The role of bailment in cultural property claims: "A subject I have not found easy".
The aim of this article is to explain how a particular legal relationship, dating almost from the dawn of human exchange, exerts a rising influence on claims and transactions regarding cultural objects. (1) The relationship is that of bailment. Even today it is a word seldom heard outside the precincts of the common law. (2)
The standard bailment is easy to recognise. It arises when an owner of goods transfers possession of them for a limited period or purpose to someone who receives possession willingly. Storage, hire, carriage and pledge are familiar types of bailment. The main example in the museum world is the 'art loan'. This means the bailment of an object to a cultural institution, normally for exhibition but sometimes for research or authentication, perhaps even for assessment before purchase. Art bailments are in themselves highly complex phenomena whose terms could benefit from closer analysis, articulation and integration at a global level. (3)
But the true nature of bailment is wider than the standard version of a direct and end-stopped delivery from owner to possessor. One reason is that not all bailments are based on agreement. There is a form of bailment which arises when one party takes possession of another party's chattel unilaterally, in other words without consulting or even informing the owner, and thus without the owner's consent.
As we hope to show in this article, the concept of the unilateral bailment may become an important foundation for the development of claims by dispossessed owners against state authorities. This form of bailment might occur when a State purports to act for the benefit of an owner by taking goods into protective custody, or where a law enforcement agency comes into possession of goods that represent either the proceeds of crime or evidence of crime. Our discussion is premised on the assumption that the possessor, on taking possession, intended only to take possession and not to usurp ownership. (4) To emphasise its purely custodial role the possessor may have made some public declaration or other commitment to the effect that only possession and not ownership was, being assumed.
Not every unilateral taking of possession, therefore, involves some hostile intention towards the owner. A sovereign State might take possession as part of a protective policy towards property that is for some reason endangered5 or towards owners who are unable to protect their own property. (6) Possession might be taken by an authority that has a duty to take possession and even intends to act for the benefit of the owner, for example to protect goods in an emergency. (7) In recent years the term 'bailee of necessity' has emerged to identify such cases. A modern illustration is the New Zealand decision in Ngan v. The Queen, (8) where the police attended a road accident in which a car had overturned. The driver was conscious and was able to identify himself to the rescue services. Ambulance staff took him to hospital. A mass of banknotes, which had obviously come from inside the car, was lying outside it in the surrounding area. The police gathered these up and examined the contents of the car, whereupon they came across an open satchel containing a computer and a sunglasses case. On opening the sunglasses case they discovered a quantity of methamphetamines and a further sum of money. They took the satchel into their possession, put the additional money that they had collected from the vicinity into the satchel, took the satchel to a police station and eventually counted the money. In due course they sought to adduce the money as evidence of drug dealing. Relying on New Zealand human rights legislation, Ngan objected that since the police had taken possession illegally the evidence was inadmissible. The Court held that the police had acted correctly, and it confirmed that there was no breach of the obligations they owed to Ngan as bailees of necessity.
This leads to a further point of inquiry. From a discussion of unilateral bailment which presumes that the possessor knows that the property in his possession is not his, we move to consider the further proposition that a person may become a bailee by being in possession of the chattel of another in circumstances where the possessor should reasonably have been aware that the chattel belongs to another. Such a situation might arise where the buyer of a cultural object either had at the time of taking possession, or came to have after taking possession, reasonable cause to believe that the seller was not the owner, that the buyer was not getting ownership, and that the chattel continued to belong to a third party (i.e. neither buyer nor seller). Such a situation might also arise where a person who accepts the possession of goods from one person has reasonable cause to believe that the goods belong to another person. If the possessor in either case continues in possession of the chattel after the interest of the third party becomes reasonably discoverable, that possessor might be deemed to have consented to hold the goods as the bailee of the third party, and will incur most if not all of the obligations of a standard bailee. This might in principle occur even though the possessor is subjectively unaware of the existence or interest of the third party and holds the goods in the belief either that he or she owns them, or that he or she holds them as the bailee of another party. From this it might follow that, when the realisation does dawn that the possessor may not be the owner, the possessor may owe a duty to inquire into the question of title and to communicate with any person whom he believes to have, or has reasonable cause to suspect to have, an interest superior to his own. (9)
Such mysteries can be fully understood however only after one has mastered the fundamental tenets of bailment. It is to those tenets that we now turn.
BAILMENT: A CAMEO PORTRAIT
MYSTERIOUS AND MULTIFARIOUS CHARACTER OF BAILMENT
Bailment is an enigmatic concept. Though the subject of detailed modern treatment by judges and authors (10) it retains an air of obscurity. It intersects with, and often runs parallel to, other concepts. In its various guises it might be interwoven with contract, tort, trust, gift, agency, sale, fiduciary obligation, confidence, copyright and unjust enrichment. (11)
Bailment derives from the French word 'bailler' meaning to deliver. A formal or physical delivery is however no longer essential. A bailor need have no active role in the creation of the bailment. Bailment has come to signify the legal relationship that exists whenever one person is voluntarily in possession of a tangible movable object that belongs to another. (12) A bailor may be anyone whose goods are thus possessed.
MODERN ORIGINS OF THE LAW OF BAILMENT
The modern law of bailment began with the milestone decision of Holt C.J. in Coggs v. Bernard, (13) In a judicial tour de force equally impressive for its erudition as for its endurance, Holt C.J. incorporated into English law large tracts of the Roman law governing the relationship between owners and possessors of goods. In so doing he enumerated and expounded all the main categories of bailment currently in operation, ranging from vadium or pledge to commodatum or loan.
MODERN QUALITIES OF BAILMENT
Holt C.J.'s exposition proved influential. A measure of its success is that it did not ossify the law of bailment. Rather, the concept developed steadily over the ensuing three centuries and adapted resourcefully to commercial usage. Bailment has now progressed to the extent that its modern identity can be expressed in a series of fairly simple propositions: (14)
(i) Bailment is a relationship sui generis. (15)
(ii) Bailment can exist without a contract or agreement whether express or implied. (16)
(iii) Bailment gives rise to obligations that cannot be rationalised solely in terms of the law of tort. (17)
(iv) Bailment exists whenever one person is voluntarily in possession of goods that belong to another. (18)
(v) Bailment requires only the possessor's consent to possession. (19)
(vi) Bailment does not require the owner's consent to the possessor's possession. (20)
(vii) Bailment can therefore arise where a person unilaterally takes possession of another's chattel in circumstances where the owner would have opposed but could not prevent the taking.
(viii) A possessor's consent to being in possession can be express or implied.
(ix) Consent to possession may be implied where a possessor
(a) should reasonably have foreseen the presence of the goods in his/her possession and
(b) accepted, or continued, in possession of such goods where he/she could have refused, or foregone, or abdicated, possession. (21)
(x) Breach of bailment may consist of the bailee's failure to return the goods to the owner on demand on conclusion of the bailment, or a bailee's failure to take reasonable care of the goods, or a bailee's conversion of the goods, or a bailee's deviation from the essential terms of the bailment.
(xi) In special circumstances breach of bailment may also consist of the bailee's failure to seek out the owner and return the goods to him/her in circumstances where the bailor is not in a position to claim them directly. (22)
(xii) The custodial bailee may owe fiduciary duties, such as a duty to account for any unconsented profit derived from the relationship or the duty to avoid a conflict of interest between bailor and bailee. (23)
(xiii) The bailee who wrongfully holds the goods in defiance of the owner's right may incur a liability to pay to the owner a reasonable hiring charge for the period of detention. (24)
(xiv) The foregoing heads of liability may overlap and in some cases may be expressed as claims for breach of the independent relationship of bailment as well as for breach of contract, tort, trust or other obligation. Bailees may commit torts (e.g. conversion) as well as defaults that are peculiar to bailment. (25) Terms may be implied on ordinary principles into contractual bailments just as they may be implied on similar principles into non-contractual bailments. (26)
(xv) In many respects (for example an alleged breach of the duty of care) the bailee carries the burden of showing that he/she has discharged the relevant obligation rather than being entitled to call on the bailor to prove the breach. (27)
(xvi) A promise added to a bailment can bind the promisor though the bailment is not a contract. (28)
(xvii) A bailee is at common law generally debarred from disputing or questioning the bailor's title. This principle is however subject to exceptions both at common law and (in England) under statute. (29)
(xviii) It appears (though direct authority is scant) that a State can become a bailee in circumstances equivalent to those in which corporations and private individuals become bailees. Law enforcement agencies, the armed services, other arms of the State and public authorities become bailees by voluntarily taking possession of goods that belong to another. (30)
(xix) A claim in bailment can avoid the effects of a statute that is framed solely in terms of contract and tort. (31)
These propositions summarise the meaning and effect of bailment within most common law legal systems. By and large they represent the position in England, Australia, Canada and New Zealand. The result of their evolution is that bailment now occupies a sturdier and more fertile territory on the map of our commercial law than its early cartographers could possibly have envisaged. But the value and adaptability of bailment are not confined to mercantile transactions. The role of this venerable but virile concept within cultural claims and controversies is no less multifarious than its role in modern commerce at large.
BAILMENT AND MUSEUMS
Some manifestations of bailment in the museum context are obvious. The so-called 'art loan' is of course a common and vigorous form of modern cultural exchange. (32) Under this the 'lender' bails the artwork to the 'borrower' for the duration of the 'loan' and the 'borrower' returns the artwork to the 'lender' at the end of that period. In theory nothing could be simpler.
In truth however such bailments are rarely loans in the literal sense and bear only the faintest resemblance to Holt C.J.'s homely description of commodatum, (33) Both parties derive an advantage from the bailment, and their respective undertakings are normally embodied in a contract which is amply documented and supported by consideration. Moreover, the agreement often exhibits a degree of sophistication and depth of treatment far removed from that involved in the everyday loan of a chattel. Among other factors, the agreed terms will often extend both to the physical corpus of the object and those various intellectual property rights that may subsist in the object. Such bailments can also be immensely lucrative, as may be observed from the revenues and visitor ratings of the modern 'blockbuster' exhibition.
Given such complexity of aims and terms, it is perhaps surprising that so few disputes involving the relations between bailors and bailees of cultural objects have come to court. (34)
Cases where one or both of the parties to the bailment are sued by a third party (or 'stranger') to the bailment are not uncommon but disputes between 'lender' and 'borrower' are rarely litigated. The nearest thing to such a claim under modern English law is the decision in Kamidian v. Holt, (35) where Tomlinson J. said:
It is common practice for collections and collectors to lend pieces free of charge for display at such exhibitions...I hesitate to describe such an arrangement as a gratuitous loan because that begs a question, much debated, as to the generation of an expected benefit constituting consideration. It is accepted that one advantage possibly to be derived from the loan of a piece for exhibition is the achievement of wider publicity for the piece which may well bring with it either an increased acceptance of a hitherto doubtful provenance or an enhancement in the realisable price or, of course, both. Naturally for some lenders such considerations will be of little moment.
Even there it was the relationship between the Tender' and two of the organising curators that occupied the main attention of the court, rather than the direct relationship between Tender' and 'borrower'. The reason why the borrower was not a significant party was that it was insolvent.
The decision in Kamidian v. Holt is nonetheless valuable, and not merely because it examines the circumstances under which an ad hoc or 'guest' curator can in principle become personally responsible for a bailed artwork in the capacity of independent sub-bailee. The judge also accepts that an analysis in terms of pure 'loan' is inappropriate to many of the art bailments that underpin modern travelling exhibitions. A sounder understanding of the modern 'art loan' might be derived from classifying the bailment as a contractual bailment by way of hire. Under such an arrangement the bailee is granted the use and enjoyment of the work in return for some benefit to the bailor which, under the English law of chattel hiring, need not be financial. (36) This carries interesting implications for title. (37)
LOAN AS A STATUTORY CONCEPT
Statutes in both the United Kingdom and Australia have used the term 'loan' in a liberal manner, with scant regard for the true meaning of loan as a 'one-sided' bailment conferring benefit only on the bailee and without confining it to those gratuitous bailments that operate to the benefit of the bailee alone. The word appears in the title of the radical new Australian immunity statute, the Protection of Cultural Objects on Loan Act 2013 (Cth). The concept of loan is defined in spacious terms by section 5 of the Act, a definition which leaves no doubt that both gratuitous and reciprocally beneficial bailments are included:
"loan of an object includes an arrangement for:
(a) the temporary transfer of the physical possession, custody or control of the object directly or indirectly from one person to another person, whether or not any consideration is provided for the transfer; and
(b) the transfer of the physical possession, custody or control of the object directly or indirectly from the other person back to the first person." (38)
Loan is also referred to in passing in the Australian Constitution (Public Record Office Copy) Act 2000 by section 1 of which:
The copy of the Commonwealth of Australia Constitution Act 1900 which at the passing of this Act is on loan to the Commonwealth of Australia shall cease to be included in the public records to which the Public Records Act 1958 applies.
It is highly unlikely that a court in either England or Australia would have characterised this important bailment as a purely gratuitous transaction. The statute shows, it is submitted, that there exists a well-established usage among museums and cultural agencies favouring the expansion of the word 'loan' to signify a range of bailments to museums that are not in strict terms loans at all.
A similar observation holds true with regard to recent legislation which emancipates the Burrell Collection at Glasgow from former constraints imposed at the time of Sir William and Lady Burrell's original gift. Even the title of this Act--the Burrell Collection (Lending and Borrowing) (Scotland) Act 2014--suggests a wider use of the words 'loan', 'lend' and 'borrow' than Holt C.J. contemplated nearly three centuries ago. By subsection 1(1)(a) of this Act Glasgow City Council may now lend any items forming part of the Burrell Collection, and by subsection 1(1)(b) Glasgow City Council may now receive on loan from third parties items that do not form part of the Burrell collection and display them alongside items which do form part of the Collection. (39)
The English statute conferring immunity from seizure on objects bailed from overseas does not contain the word 'loan'. Section 134(2)(d) of the Tribunals Courts and Enforcement Act 2007 imposes instead a requirement that, in order to qualify as a protected object, the object "must be brought to the United Kingdom to be displayed to the public in a temporary exhibition at a museum or gallery". (40) This could in theory extend to arrangements for the transfer of cultural objects other than by way of bailment. (41) However, the word 'loan' is used in the Regulations made under the Act. Regulation 3(2)(a) of the Protection of Cultural Objects on Loan (Publication and Provision of Information) Regulations 2008 requires the bailee museum to publish the name of the Tender' in order to gain the immunity. The lender is defined for this purpose as anyone whose agreement is required to make the object available for exhibition. A claimant who asserts ownership could argue that this definition necessarily includes the true owner, viz the claimant in person, and that unless the claimant's name is published as a lender the immunity does not apply. A museum that did publish the claimant's name as one of the lenders might be thought to be conceding the point at issue, and would certainly incur the displeasure of the immediate bailor, although this would not necessarily forfeit the immunity. A museum that tried to investigate the claim before deciding whether to publish the name of the claimant as a lender would arguably be losing much of the value of the immunity in the first place. (42)
OTHER ART BAILMENTS
Recent case law confirms that there are various further situations where the relationship between a person who transfers possession of a cultural object and the recipient of that possession is one of bailment. The possessor might for example entrust an object to an expert in order for that expert to conserve, research or market the object: the transferee of possession becomes the bailee of the transferor and questions might arise as to whether the bailee is precluded by the normal estoppel on denying title that applies between bailee and bailor from detaining the goods for a reasonable time to investigate the bailor's title. (43) The owner of an historic object might deliver it to a bank for safekeeping and, in the event of an alleged loss, challenge the bank to show that the loss did not occur through any default on the part of the bank. (44) An artwork might be delivered to a prospective buyer on approval. (45) A person wishing to sell an object might entrust it to an agent on condition that the agent refrain from selling it to a specific individual: in the event that the agent breaks the condition the sale might be a nullity, no property might pass to the forbidden party, and the forbidden party (having therefore possession without ownership) might hold as the bailee of the putative vendor. (46)
The fact that bailment is a transaction sin generis does not, of course, mean that it will not on occasions correspond or overlap with other sources of obligation. A bailee who misdelivers the goods, or refuses to deliver them to the party entitled, may be guilty of conversion. (47) A bailment may be created or otherwise accompanied by contract, and either party may found his claim on an express term allegedly superadded to the common law bailment or on an implied term necessary to give the bailment meaning. The fact that additional promises are enforceable under a gratuitous bailment (48) (that is, a bailment which is not contractual because one party has not furnished consideration) suggests that terms might also be implied into such bailments, thus enlarging the liability of the bailee (or bailor) beyond his simple duties at common law to accommodate promissory undertakings, in a manner that resembles but does not reflect a liability in contract. (49) A similar process might be followed under sub-bailments. (50)
BAILMENT, RESTITUTION AND REPATRIATION
Bailment also plays a significant practical role in the resolution of restitution claims. Some of these claims are founded on an allegation of bailment, as where the claimant alleges that the claimant allowed the respondent to have possession only for a limited period or purpose which has now been terminated or exceeded. This was the foundation of the
claim by Peru against Yale University for the return of artefacts removed by Hiram Bingham. (51) A similar framework of dispute applies to numerous other cases where two parties differ as to whether the delivery of a valuable chattel by one to the other was a sale or gift (under which the delivering party relinquished outright his or her property) or a mere bailment, enabling the delivering party to call for its return. Notable examples are the dispute between the Beaverbrook Foundation and the Beaverbrook Art Gallery about the terms on which Lord Beaverbrook placed certain art works in the Gallery, (52) and the dispute between the children of the composer Sir Malcolm Arnold and Sir Malcolm's former carer concerning title to certain of his manuscripts. (53)
Bailment might alternatively provide the solution to a repatriation claim rather than its basis or cause. Modern settlements of such claims involve many instances where a holding museum, while sympathetic to the claim, has been either unwilling or unable to convey its entire property in a chattel to the party seeking repatriation. To sidestep the constraints on its power to alienate the object, the museum has instead bailed the object on a renewable or rotating basis. This has occurred with the return by the British Museum to Canada of the Namgis mask, (54) the return by the Victoria and Albert Museum of a silver monstrance to a church at Toro in Spain (55) and the return by the French Bibliotheque Nationale of the Josean manuscripts to Korea. (56) Suggestions that a 'loan' agreement might afford the basis for a return of the Parthenon material from the British Museum to Athens appear to have foundered on the understandable refusal of the Greek authorities to submit to the Museum's requirement that they recognise legal title in the Museum. An alternative analysis of the potential bailment arising in such circumstances might be that the bailor guarantees its own title to the bailee. This might arise through the characterisation of the bailment as a contract of hire.
