How Accepting a Donation Can Have Disastrous Effects

By Christopher Lewis

By Arad [GFDL (http://www.gnu.org/copyleft/fdl.html), CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/) or CC BY-SA 2.5-2.0-1.0 (https://creativecommons.org/licenses/by-sa/2.5-2.0-1.0)], from Wikimedia Commons

By Arad [GFDL (http://www.gnu.org/copyleft/fdl.html), CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/) or CC BY-SA 2.5-2.0-1.0 (https://creativecommons.org/licenses/by-sa/2.5-2.0-1.0)], from Wikimedia Commons

In February 2018, the Southern District of New York issued their holding in Zuckerman v. Metropolitan Museum of Art. The plaintiff, Laurel Zuckerman who is the great-grandniece of Paul Leffmann and Administratix of Alice Leffmann’s estate, alleged that Pablo Picasso’s, The Actor, now owned by the Metropolitan Museum of Art in Manhattan, was sold under duress during the height of Adolf Hitler’s reign in Germany. Ms. Zuckerman sought over $100,000,000 in damages and for The Actor to be returned to her family. This lawsuit was dismissed as the district judge found that Ms. Zuckerman could not sufficiently argue that her great-great-uncle was under sufficient duress that would justify returning the painting to her family or allowing for damages. This case is unlikely to be overturned on appeal unless the Second Circuit Court of Appeals widens the claim of duress to include a broader reach into the parties’ motives, however, the claims of duress are not always so easily dismissed.

This case raises controversial issues such as contractual fairness and public policy concerns associated with the atrocities caused by Adolf Hitler. These issues would seem to dictate that Mrs. Zuckerman should be recouped for her loss; however, the business interests of the Metropolitan Museum of Art advocate that the museum should retain the painting.

Ordinarily, contracts made between parties are binding as to their contents so as to prevent another party from reneging on the agreement. This is a public policy concern as we want contracts to actually mean something and not be voidable whenever one party gets cold feet. However, there are ways to avoid this binding nature such as the argument of duress where the party seeking to be free from the contract alleges that a wrongful threat was made that induced that party to enter into the contract out of reasonable fear of the threat. In contracts, it is expected for there to be some semblance of power imbalance; however, it crosses the line when the imbalance reaches a wrongful threat level.  As the court discussed, Mrs. Zuckerman’s argument is tenuous at best as her forefather sold the painting for $12,000 in order to fund his escape to Switzerland; this sale was not caused by the oppressive Nazi regime nor was there evidence of a wrongful threat by the buyers. Without evidence of other conduct by the parties, Mrs. Zuckerman was not able to sufficiently allege that her forefather was under duress.

The subject of paintings sold under duress commonly arises with paintings sold during the 1930’s. One example involved Oskar Kokoschka’s 1913 Two Nudes (Lovers) painting which appeared to have a clear claim towards being returned as the painting was forcibly sold by the Nazis only to find that the period for claims had expired. Because of the great business interest that art museums have in these paintings, courts face strong opposition in deciding these issues. It is only where the parties were able to show that the paintings had been seized by the Nazis or taken against the owner’s will that the courts have been willing to allow for a claim of duress. The high standard is the result of the powerful interests that are at play. However, when the parties are able to meet this standard, settlements can be quite large.

Museums, like the Metropolitan Museum of Art, solicit and accept gifts of masterpieces that are then displayed as most museums do not have the operating budget to purchase paintings that are valued in the millions of dollars. The gifting process works primarily because of the positive connotation associated with donating to a museum and the enormous tax benefits that are given to the donor. The art donation business has become an increasingly large field that allows museums like the Metropolitan Museum of Art to promulgate new exhibits at little to no cost. As the Metropolitan Museum of Art does not officially charge any fee for admission, the ability to obtain new art is incredibly valuable to their business interests as a whole. Additionally, large parts of the operating budget are tied to what is on display at the time. Therefore, if the Museum were forced to take down an exhibition or forced to pay damages, it could be disastrous. Ms. Zuckerman was seeking over $100 million dollars in restitution, an amount that could effectively bankrupt the museum. The Museum is, therefore, forced to balance its business interests and weigh the value associated with a painting being exhibited against the danger that the painting could have been misappropriated. For almost 59 years, the Museum did not know the true origins of Mrs. Zuckerman’s painting which could have had disastrous effects. The best way to protect a museum’s business interest is to investigate the origins of the painting at the beginning to ensure that it is not misappropriated.

Christopher is a Second-Year Law Student at Wake Forest University where he is a staff member on the Journal of Business and Intellectual Property Law. He is an alumnus of Clemson University where he graduated cum laude with a major in electrical engineering and a minor in mathematics. Christopher plans to pursue a career in Intellectual Property Law upon graduating.