The New York Times recently reported on a lawsuit filed in New York State Court in which the heirs of Fritz Grunbaum are citing the recently enacted Holocaust Expropriated Art Recovery Act (known as the HEAR Act) in an effort to claim two valuable drawings by the late Austrian artist Egon Schiele.  The HEAR Act, adopted last December, has been widely praised as a necessary tool to provide the victims of Holocaust-era persecution and their heirs a fair opportunity to recover works of art confiscated or misappropriated by the Nazis during World War II.

Grunbaum’s nearly 450 piece exquisite art collection has been the center of controversy almost since the collection was confiscated from his Vienna apartment in 1938.  Over the years, Grunbaum’s heirs have argued that the collection was stolen by the Nazis.

Others, such as collectors, dealers and some museums have countered that the artwork was inventoried by the Nazis and not stolen, and that 53 of the some 81 Schiele works were legitimately sold by Grunbaum’s sister-in-law to a Swiss art dealer in 1956.  These parties are of the view that previous courts have found that the Schiele works were not stolen and that no further claims should be considered on such works.

However, the Grunbaum heirs assert that the previous claims, in the present case and others, were determined on legal technicalities, not the merit of the argument that the works were looted by the Nazis and that this is the type of case that the new law was enacted to address.

The HEAR Act creates a federal statute of limitations for such claims that is six years from the time of “actual discovery” of the whereabouts of the work.  The new law is consistent with the “spirit of two international proclamations stating that technicalities should not be employed to prevent stolen property from being returned to rightful owners.”

The two Schiele works being sought by Grunbaum’s heirs, namely, “Woman in a Black Pinafore” (1911) and “Woman Hiding Her Face” (1912), were part of the 1956 sale to the Swiss dealer.  The attorney for Grunbaum’s heirs, however, argues that the circumstances of the 1956 sales transaction were never fully investigated and that the lost works were not discovered by the heirs until they were noticed for sale at a 2015 art fair.  The two Schiele drawings are said to be valued together at about $5 million.

The Grunbaum heirs’ suit was filed in November 2015 after learning that Richard Nagy, a London art dealer and Schiele specialist, was trying to sell the two Schiele drawings at an art fair at the Park Avenue Armory earlier that same year.  Nagy has fought the claim in court by arguing that he acquired both works “in good faith and in a commercially reasonable manner” after the United States Supreme Court declined to hear the attorney for Grunbaum’s heirs appeal of an earlier case.  Nagy’s attorneys argue that prior court rulings on the Schiele works from the Grunbaum collection were based on a finding that such works had been properly conveyed in 1956.  Specifically, Nagy’s attorneys assert that the attorney for Grunbaum’s heirs was wrong to invoke the new HEAR Act because the law does not apply to cases where a final judgment has been reached.

Agnes Peresztegi, president and legal counsel of the Commission on Art Recovery, an organization founded by billionaire art collector Ronald S. Lauder, however, sides with the position of the attorney for Grunbaum’s heirs.  She indicated that the prior case was not decided on the merits, but rather on a technical issue that too much time had passed to pursue a claim.  Peresztegi “welcomes the use of the new law in deciding whether many of the Grunbaum collection’s Schieles, including the two owned by Mr. Nagy, were stolen.”

The attorney for Grunbaum’s heirs maintains a positive attitude regarding the case in which he recently indicated that “[w]e believe that the expert report and scholarship of Dr. Jonathan Petropoulos, the world’s leading expert in this field, will persuade the court that the evidence shows that Fritz Grunbaum was a victim of Nazi art looting.”

We will continue to monitor this case and will report updates on same on the Art Law blog.

 

 

 

In an art market that has been defined by the uncertainty of world events and declining inventory, it was reported earlier today that Sotheby’s announced fourth quarter earnings of $65.5 million, which is an increase over that same period in the prior year.  The auction house had a loss of $11.2 million in the fourth quarter of 2015.  Sotheby’s adjusted net income for 2016 was $99.6 million, which is down from $143.1 million in 2015.

Sotheby’s has been working to counter this softening in the art market by diversifying its business.  In particular, Sotheby’s recently acquired art authentication firm, Orion Analytical, in addition to acquiring Amy Cappellazzo’s art advisory business last year.  The auction house further acquired Moses Art Indices, which monitor the auction business, and hired Christy MacLear, the chief executive officer of the Robert Rauschenberg Foundation, in an effort to expand its advisory services for both living artists and artists’ estates and foundations.

Further, although there is a widespread reluctance on the part of auction houses to give away profits through guarantees, Sotheby’s president and chief executive officer, Tad Smith, indicated earlier today that the auction house would use such guarantees when necessary.  With the expertise of Sotheby’s team, Mr. Smith affirmed that “we can confidently offer a guarantee to the seller and hedge it on the other side.  Used prudently, guarantees are good for consignors, collectors, the market overall, and investors.”

