By Olivier de Baecque, Attorney at law*
The following contains a selection of recent judicial decisions regarding the consignment of art works which are of practical importance to participants in the French art market. It should be noted that, under Civil law, the consignment of a work is precisely regulated by the Civil Code as a “Contrat de dépôt”. In that context, we note a series of decisions resolving conflicts of ownership and compensation between artists and galleries entrusted to display and sell the works of art.
1. Who is the rightful owner of artworks consigned by an artist to a gallery? (Court of Cassation, 22 March 2012)
The lack of formal relationships between galleries and artists regarding the artworks on consignment for sale can lead to ownership disputes and result in litigation over these works, even more so when the consignments have been entrusted to art galleries for a prolonged period of time.
In this case, the heirs of Alexander Calder claimed ownership of fourteen works in the possession of the successors of Aimé Maeght, the illustrious and long-time dealer of the artist.
The successors of the dealer invoked their possession of the works as proof of ownership, in application of the famous civil law rule of evidence for proving property: “In the case of moveable property possession is equivalent to title,” (Article 2276 of the Civil Code).
The French Civil Supreme court (Cour de Cassation) ruled that such a presumption of ownership can be reversed by any means of proof against the gallery because it is acting as a merchant, and rules of evidence are specific for merchants. Here, the heirs of the artist produced writings indicating that the works were only on loan to the gallery. In addition, the former director of the gallery testified that the works were merely consigned with the gallery, with a view to their potential sale, at a price set with the artist. Therefore, the Court ruled that the possession of artworks by a merchant is not sufficient to demonstrate that its successors are the rightful owners.
Conclusion: To prove a purchase (or a donation) from the artist, the gallery is well-advised to have relevant written evidence. Given that the gallery is a merchant, any ambiguity as to the ownership of the works on loan will be construed against the merchant.
2. Is the gallery liable for damages in case of deterioration and restoration of works on consignment? (TGI, Paris, 9 March 2012)
The facts of a case heard by a First Instance Court (Tribunal de Grande Instance) in Paris are as follows: An artist and a gallery terminated their relationship. While on deposit in that gallery, some works deteriorated and, accordingly, the gallery attempted to restore these works. After the return of the unsold stock, the artist alleged that the works thus restored had been damaged.
A judicially appointed expert determined that the works in dispute did show damage or restoration marks inconsistent with proper restoration practice and with the artist’s technique. Furthermore, the expert determined that the restoration of the works was carried out without artist’s agreement.
The Court found in favor of the artist and held that the gallery must compensate the artist both for the need to effect new restorations and for damages suffered to the works. It further found that the value of the works had depreciated and ordered the gallery to make further compensation in proportion to the depreciation. Finally, the Court held that the poor quality of the restored works commissioned by the gallery infringed upon the artist’s moral rights to the integrity of his works and awarded the artist additional damages.
Conclusion: The Consignment contract obviously creates a duty for the gallery to ensure the care and protection of works entrusted. Therefore, the gallery is liable for any damage to them. In the event of any damage to the work, it is advisable to confer with the artist before undertaking any restoration of the works. If the artist is not consulted, restoration of the works may also give rise to an infringement of the artist’s moral rights.
3. Who is liable in case of deterioration of the work during the return transport and what compensation is payable? (Court of Appeal, Aix-en-Provence, 18 October 2012)
A gallery entrusted a work of César to a museum. The latter undertook to cover all the costs of consignment and of transport and to obtain “door to door” insurance for an insured value agreed to in the contract. During the return transportation, the work suffered significant damage. The insurer refused coverage based on the museum’s failure to have previously provided notice of the consignment, as required by its insurance contract.
A judicial expert determined that it was not possible to successfully restore the damaged work. The gallery brought legal action against the museum seeking compensation for the irreparable loss of the work in the amount of the full market value of the work. In turn, the museum filed an action against the art carrier. In the latter case, the carrier was able to avoid any liability because the statute of limitations had expired.
In the first case, the Court held the museum liable for damages, not for the deterioration of the work, which was not of its doing, but for failing to have fulfilled its contractual commitment to purchase insurance. Given that the liability had resulted from the failure to provide adequate insurance, the compensation awarded was limited to the value of agreed insurance, on the grounds that the gallery would not have recovered more if the work been properly insured. The gallery had sought to recover 300,952 Euros but was awarded only 228,674 Euros.
Conclusion: Art loans, transportation and insurance are expensive and involve a degree of risk. In matters relating to insurance, one must be careful to link the insured value to the actual value of the work and make sure that the insurance policy that is to be provided by third parties has actually been obtained. In any event, it is advisable to bring action against the carrier promptly as there is a short, one-year statute of limitations period during which a damaged party may act (Article L. 133-6 of the Commercial Code).
4. Who bears the burden of proving the lack of conformity of the restituted works? (Court of Cassation, 26 September 2012)
A painter consigned eight canvases to a person (a “bailee”) to sell. Two years later, the bailee failed to return the paintings because she had been dispossessed of them by her ex-husband. The painter brought legal action to recover the paintings or failing that, for reimbursement of their value. The person in possession of the works died during the legal proceedings and her heirs, who claimed to have found the canvases, offered to return the paintings to settle the dispute. The painter refused the settlement offer on the grounds that one of the major works allegedly had been replaced by another which was of lesser value.
There is no question that the bailee and her heirs must return the same works as those actually received on consignment or otherwise is liable to pay damages. However, the lack of conformity between the works consigned and those returned must be proven. The issue then is who bears the burden of proof to show that the paintings given back were identical to the ones initially consigned.
In this case, the Court of Appeal(s) had criticized the heirs of the bailee for failing to establish the similarity of the works returned and found in favour of the bailor/the artist.
However, the Court of Cassation reversed the holding and ruled that in this specific case it was up to the artist to prove the lack of conformity. The Court of Cassation’s approach is consistent with the traditional rules of evidence: the burden to prove the necessary facts falls on the party seeking success of its claim. Here, given that the plaintiff artist claimed that he was missing a work, it was incumbent upon him to prove it. Lacking such proof, his claim was dismissed. The court held that a deposit document describing precisely the works and their condition signed by both parties would have sufficed.
Conclusion: Ruling in this and similar cases illustrates the practical importance of signing a precise and detailed consignment document.
*About the Author:
Olivier de BAECQUE, Attorney at law and named partner at BOROWSKY & DE BAECQUE, Paris, France. De Baecque can be reached at Olivier@bdbparis.com or Tel : +33 (0)1 53 29 90 00 – http://www.bdbparis.com
This note is only for the purpose of summarizing a few selected judicial decisions. It is not to be relied on or deemed as legal advice.
© Olivier de Baecque – Edwige Hoflack – The authors want to thank Ms. Irina Tarsis, Esq. and Ms. Caroline Camp, Esq. who kindly reviewed this English version.