Reif v. Nagy
2019 NY Slip Op 5504 (2019)
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Rule of Law:
A transfer of property based on a power of attorney executed under duress, such as by a prisoner in a Nazi concentration camp, is void. A thief cannot pass good title, so any subsequent possessor of property stolen during the Holocaust cannot obtain valid title against the original owner's heirs.
Facts:
- Fritz Grunbaum, a Jewish Viennese art collector, owned an 81-piece collection of Egon Schiele's art, including the two artworks at issue: 'Woman Hiding Her Face' and 'Woman in a Black Pinafore'.
- After the Nazi invasion of Austria in March 1938, the Nazis arrested Grunbaum and imprisoned him in concentration camps until his murder at Dachau in 1941.
- On July 16, 1938, while imprisoned at Dachau, the Nazis forced Grunbaum to execute a power of attorney in favor of his wife, Elisabeth.
- Shortly thereafter, Nazi official Franz Kieslinger, acting under the purported power of attorney, inventoried Grunbaum's entire art collection.
- The collection was deposited with Schenker & Co., a Nazi-controlled shipping company, but records indicate it never legally left Austria.
- In 1939, an Aryan Trustee was appointed to control the Grunbaums' assets, effectively stripping them of any right to dispose of their property.
- Elisabeth Grunbaum was later murdered at the Maly Trostinec death camp in 1942.
- In 1956, many pieces from Grunbaum's Schiele collection, including the two artworks at issue, resurfaced for sale at a Swiss gallery and were eventually acquired by defendant Richard Nagy.
Procedural Posture:
- Plaintiffs, as executors for the heirs of Fritz Grunbaum, sued defendants Richard Nagy and Richard Nagy Ltd. in the Supreme Court of New York County (a trial-level court), seeking replevin and conversion of two artworks.
- Defendants moved to dismiss the action based on collateral estoppel from a prior federal case, which the trial court denied.
- On appeal, the Appellate Division, First Department affirmed the trial court's refusal to dismiss the case.
- The case returned to the trial court, where plaintiffs moved for summary judgment, and defendants cross-moved for summary judgment.
- The trial court granted plaintiffs' motion for summary judgment, ordering defendants to return the artworks and awarding damages, costs, and attorneys' fees.
- Defendants appealed the trial court's summary judgment order to the Appellate Division, First Department.
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Issue:
Do the plaintiffs, as heirs of an art collector imprisoned and murdered by the Nazis, have a superior right of possession to artworks that were part of the collector's property before his imprisonment, thus entitling them to replevin and conversion against the artworks' current possessor?
Opinions:
Majority - Singh, J.
Yes, the plaintiffs have a superior right of possession to the artworks. The court found that the plaintiffs made a prima facie showing of superior title by establishing that Fritz Grunbaum owned the artworks before World War II and never voluntarily relinquished them. The power of attorney Grunbaum signed while imprisoned in the Dachau concentration camp was a product of duress and therefore void, meaning any subsequent transfer based on it could not convey legal title. The defendants' theory that Grunbaum's sister-in-law, Mathilde Lukacs, somehow legitimately acquired the art and sold it to dealer Eberhard Kornfeld was deemed speculative and unsupported by evidence. The court noted that under well-established New York law, a thief cannot pass good title, so even if the defendant was a good-faith purchaser, he could not acquire valid title from a seller who never had it. The equitable defense of laches was also rejected, as the defendant purchased the art with full knowledge of the title dispute, thereby assuming the risk, and was not prejudiced by any delay.
Analysis:
This decision strongly reinforces New York's public policy against becoming a marketplace for stolen cultural property, particularly art looted during the Holocaust. By declaring a power of attorney executed in a concentration camp void as a matter of law, the court sets a clear precedent that such documents cannot legitimize a transfer of title. The ruling effectively shifts the evidentiary burden in Nazi-looted art cases: once heirs establish prior ownership and loss under persecution, the current possessor faces a high bar to prove a valid, voluntary transfer in the chain of title. This case limits the effectiveness of defenses like laches against purchasers who were on notice of a title claim, thereby increasing the risk for dealers trading in works with problematic provenance.
