Art Loans Gone Awry

[Museum Security Network]

>From the New York City Review:
Editor's Note: The following article about a controversy involving an
art collection that had been loaned to the Dallas Museum of Art and
then removed under rather mysterious circumstances was written by
Antony Anderson, a British electrical engineer who is a son-in-law of
the late Anthony Denney whose former art collection is the subject of
the article. Despite such an apparent conflict of interest, the issues
raised in the article are important and merit attention. Further
information can be found at http://museum-security.org/denney/coll.htm
and at http://museum-security.org/denney/15-afa.htm. As a protection
against similar loan misappropriations, Anderson suggests the creation
of a public register of loan collections, accessible via the Internet.
The system could be part of a wider distributed cataloguing system for
works of art that would serve the needs of artists, collectors,
museums, and researchers.
Carter B. Horsley, Editor, The City Review
Art Loans Gone Awry
Improving Museum Responsibility and the International Art Loans System
"Neither a borrower, nor a lender be; For loan oft loses both itself
and friend, And borrowing dulls the edge of husbandry."
Hamlet
By Antony Anderson
A 4-year study by leading international art law experts under the
auspices of the International Bar Association based in London and
published in June, 1997, by Kluwer Law suggests that art loan
controversies are far more common than might be supposed. It notes
that loans rely too heavily on good will and trust instead of properly
drawn up loan agreements that anticipate possible future problems.
A major example of an art loan failure involves the Denney Loan
Collection, which was removed in a rather irregular manner from the
Dallas Museum of Art in 1990 after the death of its 76-year-old owner
Anthony Denney. The collection, today worth several million dollars,
contains works of art by comprising modern works of art by Karel
Appel, Franco Assetto, Alberto Burri, Horia Damien, Jean Dubuffet,
Lucio Fontana, Sam Francis, Horst-Egon Kalinowsky, Georges Mathieu,
Louise Nevelson, Jean-Paul Riopelle, Antonio Saura, Antoni Tapies,
Pavel Tschelitchew, Victor Vasarely, and Emilio Vedova.
The Denney case illustrates that reliance on good faith between lender
and borrower is insufficient protection against the possible risk of a
determined conspiracy by third parties.
Forged letters were used to move the Denney Loan Collection from
Dallas to Toulouse, France, where the collection was then hidden and
later moved to the City's old Abattoirs, and where by a much-trumpeted
act of donation they were subsequently made to appear as an apparently
bona-fide gift to City of Toulouse.
Art loans are not risk-free
Art Loans are no exception to Murphy's law, which says that if
anything can go wrong it will, here are three of many possible
examples:
"Chinagate" in which a major donor of Chinese paintings to the
Metropolitan Museum of Art in New York threatened in 1997 to remove
them because, he claims, the museum has violated the contract. (See
The City Review articles.) "A Singular Passion for Amassing Art, One
Way or Another," an article by Judith H. Dobrzynski in the December
24, 1997, edition of The New York Times relates charges that Dr.
