Unclaimed art and the duty of active pursuit Cornelius Gurlitt and the hidden hoard.
To such an observer the event raises many questions:
* have the pictures been lawfully seized and on what ground?
* where did they come from and who were their previous owners?
* how did they come to be in Cornelius Gurlitt's possession?
* to whom do they now belong?
* to whom should they now be delivered?
* on what terms should they be delivered?
* should the law be changed to vary the present allocation of title or the outcomes that would normally flow from it?
* should any liability be visited upon any recent possessor beyond a simple obligation (where that possession endures) to surrender the works?
ONE QUESTION AMONG MANY
The comment which follows does not seek to answer such questions. Nor does it speculate on the outcome of the Gurlitt episode at large. The riddles posed by the Munich hoard could take years to resolve and may turn on facts that have yet to emerge. In what follows we explore a single question which has hitherto received scant attention but which might well become critical as the case unfolds. It would probably arise should similar facts occur in a common law country.
AN ACTIVE DUTY TO INQUIRE INTO AND SEEK OUT THE PAST OWNERS OF MISPLACED ART?
The question explored is whether a person who comes into possession of chattels which appear (whether at the time of getting possession or later) to be the property of someone other than the possessor owes an active duty to identify and seek out the person who is entitled to the chattels and to return the goods to that person. Of course the question can arise where the possessor is a legal as opposed to a natural person, such as a government agency. Is the possessor entitled to keep quiet about suspicions and wait passively until a claimant appears, or is there a duty to take active steps to discover and inform the owner?
This question might be approached along two routes, which are themselves interlinked: can the possessor be treated as equivalent to a finder of goods, with the duties that follow from that relationship, or might the possessor alternatively be cast as a constructive bailee, owing equivalent duties on that ground? In each case the answer might turn on the state of mind, or degree of apprehension, which the possessor harbours at the given time with regard to the prospect of an ulterior owner.
The question is important for the following obvious reason. While it goes without saying that a possessor who receives a claim from a party entitled to possession must (perhaps after a fair time for verification) yield to that demand, many untraced owners will not be in a position to make a claim until they know of the existence and whereabouts of the work and the identity of the possessor. They might never gain such knowledge unless the possessor takes positive action in order to alert potential claimants. The effort that is required to establish whether there is a claimant might range from a simple public advertisement to the searching of databases or the employment of inquiry agents; those are matters of degree. But a legal requirement that compels the active pursuit of the prospect of a viable claimant can in principle be justified on two grounds: first that no possessor should seek to profit from a deliberate concealment or knowing inertia in relation to goods that reasonably appear to belong to another; and secondly that a possessor who fails to act in such circumstances might be exposed to allegations of an independent liability or to the loss of otherwise viable defences to liability.
The question also possesses a notable breadth of application. It could, for example, help to enlighten the legal and moral position of a museum that possesses Holocaust-related art. Where a museum possessed of such material fails to discover the relevant background or, having discovered it, fails to act on the discovery, the dispossessed victim might assert that the museum's inaction was a breach of obligation. Such an assertion might enable the victim to impugn the museum's moral standing within the terms of reference of the Spoliation Advisory Panel, (1) and thus to assert a successful claim before the Panel, though the claimant's legal title has lapsed.
WHAT SORT OF LEGAL LIABILITY?
Among the adverse legal consequences of a failure to act the following might be proposed:
(i) that the failure to inquire into past ownership, being evidence of indifference to the identity of the ulterior owner, evidences a present intention to withhold the goods in defiance of the title of the true owner, thus constituting an immediate and present conversion; (2)
(ii) that the failure to inquire into ulterior ownership is an independent actionable breach of duty towards the ulterior owner, sounding in damages calculated according to what is necessary to redress any loss inflicted on the claimant by reason of the delay. Such loss might include the loss of a viable claim to recover the work, occasioned by the intermediate expiry of the applicable limitation period;
(iii) that the failure to inquire causes any excess detention, beyond the time at which inquiry should have occurred and resulted in restitution, to be an unlawful detention, in consequence of which the possessor is in a state of deviation and is therefore strictly liable for any harm occasioned to the chattel subsequent to that deviation;
(iv) that the same neglect also might attract an obligation to pay a reasonable hiring charge in respect of the possessor's detention over the period of neglect;
(v) that the failure to research and pursue ulterior ownership constitutes an independent continuing breach of bailment, liability for breach of which (a) is not curtailed by any provision in the Limitation Act 1980 (which does not expressly refer to bailment), (b) continually refreshes the limitation period (to the extent that the Limitation Act does apply);
(vi) that the same failure to investigate and pursue the question of ownership constitutes an act of concealment under sections 32(l)(c) and 32(2) of the Limitation Act and thus prevents the running of the limitation period.
It might even be argued that the power of a possessor under Clayton v. Le Roy (3) to retain goods for a reasonable period in order to examine title should on particular facts import an inherent duty to conduct such reasonable examination (and thereafter to notify all identified parties of the outcome) where the possessor knows or has reasonable cause to believe that someone other than he/she is the owner.
