Stephen Katz and Adam Cherson raise excellent points about the Cassirer case.
In this case, the parties probably stipulated that the painting was stolen. In 1939, Lilly Cassirer transferred the painting to a Nazi art appraiser for 900 Reichsmarks, well below its actual value, which the appraiser paid to a blocked account that Lilly could never access. The painting then disappeared.
A transfer under duress applied by the transferee or someone related to him would not be a voluntary sale and would not transfer the title to the painting. On the other hand, whether a transfer due to financial hardship not imposed by the transferee, such as loss of income source due to the Nazi laws followed by a public auction, would be a theft, has yet to be decided.
In this case in 1951, the painting surfaces in a reputable U.S. art gallery. It was sold to a U.S. collector by a reputable gallery. In 1952, the collector sold it though a reputable New York gallery to another U.S. collector. In 1976, Baron Thyssen-Bornemisza bought the painting through a reputable New York gallery. The painting was kept mostly in Switzerland until 1992, when the painting (along with the rest of the Baron’s collection) was loaned to the Spanish government and put on display by a foundation established by the Spanish government in a Madrid Palace. The foundation bought the collection, including the Pissarro at issue, in 1993 with funds provided by the Spanish government.
The precise question in this case is whether the foundation had acquired title by acquisitive prescription. To acquire title in that way under Spanish law, a person must possess the property as though he were the owner for a set length of time. In U.S. law, we have a comparable doctrine called adverse possession. Under Spanish law, the length of possession for a good faith purchaser is shorter than the time required for others to acquire title.
The trial judge found that the Baron, when he purchased the work in 1976, did not know that it had been stolen, and was not “wilfully blind” to the likelihood that it had been stolen. The court found that in 1976, when you bought a painting from a reputable gallery that displayed a bill of sale from another reputable gallery, there was no reason for a buyer to inquire further. Whether the court would have given the same answer had the Baron purchased at a later date, I cannot say. Thouogh the art world is famous for the secrecy of its transactions, it has become more common to pay attention to provenance since then. If the Baron had known that the work had been owned by the Nazi party, the wartime German government, or a prominent Nazi art dealer, there might have been a different answer.
What the 9th Circuit decided (on the litigation’s third visit to the Court of Appeals) was that there was ample evidence to support the trial judge’s verdict.
Adam is correct that if the question in the case was the legal effect of the sale in New York, New York law should apply (though some scholars might dispute that) and the Cassirers would win. But the question in this case was whether the Spanish doctrine of acquisitive prescription would apply. If the Baron purchased in good faith, enough time had passed for him to become the owner under Spanish law. If the Baron did not purchase in good faith, the longer period for acquisitive prescription would apply, and that period had not been met.
This is the classic case of the eternal triangle of the law. An owner is robbed of his property. The wrongdoer sells it to a good faith purchaser, and absconds with the money, leaving the owner and the purchaser to sort it out. In common law jurisdictions, the owner wins because England had a stronger attachment to the sanctity of property. In continental European countries that follow Roman legal traditions, the good faith purchaser wins because their law favored the security of commerce over the security of ownership. In neither jurisdiction do they follow what seems to me to be a sensible solution, which is to split the property. Each party is innocent. Each has been wronged. Why should one win everything and the other lose everything when they actually stand on equal innocence?
This case is a good example of waste. The claim is being made by the original owner’s grandchildren. If they win, they will need to sell the painting. Their lawyer, one of the best law firms in the country, is probably charging a contingent fee of between one-third and 40% of the fair market value of what is recovered. The Pissarro will probably fetch multi millions of dollars on the auction market. It is doubtful that the Cassirers have a spare 3 or 4 million to pay their lawyers, much less the financial resources required to insure, secure and maintain such a valuable painting. So it will go to auction, where it is likely to be bought by a very wealthy person. In the best of all worlds, it would disappear into a private collection for a generation, then be given to a museum. Alternatively, it might be placed in a storage locker in a freeport such as the Geneva airport and unseen for an indeterminate period of time. On the other side, the foundation is also represented by one of the best law firms in the U.S. It is difficult for an outsider to estimate what the legal fee has been, but it is not unusual to have a $1 million lawyer’s bill to litigate to the court of appeals once. This case has been there three times, though presumably the cost of each trip is less than the preceeding trip. How much more efficient it would have been for everyone (except the lawyers) for the foundation to have offered the Cassirers a reasonable amount plus a promise that the full sad story of their ancestor would be displayed on the identifying tag, and the Cassirers to have accepted it in lieu of trying to get the full value of the painting less their legal fees.--
Professor of Law, University of San Diego
5998 Alcala Park, San Diego CA 92110
Author: Mastering Art Law (Carolina Academic Press, 2d ed. 2020)