Memo of Law - Rhinebeck Aerodrome Museum

This memorandum of law is respectfully submitted in support of the application for the removal of respondent trustees of the Rhinebeck Aerodrome Museum pursuant to NYS Education Law §226 (4) and the rules of the Board of Regents §3.31. Petitioners request that the Board of Regents take jurisdiction of this matter, conduct a removal hearing and remove respondents trustees for misconduct, incapacity, neglect of duty and/or failure or refusal to carry into effect the educational purposes of the Museum. Petitioners also request that the Board of Regents supervise the installation of a new board of trustees and reorganization of the Museum through by-law amendments including election of new trustees by the membership.

The Rhinebeck Aerodrome Museum (“Museum”) is a true “living” museum of antique aviation artifacts, including a world-class collection of antique airplanes, automobiles, motorcycles, early engines, and other memorabilia dating from 1900-1935.

With more than sixty (60) antique and historically significant airplanes, the Museum, located in Dutchess County, New York, is one of the largest collections of antique airplanes in the world. By way of further detail, attached to this memorandum are summaries of the significant aircraft, engines and vehicles referenced in the petition.

The Museum is a unique treasure which should be vigilantly guarded and protected. Its artifacts should be carefully maintained and preserved so as to protect the integrity of these valuable historic exhibits so they may be viewed and appreciated by the public for years to come. If these items are permitted to waste, corrode, and/or deteriorate, or to be mismanaged, lost, or sold for personal gain, in the hands of the respondents trustees, the public will experience a monumental loss, one that will likely never be recovered.

It is well established that the Board of Regents is authorized, “…to remove the trustees of any corporation created by them for misconduct, incapacity, neglect of duty, or where it appears to the satisfaction of the Regents that the corporation has failed or refuses to carry into effect its educational purposes. NYS Education Law § 226. In such cases, the Regents may take action of their own motion, and however the information is brought to their attention.” The People of the State of New York, et al. v. Regents of the University of the State of New York, 199 A.D. 55, 59 (3^rd Dept. 1921).

The NYS Education Law §226(4) was discussed in detail by the Appellate Division, Third Department in Adelphi University et al. v. Board of Regents of State of New York et al., 229 A.D.2d 36 (3^rd Dept.). The Appellate Divisions stated in Adelphi:

Given the paucity of a detailed procedure under Education Law §226(4), the Board of Regents was necessarily left to determine the procedure most suitable to accomplish the legislative goal of permitting and conducting trustee removal proceedings. To this end, we note that the Board of Regents was granted the authority to remove university trustees over 75 years ago (see, L1920, ch 745). Since then, the record reveals, there have been only four trustee removal proceedings, which includes the proceeding at issue in this case. And, although not dispositive, it is noteworthy that each of the preceding petitions for removal was filed by a third party. Moreover, this Court noted in People ex rel. Diffenbach v. Regents of Univ. of State of N.Y. (199 App Div 55, 60-61, affd 234 NY 561) that: “Nor is it necessary to the validity of this proceeding that the petitioner should have some interest in the proceeding which gives him standing in court. The statue permits the Regents to remove the trustee of any corporation created by them for misconduct, incapacity, neglect of duty, or where it appears to the satisfaction of the Regents that the corporation has failed or refuses to carry into effect its educational purposes. The Regents in such matter may take action of their own motion, and however the information is brought to their attention. (emphasis in original)

[W]e find that the Board of Regents is acting within its authority in opting to permit third parties to draft and prosecute trustee removal petitions rather than do so itself.

As a practical matter, only individuals and organizations closely associated with a particular university would possess sufficient information regarding a trustee’s alleged misconduct, incapacity or neglect of duty to be able to fairly and adequately detail same in a removal petition. It is not unreasonable, therefore, that these individuals or organizations be permitted to initiate a removal proceeding by way of a detailed, verified petition and also have the burden of proving the allegations at a hearing before the Board of Regents or a committee thereof.

