A buyer who purchases stolen property does not receive good title – depending on the jurisdiction. The Cassirer family has learned this lesson all too well after nearly two decades attempting to reclaim a Nazi-looted painting by Impressionist Master Camille Pissarro. Earlier this year, a U.S. federal court in California awarded the Pissarro to a Spanish Foundation that purchased it despite red flags pointing to its illicit history. The appeal of that decision is pending in the Ninth Circuit and raises several thorny issues, including whether prior rulings by a California district court and the Ninth Circuit improperly called for application of the substantive law of Spain (instead of California).

Camille Pissarro, Rue Saint-Honoré, après-midi, effet de pluie (1897)

Theft and Bad Faith Purchase of Pissarro Painting

As discussed in an article earlier this year, Lilly Cassirer was forced in 1939 to use the Pissarro painting Rue Saint-Honoré, Après-midi, Effet de Pluie as payment for visas to depart World War II Berlin. As Jews, Lilly and her husband had realized they must escape Germany due to the imminent dangers faced by their people. After inventorying the Cassirer home, a Nazi-appointed art dealer made an under-market offer for the Pissarro. Due to the unjust circumstances of that era, Lilly had no right to decline or negotiate such an offer.

The Painting had a circuitous route after that, eventually making its way to California by the hands of smugglers.  In 1976, it was purchased from a New York gallery by Baron Hans Heinrich Thyssen-Bornemisza. By the 1990s, the Baron’s artworks were considered “the most valuable collection in private hands” and valued at approximately $1 to $2 Billion. In light of his sophistication, it is interesting that the Baron’s records show he documented his purchase of the looted Pissaro with an incorrect venue (Paris instead of New York as shown on his invoice) and a different Pissarro painting that was never in his collection (La rue Saint-Honoré: effet de soleil, après-midi).

In April 2019, a judge in the Central District of California found it “undisputed that the Nazis stole the Painting from Lilly” and found the Baron knew of that theft and acted in bad faith when he purchased the Painting. Nonetheless, that Court refused to return the Painting to the Cassirers after finding, under Spanish law, that its most recent purchaser and current possessor, the Thyssen-Bornemisza Collection Foundation (“TBC”), had no “actual knowledge” Rue St.-Honoré was stolen. This finding, and the Court’s underlying decision to apply Spanish law, are at the forefront of the errors alleged in the current appeal.

TBC’s “Actual Knowledge” of the Theft of Rue Saint-Honoré

The Baron’s involvement with TBC is a critical factor in understanding whether TBC had “actual knowledge” that the Painting was stolen. TBC is a public foundation co-created by the Baron and the Kingdom of Spain. At the time TBC purchased the Painting, the Baron was chairman of TBC’s Board and held “control” over TBC’s “Artistic Committee”. Citing the Baron’s “central and controlling role” at TBC, the heirs have labeled the District Court’s finding of independence between the Baron and TBC flawed.

Because the District Court did not impute the Baron’s knowledge to TBC, the heirs were required to show TBC was “willfully blind” to facts indicating theft of the Painting in order to prove TBC’s “actual knowledge” under Spanish law. Included in the evidence available to TBC was a half-torn label from the “prestigious” Cassirer Gallery that was visible on the back of the Painting and reads “Berlin”, evidencing the Painting’s time in that city. TBC also was aware of the Painting’s incomplete provenance that fails to make any reference to Berlin or the Painting’s whereabouts during the time the Third Reich controlled that city. Despite being aware of these inconsistencies, TBC’s experts did not conduct any investigation into the provenance before TBC finalized its purchase of the Painting.

Due to the district court’s failure to address the “obvious import” of these facts that raise questions about whether the Pissarro had been stolen, the Appellants (comprised of Lilly’s heirs and the United Jewish Federation of San Diego County) have asked for the judgment in favor of TBC to be reversed. If the appellate court finds the lower court was correct in holding TBC had no actual knowledge of the Painting’s theft, Appellants have alternatively requested a hearing before the Ninth Circuit on certain issues that it previously decided in favor of TBC.

En Banc Hearing Requested Due to Policy Concerns  

Appellants have asserted that the rulings in Cassirer undermine US policy for return of Nazi-looted artwork. Two such rulings that have been raised on this point are the Court’s interpretation of recent US Holocaust legislation and its choice of law. In the event Appellants’ arguments are deemed to be sufficiently compelling, the appellate court may grant en banc review, which is employed on occasion in the US when cases involve issues of elevated importance, like those impacting public policy.

The Holocaust Expropriated Art Recovery Act of 2016 (HEAR Act) is federal legislation enacted in the U.S. to provide parties like the Cassirers with a six-year term within which to bring a restitution suit regardless of “any defense at law relating to the passage of time”. The Ninth Circuit ruled that Spain’s acquisitive prescription adverse possession defence did not relate to the “passage of time” and therefore could be advanced under HEAR. The question raised by Appellants is whether allowance of this defence is in keeping with the underlying purpose of HEAR; they propose that it is “truly obnoxious” to HEAR’s policy and should be reversed.

As to choice of law, the decision to apply Spanish substantive law has completely altered the outcome of this case in favor of TBC – a truth Appellants propose does not advance policy meant to reunite Holocaust victims and their heirs with looted artwork. Due to their domicile in California, Appellants argue that state law should be applied. Unlike Spanish law, California law would not require a showing of TBC’s “actual knowledge”; because the Baron did not have good title to pass, TBC would not have any rights to the Painting and would be required to forfeit it to the heirs. Also, while Spain allows title transfers of personal property under acquisitive prescription (as demonstrated by TBC’s success under this defence), California law does not.

Future Impact of the Cassirer Precedent

Appellants have created an opportunity for the Ninth Circuit to affirm the policy underlying the HEAR Act and effectively nullify many traditional choice of law rules that would time-bar most Nazi-looted art claims in the US. If reversed, Cassirer would also support the policy behind international agreements that Spain and the US are both signatories to like the Washington Principles on Nazi-Confiscated Art, which also encourages reunification of looted property with Holocaust victims and their heirs. However, if the decision is affirmed it will serve as a clear example that traditional stumbling blocks for claimants seeking return do remain in place, despite the passage of the HEAR Act.  

Image credit: Camille Pissarro, ‘Rue Saint-Honoré, Après-midi, Effet de Pluie’ ©Wikimedia Commons