Rudolph Leopold's collection of the art of Egon Schiele, the subject
of a major exhibition at the Museum of Modern Art in New York in late
1997, contained some works of questionable provenance. "Indeed," she
wrote, "the presentation of the Leopold Collection at the Modern - and
previously at institutions in London; Tubingen, Hamburg and
Dusseldorf, Germany; Zurich, and Tokyo - raises serious questions for
museums that show individuals' collections: What should they know and
care about how the works came together?" "The Robin Hood of export
porcelain" According to the Art Newspaper of September, 1997, John
Quentin Feller, one time professor of history of Scranton University
and eminent Chinese export porcelain scholar, stole in order to lend
and give generously. The report maintained that he gained privileged
access to eight museums and private collections from which he stole
over 100 items over a course of two decades. He frequently loaned or
donated his acquisitions to other museums. For example, he stole
eighteen objects from the basement of the Wadsworth Atheneum in
Hartford and gave them to the Peabody Museum in Salem, Massachussetts,
which responded by making him a trustee. He was finally caught in 1991
stealing a piece of George Washington's dinner service from the
Wintherthur Museum in Wilmington, Del. He was jailed for eighteen
months, fined $30,000 and expelled from the University. One wonders
how careful the Museums receiving these unsolicited loans and
donations were to check their provenance. Children sue stepmother over
Morisot painting. According to a June 12, 1997, article in the San
Francisco Examiner, the children of the late Prentis Cobb Hale,
millionaire department store owner, are suing their stepmother, Denise
Minnelli Hale, and seeking punitive damages for the return of an
$800,000 oil painting by Berthe Morisot titled "En Bateau sur le Lac
de Boulogne," currently on loan to the De Young Museum in San
Francisco. The article said they claimed, in a lawsuit filed in March
1997, that in 1958 their father used $15,000 held in trust for them to
buy the painting and that it therefore belonged to them. Denise Hale
maintained that her husband - the heir to Carter Hawley Hale Stores,
Inc. - had used his own money to purchase the painting, and that he
had given it to her while he was alive. Hale said she planned to leave
it to The City of San Francisco in her will "so that everyone can
enjoy it". This example illustrates how easy it is for museums to be
drawn into ownership disputes unless they exercise due diligence in
checking that prospective lenders and donors have full title to what
they claim to own. International Bar Association study of art loans
Professor Norman Palmer, Rowe and Mawe Professor of Commercial Law,
Faculty of Laws, University College, London, and a team of
international experts have recently completed an exhaustive four-year
study of Art Loans for the International Bar Association that has been
published as "Art Loans" by Kluwer Law.
Prof. Palmer regards the modern art loan as an essential medium of
cultural exchange and argues that without such mechanism no major
traveling exhibition could be mounted. He indicates that there are
many pitfalls lurking within every art loan ready to catch the unwary
and says that loan agreements place far too much reliance on trust and
goodwill and too little on putting in place a legal framework to cover
unlikely future events.
Great attention, he observes, is usually paid to everyday issues such
as valuation, insurance, security measures, humidity control, orderly
paperwork and practical redress in the case of misconduct, but loan
agreements are made routinely without specific legal advice being
taken. Furthermore, he continues, potential issues for dispute such as
title, duty to exhibit, authenticity, attribution, and the choice of
law venue for settling disputes tend to be treated as of little
importance.
We can see immediately how vulnerable the art loan system is to attack
once the relationship between the lender and borrower becomes
weakened, or broken by age, infirmity, distance or death. Loan
agreements must realistically take these possibilities into account.
The basic facts in the Denney case are the following:

Anthony Denney, a UK citizen, lived in a remote 12th Century castle,
which he restored, near the village of Salvatierra de los Barros in
southern Spain. Denney's immediate family lived in the UK and the US.
The most significant part of the Denney Collection was lent in 1970 to
the Dallas Museum of Art Texas. The loan agreement was of the most
informal kind and had run for 20 years. Denney and the current museum
staff had never met. Denney was 76 years old and was a likely
candidate for a heart attack. In the event of any legal dispute
between the owner and the museum choice of law - US, UK or Spanish -
would undoubtedly be an important issue. With hindsight, we can see
that these surrounding circumstances made the collection vulnerable to
attack. However, if a conspiracy by third parties had been anticipated
as a remote possibility, a number of checks and procedures could have
been put in place that would have made the success of any conspiracy
unlikely. But I jump ahead.
Anthony Denney and his collection
Anthony Denney, born in 1913 in Norfolk, England studied Fine Art at
the Royal College of Art in London. During World War II, he was in the
Royal Engineers, finally ending up in India with the rank of Captain
and engaged in Military Intelligence. He had the good fortune to visit
China and Tibet in the process. Photographs show him riding a yak, an
achievement of which he was proud. While in India his earlier
photographic work was brought to the attention of Audrey Withers, then
the editor of Vogue, leading him to post-war prominence as Decorations
Editor and to other work for the Condé Nast organization and to a
parallel career advising the famous and wealthy on interior design for
their houses and yachts. Always a perceptive collector he became
fascinated by new trends in art during the 1950's and 1960s. His keen
eye spotted promising artists before they became known, such as Appel,
Burri, Dubuffet, Fontana, Imai, Mathieu and the Japanese Gutai group.
