Smithers v. St. Luke

Facts

Smithers and the plaintiff, Adele Smithers made a gift to the defendant, St. Luke’s Roosevelt Hospital Center of $10 million over time for the establishment of an alcoholism treatment center (the “Gift”). In his letter to the Hospital creating the Gift, Smithers wrote, “Money from the $10 million dollar grant will be supplied as needed. It understood however, that the detailed project plans and staff appointments must have my approval.” The Hospital purchased a building at 56 East 93rd Street in Manhattan to house the rehabilitation program which the Hospital agreed with Smithers it would create with the funds from the Gift. Smithers remained active in the management and affairs of the Center. In 1995, over a year after Smithers died after years of successfully soliciting millions for the restoration of the building, the Hospital announced that it was going to move the Smithers Center into a hospital and sell the East 93rd street building. Two months later, the Hospital disclosed that it had been misappropriating funds from the Endowment Fund since before Smithers died. The plaintiff founded the Center with her husband with the vision of “first class alcoholism treatment and training.” The husband reserved to himself the right to veto the Hospital’s project plans and staff appointments for the Smithers Center. Smithers and her husband remained actively involved in the affairs of the Center until his death. During his life, the deceased found that certain things that were understood between him and the Center had not been carried out. Consequently, he decided not to donate the balance of the Gift. Smithers completed the Gift only when the Hospital expressly agreed to the various restrictions imposed by Smithers. The Attorney General did not act to prevent the Hospital from diverting the funds until the plaintiff brought her lawsuit. Followed by his initial investigation of the Hospital’s administration of the Gift, the Attorney General acqui esced in the Hospital’s sale of the building, its diversion of the appreciation realized on the sale, and its relocation of the rehabilitation unit. Without the vigilance of the plaintiff, the Attorney General would have resolved the matter between himself and the Hospital without permission from any court. The plaintiff’s accountants discovered and informed the Attorney General about the Hospital’s misappropriation of funds. The plaintiff was the court appointed administratix of the estate of her deceased husband. After Smither’s death, the plaintiff brought suit to enforce the agreement between her and Smithers and the St. Luke’s Roosevelt Hospital Center.