Of course in a case involving the obligations of state authorities the legislation governing such authorities might well provide an answer. It must be said that English legislation, while not shy to impose duties to return to particular individuals such as a person from whom potentially stolen goods have originally been taken, (4) is notably timid, if not tepid, when it comes to imposing duties of active inquiry to establish the party entitled. (5) But in many cases the existence of an active duty is an open question at common law, and one that potentially applies to non-official agencies such as auction houses, borrowing museums and other bailees, as well as police and customs.
What follows is an attempt to answer this question by reference to English common law. We begin by exploring the position of the possessor as the bailee of the untraced owner.
THE OUTER MARGINS OF BAILMENT
The standard bailment is common and easy to identify. Typically it arises when two parties have a contract that obliges or entitles one of them to take possession of the other's goods for some limited period or purpose. The function of the bailment may be the storage or carriage of the goods by the bailee, or the hiring of the goods to the bailee. Other commercial examples are the pledge of goods or the performance of professional skill and labour on goods. For a bailment to arise the bailee must receive only possession and not full title. Under a bailment, the reversionary right of possession remains with the bailor. That reversionary right will normally but not necessarily take the form of ownership.
Many of these standard features are in fact non-essential to bailment. (6) All that is necessary to raise a bailment is that one person should be knowingly and willingly in possession of goods that belong to another. The founding of bailment on voluntary possession means that there is no need for a contract or even an agreement between the parties. A gratuitous bailment is unaccompanied by contract through want of consideration, but is still a bailment. A sub-bailment is unaccompanied by any agreement, or even communication, between the head bailor and the sub-bailee, but is still a bailment. There need be no direct delivery from bailor to bailee, because the relationship of possessor and owner can arise in other ways: for example a seller who retains possession of goods after property has passed to the buyer is from that moment the bailee of the buyer. A similar result may follow where a bailor sells goods that are in the possession of his bailee. When the bailee attorns to the buyer he becomes the bailee of the buyer and ceases to be the bailee of the seller, his original bailor. (7) Again, there is no direct delivery.
Most significantly, there can be a bailment even where the owner of the goods has not consented to the bailee's taking possession of them. In other words, the bailee must consent to possession but the bailor need not. There are several examples of this kind of unilateral bailment.
The standard example of the unilateral bailee is the finder. (8) It is well accepted that a finder becomes, for at least some purposes, the bailee of the owner. This can follow even though the finder has no antecedent relationship with the owner. (9) The finder owes no duty to take lost goods into his custody, (10) but once he takes possession he owes a duty to take reasonable care of them for as long as that possession continues, and he bears the ordinary bailee's burden of proof in the event that they are shown to be lost or damaged during his possession. Ancient authorities favoured the fiction that the owner of lost goods impliedly consents to the finder's taking possession, but nowadays that is realistically seen as a myth. Finding is a case where a possessor owes the duties of a bailee though he takes possession without the consent of the person entitled to possession.
Duties of the Finder
The fact that a finder takes possession without the owner's consent does not mean that his taking of possession is always wrongful. That depends on the finder's intentions. A finder who reduces lost goods into his possession with the honest intention of discovering the identity of the owner and of returning the goods to him acts lawfully and does not commit conversion or trespass to goods by the mere fact of taking possession. However, a finder who intends to keep the goods in defiance of the owner's right or who immediately on taking possession uses the goods for his personal benefit may forfeit the normal immunity accorded to such possessors and be sued for trespass to goods or conversion.
Once in possession the finder owes a duty of care. The prevalent view is that the finder owes the same standard of care as is owed by an unrewarded custodian or 'depositary'. (11) For as long as he retains possession he must take such care of the goods as is reasonable in all the circumstances. He must also, and this is the critical point in our present analysis, take reasonable steps to reunite the owner with his goods, while caring for them meanwhile. So much is plain from the judgment of Lord Donaldson (Master of the Rolls) in Parker v. British Airways Board: (12)
A person having a finder's right has an obligation to take such measures as in all the circumstances are reasonable to acquaint to true owner of the finding and present whereabouts of the chattel and to care for it meanwhile.
An occupier who manifests an intention to exercise control over a building and the things which may be upon or in it so as to acquire rights superior to a finder is under an obligation to take such measures as in all the circumstances are reasonable to ensure that lost chattels are found and, upon their being found, whether by him or a third party, to acquaint the true owner of the finding and to care for the chattels meanwhile. (13)
It will be seen that, in addition to holding that the finder owed a duty to take care of the goods, a duty to take reasonable measures to inform the true owner of the fact of the finding and of the present situation of the goods, and thus (by implication) a duty to take reasonable steps to reunite the owner with his goods, Donaldson M.R. also observes that a landowner must take reasonable steps to discover the presence of lost goods on his land. That last obligation might also, without undue strain on the underlying principle, be applied to someone who is aware of the presence of goods on his land but unaware that they are Tost' goods in the sense that they and their owner have become separated. It must be conceded however that the doctrinal basis for this particular duty is unclear. (14)
In the event that the owner can prove that the goods were lost, stolen, destroyed or damaged while in the finder's possession, the finder will be liable unless he can prove on the balance of probabilities that the misadventure did not result from the finder's want of reasonable care. It also appears that, in common with the normal bailee for reward, the finder will be liable unless able to prove that any loss or other disappearance of the goods did not result from any theft or complicity in theft on the part of any employee or agent to whom the bailee entrusted the discharge of any part of the bailee's duty of care.