He bought their works at very reasonable prices to form the nucleus of
what later became his loan collection.
His marriage to Diana Ross, a writer of children's books by whom he
had three children, had ended in divorce in 1950. Denney kept in touch
with his children and for several years Sarah, one of his twin
daughters, kept house for him. In 1970, he remarried and retired to
Spain where he bought and restored the ruined 12th Century castle of
Salvatierra de los Barros, not far from the town of Zafra in the
province of Extramadura. This splendid castle built by Crusaders on
the Syrian pattern had been a ruin since the 14th Century. He solved
the problem of housing his collection by lending the most important
part - conservatively valued in 1992 as worth $2 million, but now
worth upwards of $5 million, to the Dallas Museum of Art. (A valuation
by Sotheby's was carried out in 1992, at a time when the bottom had
fallen out of the art market. This gave a value of just over $2
million. Sotheby's say that their estimates are very conservative.
Sotheby's valued Alberto Burri's "Sacco IV" at £100,000, whereas the
City of Toulouse had been negotiating to buy it at £200,000 in 1991
and a figure of £300,000 - 400,000 is a more likely value in the 1997
market. The loan arrangement seems to have been for an indeterminate
period and of a rather informal nature, but it seems to have worked
well for twenty years. He appears to have kept the knowledge of the
whereabouts of the collection largely to himself.
Anthony Denney died of a sudden heart attack on April 30, 1990, in his
castle and his funeral took place the same evening, with his children
unable to get there in time and only the villagers present.
The long obituary, which described Denney as a photographer, art
connoisseur and collector, appeared in the London Times of May 15,
1990, mentioned that "part of his modern art collection was at one
time on loan to the Tate Gallery." His death was not picked up by the
rest of the media and did not become known in Dallas.
In mid May, 1990, about two weeks after Denney's death, the Dallas
Museum of Art received a letter, provided with other correspondence
subsequently in 1991 by the museum to the Denney heirs and submitted
as evidence in their inheritance claims in Spanish courts, that was
signed "Anthony Denney" and dated April 27, 1990, three days before
his death.
In the letter, Denney wrote:
"Now, however, it is my wish to reunite my collection in Europe. To
this end I am arranging a long term loan to the Musée d'Art Moderne de
Toulouse, France, under the directorship of Monsieur Alain
Mousseigne..From now on all arrangements will be conducted by Monsieur
Mousseigne himself, with my authorization, and he will be writing to
you directly from Toulouse."
The implications of the letter are clear. From now on, M. Alain
Mousseigne, Conservateur of the Toulouse Museum, is to be Mr. Denney's
agent and he will pay transport costs and insurance. The Dallas museum
duly acknowledged Denney's letter saying that they would wait to hear
from M. Mousseigne.
Over the next few months letters passed between the museum and
Mousseigne arranging transport. Then, in July, 1990, the museum wrote
to Anthony Denney, whom they supposed to be still alive, suggesting
that he might care to update the insurance values. They received a
reply, dated August 22, 1990, with the updated values, signed,
"Anthony Denney". The writer excused the inevitable delay in replying
by claiming to have just come back from holiday!
Still believing Mr. Denney alive, the museum completed transport
arrangements with M. Mousseigne and the collection was airfreighted to
France in November, 1990, under the high security appropriate for such
a valuable cargo. The works entered France as the property of the
supposedly living Anthony Denney. On the shipping order was written:
"4 crates containing 23 works of art which belong to Mr. Denney
RETURN OF DENNEY LONG TERM LOAN"
On arrival in Toulouse the pictures were hidden for the time being.
