TESTIMONY OF GILBERT S. EDELSON 
ADMINISTRATIVE VICE PRESIDENT AND COUNSEL
ART DEALERS ASSOCIATION OF AMERICA

Before the

HOUSE COMMITTEE ON BANKING AND FINANCIAL SERVICES

February 12, 1998

I am the Administrative Vice President and Counsel of the Art Dealers Association of America ("ADAA"), on whose behalf I appear today. I am a lawyer and counsel to the firm of Rosenman & Colin, LLP in New York City. I appreciate the opportunity to appear before the Committee, and I hope that my testimony will be helpful to you.

ADAA is a not-for-profit association of art dealers founded in 1962. Its purposes are to promote the highest standards of connoisseurship, scholarship and ethical practices within the profession and to increase the public awareness of the role and responsibilities of reputable art dealers. ADAA has approximately 150 members in more than 20 cities throughout the United States who deal in works of fine art, that is painting, sculpture, and works on paper (drawings, watercolors, prints, photographs, etc.) from the Renaissance to the present.¹

Membership in ADAA is selective; it is by invitation of the board of directors after consultation with the membership. The requirements for membership are that the dealer be in business for at least five years, that the dealer have established a reputation for honest and ethical dealing and for financial stability, that the works offered by the dealer be of high quality within their field (although not necessarily expensive), that the dealer have an expert knowledge of the works of the artists or the period in which he or she deals, and that the prospective member make a contribution to the cultural life of the community. It is fair to say that ADAA is an organization of the nation's leading dealers in works of fine art.

ADAA is a member of CINOA, the international organization of national associations of dealers in works of the fine and the decorative arts. As such, ADAA's members subscribe to the CINOA Code of Practice, which states that dealers should not import, export, or transfer the ownership of a work of art where they have reasonable cause to believe that it has been stolen.

Wholly apart from the CINOA Code and a dealer's moral and ethical obligations, there are good, practical reasons why no responsible dealer would knowingly choose to buy or sell a stolen work. Sooner or later the fact that a work was stolen would likely come to light. However innocent or careful the dealer may have been, no dealer would welcome the inevitable conflict with a good client turned irate on discovering that he or she had been sold a stolen work. No dealer would choose to incur the expense of a lawsuit.

Under the Uniform Commercial Code, which is in effect in almost every state, dealers warrant good title. Moreover, the original owner of a stolen work may sue the present possessor for the recovery of the work. In such a case, because the actual thief is almost never found or is judgement proof, one of two innocent parties, the original owner, or the present possessor --- who is usually a good faith purchaser for value --- faces a substantial loss. Under our law, good title to a stolen work never passes.² While there may be problems with the statute of limitations and laches, the courts in this country are generally sympathetic to the original owner of a stolen work. For example, in Guggenheim v. Lubell³, the New York Court of Appeals held that the statute of limitations in an action for the recovery of a stolen work of art runs from the time of demand, irrespective of whether the original owner was diligent in seeking its whereabouts. The Court said in part:

". . . our decision today is in part influenced by our recognition that New York enjoys a worldwide reputation as a pre-eminent cultural center. To place the burden of locating stolen artwork on the true owner and to foreclose the rights of the owner to recover its property if the burden is not met would, we believe, encourage illicit trafficking in stolen art."

One of the problems which dealers and auction houses have faced over the years is determining whether a given work of art has been stolen. The fact that a work of art has or does not have a provenance, that is a history of the past ownership of the work, is not generally helpful. Because there is no access to the records of private collectors, a false provenance frequently cannot be checked. In many cases there are gaps in the provenance filled with the term "Private Collection" because some owners of works of art desire anonymity. This is not usually a cause for suspicion. Some collectors regard their art acquisitions and the acquisition of other personal property of great value as private matters. Security is also a concern. Many people do not want the world to know that they have millions of dollars of works of art on their walls. Many collectors also seek anonymity when they sell a work of art.

The most effective tool which collectors, museums, dealers and auction houses could utilize in determining whether a given work has been stolen is a reliable, central source of information about what works have been stolen and the identity of the victims, or at least a reference to a person or agency to whom inquiries can be directed.

In 1962, when ADAA was formed, there was no central source of information about stolen or missing works of art. Such information was in the hands of law enforcement and other agencies and insurance companies, but it was not shared or, in many cases, made public.

In an effort to do something about this lack of information, ADAA, shortly after it was formed, began a theft notice service. We solicited and obtained information on stolen and missing works of art from law enforcement authorities, museums, dealers, auction houses, insurance companies and individuals anywhere in the world. We then circulated that information to an extensive mailing list of law enforcement agencies, auction houses, dealers and others who we believed might be interested. As part of the ADAA Theft Notice Service, we also responded to inquiries from the public, and we worked closely with law enforcement authorities, including police departments from around the country, the U.S. Customs, the F.B.I., Interpol, and many foreign police forces, including Scotland Yard, the Canadian Royal Mounted Police and the French police.

