The Maine state supreme court has overturned a lower court decision that denied legal standing to an antique automobile museum on Mount Desert Island that has been trying to sue two men who control some of the museum finances.
The Seal Cove Auto Museum sued John Sanford and John Higgins in 2016, alleging that the two men, who serve as trustees of the Richard C. Paine Jr. Automobile Collection Charitable Trust, had paid themselves excessive fees and used their positions as trustees to pay themselves additional fees for other services they rendered to the trust.
The trust and the museum were established separately by antique automobile collector Richard C. Paine Jr., who died in 2007. The trust owns an extensive collection of antique cars on display at the museum and, according to court documents, provides at least $200,000 to the museum every year to support its operations.
The museum’s 2016 suit included the state attorney general’s office as a party-in-interest, but the following year the museum was dismissed as a plaintiff after Sanford and Higgins successfully argued that the museum did not have standing to sue over how the trust is operated.
The attorney general’s office, which under state law is required to ensure public charities properly manage their funds and do not violate their legal responsibilities, reached a consent decree last spring with Sanford and Higgins that limited each man’s yearly pay as a trustee to $62,500, plus a maximum of $5,000 in travel costs. The agreement also prohibits Sanford and Higgins from using their positions as trustees to conduct business with themselves without the consent of the attorney general’s office.
On Thursday, the Maine Supreme Judicial Court ruled that a superior court judge had erred in deciding that the museum did not have standing to sue the two men. With the supreme court decision, the museum now can go back to superior court to try to force Sanford and Higgins to “repay excessive fees they had already received from the trust,” according to court documents.
Timothy Bryant, the museum’s attorney, said Friday afternoon that Sanford and Higgins each had been paying themselves $150,000 annually as trustees, and had justified their fees on an overinflated estimate of what the antique cars are worth. Not only does the museum want the two men to repay what it says were excessive fees, Bryant said, but it wants an accounting of the assets of Payne’s estate that, in keeping with his will, either were or should have been liquidated with the proceeds going to the charitable trust.
The museum’s concern with how Sanford and Higgins have been operating the trust, Bryant added, is borne out of concern that the two men were mismanaging the trust and thereby threatening the museum’s long-term viability.
“Over time, it would have run out of money,” Bryant said of the trust.
Toby Dilworth, an attorney representing Sanford and Higgins, said Friday that his clients were “disappointed” with the Law Court ruling.
“We already resolved the case with the attorney general, and that resolution was approved by the superior court,” Dilworth said. “If [the museum] intends to pursue this lawsuit further, we will defend it vigorously.”
Concerns about how Sanford, a Camden lawyer, has managed his various roles connected with Payne and the museum date back to 2007, when he served as a director of the museum and as its attorney, in addition to serving as a trustee with the charitable trust.
In a prior 2008 agreement with the attorney general’s office, which arose after Payne’s family filed complaints about Sanford with state regulators, Sanford relinquished his roles as one of the museum’s few directors and as its attorney. He was not ordered, however, to repay any of the money that he, as a museum director, had approved as payment to his law firm for legal services.
The attorney general’s office had looked into payments Sanford essentially made to himself from 1996 through 2005, which totaled $558,264, but concluded that the payments were for legitimate work Sanford had done as the museum’s attorney.
As part of that settlement, the museum agreed to follow specific standards for managing its board of directors and finances, and to adopt and adhere to a code of ethics, a conflict of interest policy and a mission statement.