As an alternative approach, loans of cultural objects have occasionally been negotiated as a gateway to some longer-term or fuller-title return, possibly to await the enactment of legislation in the returning country that enables a permanent return. (57) Finally of course the restitution of an object by way of a full-title conveyance to the recipient party might be negotiated on terms that the recipient supplies certain other cultural objects by way of loan or other bailment to the returning party. (58)
Bailment claims are sometimes interlaced with claims alleging infringement of intellectual property. This amalgam of material and non-material interests was at issue in Deakin and Wolf (t/a Faith Image Source) v. Card Rax Ltd (in dissolution) and Others. (59) Complaints there involved alleged breaches of licences to use artwork, other concomitant copyright infringement allegations, certain 'satellite' claims for additional statutory damages under the Copyright, Designs and Patents Act 1988 section 97, and a claim alleging the breach of a bailee's duty of care. In a colourful gastronomic metaphor, counsel observed that "There is a whole salami but it consists of lots of thin slices." (60)
IMMUNITY FROM SEIZURE
A further aspect of the cross-border art bailment that occupies an increasingly prominent position is the immunity statute. The effect of such statutes is normally expressed through the general proposition that they are "anti-seizure but not anti-suit". (61) In essence this means that remedies other than the arrest or specific restitution of the work remain open to a third party claimant who can establish an enduring title to the work. Principal among these would be the claim for damages in conversion where the bailee wrongfully returns the object to the bailor having received notice of the valid third party claim, (62) or the claim for a declaration that the third party has title. (63) But the statute might undercut the bailee's immunity more deeply if (as appears, for example, to be the case under the English statute) (64) the statute also precludes the bailee from interpleading. It might be questioned whether the drafters either intended or should have intended to seal off this efficient and commonplace exit strategy. (65)
The modern spread of statutes granting immunity from seizure gives rise to another question. There is a strong case for co-ordination between the availability of immunity from seizure in a particular jurisdiction and the casting of bailments designed to repatriate objects into that jurisdiction. The architects of renewable 'repatriation loans' might in other words be advised to scale the term of the loan to the maximum period that the borrowing state recognises as qualifying for local immunity. It might seem strange, for example, to broker a five-year renewable loan when the immunity period in the return country is only two years. Indeed there might be a case for granting a longer period of immunity to incoming repatriation loans than to ordinary exhibition bailments. The borrowing institution itself may not be inclined to cause trouble for the lender, but the same may not be true of dissident groups within the borrowing State.
PROTECTIVE ASSUMPTION BY STATUTE
Perhaps the most interesting vein of potential development lies in the argument that States are bailees of those cultural objects of which they have unilaterally assumed possession on some protective or custodial pretext. English authority is rare but there are clear decisions accepting that a unilateral possessor (or dispossessor) who takes without a concurrent assumption of ownership becomes a bailee of the owner or other person from possession is taken. (66) An obvious example, though one that appears never to have been tested in this context, might be the plethora of statutes on the purported authority of which the Vichy government or other Nazi puppet regimes took possession of the property of Jewish citizens. (67) A further more recent example might lie in the process by which Turkish Cypriot agents, operating after the Turkish military intervention in Cyprus, removed cultural objects to places of storage under a self-proclaimed policy of protective custody. (68)
THE BUCKNALL LITIGATION
The practice of assuming protective custody during wartime or other times of crisis was not of course confined to persecuting authorities or other predators masquerading as protectors. There is for example an English decision where the owner of portable valuables sued the Crown in detinue and bailment, seeking damages for their loss from the British Embassy in Petrograd where they had been deposited during the Russian revolution. In Bucknall v. The King (69) the claimant Charles Bucknall alleged that in April 1918 he had entrusted a quantity of jewellery, precious stones and Russian banknotes to the British consul at Petrograd, who had been left in charge of the embassy when the British diplomatic presence had withdrawn. The items were deposited in a locked leather bag marked 'A W Woodhouse' (the name of the consul) and were kept in the safe of the Chancery at the Embassy. In July 1918 Bucknall acceded to a proposal by the consul that the property be placed at the consul's disposal to enable the consul to dispose of it and use the proceeds in the service of the Crown should that become necessary. (70) That event never occurred because in August 1918 intruders claiming to represent the Soviet Government forcibly entered the Embassy, arresting the consul and others on the premises. Despite an alleged assurance to the vice-consul Cecil Mackie, that the contents of the safe would remain untouched, the leather bag was later found to have been cut open. Its contents had vanished and never resurfaced.
The claim was by Petition of Right and the Attorney General raised numerous objections, one of which was that the claim was barred by the Indemnity Act of 1920. The Attorney General argued that the Act supplied a complete answer to the claim, rendering it unnecessary to delve into "the more difficult point about bailment and onus." It was on this 'non-bailment' ground that the Court of Appeal finally dismissed the claim, Scrutton L.J. holding that the Indemnity Act was decisive in barring redress and rejecting Bucknall's argument that certain exceptions to the Act applied in his favour. The Court did however uphold the ruling of Horridge J. that "the facts required an answer by the Crown". This was a reference to the argument by Bucknall that the Crown became a bailee of the bag and its contents on delivery to the consul. At the hearing before Horridge J. the Attorney General appeared to concede that where a bailee failed to return the article claimed the onus was on the bailee to negative fault, but he further contended that "it was equally plain that the bailee might discharge the onus in any way he liked" and that in regard to the present petition "the facts disclosed that there was no default." Horridge J. accepted that the Crown owed a plain duty to take reasonable care of the items and to redeliver them on demand. He further recognised however that the Crown could avoid liability by showing that the items had been taken from its custody without default on its part, that is on the part of the consul or other responsible officers at the Embassy. The onus of disproving fault lay on the Crown and the facts as pleaded did not conclusively indicate that that onus was discharged.
When the consul was arrested it was expected by the members of the staff that the Embassy would be forcibly entered, and that raised a duty on the Crown to show that it took all steps to prevent the premises from being forcibly entered, and see that the safe was properly locked and to take all reasonable precautions to protect it ... [I cannot see] that because all the facts had been stated ... the onus on the bailee to show that he took all reasonable precautions for safe custody was discharged.
In the event Horridge J. decided against Bucknall under the Indemnity Act and that was, as we have seen, the determinative issue in the Court of Appeal. The case nevertheless shows that the Crown can in principle become a bailee by agreement, and can fail in its obligations as such by failing in the event of a loss of the goods to negative its own default. At no point does there seem to have been any argument or pronouncement in Bucknall as to whether the bailment was supported by a contract or was a gratuitous bailment in the nature of depositum. (71)
THE CROWN OF ST STEPHEN
In the United States, official documents adopted a bailment analysis in order to rationalise the USA's tenure of the Crown of St Stephen following its removal from Hungary by US authorities during the Second World War. This iconic Hungarian artefact had been handed to the US Seventh Army around the end of July 1945 by Colonel Pajtas, Commander of the Crown Guards, who had removed it to Mattsee in Austria in April 1945, and who had contacted the local US command following the surrender of all German forces on 5th May. According to the response by the State Department to questions submitted by the SubCommittee on Europe and the Middle East in 1977:
In our opinion, the legal status of the United States with respect to the Crown is comparable to that of a bailee. Were the Hungarian Government to make a formal request for the Crown's return, we believe that they could persuasively argue that we are legally obliged to return it. It is our view that U.S. policy is best served by returning the Crown before this legal issue is raised. (72)
There is an interesting contrast between the analogy with bailment expressed in this statement of 1977 and an earlier reference to the holding of the Crown 'in trust' in a statement by the
State Department in 1951:
The Crown of St. Stephen of Hungary, which was surrendered to the United States authorities for safekeeping, is being held in trust by the United States Government. It continues to be treated as property of a special status. The Government of the United States does not regard the present juncture as opportune or appropriate for taking action regarding its disposition. (73)
It is commonly accepted that bailment and trust are for the most part discordant concepts, because under a bailment the party to whom the characteristic duties of fidelity are owed remains the legal owner, while under a trust it is the party who owes those duties that has the legal title. (74) This does not mean however that the 1951 statement of the State Department was necessarily at odds with the notion of bailment. The State Department might simply have been expressing in an abbreviated, and therefore slightly distorted, form the older definition of bailment as a delivery of goods 'in trust' or 'on trust' to enable the bailee to execute the bailor's mandate. (75) And in each case at least beneficial ownership would have been recognised as residing with Hungary.
Certainly the State Department appears, throughout the period of possession of the Crown by the United States, to have consistently disavowed any suggestion that the United States had assumed legal ownership of the Crown. In 1977 a Congressional Sub-Committee observed that the facts presented to it "in no way support a conclusion that seizure [i.e., an assumption of lull title] was intended or purportedly effected by the receiving officers. (76) In response to questions, the State Department declared that "it has always been the United States policy that the Crown belongs to Hungary" (77) and offered the following comment on the process by which the United States acquired possession:
The available documentation on this not unromantic series of events demonstrates not only an absence of intent to seize the Crown properties, but from the outset a recognition that these properties were Hungarian, that they were voluntarily delivered by a responsible Hungarian official who was treated as a "representative" of the Hungarian nation, and that their custody in US hands placed a unique responsibility on us. (78)
This statement raises a further point. The phrase "voluntarily delivered by a responsible Hungarian official ... treated as a "representative" of the Hungarian nation" suggests that, in the view of the US State Department at least, the bailment of the Crown was a consensual one, to which Hungary was an informed and willing party, presumably acting through its agent Colonel Pajtas. But there seems no reason in principle why the US should not alternatively have become a bailee of Hungary in circumstances where Colonel Pajtas did not have actual or ostensible authority from Hungary to deliver the Crown to the Seventh Army, but where the US itself was nonetheless a willing recipient. That States may become bailees through a compulsory taking of possession is clearly suggested by an Israeli case, where the army during a military emergency took possession of a truck and its contents belonging to one of its citizens. The State was held responsible as bailee for the later theft of those contents while they were still in the custody of the military. (79)
THE ROMANIAN-RUSSIAN BAILMENT
Certainly not every State-to-State bailment of national treasures involves a unilateral assumption on the part of the recipient. There is at least one case of a consensual bailment where a State sought the co-operation of another in undertaking the temporary custody of national treasures endangered during wartime. The entrustment in question occurred during the First World War. Following the German occupation of Bucharest the Romanian administration relocated to the city of Iasi and addressed a request to the Tsar's Government to accept possession of certain State artefacts for purposes of safekeeping. The request was granted, an agreement was signed and the objects travelled to Russia by train. (80) Two trainloads of material departed over a six-month period in 1916-1917, the first consisting of gold ingots and coins, the second comprising valuable historic and cultural items, including the archives of the Romanian Academy and numerous antiquities such as certain 3,500-year-old golden jewels found in Romania, ancient Dacian jewellery, the jewels of the voivodes of Wallachia and Moldavia, and jewels of the Romanian royalty, and precious religious and spiritual objects owned by Romanian monasteries, such as fourteenth-century icons and old Romanian manuscripts. Most of the material thus consigned has not been returned to Romania, while parts of that portion which remained in Russia appear to have been variously redistributed, unsealed and rifled. Russia did however return portions of the archive in 1935 and certain paintings and ancient objects, most notably the Pietroasele treasure, in 1956. In recent times, following the Romanian-Russian treaty of 2003, a bilateral commission has been appointed to consider the matter but little progress appears to have been made. (81)
THE DE CSEPEL LITIGATION
In recent years, and by a curious reversal of the position with the Crown of St Stephen, progress in the use of bailment as a means of formulating claims against States has been made by claimants seeking to recover artworks held by the Republic of Hungary. In de Csepel et al v. Republic of Hungary et al (82) the claimants, descendants of Baron Mor Lipot Herzog, sought various forms of relief founded on alleged bailments. The claim related to works of art formerly in the collection of the Baron and currently in the possession of the Museum of Fine Arts at Budapest ('MoFA') and other agencies or instrumentalities of Hungary. Those defendants had acquired possession of the works following their seizure by agents of the Hungarian government and their Nazi collaborators, who took the works to the headquarters of Adolf Eichmann for onward distribution. The claimants alleged that the conclusion of the Peace Treaty between the Allies and Hungary in 1947, and in particular the provision in the treaty demanding the reversal of all racially- or religiously-motivated arrogations of property perpetrated since 1st September 1939, cast Hungary and the holding institutions in the position of bailees of their chattels. By Article 27 of the Treaty:
Hungary undertakes that in all cases where the property, legal rights or interests in Hungary of persons under Hungarian jurisdiction have, since 1 September 1939, been the subject of measures of sequestration, confiscation or control on account of the racial origin or religion of such persons, the said property, legal rights and interests shall be restored with their accessories or, if restoration is impossible, that fair compensation shall be made therefore [sic].
The claimants further relied on the fact that the nominal return by Hungary of certain works after the war was accompanied by government-inspired or government-condoned threats and harassment which effectively obliged them to deposit those works back among the defendant institutions, one of which (MoFA) exhibited some of the works with labels saying that they were 'on deposit'. These and other considerations led the claimants to contend that the relationship between 'the Herzog Heirs' on the one hand, and both Hungary and the holding institutions on the other, "was in essence a bailment" by which the defendants "retained possession of the art and displayed it for financial gain ...".
The First Instance Decision in de Csepel
Dismissing peremptorily the antiquated argument that bailment requires a transfer of physical possession and control, and preferring the more liberal proposition that a bailment can arise where a person who, having first held possession in some capacity other than that of bailee, thereafter agrees to hold possession as bailee for a particular person, (83) Judge Huvelle went on to hold that Hungary's consent to possession as bailee was implied from the circumstances of its possession. These circumstances included the voluntary exercise of national possession and control by Hungary and the making of representations in the 1947 Peace Treaty that were consistent with Hungary's acceptance or continued tenure of the works under a bailment. It was not necessary to prove an express agreement to act as a bailee. "Accordingly, plaintiffs' allegations are sufficient at this stage to state a claim for bailment." Citing Hoffman v. United States (84) and inter alia 8A Am. Jur. 2d Bailments, (85) the judge said:
The assent of the parties to a bailment ... may be implied from the conduct of the parties ... "A contract of bailment may be implied from the circumstances of a transaction or from the words and acts of the parties evincing a purpose to enter into that relation towards the property." ...
Citing the same authority, Judge Huvelle further observed that a bailment can be 'constructive' in the sense of being inferred from the facts without proof of actual consensus. Such a bailment might in her view arise without even any implied agreement on the part of the possessor, in circumstances where the law imposes obligations that equate with those of a bailee. It followed that even where no implied bailment is present:
In addition, the law recognizes a so-called "constructive bailment" or "quasi-bailment" under circumstances "where the person having possession of a chattel holds it under such circumstances that the law imposes on him or her the obligation of delivering it to another," even without an explicit agreement between the bailor and the bailee.
The judge did not expressly say so, but those situations which she identified as illustrating the constructive bailment appear to be cases where the court will deem the possessor to have consented to possession, even though the possessor has neither harboured any subjective intention, nor outwardly manifested any subjective or inferable consent, to occupy the position of bailee. (86)
The Appeal in de Csepel
Hungary fared no better when it appealed the judgment in de Csepel to the US Court of Appeals for the District of Columbia Circuit. The objections that Hungary had raised in the District Court were again dismissed, albeit with some variance of reasoning.
In affirming the District Court, the Court of Appeals made no significant further pronouncements on the essential nature of bailment, being largely content (a) to accept that for the purposes of the immediate proceedings the bailment here alleged was consensual in form--"an express or implied-in-fact bailment contract"--and (b) to affirm that the objections advanced by Hungary, while potentially effective in response to a claim based on the original expropriation, were inept in the face of the bailment claim.
Having recited the facts, the Court began by reiterating the nature of the claim as one where the Museums and the University became 'custodians' of the looted artworks and arranged with representatives of the Herzog heirs to retain possession of the works in dispute so that these could continue to be exhibited in Hungary. (87) The Court then proceeded to explain why a claim founded on these presumed facts and on the legal inferences to be drawn from them did not trespass on the immunity that a foreign State would normally enjoy as sovereign in respect of the expropriation of the assets of its citizens.
In their complaint ... the Herzog family seeks to recover not for the original expropriation of the Collection but rather for the subsequent breaches of bailment agreements they say they entered into with Hungary ... [and] ... under which Hungary assumed "a duty of care to protect the property and return it to [the Herzog family]" ... which Hungary breached by refusing to return the Collection in 2008.
This version of their material relationship with Hungary equipped the claimants with the artillery to overcome the further impediments that Hungary sought to erect against the claim. Construing the relationship as a bailment, and the claim as one based essentially on bailment, placed the claim squarely within the 'commercial activity' exception to the Foreign Sovereign Immunities Act of 1976 ('FSIA') on the simple ground that art bailments are transactions which private entities, as opposed to sovereigns, might typically undertake. As the court had observed in Malewicz v. City of Amsterdam (88) there is nothing sovereign about lending art pieces. On the contrary, inter-museum loans (whether involving public or private institutions) "occur round the world regularly."
Applying the accepted rule that it is not the purpose of an activity but its inherent nature that determines whether it is a commercial activity for the purposes of State immunity, Judge Tatel accepted in effect that (a) both the making and the repudiation of contracts are activities in which one would expect "private players within the market" to engage, (b) that "a bailment is a form of contract", and (c) that contracts of bailment are no exception to the general truth that contract business is commercial business. Whether the foreign state has acted with a profit motive or in pursuit of "uniquely sovereign objectives" is not the question. Those matters of intent are immaterial where the acts in question are the type of actions in which private parties characteristically engage in the course of trade, traffic or commerce. It appears that the test is objective and not subjective. (89)
The Court accepted that two further requirements to the successful invocation of the 'commercial activity' exception are the founding of the claim on an act that took place outside US territory, and proof that this external act caused some 'direct effect' in the USA. The first of these requirements was plainly met. The second consisted in Hungary's alleged promise to return the works to members of the Herzog family whom it knew to be residing in the US and to whom it knew that the works would ultimately have to be made available there. The fact that according to the family compliance with the bailment demanded specific performance indicated sufficiently for present purposes that the parties contemplated a performance which, if unfulfilled, would have a direct effect in the United States.
