New York Court Validates District Attorney's Seizure of Schiele Work from Art Institute of Chicago

A controversial decision by the New York County Supreme Court (the trial level court) recently granted the New York County District Attorney’s application for a turnover order and ordered the Art Institute of Chicago to surrender a drawing by Egon Schiele, Russian War Prisoner, that the museum acquired by donation in 1966.

Photo credit: Russian War Prisoner (1916) by Egon Schiele. The Art Institute of Chicago

This decision follows a succession of head-scratch inducing and seemingly contradictory civil court decisions related to the art collection of prominent pre-War entertainer Franz Friedrich (known as Fritz) Grünbaum.

The New York State Court order for turnover of a drawing that had rested comfortably for decades in the AIC is at least questionable on its face, yet the court gave scant consideration to the substantial issues and rendered a lengthy but broad-brush and free-wheeling analysis.

The Fate of Grünbaum and His Art Collection

The Nazi-era fate of Grünbaum and his wife is as tragic as any. Grünbaum, himself the inspiration for the lead character in the theater and film production Cabaret, was a sharp-witted and acid-tongued performer in pre-War Vienna who delighted in skewering the pomposity and self-importance of the Nazis.[1]

Nazi authorities in Vienna wasted little time, arresting Grünbaum in July 1938 just a few days after the Anschluss, Germany’s annexation of Austria. In Dachau, Grünbaum signed a power of attorney to his wife Elisabeth, also known as Lilly. If valid, it would have given her sole authority over his art collection, including a substantial number of drawings by Austrian Expressionist artist Egon Schiele. Ultimately, Grünbaum died as a result of the harsh conditions of his confinement at Dachau and Buchenwald, to which he was transferred for a time. His wife also died in the camps. The Grünbaum art collection disappeared, presumably into the hands of Nazi-controlled storage company Schenker, and may have later resurfaced in the 1950s in the possession of Matilde Lukacs, Grünbaum’s sister-in-law, although Lukacs’ possession of Russian War Prisoner is not established conclusively and is disputed by some.

Grünbaum’s execution of this power of attorney, signed during his imprisonment at Dachau, is generally viewed as having been involuntary. Extensive research has thus far failed to identify the exact pathway Russian War Prisoner took thereafter and how it fell into Lukacs’ hands, assuming it did, creating uncertainty and conflicting decisions about whether the Grünbaum collection was, in fact, seized by Nazi authorities in occupied Austria or remained with the family. Thereafter, Grünbaum artworks appeared on the art market in the 1950s. Most notably, Lukacs reportedly sold a group of 54 Schiele drawings to a Swiss gallery, a collection that has been the subject of a variety of proceedings in the U.S.

A Brief History of Grünbaum Claims and Litigation in the U.S.

The first Grünbaum case, Bakalar v. Vavra,[2] has a complex procedural history of its own. Collector David Bakalar possessed a Schiele drawing and brought an action in New York federal court for a declaratory judgment of title against Grünbaum heirs Leon Fischer and Milos Vavra who had claimed ownership of the drawing.

The district court first tried the case under Swiss law and awarded title to Bakalar.

On remand, after the U.S. Court of Appeals for the Second Circuit found that New York, not Swiss law should apply, the trial court issued a second decision, again in favor of Bakalar, ruling that the Grünbaum heirs had unreasonably delayed in bringing their claim and caused prejudice to Bakalar because many of the relevant documents and witnesses were lost over time, an equitable doctrine known as laches.[3] The Second Circuit affirmed.[4]

One of the drawings disputed in Reif v. Nagy. Photo credit: Egon Schiele, Woman Hiding Her Face, 1912.

The next Grünbaum lawsuit, Reif v. Nagy,[5] proceeded in New York County Supreme Court. Timothy Reif and David Frankel (co-executors of the estate of Leon Fischer) and Milos Vavra, filed a claim against art dealer Richard Nagy and his gallery for another Schiele drawing from the Grünbaum collection.[6]

Following the Bakalar decision, the Reif court agreed that New York law applied, holding that: (1) the drawing was stolen, (2) Nagy and his gallery could not prove lawful acquisition, and (3) no laches defense was available because the evidence showed Nagy had been aware of Grünbaum’s past ownership at the time of purchase. Additionally, the court found that documents and witnesses had already been lost prior to Nagy’s acquisition of the drawing. The court further noted that Nagy had acquired the drawing at a below-market price and had purchased title insurance because of the known risk of a Grünbaum claim.

The trial court then pointed to the 2016 Holocaust Expropriated Art Recovery (HEAR) Act as a basis for distinguishing the Bakalar court’s pre-HEAR Act reliance on laches.[7] Contrary to most authority, the trial judge further ruled that the Washington Conference Principles, the Holocaust Victims Redress Act, and Congress’ adoption of the HEAR Act provided substantive aspects of the Holocaust-related law applicable to the case. Citing the same rationale, the New York State Appellate Division affirmed the trial court’s holding that Reif’s claim was not barred by laches.[8]

In the third claim by the Grünbaum heirs, Timothy Reif brought a case against the AIC for recovery of Russian War Prisoner.[9] Reif again sued in New York State court and the AIC, as an out-of-state defendant, removed the case to federal court and moved to dismiss.[10] The district court held that the Bakalar case was controlling and therefore the claim was barred under laches.

