B-154459, JUN. 23, 1965

B-154459, JUN. 23, 1965

TO THE HONORABLE ROGER L. STEVENS, CHAIRMAN OF THE BOARD OF TRUSTEES, JOHN F. KENNEDY CENTER OF THE PERFORMING ARTS:

LETTERS DATED JUNE 9 AND JUNE 14, 1965, FROM THE GENERAL COUNSEL JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS (CENTER) CONCERN THE CONVERSION OF PLEDGES OF FUNDS TO THE CENTER INTO ASSETS (OTHER THAN CASH) FOR THE PURPOSE OF MATCHING THE FEDERAL APPROPRIATION.

THE JOHN F. KENNEDY CENTER ACT (FORMERLY THE NATIONAL CULTURAL CENTER ACT) 72 STAT. 1698, AS AMENDED BY PUB.L. 88-260, 78 STAT. 4, PROVIDES, IN PART, AS FOLLOWS:

"SEC. 8 THERE IS HEREBY AUTHORIZED TO BE APPROPRIATED TO THE BOARD FOR USE IN ACCORDANCE WITH THIS ACT, AMOUNTS WHICH IN THE AGGREGATE WILL EQUAL GIFTS, BEQUESTS, AND DEVISES OF MONEY, SECURITIES, AND OTHER PROPERTY, HELD BY THE BOARD UNDER THIS ACT, EXCEPT THAT NOT TO EXCEED $15,500,000 SHALL BE APPROPRIATED PURSUANT TO THIS SECTION.'

THE FOLLOWING EXPLANATION OF THE ABOVE PROVISION OF LAW APPEARS ON PAGES 3 AND 4 OF HOUSE REPORT NO. 1050, 88TH CONGRESS, 1ST SESSION:

"FOURTH: APPROPRIATIONS ARE AUTHORIZED TO BE MADE WHICH IN THE AGGREGATE WILL EQUAL GIFTS, BEQUESTS, AND DEVISES HELD BY THE BOARD. THESE APPROPRIATIONS ARE TO MATCH ON A DOLLAR-FOR-DOLLAR BASIS PRIVATE CONTRIBUTIONS AND FEDERAL EXPENDITURES FOR THIS PURPOSE ARE LIMITED TO $15,500,000. PLEDGES ARE NOT TO BE CONSIDERED AS HAVING BEEN RECEIVED OR HELD BY THE BOARD FOR PURPOSES OF MATCHING BY THE FEDERAL GOVERNMENT UNTIL SUCH TIME AS THOSE PLEDGES ARE REDUCED TO MONEY OR OTHER ASSETS ACTUALLY HELD BY THE BOARD.'

THE AUTHORIZED APPROPRIATION IS INCLUDED IN THE DEPARTMENT OF THE INTERIOR AND REALTED AGENCIES APPROPRIATION ACT, 1965, PUB.L. 88-356, 78 STAT. 273, 289, AND READS AS FOLLOWS:

"FOR EXPENSES, NOT OTHERWISE PROVIDED, NECESSARY TO ENABLE THE BOARD OF TRUSTEES OF THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS TO CARRY OUT THE PURPOSES OF THE ACT OF SEPTEMBER 2, 1958 (72 STAT. 1698), AS AMENDED, INCLUDING CONSTRUCTION, SUCH AMOUNTS WHICH IN THE AGGREGATE WILL EQUAL GIFTS, BEQUESTS, AND DEVISES OF MONEY, SECURITIES, AND OTHER PROPERTY, RECEIVED BY THE BOARD FOR THE BENEFIT OF THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS PRIOR TO JULY 1, 1965, AND AVAILABLE OR USED FOR EXPENDITURES DIRECTLY INCIDENT TO THE PLANNING, CONTRACTING, AND CONSTRUCTION OF THE CENTER: PROVIDED, THAT THE TOTAL AMOUNT APPROPRIATED BY THIS PARAGRAPH SHALL NOT EXCEED $15,500,000.'

