"When an art gallery has access to information regarding a painting's authenticity, but fails to pursue the information, it cannot reasonably rely on defendant's representations or omissions regarding the painting."

Been extra-busy with the day job (not to mention the really fun stuff), so I've fallen a little behind on some art law news.  I see that, last week in the Southern District, Judge Cederbaum granted summary judgment for the defendant (representing himself pro se) in a case involving a fake Milton Avery painting.  ACA Galleries bought the painting from Joseph Kinney for $200,000 and, "shortly after" the sale was completed, took it to the Avery Foundation, who told them the work was a fake.  The most interesting part of the decision is the holding that even if Kinney knew it was a fake -- even if, that is, he committed fraud -- the case should still be dismissed because ACA didn't do its own investigation.  "The very fact that ACA felt the need to seek authentication by the Avery Foundation after the purchase indicates that it knew how to do so prior to the purchase. ACA's decision to wait is not protected under New York law."

Here's a Strange Twist in the Knoedler Situation (UPDATED)

Now someone is suing claiming the works are real "and that he lost out on millions of dollars in profits when Knoedler failed to sell them."  Patricia Cohen has the story in the NYT here.

UPDATE:  Felix Salmon has some thoughts.

"A step that draws the city ever closer to emergency oversight by a state-assigned financial manager"

Detroit inches closer to bankruptcy.

Remember that the Detroit Institute of Arts raised nearly $70 million for itself through the imposition of a special tax this summer.

"Surely one of the great bonuses of the commodification of art is that the artists can and are making a huge difference in the lives of future generation of less commercialized artists."

Paul Schimmel:  "With the hundreds of artists foundations already existing in the U.S. and many more to be formed by the wealthiest generation of artists ever, their legacies will become among the most important not-for-profit institutions to directly support the arts."

"Charities beseech Congress to preserve donations tax break"

Reuters reports on the beseeching here.

Related:  Barron's:  A Smarter Charitable Deduction.

"Art & Cruise Ships Still Don’t Mix"

The Art Market Monitor has the latest.

"The charitable deduction is in congressional crosshairs again ..."

". . . as Rep. Dave Camp (R-MI) called for a hearing on the topic on Feb. 14."

"I often wonder who these do-gooder reporters are purporting to protect. Is it those little old ladies who walk into the sales rooms raising their paddles to bid millions of dollars in total naïveté like blind fools?"

Adam Lindemann on that front-page NYT story on chandelier bidding and other concerns:

"The other phenomenon I find strange at the moment is the art world’s, and the media’s, obsession with the alleged manipulation of the auction market. Did you read that recent front-page article in The New York Times in which reporters Robin Pogrebin and Kevin Flynn broke the news that 'at major auctions the first bids announced for a piece are typically fictional—numbers pulled from the air by the auctioneer to jump-start bidding'? Haven’t we known this for years? Chandelier phone bids are just a little theater to make it all sound exciting; every auction veteran knows the real bidding doesn’t start until we approach the low estimate."

"Lawyers Fight to Keep Auction Sellers Anonymous"

The Jenack auction house decision made its way into the New York Times this week.  The story does a good job giving equal time to the competing interpretations of the decision (which is now on appeal to the Court of Appeals).  On the one hand, "many art-law experts say the decision, if upheld, could significantly change the way the auction business is conducted in New York State"; one lawyer involved in the case is quoted as saying the ruling represented "a wholesale invitation to have people renege."  On the other hand, Sotheby's Jonathan Olsoff gets a chance to make his case (also made here) that the decision was "narrow and technical" and that its impact was being greatly overstated.  He says it "deals only with the evidence that is required if an auction purchaser defaults in paying and is sued by the auction house."

Here's the case for Olsoff's minimalist interpretation.  The relevant statute (General Obligations Law § 5-701(a)(6)) says that if "the auctioneer at the time of the sale, enters in a sale book, a memorandum" specifying, among other things, the name of the buyer and the name of the seller, then the statute of frauds is satisfied and a binding contract is thereby created.  In Jenack, the "sale book" indicated that the work at issue was "consigned by '#428' and purchased by bidder '#305'" -- in other words, neither party was identified by name.  In the case of the buyer, the court looked to another document -- the buyer's "absentee bid form," which "contained both [his] name [and] his bidder number" -- and said that other document could be considered in conjunction with the sale book to satisfy the statute as to the buyer.  So, by the same logic, all the auction house had to do to satisfy the statute as to the seller was produce a similar, "other" document identifying him by name.  Somehow they failed to do that:  "the record establishes that the plaintiff failed to produce any writing identifying [the seller] by name, either in response to the defendant's discovery demands or in opposition to the defendant's motion for summary judgment."  They relied instead entirely on the argument that "the requirement of the statute that the memorandum contain 'the name of the person on whose account the sale was made' was satisfied solely by inclusion of the consignor's assigned number [in the sale book]."  But again, the implication seems plainly to be that, if they had just produced, in the litigation (perhaps even confidentially), the same kind of external written evidence of the seller's name (and they must have some record of that somewhere) as they did for the buyer, then the case would have come out differently.  On this view (which, as I've said before, I find convincing), the decision is, as Olsoff maintains, indeed much ado about nothing.

