Rinaldo Del Gallo, IIIMuseum's judgment is bottom line

Posted
PITTSFIELD — Until events of late, I had never heard of the word "deaccession." The recent controversy about the Berkshire Museum, a story that has made its way into the Boston Globe and New York Times, changed all that. "Deaccession" is basically a $10 word for selling off part of a museum's collections, and it's controversial.

Van Shields, a man that I know personally and respect, undoubtedly knows of the controversy that happened when the Delaware Art Museum deaccessioned some of its art. Making matters worse, when the Delaware Art Museum was to sell "Isabella and the Pot of Basil," Christie's auction house expected the work to fetch between $8.4 million and $13.4 million. In fact, the bidding stalled out at a disappointing $4.25 million. Perhaps the museum should consider "reserves" which command a minimum price.

There are various "ethical codes" of museum societies, such as the American Alliance of Museums and the Association of Art Museum Directors. In a joint statement, both organizations said, "One of the most fundamental and longstanding principles of the museum field is that a collection is held in the public trust and must not be treated as a disposable financial asset." This may be an aspiration of the profession, and perhaps part of its code of ethics, but it is not binding law. Nonetheless, violating these canons could lead to sanctions, which in practicality would mean no loans from other museums that belong to these associations. That said, it is all too human to want to bail the water out of a sinking boat, and not existing might be too high a price for not being anathema.

Unethical vs. moral

While deaccession to pay off bills is a no-no, deaccession is not prohibited even by their own ethical codes in other situations. Under these ethical codes, "proceeds from a deaccessioned work are [to be] used only to acquire other works of art — the proceeds are never used as operating funds, to build a general endowment, or for any other expenses."

In this world of ethics, it's OK to sell off works you own to acquire capital to purchase other "superior" works, thin "redundant" works, or focus on a particular genre of art. For instance, in 1970, when the New York Metropolitan Museum of Art learned that Velazquez's portrait of Juan de Pareja was up for auction, it sold off pieces of its modern art collection bequeathed by Adelaide de Groot, a practice which is considered acceptable. It is not inherently obvious why selling art to stay financially viable is unethical, while selling donated art for "better" art is moral.

How will this case turn out if anybody sues the Berkshire Museum under some "breach of a fiduciary duty," "waste of corporate assets," a violation of the museum's charter, or some like theory? I suspect that if this case were ever litigated, it will come out the way it did in Dennis v. Buffalo Fine Arts Academy where the museum won. Unless the purpose of the corporation has some surprisingly limited scope in its corporate charter (articles of incorporation) which is highly unlikely, the deaccession will not be an "ultra vires" act, another $10 expression meaning an act outside the scope of the corporate charter.

Nor is there likely to be some type of "fiduciary obligation" that a court will recognize. If one gives something to a nonprofit with no strings attached, once they alienate the property, they lose all control. If interested parties want to stop the Berkshire Museum from selling the art, they had better find some covenants and restrictions that went with the donations — if the donations were given free and clear and outright, I doubt there is much that can be done to stop it in court.

Business judgment rule

The Board of Directors of the Berkshire Museum would likely be subject only to the business judgment rule. As the Dennis court put it, "The business judgment rule applies to both profit and nonprofit corporations, and states that those actions taken by a board of directors in good faith in the exercise of honest judgment and within legitimate corporate purposes cannot be overturned by a court." It is a highly deferential standard and if the paintings are sold in a commercially reasonable manner and used to further the mission of the Berkshire Museum, it will not be violated. But even in the unlikely event plaintiffs were able to convince a court to use the more taxing "breach of a fiduciary obligation rule" under a "public trust" theory (which I have not found in any reported deaccession case), it would be hard to convince a court that it was a breach of a fiduciary obligation to sell valuable pieces of artwork when confronted with a possible financial implosion jeopardizing ongoing viability.

Rinaldo Del Gallo, III is a local attorney and columnist.


TALK TO US

If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.



Powered by Creative Circle Media Solutions