It is lawful for the finder to examine, catalogue and inventorise goods that he lawfully takes into possession, provided he does so consistently with the foregoing duties. (15) He may for this purpose open any container within which vulnerable goods might reasonably appear to be present, unless there are obvious indications that such conduct would endanger the goods or third parties. Such conduct is justified as enabling the lawful possessor to discover the identity and value of the goods and the identity of the owner, to calibrate his care and supervision according to the circumstances and to answer any allegation about the precise nature and quantity of the goods taken into his possession. Such conduct might be justified by further reasons unrelated to the management of the goods themselves, such as the discovery of the identity of the former possessor or the ascertainment of special medical circumstances. (16)
BAILEES OF NECESSITY
Principles similar to those that govern the finder govern the person who takes possession of goods in order to forestall a sudden emergency. Such persons have recently been termed as 'bailees of necessity'. (17) They differ from typical finders because they may well be aware of the identity of the owner, and they are more likely than a conventional finder to have taken the goods directly out of the owner's possession. But they resemble the orthodox finder in that they take possession without (at least) the formal or express consent of the owner.
In common with the finder, the bailee of necessity incurs no liability in conversion or trespass to goods by taking possession, provided does so with the honest intention of returning the goods to the owner, though his position may differ where he uses the goods for his personal benefit, particularly if he consumes them in the process. His main obligation is a duty of reasonable care and, like the finder, he carries the bailee's normal burden of proof. As with the finder, the bailee of necessity can lawfully examine and catalogue goods that he has lawfully taken into possession, provided he does not unreasonably endanger them in the process. (18)
MISTAKEN AND UNAUTHORISED DISPOSSESSORS
A further example of the 'unilateral' bailee who takes possession of another's goods without the owner's consent is the person who honestly seizes goods in the erroneous belief that he has a right to them. (19) Decisions are rare but it seems that such a person owes at least a duty to take reasonable care of the goods throughout the period of his unauthorised possession and to exercise reasonable steps to return them to the owner within a reasonable time of discovering that the goods do not belong to him. It seems implicit in this that the possessor will be in breach of his duty if he fails to realise, in the face of reasonably clear evidence to that effect, that the goods belong to another, or if he fails to act reasonably when such realisation dawns on him. (20) In certain instances the wrongful taking of goods out of the owner's possession will be a conversion, as was recognised in an old case where the defendant took possession of goods from the claimant and later refused to return them in the mistaken belief that he was entitled to a lien over them. (21) A possessor whose possession has been wrongfully assumed is probably also liable for any subsequent damage to the goods regardless of whether that damages results from his want of care. (22)
Similar results follow in more sophisticated circumstances where, for example, governmental authorities usurp the possession of others, or prolong their own possession, without authority under the relevant statute. In Checkprice (UK) Ltd (in administration) v. Commissioners for Her Majesty's Revenue and Customs (23) HMRC were held liable in conversion for having detained goods over a longer period than was permitted by statute, and Sales J. refused to adopt an alleged analogy drawn from the law of bailment in order to exonerate that agency. Speaking of one of the categories of detained goods, he said:
I do not accept this argument. In the bailment example the bailee has an underlying right under the terms of the bailment to detain the goods, and it does not matter whether or not he correctly refers to that right at the time he detains the goods. On proper analysis, he detains the goods in question in circumstances where he has a right to detain them ... (24) This analysis does not apply in the present case. HMRC had no right to withhold the goods in question save to the extent that they validly exercised a statutory power to do so. They had a statutory power under section 139(1) of CEMA [Customs and Excise Management Act 1979] to detain the goods for a reasonable period, which period expired in mid-August 2007. Thereafter, HMRC could only lawfully retain the goods if they properly exercised their distinct power of seizure contained in section 139(1). Exercise of that power of seizure brings into operation statutory provisions constituting a protective regime for the benefit of the property-owner. The notional availability of the power of seizure cannot be relied upon as a defence to a claim in conversion where it has not in fact been exercised and where, therefore, HMRC have not brought the statutory protective regime into operation. There is no underlying right of retention for HMRC as there is in the bailment situation. HMRC's right of retention of the goods pursuant to the power of seizure is conditional upon their actual exercise of that power. Therefore, in my judgment, HMRC were liable for conversion in respect of the relevant goods ...
THE CONSTRUCTIVE BAILEE
It can be argued that to predicate bailment on a knowing and willing possession is to perpetuate a tautology. No possession can be willing unless the possessor knows what he is possessing. It should therefore be enough to say that the bailee is someone voluntarily in possession of another's goods: consent is conditional on knowledge, so knowledge must precede consent.
Disputes still occur, however, as to whether the alleged bailee did consent to possessing the particular goods in question. This may depend on whether he is deemed to have known the material facts: for example that the goods were in his possession, or that they belonged to the person to whom they truly belonged. This may in turn depend on what was reasonably foreseeable to him. Some of these disputes raise questions as to whether a constructive or imputable knowledge will suffice, as opposed to 'actual knowledge'.
