Deal or No Deal?

Charles and Thomas Danziger are the lead partners in the New York firm Danziger, Danziger & Muro, specializing in art law. Visit their website www.danziger.com.

Georgia O'Keeffe Henri de Toulouse-Lautrec Edouard Vuillard Marsden Hartley George Bellows Edgar Degas Pierre Auguste Renoir Edouard Manet

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Although we tend to view professional conferences as occupational hazards (like long hours and short-tempered opposing counsel), the one on the sale of museum property sounded promising. Deaccessioning is a hot topic, thanks to the need for increasingly cash-strapped museums to find ways to balance their budgets while trying to stay out of the papers—or court. Depending on where one sits, deaccessioning is either the unethical removal and sale of public treasures or a useful means of refining a museum’s collection.

As it happened, we were sitting in the hot seats at the conference. To our right was Renée, a London ceramics collector; to our left was Joel, the director of a struggling local museum. The auditorium lights went down, and the first speaker observed that American museums, unlike their European counterparts, often improve their collections by selling some works to purchase others.

Renée leaned heavily across us and poked Joel’s shoulder: “Are any of your museum’s Victorian vases for sale?”   

“Perhaps,” Joel whispered back, “if the transaction is quick and quiet.” Joel was so desperate to keep his museum afloat that he’d consider raffling a Raphael, but he didn’t want to draw attention to his institution’s plight.  

“American museums can always freely sell their works,” he told Renée. Typically, a deaccessioning can proceed if a museum board approves it. Museums can end up in court, however, if the sale is questioned by the state’s attorney general. In most states, it’s the attorney general who represents the public interest and who may—but in practice almost never does—sue to block a museum sale that, say, violates a state statute or the institution’s own charter.

Another scenario in which a U.S. museum cannot divest itself of objects involves donations made on the condition that they not be sold. This issue was recently faced by the financially troubled Fisk University in Nashville, Tennessee. It wanted to sell two valuable paintings, Georgia O’Keeffe’s Radiator Building—Night, New York and Marsden Hartley’s Painting No. 3, from a collection of 101 works that had been donated in 1949 by Georgia O’Keeffe with the stipulation that they be made available to the public for study. But in February 2008, a Tennessee Chancery Court judge enjoined Fisk from selling the pictures, which had been kept in storage since late 2005.

As part of the legal battle, the Georgia O’Keeffe Museum, which represents the artist’s estate, tried to wrest the collection from Fisk, arguing that the attempted sale violated the terms of the gift. The court ruled that Fisk had indeed violated O’Keeffe’s wishes but could nonetheless keep the works if they came out of storage by October 6, 2008. Fisk says it will appeal the judge’s order.

Joel leaned back across us and quietly assured Renée that since his museum’s vases had been purchased through an unrestricted general fund, he could safely dispose of them. He added that the proceeds would “benefit the collection.”

“So the money from the sale will go only toward buying new objects?” we whispered helpfully. We reminded him that the American Association of Museums (AAM) prohibits the use of deaccessioning proceeds for “anything other than acquisition or direct care of collections” and that the Association of Art Museum Directors (AAMD) requires that the funds be “used only to acquire other works of art.”

Unfortunately, these ethical codes have no legal teeth, and selling objects to raise money for general operating expenses is not necessarily illegal. There is little case law on the legality of deaccessioning to generate operating funds, and courts have generally approved such transactions if they are in the “public interest.”

Moreover, there are many examples of museums selling works to fund operations—invariably to the dismay of the larger museum community, which views the works as held in trust for the public. Consider Virginia’s Randolph College, which last November sought to reduce a large operating deficit by consigning to Christie’s four pictures from its Maier Museum of Art, including an important George Bellows painting, Men of the Docks, estimated at $25 million to $35 million. A local group succeeded in temporarily blocking the sale, contending, among other things, that it was unethical and violated donor intent. The plaintiffs eventually withdrew the case because they couldn’t raise the $1 million bond required to keep the injunction in place. And since Randolph, unlike Fisk, is not legally restricted from disposing of works, it may soon decide to proceed with the sale.