ADAA made no charge to anyone; it bore all of the expenses of the ADAA Theft Notice Service. This service was the responsibility of Donna Carlson, ADAA's Director of Administration, who did an outstanding job. Among many other compliments for her work, Ms. Carlson received an official commendation from the U.S. Customs Service.

In 1987, ADAA concluded an arrangement with the International Foundation for Art Research ("IFAR"), a non-profit organization which had become active in the field of stolen and missing art, under which ADAA terminated its service and provided financial support for IFAR's service, which was similar to ADAA's. IFAR, in turn, recently turned its work in the field over to The Art Loss Register which maintains an extensive and sophisticated computerized data bank of stolen and missing works of art. It is to that organization that dealers, auction houses and others now turn for information about stolen and missing works.

Until the past year, there have only been a few litigated claims involving works of art stolen or looted during World War II.⁴ Three of those cases involved works looted by American troops. I know of only one case, Menzel v. List⁵, which involved a work seized by the Nazis. In that case, Mrs. Menzel, the plaintiff, recovered a Chagall painting which had been confiscated by the Nazi authorities in Belgium and which, many years after the war, turned up in an American collection.

In the recent past, however, there have been a number of claims asserted by the families of Holocaust victims against museums and private collectors. Those claims have followed the publication of the important books on Nazi looting by Lynn Nicholas and Hector Feliciano. Our consciousness has been raised. It may be said that for many years the visual arts community in this country was insufficiently aware of, or insensitive to, the problem of works of art looted by the Nazis. I can assure the Committee that this is no longer the case.

There are difficult and complex issues to be faced. Nazi looted art may now be in the possession of museums and collectors who acquired the works in good faith and without knowledge of their past history. We do not yet know the magnitude of the problem; some say there are hundreds, some say that there are thousands of such works. It is not useful to speculate. Whether hundreds or thousands of works are involved, the problems must be faced and dealt with.

As always, in matters involving stolen or missing works of art we must have information.

I understand that various governmental and non-governmental agencies are in the process of gathering information relating to Nazi-looted works. Among other projects, the records now in the National Archives are being studied and analyzed with a view to preparing a data base of works seized by the Nazi regime. These efforts are commendable and deserve support. But they are not coordinated and they are not enough. Many works seized during the war were returned to their owners. We need to know which works were not returned and which are claimed by the original owners or their families.

We should do now what should have been done many years ago. There should be a central registry and data base where claims for the recovery of looted works could be registered, kept on file and where the information would be made available to all interested parties.

Such a registry and data base would serve a number of purposes:

If I represented a Holocaust victim or the family of a victim who are searching for works seized by the Nazis, I am not sure where I could turn for help, how I could inform the art community that there is a claim for the recovery of certain works. The central registry would be such a place.

At the same time, museums, collectors, dealers, auction houses and law enforcement agencies would have important information available to them. Dealers and auction houses, for example, would be able to learn quickly whether there is an outstanding claim for the recovery of a work which appears on the market. In addition, the registry would be useful in defining the extent and magnitude of the problem with which we are dealing.

The usefulness and importance of the registry is apparent. Before we can adjudicate claims, we must know that they exist.

It is important that the establishment and operation of a registry be a collaborative effort among the organizations involved in the problem of works looted during the Holocaust. It is important that there be one unified effort, that all information is shared and that the funds available be efficiently employed in a single effort and enterprise. There should, in sum, be a single registry and not duplicative efforts.

It is also important that any registry be staffed by trained art professionals who know art and the art community, who know which questions to ask, what data is important and who can do the research necessary to fill gaps in the information provided.

In addition, it is important that the registry employ the best and most advanced computer technology such as that which is now used by The Art Loss Registry, to respond quickly to inquiries.

The registry which we suggest will not solve all of the problems. There remains, for example, the matter of the adjudication of claims. But it would be a beginning and a foundation for further action.

ADAA, of course, will make its knowledge and experience in problems of stolen art available and cooperate to the extent of its ability in the establishment of an art registry with whoever undertakes the project.

The factual and legal issues involved in cases of Nazi looted art difficult and complex. They do not lend themselves to easy solution. We understand that legislation in the field is contemplated. In that regard we believe that there should be, and hope that there will be, consultation with the visual arts community.

On behalf of ADAA, I compliment the Committee and its staff on its balanced and professional approach to this very serious and difficult problem, and thank them for their efforts.

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¹ADAA's members do not deal in works of the decorative arts, such as antique furniture, rare books, rugs, porcelain, antique jewelry and similar objects. Nor do they deal in antiquities, Asian art or tribal art.

²The law in many European countries is different; a good faith purchaser for value acquires good title.

³77 N.Y.2d 311 (1990).

⁴These cases are difficult and expensive for plaintiffs. They involve events that occurred fifty years ago; the problems of proof are substantial, the legal issues complex.

⁵49 Misc. 2d 300 (Sup. Ct. 1966), modified as to damages 28 A.D.2d 516 (1967), reversed as to modification, 24 N.Y.2d 91 (1969).