Had the museum got wind of Denney's death it would have been a
different story. They would have required sufficient proof of
ownership before releasing the pictures. This means a grant of probate
from a U.S. court accompanied by duly authenticated supporting
documents from Spain, including a declaration of inheritance. A month
previously Denney's widow had made the customary Spanish declaration
of inheritance in her capacity as residuary legatee. The inventory was
confined to the castle and made no mention of the pictures. The
declaration of inheritance had it been produced, would have
demonstrated that she did not own the pictures!
In the summer of 1990, long before the pictures had arrived in
Toulouse and about a month before the second letter from "Mr. Denney",
negotiations were already in full swing between Denney's widow and M.
Mousseigne. She claimed that she was now sole owner of the pictures,
by virtue of being residual legatee of her late husband's estate, and
she was now proposing to donate the collection to the City, as if a
gift from her in fulfillment of his last wishes, or so she said.
The widow's claim to her husband's estate was based on her
interpretation of English Law, that Denney's children by his first
marriage did not have rights to a legitimate portion of the estate
under Spanish Law. (One-third on death and a second third in which the
widow had a life time interest.) The grounds for her assertion were
not particularly well founded, since only the Spanish Supreme Court
could ultimately rule on the matter and there was no existing judgment
that could indicate how they might rule if they were asked to decide
the Denney case.
In consequence, there was a significant element of risk in the City
taking at its face value the widow's claim to be able to give the
paintings freely. There could certainly be no guarantee that ownership
would not be challenged in the courts, nor could there be any
certainty in the outcome.
A further element of risk arose because the widow, while managing to
convince the local Spanish Court that the heirs had no rights and that
the entire estate therefore devolved to her, had not declared the
collection on the inventory of her declaration of inheritance.
Therefore, the pictures remained undeclared assets of the Denney
estate. If the prospective donation had become known to the Spanish
Authorities they would most certainly have demanded payment from her
of outstanding inheritance tax.
In other words, the potential donation might be in trouble both from
claims of ownership from the heirs and demands from unpaid tax from
the Spanish Authorities: hardly a donation without potential
encumbrances! This is just the kind of donation that most museums
would decline until such time as all outstanding litigation and tax
liabilities had been settled.
It seems however that the City authorities were more than happy with
the prospective donation, notwithstanding the risks. A memorandum from
M. Alain Mousseigne, Conservateur of the Museum of Modern Art in
Toulouse to an official in the mayor's office, dated Oct 8, 1990, asks
how the existence of the collection could be kept hidden from the
Spanish authorities, who did not know of its existence. The City
obliged with a carefully formulated Act, finally signed in September,
1993, that claimed to pass title to Toulouse and empowered the City to
defend the title against all comers.This Act of Donation is notable
for two things.
A copy of the widow's Declaration of Inheritance was not appended, as
it surely would have been if the pictures had been declared and
recorded on the inventory, tax had been paid and title had passed to
her. The Act refers to the fact that litigation on ownership is going
on in Spain. Where's the collection?
Denney's three children by his first marriage were not aware about
what was going on in Salvatierra and Toulouse during the summer and
autumn of 1990. But at the end of September, 1990, they each received
a copy of Denney's Spanish will and an explanatory letter from his
widow. The letters implied that their father's estate comprised merely
the castle and the surrounding land - no mention of the pictures - and
that the will disinherited them. However, when they read the will they
found it said something rather different: the disposition in favor of
the widow as residual legatee was without prejudice to the legitimate
rights that the children might have under their father's national law.
Which begged the question: what might these protected rights be in the
case of an Englishman making a Spanish will who was domiciled in
Spain? They initiated litigation to establish the point, which now has
reached the Spanish Supreme Court. The initial inheritance claim was
lodged with the Court of Jerez de los Caballeros in Extramadura,
Spain, May 10, 1991 in what is known as "non-contentious proceedings."
