Monday, November 03, 2014

Can A Jewish Man Imprisoned In Dachau Concentration Camp Transfer Valid Legal Title To A Schiele Painting?

Egon Schiele's Seated Woman With Bent Left Leg (1917)
On October 31, the family of Fritz Grunbaum gathered at the Museum of Jewish Heritage - A Living Memorial To The Holocaust to thank former District Attorney Robert Morgenthau for his efforts to recover Egon Schiele's Dead City III, an artwork he seized on behalf of Grunbaum's family at the MoMA in 1998.

Mr. Morgenthau, referring to the above drawing, read the following from a concurrence written by Judge Edward Korman when he sat by designation on  a case called Bakalar v. Vavra at the Second Circuit Court of Appeals:

Grunbaum was arrested while attempting to flee from the Nazis. After his arrest, he never again had physical possession of any of his artwork, including the Drawing. The power of attorney, which he was forced to execute while in the Dachau concentration camp, divested him of his legal control over the Drawing. Such an involuntary divestiture of possession and legal control rendered any subsequent transfer void.

Bakalar v. Vavra, 619 F.3d 136, 148 (2d. Cir. 2010)(concurrence).   The three judges on the Second Circuit panel in this published, precedential opinion found that the record suggested evidence that Nazis had looted Fritz Grunbaum's art collection and remanded to the trial court to reconsider the evidence.

Yet, despite what Judge Korman wrote, this week Sotheby's is planning to auction the Drawing without mentioning the Dachau power of attorney that Fritz was forced to execute, without mentioning Schenker, the Nazi looting entity that held the Drawing, and without mentioning Ludwig Rochlitzer, the Aryan trustee appointed to liquidate the Grunbaum's assets in January 1939.

To understand some of the facts relating to the Drawing's provenance, some explanation is necessary.
On March 22, 1938 Fritz Grunbaum was arrested by the Gestapo in Vienna and imprisoned in Dachau, where he died penniless.  Shortly after his arrest, a Nazi named Kieslinger inventoried Grunbaum's art collection.  Kieslinger counted 81 Schieles.  Five oils listed by name, including Dead City III.  The remaining 76 Schiele drawings and watercolors were not listed by title.
On April 26, 1938, the Nazis passed a decree requiring all Jews to declare their assets over 5,000RM.  According to the law, these Jewish assets were to be available to the Reich at the pleasure of Reichsmarshall Goering.  Each Jew was to declare the assets until the assets were gone or until the Jew had left the Reich.  On June 30, 1938, while in the Dachau Concentration Camp, Fritz was forced to execute a power of attorney (Vollmacht) permitting his wife to liquidate his assets.   Shortly thereafter under Nazi pressure and with her husband in a concentration camp, Fritz's wife Lily filed Jewish Property Declarations declaring Fritz's property, including the art collection with the Kieslinger inventory.  
Following Kristallnacht, the Nazis passed a decree forbidding Jews to buy or sell property and requiring the appointment of Aryan trustees to liquidate their property.  On January 1939, attorney Ludwig Rochlitzer wrote to Elisabeth Grunbaum, stating that the Nazis had appointed him to be the guardian of the "whole property" of the Grunbaums.

Thus, as of January 1939, Fritz and Elisabeth had lost control of their property as a matter of Nazi law.
The last Grunbaum Jewish property declaration was filed in June 1939.   Nazi-era export records show that a Nazi-controlled freight forwarding company named Schenker had possession of Fritz's art collection.  However, a lack of customs stamps on the export application showed that the art collection never left Vienna while the Nazis were in control.
Fritz died in January 1941.  In Nazi-era probate proceedings following Fritz's death, Elisabeth declared, under penalty of perjury, that Fritz had no property at the time of his death.  Elisabeth was deported to Maly-Trostinec, a death camp in Minsk in October of 1942.   She lasted so long because she had real property in Slovakia, and this took some time to sell.  The Nazis waited until a Jewish person had sold every last bit of property, including life insurance policies, before murdering them.
In the provenance of the Drawing, Schenker's possession is critically important, because it is the last place the Drawing was before it surfaced in Switzerland in 1956.  From court filings, an excerpt from a Schenker company history below in German with English translation following:
On September 18, 1956, art dealer Otto Kallir bought Dead City III and 18 other artworks by Egon Schiele, including the drawing above from a Swiss art dealer named Eberhard Kornfeld.   Kallir knew that Dead City III belonged to Grunbaum because he'd catalogued Grunbaum as the owner when he wrote a catalogue raisonee of Schiele's oils in 1930.    Even Eberhard Kornfeld's 1956 catalog listed Fritz Grunbaum as the immediate prior owner of Dead City III.

