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Mixed Ruling in Tulane Lawsuit on 'Donor Intent'
Louisiana law gives donors and their heirs the right to sue to colleges and other nonprofit groups that fail to carry out terms of their gifts, the state's Supreme Court ruled Tuesday. Advocates for the "donor rights" movement gaining traction in the nonprofit world heralded the ruling, which came in a case involving Tulane University's decision, in the wake of Hurricane Katrina, to fold its longtime stand-alone women's college and other undergraduate units into one unified college.
Tuesday's decision was far from a complete victory for the descendants of Josephine Louise Newcomb, whose 1886 gift of $100,000 and subsequent donations established the women's college at Tulane that bore the name of her deceased daughter, Sophie: The justices of the Louisiana high court sent the case back to a state trial court to decide whether the plaintiffs, Parma Matthis Howard and Jane Matthis Smith, qualify under Louisiana law's definition of "would-be heirs or legatees" who have standing to sue.
It was that action on which Tulane University focused in its response to the court's ruling, which followed two lower court rulings that had backed the university. "Today's decision is based on a narrow procedural issue related to the standing of the plaintiffs," the university said in a prepared statement. "The court has required the plaintiffs to prove they are in fact heirs of Josephine Louise Newcomb who have a right to bring this lawsuit. Tulane University remains confident that our actions regarding women's education at Tulane are consistent with Mrs. Newcomb's wishes and that her will imposes no conditions."
But the plaintiffs saw Tuesday's divided ruling, from which two justices dissented, very differently. They noted that the majority opinion, after carefully dissecting two centuries of Louisiana law (including excerpts in French from the Code Napoleon, on which it is based), concluded that "heirs and universal legatees have a right of action to seek enforcement of an obligation imposed by a charge or condition to which a donation is subjected. The right accrues to them in their capacity as heirs or legatees, i.e., successors, and the rights of a successor, including his right to sue on behalf of an obligee to enforce a conditional donation, are transmitted to his own successors at his death..."
Tulane officials, in their brief to the Louisiana Supreme Court opposing the plaintiffs' request that the justices hear the case, had argued that under state law, "would-be heirs lack standing to sue to enforce conditions in a will or gift."
The court's ruling to the contrary "is an important decision for supporters of Louisiana’s nonprofit sector and for nonprofit managers alike -- affirming the right of donors and philanthropists and their heirs to challenge the possible improper use of designated charitable gifts,” said Renee Seblatnigg, president of the Future of Newcomb College, a group of donors who are financing the lawsuit.
“While the case was sent back to the lower court for adjudication, the Supreme Court of Louisiana has stated in no uncertain terms that the rights of donors will be protected in this state, that the descendants of donors have a right and obligation to see that gift terms are observed, and that officials of nonprofit organizations can be challenged and held accountable when they misuse designated funds, such as the Newcomb endowment.”
Newcomb's status as a degree-granting women's college was among the casualties of Tulane administrators' plan, announced late in 2005 and carried out in 2006, to restructure the university in the wake of the devastation New Orleans and most of its colleges suffered in Hurricanes Katrina and Rita. (Tulane's engineering college also vanished in the reorganization, which administrators characterized as essential for the university's recovery.) Supporters of the women's college sued to stop the disappearance of the freestanding entity, which was the first coordinate women's college in the country, preceding Barnard and Radcliffe. Once that effort was rebuffed, they sought to have a separate women's college reconstituted.
Most of the country's higher education groups have rallied behind Tulane, filing friend of the court briefs arguing that courts should not intervene on behalf of donors or others to strip universities of the right to make major curricular and other decisions. Academic and other groups have also discouraged the Louisiana court from giving momentum to the fledgling "donor rights" movement by granting to those challenging Tulane the right to second guess their relatives' "absolute bequest" that expressed "confidence" in the university's judgment in how to carry out the gift.
"[T]o grant [the plaintiffs'] requested remedy, this Court must reverse more than 150 years of Louisiana jurisprudence ... and expose Louisiana colleges and universities to an ocean of potential claims by distant descendants with no connection to the institution or the donor," the American Council on Education wrote in a brief signed by numerous other college groups. "This court should reject [the] attempt to engraft an onerous obligation on a will executed 110 years ago and to use that obligation to control the academic decisionmaking at a nationally prominent university in Louisiana coping with 'the total devastation of property, community and social structures' that occurred after Hurricane Katrina."
The case now returns to a state district court to decide whether the plaintiffs can, as the Supreme Court wrote, "more accurately establish their standing as successors, or would-be heirs, of Mrs. Newcomb."
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