Indeed, the Smithsonian Institution, arguably one of the finest museums in the country, if not the world, has been the recent subject of trustee review by the United States Congress. See for example, Washington Post, Smithsonian’s Small Quits in Wake of Inquiry March 27, 2007, Secrecy Pervaded Smithsonian on Small’s Watch June 21, 2007, Making a Better Smithsonian January 19, 2008.

In addition, this application is brought by aggrieved members of the Museum, among other concerned citizens.

Thus, as shown, the Regents are fully authorized to entertain this petition and take action.

The regents may remove any trustee of a corporation created by them for misconduct, incapacity, neglect of duty, or where it appears to the satisfaction of the regents that the corporation has failed or refuses to carry into effect its educational purposes. A hearing in the proceeding for the removal of such trustees shall be had before the board of regents or a committee thereof and the trustees shall be given at least ten days’ notice of the time and place of such hearing. In case of removal the regents may appoint successors to the trustees so removed.

Petitioners respectfully submit that respondents trustees have engaged in repeated and persistent misconduct and neglect of duty, including but not limited to, diversion and waste of assets, failure to maintain adequate records regarding the disposition of the acquisitions and donated funds, failure to retain and secure and keep safe valuable and historically significant assets and artifacts, conflicts of interest, and misrepresentation, as detailed in the petition and below. The trustees have also failed to carry into effect the educational purposes of the Museum. Thus, under the statutory authority referenced above, petitioners believe that trustees’ removal is warranted.

The petition, which was supported by particularized allegations, documentary exhibits, verifications and affidavits, set forth in detail numerous instances of respondents’ neglect and disregard for their responsibilities and fiduciary duties of care, loyalty and obediance to the Museum and to the public. Specific details of trustees’ misconduct, neglect of duty and failure to carry out the educational purposes of the Museum are set forth in paragraphs 7 through 16 of the petition. The Regents are respectfully referred to the petition and answer for a complete recitation of the facts. As a result of respondents’[1] breaches of duty, they have damaged, and continue to threaten damage to, the integrity of the world-class collection of aeronautical artifacts owned by the Museum. As shown, the matters detailed in the petition fall squarely within the ambit of the Regents’ powers to review trustees’ actions and remove trustees under NYS Education Law § 226. Petitioners submit that the matters set forth in the petition are more than sufficient to warrant review by the Board of Regents, along with discovery, depositions and a hearing.

Respondents’ conduct also violates the terms of the Museum’s charter and the American Association of Museums Code of Ethics (petition Ex. 7). The code of ethics for museums of the American Association of Museums provides, in part:

Museums in the United States are grounded in the tradition of public service. They are organized as public trusts, holding their collections and information as a benefit for these they were established to serve. Members of their governing authority, employees, and volunteers are committed to the interest of these beneficiaries. The law provides the basis frame work for museum operations. As nonprofit institutions, museums comply with applicable local, state, and federal laws and international conventions, as well as with the specific legal standard governing trust responsibilities. The Code of Ethics for Museums takes that compliance as given. But legal standards are a minimum. Museums and those responsible for them must do more than avoid legal liability, they must take affirmative steps to maintain their integrity so as to warrant public confidence. They must act not only legally but also ethically. This Code of Ethics for Museums, therefore, outlines ethical standards that frequently exceed legal minimums.

Loyalty to the mission of the museum and to the public it serves is the essence of museum work, whether volunteer or paid. Where conflicts of interest arise – actual, potential or perceived – the duty of loyalty must never be compromised. No individual may use his or her position in a museum for personal gain or benefit another at the expense of the museum, its mission, its reputation, and the society it serves.

For museums, public service is paramount. To affirm that ethic and to elaborate its application to their governance, collections, and programs, the American Association of Museums promulgates this Code of Ethics for Museums. In subscribing to this code, museums assume responsibility for the actions of members of their governing authority, employees, and volunteers in the performance of museum-related duties. Museums, thereby, affirm their chartered purpose, ensure the prudent application of their resources, enhance their effectiveness, and maintain public confidence. This collective endeavor strengthens museum work and the contributions of museums to society – present and future.

