Recovery of Lost or Stolen Art: The Case of the Missing Lipchitz

Jacques Lipchitz was a Lithuanian-born Cubist sculptor best known for abstract “transparent” sculptures.  He moved to Paris in 1909 to study at the Ecole des Beaux-Arts and thereafter joined a group of artist that included Pablo Picasso and Amedeo Modigliani.  He became a French citizen in 1924.  When the Nazis began to occupy Paris during WWII, Lipchitz who was Jewish fled France to escape deportation to the death camps.  He arrived in the US as an asylum seeker and eventually settled in 1949 in New York State in the town of Hastings-on-Hudson in Westchester County.

In 1928-29 while still in Paris, Lipchitz sculpted an erotic piece originally titled “The Couple.”  Considered shocking when it was first exhibited in Paris in 1929, Lipchitz change the title to the more ambiguous “The Cry” in order to later exhibit the sculpture in Amsterdam.  The sculpture kept this title when Lipchitz imported it to the US in order to avoid confiscation as pornography by American customs authorities.

In 1948, Lipchitz married Yulla Halberstadt, also a sculptor, with whom he had his only child Lolya. After Lipchitz died in 1973, his wife Yulla took up with a self-styled psychic and music producer Biond Fury (who also once owned John Lennon’s white suit that Lennon wore on the Abbey Road album cover) and lived with him for the last 17 years of her life until 2003.

In 1997 Yulla made an inter vivos gift to Fury of “The Cry” by inscribing the following handwritten message on the back of a photo of the sculpture:   “I gave this sculpture, ‘The Cry’ to my good friend, Biond Fury in appreciation for all he did for me during my long illness. With love and warm wishes for a Happy Future, Yulla Lipchitz/Oct. 2, 1997, New York.”  Fury subsequently sold his interest in “The Cry” in 2005 to Toronto art collector David Mirvish for $220,000.  Mirvish then sought delivery of the sculpture to Toronto.

Unbeknownst to both Fury and Mirvish, Hanno Mott, Yulla’s son by a first marriage and her executor, had loaned the sculpture to the Tuilleries Gardens in Paris in 1998, unaware of the gift.  Neither Fury nor Mirvish had any idea that the sculpture was no longer in New York.  Mott further claimed that he had sold the sculpture to the Marlborough International Fine Art Establishment, along with two other sculptures, for $1 million. 

To determine the rightful ownership of “The Cry,” Mott commenced an action in New York County Surrogate’s Court against Mirvish.   Mirvish  filed a cross motion for summary judgment asking that the court find the decedent’s inter vivos gift to be valid.  Mirvish also sued Mott in Supreme Court for replevin and conversion to recover possession of the sculpture.

The Surrogate’s Court ruled in favor of Mirvich, finding that the inter vivos gift to Fury had been completed, and that Fury thus has the right to sell his interest to Mirvish.  Mott appealed the decision and the Appellate Division, First Department found in Mott’s favor, finding that Mirvish’s claims in replevin and conversion were time-barred by the three-year Statute of Limitations and that the accrual on the Statute of Limitations began on the date that the conversion tool place, that is, on the date when the sculpture left New York for the Tuilleries Gardens in 1998.  In essence, the court found that Mirvish was too late in filing his claims.  The fact that neither Fury nor Mirvish had any knowledge that “The Cry” had been transported to Paris was immaterial. Mirvish appealed.

The New York Court of Appeals disagreed with the First Department.  The Court found that Fury’s possession of the photo with the handwritten note by Yulla meant that Yulla’s inter vivos gift to Fury had been “delivered.”  Thus all of the elements of an inter vivos gift had been satisfied:  a present transfer; a delivery of the gift, and acceptance by Fury.  Fury thus had every right to sell his interest to Mirvish who was indeed the rightful owner of the sculpture.

What lessons can we learn from this case?  First, one’s executor should be made aware of any inter vivos gifts, including artworks.  Mott, who was an attorney, would not on behalf of the Lipchitz family have loaned the sculpture or sold it to Marlborough had he been made aware of the gift. Second, to avoid having a claim for lost or stolen art dismissed because of a statute of limitations, it is best to file a claim for replevin and conversion as soon as the artwork is found missing.  And third, a buyer of artwork should examine the provenance of the artwork carefully, noticing any gaps or suspicious ownership claims.  

If you would like to discuss your own personal situation with me, if lost or stolen artwork is part of an estate,  or you would like to make an inter vivos gift  tailored to your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.

What Constitutes Delivery of a Gift?

We all understand what delivery of a gift means, or so we think.    After all, we all receive gifts and these are delivered by the donor, by a mail carrier, or by a delivery service.  When the item arrives, it has been delivered.  But at law, the concept of the “delivery” of a gift is much more complicated.

When a person makes a gift to another during the donor’s lifetime, this is called an inter vivos gift.   At times, the person making the gift wishes to retain possession of the gift, all the while “gifting” the item in question to another person.  In such a situation, when is the item delivered?  To determine the answer, we are going to look at the inter vivos “delivery” of a significant artwork:  Gustav Klimt’s  “Schloss Kammer am Attersee II,” which sold at auction in 1997 for $23,590,177.

In the case of Gruen v. Gruen, 68 N.Y.2d 48, 505 N.Y.S.2d 849, 496 N.E.2d 869 (1986), Victor Gruen was a prominent architect of Austrian origin with offices in New York and Los Angeles.  He purchased “Schloss Kammer am Attersee II” by noted Austrian artist Gustav Klimt in 1959.   Two important events occurred in Victor’s life in 1963:  he remarried a woman named Kemija, the defendant in this case, and his son Michael by a previous marriage, the plaintiff, turned 21.   Upon his son’s achieving majority, Victor gifted him with the painting, a gift that Victor memorialized in two letters signed by him and which were sent to his son Michael.  The painting remained in Victor’s possession for the remainder of his life, except for those times when it was loaned out for exhibition purposes.

For the purposes of an inter vivos gift, three elements must be met.  The first element is “delivery.”  Delivery can be accomplished by a writing or “instrument” to the donee.  It is the delivery of the written instrument from the donor to the donee that fulfills this first requirement.  In the case of Victor Gruen, he delivered the letters not only to his son but copies were also sent to his lawyer and his accountant.

This also goes to show the second element for an inter vivos gift:  donative intent.  The donor must intend to make a transfer of present ownership to the donee.  Merely intending to give something to someone in the future is not sufficient.  The transfer of ownership with an inter vivos gift is immediate.   What can be postponed, however, is the right of enjoyment.  The donor can continue to enjoy the tangible asset until s/he dies, so long as s/he intends to transfer a present ownership right to the donee.  In effect, the donor grants himself a life estate in the tangible asset.

The third element for the completed transfer of an inter vivos gift is acceptance by the donee.  The legal presumption is that, absent a renunciation, a gift is deemed accepted if the gift is beneficial to the donee.   Since Michael Gruen never renounced or repudiated the gift of the painting, either verbally or through his actions, the gift was deemed accepted.  Even the fact that he did not declare the painting in financial affidavits that he submitted as part of his divorce action in 1973 was insufficient to show that Michael had not accepted the painting.

Why is this legal concept of delivery so important?  It’s because inter vivos gifts are often part of an estate planning strategy to reduce the corpus of one’s estate by using gifts during one’s lifetime, or as a tax credit on his/her income taxes using charitable trusts.  But unless all three elements of “delivery” are met, the gift will fail and will be subject to taxes and penalties.

If you would like to discuss your own personal situation with me, or how an inter vivos gift can be tailored to your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.