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ART ON LOAN CAN'T BE SEIZED IN LEGAL CASES, COURT RULES

In a decision closely watched by curators at the Albright-Knox Art Gallery and museums across the state, the state's highest court Tuesday said works of art on loan to museums in New York cannot be seized in court proceedings, even if they were allegedly stolen by Nazis in World War II.

The Court of Appeals upheld a 1968 state law, spawned by a dispute about an exhibit at the Albright-Knox, that said art on loan from facilities or owners outside of New York cannot be confiscated by prosecutors or others in a legal dispute involving the artwork or artist.

At risk, Albright-Knox officials maintained, was the museum's active lending program, which last year brought 100 works of art from Europe, Canada and Australia to show in its galleries. The 1968 law, which came out of legal tussle between a New York City art dealer and the paintings and sculpture by Naum Gabo on exhibit at the Albright-Knox at the time, was intended to encourage intermuseum lending by ensuring that the loaned artwork would be returned.

Then-Gov. Nelson A. Rockefeller, an avid art collector himself, said at the time that protecting museums from having artwork seized was necessary for the state "to maintain its pre-eminent position in the arts."

Albright-Knox officials, who rely heavily on a lending program to bring in great works of art from other states and nations, breathed easier after the court's decision.

"This just assures the free flow of art into New York State," said William J. Magavern, a longtime museum board member and Buffalo lawyer who represents the Albright-Knox.

Had the court decided the other way, Magavern said, it would have allowed individuals with cases against artists or their artwork to wait until an exhibit reached a New York museum before launching a legal case.

"So museums would have steered away from New York State," he said.

The case decided by the Court of Appeals involved two paintings by Egon Schiele on display at the Museum of Modern Art in 1997 as part of a world tour of the Austrian expressionist painter's works.

Several days before the exhibit ended, heirs of two estates asked the museum to not return the paintings to its Austrian museum owners because they had been stolen from their Jewish owners by Nazis in World War II. The museum refused, citing its contractual obligation to return the paintings to the Austrian museum.

The Manhattan district attorney's office then ordered the Museum of Modern Art to produce the paintings for a grand jury that was investigating whether they had been stolen. The museum fought the subpoena, basing its decision on the 1968 law that bars "any kind of seizure" of art on loan to a not-for-profit museum from an out-of-state entity.

The museum was successful in a lower court, but an appellate division panel ordered the artwork turned over to prosecutors, arguing that, free flow of art notwithstanding, the public interest is not served "by permitting the free flow of stolen art into and out of the state."

But the state's highest court said Tuesday that the protections given museums to lend art without fear of having paintings, sculptures and other works seized in legal proceedings are "unqualified" in the 1968 statute tested by the Albright-Knox case. The court said that their decision only bars the paintings from being seized and that prosecutors still have the authority to investigate whether the paintings were stolen by Nazis.

The controversial case pitted the museum industry against Holocaust survivors groups. European museums said the state was risking a loss of international artwork going to New York museums, while Jewish groups said there was a moral obligation to ensure that such works of art, stolen during Nazi plundering of Europe, were returned to their owners or heirs.

American museums, meanwhile, said they support the return of stolen art to their rightful owners, and have in the past year stepped-up efforts to determine whether artwork they borrow is part of any collection stolen by Nazis.

But museum officials said that to rule against the 1968 state law would create a chilling effect in their ability to obtain rare and important artwork for their collections.

"If the Albright-Knox Art Gallery and the other art museums cannot assure lenders of art that their works will be returned, loans will become difficult or impossible to arrange," the museum's director, Douglas Schultz, said in a recent filing with the appeals court.

Manhattan District Attorney Robert M. Morgenthau said the court is "just plain wrong" in its applying the 1968 law to criminal cases. The prosecutor said that while culture is important, Tuesday's ruling makes New York "a safe haven for stolen art."

"How can museums claim they are the sources of civilized values when they ignore questions of the legitimacy of the works held in their collections or exhibits in their displays?" he said.

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