With respect to collections the Code of Ethics for Museums provides in pertinent part:

The distinctive character of museum ethics derives from the ownership, care, and use of objects, specimens, and living collections representing the world’s natural and cultural common wealth. This stewardship of collections entails the highest public trust and carries with it the presumption of rightful ownership, permanence, care, documentation, accessibility, and responsible disposal.

· collections in its custody supports its mission and public trust responsibilities

· collections in this custody are lawfully held, protected, secure, unencumbered, cared for, and preserved

· acquisition, disposal, and loan activities are conducted in a manner that respects the protection and preservation of natural and cultural resources and discourages illicit trade in such materials

· acquisition, disposal and loan activities conform to its mission and public trust responsibilities

· disposal of collections through sale, trade, or research activities is solely for the advancement of the museum’s mission. Proceeds for the sale of nonliving collections are to be used consistent with the established standards of the museum’s discipline, but in no event shall they be used for anything other than acquisitions or direct care of collections

· collection-related activities promote the public good rather than individual financial gain

As shown by the petition, it appears that trustees have violated on numerous occasions, this generally accepted code of ethical behavior in connection with the Museum’s collection of aeronautical, technological and cultural artifacts. To be specific and as shown in the petition, the financial affairs of the Museum and the disposition of various items have been kept secret by the respondents. Access to minutes and financial records have been rebuffed or ignored. Among other things, donations given for specific purposes have not been used for such purposes. No comprehensive inventory of this valuable collection is known to exist. There have been unexplained disappearances of engines, airframes and related items. The failure to complete the installation of temperature and humidity controls in the History of Flight building is jeopardizing the safety and integrity of the collection. Aircraft have been disassembled and items have been deaccessioned at the hands of the respondents, among other things. These ethical violations further support trustees’ removal.

The answer filed by respondents confirms certain of trustees’ misconduct and actually raises more questions than it provides answers. To be specific, it appears, based on respondents’ answer (answer ¶21), that they indeed traded an Isotta-Fraschini airplane engine to pay for certain restoration on a Spad airplane. It is believed that the Spad is not a historic artifact; rather it is a replica which was constructed in the 1990’s and the work done on it was maintenance, not restoration. It would appear that it was improper under the Museum’s charter to trade a valuable historical artifact to pay for maintenance work on a replica. It also appears that it was the Air Show that traded the historic airplane which it is not authorized to do under its charter.

Also, in paragraph 7 of the answer, the respondents state that they posted the said advertisement to allegedly establish a fair market value for the engines. It is interesting to note in this regard that the advertising included a price. As such, if it were really an advertisement to establish fair market value, there would be no need to include a price. It would appear that this was actually an advertisement for sale, also improper under the Museum’s required Collection Management Policy for deaccessioning.

In addition, the answer of respondents does not demonstrate their awareness or compliance with the current Rules of the Regents and in particular §3.27(b)(4)(5)(6) or the prior version of this rule, and in particular (4)(7) under the prior statute.

A 1995 appraisal places the value of the Museum’s collection at more than $4.5 million dollars. Respondents’ failure to make a detailed evidentiary response only heightens concern that this valuable collection is in jeopardy, as are the funds of the organization and its educational mission.

Petitioners respectfully submit that the matters set forth in the petition are more than sufficient to warrant the Board of Regents conducting whatever form of proceeding it deems appropriate under its rules to remove the current officers and trustees of the

Museum under the authority vested in the Board of Regents by the NYS Education Law,

[1] There is some dispute in the record at this time as to precisely who are the current trustees. No dispositive formal documentation or other admissible evidence has been submitted by the trustees on this point. The Regents would have the authority to confirm the names of current officers and trustees as part of this proceeding.