The opinion of the court was delivered by: VINCENT L. BRODERICK
VINCENT L. BRODERICK, U.S.D.J.
This action concerns plaintiff's claim to the ownership of a painting by Claude Monet entitled "Champs de Ble a Vetheuil" (the "Monet"), which was stolen from plaintiff in 1945 and purchased in good faith by the defendant in 1957 from third-party defendant Wildenstein & Co. On April 20, 1987, after a bench trial, I issued a decision including findings of fact and conclusions of law in this matter and ordered that judgment be rendered for the plaintiff requiring that the painting be returned to the plaintiff. DeWeerth v. Baldinger, 658 F. Supp. 688 (S.D.N.Y. 1987) (the "April 20 Order").
As discussed in greater detail infra, that decision was subsequently reversed by the Court of Appeals. DeWeerth v. Baldinger, 836 F.2d 103 (2d Cir. 1987), cert. denied 486 U.S. 1056, 100 L. Ed. 2d 924, 108 S. Ct. 2823 (the "December 30 Order"). The Court of Appeals found that in this diversity case I had misapplied New York law.
Plaintiff has now moved for relief under Rule 60, Fed.R.Civ.P. The factual findings which I made with respect to the trial of this matter are necessary to consideration of plaintiff's motion and are repeated in part II below for convenience.
For the reasons set forth below, I conclude that the Rule 60 motion must be granted. In summary, the highest court of New York State has now ruled in Guggenheim v. Lubell, 77 N.Y.2d 311, 567 N.Y.S.2d 623, 569 N.E.2d 426 (1991), subsequent to the 1987 Second Circuit decision, that state law requires - and, according to the state court ruling, would previously have also required - a result which is consonant with my original determination. Because of the primacy of the state courts in determining interpretation of state law under principles of federalism, as discussed in greater detail below, the Guggenheim decision, albeit stating that it also reflects prior law, is a new development justifying Rule 60 relief.
The issue of laches, also discussed in greater detail below, was mentioned but left open in the 1987 Second Circuit decision, and raised anew by the defendant. The plight of good faith purchasers of art is an important factor in evaluating stolen art cases, as is the need to deter theft of art destined for the New York market. Both interests are relevant to balancing prejudice and reasonableness. Here, however, a nonbankrupt third party defendant from whom defendant purchased the stolen art remains in the case. Where upstream purchasers failed to exercise due care in purchasing, including examining the placement of an artwork in its context, its so-called "provenance," each defendant can, of course, follow up the chain of prior custody.
While in the wake of Guggenheim, supra, the Second Circuit declined to alter its mandate upon motion, Standard Oil Co. v. United States, 429 U.S. 17, 50 L. Ed. 2d 21, 97 S. Ct. 31 (1976) suggests that this may have been because the district court rather than the appellate court is the appropriate initial forum for seeking redress due to post-decisional changes in law or facts. Fine v. Bellefonte Underwriters Ins. Co., 758 F.2d 50, 52 (2d Cir. 1985), cert. denied 474 U.S. 826, 88 L. Ed. 2d 70, 106 S. Ct. 86 (1985) also indicates that the district court is the appropriate tribunal where there is, as I find here, a "material change of circumstances. . . ." -- in this instance because of the ruling of the State's highest court contrary to the 1987 federal appellate decision, and the state Court's assertion that its position reflects prior state law as well.
There follows a reiteration of certain factual findings contained in my decision of April 20, 1987:
"The Monet is an impressionistic depiction in oil of a wheat field, a village and trees near Vetheuil, France. It measures 65 centimeters by 81 centimeters, and is signed and dated "Claude Monet '79". Mrs. DeWeerth's father, Karl von der Heydt, purchased the Monet in or about 1908, and he thereafter kept it in his house in Bad Godesberg, West Germany. Plaintiff inherited the Monet from her father after his death on August 9, 1922, in the division of the works and objects of art in his estate. With the exception of the years 1927 to 1929, when the Monet was kept in her mother's house, plaintiff kept the Monet in her residence in Wuppertal-Elberfeld from 1922 until August 1943, where it was on display on a wall next to a sculpture by Auguste Rodin, also inherited from her father. This sculpture is still in plaintiff's possession at her West German residence, and plaintiff has submitted a 1943 photograph showing the Monet and the Rodin displayed together in her residence. From that time until the present, she neither sold nor otherwise disposed of the Monet, nor did she entrust the Monet to anyone else to sell or otherwise dispose of it.
