PETITION OF US ON BEHALF & FOR BEN. OF SMITHSON.

• Decision Date: 31 January 1980
• Docket Number: Civ. A. No. 77-0320.
• Citation: PETITION OF US ON BEHALF & FOR BEN. OF SMITHSON., 485 F. Supp. 1222 (D. D.C. 1980)
• Parties: Petition of the UNITED STATES ON BEHALF AND FOR the BENEFIT OF the SMITHSONIAN INSTITUTION, Trustee. Harbor Branch Foundation, Inc., Intervenor.
• Court: U.S. District Court — District of Columbia

485 F. Supp. 1222

Petition of the UNITED STATES ON BEHALF AND FOR the BENEFIT OF the SMITHSONIAN INSTITUTION, Trustee.

Harbor Branch Foundation, Inc., Intervenor.

Civ. A. No. 77-0320.

United States District Court, District of Columbia.

January 31, 1980.

Patricia N. Blair, James G. Bruen, Jr., Civil Division, Dept. of Justice, Washington, D. C., on behalf of petitioner.

James V. Dolan, Kenneth I. Jonson, John R. Labovitz, Kenneth D. Ludwig, Steptoe & Johnson, Washington, D. C., on behalf of intervenor and amicus curiae.

MEMORANDUM OPINION

BARRINGTON D. PARKER, District Judge:

Introduction

In this proceeding brought by the United States¹ the Court is called upon to construe the terms and conditions of two separate charitable gifts made to the Smithsonian Institution in 1969 and to instruct the Smithsonian as to its duties and obligations as trustee.The gifts were substantial and were among the largest ever made to the Institution.Their present combined value is in the neighborhood of $15 million.

While the donors were different, Mr. J. Seward Johnson of the Johnson & Johnson pharmaceutical family was a moving force in each.The gifts were related to oceanography, an area in which Mr. Johnson had long maintained an interest.

The first, known as the Johnson gift, was made in October, 1969, by Seward Johnson.It consisted of Johnson & Johnson stock whose value at the time was approximately $2 million.

The second, known as the Hunterdon gift, was made two months later by the trustees of the Hunterdon Medical Center School of Health in Flemington, New Jersey.The School was established in 1965 by Mr. Johnson to provide education in preventive medicine, early diagnosis and nutrition.His contributions provided its entire support.The School did not develop as planned, however, and in the fall of 1969, the trustees decided to dissolve it.They in turn made a gift to the Smithsonian of one-half of the School's assets valued at about $3.6 million.

The petition of the United States names as interested persons the Attorney General of the United States as "parens patriae of the public beneficiaries of this charitable trust,"J. Seward Johnson in his individual capacity and as president of the Harbor Branch Foundation, Inc., and Mr. Edwin A. Link.Harbor Branch Foundation, Inc.,² a private operating foundation under the tax laws, is an organization through which Mr. Johnson has expressed his continuing interest in oceanography.Early in this proceeding, the Court approved the intervention of Harbor Branch and the participation of Seward Johnson as amicus curiae.

The central issue presented is what restrictions are imposed on the use of the income from these gifts.The Smithsonian contends that at this time it is free to use the proceeds from both gifts for generalized oceanographic or underwater oceanographic undertakings.Harbor Branch and Mr. Johnson contend that the terms of the two gifts require that the proceeds be used for a specific oceanographic undertaking rather than oceanographic research generally.That specific undertaking is the so-called "Johnson-Sea-Link" submersible program currently being carried on by the Harbor Branch Foundation at Fort Pierce, Florida.

The dispute as to the first gift revolves around a letter of October 17, 1969, from Mr. Johnson to Mr. S. Dillon Ripley, the Secretary and chief executive officer of the Smithsonian.³The Smithsonian argues that this letter sets forth all applicable restrictions.It concedes that the primary obligation imposed in that letter was the development of the Johnson-Sea-Link submersible donated to the Smithsonian in 1971 by Johnson and Link, the submersible's designer and inventor.The submersible was being constructed by Mr. Link in 1969 at the time of Johnson's gift.The Smithsonian argues, however, that this primary obligation was fulfilled with the submersible's completion "in the engineering sense" in 1973.Since then, the Smithsonian asserts, it has been free to use the income from the gift for underwater oceanography generally, the residual purpose set forth in the letter.

