Fritz Grunbaum, a prominent Austrian Jewish collector in the 1930s, owned the drawing by Egon Schiele that is at issue in Bakalar v Vavra (SDNY, 17 August 2011) [Link available here].
Precisely what happened to the drawing between 1938 and 1964, when David Bakalar bought it, is unclear. It was not included in an inventory drawn up by a Nazi appraiser before Grunbaum’s death in the Dachau concentration camp, so it may not have been looted when the Nazis subsequently seized the bulk of his collection. Grunbaum’s sister-in-law Mathilde Lukacs sold the drawing to a Swiss gallery in 1956; it was then bought by the New York gallery from which Bakalar acquired it in 1964.
Grunbaum’s heirs, Milos Vavra and Leon Fischer, became aware of the drawing in 2005 and sought its restitution in the New York courts. In dealing with the question of Bakalar’s title, the district court initially applied Swiss law, which allows title to pass even where the seller has no right to sell the property. On appeal, it was held that New York law applied, under which a thief cannot pass good title. The case was sent back to the district court, where the onus was on Bakalar to establish that the work was not stolen; if he could not, the original owner’s heirs were entitled to it.
Bakalar could not establish that Mathilde Lukacs ever had title to the drawing, whether through gift, bailment or intestacy, nor could it be established that she had acquired it through duress (which would avoid her title altogether); the evidence was simply inconclusive. Advantage claimants, one would have thought; but Vavra and Fischer had sat on their rights and lost out as a result of laches. Even though they were unaware of the drawing specifically until 2005, they and earlier family members had been generally aware that Grunbaum had a valuable collection which had been looted or otherwise alienated. Even making allowances for the turmoil in Europe after the War, the Grunbaum heirs had put Bakalar in a position where he could not gather evidence to support his case. As a non-merchant purchaser of art, he was under no duty to investigate the provenance of the piece.