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In a previous post, Art Law Part 1: From Eagles to Ivory the Art of Lost Value, the estate tax ramifications of artwork in the Ileana Sonnabend estate was discussed in light of the new ban on the trade or sale of ivory. This article focuses on perhaps the greatest discovery of lost art since World War II, the “Schwabing Art Trove”. Much has been written about some 1,400 works of art discovered in the Schwabing, Munich apartment of one Cornelius Gurlitt in 2012. The collection was estimated to be worth a billion dollars. My article reviews how this mysterious trove came to pass and suggests some complex estate issues that might result from such a discovery.

First, how did Gurlitt amass such a collection? How did he hide it for so many decades out of the public view? Much of the answers are tied into the Third Reich’s attitude and policy towards modern art. The saga begins during the rise of the Nazi party and its policy toward modernism. The Nazis adopted the term “Entartete Kunst” or “degenerate art”, a term popularized by author Max Nordau, ironically the son of a Budapest Rabbi. In his book “Entartung” (Degeneration), published in 1892, Nordau theorized that modern or avant-garde art, which differed from the classical, must be derived from sick and deranged minds with a potential to corrupt the view of an entire generation. Building on Nordau’s view, Paul Schultze-Naumburg, a member of the Nazi party, later adopted a more sinister hypothesis in his book Art and Race. He declared that modern art depicted the thoughts of the “untermensch”, the racially inferior, and was ultimately a serious threat to the health of society.

In 1937, the Nazis, with their propaganda director Joseph Goebbels at the helm, removed all modern art from German public galleries. Some 17,500 works of art were seized. Several hundred were selected to be part of a propaganda show—intended to mock and humiliate modern artists and their works. The show, entitled “Entartete Kunst”, was designed to convince its audience of modernism’s indignity. The impugned works included paintings by Max Beckmann, Marc Chagall, Otto Dix, Henri Matisse, Vassily Kandinsky, Paul Klee, Oskar Kokoschka, Pablo Picasso, and Emil Nolde. Within the stifling confines of the exhibit space, paintings, drawings and sculptures were positioned close together. The gallery was intended to be uncomfortable for the visitor with narrow, dark rooms. Many paintings were hung by string, tacked to the wall, frameless and placed next to disparaging verbal descriptions such as: “Crazy at any price”; “purchased with the taxes of the working German people”; “revelation of the Jewish racial soul”. Ironically, the show, intended to condemn modernism was a hit, recording over 2 million attendees. This exceeded visitors to the “approved” German art show nearby intended to showcase “proper” German art in a spacious gallery setting. At the conclusion of the show the Nazis created a commission “to evaluate the products of degenerate art”. Its real purpose was to consider how much money could be made from the sale of the modern art. The commission employed only four art dealers.  One of them was Hildebrand Gurlitt, father of the now famous Cornelius Gurlitt mentioned at the outset. Although the regime’s policy had been to rid society of modern art, once its intrinsic value was recognized, the profit motive burst forth.

When American forces invaded Germany, the “monuments men” found the Gurlitt family hiding in a Nazi controlled castle. They confiscated a few hundred works suspecting that Hildebrand was a Nazi art dealer. When asked about artwork in his home, the father reported that all had been destroyed in the Dresden bombings. This was a blatant lie, for he had hidden art in several secret locations. Somehow, Hildebrand successfully changed his image from “art dealer to the Führer”, to a hero who managed to save modern art from disastrous destruction. Ultimately the confiscated works were returned to the father. The legacy of Cornelius Gurlitt was born, so to speak. Of the art found in Gurlitt’s apartment in 2012, some 590 works may have been looted from Jews fleeing Germany. About 380 pieces were categorized as “degenerate art”. Some may have been part of the Entartete Kunst propaganda show.

Living as a recluse for his entire life, under the government’s radar, Gurlitt never held a job. When in need of money, he would travel to other parts of Europe and sell a painting. In a kind of prelude to the raid of his Munich apartment, Gurlitt placed Max Beckmann’s “The Lion Tamer” up for auction in 2011. An attorney who represented the original owner Alfred Flechtheim, a Jewish art dealer forced to flee Germany, saw the catalogue advertisement two weeks prior to the auction date. The attorney contacted Flechtheim’s heir, a great-nephew, Dr. Michael Hulton. Remarkably, Gurlitt acknowledged Flechtheim’s persecution during the war and agreed to share the proceeds of the sale (over a million dollars) with Dr. Hulton. A criminal investigation into Gurlitt’s tax evasion was already underway. This transaction helped German authorities obtain a warrant to search his apartment.