"How do you adhere to a donor’s wishes when they seem to interfere with the best interests of the institution?"

Patricia Cohen had a piece in the Times a few days ago on how museums are starting to notice that the issue of donor intent isn't always so simple.

The unspoken backdrop is that the Donor Intent Police are, as I've said before, generally just the Deaccession Police in disguise.  When there's a sale they don't like, they use any weapon to hand, and sometimes that means appealing to donor intent (which they always interpret in the most literal way possible).  They pretend to care about donor intent, but what they really mean is stop the sale.  But now that the Brooklyn Museum wants to sell off some works no one cares about (works which are "not of museum quality, were misattributed or, in a few cases, were fakes"), suddenly we start hearing that hey, you know, this is a very complicated issue, forever is a long time.  Interesting.

"In several important ways, copyright fails to function properly when art is involved, both in terms of basic fairness and intended economic incentives."

I cannot recommend highly enough this piece by Alfred Steiner, who is a practicing attorney at Morrison & Foerster and also an artist.  Thanks to Sergio for the pointer.

What happens to your art if you don't pay the storage bill?

Daniel Grant explains.

"The complaint ... asks the judge to appoint a custodian to break an ongoing deadlock among the Foundation’s divided, four-person board of directors"

The Foundation in question is the Cy Twombly Foundation.

Tell me again about the public trust (20 times the presale estimate edition)

One of the 16 works that, having fallen under the aegis of the Met, were held in the public trust, to be accessible to present and future generations, until the museum decided they were no longer held in the public trust, to be accessible to present and future generations, fared pretty well at auction this week.

Isn't it great how museums get to decide when a work is no longer held in the public trust.  It's so convenient!

Art Cops

A new TV series.

On chandeliers and price lists

The New York Times had a front page story a couple days ago that, as The Art Market Monitor put it, was "a jumble of concerns about the art market and how it isn't regulated."  There seemed to be two main concerns:  so-called "chandelier bidding" (the fact that "[a]t major auctions the first bids announced for a piece are typically fictional — numbers pulled from the air by the auctioneer to jump-start bidding") and that galleries don't post price lists.

As for the first issue, Felix Salmon explained back in 2007 that chandelier bidding is "not a bad thing at all: in fact, it’s a necessary thing if the auction, as designed, is to work."  Its function is "to get the bidding up to the reserve price. But remember, that’s exactly what both the buyer and the seller want: they both want a deal acceptable to them. If there were no phantom bids, then the item for sale would simply not get sold."  "There is no harm done":  "if the deal does get done then everybody’s happy, and if it doesn’t then that’s the same outcome as if no phantom bid had been made."

Dealer Ed Winkleman takes on the other issue here:

"I don't see why this is really a newsworthy 'problem.'  In the 10+ years I've been in the art business, I have never once heard anyone complain unprompted about the lack of prices being posted other than journalists. ... I'm personally not sure why this issue keeps coming up in the press.  Perhaps ... and I'm just wondering out loud here ... it's because the lack of posted prices confirms some journalists' resentment that if you have to ask you can't afford it. ...[I]f this practice prompted complaints to the government on a regular basis, perhaps I could see the Times' 'expose' serving some public good.  As it is, though, it really seems much ado about nothing."

"What is doubly ironic in this situation is that the champions of redistribution seek to neuter the single most effective device for redistribution that is available to modern societies—the charitable deduction."

Richard Epstein on "The End of Charity?":

"It is tempting to think that the limitations on deductions will hurt the rich by cutting back on their deductions. But the burden will fall heavily on the recipients of charitable support, for as the price of making a charitable gift rises ..., the level of charitable giving will decline."

Kravis v. Bryant

Bloomberg:  "Henry Kravis ... sued collector Donald L. Bryant Jr. claiming he reneged on an agreement to donate paintings by Jasper Johns to the Museum of Modern Art in New York."

"Perhaps the Louvre should sell some of its lower-tier works to private collectors."

Tyler Cowen on the deadweight loss from museum art collections.

"This suit is the fourth filed in Manhattan federal court against Knoedler & Co. since it closed its doors in November 2011"

Here we go again.

Latest on the Gundlach Theft

From ARCA's Catherine Schofield Sezgin.  Background here.

The tragedy of the Barnes continues

The Philadelphia Inquirer:  "Attendance at the Barnes Foundation, which opened with much fanfare on the Benjamin Franklin Parkway in May, has exceeded all projections, topping 200,000 in only seven months."

All those philistines eating their Big Macs.

Tell me again about the public trust (dumping 16 Old Masters at Sotheby's edition)

Laura Gilbert has the details.

As we all know, once an object falls under the aegis of a museum, it is held in the public trust, to be accessible to present and future generations.  Not these, I guess.

Is it all just a matter of semantics?

The Nation's Jon Weiner has a post criticizing Columbia University for having sold a Rembrandt in 1974 for $1 million that's now "back on the market this year, with a price tag of $47 million."  He says the rise in price makes them "look foolish."

