Rothko Case - Valuation Issues

Valuation Issues

The courts involved in litigating the Rothko matter were faced with many complex issues as part of and beyond the wrongdoing of the Marlborough group as estate executors. In particular, the valuation of services rendered by counsel were litigated at length; and the valuation of the paintings posed complex questions as their valuation affected nearly every other matter facing the court. In 1979 after much of the matter's litigation had already taken place, the court said:

... he bulk of the estate was and is in the form of hundreds of paintings rather than cash ... and ... Internal Revenue Service may not at an early time complete its final determination with respect to date-of-death estate taxes. The estate is presently resisting a deficiency assessment of large proportions. In litigating that issue there is not only a difference of opinion with respect to the value of the hundreds of paintings in this estate but also whether a blockage discount should be given to the estate and whether a further discount should be available due to the inter vivos contract for an exclusive agency in favor of Marlborough Galleries for seven years after death, and finally whether a discount should be enjoyed by the estate for commissions which must be paid for selling many of the paintings by agents of the estate. ... revailing counsel have participated in approximately 20,000 pages of transcript of pretrial and trial testimony; thousands of exhibits have been introduced and considered; thousands of pages of briefs have been submitted to this court and to the appellate courts; many decisions were made in this court, pretrial as well as the ultimate disposition; the Appellate Division has ruled on these matters several times; and the Court of Appeals has finally unanimously affirmed the major disposition made in this court, (43 N.Y.2d 305, 401 N.Y.S.2d 449, 372 N.E.2d 291).