A pop quiz on the ins and outs of good title.
Thank you for reading Brothers in Law. We are giving a pop quiz today on what constitutes good title to art. Please close your books and take out your pencils.
Questions:
1. Alvin stole a painting titled The Chipmunk from Simon last Monday and sold it to you this morning. You had no idea the work was stolen. Do you now have good title to The Chipmunk?
2. Alvin stole The Chipmunk from Simon 25 years ago and squirreled it away, and his aunt sold it to you last Friday. In the interim, Simon hired a detective but couldn’t locate it. You had no idea the work was stolen. Do you now have good title to The Chipmunk?
3. Alvin stole The Chipmunk 25 years ago, but Simon never reported the loss to the police and didn’t bother to look for it. Over the years key documents concerning the work’s ownership have disappeared, witnesses have died, and memories have faded. You bought the painting yesterday from Alvin’s aunt. Do you now have good title to The Chipmunk?
4. Simon lent The Chipmunk to an art gallery for display in an exhibition but specifically said the painting was not for sale. You had no idea that the work was just on loan and bought it from the gallery after the exhibition opened. Do you now have good title to The Chipmunk?
5. Simon owns 60 percent of The Chipmunk, and Theodore, an art dealer, owns 40 percent. Simon lets Theodore temporarily display the painting in his home. Theodore sells the painting to you in the ordinary course of business, without telling you that Simon owns part of it. Do you now have good title to The Chipmunk?
6. Simon sells you a collage, Homage to the Chipmunk, that is decorated with real eagle feathers and whale teeth. Do you have good title to it?
7. Alvin consigns a copy of The Chipmunk that he painted in prison to Theodore’s South Beach art gallery for sale. The gallery goes bust. Who gets the work: Alvin or the gallery’s creditors?
8. A California convent, Our Lady of the Acorns, bought The Chipmunk years ago at auction. Recently, the nuns learned that Father Marmot had scampered off with the painting and was offering it for sale in New York. Unfortunately, the convent has lost all records showing that it owns the picture. Can Father Marmot be prosecuted for this theft under the National Stolen Property Act (nspa)?
9. Can Father Marmot be prosecuted under the nspa if the convent discovers that its version of The Chipmunk is actually a worthless copy of the original?
10. Do all art law cases involve chipmunks?
Answers:
1. No. Under Section 2-403 of the Uniform Commercial Code (UCC), a person who steals a work doesn’t acquire title to it and therefore cannot convey good title.
2. Maybe. Public policy favors quieting stale claims and fostering confidence in the marketplace, so all civil actions, including those involving art, are subject to statutes of limitations. These statutes vary by state, but the limits specified are usually between three and five years. However, this leaves open the key question of when the statute of limitations begins to run. Under the so-called Discovery Rule adopted in many jurisdictions, the clock starts ticking after the owner has discovered (or should have discovered) that the work was stolen. In contrast, under the so-called Demand Rule followed in New York, the statute of limitations begins only after the owner demands return of the work and the purchaser refuses the demand.
3. Maybe. You might be able to assert a so-called laches defense (an affirmative defense to untimely claims) if Simon’s delay was unreasonable and you were prejudiced by the delay. In the 1999 case Greek Orthodox Patriarchate of Jerusalem v. Christie’s, a federal court sitting in New York decided against a plaintiff who had not searched for its missing manuscript for 70 years. The court reasoned that the delay made it difficult for the defendant to provide evidence of ownership.
4. It depends. Because you had no knowledge that the gallery was not entitled to sell the painting and bought it in the ordinary course of the gallery’s business, under Section 2-403(2) of the UCC you might acquire title. However, if Simon had filed a simple UCC-1 financing statement when loaning the work and complied with other requirements, he would have put the world on notice that the gallery lacked clear title and would have an easier time getting his painting back.
5. Again, it depends, and you’ve probably bought yourself a lawsuit in addition to a painting. According to the 1981 New York case Porter v. Wertz, an owner’s interest in art can be conveyed if the owner “clothed” the seller with ownership or authority to sell the work and the buyer relied on the seller’s apparent ownership. In that case, the collector Samuel Porter let Harold Von Maker hang a painting by Maurice Utrillo in his home while deciding whether to buy it. Von Maker gave the painting to Peter Wertz, who worked in a deli and who sold the painting to the Feigen Gallery. When Porter sued Feigen for recovery of the painting and damages, the dealer raised as a defense the fact that the work had been entrusted to Wertz. However, the New York Court of Appeals held for Porter, in part because he had entrusted the painting to Von Maker, not Wertz, and in part because Wertz worked in a deli, not a gallery, so the sale was not in the ordinary course of business.
6. You may have gotten good title, but that won’t necessarily help you keep the collage if possession violates applicable federal laws, such as the Eagle Protection Act. In that case the collage would have to be forfeited to the U.S. government.
7. Yet again, it depends. Although Section 2-326 of the UCC suggests that a gallery’s creditors can reach art consigned by an artist to the gallery, some states, including Florida and New York, have enacted special statutes protecting works consigned by the artist. Note that artists must strictly comply with the requirements of such laws to be eligible for protection.
8. Yes. The convent needn’t prove clear title for Father Marmot to be prosecuted under the nspa, which is a federal statute making it a crime to knowingly transport stolen merchandise valued at $5,000 or more in interstate or foreign commerce.
9. Yes. As long as Father Marmot believed the painting was genuine, it doesn’t matter that the work was fake for purposes of the nspa. In the 1978 federal case United States v. Tobin, the defendants stole sculptures they believed were by Frederic Remington and Emile Picault and were arrested when trying to sell them to undercover FBI agents for $15,000. At trial a dealer revealed the Remington to be a fake, but the defendants were convicted anyway.
10. That’s nuts.
“Whose Painting Is It?” originally appeared in the October 2010 issue of Art+Auction.