Artful Good Faith: An Essay on Law, Custom, and Intermediaries in Art Markets

Article excerpt

ABSTRACT

This Essay explores relationships between custom and law in the United States in the context of markets for art objects. The Essay argues that these relationships are dynamic, not static, and that law can prompt evolution in customary practice well beyond the law's formal requirements. Understanding these relationships in the context of art markets requires due attention to two components distinctive to art markets: the role of dealers and auction houses as transactional intermediaries as well as the role of museums as end-collectors. In the last decade, the business practices of major transactional intermediaries reflected a significant shift in customary practice, with attention newly focused on the provenance (ownership history) of objects consigned for sale and on long-standing concerns with an object's condition and authorship. During the same time major museums developed new policies and practices applicable to new acquisitions and objects already in held in collections, focused in particular on archaeological objects and ancient art, as well as paintings present in European countries subject to the Nazi regime between 1932 and 1945. The Essay argues that, in both cases, law furnished the backdrop to significant shifts in customary practice, augmented by heightened public knowledge and concern. Custom evolved in response to salient episodes of enforcement of the law, which furnished further rallying points for newly broadened or awakened public interest and concern.

The relationships explored in this Essay are relevant to ongoing debate about the merits of the underlying law. In the United States, it has long been true that nemo dat quod non habet--no one can give what one does not have--with the consequence that a thief cannot convey good title. The subsequent transferees lack good title and are not insulated against claims by the rightful owner even when the transferees acted in good faith. To be sure, an elapsed statute of limitations may furnish a defense, as may the equitable doctrine of laches. Prior scholarship notes that the United States is unusual, but not unique, because it does not recognize any good-faith purchaser defense in this context and because it does not require that the rightful owner of a stolen object compensate the good-faith purchaser as a condition of obtaining the return of the object. However, this scholarship does not acknowledge (or does not emphasize) the significance of transactional intermediaries within art markets or the operation of customary practices of museums and transactional intermediaries. This Essay thus adds the context requisite to evaluating the merits of the relevant law.

TABLE OF CONTENTS

Introduction
  I. The Good-Faith Purchaser, the NSPA, and Customs
     Forfeiture
 II. Nemo Dat, Private-Party Litigation, and Purchasers'
     Claims Against Intermediaries
III. The Good-Faith Purchaser and the Unreliable
     Intermediary
 IV. Industry Practice, Legal Variety, and Good Faith
  V. Evolution in Customary Practice in Art Markets
Conclusion

INTRODUCTION

In markets for art objects in the United States, complex relationships tie law to customary industry practices. These relationships are dynamic, not static; law can prompt shifts in customary practice that range beyond what law directly requires. And law may, or may not, defer to established industry practices in determining whether an actor's conduct satisfied the applicable legal standard. Integral to these relationships are the roles within art markets of two distinct sets of actors: dealers and auction houses, which serve as transactional intermediaries; and museums, which serve as end-collectors, as sources of legitimation for objects that enter their collections, and often as the focal points for highly public scrutiny. This Essay argues that practices among these two sets of actors shifted--not uniformly but perceptibly--in response to highly salient episodes that illustrated the risks of collecting or dealing in art that is later discovered to have been stolen. …