In 1928, Kallir borrowed 22 Schieles from Fritz Grunbaum for an exhibition at the Hagenbund commemorating the 10th anniversary of Schiele's death.   Many of those drawings were in the batch of Schieles Kallir purchased on September 18, 1956.   Kallir knew Fritz Grunbaum well and knew that Fritz was a famous cabaret performer who had been murdered in the Dachau Concentration Camp.   Thus, Kallir knew when he bought this batch of Schieles that they had been stolen by the Nazis from a concentration camp victim.

In 1998, District Attorney Robert Morgenthau seized Egon Schiele's Portrait of Wally and Dead City III when those works were on loan from Austria to the Museum of Modern Art.  Because Austria successfully questioned the standing of the claimants to Dead City III, the work was returned to Austria where it remains - although stolen from Fritz Grunbaum - in the Leopold Museum today.

In 1998, in the wake of the seizure of Dead City III by Morgenthau, Eberhard Kornfeld was asked where he'd gotten Dead City III and the other Schieles.  For the first time he claimed that he'd bought them in 1956 from Fritz Grunbaum's sister-in-law (despite his 1956 catalogue saying he'd gotten Dead City III from Fritz Grunbaum)  The only problem was that he never produced any invoice from his gallery to Lukacs that included the Drawing.  He produced a mess of obviously forged documents that handwriting experts expressed "massive doubts" as to their authenticity.  I have included a link to the report below.   To produce a final handwriting expert report, the experts needed to see the originals in Berne Switzerland.  However, Bakalar's lawyers and Kornfeld obstructed the experts from independently viewing the documents until court deadlines for discovery had expired.  Thus, no competent handwriting expert has yet been able to conduct a scientifically reliable comparison and thus to prove that the documents Kornfeld produced were forged.   But even among the documents that Kornfeld produced, there was no mention of the Drawing, and thus no documentary reason to include Lukacs in the Drawing's provenance.  Indeed, even assuming the forgeries to accurately list the artworks he acquired, Kornfeld did NOT acquire a 1917 drawing of a headless woman from Mathilde Lukacs.
In early 2008, Dr. Jonathan Petropoulos, a Ph.d from Harvard in history and one of the world's experts on Nazi art looting put together a report on the Drawing's provenance.  The report concluded that the Drawing was stolen.  The report concluded that the Mathilde Lukacs story was untrue.  The report can be found here:   Bakalar put in no expert report, but moved to exclude the report because it was filed after a court deadline.  The trial judge granted Bakalar's motion.

Thus, the trial court in Bakalar v. Vavra never dealt with the substance of the Petropoulos Report and with the proffered expert testimony demonstrating that the Nazis had looted the Drawing and that Mathilde Lukacs never had possesson of the Drawing.

Only time will tell whether Dr. Petropoulos' view of the Drawing's provenance will prevail as the view that is historiographically sound.   Only when handwriting experts gain access to Kornfeld's original documents and examine them with a stereoscopic miscroscope will we have scientifically sound proof of the forgeries.

But as a legal matter, Judge Korman's view of New York law would appear to be the one that the New York Court of Appeals would adopt, following its precedents in Menzel v. List, Guggenheim v. Lubbell, and Matter of Flamenbaum.  New York's Dead Man's statute bars as incompetent testimony relating to a transaction with a deceased, so Kornfeld's self-serving testimony is ordinarily inadmissible under New York law.   Since Kornfeld's own business records contradict the claim that he got the Drawing from Mathilde Lukacs, a New York court might well take the view, based on documentary evidence, that Mathilde Lukacs does not belong in the Drawing's provenance.  But see Bakalar v. Vavra 500 Fed.Appx. 6 2d. Cir. 2012 (unpublished summary order).
 Copyright law, fine art and navigating the courts. All practice, no theory.
Copyright Litigation Handbook (Thomson Reuters Westlaw 2012-2013) by Raymond J. Dowd Copyright Litigation Handbook on Westlaw

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