David Cassirer v. Thyssen-Bornemisza Collection , 862 F.3d 951 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DAVID CASSIRER; AVA CASSIRER; No. 15-55550
UNITED JEWISH FEDERATION OF SAN 15-55977
DIEGO COUNTY, a California non-
profit corporation, D.C. No.
Plaintiffs-Appellees, 2:05-cv-03459-
JFW-E
v.
THYSSEN-BORNEMISZA COLLECTION
FOUNDATION, an agency or
instrumentality of the Kingdom of
Spain,
Defendant-Appellant.
DAVID CASSIRER; AVA CASSIRER; No. 15-55951
UNITED JEWISH FEDERATION OF SAN
DIEGO COUNTY, a California non- D.C. No.
profit corporation, 2:05-cv-03459-
Plaintiffs-Appellants, JFW-E
v.
OPINION
THYSSEN-BORNEMISZA COLLECTION
FOUNDATION, an agency or
instrumentality of the Kingdom of
Spain,
Defendant-Appellee.
2 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
Appeal from the United States District Court
for the Central District of California
John F. Walter, District Judge, Presiding
Argued and Submitted December 5, 2016
Pasadena, California
Filed July 10, 2017
Before: Consuelo M. Callahan, Carlos T. Bea,
and Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Bea
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 3
SUMMARY *
Foreign Sovereign Immunities Act / Holocaust
Expropriated Art Recovery Act
The panel reversed the district court’s grant of summary
judgment, on remand, in favor of Thyssen-Bornemisza
Collection Foundation, the defendant in an action under the
Foreign Sovereign Immunities Act concerning a Camille
Pissarro painting that was forcibly taken from the plaintiffs’
great-grandmother by an art dealer who had been appointed
by the Nazi government to conduct an appraisal.
The panel held that the Holocaust Expropriated Art
Recovery Act of 2016 supplied the statute of limitations for
the plaintiffs’ claims. The claims were timely because they
were filed within six years of the date of the plaintiffs’ actual
discovery of the artwork’s location.
The panel held that when jurisdiction is based on the
FSIA, federal common law, which follows the approach of
the Restatement (Second) of Conflict of Laws, applies to the
choice of law rule determination. Under the Second
Restatement, Spain’s substantive law governed defendant
TBC’s claim that it was the rightful owner of the painting.
The panel held that the district court erred in deciding
that, as a matter of law, TBC had acquired title to the
painting through Article 1955 of the Spanish Civil Code.
The panel held that there was a triable issue of fact whether
TBC was an encubridor, or accessory, to the theft of the
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
4 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
painting within the meaning of Civil Code Article 1956. In
Section III.C.1 of its opinion, the panel considered the
following Spanish rules of statutory interpretation:
(i) proper meaning of wording; (ii) context; (iii) historical
and legislative background, including (a) definition of
encubridor in the 1870 Penal Code, and (b) the 1950 Law;
and (iv) social reality at the time of enactment. The panel
concluded that an encubridor within the meaning of Article
1956 could include someone who, with knowledge that the
good had been stolen from the rightful owner, received
stolen goods for his personal benefit. The panel concluded
that TBC had not established, as a matter of law, that it
lacked actual knowledge that the painting was stolen
property. The district court therefore erred in granting
summary judgment on the grounds that, as a matter of law,
TBC acquired the painting through acquisitive prescription.
The panel rejected TBC’s other arguments for affirming
the grant of summary judgment. First, the panel held that
TBC was not entitled to summary judgment based on its
claim that Baron Hans Heinrich Thyssen-Bornemisza, from
whom it bought the painting, had lawful title under Swiss
law. The panel concluded that there was a triable issue of
fact as to the Baron’s good faith in his possession of the
painting. Second, the panel held that TBC was not entitled
to summary judgment based on a laches defense under
California law. Third, the panel held that the plaintiffs’
claims were not foreclosed by their great-grandmother’s
acceptance of a 1958 settlement agreement with the Nazi art
appraiser, the heir of another Jewish victim, and the German
government.
The panel also concluded that the plaintiffs’ other
arguments against applying Article 1955 were without merit.
The panel held that Spain’s Historical Heritage Law did not
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 5
prevent TBC from acquiring prescriptive title to the painting.
The panel also affirmed the district court’s conclusion that
the application of Article 1955 to vest TBC with title to the
painting would not violate the European Convention on
Human Rights.
The panel reversed the district court’s judgment and
remanded the case to the district court for further
proceedings.
COUNSEL
David Boies (argued), Boies Schiller & Flexner LLP,
Armonk, New York; Devin Velvel Freedman and Stephen
N. Zack, Boies Schiller & Flexner LLP, Miami, Florida; for
Plaintiffs-Appellants/Cross-Appellees.
Thaddeus H. Stauber (argued), Jessica N. Walker, and Sarah
Erickson André, Nixon Peabody LLP, Los Angeles,
California, for Defendant-Appellee/Cross-Appellant.
Martin M. Ellison and Mary-Christine Sungaila, Haynes and
Boone LLP, Costa Mesa, California, for Amicus Curiae Bet
Tzedek Legal Services.
Kathleen Vermazen Radez, Associate Deputy Solicitor
General; Joshua A. Klein, Deputy Solicitor General; Edward
C. DuMont, Solicitor General; Office of the Attorney
General, San Francisco, California; for Amicus Curiae State
of California.
Sarah E. Gettings, Connie Lam, Christie P. Bahna,
Benjamin G. Schatz, and Stanley W. Levy, Manatt Phelps &
Phillips LLP, Los Angeles, California; Michael Bazyler,
6 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
Dale E. Fowler School of Law, Chapman University,
Orange, California; for Amicus Curiae The 1939 Society.
Daragh M. Brehony and Bernardo M. Cremades Román, B.
Cremades & Asociados, Madrid, Spain, for Amici Curiae
Comunidad Judía de Madrid and Federación de
Comunidades Judías de España.
Kelly L. Perigoe and Jeanne A. Fugate, Caldwell Leslie &
Proctor PC, Los Angeles, California, for Amicus Curiae José
Luis de Castro.
Jackson Herndon, Kelly A. Bonner, and Owen C. Pell, White
& Case LLP, New York, New York; Agnes Peresztegi,
Soffer Avocats, Paris, France; for Amicus Curiae
Commission for Art Recovery.
OPINION
BEA, Circuit Judge, with whom Judge Callahan concurs.
Judge Ikuta concurs except as to Sections III.C.1.iii.b and
III.C.1.iv:
In 1939 Germany, as part of the “Aryanization” of the
property of German Jews, Lilly Neubauer (“Lilly”) 1 was
forced to “sell” a painting by Camille Pissarro (the
“Painting”), a French Impressionist, to Jackob
Scheidwimmer (“Scheidwimmer”), a Berlin art dealer. We
1
In our two prior opinions, this Court has referred to Lilly Neubauer,
the great-grandmother of Plaintiffs David Cassirer and Ava Cassirer, as
“Lilly.” See Cassirer v. Kingdom of Spain, 616 F.3d 1019 (9th Cir. 2010)
(en banc); Cassirer v. Thyssen-Bornemisza Collection Foundation,
737 F.3d 613 (9th Cir. 2013).
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 7
use quotation marks around “sell” to distinguish the act from
a true sale because Scheidwimmer had been appointed to
appraise the Painting by the Nazi government, had refused
to allow Lilly to take the Painting with her out of Germany,
and had demanded that she sell it to him for all of $360 in
Reichsmarks, which were to be deposited in a blocked
account. Lilly justifiably feared that unless she sold the
Painting to Scheidwimmer she would not be allowed to leave
Germany. The district court found, and the parties agree,
that the Painting was forcibly taken from Lilly.
The history of how the Cassirer family came to own the
Painting, as well as the application of the Foreign Sovereign
Immunity Act (“FSIA”) which resulted in recognition of our
jurisdiction to deal with the claims to the Painting, are
detailed in our earlier en banc opinion. 2 What primarily
concerns us now is the sale of the Painting by the Baron Hans
Heinrich Thyssen-Bornemisza (the “Baron”) to the Thyssen-
Bornemisza Collection (“TBC”) in 1993, its display at
TBC’s museum in Madrid ever since, and what effect, if any,
that possession has had on the claims of title by the parties
to this action.
In short, in this third appeal to this Court, we are called
upon to decide whether the district court correctly granted
summary judgment to TBC based on TBC’s claim that it
acquired good title to the Painting through the operation of
Spain’s law of prescriptive acquisition (or “usucaption”) as
a result of TBC’s public, peaceful, and uninterrupted
possession in the capacity as owner of the Painting from
1993 until the Cassirers filed a petition requesting the return
of the Painting in 2001. Second, although not ruled upon by
the district court, we consider whether the Baron’s purchase
2
Kingdom of Spain, 616 F.3d at 1023–24.
8 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
of the Painting, and his possession of it for years, vested him
with good title under Swiss law—title he could validly pass
to TBC in the 1993 sale. Third, we consider TBC’s
arguments that the Cassirers’ claims are barred by laches or
by Lilly’s acceptance of a post-war settlement agreement
with the German government. Finally, we consider the
Cassirers’ arguments that Spain’s Historical Heritage Law
and the European Convention on Human Rights prevent
TBC from acquiring prescriptive title. Ultimately, we
reverse the order which granted summary judgment and
remand for further proceedings.
I. FACTS AND PROCEDURAL HISTORY 3
A. The 1958 Settlement Agreement
After the Nazis forced Lilly to sell the Painting to
Scheidwimmer in 1939, Scheidwimmer then forced another
Jewish collector, Julius Sulzbacher (“Sulzbacher”), to
exchange three German paintings for the Painting.
Sulzbacher was also seeking to escape Nazi Germany. After
the Sulzbacher family fled Germany, the Gestapo
confiscated the Painting.