To an extent the answer must be in the affirmative. If, for example, the bailee of a container should reasonably have expected that the container would contain objects of a certain character and value, he must be considered a bailee of those objects as well as of the container. (25) His imputable knowledge of the contents on receiving possession implies consent to their possession. Parking operators have therefore been held responsible as bailees for the predictable contents of cars parked with them, (26) and an airline has been responsible as a bailee for banknotes consigned in special orange bags reserved for valuables. (27) A similar situation arose in a case where a hospital authority should have realised that a ring on a patient's finger was valuable and was held liable for failing to treat it with reasonable care. (28)
Similarly if the possessor of an object should reasonably have foreseen the identity of the person entitled to the object, he will be deemed to hold the object as the bailee of that person. (29) His imputable knowledge of the existence and identity of the owner implies consent to his standing as bailee on that owner's behalf. It should not be open to the possessor on such terms to argue that, while he consented to the possession of the goods themselves, he did not consent to holding them as the bailee of the particular owner. Where the bailor's identity is a material factor in the possessor's consent to possession, it may admittedly be necessary for the possessor to have had specific notice of the particular identity of the person claiming the goods. In many cases however (for example, the commercial sub-bailment) the precise identity of the owner will be a matter of indifference to the bailee and any person whose identity, interest and existence was reasonably foreseeable to the bailee should be capable of qualifying as his bailor. (30)
Throughout these cases there runs a recurrent theme that a person's consent to possession may be implied. The true test in determining whether the possessor impliedly consented to possession is whether the possessor 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. If the possessor in this position nonetheless assumed possession, or continued in possession, when he was free to do otherwise, he should stand as the bailee of the person whose interest he should have foreseen.
From this the further question may again arise, whether a possessor of goods may be liable for failing to take active steps to investigate the true nature or ownership of those goods before dealing with them in a manner contrary to that nature or ownership. In recent cases this question has arisen in the context of disputes as to whether a particular possessor was an unconscious bailee or an involuntary bailee. Recent authority indicates the existence of a distinct duty to seek out owners when matters of title are in doubt and a liability in conversion if a disposal is implemented without such prior inquiry. (31)
BAILMENT AFTER DEMAND
We have observed that any person is 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 at least imputable notice of the fact that they belong to another. Where the party entitled to goods makes a sufficiently informative and unequivocal demand of the possessor to render that possessor liable in conversion for defying the demand, it is submitted that the adequacy of the demand for that purpose should also render the possessor thenceforth the bailee of the demander. In that event the possessor has 'sufficient notice' of the demander's interest to satisfy the possesor's 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.
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 do belong.
THE INTERMEDIATE CASE
In Robot Arenas Ltd v. Waterfield (32) the main question was whether incoming occupiers of premises should be liable in conversion for having destroyed materials that had been left on the land by former occupiers, in circumstances where it should reasonably have been apparent to the incomers that the materials had not been abandoned and remained the property of a former occupant or depositor. The result of so holding would have been to elevate the relationship between owner and possessor from one of unconscious bailment to one of involuntary bailment, with a consequent liability on the defendants for a deliberate destruction of the goods. The claimants (33) argued that since the goods obviously belonged to someone other than the defendant himself the defendant should be liable for having deliberately destroyed them.
In the event Colin Edelman Q.C. exonerated the defendants on the ground that, having made reasonable efforts to contact the claimant with no result, they were entitled to assume that the claimants no longer had, or intended to assert any interest, in the goods. In so doing however he cited with apparent approval the argument in the leading text book (34) that (a) a possessor who is wholly and blamelessly unaware of the fact that goods in his possession belong to another should not be liable for intentionally destroying those goods, but (b) a possessor who should reasonably have been alerted by the condition of the goods, or the circumstances of his reception of them, to the fact that they were not his own should be characterised not as a mere "unconscious" bailee but as an informed and involuntary bailee, thus owing a duty not wilfully to destroy the goods, save in exceptional circumstances.
The acceptance of these statements comes close to acknowledging that modern law recognises a concept of constructive bailment, based on what the bailee should reasonably have foreseen about the circumstances informing his possession, and on his deemed consent to those aspects of his possession that he could reasonably have been expected to know and unreasonably failed to act upon. The parallel is not perhaps exact, because the sole proposition directly endorsed by Robot Arenas is that a possessor who fails to act on persuasive evidence of ownership by another may be liable for conversion if he destroys the goods. But if that be right, it seems only a short step to holding that such a possessor also owes a duty of care towards the discoverable owner, stands in the relation of bailee towards that owner, and in the event of unexplained misadventure bears the normal bailee's burden of proof. (35)
If the logic in a case like Robot Arenas applies where the task is to differentiate between an unconscious bailee and an involuntary bailee, similar reasoning should arguably apply where the choice is between an involuntary bailee and a true bailee. Where the knowing possessor of another's goods could reasonably have taken steps to identify the owner and arrange for the owner to collect them, his retention of the goods in circumstances where he was no longer compelled to retain them should enable his possession to be characterised as voluntary, making him party to a normal bailment and giving rise to the normal bailee's duty of reasonable care. We have already seen that a finder owes a duty to take reasonable steps to locate the owner and re-unite him with the goods. There seems no reason why a similar obligation should not apply to other possessors of goods who could reasonably have been expected to locate and contact the owner and who have unreasonably neglected to do so.