Alternatively, the Smithsonian argues that if the obligation imposed by the October letter was both to develop and to operate the submersible, it was relieved of that obligation by its determination in 1973 that such a course had become impossible or impractical, a contingency expressly provided for in the October 17 letter.It contends that in 1973 further development and operation of the submersible became impractical because of circumstances arising from a serious accident involving the submersible and resulting in two fatalities.One such circumstance following the accident was the transfer of legal title to the Johnson-Sea-Link from the Smithsonian to Harbor Branch.In turn, Harbor Branch agreed for a time to fund operation of the submersible in return for Smithsonian's assumption of funding of certain other oceanographic endeavors of interest to the Foundation.

As to the Hunterdon gift, the Smithsonian argues that all relevant restrictions are set forth in the trustees' resolution of December 18, 1969, distributing one-half the School's assets.⁴That resolution specified that the gift was to be used for the support of Smithsonian's programs of oceanography, with special emphasis on underwater oceanography.

Harbor Branch responds that the Smithsonian's present obligation is to use the income from both gifts to develop and operate a system of submersibles and support vessels, which it describes as the Johnson-Sea-Link submersible project; that the Johnson and Hunterdon gifts were in effect and should be construed as one; and that the Hunterdon transfer was subject to the same restrictions as the earlier Johnson gift, namely, the funds were to be used for the Johnson-Sea-Link project.

The Foundation finds no integrated trust instrument as to either gift.Accordingly, it maintains that one must look beyond the October 17 letter and the December 18 resolution for other indicators of the restrictions on the two gifts.Harbor Branch would have the Court consider evidence of various circumstances surrounding the gifts, including: statements by the principals, related documentary evidence, the conduct and statements of the Smithsonian officials administering the gifts, subsequent statements of J. Seward Johnson, and present testimony of both Mr. Johnson and the former Hunterdon trustees as to their intentions in 1969.It further argues that whether or not the development and operation of the submersible project became impossible or impractical following the 1973 accident — which it disputes — the submersible program is eminently possible and practical today as demonstrated by its present successful operation at Fort Pierce.

Based upon these considerations, Harbor Branch asks this Court to direct the Smithsonian to use the income from both gifts to support the Johnson-Sea-Link program at Fort Pierce and to reimburse it for certain outlays previously made for this purpose.^*

Following a trial on the merits and consideration of the various memoranda, stipulations, depositions and final arguments of counsel, the Court concludes, first, that the Smithsonian is obliged to use the proceeds of the Johnson gift to develop and operate the Johnson-Sea-Link submersible in the manner described at a later point in this opinion, and second, that the Smithsonian is free to use the proceeds of the Hunterdon gift to support its programs of oceanography, with special emphasis on underwater oceanography.

The Court's subject matter jurisdiction over this matter is found in 28 U.S.C. §§ 1331and1345.Venue is proper under 28 U.S.C. § 1391(b).

The factual findings and legal analysis of the Court are set forth in the discussion which follows:

FINDINGS OF FACT

A.The Johnson Gift

The Smithsonian Institution has long been involved in oceanographic undertakings but it was only in the early 1960's that an Oceanographic Sorting Center was established to identify, catalogue, and make available oceanographic specimens from throughout the world.In aid of these underwater endeavors, the Smithsonian has made use of scuba divers and submersibles.Beginning in the mid and late 1960's its oceanographic endeavors were coordinated by Dr. I. Eugene Wallen, as Director of Oceanography and Limnology, and later as Director of the Department of Science.As Assistant Director of Oceanography for the Museum of Natural History, he established the Smithsonian's Sorting Center and in his various capacities, he assumed responsibility for seeking and negotiating contracts, gifts, and grants for oceanography.

In 1963, Dr. Wallen met Edwin A. Link, the noted engineer and inventor, who at the time was designing submersibles and other devices for underwater research.Mr. Link was the inventor of the Link Trainer, a device used to train airplane pilots during World War II.Because of their shared interests, the two collaborated on several Smithsonian projects making use of the submersibles and underwater devices designed by Mr. Link.

J. Seward Johnson and Link were friends and it was through this association that Mr. Johnson became interested in the work of the Smithsonian and later was introduced to Dr. Wallen.Shortly thereafter, in the period 1968-1969, he participated financially and otherwise in several of the Smithsonian's oceanographic projects.In these projects, use was made of a submersible and other equipment designed and developed by Mr. Link.

Subsequently Dr. Wallen and Mr. Link discussed the possibility that Link might develop a submersible for use of the Smithsonian which lacked one of its own.The submersible would be revolutionary in design, having an acrylic sphere to provide unobstructed vision for the pilot and observer and a "lock-out" chamber permitting divers to leave the vehicle while it was submerged.Such direct access to the underwater environment would permit divers to gather...