After the war, the Allies established a process for
restoring property to the victims of Nazi looting. Military
Law No. 59 (“MGL No. 59”) authorized victims to seek
restitution of looted property. In 1948, Lilly filed a timely
claim against Scheidwimmer under MGL No. 59 for
restitution of, or compensation for, the Painting. Sulzbacher
also filed claims under MGL No. 59 seeking restitution of,
3
As noted above, much of the factual history of this case is
described in Kingdom of Spain, 616 F.3d at 1023–24. We include only
such factual background as necessary to explain our decision in this case.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 9
or compensation for, the Painting and the three German
paintings. In 1954, the United States Court of Restitution
Appeals (“CORA”) published a decision confirming that
Lilly owned the Painting.
Although they knew Lilly was the owner of the Painting,
Lilly, Sulzbacher, and Scheidwimmer believed the Painting
was lost or destroyed during the war. In 1957, after the
German Federal Republic regained its sovereignty, Germany
established a law governing claims relating to Nazi-looted
property known as the Brüg. Lilly then dropped her
restitution claim against Scheidwimmer and initiated a claim
against Germany for compensation for the wrongful taking
of the Painting. Grete Kahn, Sulzbacher’s heir, was also a
party in this action.
The parties to the action against Germany were unaware
of the location of the Painting and only two of the German
paintings originally owned by Sulzbacher were still
available for return. In 1958, the parties reached a settlement
agreement (the “1958 Settlement Agreement”). This
agreement provided that: (1) Germany would pay Lilly
120,000 Deutschmarks (the Painting’s agreed value as of
April 1, 1956); (2) Grete Kahn would receive 14,000
Deutschmarks from the payment to Lilly; and
(3) Scheidwimmer would receive two of Sulzbacher’s three
German paintings.
B. The Painting’s Post-War History
After the Nazis confiscated the Painting from
Sulzbacher, it allegedly was sold at a Nazi government
auction in Dusseldorf. In 1943, the Painting was sold by an
unknown consignor at the Lange Auction in Berlin to an
unknown purchaser for 95,000 Reichsmarks. In 1951, the
Frank Perls Gallery of Beverly Hills arranged to move the
10 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
Painting out of Germany and into California to sell the
Painting to collector Sidney Brody for $14,850. In 1952,
Sydney Schoenberg, a St. Louis art collector, purchased the
Painting for $16,500. In 1976, the Baron purchased the
Painting through the Stephen Hahn Gallery in New York for
$275,000. The Baron kept the Painting in Switzerland as
part of his collection until 1992, except when it was on
public display in exhibitions outside Switzerland.
C. TBC’s Purchase of the Painting
In 1988, Favorita Trustees Limited, an entity of the
Baron, and Spain reached an agreement that the Baron would
loan his art collection (the “Collection”), including the
Painting, to Spain. Pursuant to this agreement, Spain created
TBC 4 to maintain, conserve, publicly exhibit, and promote
the Collection’s artwork. TBC’s initial board of directors
had five members acting on behalf of the Spanish
government and five members acting on behalf of the Baron
and his family. Spain agreed to display the Collection at the
Villahermosa Palace in Madrid, Spain, and to restore and
redesign the palace as a museum (the “Museum”). After the
Villahermosa Palace had been restored and redesigned as the
Museum, in 1992, pursuant to the loan agreement, the
Museum received a number of paintings from Favorita
Trustees Limited, including the Painting, and the Museum
opened to the public. In 1993, the Spanish government
passed Real Decreto-Ley 11/1993, which authorized and
funded the purchase of the Collection. Spain bought the
Collection by entering into an acquisition agreement with
Favorita Trustees Limited. The Real Decreto-Ley 11/1993
4
TBC is an agency or instrumentality of the Kingdom of Spain,
which this Court previously recognized in Cassirer v. Kingdom of Spain,
616 F.3d 1019, 1027 (9th Cir. 2010).
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 11
classified the Collection as part of the Spanish Historical
Heritage, which made the property subject to the provisions
of the Spanish Historical Heritage Law. TBC paid the Baron
$350 million for the Collection. The estimated value of the
Collection at that time was somewhere between $1 billion
and $2 billion.
In 1989, after the 1988 loan agreement, Spain and TBC
investigated title to the works in the Collection. In 1993,
Spain and TBC did a second title investigation in connection
with the purchase agreement.
D. Procedural History
In 2000, Claude Cassirer, a photographer, learned from
a client that the Painting was in the Museum. TBC does not
dispute that Mr. Cassirer had “actual knowledge” of the
Painting’s location by 2000. On May 3, 2001, the Cassirer
family filed a petition in Spain seeking the return of the
Painting. After that petition was denied, in 2005, Claude
Cassirer filed this action in the United States District Court
for the Central District of California seeking the return of the
Painting. 5
As noted above, this case has been before this Court in
two prior appeals. After the second remand to the district
court, TBC filed a motion for summary adjudication. TBC
moved for summary adjudication of the following issues:
(1) Plaintiffs’ predecessor-in-interest, Lilly,
waived her rights to the Pissarro Painting in
the 1958 Settlement Agreement; (2) the
5
Claude Cassirer died in 2010. David and Ava Cassirer, his
children, and the United Jewish Federation of San Diego County succeed
to his claims. Collectively, we refer to these plaintiffs as “the Cassirers.”
12 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
Court lacks jurisdiction because any “taking
in violation of international law” has already
been remedied by Germany; and (3) the
tenets of U.S. policy on Nazi-looted art
require honoring the finality of the 1958
Settlement Agreement.
In a written order, the district court denied TBC’s motion on
the grounds that Lilly did not waive her right to physical
restitution by accepting the Settlement Agreement, which
also meant that the court retained jurisdiction under the FSIA
and the Cassirers’ claims do not conflict with federal policy.
TBC filed an interlocutory appeal of that portion of the order
which denied TBC’s claim of sovereign immunity, as to
which the district court denied TBC a certificate of
appealability on the grounds that TBC’s attempted
interlocutory appeal was frivolous and/or waived because of
this Court’s decision in 2010, which determined that the
district court could properly exercise jurisdiction pursuant to
the FSIA. The district court thereby retained jurisdiction of
the case pursuant to Chuman v. Wright, 960 F.2d 104, 105
(9th Cir. 1992). TBC now cross-appeals the district court’s
order denying its motion for summary adjudication based on
the 1958 Settlement Agreement.
After its summary adjudication motion was denied, TBC
moved for summary judgment on the grounds that it had
obtained ownership of the Painting pursuant to Spain’s law
of acquisitive prescription as stated in Spain Civil Code
Article 1955 (“Article 1955”). The Cassirers filed a motion
for summary adjudication asking the court to hold that
California law, not Spanish law, governs the merits of the
case. The district court granted summary judgment in favor
of TBC and denied the Cassirers’ motion for summary
adjudication. The district court concluded that Spanish law
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 13
governed TBC’s claim that it owned the Painting pursuant to
acquisitive prescription and that TBC owned the Painting
because TBC had fulfilled the requirements of Article 1955.
Before the district court, the Cassirers argued that their
claims were timely pursuant to California Code of Civil
Procedure § 338(c)(3)(A) (“§ 338(c)(3)(A)”), California’s
special statute of limitations for actions “for the specific
recovery of a work of fine art brought against a museum . . .
in the case of an unlawful taking or theft[.]” California
enacted § 338(c)(3)(A) in 2010, five years after the Cassirers
filed suit, but § 338(c)(3)(A) states that it applies to cases
that are pending, see Cal. Civ. Proc. Code § 338(c)(3)(B).
The district court held that, since TBC had acquired
ownership of the Painting under Spanish law prior to the
California legislature’s enactment of § 338(c)(3)(A),
retroactive application of that special statute of limitations
would violate TBC’s due process rights.
The district court entered judgment in favor of TBC. The
Cassirers timely appealed.
TBC cross-appealed the summary judgment order to the
extent that it did not address two arguments advanced in
TBC’s motion for summary judgment. First, that the Baron
had acquired ownership of the Painting under Swiss law
through prescriptive acquisition and had subsequently
conveyed good title to TBC. Second, that the Cassirers’
claims are barred by the equitable defense of laches. TBC
also cross-appealed “any interlocutory decisions or orders
adverse to [TBC]” and the motions filed by TBC that were
14 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
denied as moot by the district court following the district
court’s entry of judgment. 6
This Court consolidated the parties’ appeals. In
summary, the following appeals on the merits are before this
Court: (1) the Cassirers’ appeal of the order which granted
summary judgment in favor of TBC on the grounds that
under applicable Spanish law, TBC acquired title to the
Painting by prescriptive acquisition (usucaption), (2) TBC’s
appeal of the order which denied TBC’s motion for summary
adjudication, based on the assertion that Lilly waived her
ownership rights to the Painting pursuant to the 1958
Settlement Agreement and that the district court lacked
jurisdiction under the FSIA, (3) TBC’s cross-appeal of the
summary judgment order in its favor, for failure to consider
and rule upon its claim under Swiss law and its defense of
laches.
6
These motions are TBC’s Motion for Certification and TBC’s
Motion for Review and Reconsideration of the Magistrate Judge’s
Discovery Order. The motion for certification, which asked the district
court to certify for interlocutory appeal TBC’s claims relating to the 1958
Settlement Agreement are moot since we consider those claims in this
opinion. In TBC’s discovery motion, TBC sought reversal of the
magistrate judge’s denial of TBC’s motion to compel production of
thirteen letters between Lilly and her attorney. The motion is no longer
moot in light of our decision in this opinion to reverse and remand this
case. However, the district court did not consider this motion on the
merits, and trial courts have “broad discretion” to permit or deny
discovery, Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002) (quoting
Goehring v. Brophy, 94 F.3d 1294, 1305 (9th Cir. 1996)). Therefore, we
will allow the district court to consider this discovery motion in the first
instance on remand. See Bermudez v. Duenas, 936 F.2d 1064, 1068 (9th
Cir. 1991) (remanding to the district court to consider in the first instance
a discovery motion that was denied as moot after a grant of summary
judgment).
