Fall 2014 Newsletter: Artwork in Disputes

By Leila Amineddoleh

As with the passing of all testate and intestate property, the distribution of artwork can be accompanied with controversy and family disputes. These disputes cover a wide range of objects, from antiquities[1] and musical instruments[2] to Nazi-looted art. This last category has recently garnered a great deal of media attention, particularly in light of the 2013 announcement[3] of the discovery of Nazi-looted art in the possession of an elderly German man, Cornelius Gurlitt. The “Gurlitt Collection” was shrouded in mystery, as the origins of the bulk of the approximately 1400 works were (and still are) murky. It was estimated that the cache was worth more than $1.35 billion, although some of the items in the collection have deeply troubled pasts.

In 1937, the Nazis began a campaign against art, ransacking German public collections for “degenerate” art (anything modernist or abstract) to be sold abroad or destroyed.[4] Cornelius Gurlitt’s father was one of four dealers appointed by the Commission for the Exploitation of Degenerate Art to sell confiscated and stolen works abroad. The dealers were permitted to purchase art at fire sale prices from Jewish collectors (often under duress and fearful for their safe passage out of Germany during a time of escalating violence) to then resell and support the Nazi Party. The collection amassed by Gurlitt’s father contained 3 types of works: (1) objects legitimately purchased by Gurlitt, as he was an art collector prior to the rise of the Nazi Party; (2) “degenerate art” seized from public collections; and (3) “stolen art,” works taken mainly from Jewish owners, under pressure or through Nazi-sanctioned purchases and exchanges. Cornelius Gurlitt claimed to be the legitimate heir of all the works discovered in his possession in 2013, as he fought against restitution demands. Gurlitt’s insistences ended with his death this spring, but he left a will that has kept the controversy alive. Mr. Gurlitt had no heirs, as he never married or had children. Instead, he left the works in his collection to the Kunstmuseum Bern in Switzerland. Last month the museum announced its decision to accept the gift, along with its pledge to return all Nazi-looted items to their rightful owners.

However an estate issue arose a few days before the museum’s highly-anticipated announcement to accept the gift. Uta Werner, Mr. Gurlitt’s 86-year-old cousin, applied to the Munich Probate Court for a certificate of inheritance for his estate. She was provoked to act by a psychological report concerning Mr. Gurlitt’s limited mental capacity at the time of the drafting of his will. The president of the German Forum for Inheritance Law noted that there were indications that Mr. Gurlitt was a “misfit” suffering from delusions.[5] Yet Ms. Werner’s application was not supported by Mr. Gurlitt’s other nearest direct relative, Ms. Werner’s brother. He respected his cousin’s bequest. Ms. Werner has articulated that if she succeeds on her ownership claims, she intends to restitute Nazi-looted items to their rightful owners, as determined by a court.

Although Cornelius Gurlitt and the Kunstmuseum Bern had both agreed to ignore statute of limitations issues related to restitution claims for the objects in the Gurlitt collection, claimants (mostly the heirs of the works’ original owners) typically face major hurdles due to time constraints. In Germany, the statute of limitations for civil suits is imposed by statute, and generally runs for three years, but may extend to 30 years.[6]  However, even if claimants can overcome the hurdles of statute of limitations, proving ownership is daunting. When targeted victims of Nazi atrocities were forced to escape the Third Reich, the ownership records for their art collections were not of the utmost importance. These people fled from genocide and families were torn apart. For this reason, the heirs of the victims face the formidable task of proving standing to sue for the recovery of property. To successfully file a restitution claim, it is necessary to prove an ownership right. This task is one of the heaviest burdens facing claimants. 

In addition, the return of Nazi-looted art is fraught with other difficulties, not least of them being intra-family disputes. In the case of Bakalar v. Vavra,[7] the Second Circuit rejected a restitution claim under the doctrine of laches (the case was decided under this equitable doctrine, as the appellate court found that under laches, a claimant can lose the right to an ownership claim, if the delay was unreasonable and caused prejudice to the current possessor). The lower court examined legal title as related to an Egon Schiele sketching that was owned by a man who died in a concentration camp. It was determined that the artwork was not seized by the Nazis based on the fact that the man’s sister-in-law had possession of the work after the Second World War. However, the court noted that title to the work did not pass to the sister-in-law, as title can only transfer when the estate of a decedent passes through administration, which it did not in Bakalar v. Vavra. As a warning to heirs with potential ownership claims, the court also set forth a notice: the statute of limitations does not reset with each generation, and thus heirs are held accountable for the knowledge their predecessors may have had.[8] In this case, the court found that the heirs during the prior generation were aware of their potential claim, and did not diligently pursue it, thus excluding later generations from demanding restitution.

In another case involving the exchange of art among family members, the court again did not award restitution to the heirs of the original owner. In In re Peters,[9] the heirs of Paul Glaser, an art collector, made a restitution claim for a work by Munch. During the rise of the Nazi government, Professor Glaser fled Germany, and he left a Munch painting in the care of his brother, an art dealer. It was sold within the year. After the sale, Prof. Glaser attempted to repurchase the work from the buyer, but the exchange did not occur. Nearly 70 years after the initial sale, Glaser’s heirs demanded the return of the work, claiming that title did not pass due to the fact that the transfer occurred under duress to sell.  The Supreme Court of New York did not agree, deciding that the facts did not demonstrate a duress sale. Rather, the heirs had no cause of action because the case simply arose from an “intra-family” dispute.

