Kae Haas is correct that the Portrait of Wally case is similar in some ways. One of the lessons of law school is that no matter how complex a case seems when you first examine it, it is always much more complicated when you have carefully researched both the facts and the law. There were several important differences between Portrait of Wally and Rue St Honore.
One is the plaintiff. In Rue St. Honore, plaintiff was the heir of the owner. In Portait of Wally, plaintiff was the United States. Why was the U.S. suing? The National Stolen Property Act provides that stolen property knowingly imported into the U.S. may be civilly forfeited to the U.S. It is the custom of the U.S. (though not required by law) to return stolen property to the owner from whom it was stolen. That is one piece of good news. A second is that the true owner does not need to pay the legal expenses; they are paid by the U.S. A third is that the defendant may perceive that there may be collateral consequences to failing to “do the right thing”. The bad news is that the owner does not control the lawsuit. The Department of Justice does. It may decide to settle the case on terms that are not satisfactory to the owner. That did not happen in this case.
A second difference is the defendant. In Rue St Honore, defendant made a credible case that it was a good faith purchaser. Defendant in Portrait of Wally could not make that case. Defendant was an organ of the Austrian government. At the end of the war, the Allies confiscated Wally from the Nazi who had stolen it. It was mistakenly delivered to the Belvedere. A Dr. Leopold, who knew that Wally had been stolen from Lea Bondi Jaray, promised to help her recover the painting, but instead bought Wally from the Belvedere. Wally thus became part of the collection that was “sold” in the 1990s to the Leopold Museum, of which Dr. Leopold was the director. While the museum argued that both it and Dr. Leopold were good faith purchasers, Judge (later Attorney General) Mukassey properly gave that argument little credence in their motion for summary judgment.
In fact, there was never a final decision in Portrait of Wally. Ten years of discovery ensued where the parties tried to sort out all the facts related to the case. Both sides moved again for summary judgment, which Judge Preska, who inherited the case, denied, as she believed that there were unresolved issues of fact. As Ms. Haas related, the Austrian government then settled. It paid the heirs $19 million, and agreed to post the described label near Wally. The U.S. agreed to dismiss its suit. The Austrian government had reportedly incurred $4 million in legal fees, and was facing more if the case went to trial, and still more if an appeal followed the trial. In the meanwhile, the Altmann case had resulted in Austria’s loss of important paintings by Gustave Klimt that had been star attractions in Vienna. Its primary concern was keeping Portrait of Wally in Austria.
Dr. Leopold had died during the intervening years. His son, who was on the board of trustees of the Leopold Museum, said that his father had asked the Austrian government to offer a settlement of $2 million at the time the painting was seized in New York, but the Austrian government had refused to offer that settlement.--
Professor of Law, University of San Diego
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Author: Mastering Art Law (Carolina Academic Press, 2d ed. 2020)