Judith Dobrzynski responds here, noting, among other things, that Weiner "forgets ... that Columbia doesn’t have an art museum — unlike Brandeis and his other generalized colleges."

I think that's the standard way of thinking about these things -- that it's one thing for a university to sell a work out of what it calls a "museum," and another thing for it to sell from the university's (non-museum) collection.

Is it any wonder, then, that Brandeis thought about re-branding its museum as something else?

Three people have been arrested in that big Dutch art heist

Story here.  Background here.

"News flash for the media: You can't sell photos grabbed from Twitter."

That's the headline from Ars Technica, regarding photojournalist Daniel Morel's victory in his copyright lawsuit against news organizations that used his photos of the 2010 Haiti earthquake after they were posted on Twitter.  The decision is here.

Eric Goldman has everything you need to know about the decision.  His bottom line:

"AFP should have looped in the co-defendants and written a check from day one. After furiously litigating the case for almost two years, it's definitely going to be writing a check to Morel. ... [T]here are a ton of interesting issues addressed in the order, but the simple takeaway is something we already knew: stuff that's posted online is not necessarily fair game for recycling, especially not photos ...."

More on Harney v. Sony (UPDATED)

From Pitt's Mike Madison:

"The analysis is pretty straightforward:  (i) Photographs can be copyrighted.  (ii) This photograph is original enough to be judged copyrightable.  (iii) Most if not all copyrightable works can and should be separated analytically into original and therefore protectable elements, on the one hand and un-original elements (things that are copied from others, or things that are simple or trite, or things that are “facts” or “ideas” in copyright-speak), on the other.  (iv)  An accused infringer is liable only for copying or adapting or publicly performing or displaying original material without permission or excuse.  (v) Sony and the other defendants clearly adapted the plaintiff’s photograph without permission, but they adapted un-original parts on the one hand and copied too little of the original parts on the other."

In the comments James Grimmelmann predicts the case "may well enter the copyright teaching canon: it does a good job walking through the core issues of originality, filtration of uncopyrightable elements, and similarity of expression."

Earlier post here.

UPDATE:  My friend, copyright guru Bob Clarida emails:  "It's a fascinating case on human-interest terms, and it makes the copyright issues really clear: you can copy something very closely, but you don't infringe unless you copy protectable elements. Everybody gets that, rationally, but to see these pictures really is worth many thousand words."

Gonzalez-Torres ... Büchel ... Weiwei ... and Zaretsky?

I'm thrilled to be part of this exhibition at ICI opening next month.

"Last week the Court of Appeals agreed to review the Jenack decision."

Sheppard Mullin has an update on the Jenack auction house case.  They give a maximalist reading of the Appellate Division decision ("The Jenack decision, if left uncontested, could have far-reaching implications for the New York auction business").  Not everyone agrees.

Hey, donor intent trumps all, right?

I love this New York Times story by Patricia Cohen involving the Brooklyn Museum.

Seems a large group of works were given to the museum in 1932 by the estate of Col. Michael Friedsam.  It turns out, though, that about a quarter of the 926 works  are "fakes, misattributions or of poor quality."  The museum would like to deaccession those items and avoid the costs of storing them.

So what's the problem?

Well, according to Cohen, "the will specified that the art should go to the colonel’s brother-in-law and two friends if the collection was not kept together."  So if the museum gets rid of the 229 unwanted items, it runs the risk of losing the whole collection.

The Donor Intent Police should of course be thrilled with that outcome.  If the will says the collection is forfeited if it's broken up, then that's the way it has to be.  After all, if people can't be certain that the fakes in their collection will remain in storage at major museums, why will they ever make another donation?

It's of course a ridiculous situation, but the Donor Intent Police have no standing to all of a sudden start interpreting the conditions of people's gifts in the light of changed circumstances.  That's the point of their strident opposition to the Fisk transaction:  who cares if Fisk has to shut its doors:?  The donor said no sales and that means no sales, no matter the consequences.  Same with the Barnes.  Who cares if the institution was running out of money?  Who cares about increased public access to the collection?  All that matters is the intent of the donor (interpreted in the most literal way of course ... the Donor Intent Police are all strict constructionists).

So now that this shameless attempt to violate a poor donor's intent has been made public, I expect we'll get the usual howls of outrage from the Donor Intent Police.

Won't we?

"Infringement depends not on whether Sony copied, but on whether Sony copied protected elements of the original."

Rebecca Tushnet has a detailed summary of an interesting copyright case out of the First Circuit.

"Charitable groups say they fully expect their deduction to be under threat in the weeks and months to come"

The Hill:  Charitable groups fear tax victory in ‘fiscal cliff’ deal will prove hollow.

"More people will see the artwork in its new location"

A new home for the Maine labor mural.

Other than that, the story was accurate

There’s a really silly article regarding Richard Serra in the new Art Newspaper. Apparently it’s breaking news that one of his drawings needed some conservation in 2011. Really, that’s all there is to the story.  (Full disclosure: Serra is a longtime client of our firm.)

