"Some unutterably depressing reading"

Felix Salmon takes a look at the Detroit Proposal for Creditors. He summarizes "the litany of municipal woes," including a "crumbling" infrastructure (40% of its street lights are out of order).  And he points out that among the big losers here are going to be Detroit's municipal retirees, whose pension payments are going to be cut.

Still, he says the Michigan AG is "absolutely right" that the DIA's collection "is off-limits when it comes to satisfying the obligations of the City of Detroit."  It's not clear to me whether he means that as a statement about what the law is, or what he would like to see happen.

The other 90 cents are held in the public trust

Detroit proposes that its creditors receive "less than 10 cents on the dollar."

"[Michigan Attorney General] Bill Schuette says in a formal opinion released Thursday that the artwork 'is held by the City of Detroit in charitable trust for the people of Michigan.'"

Really, isn't that convenient?  As I've said, I've got a better idea:  why stop at the art?  Why not declare that all of the City's assets are held in trust for the people and thus not available to pay back creditors?  Where do I send my bill?

"There ought to be some type of criteria developed to articulate the public interest and policy goals with regards to assets"

Interesting post re Detroit by "urban analyst" Aaron Renn:

"When it comes to asset disposals, perhaps cities should in fact look to museums. They are organizations that hold precious assets in trust with the idea that they will be cared for in perpetuity. However, there’s also a recognition that disposing of artwork can sometimes be appropriate, if safeguards are put in place.  As one example of how to do it right, the Indianapolis Museum of Art developed a formal deaccessioning policy that includes reasons for disposing of art work, the process for doing it, and restrictions on the use of proceeds. They also maintain a deaccessioning database where the public can review and comment on artwork that is proposed to be disposed of, and see which works were sold and where the proceeds actually went."

Headline of the Day

"Banana Mural Riles Indiana Town."

"There is ... a way Detroit could raise money and share its art with other cities without relinquishing its treasures altogether: ..."

"... a time share."

Virginia Postrel responds to some of the criticism her column on the DIA received last week.  This time, she looks to the Fisk-Crystal Bridges partnership as a model:

"Finding a partner or partners to buy shares in individual works or selected portions of the DIA’s collection would give the city a way to liquidate some of its assets without actually losing them."

As I've noted before, jointly-held work is generally seen as a good thing, but was outweighed in the Fisk case by the deaccessioning taboo.  By the "logic" of the Deaccession Police, if Museum A and Museum B chip in and buy some work, that's great, a win-win.  But if Museum A buys it and later sells half to Museum B (resulting in the same state of affairs as in the first example), that's repulsive, Stalinesque, etc.  Go figure.

The Art Market Monitor says that "as an idea, it actually doesn’t go quite far enough":

"[T]he BBC has pointed to a growing trend in the UK’s formerly wealthy industrial North where works of art accumulated during the heyday of English manufacturing—like Detroit’s cultural acquisitions when it ruled the automotive industry—are being organized into travelling exhibitions that produce enough in fees to help maintain the museums."

Tyler Cowen says that, if it sells work, Detroit "would be sending a signal that it will never even try to go back to what it was."  But he adds:  "perhaps that is where we are at with Detroit."  And, in the comments, Postrel shows up and recommends this dissertation:  Treasures in the Basement? An Analysis of Collection Utilization in Art Museums.

"Art lovers should stop equating the public good with the status quo."

Bloomberg columnist Virginia Postrel writes about the DIA issue today.  She gets a lot pushback in the comments on her assertion that it's a "relatively unpopular" museum, but, putting that issue to the side, she says some interesting things.

First, she points out that "suggestions that the museum can’t sell major works without risking violations of donor intent are disingenuous. ... [T]he records for the most valuable pieces are right on the museum’s website. The city bought those works, it owns them, and it should be able to sell them."

And she's interesting on the issue of how to define the "public good" in a case like this, and ends up endorsing an application of the Ellis Rule in this instance:

"A sale to satisfy Detroit’s creditors would certainly be a tragedy for the institution and its local constituents. But if buyers were limited to other museums, possibly even to museums in the U.S., the works wouldn’t disappear from public view. ... The public trust is no less served by art in Atlanta, Phoenix or Seattle than it is by art in Detroit. ... Letting the Getty add the Canaletto view of the Piazza San Marco now in Detroit wouldn’t constitute a rape or a bonfire of the vanities. Hanging Van Gogh’s self-portrait alongside his 'Irises' at the Getty or Bellini’s Madonna near his 'Christ Blessing' at the Kimbell would not betray the public trust. It would enhance it."

