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Bakalar v Vavra Ruling of US Court of Appeals Second Circuit 12 October 2012

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The US Court of Appeals Second Circuit on 12 October 2012 upheld the judgement of the United States District Court for the Southern District of New York in the case of Bakalar v Vavra.

The case has been litigated for over seven years and involves the question of the ownership of a drawing by the artist Egon Schiele, 'Seated Woman With Bent Left Leg (Torso)'. The ownership dispute was between David Bakalar, who purchased the drawing in the early 1960s from a gallery in Manhattan, and the heirs to the alleged former owner of the drawing, the Viennese cabaret artist Fritz Grunbaum who was murdered by the Nazis in 1941.

The United States District Court for the Southern District of New York (Pauley III, J.) awarded judgment to Bakalar on the basis of laches. In a title action under New York law, a good faith purchaser of an artwork has the burden of proving that the work was not stolen. The District Court had found that the drawing was not looted by the Nazis.

After finding that the drawing was not stolen by the Nazis, the District Court required Bakalar to show that the seller in 1956, Grunbaum's sister-in-law, Mathilde Lukacs, acquired proper title in the drawing, and found that he could not.

The point was not pressed by Bakalar, and the Appeals Court affirmed instead on the District Court’s ruling that the claim against Bakalar was defeated by laches. The Appeals Court had previously recognised that Bakalar could assert a laches defense under New York law. The District Court found that Vavra and Fischer’s “ancestors were aware of--or should have been aware of--their potential intestate rights to Grunbaum property,” and that the ancestors “were not diligent in pursuing their claims to the Drawing.”

Despite the arguments of Vavra and Fischer in the appeal, the Court found that there wass no clear error in the findings "that Vavra and Fischer’s ancestors knew or should have known of a potential claim to the Drawing, that they took no action in pursuing it, and that Bakalar was prejudiced in this litigation as a result of that delay. It was therefore sound to recognize Bakalar’s title on the basis of his laches defense".

To read a copy of the Second Circuit's October 11, 2012 decision, please click here. To read a copy of the District Court's August 17, 2011 decision, please click here.

To read about the earlier hearings in 2008 and 2010, please click here.
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