The headline and lede say Serra “threatened” to “withdraw” one of his drawings from the Broad Collection.  That’s not true at all; he simply objected to its being exhibited given its sub-optimal condition, which he had every right to do.

The story goes on to suggest that “historical accuracy” may have been compromised because … I’m not sure why, really.  The drawing was made in 1989.  It was damaged, and in 2011 he restored it. He left the date as 1989, and the suggestion of the story is that there was something wrong with that. But we don’t change the date of a work every time it’s restored.  There’s no “historical inaccuracy” involved.  It’s really a ridiculous story.

"For a high-income donor who makes a large gift to charity, the Pease limitation may significantly reduce the amount of itemized deductions that a donor might otherwise expect to report."

Good summary of the new tax act's impact on planning for charitable donations.

"The second theft from the museum in two months"

Patti Cohen in the NYT:  Rare Box Stolen From Oakland Museum.

"The Associated Press said that he identified himself with the Occupy movement, and that he said he had defaced the painting as an act of social and political defiance."

NYT:  Accused Picasso Vandal Surrenders at U.S.-Mexico Border.

"Which leads us to ask, 'Hello?? Background check?!'"

ARTINFO:  French Neo-Nazi Museum Guard Adds Art Theft to a Long Criminal Resume.

Museum theft in Norway

ARCAblog:  "The museum has posted detailed versions of the photos on their Facebook page and would like help spreading the images world wide. Please like and repost. With the help of social networking perhaps these objects will be reported as being seen."

"These things sometimes take two years. It’s rare that I’m able to have a recovery in a three-week period, let alone over a holiday."

Another recovery negotiated by Chris Marinello and the Art Loss Register.

"The case has left no guidelines as to whether the IRS would in another case be entitled to set a value on a legally unsaleable artwork ..."

". . . but in this instance common sense seems to have prevailed."

"So how does it feel to have one's core beliefs turned upside down?"

Legendary architecture critic Ada Louise Huxtable died this week at 91.  Michael Kimmelman has a nice appreciation here.

Huxtable was among the philistines who admired the new Barnes:

"The 'new' Barnes ... shouldn't work, but it does. It should be inauthentic, but it's not. It has changed, but it is unchanged. The architects have succeeded in retaining its identity and integrity without resorting to a slavishly literal reproduction."

The LA Times reports that she donated her entire estate to the Getty.

"6 Ways the Fiscal Cliff Deal Will Impact the Art World"

Rachel Corbett rounds them up.

"New York Strengthens Law Governing Consignments From Artists to Galleries"

Still catching up on pre-holiday reading, a good summary of the amendments to the NY consignment statute from Amelia Brankov in the NYLJ.

"With the advances in 3D scanning and other digital technologies, I suspect it is easier than ever to duplicate work and create copies."

"An epidemic of sculpture knock-offs is plaguing the art world."

"Fiscal Cliff Deal Could Hurt Charitable Giving"

Reports the Chronicle of Philanthropy.  According to the story, the Charitable Giving Coalition wrote a letter to Sen. Reid this summer "stating its opposition to the [charitable] deduction limits."

Nonprofit Law Prof Vaughn James is unsympathetic to the Coalition's argument:  "I cannot understand why the organization's members believe that the only reason people give to nonprofits is to get a tax deduction!"

Funny how the nonprofit community can be so confused about why people give to their organizations!

In fact, some people believe that if you eliminated charitable deductions, every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse.

LaChapelle Lawsuit

The NY Post has the details.

"What really has riveted the attention of the art world in the past season has not been the art but the law"

Daniel Grant's year-in-review at the Huffington Post.  Among others, he mentions the Richard Prince appeal ("The decision of the appellate court is likely to reverberate for years to come"), the Eggleston case ("it may establish a legal definition of 'limited edition' that instructs artists, galleries and publishers on what is and isn't permissible"), the Knoedler cases ("the lawsuits against Knoedler ask, What comprises 'due diligence': What do we expect of art dealers when they sell us expensive artworks by important artists?"), and the Resale Royalty decision.

If Dr. Barnes wanted you to glimpse it, either too high or too low, always too far away, from the stairs ...

... then that's the way you'll glimpse it, dammit.

Rejoicing in the Wall Street Journal, Karen Wilkin doesn't seem to grasp the obvious point that the intentions of a long-dead donor (however hazily expressed) are far more important than "being able to study this glorious, prescient vision of a pastoral idyll at eye level, close up."

Fiscal Cliff Deal: A Primer for Nonprofits

From the Nonprofit Quarterly.

"As it happens, the amount the Met paid for the Duccio would, according to the Fistula Foundation, pay for the surgery needed by 100,000 young women whose lives will otherwise be ruined."

Utilitarian Peter Singer on where to direct your charitable contributions.

"That would amount to the largest loss the art world and its insurers have ever sustained."

The New York Times:  Art Insurance Losses from Hurricane Sandy May Reach $500 Million.

How to Steal From the Louvre

A Noah Charney TED talk.

"A feature allowing California taxpayers to use their income tax returns to make donations toward arts programs will disappear in 2013."

