Smithers v. St. Luke’s-Roosevelt Hospital Center

281 A.D.2d 127 (2001)

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Nature of the Case

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Facts

P is the widow of R. Brinkley Smithers, a recovered alcoholic. Smithers announced his intention to make a gift to D of $10 million over time for the establishment of an alcoholism treatment center (the Gift). In his letter creating the gift, Smithers stated, 'Money from the $10 million grant will be supplied as needed. It is understood, however, that the detailed project plans and staff appointments must have my approval.' D agreed to use the Gift to expand its treatment of alcoholism to include, following five days of detoxification in the hospital, 'rehabilitation in a free-standing, controlled, uplifting and non-hospital environment,' that is, a 'therapeutic community' removed from the hospital setting. With $1 million from the first installment of the Gift, the Hospital purchased a building at 56 East 93rd Street in Manhattan to house the rehabilitation program, and in 1973 the Smithers Alcoholism Treatment and Training Center opened there. D sought to avoid its obligations under the terms of the Gift, and its relationship with D was an uneasy one. By July 31, 1978, Smithers wrote that D had 'not lived up to my letter of intent,' and that 'under the circumstances, no funds or stock will be forthcoming from me.' Only slightly more than half of the Gift had been made at that time. D induced Smithers to complete the Gift. According to P her husband had no intention of completing the Gift but agreed to the sale of the building to keep the Smithers Center afloat. D kept sucking up and assuring that it would carry out Smithers's intent if he made the balance of the Gift. Smithers bought into the story. Smither's wanted the final contribution be set aside as an endowment fund, (the 'Smithers Endowment Fund'). The income is to be used exclusively for the support of the Smithers Center, to the extent necessary for current operations, and any unused income remaining at the end of each calendar year is to be accumulated and added to principal. In late 1992, D asked Mrs. Smithers to organize a 'Silver Anniversary Gala,' in honor of her husband and herself, to raise funds for restoration of the building and a scholarship program for Smithers Center patients in need of financial assistance. From 1992 to March 1995, she and, until his death in January 1994, Smithers worked to organize the event, securing pledges for millions of dollars' worth of donated goods and services. In March 1995, just over a year after Smithers's death, D announced that it planned to move the Smithers Center into a hospital ward and sell the East 93rd Street building. P notified the Hospital of her objections to the proposed relocation of the program and demanded an accounting of the Smithers Center's finances. Eventually, in May 1995, the Hospital disclosed that it had been misappropriating monies from the Endowment Fund since before Smithers's death, transferring such monies to its general fund where they were used for purposes unrelated to the Smithers Center. P notified the Attorney General. The Attorney General demanded the return of these assets and in August 1995 D returned nearly $5 million to the Smithers Endowment Fund, although it did not restore the income lost on those funds during the intervening years. The Attorney General reached an out of court settlement with D and did not require D to return the entire proceeds of such a sale, because he found that, contrary to P's contention, the terms of the Gift did not preclude D from selling the building. P sued to enforce the conditions of the Gift and to obtain an accounting. P sought an injunction to permanently enjoin D from selling the building and relocating the Smithers Center. D moved to dismiss the complaint for lack of standing. The Attorney General also moved to dismiss for lack of standing and for failure to state a cause of action. The court granted the motions to dismiss and canceled the notice of pendency on the building. P then moved for a preliminary injunction pending appeal to prevent the sale of the building or, alternatively, to enjoin disbursement of the proceeds in the event of a sale. P appealed. While this appeal was pending, the Attorney General and D reached another agreement. The sole issue is whether P, on behalf of Smithers's estate, has standing to bring this action.