Outside this decision authority is scant. A duty to seek out instructions from a known owner, rather than a duty to seek out an owner, has however been recognised in a case involving an originally consensual bailment. In Heskell v. Continental Express Ltd and Another (36) H sold goods to a Persian buyer and instructed CE to deliver them to the ship at Manchester on which H intended to ship them. CE wrongly failed to despatch the goods and remained in possession of them without notifying H. The loading brokers for the ship (S) wrongly issued a bill of lading to H who thinking the goods had gone to Persia delivered the bill of lading to the buyer and got payment. When it was discovered that the goods had not been shipped, H paid damages to the buyer. By then the goods had dropped in value. H sought damages against S and CE.
Devlin J. (37) held that S were not liable in contract or for negligent misstatement, that CE were liable neither for detinue (38) nor for breach of the contract to deliver. (39) He went on to hold however that CE were liable for their continuing breach of their duty to seek fresh instructions:
But this is not to say that their wrongdoing ceased on 5th December. They were then continuing to hold the goods in breach of the instructions which they had received. In this respect they were like bailees who, in breach of their mandate, hold the goods in some place other than that which the contract or bailment requires. They were therefore guilty of detention of the goods, which, while it may not have been adverse so as to constitute the tort of detinue, was wrongful in that it was a breach of the contract of bailment. Furthermore, they were, I think, under a continuing duty to seek fresh instructions for the disposal of the goods, or at the least to report to the plaintiff their failure to deliver. It could hardly be contended that, if some accident had prevented delivery and excused Continental Express from any fault in the matter, they could have left the plaintiff in ignorance of what had happened to his goods: the duty of a bailee to notify his bailor of such circumstances would be in accordance with the principle laid down in Ranson v. Platt (40) and Coldman v. Hill. (41) I cannot think that the duty can be less if delivery had been prevented by the bailee's own negligence or that he could rely on his own culpable ignorance of his own fault as an excuse for not informing the bailor of it. In my judgment, the detention of the goods by Continental Express and their failure to inform the plaintiff of their whereabouts was a continuing breach of duty. (42)
SO WHERE DOES THIS LEAVE THE GURLITT MYSTERY?
The implications for the authorities involved in the Munich case, and indeed for Cornelius Gurlitt personally, remain of course wholly speculative. Our analysis considers only the hypothetical position under English common law, while the position in Gurlitt is, at least prima facie, governed by German law. The German authorities would probably occupy a position comparable to that of a bailee under English common law and might also owe a duty to investigate potential third party titles before deciding whether to return the objects to Gurlitt.
It is now reported that the Minister of Culture and the Federal Chancellery have, under mounting pressure from the US and Israeli Governments and associations invoking the Principles of Washington Conference, decided to intervene (43) by setting up a federal task force, to which six art historians have been appointed, (44) to accelerate research on provenance. This suggests that regardless of whether any legal duty to investigate rival claimants exists in general cases the authorities have chosen to undertake an investigative duty in this particular instance.
Depending on the outcome of these measures there may well come a time when, if no third party claimant appears, the authorities become obliged to return some of the objects to Gurlitt as the previous possessor and/or the putative owner of the works. Similar logic has compelled the return of objects by the police in England in cases where the objects have been lawfully seized on suspicion that they are stolen goods but in the event the police's power of retention has expired because no prosecution has taken place. (45)
Until that happens one wonders whether steps might be taken to exhibit the works in some public space. In the little-known New York case of United States v. Herce (46) Judge Brieant of the US District Court for the Southern District of New York granted an application by the District Attorney that a disputed work by El Greco at that time held by the FBI should be lodged at the Metropolitan Museum of Art pending termination of the action. Relying in part on the duty owed by the police as bailees of the work, Judge Brieant said he granted this application 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.
One might hope that a modern court would show similar boldness and originality in response to a similar application. Indeed there is encouragement to be gained from a recently-announced intention to exhibit publicly a further collection of paintings discovered at another residence occupied by Gurlitt at Salzburg. (47) But to aim at such a result would require fortitude. The recipient museum could for example face a claim for possession against which a court order would not necessarily offer a defence. Indeed the position of potential borrowers is one that demands attention whatever the immediate outcome in a case of this sort. A successful claim by the former possessor on the ground of possessory title would not necessarily enable the claimant to lend the work to a museum, or enable a museum to borrow it, without fear of ulterior claims. For that, nothing short of a complete and cast-iron root of title might suffice.
Since the foregoing essay was written, intelligence has come to light regarding the issue of a claim against both the Federal Republic of Germany and the Free State of Bavaria in the United States District Court for the District of Columbia. (48) The claim seeks 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 Friedmaan'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.
The claimant pleads that on and after 21st November 2013 he addressed a series of letters to the defendants demanding the return of artworks formerly on 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 have failed to acknowledge his ownership of Two Riders on a Beach.