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 15
II. JURISDICTION AND STANDARD OF REVIEW
The FSIA, 28 U.S.C. § 1330(a), gave the district court
jurisdiction. 28 U.S.C. § 1291 gives this Court jurisdiction
over this appeal.
This Court reviews an appeal from summary judgment
de novo. Jones v. Union Pac. R.R. Co., 968 F.2d 937, 940
(9th Cir. 1992). This Court reviews a district court’s choice
of law analysis de novo. Abogados v. AT&T, Inc., 223 F.3d
932, 934 (9th Cir. 2000). A district court’s interpretation of
foreign law is a question of law that this Court reviews de
novo. Brady v. Brown, 51 F.3d 810, 816 (9th Cir. 1995). “In
determining foreign law, the court may consider any relevant
material or source, including testimony, whether or not
submitted by a party or admissible under the Federal Rules
of Evidence.” Fed. R. Civ. P. 44.1.
III. ANALYSIS
A. The Cassirers’ claims are timely within the
statute of limitations recently enacted by
Congress to govern claims involving art
expropriated during the Holocaust.
Before the district court, the parties and the district court
agreed that California, as the forum, supplied the statute of
limitations for the Cassirers’ claims. California Code of
Civil Procedure § 338(c)(3)(A) requires that “an action for
the specific recovery of a work of fine art” brought against a
museum in the case of an “unlawful taking” be commenced
within “six years of the actual discovery by the claimant” of
the “identity and whereabouts of the work of fine art” and
“[i]nformation or facts that [were] sufficient to indicate that
the claimant ha[d] a claim for a possessory interest in the
work of fine art that was unlawfully taken or stolen.” Cal.
16 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
Civ. Proc. Code § 338(c)(3)(A)(i)–(ii). The primary issue
below was whether retroactive application of
§ 338(c)(3)(A), which was passed in 2010, five years after
the Cassirers filed suit, would violate TBC’s due process
rights. The district court held that, since TBC “acquired
ownership of the Painting under Spanish law prior to [the]
California Legislature’s retroactive extension of the statute
of limitations” and the Cassirers’ claims were time barred
before the legislature passed § 338(c)(3)(A), retroactive
application of § 338(c)(3)(A) would violate TBC’s due
process rights. On appeal, TBC contends that retroactive
application of § 338(c)(3)(A) would violate its due process
rights.
However, while these appeals were pending before us,
Congress passed, and the President signed, the Holocaust
Expropriated Art Recovery Act of 2016 (“HEAR”), H.R.
6130. For the reasons stated below, we conclude that HEAR
supplies the statute of limitations to be applied in this case in
federal court and that the Cassirers’ claims are timely under
this law.
HEAR states:
Notwithstanding any other provision of
Federal or State law or any defense at law
relating to the passage of time, and except as
otherwise provided in this section, a civil
claim or cause of action against a defendant
to recover any artwork or other property that
was lost during the covered period because of
Nazi persecution may be commenced not
later than 6 years after the actual discovery by
the claimant or the agent of the claimant of—
(1) the identity and location of the artwork or
other property; and (2) a possessory interest
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 17
of the claimant in the artwork or other
property.
Id. § 5(a). Thus, HEAR creates a six-year statute of
limitations period that commences on the date of actual
discovery of the artwork’s location by the claimant. Id.
§ 5(a). Lilly suffered the taking of the Painting in 1939,
which is during the “covered period” of HEAR (January 1,
1933, and ending on December 31, 1945). See id. § 4(3).
The six-year statute of limitations applies to any claims that
are pending on the date of HEAR’s enactment, which was
December 16, 2016, including claims on appeal such as the
Cassirers’. See id. § 5(d)(1) (“Subsection (a) shall apply to
any civil claim or cause of action that is . . . pending in any
court on the date of enactment of this Act, including any civil
claim or cause of action that is pending on appeal . . . .”).
Viewing the facts in the light most favorable to the
Cassirers, as we must on an appeal from an order which
granted summary judgment, Am. Int’l Grp., Inc. v. Am. Int’l
Bank, 926 F.2d 829, 831 (9th Cir. 1991), the Cassirers
acquired actual knowledge of the Painting’s location in 2000
when Claude Cassirer learned from a client that the Painting
was in the Museum. 7 After the Cassirer family’s 2001
petition in Spain was denied, the family filed this action on
May 10, 2005. Since the lawsuit appears to have been filed
within six years of actual discovery, the Cassirers’ claims are
timely under the statute of limitations created by HEAR.
7
Of course, the date of acquisition of actual knowledge is a fact
subject to proof, and possible rebuttal, in proceedings before the district
court.
18 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
B. This Court applies the Second Restatement of the
Conflict of Laws to determine which state’s
substantive law applies in deciding the merits of
this case. The Second Restatement directs this
Court to apply Spain’s substantive law.
Although Congress has directed federal courts to apply
HEAR’s six-year statute of limitations for claims involving
art expropriated during the Holocaust, HEAR does not
specify which state’s substantive law will govern the merits
of such claims. Under California law, thieves cannot pass
good title to anyone, including a good faith purchaser.
Crocker Nat’l Bank v. Byrne & McDonnell, 178 Cal. 329,
332 (1918). This is also the general rule at common law.
See Kingdom of Spain, 616 F.3d at 1030, n.14 (quoting
Marilyn E. Phelan, Scope of Due Diligence Investigation in
Obtaining Title to Valuable Artwork, 23 Seattle U. L. Rev.
631, 633–34 (2000)) (“One who purchases, no matter how
innocently, from a thief, or all subsequent purchasers from a
thief, acquires no title in the property. Title always remains
with the true owner.”). This notion traces its lineage to
Roman law (nemo dat quod non habet, meaning “no one
gives what he does not have”). 8
But the application of our choice of law jurisprudence
requires that we not apply such familiar rules, under the
circumstances of this case. As we shall see, Spain’s property
8
Spanish law has some similar provisions. “Possession of movable
property acquired in good faith is equivalent to title. Notwithstanding
the foregoing, any person who has lost movable property or has been
deprived of it illegally may claim it from its possessor.” Civil Code
Article 464, Ministerio de Justicia, Spain Civil Code 66 (2009) (English
translation). However, the Spanish Civil Code must be read in its
entirety, including those articles which provide that title to chattels may
pass through qualified, extended possession, such as Article 1955.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 19
laws will determine whether the Painting has passed to TBC
via acquisitive prescription.
This Court has held that, when jurisdiction is based on
the FSIA, “federal common law applies to the choice of law
rule determination. Federal common law follows the
approach of the Restatement (Second) of Conflict of Laws.”
Schoenberg v. Exportadora de Sal, S.A. de C.V., 930 F.2d
777, 782 (9th Cir. 1991) (citations omitted). The district
court recognized this precedent, but believed that language
from this Court’s decision in Sachs v. Republic of Austria,
737 F.3d 584, 600 n.14 (9th Cir. 2013) (en banc), rev’d on
other grounds by OBB Personenverkehr AG v. Sachs, 136 S.
Ct. 390 (2015), called Schoenberg’s holding into question.
Sachs does not clearly overrule the Schoenberg
precedent. In Sachs, the plaintiff had been injured trying to
board a train in Austria operated by a railroad (“OBB”) that
was owned by the Austrian government. Id. at 587. The
district court granted OBB’s motion to dismiss on the
grounds of a lack of subject-matter jurisdiction, holding that
OBB was immune from suit under the FSIA. Id. Sitting en
banc, this Court reversed and held that it had subject matter
jurisdiction pursuant to the commercial-activity exception to
sovereign immunity in the FSIA. Id. at 603. In footnote 14
of the Sachs opinion, this Court held that California law
governed the plaintiff’s negligence claim. Id. at 600 n.14.
This Court assumed that California law applied because the
railroad ticket was purchased in California and Sachs’ action
was brought in California. Id. (“[W]e think it is a
permissible view of Supreme Court precedent to look to
California law to determine the elements of Sachs’s
claims[]” without engaging in a formal choice of law
analysis.). However, this Court then cited Schoenberg and
took into consideration the Second Restatement choice of
20 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
law test. See id. (“Even if we should make a separate
conflicts analysis under the Restatement, that conflicts
analysis supports the same conclusion that California law
applies to Sachs’s claims.”). Since Sachs did not expressly
overrule Schoenberg and the Supreme Court has not
overruled or effectively overruled Schoenberg, we must
apply Schoenberg to determine which state’s substantive law
applies. See Miller v. Gammie, 335 F.3d 889, 896–900 (9th
Cir. 2003). And, as noted above, Schoenberg instructs us to
apply the Second Restatement. To the extent Sachs calls into
doubt the need to apply the Second Restatement in certain
FSIA cases, Sachs is distinguishable because in Sachs the
plaintiff purchased her railroad ticket in California, Sachs,
737 F.3d at 587, while in this case TBC purchased the
Painting in Spain and claims to have acquired prescriptive
title by possessing the Painting in Spain. Therefore, we
apply Schoenberg and the Second Restatement. 9
The Second Restatement includes jurisdiction-selecting
rules and a multi-factor inquiry in Section 6, which provides
choice of law factors that a court should apply in the absence
of a statutory directive to decide the applicable rule of law.
