The “America’s
Cup” Is Decided by the New York Court of Appeals
The “preeminent international sailing regatta,” and its
interesting history and the trust document that started it all, more
than 150 years ago, are all combined in this very recent decision of
the New York high court just in time for the beginning of yachting
season here in the Northeast. The case is officially known as Golden
Gate Yacht Club v. Societe Nautique de Geneve (decided April 2,
2009), and is a far cry from the usual stuff that fills a decision
on the interpretation of a dry trust document.
“The story of the America’s Cup begins on August 22, 1851, after
the schooner yacht, America, entered a race against British sailing
vessels around the Isle of Wight, winning a large silver cup.” That
cup became the “America’s Cup” and so remains to this day. It was
used as the corpus of a charitable trust embodied in a Deed of Gift
and was donated to the New York Yacht Club in 1857. The Deed of Gift
establishes the rules governing the America’s Cup race and provides
that the holder of the Cup becomes the sole trustee and is succeeded
only by a successful challenger in a race at sea.
The original Deed required only that the challenger be an
“organized” yacht club. That led to 30 years of problems, including
disappointing races with challenging vessels which could not
withstand the “rigors” of open sea competition. The Countess of
Dufferin had “fresh water written all over her,” according to
reports, while the Atalanta, another challenger, was denounced as “a
new yacht, hastily built and totally untried and miserably
equipped.” In 1887 George L. Schuyler, the sole-surviving donor,
amended the Deed to require that a challenger be an organized yacht
club from a country other than the current champion, incorporated or
licensed by the Legislature, admiralty or other executive
department, and “having for its annual regatta an ocean water
course.” That last stipulation was at the center of this dispute.
The Deed provides that a challenger must submit a notice of
challenge and demonstrate that it meets all of the stipulated
requirements. The first to do so becomes the successful Challenger
of Record, with the right to compete against the current Champion.
The first notice of challenge for the 33rd America’s Cup race was
submitted by Club Nautico de Vela, of Spain. Plaintiff Golden Gate
Yacht Club submitted its own notice of challenge. Golden Gate met
all of the requirements. Club Nautico did not.
Golden Gate challenged the submission by Club Nautico Espanol de
Vela because it did not meet the requirement that it hold “its
annual regatta [on] an ocean water course or sea.” In fact, Club
Nautico was newly formed and had never held an annual regatta. Club
Nautico urged the court to give a different interpretation to what
is very clear language in the 1887 deed, allegedly to discern the
true intent of the settlor of the trust. The Court of Appeals
refused and held that Golden Gate Yacht Club, not Club Nautico
Espanol de Vela, had qualified as the Challenger of Record for the
33rd America’s Cup competition.
“The right to act as trustee of the America’s Cup should be
decided on the water and not in the courtroom,” said the Court.
“This noble sailing tradition should remain a perpetual Challenge
Cup for friendly competition between foreign countries (Deed of
Gift, October 24, 1887, ¶ 3).”
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