The judge in the case allowed it to go to "contentious proceedings"
July 20, 1993, on the grounds that the widow was contesting the claim
of the Denney children to be recognized as heirs. In November, 1993,
the case, known as a full demanda was presented to the Court of First
Instance and a judgment was delivered January 30, 1995, in favor of
the three Denney children. The ruling was appealed to the Provincial
Appeal court and a July 11, 1995, ruling went against the children on
a matter of procedure rather than substance.
The children had been advised by their lawyers to establish the extent
of his estate to the best of their ability before going further and to
this end they initiated an investigation to find out what had happened
to his collection.
Anthony Denney had acquired a reputation over the years for
squirreling away his possessions in the attics of obliging friends
against a rainy day. Every now and again he would visit his friends,
reclaim a few items and disappear again. This became a bit of a family
joke and sometimes a family problem. He was not always terribly
popular with some of his friends with attics, because - with the
passage of time - they needed the space themselves: then it sometimes
fell to his children to tactfully sort out some new arrangements.
Therefore, when they heard that he had passed on without leaving the
slightest trace of an art collection behind him, this struck them as
rather implausible. Yes, the castle with its massive water cisterns in
the towers and its beautifully polished marble floors had cost money
to restore, but the sale of a Fontana or a Sam Francis would probably
have paid for it all twice over. So what had happened to the rest of
the pictures? The records were locked up in the Castle and could not
be examined, but Denney had lent to public institutions in the past
and there was always the hope that some might have kept records of his
loans to them.
After a great deal of research, the breakthrough came from the Tate
Gallery Archives in London in the early summer of 1991. Six pictures
on loan to the Tate and belonging to Anthony Denney had been sent to
an undisclosed destination in Texas in 1970. Without much expectation,
letters were sent off to a number of Texas museums soliciting help.
Various letters came back regretting that they had no pictures, but
wishing good luck in the search. Then one day there was a
transatlantic telephone call from the Dallas Museum: the good news was
that there were 23 pictures; the bad news was that the pictures were
in Toulouse. Up till that day the Dallas Museum had believed that Mr.
Denney was alive.
>From the extensive information the Dallas Museum provided, it became
clear that Anthony Denney's total collection of works of art numbered
over 300: of which 130 were described in detail as being his loan
collection, the remainder not being named and being retained in his
personal collection. Of the 130 loan items, 30 were lent to Dallas in
1970, of which 23 were still in Dallas in 1990, six having been sold
in the intervening period and one, "Sacco IV," having been lent on to
the 20th Century Italian Art Exhibition in London in 1989. Of the
remaining 100 items in the loan collection, 15 pictures on loan to
various UK institutions - including Mathieu's "Battle of Hastings" on
loan to the French Institute in London - were also moved to Toulouse
in 1990-91 in a quite unauthorized manner, bringing the number moved
there after Denney's death to 38. It seems that the eventual size of
the "Denney Donation" was to be 69 pictures, some subject to usufruct,
to which was to be added Burri's "Sacco IV," to be purchased in secret
from the Widow, bringing the total to 70
In the autumn of 1991, the Museum of Toulouse was put on notice
concerning the potential rights that the Denney heirs might have under
Spanish Law. Nevertheless, the City of Toulouse proceeded with its
plans for accepting a donation from the widow. The heirs tried to take
conservatory action in the Toulouse courts to prevent donation or
sale. The full extent of the basis of their claim as heirs, as
presented in the Spanish Courts, was tabled in the French Court:
notwithstanding, the heirs were unsuccessful in blocking the Donation,
which went ahead in September, 1993 in the full and public knowledge
that ownership was the subject of litigation in Spain and that the
donor did not possess a clear title.
The City claims the collection to be a gift from heaven and one that
it could not have refused.
The reality, in my view, is different.