In addition to considering any specific jurisdiction-selecting
rule, a court is supposed to apply the Section 6 factors to
9
The district court concluded that under both the Second
Restatement and California’s choice of law test (known as the
governmental interest or comparative impairment test), Spain’s
substantive law applies to this case. Since we conclude that the Second
Restatement test applies because Schoenberg controls, we do not apply
California’s choice of law test. We note that the courts in Schoenberg
and Sachs both did not apply the forum’s choice of law test. Schoenberg,
930 F.2d at 782–83; Sachs, 737 F.3d at 600 n.14.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 21
decide which state has the most significant relationship to
the case. 10 These factors are:
(a) the needs of the interstate and
international systems, (b) the relevant
policies of the forum, (c) the relevant policies
of other interested states and the relative
interests of those states in the determination
of the particular issue, (d) the protection of
justified expectations, (e) the basic policies
underlying the particular field of law,
(f) certainty, predictability and uniformity of
result, and (g) ease in the determination and
application of the law to be applied.
Second Restatement § 6(2). These factors are not listed in
order of importance. Second Restatement § 6, cmt. C.
Instead, “varying weight will be given to a particular factor,
or to a group of factors, in different areas of choice of law.”
Id.
Chapter 9 of the Second Restatement is focused on the
choice of law considerations most relevant to property cases.
Section 222 sets forth how the general choice of law
principles stated in § 6 are applicable to real and personal
property:
The interest of the parties in a thing are
determined, depending upon the
circumstances, either by the “law” or by the
“local law” of the state which, with respect to
the particular issue, has the most significant
10
For this reason, the Second Restatement’s approach is often called
the “most significant relationship” test.
22 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
relationship to the thing and the parties under
the principles stated in § 6.
Second Restatement § 222. This general principle is
“applicable to all things, to all interests in things and to all
issues involving things. Topic 2 (§§ 223–243) deals with
interests in immovables and Topic 3 (§§ 244–266) with
interests in movables.” Second Restatement § 222, cmt. a.
Section 222 thus clarifies the subject of the § 6 “most
significant relationship” inquiry: A court should consider
which state “has the most significant relationship to the thing
and the parties under the principles in § 6.” 11 Second
Restatement § 222 (emphasis added). Moreover, the
commentary to § 222 notes the following about this “most
significant relationship” inquiry:
In judging a given state’s interest in the
application of one of its local law rules, the
forum should concern itself with the question
whether the courts of that state would have
applied this rule in the decision of the case.
The fact that these courts would have applied
this rule may indicate that an important
interest of that state would be served if the
rule were applied by the forum.
Second Restatement § 222, cmt. e. In addition, the
commentary to § 222 clarifies that “[i]n contrast to torts,
protection of the justified expectations of the parties is of
11
In addition to citing § 6 in the text itself, the commentary to § 222
also clarifies that “the principles stated in § 6 underlie all rules of choice
of law . . . .” Second Restatement § 222, cmt. b.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 23
considerable importance in the field of property.” Second
Restatement § 222, cmt. b (citation omitted).
The Second Restatement also has a specialized rule for a
claim of acquisition by adverse possession or prescription of
an interest in chattel. Second Restatement § 246 states,
“Whether there has been a transfer of an interest in a chattel
by adverse possession or by prescription and the nature of
the interest transferred are determined by the local law of the
state where the chattel was at the time the transfer is claimed
to have taken place.” The Second Restatement provides the
following rationale for this rule:
The state where a chattel is situated has the
dominant interest in determining the
circumstances under which an interest in the
chattel will be transferred by adverse
possession or by prescription. The local law
of this state is applied to determine whether
there has been such a transfer and the nature
of the interest transferred.
Second Restatement, § 246, cmt. a (emphasis added).
After considering these sections of the Second
Restatement and the relevant interests at stake, we conclude
that this Court ought to apply Spanish law to decide whether
TBC has title to the Painting. Although some of the § 6
factors suggest California law should apply, on balance,
these factors indicate Spanish law should apply because
Spain is the “state which, with respect to the particular issue,
has the most significant relationship to the thing and the
parties under the principles stated in § 6.” Second
Restatement § 222. We note at the outset that the courts of
Spain would apply their own property laws to adjudicate
TBC’s claim that it owns the Painting because Spain uses a
24 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
law of the situs rule for movable property. See Civil Code
Article 10.1, Ministerio de Justicia, Spain Civil Code 4
(2009) (English translation). As the commentary to § 222
notes, the fact that Spain would apply its own law suggests
that an important interest of Spain may be served by
applying Spanish law.
Also, as the district court recognized, the situs rule
furthers the needs of the international system by encouraging
certainty, predictability, and uniformity of result.
Considering the relevant policies of “interested states,”
Spain’s interest in having its substantive law applied is
significant. In a highly publicized sale, Spain provided TBC
public funds to purchase the Collection, including the
Painting. TBC, an instrumentality of Spain, has possessed
the Painting for over twenty years and displayed it in the
Museum. In terms of protecting justified expectations, the
1993 Acquisition Agreement between TBC and the Baron
states that English law governs the purchase of the
Collection. But, the legal opinion provided by TBC’s
counsel stated that, under English law, Spanish law would
govern the effect of the transfer. The Cassirers do not
dispute this reading of English law.
Cutting in favor of the choice of California law is the fact
that the forum, California, has a strong interest in protecting
the rightful owners of fine arts who are dispossessed of their
property. In fact, as noted in Part III.A, California has
created a specific statute of limitations for cases involving
an unlawful taking or theft of fine art. We also acknowledge
that it is more difficult for a federal court to discern,
determine, and apply Spanish law than California law.
Factor 6(e), which requires a court to consider the basic
policies underlying property law, is arguably inconclusive.
The property laws of both Spain and California seek to create
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 25
certainty of title, discourage theft, and encourage owners of
stolen property to seek return of their property in a timely
fashion. Although these states have chosen different rules
for movable property, both sets of rules further the basic
polices underlying property law.
On the other hand, § 246 indicates that Spain has the
“dominant interest” in determining whether the Painting was
transferred to TBC via acquisitive prescription because the
Painting was bought in Spain and has remained in Spain.
The Cassirers’ arguments to the contrary are not persuasive.
First, the Cassirers argue there is a bad faith exception to the
law of the situs rule when an adverse possessor acquired
property “which was known or should have been known to
have been stolen.” However, since the Cassirers rely only
on a 1980 English court decision in support of this
proposition, the argument is unpersuasive. Second, the
Cassirers argue that the law of the situs rule is “outdated (not
revised in 45 years), and is now inconsistent with modern
choice of law principles.” However, the Cassirers cite cases
in which courts have abolished the law of the situs rule for
tort actions. As a district court stated when applying § 246
in a stolen art case:
The refusal by the New York Court of
Appeals to apply the “place of injury” test in
the tort field does not dictate a different result
here. This is because the choice of law rule
advanced in the cited cases and adopted in
Section 246 of the Restatement incorporates
the concept of the “significant relationship.”
Kunstammlungen Zu Wimar v. Elicofon, 536 F. Supp. 829,
846 (E.D.N.Y. 1981) (citation omitted).
26 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
In sum, after applying the Second Restatement § 6
factors and the law of the situs rule of § 246, we conclude
that Spanish law governs TBC’s claim that it is the rightful
owner of the Painting.
The Cassirers argue in a letter submitted to this Court
pursuant to Federal Rule of Appellate Procedure 28(j) that
we should not apply Spain’s law because of HEAR.
According to the Cassirers, HEAR indicates that the
application of Spain’s substantive law in this case would be
“truly obnoxious” to federal policy. However, HEAR does
not specify which state’s rules of decision should govern the
merits of claims involving art expropriated during the
Holocaust. HEAR simply supplies a statute of limitations
during which such claims are timely. Thus, HEAR does not
alter the choice of law analysis this Court uses to decide
which state’s law will govern TBC’s claim of title to the
Painting based on acquisitive prescription.
C. The district court erred in deciding that, as
matter of law, TBC had acquired title to the
Painting through Article 1955 of the Spanish Civil
Code because there is a triable issue of fact
whether TBC is an encubridor (an “accessory”)
within the meaning of Civil Code Article 1956. 12
1. An encubridor can be a knowing receiver of
stolen goods.
After correctly determining that Spanish substantive law
applied, the district court granted summary judgment in
12
In interpreting Spanish law, we have relied on the record below,
submissions from the parties and amici, and our own independent
research. See Federal Rule of Civil Procedure 44.1 (“In determining
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 27
favor of TBC based on the district court’s analysis of Spain’s
law of acquisitive prescription. Summary judgment is
proper when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). As
noted above, we view the evidence “in the light most
favorable to the party opposing the motion,” here, the
Cassirers. Am. Int’l Grp., 926 F.2d at 831.
The district court concluded that TBC had acquired title
to the Painting because TBC had fulfilled the requirements
of Article 1955, which states in relevant part, “Ownership of
movable property prescribes by three years of uninterrupted
possession in good faith. Ownership of movable property
also prescribes by six years of uninterrupted possession,
without any other condition.” Ministerio de Justicia, Spain
Civil Code 220 (2009) (English translation). Possession is
defined in Civil Code Article 1941, which states,
“Possession must be in the capacity of the owner, and must
be public, peaceful, and uninterrupted.” Ministerio de
Justicia, Spain Civil Code 219 (2009) (English translation).
As an initial matter, we reject the Cassirers’ argument
that TBC’s defense of acquisition of prescriptive title
through usucaption based on Article 1955 is foreclosed by
HEAR. HEAR addresses when a suit may be commenced
and creates a six-year statute of limitations that applies
“notwithstanding any defense at law relating to the passage
of time.” HEAR § 5(a). Because of the time periods
mentioned in Article 1955, TBC’s defense based on Article
1955 could be at first glance considered “a defense at law
foreign law, the court may consider any relevant material or source,
including testimony, whether or not submitted by a party or admissible
under the Federal Rules of Evidence.”)