It will be interesting to see whether the other auction houses will follow suit in using such guarantees in future art auction sales this year.

In recent art world news, next week’s auction sales of Impressionist, modern and Surrealist art in London will test the strength of the international art market in this current climate of uncertainty.  The art world, of course, is hoping that it will be business as usual and perhaps even a strong market for investment-grade Guaguins and Magrittes.

The notable lot is expected to be Gustav Klimt’s vibrant flower painting “Bauerngarten (Blumengarten),” which was created in a garden near Lake Attersee in Austria during the summer of 1907.  The work is estimated to fetch well over 35 million pounds (about $44 million) at Sotheby’s on March 1, 2017.  The Klimt sale appears to be well timed as it was recently reported that American media magnate Oprah Winfrey had sold Klimt’s “Portrait of Adele Bloch-Bauer II” (1912) last year for $150 million to a Chinese buyer in a private transaction.  Ms. Winfrey had purchased the painting in 2006 at Christie’s for nearly $88 million.

Despite the contraction in certain areas of the art market, the bankability of Klimt, whose $135 million ‘Portrait of Adele Bloch-Bauer I’ was the world’s most expensive artwork in 2006, is reaching new heights.”

Klimt is recognized as a global brand, particularly since “[e]veryone knows ‘The Kiss,’ and, because of the film ‘Woman in Gold,’ more people know about the Bloch-Bauer portraits.  They’re super[-]icons[,]” according to Patrick Legant, a London-based art adviser who specializes in Impressionist and modern works.

According to the Artnet database of salesroom results, Klimt’s “Bauerngarten (Blumengarten)” is guaranteed to sell “courtesy of a third-party ‘irrevocable’ bidder, at an auction price yet to be seen for a landscape by the artist[.]”

Although the Klimt painting is described as being “property from an important private collection,” the deciphered hieroglyphic catalog symbols below the description reveal that Sotheby’s “owns the lot in whole or in part.”  It appears that Sotheby’s has proactively purchased the Klimt work at least in part.  The auction house is now “flipping” the painting at one of its own sales next week, where it will definitely find a buyer in view of the third-party irrevocable bid.

For further information on next week’s London auction sales, see “London Sales Will Gauge Art Market’s Health in Trump Era,” published online by the New York Times on February 24, 2017.

 

In recent art world news, a cat burglar was sentenced to eight years in prison by a criminal court in Paris for stealing five masterpieces from the Paris Museum of Modern Art.  The burglar admitted that he had stolen five paintings worth over 104 million euros (about $110 million) during a predawn break-in at the museum back in May 2010.  The stolen works include paintings by Modigliani, Léger, Braque, Matisse (“Pastoral”) and Picasso (“Dove With Green Peas”).

Also given prison sentences were two accomplices, including an antiques dealer for commissioning the heist and for storing the stolen paintings and a clock maker for storing the stolen paintings later.  The cat burglar was fined 200,000 euros (about $212,000) and both accomplices were fined 150,000 euros (about $159,000).  In addition, all three individuals were ordered to collectively pay a 104 million euro indemnification (about $110 million), which represents the paintings’ estimated value at the time they were stolen, to the City of Paris.

It has been reported that there remains some mystery “as to whether the paintings were sold, hidden somewhere safe or, in a worst-case scenario, destroyed, as one defendant claimed during the trial.”

The City of Paris has increased its security measures at its 14 museums, including the Petit Palais, since the burglary.  Other museums, such as the Louvre, are managed by the French national government.

Among other high profile burglaries in recent years include “the theft of Munch’s ‘Scream’ in 2004 in Oslo by armed robbers, and that of Francis Bacon paintings from a private residence in Madrid in 2015.”

In an attempt to curb illicit trafficking of fine art and antiques, a group of Geneva based art professionals known as the Responsible Art Market Initiative (RAM), which include dealers and art law attorneys, will publish a dossier on art market best practices for free ports and custom-free zones. There have been numerous reports of looted art appearing in free ports. Of recent note, an Amedeo Modigliani painting worth approximately $20 million with Nazi links was located last year in the Geneva free port.  However, despite this high profile Swiss scandal, the Responsible Art Market Initiative has reported that its dossier of guidelines will serve the art market at large, and is not solely designed for the Swiss market (which has been reported to only make up 2% of the art market).  Our contributors have noted in previous posts that the upsurge in the use of free ports by collectors has led to concerns over the use of such storage spaces for illegal activities.

