Friday, April 9, 2010

Nevada judge rules in title dispute over Norman Rockwell's Russian Schoolroom

Yesterday, after years of bitter wrangling between the parties, the judge in the Nevada District Court issued his judgment in one of the most significant art market title disputes for many years — the case of Norman Rockwell's Russian Schoolroom (above left), formerly in the collection of film director Steven Spielberg.

I’ve been following this case with interest for the past three or four years.

The facts of the case are as follows:

Some time before 1973, Jack Solomon, a Nevada-based art dealer with galleries across America, bought Norman Rockwell's painting entitled Russian Schoolroom from Danenberg Galleries in New York.

In June 1973, Solomon consigned the picture to one of his art businesses — Arts International Gallery in Clayton, Missouri. Later that same month, the picture was bought by a St. Louis art collector, Bert Elam, for $25,000.

For some reason, after writing a cheque for the painting, Elam agreed to leave it on display with Arts International.

On June 25th, 1973, the painting was stolen from the gallery. Arts International rescinded the sale and refunded Elam his money. Chubb Insurance paid Arts International $20,000 for the loss.

Fifteen years later, around 1988, the Morton Goldberg Auction Gallery in New Orleans, Louisiana "obtained" Russian Schoolroom for sale. Knowing Mrs Judy Goffman Cutler to be the preeminent dealer in original American illustration, Morton Goldberg contacted Mrs Goffman Cutler to ask if she would be interested in buying the painting for an amount between $100,000 and $150,000. Mrs Goffman Cutler declined the offer but made an index card in order to track future information concerning the painting, a practice common among most serious professional art dealers.

In October 1988, Goldberg Auction Gallery decided to offer the painting at its Annual Louisiana Purchase Auction and advertised the auction in a half-page advertisement in The Magazine Antiques, which had a circulation at that time of 62,544.

The advertisement featured a photograph of Russian Schoolroom. Goldberg also placed a similar advertisement in The Antiques and Arts Weekly, and also featured the painting as a full-colour illustration on the front cover of the Louisiana Purchase Auction catalogue of October 1988 to advertise its forthcoming sale.

The catalogue was sent to Goldberg Auction Gallery's many subscribers, friends, and customers. David Goldberg, Morton Goldberg's son, believes he even sent a copy of the catalogue to Circle Gallery, a gallery owned by the painting's former owner, Jack Solomon.

One of Solomon's acquaintances, Martin Diamond, saw the advertisement in The Antiques and Arts Weekly and, knowing the picture had been stolen, alerted Solomon to the forthcoming auction. Diamond was advised by Solomon's staff that they were aware of the sale and were "taking care of the situation".

Diamond also informed an FBI agent about the scheduled auction of the painting.

Meanwhile, David Fine, a New Orleans collector, saw the advertisement for Russian Schoolroom and became interested in it. He was assured by Goldberg Auction Gallery that the sale was perfectly legitimate as police authorities, Chubb the insurer, and the previous owner, had between them already resolved the issue of title to the painting.

Mrs Goffman Cutler, meanwhile, having seen the advertisement for the painting, resolved to bid for it and was ultimately successful, securing it for a total sale price of $70,400. She was unaware at that point that a deal had been struck between Goldberg Auction Gallery, Jack Solomon, the insurance company, and the then vendors of the painting, to split the sale proceeds, with 10% going to Goldberg Auction Galleries, $20,000 to the insurance company, and the remainder to be split 50-50 between Solomon and the individuals who had consigned it to Goldberg for sale.

Prior to bidding on the painting, Mrs Goffman Cutler conducted thorough due diligence on the painting’s background, including lodging provenance enquiries with officials at the Norman Rockwell Museum, and consulting the definitive Rockwell catalogue raisonné by Laurie Norton Moffatt, one of the leading authorities on the artist. The provenance details matched those offered by the Goldberg Galleries and so Mrs Cutler felt confident enough to proceed.

Both The Magazine Antiques and The Antiques and Arts Weekly reported Mrs Goffman Cutler's purchase of the painting in their January 1989 issues and both included a picture of the painting in their reports.

Mrs Goffman Cutler subsequently included the painting in a touring exhibition which visited Peoria, Illinois and New York City and advertised it for sale in a half-page advertisement in the July/August 1989 issue of Art & Auction, the leading magazine of the international art market.

Mary Ellen Shortland, an employee of Solomon's Circle Gallery when the painting was stolen in 1973, saw the Art & Auction advertisement and called and left messages for Solomon to tell him it had been found. Her calls were never returned. Shortland also alerted journalists whose subsequent calls to Solomon's galleries were also never returned.