28 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
relating to the passage of time.” However, TBC’s Article
1955 defense is a defense on the merits: that TBC has
acquired title to the Painting based on Spain’s property
laws. See Article 1955 (“Ownership of personal property
prescribes by . . .”) (emphasis added), Ministerio de Justicia,
Spain Civil Code 220 (2009) (English translation). Read in
context, HEAR’s § 5(a) language that the six-year statute of
limitations applies “notwithstanding any defense at law
relating to the passage of time” is meant to prevent courts
from applying defenses that would have the effect of
shortening the six-year period in which a suit may be
commenced. HEAR does not bar claims based on the
substantive law that vests title in a possessor, that is, the
substantive law of prescription of title. Therefore, HEAR
does not foreclose the possibility that TBC is entitled to
summary judgment because TBC has acquired title to the
Painting via Article 1955.
Read alone, Article 1955 would seem to vest title in one
who gained possession, even absent good faith, after six
years, so long as the possession was in the capacity as owner,
public, peaceful, and uninterrupted. TBC took possession of
the Painting in the capacity of an owner in 1993. TBC’s
claim was not challenged until the Cassirers’ petition was
filed in 2001. Although the Cassirers argue otherwise, TBC
has established the “public” element because it is undisputed
TBC publicly displayed the Painting in the Museum as part
of the permanent collection it owned. Also, information
about the Painting’s location appeared in multiple
publications between 1993 and 1999, the relevant six-year
period. The parties agree TBC’s possession was peaceful
from 1993 until 1999. Finally, TBC’s possession was
uninterrupted during this time period. Thus, Article 1955,
read in isolation, would seem to bar the Cassirers’ action for
recovery of the Painting.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 29
But the very next article in the Spanish Civil Code,
Article 1956, modifies how acquisitive prescription
operates. Article 1956 reads:
Movable property purloined or stolen may
not prescribe in the possession of those who
purloined or stole it, or their accomplices or
accessories [encubridores], until the crime or
misdemeanor or its sentence, and the action
to claim civil liability arising therefrom,
should have become barred by the statute of
limitations.
Ministerio de Justicia, Spain Civil Code 220 (2009) (English
translation). Therefore, as to any principals, accomplices, or
accessories (encubridores) to a robbery or theft, Article 1956
extends the period of possession necessary to vest title to the
time prescribed by Article 1955 plus the statute of
limitations on the original crime and the action to claim civil
liability. See Spanish Supreme Court decision of 15 July
2004 (5241/2004).
The Cassirers argue that TBC is an accessory
(encubridor) to the theft of the Painting because TBC knew
the Painting had been stolen when TBC acquired the
Painting from the Baron. For the crime of encubrimiento
(accessory after the fact) and the crime of receiving stolen
property, the two crimes the Cassirers argue TBC committed
when it purchased the Painting from the Baron in 1993, the
criminal limitations period is five years, 1973 Penal Code
Articles 30, 113, 546(bis)(a) and 1995 Penal Code Articles
131, 298, and the civil limitations period is fifteen years,
Judgment of January 7, 1982 (RJ 1982/184) and Judgment
of July 15, 2004 (no. 5241/2004). Thus, if Article 1956
applies, including the six-year period from Article 1955,
30 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
TBC would need to possess the Painting for twenty six years
after 1993, until 2019, to acquire title via acquisitive
prescription. Since the Cassirers petitioned TBC for the
Painting in 2001 and filed this action in 2005, if Article 1956
applies, TBC has not acquired prescriptive title to the
Painting. 13
Article 1956 extends the time of possession required for
acquisitive prescription only as to those chattels (1) robbed
or stolen from the rightful owner (2) as to the principals,
accomplices or accessories after the fact (“encubridores”)14
with actual knowledge of the robbery or theft.
The parties agree the first requirement is satisfied
because the forced sale of the Painting by Scheidwimmer
and the Nazis is a misappropriation crime within the
meaning of Article 1956. As for the second requirement, no
one claims that TBC had any hand in that forced sale; TBC
is not a principal or accomplice to the 1939 misappropriation
of the Painting.
13
The Cassirers also argue that TBC has not acquired title because,
under Spanish law, there is no statute of limitations for a crime against
humanity and a crime against property during armed conflict. Since
resolving this claim would not change the result in this case, we decline
to decide this issue.
14
When Article 1956 was adopted in 1889, the contemporary
dictionary meaning of encubridor was “one who covers something up.”
See 1884 Diccionario de la Lengua Castellana, Real Academia Española.
The 1888 General Etymological Dictionary of the Spanish Language by
the prestigious linguist Eduardo Echegaray mirrors the definition of the
Real Academia. No legal meaning appears in the dictionaries. However,
in an official translation of Article 1956 from Spain’s Ministry of Justice,
“encubridores” is translated as “accessories.”
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 31
The primary dispute between the parties is whether TBC
is an accessory (encubridor) as that term is used in Article
1956. The district court accepted TBC’s interpretation of
Spanish law and found that TBC was not an encubridor. The
district court decided that the term “encubridor” in Civil
Code Article 1956 should be defined by reference to the
Penal Code that was in effect when TBC acquired the
Painting. In 1993, Article 17 of the Penal Code of 1973 (the
Penal Code then in effect) defined encubridor to include
only persons who, after the commission of the underlying
crime, acted in some manner to aid those who committed the
crime avoid penalties or prosecutions. 15 Before the district
court, the Cassirers argued that TBC was an encubridor
because TBC concealed the looting of the Painting to
prevent the 1939 crime from being discovered. The district
court held that TBC was not an encubridor within the
meaning of Article 1956 because “there is absolutely no
evidence that the Foundation purchased the Painting (or
performed any subsequent acts) with the intent of preventing
15
Article 17 of the 1973 Spanish Criminal Code defines
encubridores:
[T]hose who, aware of the perpetration of a punishable
offense, without having had involvement in it as
principals or accessories, are involved subsequent to
its execution in any of the following ways:
1. Aiding and abetting the principals or accomplices to
benefit from the felony or misdemeanors.
2. Hiding or destroying the evidence, effects or
instruments of the felony or misdemeanor, to prevent
it being discovered.
3. Harboring, concealing, or aiding the escape of
suspected criminals . . . .
32 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
Scheidwimmer’s or the Nazis’ criminal offenses from being
discovered.” The district court concluded that, since Article
1956 did not apply, TBC had acquired title to the Painting
under Article 1955.
On appeal, the Cassirers offer a new reason TBC is an
Article 1956 accessory [encubridor]: According to the
Cassirers, TBC knowingly received stolen property when
TBC acquired the Painting from the Baron. The Cassirers
advocate using the definition of encubridor from the 1870
Spanish Penal Code, which was in force when Article 1956
of the Civil Code was enacted in 1889. Article 16 of the
1870 Penal Code stated:
Those who, with knowledge of the
perpetration of the felony, and not having
participated in it as perpetrators or
accomplices, intervene after its execution in
any of the following modes, are guilty of
concealment: . . .
2. By obtaining benefit for themselves, or
aiding the perpetrators to benefit from the
effects of the crime. 16
That definition of encubridor includes one who knowingly
benefits himself from stolen property. The Cassirers argue
that the 1889 legislature had the 1870 Penal Code definition
16
“Son encubridores los que, con conocimiento de la perpetracion
del delito, sin haber tenido participacion en él como autores ní cómplices,
intervienen con posterioridad á su ejecucíon de alguno de los modos
siguientes. Aprovechándose por si mismos ó auxiliando á los
delincuentes para que se aprovechen de los efectos del delito.”
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 33
in mind when the legislature enacted Article 1956. Article
1956 has not been modified since 1889.
TBC asserts that the Cassirers’ new argument on appeal,
that TBC is an encubridor based on the 1870 Penal Code
definition because TBC, knowing of the theft, received the
stolen painting, is “waived” because the Cassirers not did
present it below. However, the Cassirers’ new argument
asks this Court to interpret the term “encubridor” in Article
1956. To do so, this Court must interpret the relevant
sources of Spanish law. Therefore, the meaning of
encubridor is a pure issue of law. Under this Court’s
precedent, we may consider a new argument on appeal
which presents a pure issue of law even though it was not
raised below. In re Mercury Interactive Corp. Sec. Lit.,
618 F.3d 988, 992 (9th Cir. 2010).
For the reasons stated below, we agree with the Cassirers
that the term “encubridor” in Article 1956 has the meaning
that term was given it in the 1870 Penal Code. We thus
conclude that a person can be encubridor within the meaning
of Article 1956 if he knowingly receives and benefits from
stolen property. 17
Since our jurisprudence requires us to apply Spanish
substantive law, it stands to reason we should apply Spanish
rules of statutory interpretation. Article 3.1 of the Spanish
Civil Code (“Article 3.1”) states, “Rules shall be construed
according to the proper meaning of their wording and in
connection with the context, with their historical and
17
Article 1956 requires that the encubridor must have actual
knowledge the chattel was the product of robbery or theft. See Spanish
Supreme Court decision of 23 December 1986 (RJ 1986/7982).
34 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
legislative background and with the social reality of the time
in which they are to be applied, mainly attending to their
spirit and purpose.” 18 Ministerio de Justicia, Spain Civil
Code 1 (2009) (English translation).
i. Proper Meaning of Wording
To determine the definition of “encubridor” in Article
1956, Article 3.1 first directs us to consider the “proper
meaning of [its] wording.” As noted above, dictionaries
contemporary to the 1889 Civil Code shed little light on any
legal meaning for the term encubridor. The 1884
Diccionario de la Lengua Castellana, Real Academia
Española defines “encubridor” as one who practices
“encubrimiento,” which in turn is defined as “the action and
effect of hiding a thing or not manifesting it.” 19 The 1888
General Etymological Dictionary of the Spanish Language
by the prestigious linguist Eduardo Echegaray mirrors the
definition of the Real Academia. 20 Neither discusses the
meaning of encubridor in legal terms or as used in the law.