The matter is complex, but of particular interest for our purpose is that one of heads of claim is laid in bailment. (49) Toren alleges that the defendants occupy toward him the status of bailees under an "express, implied-in-fact, or constructive bailment." We reproduce here the full substantive content of this head of claim:
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. 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.
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' would suggest an unnecessary complication. A 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 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. (50) There is strong appellate authority for the proposition (which we cite earlier (51)) 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 prior 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 ownership or wrong, 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 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 brevity of the period between the first demand letter sent by the claimant and the commencement of proceedings (four months) 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, (52) 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.
Such matters aside, it remains far from impossible that an allegation of bailment could be sustained on similar facts under English common law. The logic is set out in an English text:
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.
In other words a person who first embarks on possession of goods as a non-bailee (because he neither knows or has reason to believe that they belong to anyone else) may become a bailee once he has received and failed to comply with an informative demand for delivery up.
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. Might it not in principle be argued that the bailment should be antedated to the time when the authorities first knew or has 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 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 the goods before they were taken from him by the current possessor. There is an obvious candidate.
* Q.C., 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.
(2) It is by no means certain that such failure would necessarily constitute the crime of theft. Cf the California Penal Code [section] 485, which speaks directly to this point: "Appropriation of lost property by finder: one who finds lost property under circumstances which give him knowledge of or means of inquiry as to the true owner, and who appropriates such property to his own use, or to the use of another person not entitled thereto, without first making reasonable and just efforts to find the owner and to restore the property to him, is guilty of theft." Compare this in turn with the criminal law obligation to report treasure, imposed by English law 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 generally Palmer in (2010) XV Art Antiquity and Law 125. It is a fine question whether a criminal duty to report might also in particular circumstances be enforced as an obligation under private law.
(3)  2 KB 1031. The power applies to public authorities, with a corresponding liability in conversion if the authority in question detains for an unreasonably long period: Checkprice (UK) Ltd (in administration) v. Commissioners for Her Majesty s Revenue and Customs  EWHC 682 (Admin); Atapattu, R. (On the Application of) v. The Secretary of State for the Home Department  EWHC 1388 (Admin).
(4) See the observations by Lightman J. in Costello v. Chief Constable of the Derbyshire Constabulary  1 W.L.R. 387, which are to the following effect: (i) the fact of possession of a chattel of itself gives to the possessor a possessory title and the possessor is entitled to rely on such title without reference to the circumstances in which such possession was obtained: his entitlement to do so is not prejudiced by the fact that he obtained such possession unlawfully or under an illegal transaction. His claim can be defeated only by proof of a title superior to his possessory title, (ii) The statutory power of the police conferred by s. 19 of the Police and Evidence Act 1984 to seize goods and by s. 22 of the 1984 Act to retain them so long as is necessary in all the circumstances places in suspension or temporarily divests all existing rights to possession over the period of the detention, but does not otherwise affect those rights or vest in the police any permanent entitlement to retain the property in the police. The limited right of the police to retain property for the statutory purpose and their obligation thereupon to return it to the "owner" is unaffected by any perceived public policy consideration that the fruits of his criminal activities ought to be withheld from a criminal. See also the Criminal Justice and Police Act 2001 Part II 'Powers of Seizure' (which came into force on 1 April 2003). This probably comes as close as any existing English statute to imposing an active duty of inquiry on a law enforcement agency, and even this falls some way short. By section 58(1), subject to exceptions within that section, seized property should be returned to the person from whom it has been seized. By section 58(2) where an obligation arises to return seized property to the person from whom it was seized, and the person with the obligation to so return is satisfied that some other person has a better right, his duty is to return to that other person, or as the case may be, to the person appearing to him to have the best right to the thing in question. By section 58(3) where different persons claim to have an entitlement to the return of the property, the thing may be returned for as long as is reasonably necessary for the determination in accordance with s. 58(2) of the person to whom it should be returned. Section 59 provides for applications to be made to the appropriate judicial authority in the set of circumstances set out in s. 59(3).