Sloganeering

Had to share another great email from Peter Dean, in response to my post on the AAMD letter about Detroit the other day:

Donn,

There is such a lack of clear thinking on this issue.  It appears that many people just reach into their briefcases or file drawers and pull out a comforting slogan in the hope or belief that it will cure the problem, rather than looking at the real issues.  It is rather like medicine back in the 18^th century when doctors might prescribe their favorite remedy for any number of ailments - regardless of likely effect.

One of the woolliest concepts is that of a “trust”, and its derivative a “public trust”.  What has been lacking is sustained legal analysis.  You might say that it is easy for a lawyer to claim that lawyers must have a say in this controversy, but in fact that kind of analysis is what is required.

Legal usage.  You and I know what the word “trust” means in the legal context (at least in the common law system, as I don’t think the Napoleonic Code really deals well with trusts).  It is a very powerful concept that imposes strict obligations on a trustee, but for there to be a trust there must be some intentional act that creates the trust, some defined property that is affected, and a trustee – and usually a defined beneficiary.  Sometimes the trust may arise as a matter of law when someone behaves very badly in a way that that leads to the imposition of a constructive trust, but I don’t think that applies in this case.

Other usage.  The term “trust” is also used frequently in other relationships, and, especially, one hears increasingly often of a “public trust”, but what is meant by that?

·       Sometimes it is an aspirational goal related to a transaction, but not necessarily creating legally enforceable rights and obligations.

·       Sometimes it is a relationship that arises as a result of legislative action (such as the creation of a national park).

·       Sometimes it reflects the residual power of the government (often exercised by an attorney-general) to ensure that assets donated for a charitable purpose continue to be used for a similar purpose of the first one fails or is completed.

·       Sometimes it is just a slogan.

 
Express trust.  There’s no doubt that one can create an express trust to encompass an art collection, and that the law will protect that.  Where the Wedgwood Museum failed was in not taking the necessary steps to make sure that the Wedgwood pottery collection was in fact conveyed to it under a legally enforceable trust.  Certainly that could have been done; but it was not.  I do not know the facts of the DIA situation, but if what I read is correct - that several decades ago the DIA transferred its collection to the City of Detroit in exchange for a promise of financial support – that arrangement could also have been set up as an express trust, that would now protect the collection from sale.  Was that done?  It sounds like it was not.

If a legally recognized trust is not created then the game is very different.  Of course, as you have noted many times, if a legally recognized trust were in fact created by the creation of a museum, then many de-accessioning sales could not occur, even if the proceeds are to be used for new acquisitions, unless the trust deed expressly permits that.  You really cannot have your trust cake and eat it too, at least not without careful planning and drafting.

When it comes to the hard issues of meeting obligations and paying bills, it is the law that will govern, not an aspirational slogan or policy.  Those who brandish the phrase a “public trust” as a cure-all against an evil, are not doing anyone a favor, but are confusing the issue  It would be better to explain what is actually required to create a trust.

Peter

"This is a crazy case." (UPDATED)

The judge presiding over the Perelman-Gagosian lawsuit urges settlement.  Background here.

UPDATE:  A fuller report from Bloomberg.com.

Tell me again about the public trust (Clark Sickle-Leaf Carpet edition)

The Corcoran sold a Persion rug at Sotheby's for more than $30 million today.  James Panero says it's "first-rate work that has been in the collection since 1925."

Look.  I obviously enjoy calling them out for their hypocrisy, but this is a serious point.  Works in museum collections ARE NOT HELD IN THE PUBLIC TRUST.  They're just not.  And it's not me telling you that; it's the museums themselves, by their actions.

You can't sell this first-rate work for $30 million and then turn around and tell me, when I want to sell another work (to keep from going out of business, or to pay creditors, or to avoid laying off staff, and so on) that I can't do so because it's held in the public trust.  If my work is held in the public trust, why wasn't yours?  Why wasn't this Persian rug held in the public trust?

Why are we still having this conversation?

Why does anybody take the slightest bit seriously the dopey letter the AAMD issued the other day about Detroit?

I've been saying for four years that they need better talking points.  I'm still waiting.

Here's a better idea

Why don't they pass a law making all assets beyond the reach of creditors?  Fiscal problems solved.  You're welcome.

Warhol Foundation Sued in Canada

Sergio Muñoz Sarmiento says the "story is a bit unclear, but it seems that the issue boils down to who owns the actual Polaroids: the Warhol Foundation or Frans Wynans Fine Art."

"It’s too soon to know the significance of the Rosales arrest because we haven’t seen the full scope of the government’s investigation."

Laura Gilbert has the latest on the Knoedler story in The Art Newspaper.

"Sophisticated businesspeople would never do a business deal without asking questions, but somehow when they are buying art or collectibles, their common sense flies out of their head."

Forbes:  Thieves And Forgers Rush In Where Big Spenders Dare To Tread.