A Thief Cannot Pass Good Title

September 20, 2010

In 1938, the Nazi’s arrested Fritz Grunbaum, a Jewish cabaret performer as he attempted to flee Europe. He was deported to Dachau and died there in 1941. During his incarceration, Grunbaum was forced to execute a power of attorney which effectively divested him of his property including a work of art by the Viennese artist, Egon Schiele. The work found its way to Swiss art gallery and then to New York where David Bakalar, a Massachusetts resident, purchased it for $4300. Earlier this month, the Second Court of Appeals vacated a Southern District of New York judgment and held that New York law, not Swiss law applied to Mr. Bakalar’s declaratory judgment action. See 2010 WL 3435375. In New York, unlike Switzerland, a thief cannot pass good title. Stolen artwork, the Second Circuit concluded, belongs to the original owner.

Raymond J. Dowd is a partner and member of Dunnington, Bartholow and Miller’s intellectual property and art law practice groups. He has broad commercial litigation experience and is author of the Copyright Litigation Handbook (on Westlaw at COPYLITIG). He also writes the Copyright Litigation Blog (http://copyrightlitigation.blogspot.com/). He represented the Grunbaum heirs. We interviewed Mr. Dowd last week.

Reference Attorneys (RA): Welcome and congratulations, Mr. Dowd. The focus of our blog is really nuts and bolts, legal research. But, it’s hard to ignore the incredible story behind this litigation; from the tragedy at Dachau to what the court described as the “shadowy institution of the art gallery.” I was especially struck, by the comments of the U.S. Consul General cited in the concurrence stating that there was “a curious respect for legalistic formalities. The signature of the person despoiled is always obtained, even if the person in question has to be sent to Dachau in order to break down his resistance.” And, this, by historian Raul Hilberg, also cited by the concurrence: “Lawyers were everywhere…again and again, there was a need for legal justifications.”

Time has passed (and, we’re in the US) but, the Swiss law seems to perpetuate the ill effect of those ‘legalistic formalities.’ What does this say about our profession?

Raymond Dowd (RD): The rise of Nazi Germany and the central role played by the legal profession shows how important it is to have an independent bar that actively promotes individual liberties and property rights in the face of state action, political pressures or unpopular causes. Too many of us are silent when rights guaranteed by the Constitution are infringed, particularly when those rights belong to an unpopular minority.

RA: As an experienced litigator, how do you view your role in righting this wrong?

RD: Specific to the Nazi spoliation of Jews 1933 through 1942, I have been able, with the help of the world’s leading historian in the area, to reconstruct the legal environment in position at the time. We had to take Nazi-era legal documents, decrees and other evidence scattered in various publications and tie them together to demonstrate that Jews weren’t simply voluntarily abandoning their property en masse, that there were legal coercions such taxes and as 90% confiscatory foreign exchange rates that pauperized anyone wishing to flee the country.

RA: Also, I mention the $4300 price tag because there’s obviously more at stake here than the value of a work of art. How would you characterize the ‘value’ of this case?

RD: I have spend five years of my life on this case, often with the evidence of hundreds of thousands of murders on my desk or a nearby bookshelf. The massive spoliation of Jews has been overshadowed in history by the horror of the murders. For a full picture of history, we must realize that 8-9% of Germany’s budget of 1938-39 was stolen from Jews. When we put the profit motive into the Holocaust, it gives us a new understanding of why the murders took place and how the Nazis exterminated a pauperized population.

RA: I was surprised by the amount of materials related to stolen and looted art. This case sites to several publications. Is there a resource you relied on or might recommend?

RD: It is estimated that over 600,000 artworks stolen by the Nazis alone are still missing. Many books have been written, it really depends on the country and era. For provenance researchers, there is the American Association of Museums Guide to Provenance Research. There are reports on stolen art that date back to the 1940’s and websites of many of the major museums report on dubious provenances in their collections.

RA: What can you tell us about the ‘art law?’ Is this a growing practice area?

RD: I think that art and cultural property will grow in significance as a practice area. Now the number of practitioners is relatively small. But U.S. museums have enjoyed explosive growth, and the US public has taken to art collecting and contemporary art like never before. As in any other multi-billion dollar industries, lawyers are needed.

RA: Is it limited to stolen and looted art?

RD: No, there is a significant legal trade in art and artworks and a myriad of problems that implicate everything from construction law to labor law.

RA: Do you have a sense for how big the problem of looted and stolen art is?

RD: I hear statistics that the illicit art trade is just behind the illegal arms and drug trades.

RA: Customers reading this case will be calling Reference Attorneys for the Austrian Nullification Act, Article 934 of the Swiss Civil Code, the Bergier Commission Report. Are these materials provided exclusively by your experts, or is there a resource you enjoy for these kinds of historical and international material?

RD: The Final Bergier Commission report is available online in English at http://www.uek.ch/en/index.htm. I am not aware of any commercially available English-language translations of the Austrian or Swiss Civil Codes, we had to pay to translate these and relied on foreign law experts. If you look at Cultural Property blogs, you can locate good resources.

RA: I learned a new term of art; a work’s “provenance” significantly affects work’s value. This sounds like a job for a history detective. Any recommendations for researching a work’s “provenance?”

RD: Attorneys and judges are not trained in historiography. An attorney must work closely with provenance researchers or “art detectives,” as well as genealogists specialized in probate research and historians trained in art. History is not logic. I think that after learning a lot about the particular art, artist and historical context, an attorney can work well with these professionals to develop theories of a case or draw solid conclusions from historical documentation.

RA: Finally, where I can our readers find you in the near future? Are you presenting or participating in any upcoming events?

RD: I will be speaking at the upcoming Federal Bar Association Convention in New Orleans, for more information, www.fedbar.org For more news on speaking enagements and Nazi-looted art, please subscribe to Copyright Litigation Blog (http://copyrightlitigation.blogspot.com/).

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West Reference Attorneys