A tale of two Schieles

We have quite regularly discussed different cases of art stolen from Jewish families by the Germans during World War II on this blog. The one point they all have in common is that it is always difficult to predict the outcome. There is never a straightforward answer to whether the art will be returned.

A recent case illustrates the incongruent approaches to the cases. 

Two paintings by Austrian artist Egon Schiele are being auctioned next month. One by Christie’s and one by Sotheby’s.

Schiele's "Seated Woman with Bent Left Leg"

Schiele's "Town on the Blue River"

The result of the sales will, however, be very different for the family of Fritz Grünbaum, who once owned both pieces.

As reported by The New York Times:

Christie’s is selling Schiele’s 1910 watercolor “Town on the Blue River,” on Nov. 5 in conjunction with a restitution agreement that treats the work as looted art and provides compensation to Grünbaum’s heirs. 

Sotheby’s is selling a 1917 gouache and crayon work, “Seated Woman With Bent Left Leg,” on Nov. 4 under an arrangement that will not compensate the family. The auction house is relying on rulings by United States federal courts that found the family waited too long to file its claim and that there was insufficient evidence to conclude “Seated Woman” had been stolen.

The different approaches apparently stems from the fact that it all comes down to the word of a Swiss art dealer who says he bought dozens of Schieles from Grünbaum’s sister-in-law.

Grünbaum had accumulated a substantial art collection prior to 1938 when he was sent to Dachau and all his art was seized. His collection included 81 Schieles, however, it is not clear whether these two paintings were part of it.

After the collection was seized, it was moved to a storage depot in Vienna. Grünbaum died in 1941, and his wife, Elisabeth, died in 1942, in a concentration camp.

 The New York Times continues:

The next time any of the works from Grünbaum’s collection surfaced on the art market was in the 1950s, when the Swiss dealer, Eberhard Kornfeld, sold some. Mr. Kornfeld later said he had purchased them from Elisabeth Grünbaum’s sister, Mathilde Lukacs-Herzl, who died in 1979. Mr. Kornfeld produced correspondence with Ms. Lukacs-Herzl, tax stamps and other documentation to support his account. 

Jonathan Petropoulos, the former art research director for the Presidential Advisory Commission on Holocaust Assets in the United States, has called Mr. Kornfeld’s story suspicious, in part because the documents carry varied spellings of the name “Mathilde” in penciled signatures and because he did not identify her as the source of the works until decades after her death. In any case, Mr. Petropoulos, who was hired by the Grünbaum family legal team, argues that Ms. Lukacs-Herzl did not have title to the art because she was never declared Grünbaum’s heir by an Austrian court, as required.  

So, on the one side Sotheby’s is taking Kornfeld's word that he acquired the paintings lawfully. On the other, Christies's acknowledge that the position is complicated and therefore will treat the painting as looted art and compensate Grünbaum’s heirs.

While the lack of consistency is not surprising, it is nevertheless disappointing particularly since it is very likely that the paintings came from the same collection. And while there are several organisations that are still working to right wrongs that took place over 70 years ago, as those events become ever more distant it becomes even more likely that the disparities will only increase.


Source: The New York Times, 24 October 2014

Detroit drama deconstructed

It's been a while since we checked in with the state of affairs in Detroit. You may remember, this time last year, we reported here and here about the city filing for bancruptcy and how there were suggestions of the Detroit Institute of Arts selling works from its collection to help pay the city's massive debt.

Despite a lot of criticism and opposition, the city's emergency financial manager, Kevyn Orr, went ahead and ordered Christie’s to appraise part of the collection, namely only artworks purchased by the city. Christie's estimated that, if sold, the works would raise between $454 million and $867 million. 

But now it is not just the city which is interested in the value of the art. Creditors of the city of Detroit have also turned their attention to the DIA collection as a source of cash. Indeed, they went so far as to file motions to allow them to remove pieces from the walls of the DIA in order to inspect and appraise them, and to access historic documents about the art, on the basis that Christie’s evaluation did not give an accurate estimate of the value of the collection

Earlier this month, the DIA were granted a bit breathing space by the Detroit court which denied these motions - reportedly telling the creditors that they could visit the museum and enjoy the art on the walls like everyone else. Although the creditors were given permission to work with DIA officials to inspect artwork which is in storage at the museum. Unfortunately, it seems that the valuation has nevertheless moved to the next level - with officials handling the bankruptcy proceedings advising the court this week that a comprehensive appraisal of the value of the collection is now underway.

Separately, the Detroit Free Press reports that: "the [DIA] moved to protect itself in court, arguing in its own filing that its artwork is legally protected from the auction block and threatened a court battle if the city pursues a sale. It said it will support the city's plan to allow the transfer of ownership of the Detroit Institute of Arts to an independent non-profit. But the museum's threat to challenge any sale in court sets up the museum as a potential obstacle for the city if the current restructuring proposal collapses."

The next major stage of this saga is the trial to determine whether the restructuring plan submitted by the city should be implemented. It is scheduled to start on 24 July.

Source: The Detroit Free Press, 15 May 2014, 27 May 2014,

Miró sale cancelled

In a similar situation to that Detroit (reported here and here), but on a larger scale, the Portuguese government sought to sell 85 works by Spanish surrealist Joan Miró in a bid to cut its debt.

Portugal hired Christie's (who was called in by the Detroit Institute of Arts to value its works) to sell the pieces.

The decision to sell the art drew widespread criticism, and a case was filed in Lisbon to prevent the sale. Although, the court ruled against the claimants, this week Christie's withdrew the artworks from its auctions.


