The opinion of the court was delivered by: MISHLER
Memorandum of Decision and Order
Nearly nine years ago, this action was commenced to recover two portraits painted by the celebrated fifteenth century German artist, Albrecht Duerer. Until 1945, the paintings were exhibited in a museum in Weimar known as Staatliche Kunstsammlungen Zu Weimar.
During the American occupation of Weimar at the end of World War II-sometime between April and July of 1945-the paintings were stolen from the Schwarzburg Castle where they had been placed for safekeeping by museum authorities. On July 1, 1945, two months after the defeat of the Third Reich and the surrender of the German government, Soviet troops arrived in Weimar and displaced the Americans pursuant to the Yalta Agreement of June 5, 1945. Shortly thereafter, the director of the museum learned that the Duerer treasures were missing. Some twenty years later, they were rediscovered in the possession of a Brooklyn resident named Edward I. Elicofon.
In January 1969, the Federal Republic of Germany (the "FRG"), claiming to be the sole legal representative of the German people, instituted this lawsuit against Elicofon to recover the paintings. Two months later, the Grand Duchess of Saxony-Weimar (the "Grand Duchess") moved to intervene as plaintiff, asserting ownership of the Duerers by assignment from her former husband, Grand Duke Carl August. By order dated March 25, 1969, this court granted her leave to intervene.
In April 1969, the Weimar Art Collection, Kunstsammlungen Zu Weimar ("Kunstsammlungen") moved for leave to intervene, claiming it alone was entitled to possession of the paintings. The other parties opposed the application on the ground that Kunstsammlungen was an instrumentality of the then unrecognized government of the German Democratic Republic (the "GDR"). By memorandum of decision and order dated September 25, 1972 (358 F. Supp. 747 (E.D.N.Y.1972), aff'd, 478 F.2d 231 (1973), cert. denied, 415 U.S. 931, 94 S. Ct. 1443, 39 L. Ed. 2d 489 (1974)), the Court denied the motion to intervene, finding that Kunstsammlungen was an arm or instrumentality of the GDR, a government not recognized by the United States and therefore not entitled to sue in its courts. On September 4, 1974, the United States extended formal recognition to the GDR. Thereafter, the court vacated its order of September 25, 1972, and permitted the intervention of Kunstsammlungen.
On April 9, 1975, the Grand Duchess amended her intervenor-complaint to add a series of cross-claims against Kunstsammlungen. By answer dated May 16, 1975, Kunstsammlungen denied the Grand Duchess' claim of right to the paintings and asserted various affirmative defenses.
Following the intervention of Kunstsammlungen, the FRG moved to discontinue its claim with prejudice and on December 9, 1975, the motion was granted.
Upon the withdrawal of the FRG from the action, there remained three competing claims to the Duerers: that of defendant Elicofon, who rested title upon his status as a bona fide purchaser and upon the untimeliness of his opponents' claims; that of plaintiff-intervenor Grand Duchess; and that of plaintiff-intervenor Kunstsammlungen. The intervenors' theories of ownership are described in subsequent portions of this opinion.
Kunstsammlungen moves for summary judgment dismissing the Grand Duchess' intervenor complaint and the cross-claims on the ground that there is no genuine issue as to any material fact and their dismissal is required as a matter of law. Alternatively, Kunstsammlungen contends that (i) the cross-claims should be dismissed under Rule 12(c) because the pleadings disclose that they are not authorized by Rule 13(g), and thus there is no independent jurisdictional basis; (ii) the cross-claims and the intervenor-complaint should be dismissed because of a failure to join indispensable parties and (iii) the cross-claims are barred by the doctrine of sovereign immunity.
In addition to opposing the above motions, the Grand Duchess seeks an order compelling the production of documents to enable her to adequately resist the motion for summary judgment.
Like Kunstsammlungen's, the Grand Duchess' amended intervenor-complaint alleges that the Duerer paintings were stolen in 1945 during the American occupation of Weimar and subsequently purchased by Elicofon from the thief or the latter's transferee. There, however, the similarity ends. Whereas Kunstsammlungen alleges that it is entitled to possession of the paintings as legal successor to the former Territory of Weimar, the Grand Duchess asserts exclusive ownership on the following grounds:
(i) The Duerer paintings were originally owned as part of the private art collection of the Grand Duke of Saxony-Weimar-Eisenach. In 1868, they were loaned to the Grand Ducal Museum at Weimar, subject to recall by the Grand Duke.
