Default and Da Fault: Zitronenscheibchen and Nazi Confiscated Art

Zitronenscheibchen (from http://www.bayerische-staatszeitung.de/staatszeitung/kultur/detailansicht-kultur/artikel/zitronenscheibchen-bleibt.html)

You don’t need to take Intro to Property Law (save yourself the sleepless nights) to know that when you default on a loan, the collateral you put up no longer belongs to you.  But does it “belong” to your creditor (or as my Property Prof would demand “do they hold property in it”?)? And how does the holding of property affect the recent massive influx of cases brought under German law for return of Nazi confiscated art work? The descendants of Carl Hagan felt this legislation was applicable to their situation, so they brought a claim for the restitution of Zitronenscheibchen (1667) by Jacob Ochtervelt.

The air about this suit is similar to many that have been in the news and subsequently won in the recent past.  They are brought by family members of deceased from a very specific time period.  During WWII the Nazi regime basically stole artwork from countless families and institutions (mostly Jewish, though other persecuted groups as well), or forced sales.  Appropriately, anything stolen by or sold under threat as a result of Nazi activity (cough cough, coercion) rightfully continues to belong to the family wronged (their property interests were never extinguished).

German law requires the return of any work of art expropriated under threat of persecution.  Here’s the disconnect though – at the time it was auctioned off Carl Thurling held property interest in Zitronenscheibchen .  Hagan and his bank had a security interest and mandated that the painting be sold in order to pay off the loan.  Technically, Hagan only ever held a security interest in the painting, never held property in it.  Also technically, his company held this interest, not him personally (if anything, perhaps the board of the company should bring the suit … if it still existed).  Hagan’s company liquidated their security interest by selling the painting to two collectors.  It went through one other owner before coming to possession of the named defendant Bayerische Staatsgemäldesammlungen.

This case actually shouldn’t be focused on the return of WWWII confiscated art work .  The main issue it raises is whether a security interest is a form of holding property.  Which even if it is (a research paper in and of itself) wouldn’t matter because then it would have been held by Hagan, who was not pressured into selling the piece at auction – that was a business decision.  If it is not a form of holding property, the piece still belonged to Thurling, which doesn’t qualify it under the legislation governing confiscated art, because he elected to use it as collateral for a (very large) loan – he wasn’t coerced by Nazis to sell it off.  Interestingly, later research brought about that Thurling wasn’t even a member of a persecuted group – he belonged to the Nazi party, no less!  All in all, it was either through fault of Thurling or Hagan himself that the piece was sold off; the Nazi’s are at fault for many many things, but the sale of this painting had nothing to do with them.

Just goes to show that you can’t wantonly jump on a legal band wagon in hopes of winning your suit.  The case is a recent one that has yet to be tried, but (granted, all the facts aren’t out there, but on the face of the case) I would personally be shocked if the painting left Bavarian control (or there was a … another …) forced sale.

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