Here ... the family alleges that Hungary promised to return the artwork to members of the Herzog family it knew to be residing in the United States and then breached that obligation by refusing to do so ... Although the complaint never expressly alleges that the return of the artwork was to occur in the United States, we think this is fairly inferred from the complaint's allegations that the bailment contract required specific performance--i.e., return of the property itself--and that this return was to be directed to members of the Herzog family Hungary knew to be residing in the United States. See id. Indeed, Hungary does not argue that the bailment contract envisioned performance outside the United States, nor did it seek jurisdictional discovery in the district court with respect to the contract's place of performance. Accordingly, drawing all reasonable inferences from the complaint in the family's favor, as we must at this stage of the proceedings ... we find that the family has alleged facts that, if true, would satisfy the commercial activity exception's requirement of a "direct effect" in the United States. (90)
This quotation suggests two points of speculation. The first is that a later deprivation inflicted by a refusal to return property to the party entitled might overleap or circumvent the immunity of its original expropriation and expose the refusing party to action even when there is no underlying bailment. The second is that a refusal originating outside the US but communicated and received inside the US might, even where state immunity is not in issue, amount to the commission of the tort of detinue or conversion within the US, thus conferring jurisdiction on a US court where none might otherwise have existed. In short, if such a refusal has a 'direct effect' in the United States for purposes of sovereign immunity it might also render the place in which it is received the locus delicti.
Hungary resorted to a second argument, which was that the repudiation of the bailment was itself a sovereign act because it consisted essentially of the failure by Hungary to "address war reparations as required by a treaty". The Court agreed however that an operative basis of the bailment--and the critical basis for this purpose--was not the Peace Treaty but the parties' direct agreement to occupy a bailment relationship. This apparently consensual bailment occurred (according to Judge Tatel) when Hungary arranged with representatives of the Herzog heirs to retain possession of most of the Herzog Collection and the Herzog family agreed to allow the artworks to be 'returned' to the Museums or the University for safekeeping. In other words, the bedrock of the bailment was agreement and not treaty, and the catalyst for the claim was the wrongful keeping and not the wrongful taking. (91)
The breach of bailment therefore consisted of affirmative acts, which transgressed beyond the original deprivations inflicted by Hungary--the 'expropriations'--and were in themselves deprivations of property. In so holding the Court confirmed that a State's later refusal to deliver up chattels in accordance with its enduring obligation as a bailee of those chattels can overleap or stray beyond the immunity that might have accompanied the State's original usurpation of possession. Further the necessary direct effect of Hungary's repudiation within the United States could be satisfied by showing that Hungary had broken its undertaking to carry out specific obligations within the United States. (92)
The Court's dismissal of Hungary's objections continued with rejections of Hungary's arguments that the Court's assumption of jurisdiction on the basis of bailment, and its refusal to construe the FSIA as shielding Hungary from such a claim, was ineffective as being in conflict with international agreements. The essence of this argument was that, in the event of a conflict between the Court's construction of the FSIA and the terms of an international agreement, binding on the United States, regarding the availability of a judicial remedy against a contracting state, the international agreement must prevail. Hungary first pointed here to the provision of binding alternative enforcement mechanisms under Articles 27 and 40 of the Peace Treaty. This argument foundered however on the court's finding that the bailment claims fell outside the scope of the Treaty, which the family dodged by the simple device of suing as bailors rather than as victims of the original expropriation: "... the family's claims rest not on war-time expropriation but rather on breaches of bailment agreements formed and repudiated after the war's end." Viewed thus, the asserted conflict dissolved because the Peace Treaty did not speak to an unlawful detention. (93)
A similar rationale thwarted Hungary's attempt to invoke the 1973 Agreement on the Settlement of Claims. That Agreement might indeed have embodied a complete and final settlement of all claims based upon a wrongful taking inflicted by Hungary before the date of the Agreement, but it had no application to bailment agreements allegedly repudiated in 2008. It followed that nothing in the 1973 agreement collided with Hungary's amenability to suit under the FSIA. (94) On this analysis the Court of Appeals found it unnecessary to pronounce on an alternative line of reasoning that found favour with the District Court, viz that the 1973 Agreement could not have affected the claims in question because it was confined to claims by those who were US citizens at the time of the expropriation, and Erszebet Weiss de Csepel was still at the time of the expropriation a citizen of Hungary. The District Court therefore found that even if the claims were characterised as founded on expropriation the 1973 Agreement did not debar them. The Court of Appeals preferred to oust the 1973 Agreement on the ground that it did not apply to claims of this character, viz claims in bailment. (95)
The fact that the Court was able to perceive the January 2008 refusal by Hungary to return the works as the pivotal event in the history of the present claim also enabled the family to sidestep Hungary's defence based on expiry of the limitation period. On the assumed facts, it was only on that date, and not at some earlier time such as the filing of suit by Martha Nierenberg in Hungary in 1999, that Hungary issued its final decision to repudiate its obligation to return the works to the family and conveyed unequivocally to the family that any further demand for the surrender of the Herzog Collection would be futile. Given that the District of Columbia operates a three-year time bar for the bringing of claims that concern the recovery of personal property or damages for its unlawful detention, (96) and given further that a cause of action in bailment accrues "when the plaintiff demands the return of the property and the defendant refuses, or when the defendant takes some action that a reasonable person would understand to be either an act of conversion or inconsistent with a bailment," (97) the commencement of the present proceedings in bailment on 27th July 2010 fell comfortably within the three-year limitation period. (98) Of course the Court did not rule out the possibility that Hungary might be able to show in later substantive proceedings that the claims in bailment accrued at some earlier point, but at the present stage of proceedings--that of Hungary's motion to dismiss--the Court saw nothing to controvert the assertion that the date of accrual was January 2008. The Court's conclusion on this point obviated the need to consider whether the District Court had correctly identified an equitable tolling--i.e., in effect, a suspension--of the claim during the pendency of the Nierenberg litigation in Hungary. With evident relief the Court of Appeals held that its conclusion that the cause of action in bailment accrued in January 2008 made it unnecessary to "wade into these equitable-tolling waters". (99)
The Court concluded by further observing that the claims were not barred by the political question doctrine or the act of state doctrine. The claims were not addressed and settled by the international agreements in 1947 and 1973 and were triggered by commercial acts on the part of Hungary that did not command protection under the doctrine of act of state. Nor were the claims fit to be dismissed under the doctrine of forum non conveniens. Every argument to that effect that was raised by Hungary on the present appeal had been considered by the District Court, and Hungary had failed to show any "clear abuse of discretion" on the part of that lower court. (100)
The Impact of the Decision
In a case like de Csepel, there may of course be numerous potential objections to the characterization of the possessing State as a bailee, and to the pursuit of claims based on bailment within a law district other than that of the holding State. Many such objections have been raised in de Csepel itself and their cogency has yet to be finally weighed. The holding State might argue that it is protected by state immunity, that the treaty under which it allegedly undertook to hold as a bailee and on which the bailment is premised cannot be challenged or invoked by individuals, that (in the US) the claim attracts neither the expropriation exception nor the commercial activity exception to the Foreign Sovereign Immunity Act, that the claim raises non-justiciable political questions concerning war reparations and claims for restitution that are the sole preserve of the executive branch, and that the doctrine offorum non conveniens requires the action to be stayed and the claim to be heard in Hungary. In addition, of course, there is the perennial question of limitation of actions. Such questions, which will in due course be definitively resolved in de Csepel, are beyond the scope of the present article. None of those objections, however, touches on the essential quality of bailment, or on its ability in principle to be invoked in claims by citizens against States.
More serious in this regard is the recurrent contention by Hungary in de Csepel that bailment is a consensual relationship that requires a "meeting of the minds": an element which the defendant alleged to be lacking in the claimants' relationship with Hungary. That analysis of bailment has ceased to reflect the position under English law for almost half a century, (101) though the main US decision recruited by Hungary in support of it is only two decades old. (102) The argument by Hungary that the bailment claim nowhere alleged that the parties mutually consented to occupy the relationship of bailor and bailee, and that the Treaty concluded in 1947 could not demonstrate the necessary intent, was contested by the claimants, and rebuffed by the Court of Appeals, not on the ground that regardless of the asserted objections Hungary voluntarily took possession of the Collection, but rather on the conceptually narrower point that the bailment was alleged to have emanated from an 'arrangement' between the family and Hungary and that the family agreed on the return of the works to the relevant Hungarian institutions 'for safekeeping'. The case pleaded by the claimant family may or may not prove to have been factually secure, but any points of frailty might have been cured by framing the bailment as one founded on a voluntary assumption of possession by Hungary, with or without the family's consent. (103)
Leaving aside the question of consensus, an outstanding issue in de Csepel concerns the process by which the alleged bailment arose. To discern a bailment when a State directly takes possession from an existing possessor may be relatively straightforward, at least where the State expressly or impliedly disavows the intention to arrogate to itself the full proprietary interest, or where any intention to assume full ownership is defectively implemented. To discover a bailment when a State agrees to return to the former possessor chattels already owned and possessed by the State appears more contentious. The agreement might be construed as one that undertakes an immediate re-vesting of property in the former possessor, followed by an interim continued possession by that possessor, in which event the case for a bailment would appear stronger. The discovery of a bailment where an expropriating State directly acknowledges to the formerly dispossessed owner that the State now holds on the latter's behalf and that the latter has now become the new owner might be founded in part on an analogy with the doctrine of attornment. (104) Alternatively, however, the agreement by the holding State might be construed as one that undertakes to re-vest property in the former possessor upon delivery, leaving the current property of the State unchanged till delivery. In that event the alleged bailment would seem more problematic, because the State would not appear at first sight to be in possession of goods that belong to another. And in either case there remains the hurdle that the bailment derives at least in part from the terms of an agreement in the form of an executive act, as opposed to a direct agreement with a private individual, with all the restraints that this implies.
Of course the position would be more favourable to the claimant if property never passed to the holding State but remained in the claimant throughout. That might occur if the original seizure from the Claimants failed to divest them of property, and if the seized chattels were then returned to the holding State by the Allied authorities at the end of the war on terms that transferred mere possession and did not vest property in the holding State or displace the original property of the Claimants. Such a scenario appears to be contemplated by the pleadings of the plaintiffs in de Csepel:
Pursuant to the 1947 Treaty of Peace between Hungary and the Allies ... Hungary received only a custodial interest in art that had been looted during the war and subsequently returned to Hungary by the Allies, including the Herzog Collection ... Ownership rights to the Herzog Collection remained at all times with the Herzog Heirs.
The failure to state a starting point leaves open the question whether this passage should be construed as meaning that the Herzog heirs had possession at all times from the date of original seizure or at all times from the conclusion of the Treaty. The former seems the more literal construction but elsewhere the claimants state that "The post-war relationship between Hungary, the Museums and the University and the Herzog Heirs was in essence a bailment ...". (105) Of course an interpretation by which property never left the claimants would be less troublesome to them than one by which it left them but returned to them after the war.
The Toren Litigation
Since the appellate decision in de Csepel, a further claim in bailment has been instituted in the United States District Court for the District of Columbia. (106) In common with de Csepel this claim relates to artworks that are alleged to have been misappropriated as part of a programme of Nazi persecution, and is directed against government: on this occasion the Federal Republic of Germany and the Free State of Bavaria. The work in question was one of those discovered in the possession of Cornelius Gurlitt when German authorities entered and searched Gurlitt's flat in February 2012. While there has hitherto been no judgment, and the circumstances differ significantly from those in de Csepel, some of the observations made earlier in regard to de Csepel might also be applied to this claim.
The claim demands the return of a work by Max Liebermann, known under various titles but identified for this purpose as Two Riders on a Beach. The claimant is David Toren, who pleads that he is both the great-nephew and a 'lawful heir' of David Friedmann and that he has the authority of all other heirs of David Friedmann to bring the claim. It is alleged that Friedmann owned the work from early in the twentieth century, that Toren saw it as a boy at his great-uncle's villa at Ahomallee 27 in Breslau, and that the Nazis seized Friedmann's entire collection, including this work, in or around 1939. The Complaint further states that Friedmann himself died in 1942 and that by the time the war ended Friedmann's entire immediate family was dead and his entire art collection had been taken. His daughter Charlotte, killed by the Nazis in 1942, was the last to be murdered.
By his First Amended Complaint, dated 22nd October 2014, (107) the claimant pleads that on and after 21s1 November 2013 he addressed a series of letters to the defendants demanding the return of artworks formerly in the possession of his great-uncle Friedmann. His demand was forwarded to the Task Force which has been appointed to assist the investigation of this matter in Germany. According to the Complaint the works in question have not been returned and the parties to whom his demands have been addressed, having first failed to acknowledge his ownership of Two Riders on a Beach, have latterly refused to return the work to him "even after acknowledging that Toren is the rightful owner." (108)
The matter is complex, but of particular interest for our purpose is the fact that one of the heads of claim is laid in bailment. (109) Toren alleges that the defendants occupy toward him the status of bailees under an "express, implied-in-fact, or constructive bailment". Early in the First Amended Complaint Toren outlines the groundwork for this plea, which he broadly founds on the voluntary assumption by the defendant governments of the status of bailee and his own concurrence in that assumption. Toren expresses these co-functioning facts in the following manner:
(a) the defendant governments never intended to take ownership of the artworks" but instead "hold the artworks as bailees", having "stated that they intend to keep custody of the artworks until they determine, and return, the works to their true owners." (110)
(b) Toren himself "accepted the ... bailment and quickly presented irrefutable evidence ... that the painting was stolen by the Nazis from Friedmann and that Toren is Friedmann's lawful heir" and he "demanded that the Defendants return the art immediately." (111)
From those premises directed towards the establishment of the bailment, Toren proceeds to identify the breach. He asserts that the defendant governments "breached the bailment agreement with Toren by not declaring him to be the true owner" of the work. (112) He further asserts (as if to accentuate the breach) that this failure has occurred in the face not only of Toren's own irrefutable evidence as to his ownership but also of the identification of the provenance of the work in the defendants' own "lost art website" as "Collection David Friedmann, Breslau" (113) and the defendants' eventual acknowledgement that Toren has contemporary and enduring title to the work. (114)
We reproduce here the full substantive content of this head of claim. (115) Since, however, there is an interesting contrast between the cause of action as currently pleaded in the First Amended Complaint and that pleaded in the original Complaint, we set out the two Complaints in succession, with the earlier Complaint reproduced after the later, First Amended version.
FIRST AMENDED COMPLAINT
FIRST CAUSE OF ACTION
(Breach of Bailment Contract)
56. Toren incorporates the preceding paragraphs as if set forth fully herein.
57. When Defendants seized and stored "Two Riders" and other artworks in the Friedmann Collection, they indicated an intent to store the artworks as bailees until they could determine, and return, the artworks to their rightful owners, wherever they may be. Toren accepted Defendants' bailment construct by submitting documents to Defendants pursuant to that construct that showed he was the true owner of the "Two Riders" and other artworks in the Friedmann Collection. This created an express, implied-in-fact, or constructive bailment contract between Toren and Defendants.
58. Defendants breached this contract by not promptly declaring Toren to be the rightful owner of "Two Riders," and then by declaring Toren the rightful owner, but still refusing to return "Two Riders" to him. The creation of the bailment contract between Toren and Defendants, and Defendants' subsequent repudiation of that contract, constitutes affirmative acts beyond the initial expropriation to deprive the Friedmann heirs of their property rights in the Friedmann Collection.
59. Under the bailment contract, Defendants owe Toren a duty of care to protect "Two Riders" and other artworks from the Friedmann Collection and return them to him. Defendants, at all relevant times, understood that the Friedmann Collection remained the property of its rightful owner and that the rightful owner retained the right to demand its return.
60. Toren presently owns and has a right to possession of "Two Riders" and any other artworks in Defendants' possession from the Friedmann Collection.
61. In a series of letters beginning in November 2013, Toren demanded the return of "Two Riders" and other artworks from the Friedmann Collection. Now, even after acknowledging that Toren is the rightful owner of "Two Riders," Defendants still refuse to return the painting to him pursuant to their bailment obligations. Any further demand would be futile.
62. Toren has been damaged by Defendants' breach of their bailment obligations incurred by their refusal to return his property. Toren is entitled to restitution of "Two Riders" and any other remaining artworks from the Friedmann Collection within Defendants' possession, custody, or control, and any other damages resulting from Defendants' breach.
FIRST CAUSE OF ACTION
(Breach of Bailment Contract)
54. Toren incorporates the preceding paragraphs as if set forth fully herein.
55. When Defendants seized and stored "Two Riders" and other artworks in the Friedmann Collection, they indicated an intent to store the artworks until they could determine, and return, the artworks to their rightful owners, wherever they may be.
56. Defendants obtained only a custodial interest in the looted property, i.e., "Two Riders" and other artworks in the Friedmann Collection, rather than ultimate ownership rights.
57. Defendants' possession of "Two Riders" and other artworks from the Friedmann Collection constitutes an express, implied-in-fact, or constructive bailment contract.
58. Defendants breached this contract by refusing to return the artworks, and that breach constitutes affirmative acts beyond the initial expropriation to deprive the Friedmann heirs of their property rights in the Friedmann Collection.
59. Under the bailment contract, Defendants owe Toren a duty of care to protect "Two Riders" and other artworks from the Friedmann Collection and return them to him. Defendants, at all relevant times, understood that the Friedmann Collection remained the property of its rightful owner and that the rightful owner retained the right to demand its return. 60 *
60. Toren presently owns and has a right to possession of "Two Riders" and any other artworks in Defendants' possession from the Friedmann Collection.
61. In a series of letters beginning November 5,2013, Toren demanded the return of "Two Riders" and other artworks from the Friedmann Collection. Defendants have refused to even acknowledge that Toren is the rightful owner of "Two Riders." Any further demand would be futile.
62. Torren has been damaged by Defendants' breach of their bailment obligations incurred by their refusal to return his property. Toren is entitled to restitution of "Two Riders" and any other remaining artworks from the Friedmann Collection within Defendants' possession, custody, or control, and any other damages resulting from Defendants' breach.
Aside from other differences, it will be seen that the First Amended Complaint has dropped the former assertion in paragraph 56 of the original Complaint that "Defendants obtained only a custodial interest in [the work] ... rather than ultimate ownership rights." Both Complaints, however, adhere to the long-standing, but by the standards of English law outmoded, analysis of bailment as (necessarily) a form of contract. So much is clear both from the heading to the paragraphs on the cause of action in bailment ("Breach of Bailment Contract") and from internal references.