"In August 1943, during the Second World War (the "War"), Mrs. DeWeerth sent the Monet, along with the Rodin sculpture and other valuables, by van to her sister Gisela von Palm (now deceased) in Oberbalzheim in Southern Germany, for safekeeping. Although the van arrived, plaintiff never saw the Monet again. In the fall of 1945, Gisela von Palm informed plaintiff of the disappearance of the Monet from Mrs. von Palm's house in Oberbalzheim. There is no direct evidence as to what caused the disappearance of the Monet. American soldiers were quartered in the house after the close of the War in 1945, and it was after they had left that its disappearance was noted. I infer that either one of those soldiers, or someone else, stole the painting from the von Palm house where it had been sent for safekeeping.
"Mrs. DeWeerth was approximately 50 years old when she learned of the Monet's disappearance. Subsequently she made efforts to locate it. In 1946 she reported the loss of the Monet to the military government then administering the Bonn-Cologne area after the end of the War. In 1948 she solicited the assistance of her lawyer, Dr. Heinz Frowein, in attempting to find and recover it. Plaintiff also made inquiries in 1955 of one Dr. Alfred Stange, known to Mrs. DeWeerth as an art expert. In 1957 she reported the Monet as missing to the Bundeskriminalamt (the West German federal bureau of investigation) in Bonn. All of these efforts to find the Monet were unsuccessful.
"By December 1956 however, the Monet had found its way to the United States through Switzerland. Third-party defendant Wildenstein & Co., Inc. ("Wildenstein"), an art gallery in New York City, appears to have acquired the Monet on consignment from Francois Reichenbach, an art dealer from Geneva, Switzerland, in about December 1956. From December 1956 to June 1957, Wildenstein had possession of the Monet in New York. A Wildenstein record shows a 1962 payment, or credit, to Reichenbach, evidently for the Monet.
"In June 1957, Wildenstein delivered the Monet for inspection to Mrs. Baldinger at her residence at 710 Park Avenue, New York, New York. Mrs. Baldinger, after several days, purchased the Monet in good faith and for value from Wildenstein on or about June 17, 1957.
"There are only four published references to the Monet in the art literature: two of them are in catalogues in connection with the exhibitions already cited, and the other two are in publications with which Wildenstein was apparently connected:
"(1) Claude Monet: Bibliographie et Catalogue Raisonne, Vol. 1 1840-1881. Published by la Bibliotheque des Arts, Lausanne, Paris; introduction by Daniel Wildenstein; collaborators Rodelphe Walter, Sylvie Crussard, and the Foundation Wildenstein, 1974, Geneva; painting no. 595.
"(2) The exhibition catalogue One Hundred Years of Impressionism, A Tribute to Durand-Ruel, A Loan Exhibition, April 2 - May 9, 1970, Wildenstein Gallery, New York; painting no. 43.
"(3) Monet: Impressions, Daniel Wildenstein, published in New York, 1967, Library of Congress call no. ND553.M76W5313.
"(4) The exhibition catalogue Festival of Art, October 29 - November 1, 1957, Waldorf-Astoria Hotel, New York; item 125.
"In or soon after July 1981, plaintiff, through the efforts of her nephew Peter von der Heydt, discovered that the Monet had been exhibited in 1970 at the aforementioned Wildenstein loan exhibition. Plaintiff thereafter retained counsel in New York in 1982 to determine whether Wildenstein knew the identity of the present possessor of the Monet. When Wildenstein refused to disclose the possessor's identity or the Monet's whereabouts, plaintiff commenced a proceeding in November 1982 against Wildenstein in New York State Supreme Court seeking "disclosure to aid in bringing an action." N.Y.C.P.L.R. § 3102(c). On December 1, 1982, the State Supreme Court found for the plaintiff, ordering Wildenstein to reveal the identity of the possessor. Plaintiff thereafter learned that defendant Baldinger possessed the Monet.