There is no mention of such elements as whether to be an
encubridor the person need have knowledge of a prior crime
or be motivated by a desire to help others or only himself.
18
“Las normas se intepretarán según el sentido propio de sus
palabras, en relación con el contexto, los antecedentes históricos y
legislativos, y la realidad social del tiempo en que han de ser aplicadas,
atendiendo fundamentalmente al espíritu y finalidad de aquellas.”
19
Encubridor: Que encubre. Encubrir: Ocultar una cosa ó no
manifestarla.
20
Encubridor, ra: Que encubre alguna cosa. Usase también como
sustantivo. Encubrir: Ocultar una cosa ó no manifestarla.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 35
Of course, if an encubridor hides the chattel, he cannot
fulfill the open, public display of the chattel, in the capacity
of an owner, which Article 1955 requires for usucaption.
Does it follow that if he displays the chattel sufficiently to
satisfy usucaption possession he is not an encubridor?
Certainly, TBC displayed the Painting to the public and
acted as the owner of the Painting.
This logic could be accepted if the word encubridor was
used in Spanish law to mean only a person who conceals or
hides or fails to manifest. But that is not what has been found
to be the case, as we will see when we apply the second rule
of interpretation prescribed by Article 3.1.
ii. Context
Second, Article 3.1 instructs us to determine the meaning
of a rule “in connection with the context.” “Encubridor” in
Article 1956 is used in a legal context. Hence, what does
encubridor mean in Spanish law?
Both parties agree that the Penal Code is the proper place
to look for the legal meaning of the term encubridor.
However, while the Cassirers urge this Court to use the 1870
Penal Code definition, which includes a receiver of stolen
goods who acts for his own benefit, TBC urges this Court to
use the 1973 Penal Code definition, which TBC claims
excludes such a receiver. Under the 1973 Penal Code, only
accessories after the fact acting in aid of the perpetrators or
accomplices of the original crime are expressly declared
encubridores under Article 17.1.
36 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
iii. Historical and Legislative Background
These conflicting positions require us to go to the third
canon of interpretation stated in Article 3.1: “the historical
and legislative background.”
a. Definition of “encubridor” in the 1870
Penal Code
Looking to “the historical and legislative background” of
Article 1956, we conclude that the term “encubridor” should
be construed consistently with the definition of “encubridor”
in the 1870 Penal Code. The parties agree that the content
of the term “encubridor” in the Civil Code should be
determined by reference to the Penal Code. The 1870 Penal
Code was in effect when Article 1956 of the Civil Code was
enacted in 1889, and Article 1956 has not been amended
since its enactment. Under the 1870 Penal Code, “[t]hose
who, with knowledge of the perpetration of a crime,”
intervene after its execution “[b]y obtaining benefit for
themselves, or aiding the perpetrators to benefit from the
effects of the crime” are encubridores. Thus, if the 1870
Penal Code definition of “encubridor” applies for Civil Code
Article 1956, an encubridor includes someone who
knowingly benefits from stolen property, including a person
who knowingly receives stolen property.
However, TBC claims that the Law of May 9, 1950
(“1950 Law”) removed from the Penal Code’s definition of
encubridor a person who, with knowledge of the theft or
robbery which produced the stolen chattel, took the chattel
into his possession solely for his own benefit and not for the
benefit of the perpetrators of the theft or robbery and that this
law changed the definition of “encubridor” in Civil Code
Article 1956 as well. There are two reasons this is not so.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 37
First, Article 3.1’s instruction to evaluate a statute’s
“historical and legislative background,” Ministerio de
Justicia, Spain Civil Code 1 (2009) (English translation),
refers to the history that occurred before Article 1956 was
enacted in 1889, not subsequent developments. Although
the Spanish legislature modified the Penal Code through the
1950 Law, it did not alter the Civil Code, including Article
1956. Therefore, the 1870 Penal Code provides the pertinent
definition of the term “encubridor” in Article 1956.
b. The 1950 Law
Second, even if the 1950 Law should affect how we
interpret the term “encubridor” in Article 1956, we reject
TBC’s suggestion that the enactment of the 1950 Law
changed the definition of “encubridor.” True, in its
enactment of Article 17.1, the 1950 Law eliminated Article
16.1 of the 1870 Penal Code and that portion of the definition
of encubridor that included an accessory after the fact acting
for his own benefit. The 1950 law enacted Article 17.1,
which restricted encubridor to include only accessories after
the fact acting on behalf or in aid of the original thieves and
accomplices. But the 1950 Law did not eliminate altogether
from the Penal Code the 1870 definition of encubridor that
included a person acting for his own benefit, motivated by
lucre. First, the 1950 Law recited in its preamble an
intention not to change the venerable law regarding
accessories: “[I]t does not seem prudent to radically change
this institution, that is now in Division I of the common
Criminal Code, a penalizing law that is a homogeneous piece
mounted on a venerable and correct classic. And it does not
seem advisable until one day the general lines of our old
Code are changed, if need be.” Second, it simply moved the
1870 definition of encubridor elsewhere in enacting the new
statute that made it a crime to receive goods known to be
38 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
stolen. Article 2 of the 1950 Law created the crime of
receiving stolen property as Article 546(bis)(a) of the Penal
Code with the title “Del encubrimiento con ánimo de lucro
y de la receptación” (meaning “Regarding acting as the
accessory [encubrimiento] with the purpose of obtaining
profit or receiving stolen property [receptación]”). Thus,
encubrimiento in the Penal Code was still described as
including acting as an accessory by receiving stolen goods
for one’s own benefit.
The preamble to the 1950 Law in fact also states that the
purpose of the law is procedural: to allow independent
criminal prosecutions for receivers of stolen goods even
when the principals of, or accomplices to, the theft or
robbery cannot be located. Under Spanish law at the time,
accessories after the fact could not be charged by
themselves. They were subject only to a joint proceeding in
which they were joined as defendants with principals and
accessories, if any.
The language of Article 546(bis)(a) of the Penal Code,
as adopted at the time, reflects the fact that receiving stolen
goods had long been considered a form of encubrimineto
(acting as an accessory):
Who with knowledge of the commission of a
felony against property takes advantage for
himself of the product of the [felony], will be
punished with minor jail and fined from
5,000 to 50,000 pesetas. In no case can a
sentence which deprives one of liberty
exceed that established for the felony
concealed [“al delito encubierto”].
Specifically, the use of the adjective “encubierto” to
describe the activities of a receiver of stolen goods acting for
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 39
his own benefit implies that the receiver is himself an
encubridor. Thus, the historical and legislative background
of the term encubridor in the Spanish Penal Code suggests
that someone who knowingly receives and benefits from
stolen property can qualify as an encubridor for purposes of
Civil Code Article 1956.
iv. Social Reality at Time of Enactment
Turning to the fourth canon in Article 3.1, this Court
should consider “the social reality of the time” in which
Article 1956 is to be applied. In 1993, when TBC acquired
the Painting, the crime of receiving property known to be
stolen and the crime of acting as accessory after the fact of
theft by possessing such property were interchangeable in
practice. This fact is demonstrated by the Judgment
1678/1993 of July 5 (RJ 1993/5881) that is cited in the
amicus brief of Comunidad Judía de Madrid and Federación
de Comunidades Judías de España. In that case, the appeal
to the Supreme Court of Spain was on the basis of what we
call a “variance” between the indictment and the crime of
conviction. The appellant had been accused of receiving
stolen goods, but was convicted of being an accessory after
the fact. The Spanish Supreme Court found that the
perpetrator’s actions in receiving stolen jewelry to sell and
keep the proceeds were sufficiently laid out in the accusatory
pleading to allow the defendant to mount an adequate
defense to the charge of being an accessory after the fact,
even if he was convicted of a crime strictly not charged.
There was no mention of the defendant acting in aid of the
persons who had committed the original jewelry theft. As
the court stated, “Thus then, we must say that here we find
ourselves before two homogeneous felonies, with identity of
rights protected and in fact adjudged, and as the sentence
imposed was less [than that of the crime laid out in the
40 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
accusation] it is clear that the principle of [fair notice]
accusation was lawfully respected.”
The Spanish Supreme Court also recognized the
interchangeability of the crimes of receiving stolen goods
and of being an accessory after the fact (encubridor) in
Judgment 77/2004, of 21 January (RJ2004/485). 21 In this
case, a boat was stolen in Germany and the defendant knew
it was stolen. After trying to sell the boat to a good faith
purchaser, the defendant was accused of being a receiver of
stolen goods (receptador) by accusatory pleading, but then
was convicted under Article 17.1 as an accessory after the
fact (encubridor). The court found no fatal “variance”
between the accusatory pleading under Article 546(bis)(a)
and the conviction under Article 17.1 because the defendant
was given fair notice of all the “points” on which conviction
would depend at trial, and hence could mount a complete
defense. According to the Supreme Court, both crimes
require (1) knowledge of the prior felony and the stolen
nature of the goods in question and (2) possession of those
goods by the accused. Again, there was no mention that the
defendant acted as an accessory after the fact by concealing,
in aid of the boat’s thief.
21
In 1995, the Penal Code was updated and the crime of receiving
stolen goods was moved to Article 298 of the Penal Code. Of note, in
specifying sentencing, Article 298 retains the language used in the old
Article 546(bis)(a), “Under no circumstances whatsoever may a sentence
of imprisonment be imposed that exceeds that set for the felony
concealed.” In Spanish, “En ningún caso podrá imponerse pena
privativa de libertad que exceda de la señalada al delito encubierto.”