To someone versed in English common law (the birthplace of the modern transaction of bailment and its seed-ground since 1703) the insertion of the word 'contract' might suggest an unnecessary complication. An English bailment can exist without a contract, for example where a consensual transfer of possession is gratuitous, unaccompanied by consideration and therefore by definition non-contractual, or where the alleged bailee's taking of possession is not by agreement with the owner but arises from a purely unilateral voluntary act of the part of the possessor without the owner's consent. It is in keeping with the latter analysis that English common law treats finders as bailees, at least for certain purposes. (116) There is strong appellate authority for the proposition (which we cite earlier) (117) that a bailment arises whenever one person is voluntarily in possession of goods that belong to another.
The Toren claim might represent an interesting initiative to nudge US law towards a similarly expanded definition. Certainly the notion of an implied-in-fact or constructive bailment is not without some earlier acknowledgement from US courts, and there are judgments in claims concerning wartime seizures that reflect this approach.
However, there are numerous complications.
First, the continued lip-service to bailment as a sub-division of contract cannot be helpful in a case where there was no apparent communication, let alone consensus, between the claimant and the defendants regarding the defendants' assumption of possession. Unless the Court is prepared to sever decisively the link between bailment and contract, that link might yet forge a barrier to any bailment-based claim.
Secondly, the German authorities might well find themselves confronted by the rival argument that, notwithstanding any original ownership or wrong, the estate of Cornelius Gurlitt is the contemporary owner and the party to whom the work should be returned. The emergence of conflicting claims from the descendants of an original owner and the later possessor from whom the law enforcement agents directly took the chattels might in theory induce the holding authorities to invoke a procedure akin to that of interpleader, by which they apply to the court for permission to retire from the proceedings, perhaps while continuing to hold the paintings as neutral stake-holders, and thereafter to await, and act according to, whatever final order the court makes after hearing the claims of the claimants.
Thirdly, the relative brevity of the period between the first demand letter sent by the claimant and the commencement of proceedings (four months), coupled with the patent complexity of the matter, might well induce the defendants to invoke some principle of German law akin to the English common law doctrine laid down in Clayton v. Le Roy, (118) that a possessor of goods from whom possession is claimed is entitled to retain them for a reasonable period in order to examine the true location of title. In that event the issue of proceedings might prove to have been premature and the right of possession might lie temporarily with the law enforcement agents.
It may be significant in the latter regard that, contrary to the allegation contained in paragraphs 58 and 61 of the First Amended Complaint, the defendant governments do not appear to have declared that Toren is the owner of the work, but appear merely to have accepted that the work had been taken from its original owner in circumstances of Nazi persecution. Of course the two propositions are not necessarily congruent. Whether a proposed statutory amendment to the Bavarian law of limitation periods119 would alter this situation and bring about a change in the identity of the defendants' bailor remains an open question. (120)
Such matters aside, it remains far from impossible that an allegation of bailment could be sustained on similar facts under English common law. (121)
In the Toren case, the interval between the taking of possession and the demand for delivery up was so short that it might be unrealistic to allege that the authorities became bailees at an earlier time than the claimant's demand. The fact remains however that over eighteen months elapsed before the authorities officially acknowledged their possession. It might in principle be argued that the bailment should be antedated to the time when the authorities first knew or had reasonable cause to know that they were holding material that had once belonged to, and might still be the property of, the Friedmann family.
Of course an effective claim in bailment would ultimately depend on whether the heirs of Friedmann could establish an enduring contemporary title in themselves. The vagaries of limitation periods and foreign post-War title-conferring transactions might well debilitate this aspect of the claim. But if an enduring title could be shown, and if a current possessor's status as a bailee turns on whether that possessor voluntarily continued in possession of goods when he knew or had reasonable cause to know that he was in possession of goods that belonged to someone else, it might also be possible to allege bailment against any intermediate possessor who had possession of the goods before they were taken from him by the current possessor. The estate of Cornelius Gurlitt is an obvious candidate.
BAILMENT BY ALERTMENT
The concept of deemed or inferred consent may therefore be valuable in supplying the rationale for a residual or marginal category of 'constructive' bailments, arising in cases where no true consent exists on the part of the alleged bailor. This may adequately explain the duties of a possessor who without legal authority takes the goods directly and invasively from an earlier possessor who retains the superior right to possession. It may also explain the duties of a possessor who takes possession on the unwarranted assumption that such taking confers ownership of the goods, whereas in fact it transfers only possession. This might occur where a purported confiscation, accompanied by physical seizure, fails for some legal reason (contrary to the intention of the seizing authority) to confer ownership on the seizing authority. Such a situation might arise where a State takes possession of goods and purports to confiscate them on the misguided belief that a wrongful exportation of the goods by their owner entitles the State to usurp the property of the exporting owner. (122) Having voluntarily (if mistakenly and unlawfully) taken possession in circumstances that do not simultaneously render it the owner of the goods the State will become a bailee.
But in other situations the exclusion of the original possessor may be indirect, in that it arises upon the ultimate possessor's receipt of possession from an intermediate possessor who transfers such possession willingly. This might occur where a chattel is stolen from A by B and passed along a chain of sale to C and D before coming to rest in the possession of E, in circumstances where E does not obtain property under one of the exceptions to the principle nemo dat quod non habet. In such a case, where the original possessor never consented to forego possession, the position of the ultimate possessor is somewhat different from that of a direct taker. In many cases E will be wholly innocent of the existence of A or of any interest on the part of anyone other than E himself.
In such a case it would appear contrary to principle to characterise E as the bailee of A, even though A retains ownership and E has possession. But where a person such as E either is, or should reasonably have been, aware that he or she is in possession of the chattel of another, and continues in possession of the chattel despite being free to relinquish it, the possessor E's consent to that possession might fairly be implied. In other words, the true test for determining whether the possessor impliedly consented to possession is whether the possessor (a) should reasonably have foreseen that the goods were present within his possession, or were encumbered by an interest other than his own or that of the person who immediately delivered the goods to him, and (b) nonetheless voluntarily assumed possession, or voluntarily continued in possession, when free to do otherwise. In such a case the possessor should stand as the bailee of the person whose interest he should have foreseen.
In this regard it is to be remarked that elsewhere in her judgment in de Csepel, Judge Huvelle cited without apparent disapproval the argument by the claimants that "Hungary, the Museums and the University knew at all relevant times that the Herzog Heirs owned the Herzog collection ... The post-war relationship between Hungary, the Museums and the University and the Herzog Heirs was in essence a bailment ...". (123) We submit that, even without actual knowledge of the ulterior existence or interest of the owner, the possessor should be liable to characterisation as a bailee on proof of "sufficient notice" (124) of such existence or interest. In this context notice can exist without knowledge and notice can be sufficient to germinate a bailment if it is such as would alert a reasonable person in the position of the possessor to the existence of an ulterior interest.
If bailment by alertment has any potential within cultural property claims, it would seem capable of arising notwithstanding that the possessor is in no position to identify any specific person as the party entitled to the goods. It would suffice that the possessor is in command of facts from which a reasonable person in his position would infer that the goods belong to another person. (125) Such a situation might be glimpsed on the reported facts of an episode involving the National Gallery of Canada. (126) The object in question is a Cezanne landscape, Groupe d'Arbres, which appears to have been in the Gallery since the Second World War. One theory is that it was among a group of around 600 works which were removed from France in 1940 by an art broker named Martin Fabiani who had earlier (and, it appears, lawfully) acquired them from Lucien Vollard, the brother of Ambrose Vollard. Having been shipped first to Spain and then to Portugal, the collection was carried to Bermuda in a vessel that was later boarded by British naval officers and customs personnel when it docked there. From Bermuda the collection was taken for safekeeping to the National Gallery at Ottawa. Paintings other than Groupe d'Arbres were distributed among various claimants in 1949 (viz Fabiani and Lucien Vollard's elderly sisters Leontine and Jeanne) and removed by the parties to whom they were awarded, but this work remained at Ottawa. Later unsuccessful requests were made for the return of a missing painting but without mentioning Groupe dArbres by name.
The Director and Chief Executive Officer of the Gallery is reported to have said of this work that "we have never pretended to own it and we don't pretend to own it. Until a rightful owner emerges, we just take care of it." He also drew attention to the perils of returning the work to a claimant who could not prove full entitlement. Perhaps on account of this neutral and open-minded stance, the Gallery appears never to have "listed [the work] among its collection, put it on display or publicly noted its existence." But the Gallery authorities insist that this does not mean that they made no effort to resolve the conundrum.
Should the true owner appear, the facts would indeed suggest a fertile arena for the imposition of both the conventional duties of a bailee (for example, the duty to take care of the work) and the more peripheral duties (for example, the duty to research the provenance, seek out the owner and made reasonable steps to reunite him or her with the chattel). These duties should be capable of invocation by the true owner when he or she finally surfaces to claim the goods, irrespective of whether the Gallery knew his or her name at any earlier point during its possession. Whether a bailee of this character should be estopped from denying the claimant's title is a tricky and circular question, the answer to which should probably be negative.
BAILMENT BY DEMAND
From this a further consequence would appear to follow. A person who receives the possession of goods under the honest but erroneous belief that he or she has become the owner may become a bailee of the true owner from the time at which that owner demands the return of the goods. To be willingly in possession of the goods of another for this purpose requires one to have at least imputable notice of the fact that they belong to another. Where the party entitled to goods addresses to the possessor a sufficiently informative and unequivocal demand to render that possessor liable in conversion for defying the demand, there seems no reason why the adequacy of the demand for that purpose should not thenceforth render the possessor the bailee of the demander. In that event the possessor has 'sufficient notice' of the demander's interest to satisfy the possessor's inclusion within the bailment relation. (127) It should make no difference that the possessor genuinely and honestly misjudged the position in concluding that the demander's interest was illusory and that his demand was misconceived. On the contrary, even without formal notification of a particular person's interest, a possessor may become the bailee of that person wherever he should reasonably have been aware of that party's interest. This is so whether the source of the possessor's misconception is a failure to realise that the goods belong to anyone other than him or a mistake as to the identity of the other person to whom they belong.
So What Rides on Bailment?
No amount of abstract theory as to the juridical basis of bailment is remotely helpful to an understanding of cultural property claims unless one can state the practical consequences of discovering a bailment on particular facts. In what respect does it help a claimant to show that the party holding the chattel is that claimant's bailee? Here we must revert to the list of obligations given near the beginning of this article (128) and select from that list two examples.
Reasonable Care in Safekeeping
First, a bailee owes a duty to take reasonable care to safeguard the chattel against theft or other misadventures. (129) Where a disputed work of art is stolen, lost, destroyed or damaged before the owner can reclaim possession, but after the possessor has become the owner's bailee, the possessor will generally be answerable for that harm unless he or she can prove that he or she has taken the necessary care. (130) Such liability might occur where the owner has made an informative demand for the return of the work which leaves the possessor in no reasonable doubt as to the basis of the owner's claim. A similar duty applies where a bailor's title is challenged by a third party or is threatened by some other event the original occurrence of which is not attributable to the bailee's fault. The bailee's duty of care extends to an obligation to take reasonable active steps to safeguard the bailor's position and to reverse the effects of the original misadventure. (131) The fact that the burden of proof rests on the possessor is a considerable advantage to the bailor. A further advantage in this context is that the bailee is also liable for any theft of the goods by any employee or independent contractor to whom he has entrusted any aspect of the duty of care, and that here again the burden of proof is on the bailee.
Active Inquiry as to Owner
The possessor may be liable to the true owner for failing to take reasonable and active steps to investigate the true ownership of the disputed object and to reunite the owner with his or her property. Breach of this obligation might take the passive form of simply keeping the owner out of possession for longer than is justifiable, or the active form of dealing with the object in a manner contrary to the owner's rights, for example by destroying the chattel or selling it to a third party. Remedies will follow accordingly. (132)
There is allusive authority, within the case law on finders, for imposing a duty to seek out the owner where the possessor is aware that he or she does not own the goods personally. In Parker v. British Airways Board (133) Donaldson L.J. remarked obiter that the finder of a chattel owed not only an obligation to take care of the chattel once he or she takes it into possession, but an obligation to take reasonable measures to inform the true owner of the fact of the finding and of the present situation of the chattel: in short, to reunite the owner with the chattel. Moreover, recent authority involving an involuntary bailee appears to confirm the existence of a distinct duty on the involuntary possessor to seek out the owner when matters of title are in doubt, and suggests that the possessor will be liable in conversion if he or she disposes of the chattel without such prior inquiry. (134) While authority tending to the contrary can be cited, (135) there seems no reason in principle why a similar duty to seek out the owner and inquire into the existence and location of any ulterior title should not apply to possessors other than finders who when first taking possession, or having earlier taken possession, develop some reason to believe that the goods do not belong to them. This active duty need not prove unduly onerous if the possessor has the alternative option as an involuntary bailee of taking reasonable steps to rid him/herself of its possession; (136) indeed the duty to inquire may be integral to and consistent with that option. Though the duty itself is still nascent in form, its policy and logic seem cogent. The bailee cannot conscionably stonewall and stand idle on the issue of title in the hope that the party entitled will be thrown off the scent. (137)
Bailment and Limitation of Actions
Taken to extremes, this analysis might have the effect of mitigating or even circumventing the effect of the Limitation Act 1980. Suppose for example that a buyer acquires surreptitiously an object which, even at the point of acquisition, he/she suspects to have been stolen. His/her suspicion also leads him/her to suspect that the ownership of the original owner has not been displaced and that the buyer is getting possession alone. Under the foregoing argument the buyer might, apart from occupying any other relationship, be characterised as equivalent to a finder or constructive bailee of the object after taking possession, in that (a) he/she should reasonably have realised that he/she had come into possession of property that belonged to another and (b) by retaining such possession while harbouring that state of mind he/she can be deemed to have consented to possession on behalf of that other, and thus to have become the bailee of the true owner. The argument would run that in this event the buyer owed a duty of care to the true owner to seek him/her out in the sense of taking reasonable steps to identify the owner as owner, to reunite the owner with his/her property, to care for it meanwhile and not to convert it.
From this argument, certain other consequences might follow that are no less helpful to the owner. The owner might argue that since the buyer's duty as a bailee to care for the goods and seek out the owner was a continuing one, there was no single or solitary time at which the cause of action for its breach accrued for purposes of the applicable limitation period. Rather, there was a continuing breach for as long as the buyer or anyone who derived possession through the buyer had possession of the object and failed to observe those duties. This argument would, if successful, block off any argument that the breach had occurred at a sufficient distance of time to have exhausted the limitation period. More ambitiously, the owner might recruit the buyer's obligations under the common law relationship of bailment, coupled with the lack of any specific statutory reference to bailment, as a springboard to argue that the Limitation Act 1980 does not apply to claims in bailment anyway, which therefore attract no statutory time bar. (138)
At this point one encounters another potentially useful trait of bailment, which is its ability to evade the grasp of statutes that are expressed solely in terms of contract and tort. Although the ultimate question is the intention of the drafter, and the argument in favour of an exemption for bailment has occasionally failed in relation to individual statutes, modern statutes are capable of referring expressly to claims in bailment, as distinct causes of action, when they intend to cover them.
The Limitation Act 1980 (the '1980 Act') nowhere expressly prescribes a limitation period for claims in bailment. The word 'bailment' appears nowhere in the 1980 Act. The lack of such reference to bailment in the Limitation Act 1980, combined with the sui generis nature of the modern bailment in general, might indicate an intention to leave claims in bailment unaffected. (139) Attempts to stretch the language of section 2 ('Time limit for actions founded on tort') and section 5 ('Time limit for actions founded on simple contract') to engulf claims in bailment are, it is submitted, strained, artificial and misconceived.
Statutes can and do refer expressly to claims in bailment when bailment is intended to be covered. Explicit reference is illustrated by the Insolvency Act 1986, section 382(4) of which provides that:
In this Group of Parts, except in so far as the context otherwise requires, "liability" means (subject to subsection (3) above) a liability to pay money or money's worth, including any liability under an enactment, any liability for breach of trust, any liability in contract, tort or bailment and any liability arising out of an obligation to make restitution.
Similarly, paragraph 13.12 of the Insolvency Rules 1986 provides that:
In any provision of the Act or the Rules about winding up, except in so far as the context otherwise requires, "liability" means...a liability to pay money or money's worth, including any liability under an enactment, any liability for breach of trust, any liability in contract, tort or bailment, and any liability arising out of an obligation to make restitution.
The absence of any reference to bailment in a statute may (depending on the language of the statute and its context) entail that claims in bailment are beyond the statute. Claims in bailment have been held to outflank or overleap specific statutes governing the carriage of goods (or specific conditions or restrictions imposed by such statutes). The leading modern authority is East West Corpn v. DKBS AF1912 A/S and another (140) where the Court of Appeal held that the statutory transference of rights of action in contract effectuated by the Carriage of Goods by Sea Act 1992 did not operate to transfer rights of action in bailment, which accordingly remained with the bailor. Lord Mance said at :
On the view I take, therefore, a relationship of bailment continued in existence between the claimants and the shipping line, despite the claimants' transfer of the bills of lading and of the attendant contractual rights to the Chilean banks as the claimants' agents, and whether or not the effect of that transfer was to confer on the Chilean banks a sufficient possessory interest for them to pursue claims in bailment.
In other words, the sweeping up of the rights in contract into the hands of the holders of the bills of lading was not accompanied by a sweeping up of the rights in bailment, which stood outside the statute. (141)
In Leicester & Co v. Cherryman, (142) a decision concerned with section 30 of the Pawnbrokers Act 1872, Ridley J. said:
The view which I take of this matter is that none of the Acts dealing with the restitution of stolen property were intended by the Legislature to alter the civil rights of the parties as they existed ... It was contended on behalf of the defendant that the effect of s. 30 of the Pawnbrokers Act, 1872, is to deprive the owner of the property of the right to pursue his civil remedy for the return of his property, if an order has been made under the section. It is, I think, a sufficient answer to that argument that, if that had been the intention of the Legislature, it would have been so stated in the section.
Claims in bailment are not alone in their isolation from the 1980 Act. At least one other head of liability, for infringement of copyright, has been held to lie beyond the reach of the Act. (143) More complex is the position relating to claims for breach of fiduciary duty, (144) restitution on the basis of unjust enrichment145 and proprietary restitution. (146) Recent authority holds that claims for accessorial liability in equity are not claims against a trustee for fraud within section 21 (l)(a) so as to render them claims without limitation. (147) The general six-year time limit for breach of trust-related actions in section 21(3) applies.
