935 N.W.2d 581
Iowa2019Background
- In 1976 the Eugene C. Eppley Foundation donated seven Grant Wood panels to Coe College, stating they "be given to the Coe College and that this would be their permanent home, hanging on the walls of Stewart Memorial Library," and describing a commemorative plaque and bust.
- The Eppley Foundation was dissolved in 1977 and no successor donor exists. The plaque remains in the library with the paintings.
- Coe treated the paintings as unrestricted assets from 1976–2016; an auditor reclassified them as permanently restricted in 2016, reducing the college’s endowment valuation and prompting Coe to seek declaratory relief and, if necessary, relief from any restrictions.
- The district court concluded the gift imposed a permanent restriction on alienation (the paintings must remain in the library) and denied modification under Iowa’s UPMIFA and cy pres.
- On de novo review, the Iowa Supreme Court affirmed: it held the gift language created a restriction, UPMIFA did not authorize modification because the paintings are program-related assets (not an institutional fund), and cy pres relief was premature on the stipulated record because the restriction was not yet impracticable or impossible to fulfill.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1976 gift imposed a restriction on alienation ("permanent home") | "Permanent home" only contrasted with the prior temporary loan; the gift was unrestricted and Coe may sell or alienate the paintings | The gift’s language and the paired memorial plaque show donor intent that the paintings remain permanently housed at Coe’s Stewart Memorial Library | The court held the gift imposed a restriction: "permanent home" means the paintings must be housed at Coe and not alienated |
| Whether UPMIFA (Iowa Code § 540A.106) permits judicial modification of the restriction | Even if restricted, UPMIFA should allow modification because the gift is an institutional asset held by a college | The paintings are program-related assets (held to accomplish a charitable purpose), so UPMIFA’s institutional-fund modification provisions do not apply | The court held UPMIFA does not apply because the paintings are program-related assets, not an "institutional fund," so statutory modification under §540A.106 is unavailable |
| Whether cy pres permits modification or removal of the restriction | Coe argued modification or lifting was appropriate because reclassification harmed its endowment and financial reporting | Attorney General argued cy pres is unavailable absent showing the specific charitable purpose has become impracticable, unlawful, or impossible | The court held cy pres is not appropriate on this record: no showing the donor’s specific purpose (display and memorial) is impracticable or impossible; relief may be possible on a fuller record showing substantial impairment |
| Whether temporary loans or exhibitions violate the restriction | Coe sought flexibility to loan paintings for exhibitions and fundraising | AG emphasized the donor required them to hang in Stewart Library | The court affirmed that temporary loans to other educational/charitable institutions are permissible and consistent with donor intent; permanent alienation is barred |
Key Cases Cited
- Lupton v. Leander Clark Coll., 187 N.W. 496 (Iowa 1922) (interpreting donor intent and restrictions on endowment gifts)
- Sisters of Mercy of Cedar Rapids v. Lightner, 274 N.W. 86 (Iowa 1937) (donor may impose restraints on alienation for charitable gifts)
- Kolb v. City of Storm Lake, 736 N.W.2d 546 (Iowa 2007) (application of cy pres requires specific purpose to be impracticable, unlawful, or impossible)
- In re Tr. of Rothrock, 452 N.W.2d 403 (Iowa 1990) (cy pres as a liberal rule to effectuate donor intent)
- Simmons v. Parsons Coll., 256 N.W.2d 225 (Iowa 1977) (tripartite test for cy pres: charitable trust, specific purpose failed, general charitable intent)
- Museum of Fine Arts v. Beland, 735 N.E.2d 1248 (Mass. 2000) (interpreting "permanently and inalienably" as a clear bar to sale)
- Lord v. Soc’y for the Preservation of New England Antiquities, 639 A.2d 623 (Me. 1994) (preference language may be insufficient to create a legally binding restriction)
- Georgia O’Keeffe Found. v. Fisk Univ., 312 S.W.3d 1 (Tenn. Ct. App. 2009) (cy pres analysis remanded where sale was sought and no express divesting clause existed)
- Clarke Cty. Reservoir Comm’n v. Robins Revocable Tr., 862 N.W.2d 166 (Iowa 2015) (standards for appellate review of declaratory judgment/equitable actions)