"The state law that added the grant-making Arts Council to the mix for the two years specified that the box would vanish if the option didn't bring in at least $250,000 from tax returns filed for the 2011 tax year."

Kinkade Settlement

"A rancorous public feud between the widow of painter Thomas Kinkade and his girlfriend over his multi-million dollar estate has been quietly settled."

The Charitable Deduction in Context

From lawprof Miranda Perry Fleischer.

House of Barnes

Let me recommend Neil Rudenstine's new book to anyone interested in the whole Barnes saga.  First of all, he completely demolishes the latest, desperate talking point of the anti-move crowd that the Barnes was not in terrible financial shape.  "The fundamental problem," he says, is that "the endowment effectively ceased to grow after 1961" (p. 153).  "Expenses continued to rise steadily at a far greater rate than the endowment, resulting in larger and larger annual deficits" (p. 154).  The Foundation, "in the face of steadily rising costs," was "essentially doomed" (id.).  By 1988 the endowment had fallen to about $7 million, or "about 30% less than its 1952 value," while expenses had increased by nearly 2,000% (p. 163).  The financial situation was "hopeless":  "more deficits were projected for the years immediately ahead"; "the reasonable expenses of running the most basic operations of the Barnes far exceeded the institution's capacity."  The "longer term finances of the Foundation were irremediable" (id.).

Though it's nice to have it all in one place, that's all been said before.  What's more interesting, I think, is his discussion of whether the Foundation was fulfilling its primary mission in the old location.  The organization's central purpose, according to its Indenture, was to advance "education and the appreciation in the fine arts."  Its primary concern was "spreading" the principles of "democracy and education" (p. 172).  The Indenture provided that "plain people" (the kind who might even eat at McDonald's!) should be admitted free of charge, and aimed to benefit people from "all classes and stations of life."

On this criteria, the old Barnes, Rudenstine convincingly argues, was a failure.  "We know that many people were prevented from visiting or attending courses" (p. 173).  Nor is there "any evidence at all of special and consistent efforts made to admit plain people free of charge or to determine the extent to which the Foundation was actively trying to spread democratic principles" (id.).  Looking at a micro level at the Barnes's education program, he finds that, "over a recent seven-year period," there were a total of 756 enrollments in all art courses combined -- about 100 a year.  Since the courses typically met once a week for a four-hour session, that meant the entire gallery was closed three and half days a week ... "in order to serve about 100 students" (id.).  Democracy!

Of that select group of students, the average age was 56, and the bulk came from "well-off suburban towns."  Only about 14 per year came from Philadelphia.  More than 40 students took the same course more than once, and more than 100 of the 756 enrollments were "repeats" (pp. 173-74).  In short, "the situation seems inordinately far from the strongly stated democratic purposes in the Foundation's Indenture" (p. 174).

As Rudenstine notes, "by far the strongest" opposition to the move has come from those who are "focused on the art collection and the Foundation's setting."  But -- "significant as these are" -- they "do not relate directly to Barnes' own stated purpose in creating his Foundation, or to the goals that he himself said he wanted to fulfill."  The "diverse city of Philadelphia would clearly offer the promise of greater openness and accessibility in a 'democratic' milieu" (p. 174).  In other words, what if the move to Philadelphia actually got us closer to Barnes's intent?  What if we think of his intent as more than just that a collection of artworks remain at a particular address?

Rudenstine concludes:  "[T]he art is there, installed as it was in Merion.  The education programs -- improved and expanded -- are there.  Special exhibitions will -- for the first time -- be possible. ... The primary purposes for which the Barnes was created will, reanimated, be at the center of the institution."

Deduction Debate

The Wall Street Journal runs two views of the charitable deduction:  the Cato Institute's Daniel Mitchell argues, among other things, that "there's just no evidence that the tax break leads people to increase their giving"; Diana Aviv of Independent Sector responds that "limiting the charitable deduction would be a tremendous mistake with potentially catastrophic consequences for groups that do good."

Some reactions from the Nonprofit Law Prof Blog.

Relatedly, Yale economics professor Robert Shiller in the New York Times:  Please Don't Mess With the Charitable Deduction.

The Fighter With The Lion Tattoo

Sergio Muñoz Sarmiento asks:  Who owns the copyright to a tattoo?  The occasion is a lawsuit by a tattoo artist who tattooed a lion on an MMA fighter, whose likeness (including the tattoo) now appears in a video game.  Sergio seems to think the tattoo artist will prevail in a knockout.  I'm not so sure, for the reasons mentioned here and here, the implied license theory in particular.

"People want to take advantage of 2012's certainty" (UPDATED)

Wall Street Journal:  Fiscal Talks Spur Charitable Giving.

UPDATE:  The Nonprofit Law Prof Blog rounds up some other interesting links.

"Many cases recognize that the government must have some discretion as to the choice of art it puts on the walls of its offices, even where the government is acting as an arts patron."

The First Circuit has affirmed the District Court's decision that it was not a First Amendment violation for the Governor of Maine to remove a mural from a state office.  The decision is here.  News story here.  Background here.