It would be a mistake to believe that every claim in bailment coincides either with a claim in contract or a claim in tort. Gratuitous promises superadded to gratuitous bailments, for example, are enforceable irrespective of the want of consideration, and essential promises made by sub-bailees to sub-bailors can be enforced against those sub-bailees by contractually unrelated head bailors. (148) The fact that these and other critical aspects of liability in bailment are not reflected in contract and tort justifies the conclusion that the law of bailment is to be treated as an independent and fully integrated body of law, and that all claims in bailment are to be treated as sui generis, beyond the grasp of the 1980 Act.
We have already noted the exemption from the 1980 Act of certain liabilities not expressly identified in that Act. It might be argued that the fact that bailment constitutes a form of entrustment (and was referred to by older authorities as a delivery of goods in trust) (149) justifies exempting actions in bailment from the statutory limitation periods that govern tort and contract, and treating them rather in a manner akin to actions for breach of trust. (150)
Other considerations peculiar to the inherent nature of bailment further justify the liberation of claims in bailment from the limitation periods imposed by sections 2 and 5 of the 1980 Act. As regards claims based on title, section 3(2) of the Act provides that where any cause of action in conversion "has accrued to any person and the period prescribed for bringing that action has expired and he has not during that period recovered possession of the chattel, the title of that person shall be extinguished." In the case of a conversion that is committed by a defendant who has no prior consensual relationship with the claimant this effect may be justified. But to extend this effect to a claim brought by a bailor against his bailee is arguably to offend the bailee's estoppel, which debars every bailee from denying or contesting his bailor's title. (151) To plead the limitation period in a conversion claim necessarily constitutes a denial that the bailor has title, because that title would under section 3(2) be extinguished. The isolation of claims in bailment from the Limitation Act 1980 is therefore explicable as consistent with the maintenance of the bailee's estoppel.
Even if the 1980 Act prescribes a limitation period for those liabilities in bailment that are congruent with liabilities in contract or tort, it prescribes no period of limitation in respect of those liabilities in bailment that are not congruent with any liability in contract or tort.
We submit, therefore, that it would conflict conspicuous violence on the language of the 1980 Act to characterise numerous aspects of the liability of the bailee as arising from tort (as within section 2 of the Act) or contract (as within section 5). As we have already observed, sub-bailees can be liable on promissory commitments to head bailors irrespective of the absence of any interlinking contract. Gratuitous (unrewarded) bailees are liable for deviation and indeed for breach of any promise that they have superadded to the bailment, irrespective of any consideration moving in their favour and irrespective of whether the deviation or breach of express promise corresponds with any liability in tort. There seems no reason moreover why promises cannot be implied under non-contractual bailments, thus affording a further example of distinctive liability. All bailees are estopped from denying their bailor's title and all bailees carry a distinctive burden of proof, at variance with the normal principle governing claimants in contract and tort that he who asserts must prove.
This concatenation of peculiar features decisively segregates bailment from contract and tort. For these and other reasons, at the very least a bailee cannot plead the 1980 Act in regard to those aspects of its liability that are peculiar to its position as a bailee. The aspects in question are (we sumit) deviation, the duty to safeguard goods against theft, presumed breaches of the duty of care, presumed liability for theft or complicity in theft on the part of persons to whom the Defendant has entrusted any aspect of its duty of care, and liability for conversion under section 2(2) of the Torts (Interference with Goods) Act 1977.
DUTIES OF FIDELITY; LIABILITY FOR UNJUST ENRICHMENT; THE DOCTRINE OF THE REASONABLE HIRING CHARGE
FIDELITY AND BREACH OF FIDUCIARY DUTY
Although older cases refer to bailment as a delivery of goods 'on trust', it is clear for numerous reasons that a bailment is not a trust in the strict modern sense. That does not mean, however, that the bailee cannot owe fiduciary obligations to the bailor, such as a duty to avoid any conflict of interest and a duty not to profit from misuse of the bailed material.
A modern example from the United States is Michael Lawton v. Yale University. (152) This was a claim based on the alleged detention by Yale of certain photographs that Lawton had bailed to the University. In preliminary proceedings, the Court held it to be an arguable proposition that a bailee owed fiduciary (equitable) obligations to the bailor in addition to its obligations at common law. Yale had challenged the assertions of fiduciary obligation set out in Count 6 of Lawton's claim on the grounds that (a) such obligations cannot arise without a fiduciary relationship, (b) aside from a single allegation of bailment in Count 5 of its claim Lawton had advanced no material from which a fiduciary relationship could be inferred, and (c) the allegation of bailment was by itself inadequate for that purpose. Disagreeing, the Court held that:
Our Supreme Court has characterized bailment as involving fiduciary duties. "Fiduciaries appear in a variety of forms, including agents, partners, lawyers, directors, trustees, executors, receivers, bailees and guardians." (153) Connecticut common law has always recognized a special relationship of trust and strict obligations of care between a bailor and a bailee for hire. (154) Since our Supreme Court has stated that bailment inherently involves fiduciary duties and since Yale has challenged the sixth count only on the basis that no fiduciary relationship has been pleaded, the motion to strike the sixth count is denied.
THE REASONABLE HIRING CHARGE
A bailee or other possessor who unlawfully detains another's chattel may in certain circumstances be obliged to pay to the owner a reasonable sum, to represent the market rate that the detainer would have had to pay to the owner in order to hire the chattel over the period of detention. (155) The remedy appears to belong to the law of restitution, in that it operates to prevent the defendant from being unjustly enriched at the claimant's expense. It reverses that enrichment by obliging the defendant to pay whatever he would have had to pay on the market for the use and enjoyment in question. (156)
One practical objection to the award of such a remedy in the specific context of a detained artwork concerns the quantum of the reasonable hiring charge. There is virtually no material from which a reasonable charge for the hiring of (for example) an Old Master painting, or even a distinguished work of contemporary art, can be determined. In such authorities as exist, the mode of assessment of market rental is usually agreed or conceded, or referred to experts or arbitrators, or (in certain appellate decisions) remitted to the trial judge. The value of the decisions in point is further limited by the fact that they characteristically involve commercial chattels with a capital market value that declines over time and through use. That is, of course a different case from that of an important painting, whose investment value, though capable of fluctuating, is normally rooted in capital appreciation rather than in its capacity to generate rental income. On the rare occasions when the detained chattels were in the nature of distinctive articles (for example, 'prestige' or 'classic' motor cars) the court held the principle itself to be inapplicable and the technique of assessment did not arise. (157)
The points of debate explored in this article are no more than a sample of the questions and solutions to which the law of bailment might contribute. Even a limited analysis within a single jurisdiction brings to light illuminating resemblances with different legal systems and a remarkable potential for growth. The analysis in de Csepel, for example, enables valuable parallels to be drawn with corresponding principles under English law. (158)
There are many further potential applications of the bailment concept, and they give rise to numerous conundra. To what extent, for example, should a bailee by unilateral assumption be estopped from denying the bailor's title? Should the law follow the ordinary bailment principle, applying to a bailee who takes possession by agreement with the bailor, that the bailee is legally debarred from pleading the jus tertii, or should the lack of a conventional bailor by agreement displace the normal principle? (159) If the unilateral bailee is estopped from denying the bailor's title, does this disqualify him other from detaining the chattel for a reasonable time in order to investigate title, on the ground that he owes an undivided loyalty to the bailor by virtue of the convention that the bailor is the owner? (160) What happens if a self-styled 'art loan' proves on strict analysis to be a bailment by way of hire, thus attracting the statutory undertakings as to title and quiet possession that (under UK law at least) are implied against the bailor: is the bailee's estoppel displaced?
A further set of questions concerns the recovery of damages for a loss of information that follows the unlawful removal of a chattel. (161) Such loss might occur where an archaeological site is effectively destroyed by illegal digging, or where the research value of a newly-discovered gold antiquity is lost through its being stolen and melted down. Such claims involve highly complex questions about the recovery of damages for interference with intangible property, the level of foresight (if any) required of a defendant who deliberately destroys material, the principle omnia praesumuntur contra spoliatorem and the evaluation of damages for a loss of opportunity. Proof of a bailment may shine a clear light on these issues.
Such questions must await another occasion. For the present three cautions are offered.
* First, those who seek to understand the interplay between international law and the cross-border recovery of art and antiquities might find it instructive to look more searchingly at the civil law operating 'on the ground': that is, in the country in which the object is located, or within the legal system from whose courts a remedy is sought. Important cases involving the return of looted cultural objects can turn on the minutiae of the law of personal property in the particular forum rather than on abstract principles of common international doctrine. An outstanding example in England is the decision of the Court of Appeal in Government of the Islamic Republic of Iran v. Barakat Galleries Ltd, (162) which hinged in part on a detailed examination of such arcane points as the distinction under both common law and statute between proprietary and possessory interests, the efficacy of immediate rights of possession to support claims in conversion, the effect of foreign statutes on the prior ownership of undiscovered antiquities and the proper interpretation of an elderly prior Court of Appeal decision involving not antiquities but (of all things) bathroom fittings. (163) Cross-border litigants, and indeed, the drafters of cross-border instruments, should take heed of these local margins of appreciation.
* Secondly, the fact that bailment is "the secret weapon of the common law" should not induce one to overstate its significance or to underrate the value of other legal concepts in their application to cultural objects. The policy of art mobility, for example, might be better served in some cases by the use of such devices as cross-border or extra-territorial trusts, collective acquisitions, time-share agreements or other forms of 'horizontal' sharing, rather than by conventional 'vertical' or 'top-to-bottom' art loans. Moreover, some of the consequences that we have examined (such as the recovery of damages in conversion for a loss of information) might not be peculiar to bailment and might be visited on defendants who are not bailees. The fact remains that bailment is, for all its antiquity, a useful tool in the box.
* Thirdly, and essentially, the bailment cases remind us that legal creativity is at the heart of modern art dealings, whether those dealings are amicable or adversarial. One element in such creativity is the revival or revisiting of old legal concepts and their adaptation to new applications: a form of legal archaeology. Nowhere, perhaps, is such creativity more visible today than in the pursuit of Holocaust-related claims or national claims to recover looted antiquities. In each of these spheres and in numerous others the law of bailment has a part to play and that part can be a creative one. (164) Whether such improvisation works for or against art claimants, its influence is mounting. We ignore it at our peril.
([dagger]) These words are taken from the judgment of Thirlwall J. in Spencer v. S. Franses Ltd  EWHC 1269 (Q.B.) at para. ,
(1) The role and influence of bailment are not of course limited to art transactions. One field among many in which the law of bailment has made significant recent advances is that of shipping law: see for example Metall Market 000 v. Vitorio Shipping Co Ltd The Lehmann Timber  EWCA Civ. 650; ENE Kos l Ltd v. Petroleo Brasiliero SA (No. 2)  UKSC 17,  2 W.L.R. 976; Scottish & Newcastle International Ltd v. Othon Ghalanos Ltd  UK.HL 11; East West Corpn v. DKBS AF 1912 A/S and another  Q.B. 1509,  EWCA Civ. 83. Possessory liens are another fertile field: see The Lehmann Timber, above; Your Response Ltd v. Datateam Business Media Ltd  EWCA Civ. 281.
(2) See generally Winfield, Province of the Law of Tort 102-103. Although originating as a common law relationship, bailment is frequently modified by statute or similar instrument. An unusual example affecting the custodianship of historic material is to be found in the Statutes of the Order of St Patrick (revised version, [29.sup.th] July, 1905) statute 27 of which provides that Ulster King of Arms "shall have custody of the...jewelled insignia of the Grand Master" and statute 20 of which provides that regalia in the custody of the Ulster King of Arms "shall be deposited for safekeeping in a steel safe in the strongroom...in the Chancery of the Order in the office of Arms in Ireland." These provisions were at the heart of the Report of the ViceRegal Commission of 1908, established "to investigate the circumstances of the loss of the Regalia of St Patrick and to inquire whether Sir Arthur Vicars [Ulster King of Arms] exercised due vigilance and proper care as the custodian thereof." See further on this curious episode (and generally) Coates (ed, Argonaut Papers, undated) The Theft of the Irish Crown Jewels, an edited selection of papers from the inquiry, p. 17 and passim. On a more general plane, numerous statutes impose obligations of care on agencies that come into possession of the chattels of others in the course of their functions: see, for an example drawn almost at random, the Proceeds of Crime Act 2002 (Australia) s. 254 ("Responsibility for things") by which "(1) If a thing is seized under a search warrant or under s. 251, the responsible custodian of the thing must: (a) arrange for the thing to be kept until it is dealt with in accordance with another provision of this Act; and (b) ensure that all reasonable steps are taken to preserve the thing while it is so kept." The responsible custodian is defined by s. 254(2).
(3) See generally Norman Palmer 'Art Loans as Legal Animals' (1996) I Art Antiquity and Law 251. Such bailments carry particular risks for lenders in the cross-border context, potentially affecting their reputation as well as their legal and economic security. For a modern expression of surprise at the overseas bailment of a work without the conduct of sufficient prior provenance inquiry on the part of the bailor, see Spoliation Advisory Panel, Report on a Constable Sketch in Tate Britain, 2013: "The Painting was lent abroad three times between 2002 and 2007. The Tate argues that the obligation to research provenance rests on the borrowing institution, not the lending institution, and that it should not, therefore, have been expected to research the provenance before such loans. Even in terms of the Tate's self-interest, the Panel finds it surprising that the Tate was prepared to send overseas and expose to the risk of a claim in another country a work of such incomplete provenance, which any reader of Mravik's work of 1998, would know was believed to have been owned by a Hungarian of Jewish origin."
(4) Mandatory acquisitions or 'expropriations', whether effective or not, are in a different class from mere assumptions of possession. The distinction is pointedly illustrated by the de Csepel decision, examined below at p. 216 et seq. But a purported expropriation which for some reason fails to take effect as an outright vesting of property in the expropriator, and results only in a transfer of possession to the purported expropriator, could arguably give rise to a bailment by unilateral assumption. To this it might be countered that such a bailment is involuntary because the expropriator did not intend to take or hold mere possession on behalf of the deprived owner and is therefore not voluntarily in possession as the bailee of that person. But the expropriator in such a case is probably more persuasively characterised as occupying a position analogous to that of a voluntary bailee who has deviated from the terms of his possession, and should be held strictly liable for ensuing losses: cf Palmer on Bailment ([3.sup.rd] edn, 2009) para. 26-095 note 558, and see McCowan v. McCulloch  1 D.L.R. 312; Finlayson v. Taylor, The Times, 14 April 1983; Burns v. Roffey (unreported, 16 March 1982). A similar analysis might be applied to those original expropriations that are later reversed by legislation or treaty, leaving the expropriating party in possession but without ownership. That was apparently the position in de Csepel, below.
(5) Cf State of Israel v. Levenshtein and Others (State of Israel v. Levenshtein and Others, 46/75, (CA-Civil Appeal) P.D. (Piskai Din) 30(1) 716.
(6) Such a policy might according to circumstances be benevolent and conscience-driven or cynical and predatory. It might even result from acts of the possessing State that were themselves designed to dispossess the people whose property is in question.
(7) See the Proceeds of Crime Act 2002 (Australia) s. 254, above note 2. Cf United States v. Herce 334 F Supp 111 (1971). The US District Court for the Southern District of New York, Judge Brieant, granted an application by the District Attorney that a disputed work by El Greco currently held by the FBI should be lodged at the Metropolitan Museum of Art pending termination of the action. District Judge Brieant, relying in part on the duty owed by the police as bailees of the work, said he did so gladly "because of the great public interest involved. Indeed, the right of the public to have such a work of art, a masterpiece which is not only a part of the national heritage of Spain but also a part of the heritage of all mankind, made available for public view is a substantial one. This argument, however, must be addressed to the Legislative Branch."
(8)  NZSC 105; see also Zien v. The Queen (1986) 26 D.L.R. ([4.sup.th]) 121 (Fed C.A., Can.); State of Bombay (now Gujarat) v. Menon Mahomed Haji Hasam  I.N.S.C. 150; A.I.R. 1967 S.C. 1885; 1967 (3) S.C.R. 938 (5 May 1967) (Sup. Ct, India) (customs authorities); Williams v. Att Gen  1 N.Z.L.R. 646; and generally Palmer on Bailment ([3.sup.rd] edn, 2009) paras 1-039 to 1-040; cf A & D International Inc v. United States of America 665 F.2d 669 (1982) (US Court of Appeals, Fifth Circuit).
(9) See further on this question Palmer 'Unclaimed Art and the Duty of Active Pursuit: Cornelius Gurlitt and the Hidden Hoard' in (2014) XIX Art Antiquity and Law 41.
(10) East West Corpn v. DKBSAF 1912 A/S and another  Q.B. 1509,  EWCA Civ. 83; Sandeman Coprimar SA v. Transitosy Transportes Integrates SL and Others  Q.B. 1270,  EWCA Civ. 113.
(11) See for example QNS Paper Co v. Chartwell Shipping Ltd  2 S.C.R. 683 per Wilson, La Forest, Sopinka and Cory JJ.: "... nowhere does it become more obvious that the law is a seamless web than when one considers the interplay between contract, agency and tort, to say nothing of bailment." As to the interlap of bailment and sale see McCandless Aircraft LC v. Payne  EWHC 1835 Q.B. at para. 4 per Tugendhat J. "When goods are delivered by the owner to a recipient with a view to sale to a third party there are potentially a number of possible legal relationships between the owner and the recipient ... The recipient may be an outright buyer, or he may take the goods as a bailee who may elect to buy (for example on sale or return). Another alternative is that the recipient may be the owner's agent, or together they may be parties in a joint venture...In a sale there may be an agreement for the owner to retain title until the sale to a third party. See further as to the permutations that dwell along the sale-bailment borderland Odone v. Hawarden Services Ltd and Others  EWHC 1694 (Q.B.).
(12) The Pioneer Container  2 A.C. 324.
(13) (1703) 2 Ld Raym. 909; 92 E.R. 107.