The facts are: the collection was extracted from Dallas by forged
letters; it remains undeclared to the Spanish Tax authorities; it is
the subject of litigation in Spain; and, finally, it appears not to be
a gift at all, but a barter arrangement between the City and the
widow. The agreement was for the City to purchase Alberto Burri's
"Sacco IV". The city had to get the approval of the Musées de France
to purchase the painting from an "unknown collector" for 2,000,000
French Francs in 1991. This is documented. Finally after repeated
questioning by the opposition in the Town Council, the Mayor admitted
that the unknown collector was Mme. Denney. The purchase of Sacco IV
has never actually gone ahead because the Mayor Has come under
pressure from the opposition in the Municipal Council to explain how,
if it is a donation, the City is proposing to buy "Sacco IV" from the
widow and why it is paying her legal expenses in Spain. The argument
is really one on the subject of the improper use of public funds. The
donation is clearly not the simple gift without strings attached as it
has been presented to the Toulousain public.
Toulouse Mayor Dominique Baudis says that the ongoing litigation in
Spain between the heirs and the widow is a private matter in which
neither the state, nor the region, nor the city is in any way
involved. Technically this is true. Yet at the same time he justifies
the use of public funds to pay the widow's legal expenses in Spain
because he considers that she is defending the interests of the City
of Toulouse.
Denney's widow claims that because Mayor Baudis is not involved in the
Spanish Litigation he is placed at an unfair disadvantage in defending
his title to the pictures: in her view he should have been able to
make his views known at the Spanish proceedings and because he was
unable to do so the case should be thrown out. The judge of the Court
of First Instance at Jerez de los Caballeros rejected this argument
January 30, 1995, on the basis that the defense had failed to
demonstrate that the collection had ever left the Denney estate. The
judge in the Provincial Appeal Court in Badajoz, Spain, decided, July
11, 1995, to allow the argument and granted the appeal: throwing the
case out without considering the heart of the matter.
An appeal to the Tribunal Supreme, the highest court in Spain, from
this ruling was lodged November 8, 1995, and admitted June 20, 1996.
All stages have been completed and a final verdict is awaited. However
the judgment is unlikely to be until late 1999.
The Denney case demonstrates how vulnerable loans are to attack by
third parties and the need to give loans the same protection afforded
to a museum's own collection. If the poaching of loan collections
became acceptable practice, which collector would then feel they could
safely entrust their collection to a museum? Might not the whole Art
Loan system then run the risk of collapse?
Openness is the best protection of all.
If the existence of Denney's collection had been widely known, nobody
would have tried to hijack it because the risks of discovery would
have been too high.
In "Lessons from the Denney Collection" (see article at
http://museum-security.org/denney/index.htm), I suggest the use of
the Internet for the worldwide sharing of information about Art Loans
and, for want of a better name, have called the idea "Denney Net". The
system would record and track art loans from the moment that the
object passed into the public domain. Everyone would be able to follow
a picture if it became part of a traveling exhibition, for example. I
believe it would help raise the level of security for art loans to an
acceptable level. It would be complimentary to the Art Loss Register
(http://www.artloss.com), a permanent computerized database of stolen
and missing works of art, antiques and valuables, operating on an
international basis to assist law enforcement agencies in the battle
against art theft.
The objectives of the Art Loss Register are to:
Increase the recovery rate of stolen art and antiques.
Deter art theft by impeding the potential resale of stolen work of
art. Reduce the trade in stolen art, antiques and valuables. Assist
law enforcement agencies in the process of identifying and recovering
stolen works of art. Protect collectors and dealers from the financial
and criminal liabilities of buying and selling stolen works of art.
Improve the loss ratio for the insurance industry. Collectors draw up
loan agreements that take into account the remote possibility that
someone may try to "hijack," or abscond with your Sam Francis, or
Fontana, or whoever. But even the best loan agreements cannot cope
with every situation. For example, what about the time when family and
friends are preoccupied with funeral arrangements and giving you a
good send off at the crematorium? Who will be thinking about the
safety of your collection as your friends are reminded of your brief
span of life on earth? This is just the right time for a good
impersonation and the perfect moment for a hijack! So to preserve your
heritage for your rightful heirs, not only draw up proper loan
agreements and cover all the loaned items in your will, but also make
sure to send each loan museum a copy of your obituary!
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