IT IS CLEAR FROM THE ABOVE-CITED STATUTES AND THE LEGISLATIVE HISTORIES THEREOF THAT THE $15.5 MILLION APPROPRIATION IS AVAILABLE FOR THE PURPOSE SET FORTH THEREIN, ONLY TO THE EXTENT THAT MATCHING CONTRIBUTIONS ARE AVAILABLE FROM NONFEDERAL SOURCES AND THAT PLEDGES MAY NOT BE USED FOR MATCHING PURPOSES UNTIL REDUCED TO CASH OR OTHER ASSETS.

THE GENERAL COUNSEL STATES THAT IT IS PROPOSED TO CONVERT CERTAIN PLEDGES INTO PROMISSORY NOTES WHICH WILL BE ENFORCEABLE AGAINST THE PROMISORS. ADVISES THAT THERE WILL BE AT LEAST TWO SUCH NOTES AND POSSIBLY OTHERS. THE NOTES WILL BE EXECUTED IN NEW YORK CITY, WILL BE DEPOSITED IN SAFEKEEPING THERE, AND WILL BE PAYABLE TO THE ACCOUNT OF THE CENTER IN A NEW YORK CITY BANK. THE NOTE ENCLOSED WITH THE LETTER OF JUNE 14 IN LIEU OF THE NOTE FORM ENCLOSED IN THE LETTER OF JUNE 9 WILL READ AS FOLLOWS:

"IN CONSIDERATION OF THE GIFTS OF OTHERS, IN CONSIDERATION OF THE PROMISES OF THE TRUSTEES OF THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS TO MEMORIALIZE JOSEPH P. KENNEDY BY THE ENDOWMENT OF A BOX, IN THE CONSTRUCTION OF SAID JOHN F. KENNEDY CENTER, AND IN CONSIDERATION OF RELEASE FROM ALL FURTHER OBLIGATIONS OF MY PLEDGED SUBSCRIPTION OF $500,000. TO THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS, I PROMISE TO PAY TO SAID JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS THE SUM OF $500,000., IN PAYMENTS ON , , AND , PAYABLE TO THE ACCOUNT OF THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS AT THE (BANKERS TRUST COMPANY), NEW YORK, NEW YORK.

DATE: "

IT IS THE OPINION OF THE GENERAL COUNSEL THAT NOTES IN THIS FORM, EXECUTED, DEPOSITED, AND PAYABLE IN NEW YORK CITY, ARE VALIDLY ENFORCEABLE INSTRUMENTS AND WHEN EXECUTED WILL CONSTITUTE ASSETS WITHIN THE MEANING OF SECTION 8 OF THE JOHN F. KENNEDY CENTER ACT, AS AMENDED. HE POINTS OUT THAT CHARITABLE SUBSCRIPTIONS HAVE BEEN HELD TO BE ENFORCEABLE IN NEW YORK.

THE GENERAL COUNSEL ASKS WHETHER WE CONCUR IN HIS OPINION THAT PROMISSORY NOTES MADE AS DESCRIBED ABOVE AND ENFORCEABLE IN NEW YORK ARE ASSETS WHICH MAY BE MADE APPLICABLE TO MATCH THE FEDERAL APPROPRIATION MENTIONED ABOVE.