(ii) In 1921, the Territory of Weimar, successor to the State of Sachsen-Weimar-Eisenach, entered into an agreement (the "1921 Settlement Agreement") with the Grand Duke Wilheim Ernst who, three years earlier, had abdicated his sovereignty. The Agreement acknowledged that the Grand Ducal Art Collection, of which the Duerers were a part, were owned by the former Grand Duke. It further provided that, as in the past, the collection would remain on loan to various museums and other institutions controlled by the Territory of Weimar. As consideration for said loan, the Territory of Weimar and its successors undertook the obligation to pay the Grand Duke and his male descendants 300,000 marks per annum.
(iii) Payments pursuant to the 1921 Settlement Agreement ceased in 1945, notwithstanding the fact that the male descendants of Grand Duke Wilhelm Ernst were then extant and continue presently to survive.
(iv) The failure to make the payments required by the 1921 Settlement Agreement has terminated that Agreement and "any rights to possession of the Grand Ducal Art Collection, including the Duerer paintings, conferred by its terms to the Territory of Weimar and its successors, have been extinguished " and the successor to Grand Duke Wilhelm Ernst is entitled to immediate repossession of the paintings. (Grand Duchess' Complaint & Cross-claim, para. 9).
(v) The hereditary successor to the former Grand Duke Wilhelm Ernst, Grand Duke Carl August (his oldest son), has assigned to the Grand Duchess all his right and interest in the paintings and all claims for damages arising from, inter alia, the nonpayment of annuities due under the 1921 Settlement Agreement.
The Grand Duchess' four cross-claims against Kunstsammlungen are predicated upon the allegation that the latter is "an arm, agency and instrumentality of the German Democratic Republic" (Grand Duchess' Complaint & Cross-claim, para. 18). Three of the four cross-claims are directly founded upon the 1921 Settlement Agreement. The first alleges that any claim of possession or title to the paintings by the GDR could only have been acquired by it as successor in interest to the Territory of Weimar and that, by reason of the nonperformance since 1945 of the terms of the 1921 Settlement Agreement, such possession or title has been extinguished. The second claim asserts that should the GDR, and through it Kunstsammlungen, be held to have acquired title or right to possession of the Duerers by virtue of the 1921 Settlement Agreement, both are liable for the annuity payments due thereunder, to wit, 300,000 marks annually since 1945. The third cross-claim avers that since 1945, works of art other than the Duerers which belonged to the Grand Duke under the 1921 Settlement Agreement have been confiscated by the GDR without compensation. It further asserts that the Duke's male descendants or their assigns are entitled under the terms of that Agreement to declare that the GDR has consented to an exchange of those wrongfully taken works of art for the Duerers. Finally, the fourth claim alleges that Kunstsammlungen's intervention in this action has forced the Grand Duchess to incur expenses far in excess of those she otherwise would have incurred to recover the paintings.
The Grand Duchess requests alternative relief. First, she seeks a judgment (i) declaring her to be the owner of the paintings and entitled to their possession and custody; (ii) enjoining all persons, including defendant and Kunstsammlungen, from interfering with her title, custody and possession; and (iii) dismissing Kunstsammlungen's intervenor-complaint and awarding her-damages under her fourth cross-claim. Alternatively, she seeks a judgment (i) declaring the GDR the successor in interest to the Territory of Weimar under the 1921 Settlement Agreement and responsible for the obligations thereunder, including the payment of annuities to the male descendants of the Grand Duke and their assigns; and (ii) awarding her 900,000 marks with interest from 1945 (presumably for past annuities) and additional damages, unspecified in amount, under her fourth cross-claim.
We turn first to Kunstsammlungen's motion for summary judgment dismissing the Grand Duchess' claim to ownership of the paintings.
