In re Estate of Rothko
Court of Appeals of New York
372 N.E.2d 291 (1977)
Painter Mark Rothko's will named executors Reis (also Marlborough Gallery's director, secretary, and treasurer), Stamos (a Marlborough-contracted artist), and Levine (defendants), who sold 100 of the 798 paintings in Rothko's estate to Marlborough A.G. and consigned roughly 700 more to Marlborough Gallery at a steep 40-50% sales commission, all at severely undervalued prices; Rothko's children and the state attorney general (plaintiffs) sued to remove the executors, void the contracts, and recover damages, and the trial court found Reis and Stamos breached fiduciary duties through their conflicts of interest while Levine breached his duty by following them despite awareness of those conflicts, voiding the contracts and awarding appreciation damages against Reis, Stamos, Marlborough, and MAG (with Levine liable only for sale-date value); the appellate division affirmed, and the executors, Marlborough, and MAG appealed the damages measure and the no-further-inquiry rule's application.
Whether, if a will's executor sells estate property for inadequate value due to a conflict of interest, the sale is void and the executor is liable for the property's appreciated value at the time of trial.