This was the same language that was used in Article 546(bis)(a) in force
from 1950 to 1995.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 41
Our conclusion that the terms “accessory motivated by
lucre” and “receiver of stolen goods” are interchangeable
and have been preserved in the Spanish Penal Code
following the 1950 Law is not novel. This seems to have
been the interpretation given that portion of the 1950 Law by
Cuello Calón in his annual report on criminal law: “Anuario:
Annual of Penal Law and Penal Sciences (1951),
modifications introduced in the Penal Code as to accessory
[liability] by the Law of 9 May, 1950.” 22 As Calón states,
“Better fortune [as to the survival of the terms after the 1950
law] has occurred to the so-called ‘receptación’ or
‘encubrimiento’ for both expressions are used as synonyms
by the new law.” 23
In sum, after applying the four methods of interpretation
set forth in Article 3.1, we conclude that the meaning of
encubridor (accessory after the fact) in the 1889 Civil Code
is that of the 1870 Penal Code and that later legislation has
not changed that meaning. Thus, an Article 1956 encubridor
can be someone who acts as accessory after the fact of the
crime committed, and who acts for his own benefit—to gain
lucre. A detailed reading of the 1950 Law tells us this
meaning of encubridor was not intended to be changed nor
was in fact changed by that Law. That law rearranged the
22
Anuario de Derecho Penal y Ciencias Penales (1950),
Modificaciones introducidas en el Codigo penal en materia de
encubrimiento por la Ley de 9 de Mayo, 1950, p. 346, Eugenio Cuello
Calón (“Anuario, 1950”). See also Cuello Calón, Derecho Penal 672
(C. Camargo Hernandez rev. 18th ed. 1981) (explaining that
concealment is a crime separate and distinct from the original theft and
robbery which provided the stolen chattel).
23
“Mejor suerte ha cabido a la llamada ‘receptación o
encubrimiento, con ánimo de lucro’ pues ambas expresiones son usadas
como sinónimas por la nueva ley.”
42 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
concept of an accessory after the fact acting for his own
benefit into the receipt of stolen goods for procedural
convenience: to allow prosecution of the suspect without the
necessity of a joint prosecution of the principals and
accomplices, if any, of the underlying crime. But a knowing
receiver of stolen goods could still be prosecuted as an
accessory after the fact to the theft even if he benefited only
himself. The meaning of “encubridor” is considered
interchangeable with “receptador” (receiver of goods
known to be stolen) as shown by the title and text of Article
2 of the 1950 Law. Also, this reading of the Law of May 9,
1950, is confirmed by Spanish Supreme Court decisions
which describe the two terms as interchangeable and
homogeneous. Last, this homogeneity is recognized by the
official annual report written by Cuello Calón
contemporaneously with the adoption of the 1950 Law.
2. TBC has not established, as a matter of law,
that it did not have actual knowledge the
Painting was stolen property.
Assuming Article 1956 applies to someone who
knowingly benefits from stolen property, TBC has not
established as a matter of law that it acquired title to the
Painting through acquisitive prescription. Clearly, TBC
benefited from having the Painting in its museum. As for
the required actual knowledge element of Article 1956, we
review the evidence proffered by the Cassirers with all
inferences in their favor as required by our summary
judgment rules, to see if the Cassirers have produced
sufficient evidence to create a triable issue of fact that TBC
knew the Painting had been stolen from its rightful owner(s)
when TBC acquired the Painting from the Baron.
Dr. Jonathan Petropoulos, the Cassirers’ expert and a
professor of European History who has published on the
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 43
subject of Nazi art looting, declared that numerous so-called
“red flags” would have indicated to TBC (and to the Baron)
that the Painting was stolen. 24 The provenance information
given by the Stephen Hahn Gallery to the Baron in 1976 did
not mention a previous owner, only the gallery Durand-Ruel
in Paris, where the painting was said to have been exhibited
in 1898 and 1899. 25 The Painting contained a partial label
on the back that said “Berlin” and part of two words “Kunst–
und Ve . . .” that may be German for “art and publishing
establishment” (“Kunst und Verlagsanstalt”). This label
may be from the Cassirers’ art gallery. Although this label
was on the back of the Painting, the Painting had no
documentation showing a voluntary transfer of the Painting
out of Berlin. Also, according to Dr. Petropoulos, Pissarro
paintings were “immediately suspect” because they were
favored by European Jewish collectors and often looted by
the Nazis. Dr. Petropoulos noted that the French Ministry of
Culture in 1947 published a compendium of French cultural
losses during World War II that includes forty-six works by
Pissarro that were looted by the Nazis and have yet to be
recovered. The CORA decision confirming Lilly’s rightful
ownership of the Painting had been published and made
available to the public. 26
24
TBC started investigating the Baron’s collection in 1989. Thus,
TBC had time to discover these red flags before the 1993 purchase.
25
Julius Cassirer, who was Lilly’s father-in-law, bought the Painting
from Paul Durand-Ruel in Paris in 1898.
26
Dr. Petropoulos provided some evidence that suggests TBC may
have been aware of this decision: the CORA decision was cited in a 1974
book about Allied restitution laws published by a prestigious German
publisher that received reviews in English language periodicals.
44 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
How TBC purchased the Painting also provides some
evidence that TBC knew the Painting was stolen. While
TBC held the collection on loan, in an official publication in
1992, Modern Masters by Jose Alvarez Lopera, TBC
published incorrect provenance history that stated the Baron
had acquired the Painting through the Joseph Hahn Gallery
in Paris when in fact the Baron purchased the Painting
through the Stephen Hahn Gallery in New York. The
Cassirers argue that TBC sought to conceal the Painting’s
provenance because the Stephen Hahn Gallery sold at least
one other work looted by the Nazis. Also, when
investigating the Baron’s collection, TBC’s lawyers decided
to assume the Baron acquired his collection in good faith.
By assuming good faith, TBC chose to investigate only
artwork that was acquired by the Baron after 1980. One
possible inference is that TBC knew the Painting was stolen
and did not want to create documentation that reflected this
history.
TBC paid $338 million for the Baron’s Collection that
included the Painting when the Collection’s estimated value
was between one and two billion dollars. Although TBC
offers a number of innocent explanations for this below-
market price, this fact may indicate that TBC knew the
Painting and other works in the collection were stolen.
William Smith, an expert in 16th to 20th century European
paintings who filed a declaration on behalf of the Cassirers,
opined that the Painting was sold to the Baron at a discount
of 41.2%–50% of the estimated gallery retail price. TBC
argues that the Baron did not purchase the Painting at a
suspiciously low cost, but we must consider this clash of
evidence in the light most favorable to the Cassirers. TBC’s
knowledge of the below-market price the Baron acquired the
Painting for may also suggest TBC knew the Painting was
stolen.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 45
In conclusion, when all of the evidence is considered in
the light most favorable to the Cassirers, the Cassirers have
created a triable issue of fact whether TBC knew the Painting
was stolen from Lilly when TBC purchased the Painting
from the Baron. TBC acquired the Painting for its own
benefit, and TBC may have known the Painting was stolen.
If so, TBC can be found by the trier of fact to be an
encubridor who could not have acquired title to the Painting
through acquisitive prescription until 2019 since an Article
1956 encubridor can be someone who knowingly benefits
from the receipt of stolen property. Therefore, the district
court erred in granting summary judgment on the grounds
that, as a matter of law, TBC acquired the Painting through
acquisitive prescription. 27
D. TBC is not entitled to summary judgment based
on its claim that the Baron had lawful title to the
Painting under Swiss law.
In TBC’s cross-appeal of the summary judgment order,
TBC argues that “it is the lawful owner of the Painting
because [TBC] purchased the Painting in a lawful
conveyance from a party (the Baron) who had valid title to
convey.” Since the district court granted summary judgment
in favor of TBC on the basis of Spanish law, the district court
did not consider TBC’s argument that the Baron gained
27
The Cassirers make a similar argument that TBC “purloined” the
Painting within the meaning of Article 1956 and therefore could not have
acquired the Painting through acquisitive prescription. In support of this
argument, the Cassirers cite Spanish authorities suggesting the term
“purloin” in Article 1956 can include knowing receipt of stolen goods.
Therefore, whether interpreting “encubridor” or “purloin,” the
Cassirers’ argument turns on whether someone who receives and
benefits from goods known by him to be stolen is delayed in taking
prescriptive title because of Article 1956.
46 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
lawful title before transferring the Painting to TBC.
Nonetheless, “if the district court’s order can be sustained on
any ground supported by the record that was before the
district court at the time of the ruling, we are obliged to
affirm the district court.” Jewel Cos., Inc. v. Pay Less Drugs
Stores Nw. Inc., 741 F.2d 1555, 1564–65 (9th Cir. 1984)
(citing Calnetics Corp v. Volkswagen of Am., Inc., 532 F.2d
674, 682 (9th Cir. 1976)).
We begin our analysis by considering which state’s law
governs the effect of the conveyance from the Baron to TBC.
As noted in Part III.B, based on the principles set forth in the
Second Restatement of the Conflict of Laws, this Court
should apply Spanish property law to adjudicate TBC’s
claim that it is the rightful owner of the Painting. Also, § 245
of the Second Restatement states, “The effect of a
conveyance [from the Baron to TBC] upon a pre-existing
interest in a chattel of a person [Cassirer] who was not a
party to the conveyance will usually be determined by the
law that would be applied by the courts of the state where
the chattel was at the time of the conveyance.” The Painting
was in Spain when TBC and the Baron entered into the
acquisition agreement on June 21, 1993, because TBC had
held the Painting as part of the prior loan agreement. As
noted in Part III.B, Spain uses the law of the situs rule for
movable property. See Civil Code Article 10.1, Ministerio
de Justicia, Spain Civil Code 4 (2009) (English translation).
