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

In a June 16, 1971 letter to St. Luke’s-Roosevelt Hospital Center (Hospital) (defendant), R. Brinkley Smithers announced his intention to make a $10 million gift to the Hospital over time to establish an alcoholism treatment center. In the letter, he retained a veto power for himself over the center’s project plans and staff appointments. As it was Smithers’ intention that the treatment center be established in a separate facility, the Hospital purchased a building and opened the Smithers Alcoholism Treatment and Training Center (Center) in 1973. By 1978, Smithers informed the Hospital that no further gift funds would be transferred because the Hospital was not complying with the terms of his gift. After the hospital president convinced Smithers of the Hospital’s intention to strictly comply with the terms of the gift, Smithers completed the gift in 1983. When Smithers died in 1994, he and his wife, Adele Smithers (Adele) (plaintiff), had been planning, at the Hospital’s request, a gala to raise funds for the Center. However, the Hospital suddenly announced in 1995 its intention to relocate the Center and instructed Mrs. Smithers to cancel the event. When Mrs. Smithers’ accountants discovered that the Hospital had been misappropriating gift funds, she alerted the Attorney General (AG) (defendant), who commenced an investigation and learned that the Hospital had been transferring the gift funds to its general fund as “loans.” Although the Hospital complied with the Attorney General’s demand to return the funds, the Hospital persisted in its plan to sell the building where the Center was located. The AG believed that the terms of the gift did not prevent the Hospital from selling the building and agreed with the Hospital that it would pay $1 million from the proceeds of the sale to the Center. Mrs. Smithers brought an action as Special Administratrix of J. Brinkley Smithers’ estate against the Hospital and the AG, both of whom moved to dismiss for lack of standing. The trial court dismissed the complaint, holding that Mrs. Smithers lacked standing because she represented the beneficiaries and had no tangible stake in the gift. On appeal, the new AG reversed its position, agreeing that all net proceeds from sale of the building belonged to the Center and therefore the issue of standing need not be reached. While the appeal was pending, the AG and Hospital reached a new agreement. The AG again reversed his position, asserting to the Appellate Division that only an Attorney General had standing to enforce the gift.