(5) Statutes governing police powers conventionally empower the police to deliver chattels to persons whom they consider to be entitled to them, but fall short of expressly obliging the police to make positive inquiries to determine the party entitled. See for example ss 58(1) and (2) of the Criminal Justice and Police Act (headed 'Person to whom seized property is to be returned' (set out in note 3 above) which appear to operate through the prism of power rather than obligation. A duty to initiate inquiries might however conceivably be inferred in limited circumstances from s. 58(3) by which "Where different persons claim to be entitled to the return of anything that is required to be returned under this Part, that thing may be retained for as long as is reasonably necessary for the determination in accordance with subsection (2) of the person to whom it must be returned." No firmer guidance is afforded by the Police and Criminal Evidence Act 1982 s. 22, though note s. 22(2)(b) by which "... anything may be retained in order to establish its lawful owner, where there are reasonable grounds for believing that it has been obtained in consequence of the commission of an offence." The Police (Property) Act 1897, which enables the police to apply for a court order supporting the return of goods to an identified person, has been held inapplicable to cases where the title is in doubt: Raymond Lyons & Co Ltd v. Metropolitan Police Commissioner  1 Q.B. 321, D.C., at 325, 326, per Lord Widgery C, Thompson and Mais JJ. concurring, who said that the 1897 Act is not to be used "in cases which involve a real issue of law or any real difficulty in determining whether a particular person is or is not the owner." See further O 'Leary International Limited v. Chief Constable of North Wales Police and Crown Prosecution Service  EWHC (Admin) 1516. Certain Codes of Practice offer greater support: see for example the Policy of the Warwickshire Police on Property (Lost, Found and Detained) para. 13.4, by which "Detained property in a case which is complete and for which no owner can be found can be disposed of twelve months after the property was first taken into police possession provided that the following guidelines are satisfied: (i) The officer in the case must have exhausted all reasonable courses of action in establishing ownership of the property [...]" (Emphasis added). See also the Museums Association code, clause 7.4 of which requires museums to "inform originating communities of the presence of items relevant to them in the museum's collections, wherever practical." But whether institutional codes and guidelines can give rise to legally enforceable duties is a matter of debate: see 'Painting the Wayside Flower; Law, Ethics and Regulation in the Art and Antiquities Market: a Common Law Perspective' (a paper delivered at Bonn in Oct. 2006 and published by the German Federal Ministry of Culture).
(6) Palmer on Bailment (3rd edn, 2009) chapter 1.
(7) Palmer, above, note 6, chapter 26.
(8) Palmer, above note 6, chapter 25.
(9) There are many cases. Among the latest are: East West Corpn v. DKBS AF 1912 A/S  Q.B. 1509 at para. 26, 1529-1530/>er Mance L.J.; The Pioneer Container [ 1994] 2 A.C. 324 at 337 per Lord Goff of Chievely, for the Board; W D & O Wills (Australia) Ltd v. State Rail Authority of New South Wales (1998) 43 N.S.W.L.R. 338 at 353 per Mason P. For further authority and detailed discussion see Palmer, above, note 6, chapter 1.
(10) Palmer, above, note 6, 26-087.
(11) This level of duty corresponds largely with that owed by a bailee for reward, though the two standards may differ subtly on particular facts; Ngan v. the Queen  NZSC 105 at para. 19, citing Port Swettenham Authority Ltd v. T W Wu (.M) Sdn Bhd  AC 580 at 589 per Lord Salmon.
(12)  Q.B. 1004 at 1017, 1018. Similar remarks appear in Kowal v. Ellis (1977) 76 D.L.R. (3d) 546 at 547; Tamworth Industries Ltd v. Attorney General  3 NZLR 616 at 623-624per Eichelbaum CJ; and see Pierce v. Bemis, The Lusitania  1 Lloyd's Rep. 132 at 141-142.
(13) Hickey, Property and the Law of Finders (2010) 75 describes this proposition as "the barest statement of principle". Others have also commented on the lack of general authority preceding the Parker decision, for example the author's own work (Palmer on Bailment (3rd edn, 2009) chapter 26; but cf p. 1241: "... there seems no reason in principle why any person who comes unwittingly into possession of goods that belong to another, but who later receives information that would suggest to a reasonable person that the goods belong to someone other than the possessor or the deliverer, should not owe a duty to take reasonable steps to identify the owner and allow him a reasonable opportunityto recover his goods." For the purposes of the present account, however, we assume that Lord Donaldson's proposition is sustainable.
(14) Cf Hickey, above, note 13.
(15) Ngan v. The Queen  NZSC 105.
(16) Although in Ngan the Court did not expressly say so, the finder at least has a duty to take reasonable measures to reunite the owner with the goods; see above.
(17) Though a clearly communicated refusal of consent would presumably strip the possessor of the immunity and render his possession unlawful ab initio.
(18) The classic modern illustration of the bailee of necessity is the New Zealand decision in Ngan, above, note 15. The police attended a road traffic 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 quantity 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.
(19) For examples other than those cited in the text see Palmer, above, note 6, para 1-039.
(20) A telling example is a Canadian case where a passenger removed the wrong suitcase when leaving a train. In McCowan v. McCullough  1 D.L.R. 312 the court held that the erring passenger owed a duty to take reasonable steps to reunite the suitcase with its true owner and that, by failing to take steps that were sufficiently protective of the owner's interests, he had broken that duty. It may well be that the seizing party owes, in common with and by analogy with a bailee who deviates from the bailment, a strict liability for any misfortune afflicting the goods following the wrongful removal from the owner's possession; see Winfield & Jolowicz, Tort (17th edn, 2006) 753: "..if goods are destroyed while in the possession of a wrongdoer it would surely be wrong to allow him to escape by showing that it was not his fault, for that would be to treat him like a bailee ... since the law imposes the liability of an insurer upon a person who came lawfully into possession of another's goods but who deviates from the terms of his permission it must inevitably do the same to a defendant who takes the goods wrongfully ".
(21) Tear v. Freebody (1858)4 CBNS 228.
(22) Above, note 20.
(23)  EWHC 682 (Admin).