(14) In the interests of economy we shall not cite the full range of authority for each of the propositions that follow. The cases are discussed generally by the author in Palmer on Bailment (3rd edn, 2009) passim. Perhaps the most significant general decisions in the past twenty years are Yearworth v. North Bristol NHS Trust  EWCA Civ. 37, as to which see Palmer, above, note 4, paras A5-001 to A5-002, East West Corpn v. DKBS AF 1912 A/S and another  Q.B. 1509,  EWCA Civ. 83 as to which see Palmer above, note 4, paras 1-019 to 1-020, and The Pioneer Container  2 A.C. 324, as to which see Palmer, above, note 4, ch. 23.
(15) Building and Civil Engineering Holidays Scheme Management Ltd v. Post Office  2 Q.B. 247 at 261 per Lord Denning M.R.; Sutcliffe v. Chief Constable of West Yorkshire  RTR 86 at 90 per Otton LJ; Yearworth v. North Bristol NHS Trust  Q.B. 1,  EWCA Civ. 37, at [48h] per Lord Judge C.J.; Deakin and Wolf v. Card Rax and others [2011 ] EWPCC 3 at  per His Honour Judge Fysh Q.C. See further Palmer on Bailment (3rd edn, 2009) para. 1-01 and passim.
(16) East West Corpn v. DKBS AF 1912 A/S and another  Q.B. 1509 at  per Mance L.J.; Yearworth v. North Bristol NHS Trust  Q.B. 1,  EWCA Civ. 37, at [48h] per Lord Judge C.J.
(17) For example, a gratuitous bailee is answerable for promises added to the bailment despite the absence of consideration to support them: Yearworth v. North Bristol NHS Trust  Q.B. 1,  EWCA Civ. 37, at [48h] per Lord Judge C.J. Where a gratuitous bailee undertakes the custody of goods in the course of professional obligations the bailee owes not only a duty of reasonable care in relation to the goods and a duty not to convert them, but also a duty to answer for the acts of delegates, and a duty not to deviate from the terms of the bailment: Palmer, op cit, 9-010; Port Swettenham Authority v. T Wu & Co (M) Sdn Bhd  AC 580 at 590C per Lord Salmon; Mitchell v. Ealing LBCQ.B. l;7bor v. Rassi  E.G. 9 (CS) C.A. (Civ. Div). An unrewarded bailee undertakes the same burden of proof as a bailee for reciprocal advantage: see most recently Rolfe v. Investec Bank (Australia) Ltd (ACN 071 292 594)  VSCA 38. The unrewarded bailee's duty to abstain from deviation is particularly hard to rationalise as an obligation sounding in tort. A sub-bailee who gives a positive promise to the head bailor is liable on that promise regardless of whether the relationship with the head bailor is contractual: Sandeman Coprimar SA v. Transitos y Transposes Integrates SL and Others  EWCA Civ. 113,  Q.B. 1270. Again this is hard to rationalise as an obligation sounding in tort.
(18) The Pioneer Container  2 A.C. 324.
(21) Southland Hospital Board v. Perkins Estate  1 N.Z.L.R. 373; cf Rolfe v. Investec Bank (Australia) Ltd(ACN071 292 594)  V.S.C.A. 38.
(22) Cf Heskell v. Continental Express Ltd and Another  1 All E.R. 1033 at 1045-1046 per Devlin J. And see, as to the duties of a finder, Parker v. British Airways Board  1 Q.B. 1004 at 1017, 1018 per Donaldson L.J. This aspect of bailment is discussed at greater length by the present author in 'Unclaimed Art and the Duty of Active Pursuit: Cornelius Gurlitt and the Hidden Hoard' in (2014) XIX Art Antiquity and Law 41.
(23) Michael Lawton v. Yale University 2007 Conn. Super. LEXIS 867, 30 March 2007 (Conn. Sup. Ct).
(24) Strand Electric and Engineering Co Ltd v. Brisford Entertainments Ltd  2 Q.B. 246; Sadcas Pty Ltd v. Business and Professional Finance Pty Ltd [20111 NSWCA267.
(25) Antariksa Logistics Pte Ltd and Others v. Mctrans Cargo (S) Pte Ltd  1 Lloyd's Rep. 117; Tat Seng Machine Movers Pte Ltd v. Orix Leasing Singapore Ltd  4 S.L.R.(R) 101; Marcq v. Christie Manson & Woods Ltd  Q.B. 286.
(26) Cf Spencer v. S Franses Ltd  EWHC 1269 (Q.B.).
(27) Rolfe v. Investec Bank (Australia) Ltd (ACN 071 292 594)  VSCA38; noted by Katharine Mason, below, p. 293.
(28) Yearworth v. North Bristol NHS Trust  EWCA Civ. 37; Toor v. Bassi  EG 9(CS) (C.A. Civ. Div.).
(29) Torts (Interference with Goods) Act 1977, s. 8. See generally Palmer on Bailment (3rd edn, 2009) Chapter 4.
(30) United States v. Herce 334 F Supp 111 (1971).
(31) East West Corpn v. DKBS AF 1912 A/S and another  Q.B. 1509,  EWCA Civ. 83. Cf R (On the application of Eastenders Cash and Carry plc and others v. The Commissioners for Her Majestys Revenue and Customs  UKSC 34. And see below p. 234. The remedies awardable against a defaulting bailee might include: (i) specific delivery of the chattel, (ii) specific performance, injunction, and other equitable redress, (iii) damages, (iv) disgorgement of profits, and (v) the payment of a reasonable hiring charge.
(32) See generally Palmer, Art Loans (Kluwer Law International, 1997).
(33) Other situations might however give rise to commodatum. For a discovery of commodatum on highly unusual facts see the decision of the Court of Appel of Sri Lanka in Dhammadasi Them v. Dhammasiddi Them  L.K.C.A. 10, (1946) 47 N.L.R. 553. Broadly stated, this case involved a demand by the appointing authority to a position in a holy shrine that the appointee, on termination of the appointment, should yield up, on the direction of the appointing authority, the key to and other articles associated with the shrine. Adhering to the now- archaic notion of bailment as contract, but providing early recognition that a bailor need not be the owner of the goods that are the subject of the bailment, Canekeratne J. (Keuneman S.P.J. concurring) opined: "There was a delivery of articles by the plaintiff to the defendant for a particular purpose on a contract express or implied that the articles shall be redelivered as soon as time for which they were given shall have elapsed. This is a contract of bailment of the kind known as commodatum. It does not matter if the thing lent is the property of a third party seeing that the ownership does not pass in the case of commodatum but only the natural detention and the use. It is sufficient if the lender has a special (or qualified) property in the thing lent or the lawful possession of it. The right of the bailee may be determinable at any instant at the will of the bailor, or otherwise in accordance with the terms of the bailment. There has been a determination of the bailment in this case and the right to take the articles has reverted to the plaintiff. The law also creates an estoppel against a bailee (Sec. 117 of Evidence Ordinance). One who received property from another as his bailee must restore or account for that property to him from whom he received it. A bailee may set up a jus tertii if the facts show that there has been what is equivalent to an eviction by title paramount: if the bailee retains possession of the goods and there has been no eviction the bailee may nevertheless set up and rely upon the jus tertii if he defends this possession upon the right, title and authority of the tertius. It is not enough that the bailee has become aware of the title of a third person. The contention of the defendant that the ownership of the articles is vested in the trustee of the Vihare affords no justification for the defendant's refusal to redeliver them; the present trustee is Daniyagama Ananda, who gave evidence for the plaintiff.
In the exercise of his right the plaintiff appointed the defendant the officiating priest in the shrine room: this is a religious office which is attached to a place. The office is now wrongfully usurped by the defendant. The right to the possession of the articles enumerated in the plaint is the plaintiff: these are articles necessary for the performance of the ceremonies at the shrine room : they must be kept at Devu Raja Vihare and the plaintiff must make provision for the preservation of these articles at the Vihare. As he lives in Kandy it would be necessary to entrust the articles to some person living in the locality, preferably to a person in whom he has confidence. The most natural course in these circumstances would be to appoint a new thewawa priest and to give the articles to him. Rights of a temporal nature are involved in the action and a Court cannot refuse to adjudicate on such rights."
(34) For some rare examples, apart from Kamidian v. Holt  EWF1C 1483 (Comm.) (discussed below, p. 205), see White v. Potter  D.C.R. 420 (N.Z. D.C.) and Bell v. Tinmouth 1987) 39 D.L.R. (4th) 595; (1987) 43 D.L.R. (4th) 468; (1988) 53 D.L.R. (4th) 731 (B.C. C.A.).
(35)  EWHC 1483 (Comm.) at .
(36) Supply of Goods and Services Act 1982, s. 6(3); and see Palmer on Bailment (3rd edn, 2009) para. 21-010.
(37) Supply of Goods and Services Act 1982, s. 7.
(38) Emphasis added.
(39) Emphasis added.
(40) Protected objects for the purposes of the 2007Act are defined by s. 134. An object will be protected only if five conditions are satisfied:
(a) the object must usually be kept outside the United Kingdom,
(b) it must not be owned (whether beneficially or not, and whether alone or with others) by anyone resident in the United Kingdom,
(c) the import of the object must comply with the law on the import of goods,
(d) it must be brought to the United Kingdom to be displayed to the public in a temporary exhibition at a museum or gallery, and
(e) the museum must have complied with the regulations requiring publication of information about the object.
(41) The same is true, on different language, of the Protection of Cultural Objects on Loan Act 2013 (Commonwealth of Australia); above p. 205
(42) Compare the use of the same word in Regulations 3(2)(f) and 5(a), and the use of the term "borrowing institution" (not defined) in Regulation 5(3).
(43) Cf Spencer v. S Franses Ltd  EWHC 1269 (QB); Palmer (2011) XVI Art Antiquity and Law 261, where Thirlwall J. held (i) that notwithstanding the conventional estoppel on denying the bailor's title the bailee was entitled to detain the goods for a reasonable time in order to investigate the bailor's title, but (ii) that on the present facts such a time (and with it the right to detain) had long since expired.
(44) Cf Andre v. Clydesdale Bank pic  EWHC 169 (Ch.) where the bailor failed to discharge the anterior burden of showing that he had deposited with the Bank the particular objects for the alleged loss of which he had claimed. A case where the bailor under a long-term gratuitous bailment did succeed in establishing the contents of the deposit is Smith v. Luk Chi Wah and Others  HKCFI 262, HCA 6468/1989 (17 Dec. 1991). An allegation of bailment might also fail where there exists inadequate evidence as to the identity of the party in possession: Hardy v. Washington Green Fine Art Publishing Co. Ltd  EWC A Civ. 198 noted by Palmer (2011) XVI Art Antiquity and Law 85; Mainline Private Hire Ltd v. Nolan  EWCA Civ. 189 noted by Palmer (2011) XVI Art Antiquity and Law 161; and cf A & D International Inc v. United States of America 665 F.2d 669 (1982) (US Court of Appeals, Fifth Circuit): "Although we doubt seriously that bailment law governs this transaction, we need not decide whether it does because the existence of a bailment was not proven below. At most, the plaintiff shows that the gems were lost while in the possession of one of the two defendants. Such a factual situation does not create a true bailment. Also, to trigger a bailment analysis, it would have been necessary for the district court to specifically find that 39 packets of jewels were delivered by plaintiff to defendants. The district court did not so find.... Although this case lends itself to bailment analogies, undue reliance on bailment law can lead to confusion.... Plaintiff did not prove the existence of a bailment ..."
(45) See Palmer in Lord Millett (ed) The Encyclopaedia of Forms and Precedents (5th edn, 2011 Re-issue) vol 34 'Sale of Goods' 354-377.
(46) Cf Lord Spencer-Churchill v. Faggionato Fine Art Ltd  EWHC 2318 (Ch.) (Robert Ham Q.C.), noted by Elizabeth Emerson (2012) XVII Art Antiquity and Law 359 where in the event none of the arguments mentioned in the text fell to be determined.
(47) Motis Exports Ltd v. Dampskibselskabet AF 1912 Aktieselskab  1 Lloyd's Rep. 211 (C.A.); Metall Market 000 v. Vitorio Shipping Co Ltd  EWCA Civ. 650 at para. 49 per Rix L.J. (strict liability); cf Marcq v. Christie Manson & Woods Ltd  Q.B. 286; Antariksa Logistics Pte Ltd and Others v. Matrons Cargo (S) Pte Ltd  1 Lloyd's Rep 117; Tat Seng Machine Movers Pte Ltd v. Orix Leasing Singapore Ltd  4 S.L.R.(R) 101 (bailee returning to unentitled bailor: liability to third party founded on notice of third party's claim).
(48) Yearworth v. North Bristol NHS Trust  EWCA Civ. 37.
(49) Cf Spencer v. S Franses Ltd  EWHC 1269 (Q.B.), where the bailee appears to have foregone such an opportunity. In litigation concerning a bailment of ancient embroideries to the defendant specialists for purposes of research, conservation, authentication and marketing, the defendant argued that there was an implied contractual term entitling it to retain the embroideries for a reasonable period in the face of demands by the claimant for their immediate return, in order to investigate doubts which the defendant had developed concerning the claimant's title. Thirlwall J. at para. 222 (and see further paras 223 to 228) held that there was no contract, that no such term could therefore be implied, and that even had there been a contract she would not have implied the alleged term: "There was no contract. It follows that there was no implied term that the Defendant was entitled to make inquiries into the Claimant's title. Even had I found that the parties had entered into a contract I would not have found that such a term should be implied." It appears that counsel for the defendant did not argue any such implied contractual term at the hearing (though such a term was asserted in the pleadings). That being so it is not surprising that counsel for the defendant did not develop the argument into one that claimed the existence of a term implied into any non-contractual bailment that the bailee should have a reasonable opportunity to investigate questions as to title. But irrespective of contract there was undoubtedly a bailment between the parties into which terms might have been implied by analogy with Yearworth v. North Bristol NHS Trust  EWCA Civ. 37.
(50) Sandeman Coprimar SA v. Transitosy Transposes Integrates SL and Others  Q.B. 1270,  EWCA Civ. 113.
(51) Peru v. Yale University (2008) was a lawsuit filed by Government of Peru in the District of Columbia in Dec. 2008, alleging (inter alia) that the defendant Yale University wrongfully, improperly, and fraudulently detained a collection of artifacts, objects, antiquities, and related items that belonged to Peru and its people and are central the history and heritage of the Peruvian nation. The property in question included centuries-old Incan materials (mummies, skulls, bones and other human remains, pottery, utensils, ceramics, objects of art and other items) which were allegedly excavated from Cuzco, Machu Picchu and the surrounding areas by agents of the University. The claim was finally settled: see Rosemary Listing 'The Treasure Quest: Peru, Machu Picchu and the Yale Peruvian Expedition 1911-1916'(2011) XVI Art Antiquity and Law 67, and the Statement from Yale University Regarding Machu Picchu Archaeological Materials, published 21 Nov. 2010.
(52) The matter was finally resolved by arbitration: see the analyses by Ina Jahn 'Loans Versus Gifts: Determining the Donor's Intention' in (2007) XII Art Antiquity and Law 81 on the original arbitration, and by Herman in (2011) XVI Art Antiquity and Law 317 on the appeal. Since then the parties have reached a settlement on a further 78 works that remained in dispute, with the Foundation now being recognised as having title to 43 of the works and the Gallery now recognised as having title to the residual 35. The Foundation has further agreed to a five-year loan to the gallery of its portion of the works, with the prospect of renewal. See Globe and Mail, 28 Feb. 2014.
(53) Day v. Harris, Day v. Royal College of Music  EWCA Civ. 191; Herman 'The Composer, his Children, the Caregiver and the Meaning of 'Etcetera' (2013) XVIII Art Antiquity and Law 193.
(54) See Andrea Sanborn 'The Ceremonial Mask of the Kwakwaka'wakw First Nations from the British Museum-on long-term loan-to the U'mista Cultural Centre in Alert Bay, British Columbia, Canada' <www.unesco.org/culture/laws/pdf/abstract_sanborn.pdf>. The Namgis Mask (Kwakwaka'wakw ceremonial transformation mask) was one of several hundred dancing masks seized during a ceremony of the Kwakwaka'wakw people, a First Nations group of the west coast of Canada, following which these cherished objects were sold and distributed to North American museums. In 1938 one of these museums, now the National Museum of the American Indian, sold the present mask to the English collector, Harry Beasley, for his Cranmore Museum in Kent. The mask, which represents an animal ancestor of the Kwakwaka'wakw, was donated to the British Museum in 1944 by Mr Beasley's widow. The director of the U'mista Cultural Society and the chief of the Kwakwaka'wakw tribe had for a long time been pressing the BM to return the mask to its place of origin. Having determined that the title dispute was "going nowhere" the parties agreed that the mask would return to Canada on a long-term loan. The mask is currently displayed at Alert Bay, Canada.
(55) Guardian, 8 Sept. 2005. The Toro monstrance, stolen in 1890, was in June 2005 returned on a three-year renewable loan to its former home, the Colegiata de Santa Maria la Mayor de Toro in Spain, at the request of the Diocese of Zamora. It had surfaced in Switzerland in 1928 and was bequeathed to the V&A by an American collector in 1956. The V&Aaccepted that the monstrance was stolen but was unable to reconvey ownership of it by virtue of s. 6(3)(b) of the National Heritage Act 1983.
(56) See reports in <http://www.lefigaro.fr/culture/2010/ll/24/03004-20101124ARTFIG00437la-restitution-des-manuscrits- coreens-froisse-les-conservateurs-de-la-bnf.php>; <http://www. lepoint.fr/culture/l-affaire-des-manuscrits-royaux-de-coree-15-12-2010-1275616_3.php>; <http://coree.aujourdhuilemonde.com/nicolas-sarkozy-confirme-le-retour-des-manuscrits-dejoseon-seoul>.
(57) That was the position in regard to the Benevento Missal, at which see Report of the Spoliation Advisory Panel in Respect of a Twelfth-century Manuscript now in the Possession of the British Library 23 March 2005, (2005 HC406) and Report of the Spoliation Advisory Panel in respect of a renewed claim by the Metropolitan Chapter of Benevento for the return of the Beneventan Missal now in the possession of the British Library, 15 Sept. 20110 ; and see further Martin Bailey, 'Heading Back to Mexico a Step at a Time: Austria and Mexico Close to a Deal that would see Moctezuma's Crown Return on Loan' in Art Newspaper issue 222, March 2011.
