Editors’ Note: Brian Galle weighs in on the misunderstood legacy of heiress Adele Smithers, who passed away last week.
HistPhil readers will have noticed the passing last week of Adele Smithers, the heiress and careful monitor of the charitable trust established by her late husband, R. Brinkley. The New York Times obit describes her as having “empowered charity benefactors” through her lawsuit against St. Luke’s-St. Roosevelt hospital, which she saw as misusing her husband’s restricted funds. That lawsuit, the Times said, gave rise to a “groundbreaking legal development.” Not quite. What Adele did instead was remind us all of New York law that had been around since at least the turn of the 20th Century.
Let’s not start quite that far back. In 1998, Adele sued SL-SR, and lost in a New York trial court. That court declared that, in New York, donors of charitable trusts had no standing to sue to enforce the terms of their restricted gifts. That decision was unpublished, and we know little now about what it said. In 2001, however, an intermediate court of appeals reversed the trial court, declaring that donors (and the administrators of their estate) could indeed sue. This was the Smithers decision to which the Times obit alludes.
It’s true that other commentators, including at least two of the sharpest commentators in the trusts & estates field, have reacted to 2001 Smithers decision as though it were a novel holding. I was in law school at the time, so I can’t say I would have thought differently. But with the benefit of hindsight, the claims of novelty look a little puzzling. The 2001 Smithers decision itself declared that the right of donors to sue was “longstanding” in New York, citing a decision by New York’s highest court from 1900.
Perhaps what drew the attention of commentators was that in 2001 standing to sue was, while not unheard of, certainly a rarity. Probably only three or four (depending on how one reads a mid-1960’s California decision) other states allowed donors to sue to enforce the terms of their gifts at that time. The Restatement of Trusts had long declared that donors had no such power (though the Restatement mysteriously failed to acknowledge a handful of contrary judicial decisions). Several state courts relied on the Restatement over their own precedent, as apparently occurred repeatedly in New Jersey, where 19th-Century authority granting the right to sue was ignored by mid-20th Century courts. Similarly, the Connecticut Supreme Court had declared in 1997 that at common law donors lacked standing, neglecting the New York, New Jersey, and California precedents (Connecticut’s court made the classic bad-lawyer mistake of citing, for support, another NY case that used some of the same words–“standing” and “donor” both appear, albeit not next to each other–but wasn’t about the same issue at all).
You don’t have to take my word for it; you can also look at data I compiled. I have a long paper available on-line examining the impact of donor standing on the behavior of donors and the organizations they support (short version: standing increases gifts to private foundations, and reduces their overhead ratio, but I can’t measure any effects at public charities). In the paper, I test whether donors reacted to the 1998 and 2001 New York decisions the same way that they reacted to other forms of judicially-declared standing. And, indeed, what I find is consistent with my theory that the ultimate Smithers outcome was not news: donors appear to have been surprised by the 1998 decision, then reassured that they were right all along when the 2001 decision came down.
Still, my paper can be understood as measuring a different aspect of Adele’s legacy. It seems likely that the attention the Smithers litigation garnered (together with other major litigation of that time, such as the Robertsons’ suit against Princeton) helped to propel the recent spread of donor standing, which now is the law in more than half the states. And that’s probably helped to encourage donors around the country to open their wallets a little wider.
Brian Galle is a professor of law at Georgetown University Law Center, where he teaches courses on taxation, law & economics, and nonprofit organizations. He also blogs at https://medium.com/whatever-source-derived.