Tuesday, August 18, 2009
Leibovitz Update
This week's New York magazine has a lengthy story on Annie Leibovitz's legal troubles. Felix Salmon says "Art Capital did not ... simply have $24 million lying around when it extended the loan to Leibovitz. As a result, it sold part of the loan to other investors, including Goldman Sachs. And Goldman Sachs, while it’s happy to make lots of money, does not want to be painted as a predatory lender. So Goldman is now Leibovitz’s best hope: if Goldman can buy out Art Capital, it might be able to come to a more Annie-friendly agreement." And the Art Market Monitor adds some thoughts: Art Capital Group Negotiates with Goldman Sachs Through Bloomberg.
Stolen Art Database
Derek Fincham notes that INTERPOL is putting its stolen art database online. Says Derek: "This is a remarkable development in a number of ways, and makes it possible for anyone to search. This means it will be far more difficult for a buyer to claim he or she did not have the resources to check into a work's history."
Sunday, August 16, 2009
"Where do you draw the line between critique or parody and outright exploitation?"
In the NYT Week in Review section today, Charles McGrath discusses the legal issues surrounding literary prequels and sequels, including the Salinger case currently on appeal to the Second Circuit:
"Mr. Salinger, who is 90 and went all the way to the United States Supreme Court in the late 1980s to stop the biographer Ian Hamilton from quoting from his work, has just won another legal battle, halting the publication of '60 Years Later: Coming Through the Rye,' a sequel to 'The Catcher in the Rye,' by Fredrik Colting, a Swede who for some reason writes under the name J. D. California. Most accounts of Mr. Colting’s book make it sound pretty awful: Holden Caulfield, now in his 70s and stricken with urological problems, escapes from a nursing home and reunites with his sister Phoebe, who is apparently suffering from dementia. ... But Mr. Colting’s book has nevertheless become a literary cause célèbre, with a number of legal experts ... seeking to overturn the judge’s decision. The argument is that the Colting text is 'transformative': that instead of being a mere rip-off, it adds something original and substantive to Mr. Salinger’s version."
"Mr. Salinger, who is 90 and went all the way to the United States Supreme Court in the late 1980s to stop the biographer Ian Hamilton from quoting from his work, has just won another legal battle, halting the publication of '60 Years Later: Coming Through the Rye,' a sequel to 'The Catcher in the Rye,' by Fredrik Colting, a Swede who for some reason writes under the name J. D. California. Most accounts of Mr. Colting’s book make it sound pretty awful: Holden Caulfield, now in his 70s and stricken with urological problems, escapes from a nursing home and reunites with his sister Phoebe, who is apparently suffering from dementia. ... But Mr. Colting’s book has nevertheless become a literary cause célèbre, with a number of legal experts ... seeking to overturn the judge’s decision. The argument is that the Colting text is 'transformative': that instead of being a mere rip-off, it adds something original and substantive to Mr. Salinger’s version."
"The dispute raises questions about the obligation of a state government with finite resources to uphold the artistic vision of a public memorial"
Sergio Muñoz Sarmiento spots a threatened VARA suit in Washington State involving a World War II memorial sculpture. According to a local news report, artist Simon Kogan "says that overaggressive cleaning in May 2007 damaged the memorial .... He has demanded that the state agency fix the damage or he will sue."
On that way of framing the issue, one problem Kogan faces under VARA is section 106A(c)(2): "The modification of a work of visual art which is the result of conservation ... is not a destruction, distortion, mutilation, or other modification described in subsection (a)(3) unless the modification is caused by gross negligence."
On that way of framing the issue, one problem Kogan faces under VARA is section 106A(c)(2): "The modification of a work of visual art which is the result of conservation ... is not a destruction, distortion, mutilation, or other modification described in subsection (a)(3) unless the modification is caused by gross negligence."
Saturday, August 15, 2009
Roerich Return (UPDATED)
Art Theft Central's Mark Durney breaks the news that one of the two works recently stolen from the Nicholas Roerich Museum was returned, in an "ordinary yellow, padded envelope, with a Brooklyn return address."
UPDATE: More from Durney: "From my exchanges with a museum representative, I would describe them as cautiously optimistic for the return of the [second work]."
UPDATE: More from Durney: "From my exchanges with a museum representative, I would describe them as cautiously optimistic for the return of the [second work]."