Eugene Volokh:  "Sounds right to me .... When the government puts up a particular item of speech (art, text, video, or what have you), not as part of an open-to-a-diversity-of-speakers public forum but instead because it likes that particular speech, it should later be free to take it down, even if only because the new administration now dislikes the speech, finds it inappropriate in this location, finds it too controversial, or what have you."

"Warhol Foundation May Proceed With Claims Against Insurer for Failure to Defend Lawsuits"

Story here.  Decision here.

Tell me again about the public trust ("featuring property from the Los Angeles County Museum of Art" edition)

Fifteen works being sold at auction.

85% Held in the Public Trust (UPDATED)

Zurich has misplaced 15% of its art collection, more than 5,000 works.

UPDATE:  Related story.

How It Should Be (UPDATED)

Several readers have called my attention to this story of a Boston church that is considering "deaccessioning" a 17th century book of psalms that could be worth $20 million.  The sales proceeds would be used not to acquire other psalm books (which would satisfy the Deaccession Police, were the church a member of the AAMD), but for general operating expenses.

What strikes me about the story is that this is how the debate about these things should go.

The people in favor of the sale make the case for why it's a good idea ("We want to take this old hymn book, from which we literally sang our praises to God, and convert it . . . into doing God’s ministry in the world today").

The people who oppose the sale make the opposite case ("Critics say they intend to argue that there is nothing so urgent, so dire, that requires the sale of precious assets").

Neither side gets to appeal to a conversation-stopping "ethical" principle that resolves the debate in their favor.  Nobody gets to impose sanctions on anyone.

It's refreshing.

UPDATE:  Apparently the debate is over; the pro-sale side won:  "After a lengthy and open debate, the congregation spoke with nearly one voice: 271 members voted in favor of the sale, and only 34 opposed it."  Compare and contrast to another instance where the members spoke with nearly one voice.

DIA Lawsuit

Some Michigan residents are suing the Detriot Institute for reneging on their promise of free admission if their millage passed.  The museum says the offer did not include special exhibits.  The museum's pre-vote FAQ page included the following:

What benefits will the voters receive in return for their financial support for the museum?
Counties that approve the millage will receive free unlimited general admission for its residents, including students taking field trips to museum, enhanced programs for students and seniors, and bus subsidies for seniors and student visits.

"I would not give a penny to the Met to buy another painting"

Philosopher Peter Singer says that "philanthropy for the arts or for cultural activities is, in a world like this one, morally dubious."

"Well, if you eliminated charitable deductions ..."

"... that means every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse."

'"The culmination of a five-year absurdist farce—one tinged more by Kafka than Feydeau"

The Wall Street Journal's Eric Gibson on Rauschenberg's eagle.

"The market for late Dalí sculptures remains plagued by misinformation, unauthorized editions, ownership disputes, and some outright fraud"

ARTnews:  The Dalí Sculpture Mess.

"The market for fine art is idiosyncratic and it is like no other market"

The IP Finance Blog:  The Oddest Market of Them All?

"Nonprofits Step Up Pressure to Keep Charitable Deduction Intact"

From the Chronicle of Philanthropy.

How the Gundlach Case Was Cracked

It involves a Google search.  Background here.

"Charitable giving reacts to tax incentives ..."

"... and in response to any limits on deductions it could even fall by about the same amount as the increase in the tax bill, according to John List of the University of Chicago, who recently reviewed the literature on this subject. Other studies have suggested an effect about half as large. Even that smaller estimate, though, suggests that limiting deductions to $50,000 a year could easily reduce giving by tens of billions of dollars."

That's former Obama administration official Peter Orszag on proposals to limit the charitable deduction.

"The eagle has now landed" (UPDATED)

Patricia Cohen reports that there's been a (very sensible) settlement in the Rauschenberg bald eagle case:  "the I.R.S. dropped the [$41 million] tax assessment; in exchange, the family was required to donate [the work] to a museum where it would be publicly exhibited and claim no tax deduction."

UPDATE:  The Art Market Monitor:  "a reminder that real value in art history doesn’t come in market denominations."

"Alas, plenty of other experts are now too scared of lawsuits to authenticate pictures."

The Economist:  Fear of litigation is hobbling the art market. 

"In the 25 years I have investigated these robberies, I have never heard of anyone actually monetising these very valuable paintings."

BBC News:  Thieves fail to profit from stolen works of art.

"The book, unlike the film, posits no vast conspiracy involving Philadelphia sharks bent on consuming cultural fish from the defenseless ponds of Merion."

"In fact, Rudenstine argues that by moving to Philadelphia, the Barnes Foundation simply rescued itself from inevitable financial ruin."

The Philadelphia Inquirer's Stephan Salisbury previews a new book by Neil Rudenstine, president emeritus of Harvard:  The House of Barnes: The Man, the Collection, the Controversy.  I've already ordered my copy.

"There would be no deduction for charitable giving, or close to none, angering wealthy donors and nonprofit directors."

How to raise $1.6 trillion in new tax revenue.

"If Wiley gets its way in the Kirtsaeng case, every museum that hangs a foreign-made work of art on its walls would be a potential infringer."

