Appellate Division Declines to Apply the Doctrine of Cy Pres to Modify a Charitable Trust

In re Bierstadt Paintings Charitable Tr., Dated October 6, 1919, A-0529-20, 2021 WL 3057076 (N.J. Super. App. Div. July 20, 2021).

In 1919, J. Ackerman Coles (“Coles”), a well-known doctor, art collector, and philanthropist, gifted inter vivos two paintings to the City of Plainfield (“the City”).  The paintings by Albert Bierstadt are held in a charitable trust by the City and have been displayed in the City’s library in the municipal building.

Coles offered the two 8 x 12-foot masterpiece paintings to the City in a charitable trust with the City acting as trustee.  One of the paintings, a landscape, is entitled “Autumn in the Sierras.”  The other work, the one at issue, is a painting entitled “The Landing of Columbus,” which the City alleges depicts racial themes and undertones.  As such, the City instituted a lawsuit requesting modification of the trust so it could sell the paintings.

One hundred years after the paintings were donated, the City filed a petition seeking modification of the trust under the cy pres doctrine and N.J.S.A. 3B:31-29(a).  The City asserted that the Columbus painting contained racist implications and to display it in a public forum in a community comprised of mostly people of color would only continue to cause irreparable harm.  The City further alleged that the Columbus painting no longer provided an aesthetic enjoyment to the community and thus, the charitable trust was impractical.  The only remedy the City sought was judicial modification of this trust pursuant to the cy pres doctrine to enable the sale of both paintings.  The City proposed that the proceeds from the sale would be held in trust by Plainfield Promise, a charitable organization that would use the money to create a financial literacy program for the City’s youth, create a college scholarship fund for City residents, and establish and construct the “Plainfield Center of Excellence,” a recreational educational facility.  The City conceded that the Sierras work was not offensive, but asserted that the municipality did not have the economic resources to maintain and protect the highly valued painting.  In 2016, the Columbus painting was appraised at $15,000,000 and the Sierras was valued at $4,500,000.

During the litigation, the Attorney General’s Office, a necessary party, submitted a letter that they had no objection to the sale of the paintings, but questioned whether the intended plan to use the proceeds from the sale was in line with the grantor’s intent.  Thus, they left the ultimate decision on the modification of the trust, the sale of the paintings, and the use of the proceeds to the discretion of the court.  A beneficiary under Coles’s Will — the Scotch Plains Baptist Church — also submitted a letter to the court stating that if Coles was alive, he would not agree to the sale of the paintings as he wanted to honor his father with the display of the paintings.

The trial court, in an oral opinion, considered Coles’s Will, a 1986 memorandum from the City addressing the sale of the paintings, and a 1987 letter authorizing the exposition of the paintings in a museum.  The trial court found that there was no evidence that Coles would have intended to have the paintings sold.  In fact, it appeared that there was evidence that his specific intent was evidenced by the way he devised the paintings with specific instructions, and also the way he donated items of value from the Coles family, which simply could not have been liquidated.  The trial court found that the City was permitted to relocate the paintings or donate them to a museum, but denied the City’s application to modify the charitable trust and sell the paintings.  The City appealed, asserting that the trial court erred by failing to modify the charitable trust to allow it to sell the two paintings and use the proceeds to fund Plainfield Promise.

The Appellate Division affirmed the trial court decision, finding that in applying the cy pres doctrine, the court must make two determinations:  (1) determining if accomplishment of the particular purpose of the trust has become impossible, impractical, or illegal; and (2) if the court makes such a finding, to apply the trust funds to a charitable purpose as nearly as possible to the particular purpose of the settlor if there was a general intent to promote charity.  The trial court had rejected the City’s argument that it was impractical to retain the paintings, stating that the City does not sufficiently demonstrate why the paintings could not be placed in a different location, such as a museum.  The Appellate Division agreed, finding that they were not convinced by the City’s argument that the current social perceptions of Columbus rendered the continued ownership of the paintings impractical.  The City was free to display the paintings in any location it chose.  The Appellate Division also noted that the appraised value of the paintings reflected how highly coveted the works of art were.

Although they did not need to address the second prong, finding that City had not demonstrated the accomplishment of the trust was impractical, the court commented on the second prong of the cy pres analysis briefly.  If the City was able to establish the impracticability test, the paintings could only be sold if a court finds that Coles originally donated with the general intent to promote charity.  The Appellate Division found that the City had not offered evidence of Coles’s general charitable intent, for instance, “if Coles intended to support education in the community, as the City asserts, he would likely have made a monetary donation or bequest, not an inter vivos gift of two masterpiece paintings valued by him higher than any dollar amount.”