Friday, August 14, 2009
Lloyd Webber Dismissal Affirmed
The Appellate Division has affirmed the dismissal, on standing grounds, of a lawsuit against the Andrew Lloyd Webber Art Foundation by a man who claimed his great-uncle was forced by the Nazis to sell a Picasso painting now owned by the foundation. I discussed the lower court decision here. Am Law Litigation Daily's Alison Frankel has a good summary:
"Under New York law, the appellate division opinion says, Schoeps would have had to show that he had been appointed the personal representative of his great-uncle's estate. Instead, the record showed only that he was one of several heirs .... That's quite a different result than what Schoeps ... achieved in similar litigation [before Manhattan federal district court judge Jed Rakoff] with the Museum of Modern Art and the Guggenheim Museum. The state appellate court expressly rejected Rakoff's reasoning on Schoeps's standing."
"Under New York law, the appellate division opinion says, Schoeps would have had to show that he had been appointed the personal representative of his great-uncle's estate. Instead, the record showed only that he was one of several heirs .... That's quite a different result than what Schoeps ... achieved in similar litigation [before Manhattan federal district court judge Jed Rakoff] with the Museum of Modern Art and the Guggenheim Museum. The state appellate court expressly rejected Rakoff's reasoning on Schoeps's standing."
Thursday, August 13, 2009
Tuesday, August 11, 2009
Fractional Gift News
The Wall Street Journal reports that "reacting to museums' complaints of sharp declines in art donations, a bill announced Friday by Sen. Charles Schumer ... could revive the practice of so-called fractional gifts."
Some brief background is probably in order. The Pension Protection Act of 2006 drastically changed the rules applicable to fractional gifts -- essentially bringing about an end to fractional giving. The most serious problem was what I referred to as the "mismatch problem": if the work appreciated in value between the time of the initial gift and a subsequent gift, the excess value of the subsequent gift would have been subject to gift or estate tax. In early 2008 technical corrections were enacted fixing the mismatch problem, but, as I noted at the time:
"[The technical corrections] do not, however, change the requirements that (1) the gift be completed within 10 years (or, if sooner, the collector's death) or (2) the value of any additional contributions be determined using the lesser of the value of the work at the time of the initial contribution or the time of the additional contribution (thus depriving donors of the benefit of any increase in the value of the work over time). So, while the corrections do bring fractional gifts back from the dead (as evidenced by the recent major gift to LACMA), there still remain some disincentives to fractional giving."
The new bill focuses on these two issues, and basically tracks the "agreement in principle" among members of the Senate Finance Committee that was described in a New York Times article in July of last year:
First, it was reported that "amendments hammered out by aides to Mr. Schumer and Mr. Grassley would lengthen [the 10-year donation period] to 20 years" -- and that's exactly what the new bill provides.
And second, it was said that Grassley appeared "willing to allow donors to claim deductions for subsequent donations that reflect increases in the value of the portion of the artwork they still own." That is also now reflected in the bill.
There's one other important change to note. Back in 2006, when this problem first surfaced, I mentioned a New York Times article which said that proponents of the change were concerned about "abuse" by collectors who "received upfront tax deductions for works that will not appear in museum collections for decades, if ever." Senator Grassely was quoted as saying: "It isn’t right for a donor to get a big tax break for supposedly donating a painting that hangs in his living room, not the museum, all year. A painting in a private living room doesn’t benefit the public." As I said then:
"Those problems, to the extent they are problems, could have been solved with the following two changes:
"1. By overruling the Winokur rule that the museum’s legal entitlement to possession for a portion of the year was sufficient to secure the deduction, even if it never took actual possession. This would eliminate Senator Grassley's concerns about a painting hanging in the collector's living room all year.
"2. By requiring that the collector transfer her remaining interest to the museum by some outside date .... This would deal with the concerns ... about works not appearing in the museum's collection 'for decades, if ever' (though the first change, overruling Winokur, would ensure that, from the beginning, the works would appear in the museum's collection for at least part of each year)."
As we've seen, the new bill does the second thing: it sets an outside date of 20 years for completion of the gift. But it also does the first: it overrules Winokur by providing that, for every five-year period, the work must be "in the physical possession" of the museum (and "used in a use which is related to a purpose or function constituting the basis for the donee organization's [tax] exemption") for a portion of the time "substantially" equivalent to its fractional interst (so, for example, a museum with a 20% interest in a painting must take physical possession of the painting for roughly one year out of the five). The WSJ story interprets this provision as requiring that the museum "exhibit the artwork in proportion to its ownership interest over every five-year period" (my emphasis), but it's not clear to me whether keeping a work in storage, or perhaps making it accessible to scholars, would satisfy that requirement. If not, then the donor may have to extract a promise from the museum, as a condition of the gift, to exhibit the work in compliance with this provision.
Very briefly, a few other points about the bill. First, like the Pension Protection Act, it provides that no deduction will be allowed unless all interests in the work were owned by the donor and the donee immediately before the contribution (although it contemplates the issuance of regulations covering "cases where all persons who hold an interest in the property make proportional contributions" of their interests).
