On June 10, 1963, Rothko signed an agreement with Marlborough A.G.—a Liechtenstein corporation with numerous international galleries—for the sale of 15 paintings on canvas and paper for $148,000. The paintings went to Marlborough Fine Art, Ltd., London, one of the galleries in the Marlborough conglomerate founded and directed by Francis K. Lloyd (1911–1998). Rothko retained the right to sell works directly from his studio in New York, but he gave Marlborough the exclusive right to exhibit and sell his work abroad for the next five years at a commission rate of 33 1/3 percent. Rothko was given a one-person show from February to March 1964 at Marlborough’s London gallery.
On February 21, 1969, Rothko signed a second contract with Marlborough A.G. and its New York affiliate Marlborough-Gerson Gallery, Inc., which had recently opened in the Fuller Building on East 57th Street. He sold 26 paintings on canvas and 61 paintings on paper for $1.5 million, payable in installments over the following fourteen years, an extended payment plan recommended by Rothko’s friend, accountant, and financial adviser, Bernard J. Reis (1895–1978). A supplemental agreement granted the gallery the exclusive right to act as his dealer for the following eight years. On December 8, 1969, Rothko sold an additional 18 paintings on canvas to Marlborough A.G. for $396,000 payable over the following ten years.
Rothko died by suicide in his New York studio on February 25, 1970. The executors of Rothko’s will and estate—Reis; the painter Theodoros Stamos (1922–1997); and Morton Levine (1922–1982), a professor of anthropology—quickly entered into a two-part contract with Marlborough A.G. and Marlborough Gallery, Inc., New York (formerly Marlborough-Gerson Gallery, Inc.) for the sale and consignment of 798 paintings on canvas and paper in Rothko’s estate
. The two-part contract of May 21, 1970, detailed the outright sale of 100 paintings on canvas to Marlborough A.G. for a total of $1.8 million, of which $200,000 was paid up front to the artist’s estate, while the remaining $1.6 million was to be paid to the estate in equal interest-free annual installments over twelve years beginning on June 1, 1971. An additional 698 works on canvas and paper were consigned to Marlborough Gallery, Inc., New York. The gallery was permitted to sell as many as 35 works per year from each of two chronological periods, pre-1947 and post-1947, over the following twelve years at an above-market commission rate of 50 percent per work (40 percent on works sold to or through other dealers).
In November 1971 the artist’s twenty-year-old daughter, Kate Rothko, filed a lawsuit that initiated proceedings against the three executors of her father’s estate, Marlborough A.G., and Marlborough Gallery, Inc., New York. The proceedings commenced in Surrogate’s Court, New York County, where they were overseen by Surrogate Millard L. Midonick. Kate was joined in her complaint by the guardian of her then seven-year-old brother, Christopher. Their petition sought a rescission of the two-part contract of May 21, 1970, between the executors of Rothko’s estate and Marlborough A.G. / Marlborough Gallery, Inc., New York; restitution of the 798 paintings sold or consigned to the galleries; and the removal of the executors on grounds of conflict of interest, collusion with Marlborough, and wasting of assets of the estate.
The trial began on February 14, 1974, and lasted eighty-nine days. Evidence presented showed that on January 30, 1970, a month before Rothko’s death, Reis had been elected a director, secretary, and treasurer of Marlborough Gallery, Inc., New York. Acting as an executor of Rothko’s estate and director of Marlborough amounted, in the surrogate’s opinion, to a fiduciary conflict. The degree of Stamos’s and Levine’s self-interest was less clear-cut. While Stamos signed a favorable contract as an artist with Marlborough Gallery, Inc., New York, in 1971, Levine seemingly did not benefit personally from the Marlborough arrangement. He did, however, possess knowledge of Reis’s self-serving interest in the Marlborough contract when he approved the arrangement as an executor, so, along with Stamos, was deemed negligent in acting to cause loss to the estate. On December 18, 1975, New York County Surrogate’s Court ruled against the executors, dismissing Reis, Stamos, and Levine and finding them personally liable for damages suffered by the estate.
Kate Rothko was appointed as the estate’s sole administrator. The two-part contract of May 21, 1970, was rescinded, and Marlborough was ordered to return to the estate 658 paintings that had not been sold to bona fide (non-party) purchasers. The surrogate found Reis, Stamos, Marlborough A.G., and Marlborough Inc., New York, jointly liable for a total of $9,252,000 in damages and fines, the bulk of which was determined by the market value of the paintings sold; Levine was found liable for a share of a lesser amount. The ruling also dictated the distribution of the estate. Because the children had inherited what was determined to be one-ninth of the works by their father through their mother’s estate in 1970, the surrogate directed that four-ninths of the remainder of the estate would go to the children and five-ninths to the Mark Rothko Foundation
, resulting in each party receiving an equal share of the total estate [see Estate of Rothko, 84 Misc. 2nd 830, 379 N.Y.S.2nd 923 (Sur. Ct. 1975)].