Realty Law Digest
Land Use—Donor Recognition Text to Be Placed in a Park—Public Interest in Enforcing Recognition Contracts Outweighs Shifting Aesthetic Concerns—Doctrine of Impracticability or Impossibility
This decision involves the issue of whether "aesthetic considerations trump a carefully considered and crafted contractual provision dictating the specific location of an inscription on a work of art?" The Appellate Division, First Department (court) held that the contractual provision must be enforced.
The subject dispute involved a park which commemorates Franklin D. Roosevelt's famous "Four Freedoms" speech. For more than 30 years, efforts to develop the park had been unsuccessful. In 2005, at the urging of officers of a foundation, "the Franklin & Eleanor Roosevelt Institute formed the Franklin D. Roosevelt Four Freedoms Park, LLC (LLC) and undertook to raise the funds necessary to complete the Park." In March 2010, the foundation contracted to give the LLC a $2.5 million grant. In exchange for the grant, the LLC contractually agreed that a "Recognition Text" (text) would be placed "at a specific location near a bust of FDR…which was to be housed in the park."
The foundation had been among the early donors to the project and its contribution had been made "at a time when there remained considerable doubt as to whether the LLC could raise the funds necessary to complete the project." Based on the grant, the LLC qualified "for essential public funding from New York State and New York City, after which the LLC was able to raise the necessary funds to complete the Park." The park was "essentially completed." However, the LLC reneged on its obligation to engrave the text at the specified location, citing aesthetic concerns.
The terms of the grant had been embodied in a series of agreements. The agreements detailed "the LLC's obligation to engrave specific text recognizing the Foundation and its founders…on a…granite wall" near a bronze bust of FDR. The text was to be "low to the ground, in small font less than two inches high along the bottom of a solid 12 foot by 12 foot granite wall…." The agreements vested the foundation with the right in its sole discretion, to terminate the grant agreement under certain conditions and specified "the precise location and wording of the '…Text,' as well as requirements for the carving and maintenance of the inscription." The agreements further provided that the foundation would be entitled to specific performance in the event of a breach by the LLC.
The LLC pressured the foundation to consent to relocate the text to a different part of the Park, "where other donors' names were going to be engraved." The foundation declined and insisted that the LLC comply with the agreements. The LLC refused to perform, stating that its "architects and consultants have told us" that incorporating the text at the agreed upon location was not "the 'best aesthetic.'" The LLC offered to return the foundation's money. The foundation thereafter commenced the subject proceeding, "seeking a declaration that the LLC breached its contractual obligations, and an order directing specific performance of the [agreements]."
The LLC asserted that compliance with the agreements was "totally inconsistent with the objective of the Foundation's own gift, and that this was a case that 'cries out for equitable relief, not tipping on the side of a selfish private interest, but on the side of the public in a lasting historical monument.'" The LLC's "art expert" asserted that to place the text at the specified location would be "akin to signing a donor's name within the frame of [a] great painting, something…that no donor would ever insist on…doing to a great Picasso or Van Gogh canvas upon donating such to a museum." The LLC also contended that the text "would be inappropriate" and inconsistent with the design and artistic intention of the park's original highly respected architect. Thus, the LLC claimed that compliance with the agreements would damage the "design, the 'aesthetic purity of the space, and the purpose of the Park.'"
The court explained that "[a]esthetic considerations extraneous to a contract cannot trump its terms." The court found that "the LLC breached its contractual obligations to the Foundation" and the trial court had "properly ordered specific performance by directing the engraving of the…Text in accordance with the [agreements]…." The court also noted that "specific performance is appropriate in situations involving unique articles of property 'having a special and unascertainable quality'…."
The LLC had raised, for the first time on appeal, the defense of impracticability. The court found that "the LLC's changed aesthetic vision did not render its performance impracticable or impossible." Under the doctrine of "impossibility or impracticability," performance is excused "only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible" and that "the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract…." Here, the LLC could comply with the contract. The LLC chose not to do so because "its 'advisors' believe, on aesthetic grounds, that there should be no such engraving" at the location specified in the agreements.
The court reasoned that "[t]he time for the LLC to have voiced its aesthetic concerns was at the time the [agreements] [were] negotiated, not after it had 'accepted and spent the Foundation's money….'" Moreover, the court rejected the LLC's argument that there was a public interest in "protecting the aesthetics of the Park." The court explained that "the public interest in enforcing donor recognition agreements outweighs the shifting aesthetic concerns regarding the LLC…." The court reasoned that "the failure 'to protect the interest of donors' risks the result that 'donors may become more hesitant to contribute at all.'" Furthermore, the court stated that "a donor's desire to perpetuate his name as a benefactor of a particular charitable institution and humankind is not a selfish one. These desires are deeply ingrained in human nature and are effective motivating forces in donations of this character…."