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New York’s Appellate Division Upholds Return of Artworks to Heirs


by Jana Farmer on July 17, 2019

Just a few days after the Second Circuit held that New York’s Metropolitan Museum of Art could keep in its collection the monumental work by Pablo Picasso entitled The Actor, New York’s Appellate Division, First Department, upheld the return to the heirs of the original owners of art allegedly looted by the Nazis during World War II. Both of these recent decisions touch upon the Holocaust Expropriated Art Recovery Act (HEAR Act), the 2016 legislation that expanded the timeliness for actions to recover artworks lost during the Holocaust.

Two gouaches by the Viennese modern artist Egon Schiele, titled Woman in a Black Pinafore and Woman Hiding Her Face (the Artworks), were once part of the collection of a Jewish-Viennese cabaret performer named Fritz Grünbaum. In 1938, Nazi officials compelled Grünbaum and his wife to permit them to inventory Grünbaum’s property, including his art collection. Shortly after the inventory, Grünbaum’s entire art collection was deposited with a Nazi-controlled shipping company. Documentation as to its fate is sparse until in 1956, when several pieces from the collection, including the Artworks at issue, were put up for sale by Galerie Kornfeld, an art gallery in Switzerland. The subject Artworks were eventually acquired in 2013 by Richard Nagy, a London art dealer. Grünbaum’s heirs brought an action sounding in replevin and conversion, seeking return of the Artworks on the grounds that there had never been a voluntary transfer out of Grünbaum’s estate and in New York a thief cannot pass good title.

At the trial court level, Justice Ramos granted summary judgment in favor of the heirs based on his findings that the Artworks were the property of Grünbaum, who was dispossessed due to the Nazi persecution, and that Nagy had failed to establish a triable issue of fact regarding any superior claim to the Artwork. By contrast, Grünbaum’s heirs were unsuccessful in their attempt to recover another artwork from Grünbaum’s collection in Bakalar v. Vavra, 819 F. Supp. 2d 293 (S.D.N.Y. 2011) aff’d, 500 F. App’x 6 (2d Cir. 2012), where the court held that their claims were barred by the equitable defense of laches. The Second Circuit also had used laches in the dismissal of the plaintiff’s complaint in Zuckerman v. The Metropolitan Museum of Art, as discussed in our July 2, 2019, alert.

The Decision
Plaintiff’s initial burden was to prove that the Artworks were in fact originally owned by Grünbaum, a difficult task given the passage of time and the loss of many records from the World War II era. The First Department found that plaintiffs submitted sufficient proof of Grünbaum’s ownership of the Artworks through circumstantial evidence, including references in exhibition catalogues and witness testimony.

Second, the Appellate Division found that while there was no definitive documentation proving to whom, exactly, Grünbaum lost his art collection, that issue was immaterial in light of the undisputed fact that he did not voluntarily relinquish the works. The evidence showed that the Artworks were inventoried by the Nazi officials, an Aryan Trustee was appointed to administer Grünbaum’s art collection and Grünbaum was executed during the Holocaust.

With respect to laches, an equitable defense based on a lengthy period of neglect or omission to assert a right and the resulting prejudice to an adverse party, the First Department noted that Nagy acquired the Artworks in 2013 and found that he suffered no change in position and there was no evidence lost between his acquisition of the artworks and the plaintiff’s demand for their return. Nagy also was aware of the plaintiff’s claims to the Grünbaum collection, as the plaintiff had filed a brief in the Bakalar action.

In issuing its decision, the First Department took specific note of the HEAR Act and its intention to ensure that laws governing claims to Nazi-confiscated art and other property further United States policy and are not unfairly barred by statutes of limitations. It also noted New York’s strong public policy to ensure that the State of New York does not become a haven for trafficking in stolen cultural property or permit thieves to obtain and pass along legal title.

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