The 1921 Settlement Agreement, upon which this claim is founded, must be interpreted under German law. "A contract made in a foreign country by citizens thereof and intended by them to be there performed is governed by the law of that country." Perutz v. Bohemian Discount Bank in Liquidation, 304 N.Y. 533, 537, 110 N.E.2d 6 (1953).
Both parties have submitted extensive affidavits by experts on German law which set forth their respective opinions on the governing law and the facts.
Kunstsammlungen's principal expert, Bernhard Graefrath, states:
It is my opinion that under the laws of Germany prior to the establishment of the GDR government in 1949 and under the laws of the GDR, the former Grand Duke Wilhelm Ernst did not own or have any rights to possession of the Duerer paintings after January 1, 1919, and neither his son Carl August nor the Grand Duchess has ever owned or had any rights to possession of the paintings. (Graefrath Affid. 3/31/77, para. 5)
His conclusion is based on the following premise: under the laws of Germany governing the property of the Grand Ducal Dynasty in Saxe-Weimar-Eisenach, the Duerers and the remaining paintings comprising the former Grand Ducal Art Collection constituted public property.
Known as Krongut ("crown goods"), this property was held by the Grand Dukes of Saxe-Weimar-Eisenach qua sovereign. Consequently, when Grand Duke Wilhelm Ernst abdicated his sovereignty in November 1918, the Grand Ducal family lost all rights and interest in the paintings and ownership passed to the successor sovereign of the Grand Duchy, the newly established Territory of Weimar.
The 1921 Settlement Agreement, entered into by the former Grand Duke and the new Weimar government, confirmed the public status of the paintings. This, section 1 therein provides in relevant part:
The former sovereign, Grand Duke Wilhelm Ernst of Saxony, having on November 9, 1918, for himself and his family, renounced the throne and succession to the throne in Saxe-Weimar-Eisenach for all time ..., the Grand Duke acknowledges ... that the entire Kammervermoegen, inclusive of the Krongut, is the exclusive property of the Territory of Weimar or its legal successor, insofar as not otherwise hereinafter expressly provided.
(Exhibit A to Graefrath Affid.)
Section 8 of the Agreement, upon which the Grand Duchess grounds her claim, refers solely to those works of art owned by the Grand Duke and his family in a personal, private capacity. Like the Grand Ducal Art Collection, these paintings were also exhibited in the Weimar Museum (as well as in other state-owned public institutions and museums) when the 1921 Settlement Agreement was executed. This section reads in pertinent part:
The Grand Duke shall continue, as heretofore, to permit the public view (exhibition) of the objets d'art belonging to him and his family that are presently situated in public institutions and museums....
(T)he Territory of Weimar assumes the costs of maintaining and securing the objets d'art.... (Exhibit A to Graefrath Affid.)
Since the Grand Ducal Art Collection constituted Krongut, it was not governed by this section, but rather embraced by section 1.
To support his opinion that the Grand Ducal Art Collection was deemed Krongut and thereby controlled by section 1, Professor Graefrath refers to the 1913 Catalogue of the Weimar Museum. Those works of art privately owned by the Grand Ducal family bore the designation "Eigentum Sr. K. H. des Grossherzogs" ("property of his Royal Highness the Grand Duke"). The Duerer works, listed as numbers 170 and 171 in the catalogue, were not so designated and hence were now owned by the Grand Duke in a personal capacity.
The court is also cited to an 1821 Act issued by the then Grand Duke Carl August and a Ministerial Decree of 1862 as evidence of the public character of the paintings.
In response, the Grand Duchess' experts maintain that the Grand Ducal Art Collection did not constitute Krongut but was privately owned by the Grand Duke. To support their position, Mr. Von Stackelberg and Mr. Ferencz state that in 1848 the Collection was declared a Kronfideikomiss, a type of family trust in which title was vested in the Grand Ducal family until the male line became extinct. While under the terms of the trust the public was granted the right to view the paintings, title remained with the Ducal family. Thus, the 1918 abdication did not effect a transfer of this property to the state. Under section 8 of the 1921 Settlement Agreement, Wilhelm Ernst permitted the paintings to remain on loan to the Territory of Weimar, conditional on the payment of annuities, ...