Richard Polsky writes:

As the owner of Richard Polsky Art Authentication, I’ve always believed that authenticity is the bedrock of any art transaction, which seems to have been proven out by the constant stream of related articles in the New York Times. During the last six months alone, we’ve been treated to the spectacle of the Knoedler gallery scandal for selling fake canvases by Jackson Pollock, Mark Rothko, Robert Motherwell, and others. Then there was the dealer Mary Boone pulling a bait and switch of a Ross Bleckner painting on the actor Alec Baldwin. This was followed by London’s James Mayor Gallery suing the Pace Gallery, over their rejection of 13 Agnes Martin works that they once sold, for inclusion in the catalog raisonne that Pace is in the process of compiling.

Recently, we expanded beyond our core business of exclusively authenticating the work of Andy Warhol, Jean-Michel Basquiat, and Keith Haring. We now offer a “Preliminary Opinion” service, which will focus on the work of 39 significant Post-War & Contemporary artists — and Georgia O’Keeffe. Rather than an in-depth authentication analysis, our new concept is to offer a client a credible, but affordable opinion, on the probability of a painting being genuine or not.

The logic behind branching out into 40 additional artists is based on the complete abandonment of authentication responsibilities by virtually every major artist’s estate. As followers of the art world know, the Andy Warhol Art Authentication Board closed up shop five years ago. Their decision was almost entirely based on incurring millions of dollars in legal fees to defend themselves against lawsuits, brought by disgruntled clients whose works were rejected. Immediately following the Warhol board’s announcement, the authentication committees for Roy Lichtenstein, Jean-Michel Basquiat, Keith Haring, and others, all followed suit. Each of them cited the same reason; fear of being sued.

In 2015, when I sent out an announcement that I had formed an art authentication company, I was immediately inundated with inquires, all asking the same thing, “How are you going to protect yourself from being sued?” The simple answer was by being completely transparent (though I still have the client sign a disclaimer). When a collector signed a release with the Warhol estate, he agreed to allow them to stamp the back of his painting with the word “Denied,” if they concluded it was a fake. When the collector wanted to know why it was rejected, he was given the unsatisfying answer, “We can’t tell you because we don’t want to aid counterfeiters.” While most owners simply shrugged, a number of people felt they were treated unfairly, and took action. My guess is that if the Warhol people had just leveled with these painting owners, much of the litigation, which led to their ultimate demise, could have been avoided.

Part of my motivation for starting Richard Polsky Art Authentication was the opportunity to be involved with something that was intellectually satisfying. I enjoy using a body of knowledge that I had acquired from many years of studying art. Additionally, I frequently found myself smiling after informing a client that his Warhol was the real deal; having to tell a client his painting was a fake wasn’t a good feeling. Not surprisingly, those who owned authentic pictures never failed to compliment my skill and acumen; those on the other end of the stick thought I was ignorant. But one of the unforeseen pleasures of the art authentication business was that I was now in a position to give something back to the art world. I decided to offer our services to university art museums on a pro bono basis. Recently, we were asked by Oxford University to examine a small Keith Haring sketch that was given to them — and it happily turned out to be genuine.


Richard Polsky has accumulated forty years of expertise in the contemporary art world as a gallery owner, author of multiple books on the art market, lecturer, and provider of litigation support. Richard Polsky Art Authentication can be viewed at www.RichardPolskyart.com.

I was very inspired after reading this recent online NPR article on blind and visually impaired art enthusiasts being able to “see” and experience works of art at the Smithsonian American Art Museum in Washington, D.C. through uniquely guided tours.  The museum offers America InSight tours twice a month led by specially trained docents to blind and visually impaired visitors.

During these specially guided tours, the dozen or so volunteer docents use verbal descriptions of artwork as well as other senses in their verbal descriptions, such as the sound of music to bring to life a work of art.  The visitors are encouraged to imitate the pose of a sculpture while participating in the tour.  In some cases, low vision and blind visitors can even touch some of the art with the use of Latex-free gloves.

While moving slowly through the museum during the tour, the blind and visually impaired visitors are able to “see” the artworks in their imaginations with some getting close to the artwork to view it better with the aid of a magnifying device.

The Smithsonian American Art Museum’s America InSight tours certainly prove that there are a number of ways to experience works of art and not just through sight.

In recent art world news, on December 29, 2016, the Polish government signed an agreement with the privately owned Princes Czartoryski Foundation to purchase the Czartoryski art collection, which is recognized as one of Europe’s most significant private art collections.  The family foundation has administered the collection since its inception in 1991.

The Czartoryski art collection includes 250,000 historic manuscripts and documents, some of which were previously owned by Polish kings.  The treasured collection also includes 86,000 museum artifacts of which contain 593 precious artworks, most notably, Leonardo da Vinci’s “Lady With an Ermine” (1489-1490), Rembrandt’s “Landscape With the Good Samaritan” (1638), and sketches by Rembrandt, Auguste Renoir and Albrecht Dürer.

The purchase transaction only changes the status of the family art collection, which was set up more than 200 years ago by Princess Izabela Czartoryska.  It has been reported that the artworks will remain where they are today – most are housed and displayed in the National Museum in Krakow with the exception of “Lady With an Ermine”, which is displayed at the Wawel Royal Castle in Krakow.