(58) A leading example is the return to Italy of the Euphronios vase and some twenty other artefacts by the Metropolitan Museum at New York following the presentation of evidence that these objects had been unlawfully removed. As their contribution to the bargain the Italian authorities undertook to conclude long-term loans to the New York museum of objects of "equivalent beauty and importance": see (<https://plone.unige.ch/art-adr/cases-affaires/euphronios-kraterand-other-archaeological- objects-2013-italy-and-metropolitan-museum-of-art>).
(59)  EWPCC 3 (H.H.J. Fysh Q.C.), noted by Harry Martin in (2013) XVIII Art Antiquity and Law 287.
(60) Ibid, at para. 3. See also Alex Herman 'Gift or Loan: Vincent Van Gogh and Francis Bacon' (2011) XVI Art Antiquity and Law 4.
(61) Norman Palmer 'Itinerant Art and the Architecture of Immunity from Legal Process: Questions of Policy and Drafting' (2011) XVI Art Antiquity and Law 1. But see, for a conspicuous exception to this general limit on the immunity conferred by national statutes, the Protection of Cultural Objects on Loan Act 2013, an Australian Commonwealth statute that aims to protect art lenders and borrowers against damages and other financial claims as well as claims for the physical delivery up of objects bailed to Australian institutions. The Act is implemented and underpinned by the Protection of Cultural Objects on Loan Regulation 2014, Select Legislative Instrument No 142, 2014.
(62) Marcq v. Christie Manson & Woods Ltd  Q.B. 286; Antariksa Logistics Pte Ltd and Others v. Mctrans Cargo (S) Pte Ltd  1 Lloyd's Rep. 117; Tat Seng Machine Movers Pte Ltd v. Orix Leasing Singapore Ltd  4 S.L.R.(R) 101.
(63) Cf Kingdom of Spain v. Christie Manson & Woods Ltd  3 All E.R. 28.
(64) Tribunals, Courts and Enforcement Act 2007, Part 6.
(65) The embargo on acts of judicial restraint would also disable the courts from exerting certain of the orthodox remedies normally available for infringement of intellectual property rights. Occasionally cases alleging such infringements will be combined with a claim for breach of bailment in respect of the material object: for a modern example see Deakin v. Card Rax Ltd above, note 59.
(66) Palmer on Bailment (3rd edn, 2009) paras 1-039 to 1-040, 26-095 to 26-096.
(67) Under the Vichy Regime, the French statute Lot du 22 juillet 1941 no3086 (JORF 26 Aug. 1941 pp. 3594-3595) established the 'aryanisation' of all companies, goods and titles belonging to Jews. The term aryanisation implies the loss of the right of possession of Jewish owners in favour of non-Jewish persons without any valid consideration. According to Art. 1, the statute aimed to 'erase any Jewish influence on the economy'. Therefore, the Commissariat aux questions juives designated an administrates provisoire, who was given the most extended powers to run Jewish companies and manage Jewish goods, including the right to sell the company or goods (works of art, buildings, etc.) under the control of the Commissariat aux questions juives (Arts 3 and 14). The funds of such a sale were then transferred to an account kept at the Caisses des depots et consignations (the French State's bank) under the name of the original Jewish owner. However, the owner or his heirs could not reclaim the funds without the prior authorisation of the Commissariat aux questions juives (Arts 21 and 23).
Another Vichy statute, the Loi du 23 juillet 1940 (JORF 24 July 1940 p. 4569), imposed the sequestration of goods belonging to persons deprived of French nationality. More than 6,000 Jews were affected. The sequestration tjmise sous sequestrej of the goods was obtained by court order. After a six-month period, the goods were liquidated by decision of the President of the Tribunal Civil to the benefit of the Secours national. If the goods were not sold, they were kept by the French State at the Administration des Domaines. (G. Lagarde, 'L'ordonnance du 14 novembre 1944', Gaz. Pal. 1. 450-452, 1945; La documentation Franfaise : Aryanisation economique et restitution /Mission d'etude sur la spoliation des Juifs de France ; presidee par Jean Matteoli; rapport redige par Antoine Prost, Remi Skoutelsky, (et at.))
At the end of the war, the decret no. 49-1344 du 30 septembre 1949 relatif a la fin des operations de la Commission de Recuperation Artistique (JORF du 2 Oct. 1949) establishes that the Direction des Musees de France is voluntarily in possession of looted works of art which have not been yet requested by their owners. French Museums still hold around 2,000 looted works of art, registered as 'MNR' (Musees Nationaux Recuperation). (<http://www.cuIture.gouv.fr/documentation/mnr/MnR-pres.htm>)
(68) Council of Europe, Parliamentary Assembly (Information Report on the cultural heritage of Cyprus presented by the Committee on Culture and Education (General Rapporteur on the architectural heritage: Mr van der Werff) July 1989 Doc. 6079, p. 9. It appears from this Report that the protective custody procedure was not conducted in a duly and orderly way and was done without transparency. Many items and especially valuable icons were lost, looted or were illegally exported. Inventories and receipts were not systematically recorded (Report p. 12). For a deep analysis of the Cyprus problem, see the article written by Nicholas Augustinos, 'The Protection of Cultural Heritage in the Event of Armed Conflict: the Cyprus Experience' in Palmer (ed.), The Recovery of Stolen Art; a Collection of Essays (Institute of Art and Law and Kluwer Law International, 1998) Chapter 14, pp. 221-260.
(69) (1930) The Times 15 April (Horridge J.), 29 May (C.A.). The case is mentioned in passing by Penelope Lively (referring to her family's friendship with the daughter of Charles Bucknall) in A House Unlocked (Penguin, 2001) 90. She comments thus: "The Times report is full of impenetrable jargon about demurrers and bailment and much invoking of the Indemnity Act of 1920, but laced with mentions of a locked leather bag subsequently found open and empty, behind which smokes the reality of that time." The author also tells us that the Bolshevik intruders shot the naval attache to the Embassy, Captain Cromie. Cf a case where a bailee who responded to the volatile political and military situation at Batum in 1920 by removing the bailed goods to Constantinople was held to have acted lawfully as a bailee of necessity: Tetley & Co v. British Trade Corpn  Lloyd's L.R. 678. It seems clear that, in addition to avoiding liability for conversion, trespass or breach of its duty of care, the bailee in this case also, by reason of the overriding necessity of moving the goods, avoided committing a deviation from the bailment.
(70) It was presumably understood that in this event Bucknall would be reimbursed for the value of the contents. See further on this aspect note 71 below.
(71) The fact that, following the original deposit, Bucknall appears to have agreed to the proposal by the consul that the property be placed at the consul's disposal to enable the consul to dispose of it, and use the proceeds in the service of the Crown when necessary, might have sustained an argument that the bailment was one for reciprocal benefit and supported by consideration. Interestingly, counsel for Bucknall argued before Horridge J. that by reason of that agreement property passed immediately to the Crown and rendered the bag and its contents at the Crown's risk by the time of the violation. Horridge J. rejected this contention, holding that "the property would not pass until an occasion arose when the consul would require to dispose of it, and that had not arisen when the property was taken." Counsel for Bucknall had, presumably on the basis of the Crown's contingent power to acquire the contents and use them for its own purposes, referred to the relationship between Bucknall and the Crown as a "quasi-bailment". His adoption of this expression seems to have pre-dated its general use by some 70 years, and could be the first reference to the term in any court proceeding. See generally as to the modern meaning of quasi-bailment Palmer on Bailment (3rd edn, 2009) para. 23-011 et seq.
(72) The Holy Crown of St Stephen and United States-Hungarian Relations: Hearing before the Sub Committee on Europe and the Middle East; Questions submitted to the Department of State and its Responses, House of Representatives Ninety-fifth Congress First session, 9 Nov. 1977, Washington DC at p. Ill (emphasis added).
(73) US Department of State Statement, July 27, 1951, printed in the College Art Journal (1951) Autumn, pp. 33-35, at p. 34.
(74) MCC Proceeds Inc v. Lehman Bros International (Europe)  4 All E.R. 675, C.A.; Palmer 'Trusts of Historic and Valuable Chattels: Equitable Interests and Common Law Remedies' (1999) IV Art Antiquity and Law 69.
(75) The language of 'trust' was being used as late as 1945 to define bailment: Re S Davis c& Co  Ch. 402 at 405. In Re Swan, Witham v. Swan  1 Ch. 829, Sargent J. held that the rights of a remainder-man against a tenant for life of chattels could be expressed alternatively in terms of bailment (with the life tenant as bailee) or of trust (with the life tenant as trustee).
(76) The Holy Crown of St Stephen and United States-Hungarian Relations: hearing before the SubCommittee on Europe and the Middle East; Questions submitted to the Department of State and its Responses, House of Representatives Ninety-fifth Congress First session, 9 Nov. 9, 1977, Washington DC at pp. 106-107.
(77) Ibid., Appendix 5; Questions Submitted by the Subcommittee on Europe and the Middle East to the Department of State and its Responses, 1977, at p. 110 (emphasis added).
(78) Questions Submitted by the Subcommittee on Europe and the Middle East to the Department of State and its Responses, at p. 108 (emphasis added).
(79) State of Israel v. Levenshtein and Others (1975) 46/75(C.A.-Civil Appeal) PD (Piskai Din) 30(1)716. Cf Bucknall v. The King (1930) The Times 15 April (Horridge J.), 29 May (C.A.); above p. 212.
(80) See the article by Irina Cristea, 'Tezaur--Se reiau negocierile', Jurnalul National, 22 July 2005, and see further Camelia Muntean, 'Comoara Romaniei ramane ingropata la Moscova', Jurnalul National, 20 May 2005.
(81) The Treaty made no express reference to the treasure. Following the return to Romania in 2011 of a Greek papyrus scroll dating from the fourth century B.C., which had been found at Mangalia (south-western Romania) in 1959 and sent to Moscow for restoration, it was reported that the debate over the Romanian objects entrusted during the First World War had reopened: <http://www.balkaninsight.com/en/article/old-artefact-retumed-to-romania>.
(82) 808 F. Supp. 2d 113 (Dist. Court, Dist. of Columbia, 1 Sept. 2011).
(83) Cf the common law doctrine of attornment: Palmer on Bailment (3td edn, 2009) Chapter 25.
(84) 266 F Supp 2d 27 at 39 (DDC 2003). The claim in Hoffmann centred on certain archive materials seized by the US Army at the end of the Second World War which had not (in contrast to other seized Hoffmann archive items) become vested in the United States. The claim in bailment was finally dismissed on other grounds, viz expiry of the limitation period.
(85) Tit. 2, 12, 37.
(86) This is one of several areas in which valuable parallels can be drawn between the court's analysis of US law and corresponding propositions applicable under English law. For others see note 158 below.
(87) De Csepel v. Republic of Hungary, 714 F. 3d 591 (D.C. Cir. 2013). The duties that the claimants sought to found on these relationships were a duty of care to protect the goods and a duty to return them to the family on demand. They appear to have advanced no separate allegations that the defendants owed a duty (i) to seek out the claimants and apprise them of the defendants' continued possession of their property, (ii) to abstain from deviating from the bailment (for example by moving the works without authority or over-holding them in mora), or (iii) to refrain from denying the claimants' title.
(88) Malewicz v. City of Amsterdam 362 F Supp 2d 298 at 314 (D.D.C. 2005): "There is nothing "sovereign" about the act of lending art pieces, even though the pieces themselves might belong to a sovereign."
(89) The Court reached this conclusion without ruling on the claimants' additional argument that jurisdiction could alternatively be justified under the expropriation exception to the FSIA, which abrogates sovereign immunity wherever the issue concerns property rights taken in violation of international law. The District Court had dismissed on the facts Hungary's objection that there is no violation of international law where a state takes the property of its own citizens, observing (i) that Hungary did not consider the present victims to be citizens of Hungary, having de facto stripped them of their citizenship rights, and (ii) that the present case was distinguishable from an ordinary confiscation by a sovereign of the property of its nationals in that (on the family's own case) the deprivations occurred with the active involvement of German Nazi officials. The appellate court, holding that the foundation for the current claim was not the original expropriation but the subsequent bailment, held that the claims fell comfortably within the commercial activity exception, without regarding it as necessary to rule on the availability of the expropriation exception.
(90) De Csepel v. Republic of Hungary, 714 F. 3d 591 (D.C. Cir. 2013), para. II A, p. 16. Not for the first time, perhaps, one detects a certain clemency in the court's interpretation of the factual balance.
(91) Ibid., II A, p. 13.
(92) Ibid., II A, p 14-15.
(93) Ibid., II B, pp 17-18.
(94) Ibid., II B, pp 18-19.
(95) Ibid., II B, p 19.
(96) D.C. Code [section] 12-301(2)
(97) Malewicz v. City of Amsterdam, 517 F. Supp. 2d 322, 335 (D.D.C. 2007) (citing In re McCagg, 450 A.2d 414, 416 (D.C. 1982))
(98) De Csepel v. Republic of Hungary, above note 90, II C, pp. 21-22.
(99) Ibid., II C, pp. 20-21.
(100) De Csepel v. Republic of Hungary, above note 90, II D, pp. 22-25.
(101) Since, at the latest, Morris v. C W Martin & Sons Ltd  1 Q.B. 716; and see The Pioneer Container  2 A.C. 324.
(102) Mac 'Avoy v. Smithsonian Institute 757 F Supp 60 (DDC 1991); but there the question in dispute was whether certain works had been donated or loaned to the Smithsonian, and the prospect of a non-consensual bailment was not in issue. See Palmer, op cit, para. 3-026; and cf Hoffmann, above. Other authority, ante-dating de Csepel and involving an alleged bailment of looted property to the US, has seemed more reluctant to move beyond the position that a bailment must be either express or implied and must therefore be at least ostensibly or colourably consensual in origin, but at least indicates that the consensus necessary for an 'implied-in-fact' bailment can be inferred from conduct: see Rosner v. United States (US District Court, SD Florida) No 01-1859--CIV.--SEITZ Aug 28 2002, & Order Clarifying Opinion on Denial of Reconsideration Nov 26, 2002) a claim involving the seizure by the US Army of the contents of the Gold Train from pro-Nazi Hungarian forces at Salzburg in 1945. The claim was finally settled in 2005. But it seems that a bailment might at least be objectively inferred: thus it has been said that a bailment "describes a result which in many instances does not flow from the conscious promises of the parties made in a bargaining process but from what the law regards as a fair approximation of their [intentions]." Ellish v. Airport Parking Co., 42 App.Div.2d 174, 345 N.Y.S.2d 650 (2d Dept. 1973), aff'd on opinion below, 34 N.Y.2d 882, 359 N.Y.S.2d 280, 316 N.E.2d 715 (1974); cited in Rich v. Touche Ross 415 F.Supp. 95 (1976) per Brieant J. at footnote 2 of the judgment.
(103) Elsewhere the Court of Appeals observed that: 'The complaint contains allegations that the parties directly agreed to a bailment relationship, with Hungary "arranging] with representatives of the Herzog Heirs to retain possession of most of the Herzog Collection" and the Herzog family "agreeing] to allow the artworks to be 'returned' to the Museums or the University for safekeeping.'": De Csepel v. Republic of Hungary, 714 F. 3d 591 (D.C. Cir. 2013), II D, p. 23. The Court went on to deny that the allegation of bailment was controverted by Hungary's argument that the Herzog family had no choice but to accept the retention of the works by the Hungarian authorities, and that the retention was therefore insufficiently consensual to give rise to a bailment. In the words of Tatel J.: 'Even if the family's consent was induced by duress--a conclusion we would be reluctant to draw at the motion to dismiss stage--that would mean only that the family could disclaim the agreement, not that the agreement was invalid.' Ibid, II D, p 23.
(104) Palmer, above, note 14, Chapter 25.
(105) Below; emphasis added.
(106) David Toren v. Federal Republic of Germany and Free State of Bavaria, Case 1:14-cv-00359ABJ, filed 5 March 2014.
(107) There was an earlier Complaint dated 5 March 2014.
(108) First Amended Complaint paras 58, 61. The allegation that the defendant governments have conceded Toren's ownership is questionable: see below.
(109) The other heads are conversion, replevin, constructive trust, accounting, and declaratory relief.
(110) First Amended Complaint, para. 10.
(111) Ibid., para. 11.
(112) Ibid., para. 11. It is unusual to read an allegation of breach of bailment that founds on the alleged bailee's failure to publicly declare or acknowledge the alleged bailor's title, but in principle an active duty of this nature might justly be regarded as following naturally from the bailee's estoppel. Later in his statement of the cause of action in bailment Toren also cites the defendants' "refusal to return his property" as an act of breach of bailment in addition to their original "not promptly declaring Toren to be the rightful owner": First Amended Complaint paras 58, 61, 62.
(113) Ibid., para. 11.
(114) First Amended Complaint paras 58, 61. Sed quaere.
(115) First Amended Complaint, paras 56 to 62.
(116) Palmer on Bailment (3rd edn, 2009) Chapter 26.
(117) Above, notes 22, 101.
(118)  2 K..B. 1031; above footnote 43. And see Spencer v. S Franses Ltd  EWHC 1269 (Q.B.).
(119) As to this see Palmer, Art, Adventure and Advocacy (forthcoming, Institute of Art and Law, 2015) Chapter 19.
(120) The question may also become academic if (as seems possible) the legislative change fails to materialise: private information given to the author Oct. 2014.
(121) For further argument that a person who first embarks on possession of goods as a non-bailee (because he or she neither knows or has reason to believe that they belong to anyone else) may become a bailee once he or she has received and failed to comply with an informative demand for delivery up, see Palmer on Bailment ([3.sup.rd] edn, 2009) para. 1-086: "Bailment after demand: Any person can be considered a bailee who is willingly in possession of goods that belong to another. To be willingly in possession of goods for this purpose requires one to have notice of the fact that they belong to another. Where the bailor's identity is a material factor in the possessor's consent to possession, it may also be necessary for the possessor to have had specific notice of the particular identity of the person claiming the goods, though in many instances this will be a matter of indifference to the bailee. Where the party entitled to goods makes a sufficiently informative and unequivocal demand of the possessor to render that possessor liable in detinue or conversion for defying the demand, it is submitted that the adequacy of the demand for that purpose should be matched by its adequacy to render the possessor thenceforth the bailee of the demander. In that event the possessor has "sufficient notice" of the demander's interest to satisfy his inclusion within the bailment relation. It should make no difference that the possessor genuinely and honestly misjudged the position in concluding that the demander's interest was illusory and that his demand was misconceived."