When, in August 1989, Mrs Goffman Cutler offered to sell the painting to a representative of Solomon's Circle Gallery in New York, the gallery declined. Later in 1989, Mrs Goffman Cutler sold the picture to Steven Spielberg (right), already an established and valued client, for $200,000.

In 2007, one of Steven Spielberg's collection researchers came across Russian Schoolroom listed on the FBI's website. Spielberg immediately informed the FBI that he was in possession of the painting. When the FBI passed this information on to Jack Solomon, Solomon filed suit against Spielberg, claiming good title and seeking re-possession of the painting.

On learning that a case was to be brought against her valued friend and client Steven Spielberg, Mrs Goffman Cutler released Mr Spielberg from the lawsuit by giving him Peace Corps in Ethiopia, another 1960s Rockwell painting of comparable value and significance to replace the disputed Russian Schoolroom.

Mrs Goffman Cutler, who with her husband Laurence owns the National Museum of American Illustration in Newport, Rhode Island (left), thereafter contested the case on her own account.

Now, after years of legal wrangling, with hundreds of thousands of dollars of legal fees under the bridge, the judge has finally ruled that Mrs Goffman Cutler does indeed have good title to the painting. In paragraph 49 of his summary judgment, Judge Roger L. Hunt stated that:

Cutler's investigation into the provenance of Russian Schoolroom prior to purchasing the painting met the standard of care for art dealers in the industry. Moreover, in paragraph 56, the Judge states:

The Court finds Cutler acted with the necessary due diligence before purchasing Russian Schoolroom at the Louisiana Purchase Auction.

Those statements may offer some comfort to Mrs Goffman Cutler and her husband who over recent months have had their business ethics called into question by parties who should have known better. The evidence, however, shows that at every stage they acted with responsibility, honesty and propriety.

The case also offered bountiful evidence that Jack Solomon (right) knew, or should have known, that the Louisiana Purchase Auction was taking place, and yet failed to lodge his title claim until Steven Spielberg entered the frame.

Did Solomon believe the Spielberg name and associated publicity would significantly enhance the painting’s market value and thereby gain him a potentially significant upside were he to regain good title and subsequently consign the painting for sale?

Solomon was quoted as saying at the time, “I’m sure in two calls I could turn it over for x million dollars before the sun goes down.” (Riverfront Times, 2 March, 2007).

So, Mrs Goffman Cutler has won her case, thereby endorsing how important it is for art dealers to conduct their own due diligence rather than relying on the services of spurious due diligence agencies, not all of which work in the most ethical way, and one or two of which also seem primarily motivated by the trilling of cash registers.

One thing that remains unanswered about the case is why the Art Loss Register (ALR) chose to represent Jack Solomon against Mrs Goffman Cutler (a position from which the ALR eventually withdrew). Even the most low-level due diligence on the substance of Solomon's title claim should have been enough to dissuade the ALR from taking his side in the dispute. Did the ALR also spot a potential pot of gold lurking in the corner of the Russian Schoolroom?

Other sources
Stolen Rockwell found in Spielberg's collection (MSNBC)
Theft of Norman Rockwell's Russian Schoolroom (FBI)
The Rockwell Files (Riverfront Times)
The Purloined Rockwell (Riverfront Times)
Art Theft! Lawsuits! Spielberg! (Las Vegas Sun)
Steven Spielberg and the Norman Rockwell painting that got away (Los Angeles Times)
Of art and theft: Rockwell, MLK, and Spielberg (The Providence Journal: Rhode Island News)


Anonymous said...

There are many holes in this case, which remain unanswered. One of the biggest is, why would the painting still be listed on the FBI Stolen Art list in 2006 (the FBI headline said RECOVERED: ROCKWELL PAINTING STOLEN IN 1973 FOUND IN LOS ANGELES) if, indeed, the painting was legally found and sold at auction house in New Orleans? This doesn't add up. It also doesn't add up that Solomon, would have been involved with an auction house in New Orleans for a low percentage of what the painting was truly worth. I'd love to see the actual proof Solomon was part of that 'deal' because it makes no sense.
The tie-in to the long-circulating rumors about J Edgar Hoover and his hatred of MLK is more intriguing than a whodunnit written from pure imagination.
I think there are more holes and questions now that the case has been settled. I wonder if Cutler or Solomon know more than was revealed---or if such questions will ever be answered...

Matt Warner said...

Just a correction...The case took place not in the Nevada District Court, but in the United States District Court, District of Nevada. They did that because Robert Mueller, the former head of the Federal Bureau of Investigation, was at one time a defendant in the case.