The legal effort of Poland’s culture ministry “reflects a broader goal by the right-wing Law and Justice government, which since taking power more than a year ago has been striving to re-establish Polish heritage and history as a source of national identity and pride.”  Poland’s deputy prime minister and minister of culture, Piotr Glinski, who signed the agreement, has acknowledged that the $105 million paid for the collection by the Polish government is “way below the market price,” which is widely estimated at more than $2 billion, and the transaction can be viewed more as a “donation.”

Many artworks from the family art collection were looted during the war years, including Raphael’s masterpiece “Portrait of a Young Man” (1513-1514) and were never recovered.  The list of lost art work includes as many as 800 works.  The recently signed agreement “not only gives Poland the rights to the current collection, but also transfers the rights to any future claims to works of art that may be retrieved.”

As recently reported in the New York Times, the heirs of Alfred Flechtheim, a prominent German art dealer and collector, brought suit in federal court in Manhattan earlier this week against the German state of Bavaria over alleged Nazi-looted art works.  The heirs argue that the German state of Bavaria has refused to return art works that were looted by the Nazis before World War II.

The Flechtheim heirs seek the return of eight paintings by artists Max Beckmann, Juan Gris and Paul Klee from the Bavarian State Paintings Collection.  According to the complaint, the eight paintings include Beckmann’s “Duchess of Malvedi” (1926), “Still Life with Cigar Box” (1926), “Quappi in Blue” (1926), “Dream—Chinese Fireworks” (1927), “Champagne Still Life” (1929) and “Still Life with Studio Window” (1931); Gris’ “Cruche et Verre Sur un Table” (1916) and Klee’s “Grenzen des Verstandes” (1927).

The heirs had been in negotiations with the Bavarian government for seven years prior to filing their suit.  In their court filing, they accused the German state of not meeting international commitments on the restitution of Nazi-looted art.  Specifically, the complaint states “Bavaria’s refusal to confront its responsibility has persisted since the war” and its “chain of title to the paintings is defective because it was rooted in the seizure of Flechtheim’s property in violation of international law.”

In the complaint brought by the son and widow of Flechtheim’s nephew, the heirs allege that the works being sought were among those Flechtheim was forced to leave behind as he fled Germany and his galleries were taken over.

The Bavarian government has previously taken the position that the paintings were not looted art and that the works were sold by Flechtheim in 1932 before the Nazis came to power.  And, in 1974, the paintings were later donated to the Bavarian State Paintings Collections by Munich art dealer, Günther Franke.

The Flechtheim heirs, however, dispute the Bavarian government’s position, citing evidence that they claim shows the paintings were still in Flechtheim’s possession in 1934 after the Nazis came to power.  The heirs criticize the German state for its refusal to open records that they claim would be helpful in researching the fate of the paintings.  Their court filing cites a letter sent last year to the governor of Bavaria by nearly 30 members of United States Congress requesting “‘greater dialogue and cooperation to fulfill’” international principles aimed at supporting the restitution of art seized by the Nazis.”

The case is Hulton et al. v. Bayerische Staatsgemaldesammlungen et al., United States District Court, Southern District of New York, No. 16-09360.

In recent art world news, a Nazi-looted sculpture has been restituted to the rightful owners by the City of Berlin.  The looted art is a marble sculpture by Reinhold Begas entitled Susanna (1869-72) and the rightful owners are the heirs of the former publishing mogul Rudolf Mosse.

At the turn of the century, Mosse was one of the three wealthiest men in Berlin.  According to The Art Newspaper, Mosse’s “palatial neo-Baroque home on Leipziger Platz was filled with paintings, sculptures, antique furnishings and tapestries.  His collection included works by Max Liebermann, Carl Spitzweg, Wilhelm Leibl, Hans Makart and Adolph Menzel.”

Mosse was a successful publisher of the Berliner Tagesblatt newspaper, “a staunch advocate of democracy even before the Weimar Republic.”  After his passing in 1920, Mosse’s son-in-law, Hans Lachmann-Mosse managed the newspaper until he and his wife, Felicia Lachmann-Mosse, were forced to flee the Nazi regime eventually emigrating to the United States from Switzerland.

Mosse’s collection had been bequeathed to his daughter, Ms. Felicia Lachmann-Mosse, but had become lost after her emigration.  In 1934, the family’s possessions were seized and sold at auction and the family never saw the proceeds.

The Mosse Art Restitution Project was established by the family in 2012 in order to locate the missing art works.  Since the founding of the Project, eight works were returned in 2015.

According to the Prussian Cultural Heritage Foundation, the marble sculpture will remain on loan to Alte Nationalgalerie in Berlin, where it is currently on display.