(122) Cf Government of the Islamic Republic of Iran v. Barakat Galleries Ltd  Q.B. 22 at paras 148-149.
(123) de Csepel et al v. Republic of Hungary et al, 808 F. Supp. 2d 113 (Dist. Court, Dist. of Columbia, 1 Sept. 2011), Analysis: IV, p. 28 (emphasis added).
(124) The phrase is that of Lord Goff of Chieveley in The Pioneer Container  2 A.C. 324 at 342.
(125) That would appear from the First Amended Complaint to be the core of the bailment claim in Toren: above p. 226.
(126) The account which follows is based on an article by Ian Macleod in the Ottawa Citizen, 23 April 2013. I am indebted to Alex Herman for drawing my attention to this article.
(127) See generally on this argument Palmer on Bailment (3rd edn 2009) para. 1-083 et seq.
(128) Above pp. 202-203.
(129) See generally Palmer on Bailment (3rd edn, 2009) Chapters 14, 15. Such misadventures might include the issuance of an adverse third party claim that threatens the security of the owner's right of possession: see below.
(130) Frans Maas (UK) Ltd v. Samsung Electronics (UK) Ltd  2 Lloyd's Rep. 251.
(131) Coldman v. Hill  1 K..B. 443; Edwards v. Newland & Co  2 K.B. 534; Ranson v. Platt  2 K.B. 291.
(132) See further on this question the author's article, cited above, note 9..
(133)  1 Q.B. 1004 at 1017, 1018. And see Kowal v. Ellis (1977) 76 D.L.R. (3d) 546 at 547; Tamworth Industries Ltd v. Attorney General  3 N.Z.L.R. 616 at 623-624 per Eichelbaum C.J.; Pierce v. Bemis, The Lusitania  1 Lloyd's Rep. 132 at 141-142; cf the duty imposed upon the unwitting bailee in A. V.X. Ltd v. E.G.M. Solders Ltd, The Times, 7 July 1982 and see generally Palmer on Bailment (3rd edn, 2009) Chapter 26.
(134) Robot Arenas Ltd v. Waterfield  EWHC 115 (Q.B.); cf Marcq v. Christie Manson & Woods Ltd  Q.B. 286 (below) which appears flawed on this point.
(135) Cf Marcq v. Christie Manson & Woods Ltd  Q.B. 286, criticised by Hudson (2005) X Art Antiquity and Law 201. An auction house took possession of a painting from a consignor who, on the assumed facts, was not the owner. The auction house later redelivered the work to the consignor after it had failed to sell at auction. The alleged owner sued in conversion and for breach of duty of care. The Court of Appeal refused to discover a duty in the auction house to take reasonable care to establish that the party delivering the chattel into the auction house's possession, and/or the party to whom the auction house delivered up the chattel, had the immediate right of possession. By implication this refusal would apply to any possessor (and not merely an auctioneer) who redelivers goods to a putative bailor while lacking notice of an ulterior claim to those goods.
(136) For recent authorities on the duties of the involuntary bailee see Da Rocha-Afodu and another v. Mortgage Express Limited and another  EWCA Civ. 454,  2 P. & C.R. DG10; Campbell v. Redstone Mortgages Ltd  EWHC 3081 (Ch); and see generally Palmer on Bailment (3rd edn, 2009) Chapter 13.
(137) Compare the criminal law obligation to report treasure, imposed on both finders and acquirers of treasure by ss 8 and 8 A of the Treasure Act 1996 respectively. The latter section is not yet in force. See Palmer in (2010) XV Art Antiquity and Law 125.
(138) See the discussion by Gilead Cooper Q.C. in Palmer on Bailment (3rd edn 2009) Chapter 40; cf Chesworth v. Farrar  1 Q.B. 407.
(140)  Q.B. 1509,  EWCA Civ. 83.
(141) See also Western Digital Corpn v. British Airways pic  1 Q.B. at , [81.III] per Mance L.J.; Gatewhite u Iberia Lineas Aereas de Espana SA  1 Q.B. 326 and Tasman Pulp and Paper Co. Ltd v. Brambles J B O 'Loghlen Ltd  2 NZLR 225; cf American Express Co v. British Airways Board  1 W.L.R. 701 where Lloyd J. held that the statute in question--the Post Office Act 1969--would have been robbed of all meaning had claims in bailment been excepted (which is manifestly not the case in respect of the Limitation Act 1980).
(142)  2 K..B. 101 at 102, 103.
(143) Fisher v. Brooker  UKHL 41 at  per Lord Hope of Craighead: "there is no statutory limitation period that applies in English law to claims in copyright."
(144) In Nelson v. Rye [ 1996] 1 All E.R. 196 at 198 Laddie J accepted the "basic premise" that "the 1980 Act imposes limitation periods only on those actions it specifically identifies", and he concluded that "A cause of action for which the 1980 Act, or other legislation, makes no limitation provision is not subject to a limitation period. Actions for breach of fiduciary duty are not expressly covered. It follows that prima facie no limitation applies to them ..." Laddie J. went on to observe that s. 21 of the Act specifically provides that (subject to qualifications): "No period of limitation prescribed by this Act shall apply to a beneficiary under a trust ...", but he did not infer from the express exemption in s. 21 that a cause of action not expressly exempted by the Act is necessarily caught by it. Laddie J. also observed that a claimant who has two causes of action, one of them time-barred by the Act and the other not thus barred, is not disqualified by the expiry of the limitation period governing the first cause from relying on the second. See also Tito v. Waddell (No. 2), Tito v. A-G  3 All E.R. 129 at 248-250,  Ch. 106 at 251, per Megarry V-C; A-G v. Cocke  2 All E.R. 391 at 395,  Ch. 414 at 421 per Harman J.
(145) Such claims receive no specific mention in the 1980 Act. Unjust enrichment is undoubtedly an independent cause of action (Lipkin Gorman (a firm) v Karpnale Ltd  2 A.C. 548) and has earned some recognition as a cause of action potentially beyond the reach of statutes that refer only to contract and tort. In Agodzo v. Bristol City Council  1 W.L.R. 1971 Holman J. (Henry L.J. agreeing) suggested that the words "founded on contract or tort" in s. 15 of the County Court Act 1984 would not apply to a claim in unjust enrichment because it would be very difficult to characterise the claim as being founded on either contract or tort. Having remarked that Dr Agodzo's action seemed to be founded on unjust enrichment, he went on to observe that the decision of the House of Lords in Kleinwort Benson Limited v. Glasgow City Council  1 A.C. 153, "in the absence of statute" could render it "very difficult" to characterise the action as being founded on either "contract" or "tort". But the bulk of authority on the point favours the application of s. 5 of the Limitation Act 1980 to claims in quasi-contract: see Kleinwort Benson Ltd v. Sandwell B.C.  1 All E.R. 890 where Hobhouse J. held that the words "action founded upon a simple contract" within s. 5 are sufficiently broad to cover an action for money had and received; Burrows, Restitution (3rd edn, 2010) 604 et seq. A further disadvantage to the use of this basis of claim to circumvent the Act is that general opinion (eg Burrows, Restatement of the English Law of Unjust Enrichment, 2012, 145) favours a general accrual of the cause of action on the date of the receipt constituting the enrichment rather than at the later time on which the claimant should reasonably have known that the unjust enrichment had occurred. Burrows accepts however that where the defendant is guilty of a deliberate concealment under section 32(1)(b) LA 1980 the commencement of the limitation period is postponed until the claimant has discovered, or could reasonably have discovered, the concealment. Quaere whether the date of actual discovery or reasonable discoverability could ever represent the starting date of the cause of action in the absence of any deliberate concealment. If, in spite of the various impediments, it is accepted that the cause of action for unjust enrichment accrues only when the defendant is enriched at the claimant's expense, it might be argued that the enrichment did not occur until the claimant's title was prima facie extinguished under s. 3(2) L.A. 1980 and that, until that point in time, the claimant continued to have title. From this it might follow that (i) any original redress that the claimant had in respect of the goods were founded on the claimant's enduring title rather than on any unjust enrichment at the former owner's expense, (ii) that once that title was extinguished, the good faith buyer was correspondingly enriched at the former owner's, and (iii) that the proprietary claim was thereafter substituted with a claim for unjust enrichment. A court would however be highly sceptical about any argument that the enrichment arising from the passage of title to a good faith buyer for value under s. 3(2) L.A. 1980 is 'unjust', when that passage of title manifests (as here) a clear policy of Parliament.
(146) While the remedial response to a claim for unjust enrichment is always restitutionary, not every claim where a restitutionary remedy is awarded is a claim for unjust enrichment. It may be a claim for breach of contract or tort. In Armstrong v. Winnington  Ch. 156 the Court recognised that where legal title to intangible property remained vested in the claimant but the property was transferred to the defendant, there was a proprietary restitutionary claim at common law, which was distinct from a claim for restitution on the grounds of unjust enrichment, and which was available in respect of receipt of intangible property. Importantly, liability did not depend on showing that the defendant committed any tort. The Judge held that a bona fide purchaser without notice or knowledge of the claimant's title may have a defence he but doubted whether any general defence of change of position was available. At present there is no authority which holds that a similar liability will arise where the defendant receives the claimant's legal tangible property (although there may be restitutionary liability for the tort of conversion, which is perhaps very similar to the liability under consideration). It is possible that a court might be persuaded to extend the principles of proprietary restitutionary liability into the field of tangible property. If so, there would be no obvious limitation period for such a claim under the L.A. 1980 although the court might well be tempted to apply by analogy the time limit for claims for conversion. The author is grateful to Luke Harris for valuable guidance on these matters.
(147) Williams v. Bank of Nigeria  UKSC 10.
(148) Palmer on Bailment (3rd edn, 2009) para. 40-007.
(149) For example, Re S Davis & Co. Ltd  Ch. 402 at 405.
(150) Under s. 21 (3) of the 1980 Act some actions for breach of trust are subject to a six-year limitation period, but this is a matter of express inclusion.
(151) Biddle v. Bond (1865) 6 B & S 225, 122 E.R. 1179. The estoppel is subject to exceptions which are here irrelevant.
(152) 2007 Conn. Super. LEXIS 867, 30 March 2007 (Conn. Sup. Ct).
(153) Citing Falls Church Group v. Tyler, Cooper & Alcorn, LLP, 281 Conn. 84, 108-09, 912 A.2d 1019 (2007). "[V]arious types of fiduciaries have evolved over the centuries. Trustees, administrators, and bailees are of ancient origin ..." (Internal quotation marks omitted); Konover Development Corp. v. Zeller, 228 Conn. 206, 222, n.11, 635 A.2d 798 (1994).
(154) Citing Maynard v. James, 109 Conn. [365, 146 A. 614] (1929); Zelencich v. American Yacht Services, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV02 0187145, 2006 Conn. Super. LEXIS 2296 (July 31, 2006, Jennings, J.).
(155) Strand Electric & Engineering Co. Ltd v. Brisford Entertainments Ltd  2 Q.B. 246 (C. A.); Hillesden Securities Ltd v. Ryjak Ltd  2 All E.R. 184; Gaba Formwork Contractors Pty Ltd v. Turner Corpn. Ltd (1993) 32 N.S.W.L.R. 175; Nichols Advanced Vehicle Systems Inc v. Rees (No. 3)  R.RC. 71 (C.A.); Palmer on Bailment (3rd edn, 2009) Chapters 33 and 37.
(156) Ministry of Defence v. Ashman (1993) 25 H.L.R. 513 (C.A.).
(157) Cases have occasionally arisen where the court has been obliged to find that there exists no rental market for the chattel in question. In one decision the judge held that the court should nevertheless set a market value based on information available to it: Gaba Formwork Contractors Pty Ltd v. Turner Corpn Ltd (1993) 32 N.S.W.L.R. 175. In another case, however, the apparent total lack of a market led the judge to decline to award anything in respect of this form of redress: Nichols Advanced Vehicle Systems Inc v. Rees (No. 3)  R.P.C. 71 (C.A.); and see Saleh Farid v. Theodorou and Blacklake Securities (30 Jan., 1992, unreported) C.A.; but cf Hillesden Securities Ltd v. Ryjak Ltd  2 All E.R. 184. This approach appears to confirm that the principle of the reasonable hiring charge is not founded on loss (viz of potential rental income) to the chattel owner or indeed on commercial gain to the wrongdoer: Halsbury, Laws of England (4th edn, Reissue) vol. 12(1) paras 1096-1099; Ewan Me Kendrick in Palmer and McKendrick, Interests in Goods (2nd edn, 1998) Chapter 35. But while there appears to exist no mainstream legal authority concerning a reasonable hiring charge for a work of art or similar chattel, some support for the use of such principles in relation to fine art can be gleaned from an official report concerning a work on display in a public museum: see the Report of the Spoliation Advisory Panel on a Claim relating to a Painting by Jan G riffle r the Elder, delivered on 18 Jan. 2001 (available from the DCMS web-site: <www.culture.gov.uk>); discussed in Palmer and Redmond-Cooper (eds) Taking it Personally: The Individual Liability of Museum Personnel (Institute of Art and Law, 2011) 26-29.
(158) For example, the District Court in de Csepel, 808 F. Supp. 2d 113, VI, p. 35, citing Malewicz v. City of Amsterdam 517 F. Supp 2d 322 at 335 (D.D.C. 2007) and inferentially Richards v. Mileski 662 F. 2d 65 at 73 n 13 (D.C. Cir. 1981), held that motions to dismiss "based on a limitations defence are disfavoured because resolution generally requires the development of a record and the adjudication of factual issues." "Dismissal on statute of limitations grounds is only appropriate when the complaint establishes the defence on its face."" This proposition appears to be closely paralleled by the decision of Tugendhat J. Rachmaninoff v. Sotheby's  EWHC 258 (Q.B.); see also First National Commercial Bank pic v. Loxleys (1996) The Times 14 Dec. C.A. Further, the court citing Malewicz 517 F. Supp 2d 322 at 335 (D.D.C. 2007) and inferentially In re McCagg 450 A 2d 414 at 416 (D.C. 1982) held that "Accordingly, "a claim for conversion accrues when the plaintiff demands the return of the property and the defendant refuses, or when the defendant takes some action that a reasonable person would understand to be either a conversion or inconsistent with a bailment." This is fully in accord with English common law and is echoed by numerous English authorities: see generally Kuwait Airways Corpn v. Iraq Airways Co (No 6)  2 A.C. 883 at para. 39, where Lord Nicholls of Birkenhead stated that conduct must satisfy three ingredients to be conversion: (1) it must be inconsistent with the rights of the owner or other person entitled to possession, (2) it must be deliberate as opposed to accidental, (3) it must encroach so extensively on the rights of the owner as to exclude him from use and possession of the goods. Lord Nicholls further held (at para. 40) that an owner can be deprived of possession where he is excluded from possession or possession is withheld from him. Lord Steyn (at para. 119) said that the essential feature of the tort of conversion is the denial by the defendant of the possessory interest or title of the plaintiff in the goods, which may occur where he manifests an assertion of rights or dominion over the goods which is inconsistent with the plaintiff's rights. Also citing Malewicz 517 F. Supp. 2d 322 at 335 (D.D.C. 2007), which cited in turn 90 CJS Trover & Conversion tit 45 (2006), the District Court in de Csepel, 808 F. Supp. 2d 113, VI, p. 37, further held that "Where a demand and refusal are relied on to show a conversion, the refusal must be absolute and unconditional ... A refusal which is not absolute, but is qualified by certain conditions that are reasonable and justifiable ... is not a sufficient basis for a conversion action." This proposition is closely paralleled by the reasoning of Eady J. in Schwarzschild v. Harrods  EWFIC 521 (Q.B.), as to which see Nicholas Queree (2008) XIII Art Antiquity and Law 204; Palmer on Bailment ([3.sup.rd] edn, 2009) para. 1-078 footnote 464. Yet again, citing the Restatement (Second) of Torts tit. 240, the District Court in de Csepel, 808 F. Supp. 2d 113, VI, p 37, held that "ne in possession of a chattel who is in reasonable doubt as to the right of a claimant to its immediate possession does not become a converter by making a qualified refusal to surrender the chattel to the claimant for the purpose of affording a reasonable opportunity to inquire into such right." This passage is almost exactly paralleled by the decision of the Court of Appeal in Clayton v. Leroy  2 K..B. 1031, C.A., the ratio of which has recently been held to apply even to claims within bailments, where the bailee is generally estopped from denying the bailor's title: Spencer v. 5 Franses Ltd  EWFIC 1269 (Q.B.). As to this see Palmer, above, note 14, para. 1-085, cited with approval in Spencer v. Franses, above, note 43, at para. 291.
(159) Where the claimant was in possession at the time of the taking, the taker is clearly estopped at common law (subject to exceptions) from pleading the jus tertii: The Winkfield  P. 42. But the position is significantly less clear-cut where the taking is by finding and the claimant has already ceased to be in possession before the finder take possession: Palmer on Bailment (3rd edn, 2009) Chapter 26.
(160) Evidently not, according to Thirlwall J. in Spencer v. S Franses Ltd EWHC 1269 (Q.B.) at paras 300-301: "I am not satisfied that a bailee who receives a demand from a bailor for the return of his goods can never have a right to a reasonable period to inquire into title when he is on notice that the bailor does not have good title.... My analysis of the authorities leads me to conclude that the principle underpinning such right as the authorities may allow is an acceptance that a bailee should have a reasonable opportunity to protect himself from a claim by the rightful owner."
(161) There is substantial resistance to the direct application to intangible property of doctrines applicable to chattels: see, most recently, Your Response Ltd v. Datateam Business Media Ltd  EWCA Civ. 281. But in the situation here considered the loss of information results from the abstraction of tangible goods. See generally Palmer on Bailment (3rd edn, 2009) Chapter 30.
(162)  Q.B. 22.
(163) Jarvis v. Williams  1 W.L.R. 71, C.A.
(164) See for example the decision in Herce, examined in footnote 7 above. There, the Court's characterisation of the police as bailees owing a duty of care towards the (unidentified) owner of a work by El Greco was recruited to justify an order for the deposit of the work of unknown ownership in a public museum.
Norman Palmer, Q.C. (Hon.), C.B.E., F.S.A.; Barrister, 3 Stone Buildings, Lincoln's Inn; Visiting Professor of Law at King's College London; Emeritus Professor of the Law of Art and Cultural Property at University College London.
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|Publication:||Art Antiquity & Law|
|Date:||Oct 1, 2014|
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