The discovery of the magnificent trove stimulated major legal questions surrounding this collection. One is the German 30-year statute of limitations for claims of stolen property. Since Gurlitt possessed the works for over sixty years, this law seems to protect Gurlitt irrespective of  whether or not the works were looted. This may help explain why Gurlitt was initially opposed to any agreement to relinquish the art. Through a series of delicate negotiations Gurlitt was eventually persuaded to the contrary. On April 7, 2014, Gurlitt agreed to allow research to determine the origin of works suspected of being confiscated from their owners by the Nazis or of being labeled degenerate art as well as the return of pieces to their rightful owners. The agreement is binding on his estate.

Less than a month later, Gurlitt died at age 81. His death generated a plethora of estate questions. For example who would inherit this spectacular trove estimated to be worth over a billion dollars? Gurlitt left two testamentary documents, a will and the equivalent of a codicil or amendment. These named the Kunstmuseum in Bern, Switzerland as the sole and unfettered heir. Why he chose the Bern museum to be his sole beneficiary is not known but, clearly, the bequest was a snub to Germany. The museum is bound by the terms of Gurlitt’s agreement as well as the Washington Principles on Nazi-confiscated Art. The latter is an international code of ethics on how to deal with Nazi looted art. Established in 1998, it calls for identification of the art, making the information accessible to the public, locating heirs and working toward restitution.

It is now up to the German probate court to determine the validity of the will. There may be a potential for a probate contest by Ekkeheart Gurlitt, the great-nephew of Cornelius. This relative is said to be pondering whether to challenge the will created in the twilight of Gurlitt’s life. Will Ekkeheart be able to force a share of the inheritance even if he was cut out of the will?

Under German probate law, the museum in Bern has six months within which to accept or deny the bequest. The museum has already hired counsel to review the many issues. Publicly it stated that the entire six month period (which began in May) will be needed to decide. Although the modern art collection is remarkable and would likely enhance the museum’s international presence, nevertheless the museum also would inherit the legal, moral and ethical responsibilities of ensuring that looted art is returned to its rightful owners. It also would have to defend many legal claims that ensue. Litigation could drag on for years in the face of competing claims of ownership. Since the museum is a public entity, there are political questions regarding whether Switzerland wishes to deal with this entangled vestige of Nazi history. What about German claims to the so-called degenerate art? Can German museums from which the works of degenerate art were confiscated by the Nazis seek a return of the works to their galleries? Germany has already hinted that it may assert claims of German heritage over certain pieces of art. This may be an ultimate irony, degenerate art in one generation, German heritage art today.

Photos of the probably-looted art are now listed on the website www.lostart.de. Several paintings have been positively identified as stolen art, such as Max Liebermann’s “Two Riders on the Beach”. A Federal claim has been filed by heir David Toren, against the Republic of Germany and the State of Bavaria, seeking the return of his great uncle’s painting. The German provenance task force agreed with Toren’s position advocating for the return of the painting. Toren, now 88, escaped Germany with his brother. His parents were killed at Auschwitz. Similarly, Henri Matisse’s “Woman with a Fan,” worth between 6 to 8 million dollars, was determined to have been looted from the collection of Paul Rosenberg, a prominent Jewish art dealer. Anne Sinclair, a French news journalist is Rosenberg’s granddaughter. She and two other potential heirs have filed competing claims.

Understanding the history of “degenerate art” is a way of viewing a sliver of the Holocaust era through a different lens. As Ronald Lauder asserted, behind every painting there is a story of a family destroyed. Nazi policy toward modern art may have taught an eerie lesson—if the Nazis could prescribe which art was in good taste versus bad, they could project the same policy upon human life. The evolving estate questions and legal battles will surely continue to remind sensitive persons about a darker era when citizens were enslaved not only physically but on how to think.

The Neue Galerie in New York City held a superb exhibit of Degenerate Art, The Attack on Modern Art in Nazi Germany in 1937.  Modern art from the 1937 Entartete Kunst show was thoughtfully juxtaposed with classical art, some from Hitler’s home, a modern era statement that the universe of art is large enough to accommodate a variety of tastes within a free society. The exhibit was organized by Dr. Olaf Peters, professor of art history at Martin-Luther-Universität Halle-Wittenberg. The catalogue Degenerate Art, The Attack on Modern Art in Nazi Germany 1937, published in conjunction with the exhibit, edited by Dr. Peters, was used as a reference for this article.