"By letter to Baldinger dated December 27, 1982, plaintiff demanded return of the Monet. By letter dated February 1, 1983, Baldinger refused the demand. This action ensued."
April 20 Order, 658 F. Supp. at 690-692.
In my April 20, 1987 decision, I inferred that the Monet had been stolen from Frau von Palm's home in Germany and subsequently passed through a series of parties to Mrs. Baldinger. Applying New York law, which holds that not even a bona-fide purchaser can acquire valid title from one who acquires title from a thief, I held that Mrs. DeWeerth had a right of title to the Monet superior to that of Mrs. Baldinger. I also held that plaintiff had timely commenced her suit pursuant to the three year limitations period applicable to actions seeking the recovery of stolen property provided by New York Civil Practice Law and Rules § 214 ("Section 214"). It was in accordance with these findings that judgment was entered for the plaintiff, directing that the Monet be returned to her.
In reversing the judgment, the Court of Appeals held that plaintiff's claim was barred by Section 214's three year limitations period. The Second Circuit noted that under New York law, where a plaintiff seeks recovery of a stolen chattel from one who innocently purchases such property, Section 214's limitations period does not begin to run until a demand for the return of the property has been made and that demand is refused. The Court also noted that New York law required that a plaintiff make such a demand within a reasonable period of time subsequent to learning the identity of a chattel's current possessor. In these respects, the Court did not disturb the legal conclusions which I had arrived at in my decision.
The Court then went on to hold that a plaintiff seeking the recovery of stolen property in New York had "a duty of reasonable diligence in attempting to locate stolen property" and that absent a showing that such diligence had been exercised, a chattel owner's otherwise timely suit would be time barred. 836 F.2d at 108. While acknowledging that this due diligence requirement had not previously been applied by the New York courts, the Court determined that its new rule was a justifiable application of New York law for three reasons.
First, the Court said that New York had a "policy of favoring the good faith purchaser" and of discouraging stale claims. Id. at 109.
Second, it noted that its decision brought the law in New York into harmony with the law of other jurisdictions. New York courts had taken a uniquely pro-original owner position on issues in which the rights of original owners were balanced against those of subsequent purchasers. This minority position, the Court of Appeals pointed out, put New York's demand and refusal rule at odds with the rules applicable in other states. New York law needed to be made more harmonious with the law applicable in other jurisdictions:
Other jurisdictions have adopted limitations rules that encourage property owners to search for their missing goods. In virtually every state except New York, an action for conversion accrues when a good-faith purchaser acquires stolen property; demand and refusal are unnecessary. (citations omitted) . . . It is true that New York has chosen to depart from the majority view. Nevertheless, the fact that plaintiff's interpretation of New York law would exaggerate its inconsistency with the law of other jurisdictions weighs against adopting such a view.
Finally, the Court stated that the imposition of a due diligence requirement would further the general policy promoted by any statute of limitations; the protection of defendants from stale claims. Id. at 108-109.
I had held that regardless of whether or not New York law could be construed as imposing a due diligence requirement upon original owners, plaintiff's suit would have been timely commenced, since the evidence demonstrated that the plaintiff made a "'diligent although fruitless effort'" to locate the Monet. 658 F. Supp. at 694, quoting Kunstsammlungen Zu Weimar v. Elicofon, 536 F. Supp. 829, 849 (E.D.N.Y. 1981), aff'd 678 F.2d 1150, 1160 (2nd Cir. 1982). The Court of Appeals treated this finding as a legal conclusion and reviewed it de novo, reaching an opposite conclusion. It held that DeWeerth's efforts to locate the Monet had been "minimal" and that she had failed to satisfy the due diligence requirement the Court announced in its ruling.
On February 5, 1988 the Second Circuit denied DeWeerth's petition for rehearing and on February 19, 1988 the mandate of the Court of Appeals directing that the judgment in favor of plaintiff be reversed was filed in this court. Plaintiff's petition for a writ of ...