Second, the initial fractional contribution must be at least 10%, and it must be pursuant to a "written binding contract" which requires (a) that a total of at least 20% be contributed within 11 years and (b) the rest be contributed within 20 years.
Finally, for works (as distinct from interests) worth more than $1 million, the donor has to attach to her tax return "a statement of value obtained from the Internal Revenue Service." There are also additional reporting requirements for museums.
You can read the bill, S. 1605, here.
Some brief background is probably in order. The Pension Protection Act of 2006 drastically changed the rules applicable to fractional gifts -- essentially bringing about an end to fractional giving. The most serious problem was what I referred to as the "mismatch problem": if the work appreciated in value between the time of the initial gift and a subsequent gift, the excess value of the subsequent gift would have been subject to gift or estate tax. In early 2008 technical corrections were enacted fixing the mismatch problem, but, as I noted at the time:
"[The technical corrections] do not, however, change the requirements that (1) the gift be completed within 10 years (or, if sooner, the collector's death) or (2) the value of any additional contributions be determined using the lesser of the value of the work at the time of the initial contribution or the time of the additional contribution (thus depriving donors of the benefit of any increase in the value of the work over time). So, while the corrections do bring fractional gifts back from the dead (as evidenced by the recent major gift to LACMA), there still remain some disincentives to fractional giving."
The new bill focuses on these two issues, and basically tracks the "agreement in principle" among members of the Senate Finance Committee that was described in a New York Times article in July of last year:
First, it was reported that "amendments hammered out by aides to Mr. Schumer and Mr. Grassley would lengthen [the 10-year donation period] to 20 years" -- and that's exactly what the new bill provides.
And second, it was said that Grassley appeared "willing to allow donors to claim deductions for subsequent donations that reflect increases in the value of the portion of the artwork they still own." That is also now reflected in the bill.
There's one other important change to note. Back in 2006, when this problem first surfaced, I mentioned a New York Times article which said that proponents of the change were concerned about "abuse" by collectors who "received upfront tax deductions for works that will not appear in museum collections for decades, if ever." Senator Grassely was quoted as saying: "It isn’t right for a donor to get a big tax break for supposedly donating a painting that hangs in his living room, not the museum, all year. A painting in a private living room doesn’t benefit the public." As I said then:
"Those problems, to the extent they are problems, could have been solved with the following two changes:
"1. By overruling the Winokur rule that the museum’s legal entitlement to possession for a portion of the year was sufficient to secure the deduction, even if it never took actual possession. This would eliminate Senator Grassley's concerns about a painting hanging in the collector's living room all year.
"2. By requiring that the collector transfer her remaining interest to the museum by some outside date .... This would deal with the concerns ... about works not appearing in the museum's collection 'for decades, if ever' (though the first change, overruling Winokur, would ensure that, from the beginning, the works would appear in the museum's collection for at least part of each year)."
As we've seen, the new bill does the second thing: it sets an outside date of 20 years for completion of the gift. But it also does the first: it overrules Winokur by providing that, for every five-year period, the work must be "in the physical possession" of the museum (and "used in a use which is related to a purpose or function constituting the basis for the donee organization's [tax] exemption") for a portion of the time "substantially" equivalent to its fractional interst (so, for example, a museum with a 20% interest in a painting must take physical possession of the painting for roughly one year out of the five). The WSJ story interprets this provision as requiring that the museum "exhibit the artwork in proportion to its ownership interest over every five-year period" (my emphasis), but it's not clear to me whether keeping a work in storage, or perhaps making it accessible to scholars, would satisfy that requirement. If not, then the donor may have to extract a promise from the museum, as a condition of the gift, to exhibit the work in compliance with this provision.
Very briefly, a few other points about the bill. First, like the Pension Protection Act, it provides that no deduction will be allowed unless all interests in the work were owned by the donor and the donee immediately before the contribution (although it contemplates the issuance of regulations covering "cases where all persons who hold an interest in the property make proportional contributions" of their interests).
Second, the initial fractional contribution must be at least 10%, and it must be pursuant to a "written binding contract" which requires (a) that a total of at least 20% be contributed within 11 years and (b) the rest be contributed within 20 years.
Finally, for works (as distinct from interests) worth more than $1 million, the donor has to attach to her tax return "a statement of value obtained from the Internal Revenue Service." There are also additional reporting requirements for museums.
You can read the bill, S. 1605, here.
Monday, August 10, 2009
Still More on the Roerich Thefts
From Art Theft Central's Mark Durney here and here: "Why are the police only publicizing the thefts now? Also, if the museum receives only approximately 35 visitors a day, then have investigators attempted to track who visited on Wednesday, June 24 and Sunday, June 28?"
