Ruling On Schieles A Victory For Morgenthau

New York cannot be used as a haven for stolen artworks, the Appellate Division of state Supreme Court ruled this week in upholding the power of Manhattan District Attorney Robert Morgenthau to seize two Egon Schiele paintings whose ownership was contested.

The case had triggered a worldwide reassessment of artwork stolen by the Nazis from Jews during the Holocaust. It prompted museums to examine their own collections for looted art and led to the Austrian government’s decision last month to return 250 art objects, including three paintings by Dutch master Franz Hals, to the Rothschild family.

Two weeks ago, the mayor of Vienna announced that the city itself would return "objects that do not belong to us that the Nazis robbed from our Jewish friends and fellow citizens."

Artworks stolen by the Nazis has emerged in the last year as a major issue following the settlement by Swiss banks of claims that they profited from the Nazi plundering of Jews.

Although the case involving the Schieles concerns only two paintings that were displayed at the Museum of Modern Art, a relative of one of the alleged owners, Rita Reif, said she believed Morgenthau might broaden his investigation to look at other contested art in museums throughout the city.

But Assistant District Attorney Daniel Castleman said his office is concentrating only on the Schieles unless it receives additional complaints.

"First things first," he said. "We’ll worry about other cases later. We launched this investigation because of two specific complaints. This is not a pretext to launch an investigation into the artworks owned by museums in general."

The Brooklyn court ruling Tuesday allows Castleman, chief of the investigation unit, to continue seeking to determine if there was any criminal conduct in connection with the Schiele paintings. It is alleged the Nazis stole "Portrait of Wally" and "Dead City" from their Jewish owners.

Both paintings were exhibited at the Museum of Modern Art in late 1997 as part of a 150-piece collection owned by the Austrian government-financed Leopold Foundation. Just hours before they were to be returned to Austria, Morgenthau, in response to complaints from relatives of the claimed Jewish owners, empanelled a grand jury and seized the paintings to determine the truth of allegations.

The museum filed suit challenging the seizure on the grounds that a 1968 state law prohibited such action. A lower court agreed. But in a unanimous decision, the four-member Appellate Division said the state law was never intended to apply to criminal proceedings, only civil matters. It said the legislative history of the law demonstrated that it was adopted to maintain the free flow of art without museums having to be concerned about legal seizures by local creditors in a civil proceeding.

"No one disputes that intent, but it is not contended, nor could it be, that the public interest is served by permitting the free flow of stolen art into and out of the state," the court held.

It added that law enforcement authorities did not comment on the proposed law in 1968 "for the obvious reason that no one envisioned the legislation as having any impact on criminal proceedings."

And the court said the relatives whose complaints led to the seizure may not now move to seize the paintings as a prelude to a civil suit seeking ownership. But it said Morgenthau is free to continue his investigation, and whether that probe "leads to a criminal prosecution or a decision that the ownership dispute is purely a civil matter" is left to the district attorney and the grand jury.

MoMA immediately announced plans to appeal to the state’s highest court, the Court of Appeals. The court can either hear the appeal or sustain the Appellate Division ruling. Pending an outcome of the dispute, the paintings are to remain in storage at the museum.

"This is a deeply troubling and disappointing decision," said the museum in a statement. "We continue to believe that Supreme Court Justice Laura E. Drager’s original ruling is correct and that there are no exceptions [to the law]. The clear intent of the legislative and executive branches was to give out-of-state lenders confidence that loans of art to New York State would not be threatened in any way. This is a loss not just for the Museum of Modern Art but for all the people of New York."

The statement added that the museum remained interested in resolving the ownership of these and other artworks allegedly stolen by the Nazis. It pointed out that there are now numerous organizations investigating this issue and that its director, Glenn Lowry, is a founding member of a task force created for this purpose.

Reif, a relative of the owner of "Dead City," praised the court’s decision, saying: "We have always been confident that the legal merits of the district attorney’s case would prevail. We believe that his action will help to shed light on a very dark subject."

Constance Lowenthal, director of the World Jewish Congress’ Commission on Art Recovery, called the ruling a "very important contribution to a clarification of the law in New York. But these are both complex cases, as is every claimed World War II looted art case. They are complicated by the difficulty in obtaining good documentation, by the passage of time and the proliferation of heirs. Both of the claims deserve scrutiny and this decision will give more time for that scrutiny."