THE ENFORCEABILITY OF SUCH NOTES WOULD BE FOR DETERMINATION UNDER THE LAWS OF NEW YORK. THE COURTS OF NEW YORK STATE HAVE HELD IN CONNECTION WITH CHARITABLE SUBSCRIPTION AGREEMENTS CONTAINING MUTUAL PROMISES ON THE PART OF THE PROMISOR AND PROMISEE TO DO CERTAIN ACTS, THAT SUCH MUTUAL PROMISES ARE SUFFICIENT CONSIDERATION TO SUSTAIN THE ENFORCEABILITY OF SUCH AGREEMENTS ON THE BASIS THAT THE AGREEMENTS CONSTITUTE BILATERAL CONTRACTS. THAT IS TO SAY, THE NEW YORK COURTS HELD, IN EFFECT, THAT AN EXPRESS AGREEMENT BY THE PROMISEE TO DO CERTAIN ACTS IN RETURN FOR THE SUBSCRIPTION IS SUFFICIENT CONSIDERATION AND ALSO HELD THAT A PROMISE OF THE PROMISEE TO CARRY OUT THE PURPOSE FOR WHICH THE SUBSCRIPTION IS MADE, EITHER EXPRESS OR IMPLIED FROM THE SUBSCRIPTION OR CONDUCT OF THE PROMISEE, IS DEEMED SUFFICIENT CONSIDERATION FOR THE PROMISE TO PAY. SEE ALLEGHENY COLLEGE V. NATIONAL CHAUTAUQUA COUNTY BANK (1927), 246 N.Y. 369, 159 N.E. 173; IN RE TAYLOR'S ESTATE (1929), 251 N.Y. 257, 167 N.E. 434; AND IN RE LORD'S WILL (1941), 25 N.Y.S. 2D 747.

IN THE LAST CASE CITED THE SUBSCRIPTION AGREEMENT SIGNED BY THE PROMISOR WAS TO THE EFFECT THAT HE SUBSCRIBED THE SUM OF "ONE THOUSAND DOLLARS TWO MEMORIAL WINDOWS--- NOTE PAYABLE" AS SET FORTH THEREIN. THE COURT HELD, IN PART, THAT "A BILATERAL CONTRACT WAS CLEARLY DEMONSTRATED WITH THE MUTUAL PROMISES THAT OF THE DECEDENT TO PAY A SPECIFIED SUM AND OF THE COLLEGE TO ERECT AND TWO MEMORIAL WINDOWS.' THE PROMISE OF THE COLLEGE TO ERECT THE WINDOWS WAS ESTABLISHED APPARENTLY BY PAROL EVIDENCE.

THE PROPOSED FORM OF PROMISSORY NOTE INVOLVED HERE MAKES IT CLEAR THAT ONE OF THE CONSIDERATIONS FOR THE PROMISE OF THE PROMISOR IS THE PROMISE OF THE BOARD OF TRUSTEES (PROMISEES) OF THE CENTER TO MEMORIALIZE THE INDIVIDUAL NAMED IN THE NOTE BY THE ENDOWMENT OF A BOX IN THE CONSTRUCTION OF THE CENTER. IN OTHER WORDS, THE PROPOSED NOTE WHICH IS A VOLUNTARY PROMISE ON THE PART OF THE PROMISOR EXPRESSLY IMPOSES UPON THE PROMISEE (TRUSTEES) AN OBLIGATION TO MEMORIALIZE THE INDIVIDUAL NAMED THEREIN AND IT CLEARLY CAN BE IMPLIED FROM THE TERMS OF THE NOTE AND ITS ACCEPTANCE THAT THE BOARD ASSUMES THE OBLIGATION SO IMPOSED. YOU MAY DEEM IT DESIRABLE, HOWEVER, TO EXPRESSLY ASSUME THIS OBLIGATION IN WRITING TO AVOID ANY QUESTIONS IN THE FUTURE. IN ANY EVENT, IT IS OUR VIEW THAT SUCH PROMISSORY NOTES WOULD BE ENFORCEABLE IN NEW YORK IN LIGHT OF THE COURT DECISIONS CITED ABOVE.

FURTHER, WE CONCUR IN YOUR OPINION THAT PROMISSORY NOTES PAYABLE TO, AND HELD BY, THE BOARD WHICH ARE ENFORCEABLE UNDER NEW YORK LAW WOULD CONSTITUTE ASSETS HELD BY THE BOARD AND, HENCE, AVAILABLE TO MATCH THE FEDERAL APPROPRIATION CONTAINED IN PUBLIC LAW 88-356.