Even before a restitution claim is filed, family quarrels may play a pivotal role in the disposition of art. There may be disputes, such as disagreements among heirs that impede claims from being pursued. In addition, differences may arise after the successful restitution of stolen works. Once a valuable object is returned to a decedent’s heirs, how should the work’s value be distributed? Unlike liquid assets, a painting or sculpture is not divisible. In the case of a single art object, the group of heirs must decide how to equitably manage the work. In many cases, family members may disagree. Although the cash value is sometimes the desired prize, oftentimes heirs want to retain the artwork. Art is unique in that it links individuals to the past. The retention of the work has not just an economic value, but emotional and sentimental value.  In some cases, one heir may decide to purchase the interests of the other heirs in order to hold onto this non-economic significance.

On the other hand, all the heirs may opt to retain their ownership interests and thus must jointly determine how to handle the object. Some heirs have decided to auction or sell objects and then divide proceeds (or in the case of a recent auction, the heirs came to an agreement with an auction house regarding the division of proceeds).[10] In the landmark case of Altmann v. Austria,[11] Maria Altmann and her joint-heirs chose to sell five restituted works at auction and through private sale, resulting in one of the highest prices realized for a painting (the Portrait of Adele Bloch-Bauer sold for $135 million). Other heirs may decide to donate restituted artwork or provide a temporary loan in memory of their deceased relatives or to educate the public about the atrocities of the Holocaust.[12]

No matter what the outcome, the exchange of art is fascinating, linking today with the past, connecting individuals with their ancestors, and presenting occasions to bring families together and sometimes tear them apart.  

[1] In Re: Flamenbaum (during probate, an ancient golden Assyrian tablet was found among the possessions of the recently deceased Riven Flamenbaum, who had emigrated to the U.S. in 1949 after surviving wartime imprisonment in Auschwitz. During a probate dispute, Flamenbaum’s children informed a German museum of the existence of the tablet, and it was discovered that the object was stolen during World War II.

[3] Carlo Angerer & Andy Eckardt, Nazi Art Trove in German Apartment Includes Previously Unknown Matisse, NBC News, Nov. 5, 2013, http://worldnews.nbcnews.com/_news/2013/11/05/21318847-nazi-art-trove-in-german-apartment-includes-previously-unknown-matisse.  

[4] Jonathan Jones, What the Nazis Didn’t Want You to See, The Guardian, Aug. 15, 2005, http://www.theguardian.com/world/2005/aug/16/secondworldwar.

[5] Andrea Thomas, Swiss Museum Accepts Art From Late Dealer Cornelius Gurlitt, Wall Street Journal, Nov. 24, 2014, http://online.wsj.com/articles/swiss-museum-accepts-art-from-gurlitt-1416826077

[6] See Bugerliches Gesetzbuch [BGB] [Civil Code], 2 Jan. 2002, Federal Law Gazette, Title 1, § 202.   

[7]550 F.Supp.2d 548 (S.D.N.Y. 2008); vacated and remanded, 619 F.3d 136 (2d Cir. 2010); on remand, 819 F. Supp. 2d 293 (S.D.N.Y. 2011), aff’d, No. 11-4042 (2d Cir. N.Y. Oct. 11, 2012), reh'g denied, No. 11-4042 (2d Cir. N.Y. Dec. 28, 2012).

[8] For a thorough discussion of Bakalr v. Vavra, see Bakalar v. Vavra and the Art of Conflicts Analysis in New York: Framing a Choice of Law Approach for Moveable Property, http://columbialawreview.org/wp-content/uploads/2012/06/Frey.pdf .

[9] 821 N.Y.S. 2d 61 (2006).

[10] At a sale at Christie’s this fall, the proceeds of a sale for an Egon Schiele work was dividing between heirs of the original owner and the current owner (http://www.nytimes.com/2014/10/25/arts/design/christies-and-sothebys-differ-on-handling-of-2-schieles.html)

[11]  538 U.S. 1029 (2003), cert. granted in part, 539 U.S. 987 (2003)

[12] In the case of a restituted painted by Pissarro, the owner (an heir of a Holocaust victim) lent the work to a museum before it was passed to her heir (http://www.sothebys.com/en/auctions/ecatalogue/2014/impressionist-modern-art-evening-sale-l14002/lot.43.html).

Leila Amineddoleh is a Partner at Galluzzo & Amineddoleh. Her practice focuses on art, cultural heritage, and intellectual property law.  Prior to joining the firm, Leila worked as an associate at Fitzpatrick, Cella, Harper & Scinto, where she specialized in intellectual property litigation.  Thereafter, she began working as a legal consultant for artists, designers, musicians, films, arts organizations, and art collectors.  She also served as a mediator for MediateArt, a program run by Volunteer Lawyers for the Arts. Leila is also the Executive Director of the Lawyers’ Committee for Cultural Heritage Law. In her spare time, Leila is a musician who regularly performs as a solo pianist, and occasionally with other musicians, in New York City