Iowa Supreme Court ruling on Coe College’s Grant Wood paintings costs school’s endowment more than $5 million

Grant Wood’s “Farmer with Pigs and Corn” (L) and “Farmer’s Wife with Chickens” from the Coe College Permanent Art Collection. Artwork © Figge Art Museum, Successors to the Estate of Nan Wood Graham. — photos by Mark Tade, 2005

The Iowa Supreme Court ruled last week that Coe College in Cedar Rapids can’t include their seven Grant Wood paintings among the college’s sellable assets, which lowered the value of Coe’s endowment fund by $5.4 million.

The seven paintings — “The Fruits of Iowa” — were originally a mural that businessman Eugene Eppley commissioned Wood to paint in 1932 for the Hotel Montrose in Cedar Rapids. After the hotel was sold in the late 50s, Eppley had the mural taken down and separated into seven panels. (The Montrose, which stood at the corner of Third Street and Third Avenue for 82 years, was demolished in 1988.)

The paintings were first loaned to Coe College with the understanding they could be taken back after one year, but they remained on loan at Coe for two decades. In 1976, the arrangement changed and the Eppley Foundation, which owned the paintings, donated them to Coe. A letter accompanying the donation stated that Coe was receiving the paintings with the understanding that “this would be their permanent home, hanging on the walls of Stewart Memorial Library.”

Despite the letter, the college treated the paintings as an unrestricted gift for accounting purposes, which meant their potential sale value could be added to the overall value of Coe’s endowment fund. But during the college’s routine annual audit in 2016, auditors determined that classification was wrong.

If the paintings can’t be sold, that potential sale value can’t be included in assessments of the endowment fund.

According to Coe, the term “permanent home” in the donation letter was a reference to the paintings no longer being just on loan or temporarily displayed, and wasn’t intended to restrict what the college could do with them. Because Coe could not ask the Eppley Foundation to clarify the intention behind the donation — the foundation no longer exists — the college went to court, asking a judge to rule in favor of its interpretation of the letter.

Coe said it was seeking the ruling just for endowment accounting purposes, and had no intention of actually selling the paintings. But as Wood’s work continues to increase in price, the sales estimates buoyed the value of the endowment.

In January, the district court ruled the “permanent home” designation in the letter meant the painting can’t be classified as salable assets. Coe appealed the decision to the Iowa Supreme Court, which affirmed the lower court ruling on Friday.

Coe College Vice President for Advancement David Hayes emailed a statement to Little Village after the ruling.

As the Iowa Supreme Court’s opinion detailed, the need for this petition was not about any intent to sell the paintings, but rather was necessary to confirm the appropriate accounting treatment for a select few of the Grant Wood paintings the college owns and displays on our campus. Because of the inherent ambiguity of the original gift letter and the lapse of time from when the gift was made, the college sought clarity on the impact of these works when valuing Coe’s total endowment. Today’s ruling by the Court confirms the college’s current classification and treatment of these murals, including our practice of occasionally loaning the paintings to other art institutions to celebrate the work of Grant Wood.

A school’s endowment is based on its donated money and financial assets. The size of a school’s endowment can be important to prospective students and their families.

According to a study by the National Association of College and University Business Officers, almost half of a school’s endowment withdrawals are typically used to pay for student scholarships and other financial aid programs. The study looked at data from 802 colleges during the 2018 fiscal year.

Financial aid, including scholarships and grants, accounted for half of Coe’s expenditures during the 2017-18 academic year, according to the college’s annual report. Coe’s endowment fund for the 2018 fiscal year was approximately $90 million.


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“A large and growing endowment is the engine that powers an institution, and building such an endowment at Coe is essential,” the college’s website states.

Writing for the Iowa Supreme Court, Justice Edward Mansfield noted the impact the court’s decision will have on the endowment.

“While we sympathize with difficulties faced by small private colleges in a trying financial environment, it is difficult to see this fortuitous increase in the value of an asset as rendering the original restrictions impracticable or impossible to meet on the present record,” Mansfield wrote.

“Furthermore, although Coe has demonstrated that its endowment has dropped by $5.4 million due to the reclassification of the paintings as a restricted gift, it has not offered proof of actual financial difficulties resulting therefrom.”

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