Almost two years after two paintings by Egon Schiele, looted by the Nazis, arrived in the United States from Austria for a three-month exhibition at the Museum of Modern Art, New York's highest court ruled yesterday that a grand jury subpoena keeping the works here while their ownership is investigated is invalid.
In a 6-to-1 decision, the New York State Court of Appeals said that the state's 30-year-old Arts and Cultural Affairs Law did indeed protect the works, "Portrait of Wally" and "Dead City III," from seizure in all cases, criminal as well as civil.
The two paintings, which had been lent to the Modern by a Viennese foundation, were claimed by two separate families on Dec. 31, 1997, just days before their scheduled return to Austria. The families said the works had been confiscated from their Jewish relatives, now dead, and had made their way improperly into the collection of Dr. Rudolf Leopold and then into the private, state-financed Leopold Foundation.
The Manhattan District Attorney, Robert M. Morgenthau, obtained a subpoena on Jan. 7, 1998, ordering the museum to hold the paintings pending a criminal inquiry into their ownership. The Modern then moved to quash the subpoena, citing the state law. The state's Supreme Court, the lowest court in New York, sided with the Modern in May 1998, but the Appellate Division of State Supreme Court reversed that ruling in March.
The decision yesterday again backed the museum, effectively ending the dispute about the paintings' whereabouts. "It's over, totally done," said Evan A. Davis, the lawyer for the Modern. "It's a state law question, and there is no appeal."
Mr. Morgenthau, in a statement, said the decision was "wrong both as a matter of law and policy" and called it "a sad day."
The paintings' ownership remains in dispute, and Daniel Castleman, chief of the District Attorney's investigation division, said: "We have to take a hard look to see what impact the ruling will have on our investigation. The law in Austria is different."
The Modern said it would return the two works, which have been held in storage at the museum, to Austria as quickly as possible. Months ago, however, the United States Department of Justice asked the Modern to inform it of the plan for shipment, and the museum agreed.
Glenn D. Lowry, the Modern's director, was traveling overseas yesterday and could not be reached for comment, but the Modern issued a statement calling the ruling "a victory for all of the people and museums of our state because it means that New York will continue to be the cultural center of the world." Thirteen museums around the state, fearful that collectors and other museums would be unwilling to lend artworks if the law was not interpreted broadly, had filed a brief in support of the Modern.
The case essentially turned on two questions: whether the statute's proscription against seizure applied to all judicial proceedings and whether the subpoena constituted seizure. Mr. Morgenthau had contended that the statute applied only to civil proceedings, not a criminal inquiry, and that the subpoena was not a seizure; the Modern disagreed on both counts and won on both.
In the majority decision, Judge Richard C. Wesley wrote that the statute's words, "unrestricted as they are -- are not limited to civil processes," citing the legislative history of the act as backup.
On the question of seizure, Judge Wesley noted the time that had lapsed without an indictment and wrote: "The museum has been and would continue to be precluded indefinitely from returning the paintings to the Leopold Foundation. The subpoena here has interfered significantly with the Leopold Foundation's possessory interests in the paintings by compelling their indefinite detention in New York, and thus effectuating a seizure."
Although the court confirmed that there are no exceptions to the state law protecting art loans from seizure, the Modern's victory was not undiluted. The court rejected the museum's contention that any judicial proceeding constituted seizure. "The ruling leaves open what would be temporary and would not be temporary," Mr. Davis conceded.
Yesterday's ruling has no bearing on the merits of the claimants' cases, and Judge Wesley also wrote that it should not be construed in any way as an impediment to investigations of stolen art or the broad, exploratory powers of grand juries. "The people are not prohibited from continuing the grand jury investigation of possible criminal wrongdoing with regard to these two paintings," he said.