Rozalia Jovanovic on the big first sale case in front of the Supreme Court.

"Part salvage operation, part art dealership and part private detective agency"

Chris Marinello and The Art Loss Register.

Felix Salmon on the State of the Art Market (UPDATED)

Occupy Art.

UPDATE:  A response at The Art Market Monitor from dealer Kenny Schachter.

Met Admission Suit

The NYT's Randy Kennedy reports that a new lawsuit contends that the Met "misleads the public into thinking that its admission fees ... are mandatory and not simply suggested."

Sergio Muñoz Sarmiento:  "We have to say it’s not just the sign, or lack thereof, that makes one pay a 'suggested fee.' Sometimes it’s just guilt."

Are millages the future of arts funding?

Judith Dobrzynski says no.

"Mr. Ramnarine ... was indicted on charges he used Mr. Johns’s mold to surreptitiously make a bronze sculpture that he attributed to Mr. Johns and tried to sell for $11 million"

Patricia Cohen has the story.

"[T]he consignment agreement gave Sotheby's the right to withdraw the print from auction 'if in its sole judgment' there were doubt as to attribution" (UPDATED)

"Given Noland's assertion of her right under VARA to prevent use of her name in connection with plaintiff's [work], ... Sotheby's was within its rights to withdraw the [work] from [auction]."

Sotheby's has prevailed on summary judgment in the lawsuit brought against it by Marc Jancou.  No link available at the moment.  Jancou's claims against artist Cady Noland were not at issue on the motion, and so remain intact.

UPDATE:  More from ARTINFO's Rachel Corbett here.

Proceeds from the auction will go towards "the nurturing of young photographers, artists and explorers"

The National Geographic Society is auctioning off 240 pieces from its collection of photos and original illustrations at Christie's in December.  The sale is expected to bring about $3 million and the proceeds will not be used for acquisitions.  Does that make them repulsive?

As I've wondered before, how is it that some nonprofits hold their assets in the public trust and others don't?  How are we supposed to tell the difference?

Peters-Waitt Settlement

Story here.  Background here.

"How Larry Gagosian is like Goldman Sachs"

Felix Salmon makes the case.

"Four of five paintings stolen from the Pretoria Art Museum have been found on a bench in a cemetery" (UPDATED)

"Mills said there was no obvious evidence of damage to the artworks."

UPDATE:  More from the ARCAblog.

Some Clarifications Re Murakami v. Boesky

There was some press coverage last week about the lawsuit brought by Takashi Murakami against his former dealer Marianne Boesky.  I'm co-counsel to Murakami on the case.

A couple of points are worth clarifying/emphasizing:

The Daily News story says "Murakami is seeking compensation to be proven at trial."  That's not what the case is primarily about.  It's really about the right of an artist to control the production of his own work.  Murakami left Boesky more than six years ago.  There's no earthly reason why she should continue to print and distribute his work on her own.

And the Post says Murakami's claim is that Boesky "lent a wallpaper design he created to the Metropolitan Museum of Art without permission."  That's not right either.  She has every right to lend work she owns to whomever she'd like.  The issue in the case, again, is whether she has the right to print additional sheets of the wallpaper on her own.

New Art Fund

Details from The Art Market Monitor.

Armed Museum Robbery in South Africa

ARCA's Catherine Schofield Sezgin has the details.

Just Doing Their Job

I’ve mentioned a couple of times a new collection of essays on museums that’s just been published by MuseumsEtc.  The book is called A Handbook for Academic Museums:  Beyond Exhibitions and Education and is part of a two-volume series (the other being A Handbook for Academic Museums:  Exhibitions and Education).  My essay (on Fisk-O’Keeffe) is in a chapter entitled Monetization of the Collection to Support the Parent Organization.  I recently did a Q+A with Peter Dean, who also has an essay in that chapter.  That was so much fun I thought I’d do it again, this time with Mark Gold, who, along with Stefanie Jandl, edited the book and also contributed an essay of his own on the legal obligations of trustees of what he calls “parent organizations” – primarily colleges and universities that contain art museums:

Q.  It won't come as any surprise to regular readers of the blog that I thought your piece was terrific. If you were a museum director, I would put you in my Hall of Fame. One thing I particularly liked is how you emphasize that, to the art world, the needs of the parent organization are completely irrelevant. They don't matter at all. I've long thought that, rather than being impartial "arbiters" of the ethics of the situation, groups like the AAMD are just lobbyists for a particular point of view (namely that art is more important than any competing need the parent organization can point to). Do you think that's a fair assessment? Is the AAMD really just lobbying for their desired outcome?

A.  I do think that’s a fair assessment, but it goes far beyond lobbying.  As you know, the response of AAMD, AAM and others includes condemnation and punishment.  I can appreciate, actually, the passion with which they take that position, although I don’t agree with it.  But their apparent lack of appreciation for the fiduciary duties of trustees to do what is best for the parent organization and its broader mission, and the often vitriolic response, can cause them to look more like petulant children than collegial partners in addressing the difficult situation in which the parent organization finds itself.  And, frankly, I think that harms their cause.