Background here.
Background here.
Arts Programming Cuts
The top story in the NYT Arts section today tells how "tens of thousands of students at public and private colleges and universities around the country will find arts programs, courses and teachers missing — victims of piercing budget cuts — when they descend on campuses this month and next." You can read the gory details here.
Derek Fincham thinks it perhaps "indicates ... a potential tide of deaccessions across the country":
"Given this, I think we need to seriously ask whether the current set of rules for deaccessioning works of art are really ensuring the continued viability of the arts. Why can't a University decide to sell all or part of its art collection? So long as it remains on display or available to researchers in the public trust, who is harmed?"
Derek Fincham thinks it perhaps "indicates ... a potential tide of deaccessions across the country":
"Given this, I think we need to seriously ask whether the current set of rules for deaccessioning works of art are really ensuring the continued viability of the arts. Why can't a University decide to sell all or part of its art collection? So long as it remains on display or available to researchers in the public trust, who is harmed?"
Friday, August 07, 2009
Not Off To A Great Start
The Boston Herald reports that "the [Massachusetts] Supreme Judicial Court won’t hear the lawsuit filed by three top Rose Art Museum patrons against Brandeis University .... The SJC transferred the case to the Suffolk probate court."
Thursday, August 06, 2009
"We were always more oriented toward prevention"
More from the NYT on the Roerich Museum thefts. Derek Fincham says "such a small museum is a good target for art thieves as it may not have sophisticated security systems, and limited visitors who may notice a theft."
Wednesday, August 05, 2009
"We imagine that the first hurdle the three plaintiffs will face is a challenge by Brandeis University to their standing"
The Charity Governance Blog's Jack Siegel on the recently filed Rose lawsuit:
"Under general principles of charity law, the [plaintiffs] probably lack standing: Donors lack standing. ... The donors may ... be able to argue special interest standing, but the Massachusetts Attorney General is aware of and, according to the plaintiffs' own pleadings, has been involved in the dispute. Attorney general involvement can undercut a claim to special interest standing. The three plaintiffs will undoubtedly argue that their status as members of the Board of Overseers of the Rose Museum provides them with standing. As we understand the board’s legal status, it is advisory. That fact may undercut their claim. At this point, all we can say is that both sides have sufficient facts to keep the battle over standing going for several rounds of court decisions. In the end, we bet the three will lose on the standing issue, but there are cases where donors have prevailed. See, for example, Smithers v. St. Luke’s-Roosevelt Hospital, 281 A.D.2d 127 (N.Y. App. Div. 2001)."
My initial reaction to the complaint was similar.
"Under general principles of charity law, the [plaintiffs] probably lack standing: Donors lack standing. ... The donors may ... be able to argue special interest standing, but the Massachusetts Attorney General is aware of and, according to the plaintiffs' own pleadings, has been involved in the dispute. Attorney general involvement can undercut a claim to special interest standing. The three plaintiffs will undoubtedly argue that their status as members of the Board of Overseers of the Rose Museum provides them with standing. As we understand the board’s legal status, it is advisory. That fact may undercut their claim. At this point, all we can say is that both sides have sufficient facts to keep the battle over standing going for several rounds of court decisions. In the end, we bet the three will lose on the standing issue, but there are cases where donors have prevailed. See, for example, Smithers v. St. Luke’s-Roosevelt Hospital, 281 A.D.2d 127 (N.Y. App. Div. 2001)."
My initial reaction to the complaint was similar.
"These books seem to cover everything an art professional might need to know"
In The L Magazine, Paddy Johnson reviews Heather Darcy Bhandari and Jonathan Melber’s Art/Work: Everything You Need to Know (and Do) As You Pursue Your Art Career and Jackie Battenfield’s The Artist’s Guide. I mentioned the former before here.
"If someone steals your car you can go get another one, but with a painting you can't replace it"
From the New York Post: "Brazen art thieves swiped two Russian masterpieces right off the walls of an Upper West Side museum in separate heists that police are finding as hard to decipher as an abstract painting. A cop who happened to be visiting the museum was the first to notice a work was missing from the Nicholas Roerich Museum on West 107th Street near Riverside Drive."
Tuesday, August 04, 2009
More on the Bull Suit
Nick Obourn: "The irony behind this, of course, is if Random House loses the lawsuit, the title of the book (A Colossal Failure of Common Sense) will have a deeply regretful double meaning."
Saturday, August 01, 2009
"The city's attorneys set Clearwater on a path that led to unnecessary expense, public ridicule and losses in court"
The St. Petersburg Times editorial board on the fish mural suit.
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