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Committee on Financial Services

United States House of Representatives

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FEBRUARY 12, 1998

My name is Stephen E. Weil. Prior to my retirement in 1995, I was Deputy Director of the Smithsonian Institution's Hirshhorn Museum and Sculpture Garden for twenty-one years. I am also a member of the New York bar and the co-author of two books on art law published in 1974 and 1986 respectively.

I was invited this morning to discuss some of the legal obstacles that the original owners of stolen works of art are likely to encounter in this country when seeking to recover those works from other individuals or institutions that may subsequently have acquired them through wholly good faith transactions. Paramount among those obstacles are the various state-formulated statutes of limitations that can bar such recovery efforts entirely.

Cases to recover stolen works of art have generally involved a collision between two deeply cherished principles: justice and fairness. Justice is embodied in the traditional legal rubric that a nobody can acquire good title from a thief. Taken alone, that would mean that neither the original theft of a work of art nor any subsequent transfer -- whether made in good faith or not -- can impair the original owner's property rights in that work. It ought, accordingly, logically follow that the original owner should be able to trace the chain of possession and always recover the work wherever and whenever she may ultimately find it.

Crosscutting the claims of justice however -- at least in many instances -- are the conflicting claims of fairness. Fairness dictates that the subsequent owner of a stolen work of art -- particularly a good faith purchaser for value -- should not remain indefinitely exposed to the risk that he might have to defend his rights to that work against increasingly stale or ancient claims. Fairness requires that there should come a time when, in his ownership of that work, he can enjoy what the law terms "repose". This fairness principle is embodied in statutes of limitations that are intended both to prod those with cognizable legal claims to assert those claims in a timely manner and to assure that such claims, when once asserted, can be adjudicated fairly before -- in the words of one commentator -- "evidence has been lost, memories have faded, and witnesses have disappeared".

Describing the interplay of these principles, one New York court observed: "The statute of limitations is a statute of repose. At times it may bar the assertion of a just claim. Then its application causes hardship. The legislature has found that such occasional hardship is outweighed by the advantage of outlawing stale claims." (Schmidt v. Merchant's Dispatch Transp. Co., 270 N.Y. 287, 302, (1936))

To my knowledge, nobody has ever argued that statutes of limitations should not be applicable to cases seeking the recovery of stolen art -- including art stolen from victims of the Holocaust. The more complicated questions that the American courts have had to face, however, concern how those statutes are to be applied and, most particularly, when the limitation periods they prescribe should begin to run. In most legal contexts -- negligence cases, for example, or breach of contract -- the normally applicable rule is that the statute of limitations begins to run when the underlying cause of action accrues. In the case of stolen art, however, to start running the statute at the moment of theft -- a moment that may be decades before the original owner is able to discover the whereabouts of her stolen property -- would produce so manifestly unjust an outcome that no court appears to have ever seriously considered it.

What has emerged instead in recent years is a so-called "discovery" rule that attempts to strike a balance between justice and fairness. In California, that rule is statutory. The California Civil Code (section 338.3) specifically provides -- in the case of stolen art or artifacts -- for a three-year statute of limitations that does not begin to run until the discovery of the stolen property's whereabouts. Elsewhere. a roughly similar rule has been formulated by the courts. New York, however, has a rule uniquely its own. There, pursuant to a 1969 decision involving the Holocaust-related theft (Menzel v. List, 298 NY2d 979 (1969)) of a Marc Chagall painting, the statute of limitations does not begin to run until the original owner has not only discovered the whereabouts of the property but has also demanded its return and had that demand refused. Of the various American rules, New York's is clearly the one most favorable to an original owner seeking to recover her stolen property and, correspondingly, least favorable that property's subsequent good faith purchaser.

Intertwined with these overarching limitation rules are a tangle of lesser ones. Some of the most problematic of these deal with diligence. Should the original owner lose her recovery rights entirely if she never made any effort to locate her stolen property? If so, how much effort is required to avoid this? Under New York's demand-and-refusal rule, must a demand be made within a reasonable time after discovery of the stolen property's whereabouts? What diligence is required, in turn, of a subsequent purchaser to qualify as a good faith purchaser? As data bases such as the Art Loss Register become more widely available, might courts hold purchasers culpable for their failure to consult these?

Choice of law rules are also problematic. When the British nephew of the original owner discovers that the painting stolen from his aunt in Brussels now belongs to a New York collector who purchased it in California, which statute of limitations applies? Problematic, finally, are matters of proof. What evidentiary rules are appropriate or even sufficient some fifty-plus years later to get at the truth of events that occurred in the bewildering chaos of wartime Europe?

What this should strongly suggest is that seeking to restore the tens of thousands of works of art looted or otherwise displaced by World War II to their rightful pre-War owners through the routine channel of object-by-object litigation has not proven practical. Given the daunting obstacles that must be overcome, only a handful of cases have been brought. Those few, in turn, have proven for the most part to be unexpectedly complicated, expensive, and protracted. If we are to provide an effective means to restore to their original owners works of art stolen during the Holocaust that might today be found within our borders,, it will require the establishment of some alternative mechanism -- an imaginative mechanism that is both just and fair and one that will permit claims for the return of such art to be resolved in some simpler, swifter, less costly and more satisfactory manner than is now the case.


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