At the end of the day, trustees will do what is best for the organization and its mission.  Indeed, the “settlement” reached in the Rose litigation does not limit in any way the ability of future trustees to monetize all or part of the unrestricted collection.  The inflexibility of the position that the collection trumps all (including the survival of the museum), or that the museum trumps the competing needs of the parent organization, renders the professional associations and their rules essentially irrelevant when crunch time comes for a parent organization – or even a free-standing museum.  A prudent trustee is not going to let the rules of a professional association (in some cases, such as Randolph, of which the museum is not even a member!) get in the way of doing what is best for the parent organization. 

Q.  I think that’s right.  As I’ve noted from time to time, their position is a classic of circularity.  Step 1:  If you sell that work, we will sanction you.  Step 2:  It would not be a good thing for you to be sanctioned.  Step 3:  Therefore, you should not sell that work.  You almost have to admire the chutzpah!  But what do you think a more useful role for these organizations would look like?  How could they stay more relevant?

A.  I had a conversation with a museum director when I first started looking at this issue, and we were talking about the ethical rule on the use of proceeds of deaccessioning.  When I asked whether there should be an exception where the survival of the museum was at stake, she replied, “Those museums deserve to die.”   It was a stunning moment for me.  And even more stunning when I later found that she was no outlier.

Yet this view persists, along with the naïve belief that objects in closed museums will find happy and welcoming homes in other museums.  The experience of the Fresno Metropolitan Museum, in which the entire collection was sold for the benefit of creditors, should be a wake-up call to those who take comfort in that myth. 

I think the professional associations become more relevant when they acknowledge that there are legitimate exceptions to the rule – some whose rationale cannot be denied without a complete loss of credibility.  Illustratively, how can it be unethical for a museum to finance the purchase of an important painting for the collection (thereby keeping it in the public domain), by pledging the work as collateral while donors have time to raise the cash?  How can it be unethical to sell the multiple duplicates of a particular object in the basement to other museums to raise cash to keep the doors open?  The point is that, like most rules, there are factual situations that cry out to be exceptions.  To deny them, undermines the rule itself, as well as the professional associations that seek to enforce it regardless of the circumstances. 

But we’ve strayed a bit from the role of trustees in making decisions for the parent organization. 

Q.  So let’s come back to that.  What is the role of a trustee in these situations, where, as you point out in your piece, her legal obligation is “to focus on the specific mission of the [parent] organization” … but, at the same time, there are these professional organizations (again quoting from your essay) “weigh[ing] in on these decisions with outrage and condemnation,” “relentlessly assert[ing]” that the interests of the museum trump those of its parent?

A.  A prudent trustee will – or at least should – consider and give weight to the positions taken by the professional associations.  These are serious people with considerable knowledge of their field, deserving of respect. 

But the law is very clear.  The trustees are bound by a duty of obedience, which you describe above, as well as a duty of due care - to act in the best interest of the corporation.  In the case of academic museums, for example, the duty of trustees is to hold paramount the college or university and its educational mission.   When times are tough and programs need to be cut or assets monetized, they will naturally look to all programs and all assets.  It is not reasonable to think that they will or should hold the museum and its collections exempt from this process. 

In my opinion, an astute museum professional will spend time and energy building relationships and posturing his or her museum solidly within the broader mission of the parent, rather than insisting that it be afforded special treatment or privileged status.  No one does that better than Lyndel King at the Weisman Art Museum at the University of Minnesota.  She also has an essay in our book that outlines her strategies in a very helpful way.  Educating parent organization trustees about what the museum and its collections contribute to the broader mission in a way that makes it unthinkable that the museum and its collections ever be compromised – and building relationships across campus - is far more effective than relying upon the dictates of professional associations that are not binding on the parent organization or its trustees.

"I have a duty to ensure residents do not suffer from the brunt of the horrendous cuts being imposed on us"

The Borough of Tower Hamlets in the East End of London has decided to sell a Henry Moore sculpture.  "The Tower Hamlets council ... is looking at a potential sale price estimated around $32 million, which would cushion it against cuts in government funding that are forcing the council to make drastic trims in its own budget."  Repulsive!

Around here, every day is Art Law Day

Had a good time talking about the state of fractional giving at the Appraisers' Association's "Art Law Day" down at NYU this afternoon.  Many thanks to Aleya Lehmann Bench and her team for putting together such a nice event.

"Perhaps the most quietly revealing comment on the nature of disputes in the art market"

The Art Market Monitor has it here.

"Where Now for the Charitable Contribution Deduction?"

The Nonprofit Law Prof Blog has some thoughts.

More on Jenack (UPDATED 2X)

ARTINFO's Julia Halperin has a piece on the meaning of the Jenack decision which quotes from this post last week.

UPDATE:  Some thoughts from the Art Market Monitor.

UPDATE 2:  More from Nicholas O'Donnell:  "The decision does not say that an auction house has to disclose the seller as a matter of course. To the extent that reports have simplified it in that way, the criticism is correct, and a welcome clarification."

"Something like a game of Whac-A-Mole"

The NYT's Patricia Cohen on fakes that just keep resurfacing.