Applying New York law, the federal court judge ruled that the Grünbaum heirs’ claim against AIC was time-barred; the HEAR Act’s statute of limitations did not make the claim timely because the Grünbaum heirs had ample opportunity to sue before passage of the HEAR Act but failed to do so.

On appeal by the Grünbaum heirs, the Second Circuit reversed the decision of the trial court and remanded the case to the district court.[11] The Second Circuit concluded that the Grünbaum heirs should be entitled to litigate the question of whether the AIC had acted in good faith or not. Additionally, the pre-HEAR Act Bakalar decision did not have to consider whether the HEAR Act rendered the Grünbaum heirs’ claim timely, so the court believed that question would have to be considered afresh.

In addition to these court cases, the Grünbaum heirs have recovered a number of Schiele drawings from the Lukacs group through settlements, particularly in connection with criminal seizures initiated by the New York County District Attorney’s Office.[12]

Art Institute of Chicago Challenges Seizure by District Attorney of New York County

Photo credit: by ajay_suresh - Art Institute of Chicago, CC

The Antiquities Trafficking Unit (“ATU”) of the Office of the District Attorney of New York County (“District Attorney”) has for years pursued recovery of cultural objects it believes were looted from around the world. As a criminal investigative unit, the primary purpose of the ATU would be expected to be the apprehension, prosecution, conviction, and imprisonment of art trafficking perpetrators. The ATU has, instead, focused almost exclusively on recovering antiquities for return to their presumed countries of origin which is traditionally a civil matter. The ATU, however, has no civil turnover or forfeiture jurisdiction and must therefore proceed under New York State’s criminal laws which allow turnover of a stolen object as a remedy in what the courts call a civil-like proceeding.

Having demonstrated its ability to coax or coerce agreements with museums and private collectors across the U.S. to turn over objects of cultural property,[13] the ATU has recently delved into the area of Holocaust-related art restitution claims.

In the case under consideration here,[14] AIC challenged a seizure warrant that the ATU procured from New York County Supreme Court and served on the AIC. After protracted proceedings, including lengthy briefing and a 4-day hearing, Justice Althea Drysdale of the New York County Supreme Court issued a 79-page opinion denying AIC’s motion to dismiss and granted the District Attorney’s request for an order requiring AIC to turn over the artwork.[15] AIC has appealed.

The trial court opinion presents a history of the Lukacs group of drawings, focusing on Russian War Prisoner, and follows with a lengthy recitation of its view of the post-War history of art restitution generally and legislative and administrative developments. Little of this material is directly pertinent to Grünbaum or to the Russian War Prisoner dispute. Following this generalized history, the court undertakes a legal analysis addressing (among other matters) three major issues: whether Russian War Prisoner was stolen, whether the court has jurisdiction, and whether ATU’s claim is timely. The court’s analysis generally follows the District Attorney’s presentation with little attention to AIC’s perspective.

a.    Whether Russian War Prisoner Was Stolen

The court presents a pastiche of past testimony, bits of previous Grünbaum decisions, hearsay, and speculation to establish that Russian War Prisoner was stolen. This recitation would be problematic in a civil case but seems particularly out of place in a turnover proceeding based on criminal law.

The court addresses the question of AIC’s due diligence at the time of its 1966 acquisition and thereafter. AIC, like many museums and institutions, has only come to provenance research recently and is not a poster child for museum due diligence. When it received Russian War Prisoner by donation in 1966, AIC made essentially no provenance inquiry. Its only effort to establish a provenance came in 2002, when it asked the dealer for more information. The court also faults AIC for ignoring warnings from the State Department and others to be on the lookout for Nazi-looted art, notices that were undoubtedly given little attention when issued.

While AIC’s diligence was certainly less than exemplary, the court evaluates it by reference to today’s guidelines and to standards that have evolved over the years.

The court’s determination that Russian War Prisoner is stolen property is not wholly surprising given the split between the courts in Reif v. Nagy and Bakalar and might give the AIC pause on the ethics of keeping it. The court in Bakalar determined that the work in question there was indeed not stolen. The court in Reif v. Nagy reached the opposite conclusion. The court here reaches the same conclusion as Nagy, finding that Russian War Prisoner was stolen.