Reuters explains:

The auctioneers withdrew [the artworks] from a London sale even though a Lisbon court threw out a suit by opposition lawmakers, prosecutors and the public trying to block the offer saying the government had violated the rules on classifying the artwork. 

The Miro collection, estimated at more than 35 million euros ($47 million), came into state hands in 2008 when Portugal nationalized the failed bank BPN that owned them. 

... 

"The legal uncertainties created by this ongoing dispute mean that we are not able to safely offer the works for sale," Christie's said only hours before the two-day sale was to start.  

The paintings are being offered by the state holding company Parvalorem, which is in charge of minimizing the impact of BPN's old debts and bad loans on public accounts.  

The court ruled the sale could not be stopped but noted that the state culture secretary's decision had not sought proper authorization to send the paintings to London last week.

The pieces remain at Christie's in London for now. We will have to wait and see whether they are returned to Portugal.

Source: Reuters, 4 February 2014

Christie's conditions of sale found to be reasonable

The recent case of Avrora Fine Arts Investment Ltd v Christie, Manson & Woods Ltd (2012) saw Christie's' terms and conditions of sale put under scrutiny by the English High Court.

The case concerned a painting called “Odalisque” which the claimant, Avrora Fine Arts Investment Limited (“Avrora”), bought at an auction held by Christie's. The painting was said to be by a famous Russian artist Boris Mikhailovich Kustodiev. However, after the sale, an art dealer who had been asked to view Avrora's collection expressed doubts about the authenticity of the painting, and certificates were later obtained from Russian museums stating that the painting was not by Kustodiev.

The sale was conducted pursuant to Christie's' conditions of sale. These included a limited warranty enabling a buyer to cancel a sale and obtain a refund in the event that the item sold was found not to be authentic. They also provided that all statements made were statements of opinion; that, subject to the limited warranty, Christie's would not be responsible for errors and omissions in the catalogue; that each item would be sold "as is"; and that, subject to the limited warranty, no representation, warranty or guarantee would be given in respect of matters such as attribution, authenticity and provenance.

Avrora brought the claim to cancel its purchase of the painting and get a refund pursuant to the warranty given by Christie's. It also made claims against Christie’s for negligence and misrepresentation under the Misrepresentation Act 1967.

In respect of the first claim, the Court held that since the evidence indicated quite strongly that Kustodiev was not the painter, Avrora was entitled to cancel its purchase of the painting and to recover the money paid.

The Court then turned to Avrora’s claims under the Misrepresentation Act – that Christie's (i) had been negligent in attributing Odalisque unequivocally to Kustodievd; and (ii) had impliedly represented that it had reasonable grounds for attributing “Odalisque” unequivocally to Kustodiev when it did not in fact have such grounds. Both claims raise issues relating to the “requirement of reasonableness” in the Unfair Contract Terms Act 1977 (“UCTA”).

On the first point, the Court said that Christie's' conditions of sale made it clear that it was not assuming responsibility to Avrora. Therefore, the negligence claim must fail unless the conditions were found to be contrary to UCTA. However, on the second claim, the court found that a misrepresentation had been made as it was clear that Christie's had not only warranted that Odalisque was by Kustodiev but had represented that this was its opinion. Since Christie's was giving its opinion as well as a warranty, it had impliedly represented that it had reasonable grounds for holding that opinion.

The Court then considered UCTA. Avrora had submitted, that UCTA applied and Christie's' conditions failed the requirement of reasonableness as required under the Act since they would, if effective, preclude a negligence claim against Christie's. Christie's said that UCTA did not apply. The Court found that UCTA did apply as: "the conditions did “[part] company with reality” insofar as they negated the assumption of responsibility. The reality was that Christie’s had taken responsibility for the attribution of “Odalisque” to Kustodiev. It stated that that was its opinion; it gave Avrora a warranty to that effect; it indicated that its views reflected research (for example, by presenting itself as a centre of excellence and, more specifically, by explaining in the “Important Notes and Explanation of Cataloguing Practice” that more qualified catalogue entries – e.g. “Attributed to …” - were “based upon careful study” and represented “the opinion of experts”, tending to suggest that an unequivocal attribution would be too); and it was intending to charge the buyer a substantial premium."

The next question was, therefore, the “requirement of reasonableness” under UCTA was met. If Christie's' conditions failed to meet this requirement, the conditions could not bar a claim for negligence under the Misrepresentation Act. The Court found that the requirement of reasonableness was met. The court listed a number of reasons for this conclusion, including:

- there was no question of Avrora being left without a remedy if “Odalisque” proved not to be by Kustodiev, since Christie’s was giving a warranty;
- it was not unreasonable for Christie’s to exclude its liability in the event that the authenticity of the painting was incorrect;
- while Christie’s only contracted on its own standard terms, Avrora is a vehicle for a particularly rich man and it was under no economic imperative to deal with Christie’s if it did not wish to; and
- Avrora appeared to have some familiarity with Christie’s’ terms, and in any event could reasonably be expected to know of them.

Accordingly, the relevant parts of the conditions were not invalidated by UCTA and so could serve to bar the claims for negligence and misrepresentation.

To summarise, therefore, Christie's can continue to conduct business under its standard conditions of sale, under which it can contract out of liability in relation to the lots it sells. However, if it is established that a painting bought at a Christie's auction, under those conditions, is a forgery, the purchaser should be entitled to cancel the purchase and claim a refund of the money paid.