of the Fallman trust and therefore lacked standing citing Weaver v. Wood, 425 Mass. 270, 275 (1997) cert. denied, 522 U.S (1998) 1
4 140 The case discusses at length the ability of the Attorney General to join in an action at any stage of litigation when his mandate to enforce charitable trusts is implicated. The Attorney General in his brief re-asserted the generally recognized common law rule that the Attorney General has exclusive standing to enforce the rights of a charity s beneficiaries to correct abuses in the administration of a public charity. Massachusetts does not recognize a sub-trustee (Yeshiva) as having standing to sue an original trustee. In re Boston Regional Medical Center, Inc., 328 F. Supp.2d 130 (D. Mass 2004) The exclusive jurisdiction of the Attorney General in Massachusetts was examined extensively in this bankruptcy action involving Boston Regional Medical Center. The Attorney General was not a party to this case. The committee of unsecured creditors of the hospital initiated an action that claimed that certain compensated officers of the hospital had breached their fiduciary duties by putting the interests of the affiliate church ahead of those of the hospital in choosing which acquisition offer to accept. In re Boston Regional Medical Center, Inc., at 136 ( BRMC ). The Court noted that the Attorney General s standing to enforce the rights of the beneficiaries of charitable trusts is, as the Supreme Judicial Court has often said, exclusive. However, it is exclusive only of other individuals who claim to represent the trust s beneficiaries. It is not exclusive of the standing of the trust itself to seek redress for injuries to the trust. The distinct interest may be that of a fiduciary or of a beneficiary with a separate interest from the general public s interest as a beneficiary. See, BRMC at Marion R. Fremont-Smith, Governing Nonprofit Organizations: Federal and State Law Regulation 334 (2004); Bogert & Bogert, at The Court stated that because the represented interests are conceptually distinct, the parties asserting those interests are viewed as supplementing, and not replacing each other when they do not bring suit concurrently. B. The Massachusetts Attorney General s Efforts to Include Public Participation in Enforcement Actions Wheaton College v. James M. Shannon Defacto Intervention by Donors Even though the case law of Massachusetts strongly supports the exclusive jurisdiction of the Attorney General to enforce charitable trusts, from time to time a case will arise that calls into question the ability of the Attorney General to represent the interest of all members of the public. The Office of the Attorney General confronted this issue in 1988 in a trial court case, Wheaton College v. James M. Shannon. Wheaton College ( Wheaton ) raised $13.5 million during Wheaton s Sesquicentennial capital campaign. The slogan on the fundraising literature was about Wheaton s ability to educate women in the 21 st century. Shortly after the end of the campaign Wheaton announced its intention to become a coeducational facility. Donors, parents, alumnus and students were dismayed. The Attorney General kept in constant contact with representatives of these groups. 2
5 141 The Attorney General took the position that co-education was fundamentally different from single sex education and proposed to Wheaton s legal representatives that it should present a case to the court in which it presented evidence that Wheaton s existence as a single sex college had become impossible or impracticable and therefore under the judicial doctrine of cy pres, Wheaton should be allowed to become coeducational. Despite the Attorney General s open door policy for members of the public who claimed a particular interest in this change, approximately twenty donors moved to intervene and hired counsel to represent them. The single justice did not rule on intervention; however he sent the case to probate court for fact finding, and treated would be interveners as parties. As a settlement, Wheaton agreed to notify donors to the Sesquicentennial Campaign of an option to restrict a donation for the use of women, or to allow a donation to be used for coeducational purposes, or to request a refund. It was gratifying to the Office, in its effort to carry out its mandate to represent the public interest in the due application of charitable funds, that very few donors restricted their gifts to women or asked for a refund. The Isabella Stewart Gardner Museum, Inc., v. James M. Shannon Public as Amicus Curiae In 1988 The Isabella Stewart Gardner Museum ( Museum ) approached the Attorney General with a plan to file a complaint with the probate court to allow the Museum to deviate from a provision in the will of Isabella Stewart Gardner. Specifically the provision called for the fourth floor of the Gardner Museum to be used by the director as his residence. The Museum stated a desperate need for new space for conservation laboratories. The Museum contended that the best solution to the space problem would be to use the fourth floor as the current director was resigning his position leaving the fourth floor vacant. Professor Ann Higonnet of Wellesley College opposed the Museum s interpretation of the will as allowing the use of the fourth floor for other than the director s apartment. She engaged legal counsel and she moved to intervene in the Museum s complaint for deviation. The Museum moved to preclude Higonnet s appearance. Thereafter, the Attorney General agreed to Higonnet s filing a brief as amicus curiae. The court was approving of this measure as Professor Higonnet was an art historian and could have been in a position to provide assistance to the court. The court decided the case in favor of the Museum and issued a Memorandum and Order. 3
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