What is more surprising, though, is the court’s analyses of jurisdiction and timeliness.

b.    Jurisdiction

The court rules that it may exercise jurisdiction over AIC with regard to Russian War Prisoner. This is an extreme result in favor of the District Attorney, considering that a New York court is ruling that a Chicago museum has criminal possession of and must surrender a drawing that passed through New York only briefly almost 70 years ago. The court justifies its exercise of jurisdiction by invoking the law of conspiracy, which requires an agreement to commit a crime and an act in furtherance of that agreement. Although the court does not disclose its delineation of the conspiracy, it seems to hypothecate a conspiracy that began in the 1950s with the possession and sale of Russian War Prisoner in New York and extends to all those in the chain of possession and to the present with the AIC’s possession. Nor does the court provide precedent for such a broad and poorly defined criminal conspiracy. And yet, only the actions of the dealers in New York provide the foundation for the court’s jurisdiction over events occurring now in Illinois.

c.    Timeliness

As demonstrated by the Grünbaum cases discussed above, laches has become a central issue in replevin cases to recover property. The court in this case, however, finds that laches has no role to play in criminal proceedings, even civil-like proceedings. Though the court mentions several times that the District Attorney’s application for a turnover order is a “civil-like” proceeding, it never defines what that means. It does consider laches as an alternative analysis and concludes that the District Attorney’s delay in bringing the case is understandable, given the complexity of the matter. Nonetheless, today there are no living witnesses; witnesses questioned in the past were not subject to cross examination by AIC; and the documentary record is incomplete.

The court’s effort to fill in the evidentiary record with a thumbnail sketch of Nazi looting, post-War restitution, and various other related and semi-related matters (such as the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property) only serves to emphasize that the decision is not based on evidence. Given the age of events, the paucity of genuine evidence, and reliance on bits and pieces of hearsay, the opinion has raised eyebrows internationally since a criminal (or civil-like) prosecution in this context ought not be an acceptable substitute for seeking restitution in a far more appropriate civil proceeding. The result is a decision that rests on supposition and speculation and not the fires of controversy that are intended to produce a just result.

Conclusion

Justice must be done and also must be seen to be done in these cases. If one accepts that Russian War Prisoner was looted by the Nazis and one is result-oriented, this decision may seem to be a positive development. If one believes, however, that the court twisted too many rules, the decision lacks thoughtful analysis and reliance on persuasive evidence and legal precedent. In that case, one can be forgiven for hoping for reversal on appeal and issuance of an appellate decision that provides much-needed clarity and guidance.

Author:

Thomas R. Kline*

*Mr. Kline is an art law attorney practicing as Of Counsel to Schindler Cohen & Hochman LLP. Mr. Kline has represented German museums and other cultural institutions in recovering their wartime losses. He has also represented the heirs of Holocaust victims and possessors of artworks concerning claims of spoliation during the Nazi era and WWII. In the past, he has handled litigation involving the District Attorney of New York County and the Art Institute of Chicago.

[1] When electric power went out during one of his performances, he famously quipped: "I can't see a thing, not a single thing; I must have stumbled into National Socialist culture." Marie-Theres Arnom,  “GRUSS MICH GOTT!,” Koordinierungsausschuss für christlich-jüdische Zusammenarbeit (Apr. 13, 2005), Walter Fritz, Im Kino erlebe ich die Welt: 100 Jahre Kino und Film in Österreich 146 (1997).

[2] No. 5-CV-3037, 2008 WL 4067335 (S.D.N.Y. Sept. 2, 2008).

[3] 819 F. Supp. 2d 293 (S.D.N.Y. 2011).

[4] 500 Fed. App’x 6 (2d Cir. 2012).

[5] 61 Misc. 3d 319 (N.Y. Sup. Ct. 2018).

[6] In New York, the Supreme Court is the trial court of general jurisdiction. Appeals go to the Appellate Division of the Supreme Court and thence to the New York Court of Appeals.

[7] Drawing a distinction between the Reif v. Nagy case and Bakalar v. Vavra was critical to the court because of the doctrine of collateral estoppel which would have prevented the Grünbaum heirs from relitigating the laches issue they had lost in Bakalar.

[8] 175 A.D.3d 107 (1st Dep’t 2019).

[9] Reif v. The Art Institute of Chicago, No. 654836/2022 (N.Y. Sup. Ct.).

[10] 703 F. Supp. 3d 427 (S.D.N.Y. 2023).

[11] No. 24-0809, 2025 WL 763424 (2d. Cir. Mar. 11, 2025).

[12] D.A. Bragg: Eleventh Piece Of Nazi-Looted Art Returned To Relatives Of Fritz Grünbaum, Manhattan District Attorney’s Office (July 26, 2024).

[13] Under New York State law, possessors of stolen property may have their objects seized pursuant to a warrant. A turnover order then transfers title from the possessors. In the federal system, seizure is followed by a forfeiture order, which has the same effect of severing the putative owners’ rights.  

[14] 85 Misc.3d 1265(A) (N.Y. Sup. Ct. 2025).

[15] The opinion contains factual and typographical errors throughout. It refers to New York State case Reif v. Nagy as a federal court decision and renders “Schutzstaffel” as “Schitzstaffel”. Id. at 4 n.11. It also dates Military Law 52 as being enacted in 1948, when in reality it was published in 1944 during wartime. Id. at 10. Additionally, the court accepts without question that the 1,500 artworks found with Cornelius Gurlitt were “stolen or otherwise looted.” Id. at 24. However, provenance research has established that only a relative handful of the works appear to have been looted. Sabine Oelze, Nazi-looted art: A chronology of the Gurlitt case, DW (Feb. 28, 2022),

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