(24) Sales J. compared at this point "the right of an innocent party to a contract to rely on breaches of contract against the other party even though they were not invoked by him at the time he treated the contract as having been repudiated": Boston Deep Sea Fishing & Ice Co. v. Ansell (1888) LR 39 Ch. D. 339, C.A.
(25) Palmer, above, note 6, chapter 6.
(26) Brown v. Toronto Auto Parks Ltd  1 D.L.R. 461.
(27) Moukataff v. BOAC Ltd  1 Lloyd's Rep 396.
(28) Southland Hospital Board v. Perkins Estate  1 N.Z.L.R. 373; Martin v. LCC [ 1947] 1 K.B. 628.
(29) Cf Marcq v. Christie Manson & Woods Ltd  Q.B. 286, criticised by Palmer, above, note 6, paras 6-016 to 6-018 and by Hudson (2005) X Art Antiquity and Law 201.
(30) A similar approach exists to the question whether the bailor consented to possession by the alleged bailee; Sonicare International Ltd v. East Anglia Freight Terminal Ltd and others and Neptune Orient Lines Ltd  2 Lloyds Rep. 48; Palmer, above, note 6, para. 23-017.
(31) Robot Arenas Ltd v. Waterfield  EWHC 115 (Q.B.); cf Marcq v. Christie Manson & Woods Ltd  Q.B. 286 which appears flawed on this point.
(32)  EWHC 115 (QB)
(33) Relying on AVXLtdv. EGM Solders Ltd (1982) The Times 1 July 1982.
(34) Palmer, above, note 6, para 6-022.
(35) This form of bailment might be termed 'bailment by alertment'. Where a person 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'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 or her possession, or were encumbered by an interest other than his or her 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 or she should have foreseen.
(36)  1 All E.R. 1033.
(37) At 1045-1046.
(38) On the ground that an order for delivery is not a demand for purposes of detinue: "The causes of action alleged against Continental Express are detinue and breach of contract. The former, in my judgment, is not made out. There was no demand. The instructions to despatch, which are relied on for this purpose, are not a demand for delivery up of the goods. Continental Express did in fact accept them, but they were not obliged to do so; and they could have ignored them without thereby failing or refusing to deliver up on demand. In short, Continental Express never set up any adverse title. I need not go into this point in any detail, for counsel for the plaintiff has said that before me he cannot contend that the damages obtainable for detinue would be any higher than those obtainable for breach of contract, and breach is admitted."
(39) On the ground that this was not a continuing breach, and that the particular breach had lapsed once a reasonable time elapsed: "It is, however, important to determine at the outset what sort of a breach of contract has been committed. I do not think that it is strictly right to say that the failure to deliver as instructed is a continuing breach. Continental Express were required to deliver within a reasonable time, which expired certainly not later than 5 Dec. 1946. When they failed to deliver by that date, the breach was complete: thus a covenant to build by a certain date can be broken only once: see Stephens v. Junior Army and Navy Stores  2 Ch. 523. Continental Express were not after 5 Dec. still under a duty to deliver the goods at No. 9 shed, - indeed, it would have been absurd if they had done so without express instructions; and without a continuing duty there cannot be a continuing breach."
(40)  2 K.B. 291.
(41)  1 K.B. 443.
(42) Devlin J. implies that CE were also guilty of deviation, but whether that alone would compensate H for the drop in value of the goods was not (it appears) decided. It is an interesting question as to whether a deviation carries automatic liability for loss of profits.
(43) Washington Conference Principles on Nazi-Confiscated Art, 3 Dec. 1998; reproduced in Norman Palmer, Museums and the Holocaust (2000, Institute of Art and Law) 278.
(44) David Charter, T Know Nothing, Says Son of Nazi Art Dealer', The Times, 24 Nov. 2013
(45) Costello v. Chief Constable of Derbyshire [2001 ] 1 W.L.R. 1437, C.A.; and see O 'Leary International Limited v. Chief Constable of North Wales Police and Crown Prosecution Service  EWHC (Admin) 1516.
(46) 334 FSupp 111 (1971).
(47) See WDR, 'Osterreich will Gurlitt-Bilder in Sammlermuseum' ('Austria wants to create a Museum to display Gurlitt Paintings'), 20 Feb. 2014, made available by The Central Registry of Information on Looted Cultural Property 1933-1945 at LootedArt.com: <http://www. lootedart.com/news.php?r=Q186CJ548061>.
(48) David Toren v. Federal Republic of Germany and Free State of Bavaria, Case 1:14-cv-00359ABJ, filed 5 March 2014.
(49) The other heads are conversion, replevin, constructive trust, accounting, and declaratory relief.
(50) Palmer, above, note 6, Chapter 26.
(51) Above, p. 45.
(52)  2 K.B. 1031; above note 2. And see Spencer v. S Franses Ltd  EWHC 1269 (Q.B.).
|Printer friendly Cite/link Email Feedback|
|Publication:||Art Antiquity & Law|
|Date:||Apr 1, 2014|
|Previous Article:||Hildebrand Gurlitt, the monuments men and the discovery of the Munich Art Trove.|
|Next Article:||Art authentication: protection of art experts from a Swiss perspective.|