This means Spain would apply its own property laws to
decide the effect of the conveyance from the Baron to TBC.
Thus, the Second Restatement directs us to apply Spanish
law to determine whether TBC acquired ownership of the
Painting via the 1993 acquisition agreement.
Under Spanish law, a consensual transfer of ownership
requires title and the transfer of possession. See Civil Code
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 47
Article 609, Ministerio de Justicia, Spain Civil Code 83
(2009) (English translation). As noted, when the acquisition
agreement was entered into, possession of the Painting had
already been transferred to TBC pursuant to the loan
agreement. Therefore, if the Baron had good title to the
Painting when he sold it to TBC, then TBC became the
lawful owner of the Painting through the acquisition
agreement.
TBC argues that the Baron had good title to convey
because the Baron acquired good title to the Painting either
through the Baron’s purchase of the Painting in 1976 from
the Stephen Hahn Gallery in New York or through
Switzerland’s law of acquisitive prescription. Since Spain
applies the law of the situs for movable property, Spanish
law would look to New York law to determine the effect of
the 1976 conveyance in New York, and Swiss law to
determine whether the Baron acquired title to the Painting
when he possessed it in Switzerland between 1976 and 1992.
Under New York law, “a thief cannot pass good title.”
See Bakalar v. Vavra, 619 F.3d 136, 140 (2d. Cir. 2010)
(citing Menzel v. List, 267 N.Y.S. 2d 804 (N.Y. Sup. Ct.
1966)). “This means that, under New York law, . . . absent
other considerations an artwork stolen during World War II
still belongs to the original owner, even if there have been
several subsequent buyers and even if each of those buyers
was completely unaware that she was buying stolen
goods.” Id. (internal quotation marks omitted). Here, even
if the Stephen Hahn Gallery (the gallery from which TBC
alleges the Baron purchased the Painting) had no knowledge
that the Nazis stole the Painting, the conveyance did not
confer good title on the Baron under New York law.
As noted, TBC also argues that the Baron acquired title
to the Painting through the Swiss law of acquisitive
48 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
prescription. Under Swiss law, to acquire title to movable
property through acquisitive prescription, a person must
possess the chattel in good faith for a five-year period. Swiss
Civil Code Article 728. The Baron completed the five-year
period of possession between 1976 and 1981. Even though
the Baron exhibited the Painting during a tour of Australia
and New Zealand in 1979 and 1981, TBC’s Swiss law expert
stated that this exhibition abroad “did not create a legally
relevant interruption, since the Painting was bound to return
to [Switzerland].” In briefing to this Court, the Cassirers do
not dispute that the Baron possessed the Painting for a
sufficient amount of time.
However, the Baron acquired title through acquisitive
prescription only if he possessed the Painting in good faith.
The Cassirers assert there is a triable issue of fact as to
whether the Baron possessed the Painting in good faith.
Swiss law presumes good faith. See Swiss Civil Code
Article 3.1. But good faith can be rebutted by showing that
a person “failed to exercise the diligence required by the
circumstances.” See Swiss Civil Code Article 3.2.
According to Dr. Wolfgang Ernst, TBC’s Swiss law expert,
the finding of good faith or bad faith in an individual case is
considered to be an issue of fact.
In determining whether a purchaser acted in good faith
or not, the Swiss Supreme Court has considered factors such
as: (1) whether the purchaser should have considered the
stolen or looted origin of the object at least as a possibility;
(2) the fact that specific circumstances, such as war, required
a high degree of attention; and (3) the general public
knowledge of the circumstances in which the works of art
were taken from their legitimate owners. See Paul
Rosenberg v. Theodore Fisher et al., Swiss Supreme Court
June 3, 1948. Thus, a good faith purchaser is one who is
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 49
honestly and reasonably convinced that the seller is entitled
to transfer ownership.
After reviewing the record developed before the district
court, we conclude that there is a triable issue of fact as to
the Baron’s good faith. As noted in Part III.C, the Stephen
Hahn Gallery from which the Baron purchased the Painting
sold at least one other work looted by the Nazis. William
Smith, the Cassirers’ expert in European paintings, stated
that the $275,000 price the Baron paid for the Pissarro in
1976 “was approximately half of what would have been
expected in a dealer sale, and that there is no reasonable
explanation for this price other than dubious provenance.” 28
Furthermore, Dr. Jonathan Petropoulos’ “red flags”
analysis of the Painting’s background provides some
evidence that suggests the Baron did not possess the Painting
in good faith. 29 To recap these alleged “red flags,” the Nazis
looted many Pissarro paintings, which were a favorite
among European Jewish collectors. Moreover, the Painting
had a torn label on the back from a gallery in Berlin (the
Cassirers’ gallery), but no documentation showing a
voluntary transfer of the Painting out of Berlin. The
published CORA decision identified Lilly’s ownership of
28
Although TBC’s expert, Dr. Ernst, stated that he was “not aware
of any evidence that this price was conspicuously low so as to indicate
eventual problems regarding the provenance/title situation[,]” we must
view this conflict of evidence in the light most favorable to the non-
moving party, the Cassirers.
29
As Dr. Petropoulos declared, “In my opinion, if the Baron and
TBC did not in fact know of the faulty provenance of the Painting and
the high likelihood that they were trafficking in Nazi looted art, they
were willfully blind to this risk and ignored very obvious ‘red flags’ that
no reasonable buyer would have ignored.”
50 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
the Painting. Also, Dr. Petropoulos stated that Ardelia Hall
and Ely Maurer at the United States State Department
collected CORA decision reports and warned museums,
university art facilities, and art dealers about looted artworks
entering the United States and that, had the Baron contacted
these individuals about the Painting, the CORA decision
would have been discovered. When the Baron purchased the
Painting, the Stephen Hahn Gallery provided minimal
provenance information: no previous owner was mentioned,
only the gallery Durand-Ruel in Paris, where the painting
was said to have been exhibited in 1898 and 1899. Dr.
Petropoulos states that the Baron’s “highly distinguished
cohort of experts” failed to “undertake a serious
investigation” to determine the provenance of the Painting.
Another expert for the Cassirers, Marc-André Renold, a
professor at the University of Geneva Law School who
specializes in international art law, stated that he “would
have expected someone of the Baron’s sophistication to have
undertaken a more diligent search into the provenance of the
Painting.”
This evidence indicates there is a triable issue of fact
whether the Baron was a good faith possessor under Swiss
law. Therefore, we cannot affirm the district court’s grant of
summary judgment on the basis that, as a matter of law, the
Baron acquired title to the Painting under Swiss law. 30
30
The triable issue of fact whether the Baron held the Painting in
good faith is another reason TBC cannot establish as a matter of law that
the Baron acquired title to the Painting through the 1976 conveyance
from the Stephen Hahn Gallery. Even if the Painting was purchased in
Switzerland and the conveyance was governed by Swiss law, under
Swiss law, only a good faith purchaser can acquire title to a chattel
through a conveyance. See Swiss Civil Code Article 936 (“A person that
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 51
E. TBC is not entitled to summary judgment based
on its laches defense.
TBC also argues in its cross-appeal of the summary
judgment order that the Cassirers’ claims are barred by
laches. TBC raises its laches argument under California law.
Since the district court granted summary judgment on the
basis of Spanish law, the district court did not consider
TBC’s laches defense. As noted above, we also conclude
that Spanish law applies.
However, even if California law applied, this Court has
stated: “To establish laches a defendant must prove both an
unreasonable delay by the plaintiff and prejudice to itself.
Because the application of laches depends on a close
evaluation of all the particular facts in a case, it is seldom
susceptible to resolution by summary judgment.” Couveau
v. Am. Airlines, Inc., 218 F.3d 1078, 1083 (9th Cir. 2000)
(per curiam) (citations omitted). There is at least a genuine
dispute of material fact as to whether any delay was
unreasonable. After the war, Lilly sought physical
restitution of the Painting, but her unsuccessful efforts
involving litigation lasting a decade ended with the 1958
Settlement Agreement. Thus, Claude Cassirer could have
reasonably believed the Painting was lost or destroyed in the
war.
Thus, TBC is not entitled to summary judgment based on
its laches defense.
has not acquired a chattel in good faith may be required by the previous
possessor to return it at any time.”).
52 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
F. Lilly’s acceptance of the 1958 Settlement
Agreement does not foreclose the Cassirers’
claims.
In TBC’s appeal of the district court’s order denying its
motion for summary adjudication on the grounds that Lilly
waived her ownership rights to the Painting in the 1958
Settlement Agreement, TBC repeats the same arguments that
the district court rejected. As noted in Part I.A, the 1958
Settlement Agreement was between Lilly, Scheidwimmer
(the Nazi art appraiser), Grete Kahn (the heir of the other
Jewish victim, Sulzbacher), and the German government.
The Settlement Agreement provided that: (1) Germany
would pay Lilly 120,000 Deutschmarks (the Painting’s
estimated value as of April 1, 1956); (2) Grete Kahn would
receive 14,000 Deutschmarks from the payment to Lilly; and
(3) Scheidwimmer would receive the two German paintings.
Grete Kahn expressly waived any right to restitution of the
Painting. However, Lilly did not expressly waive her right
to physical restitution. Instead, as for Lilly, the Settlement
Agreement just notes that the settlement settles “all mutual
claims among the parties.” The whereabouts of the Painting
was unknown, no party possessed it.
Neither party has expressly argued which sovereign’s
law should be used to interpret the Settlement Agreement.
However, the district court applied German law, and the
parties do not contest this conclusion on appeal.
Accordingly, any choice-of-law issue has been waived,
Martinez-Serrano v. I.N.S., 94 F.3d 1256, 1259 (9th Cir.
1996), and we apply German law in interpreting the
Settlement Agreement.
TBC argues that Lilly’s acceptance of the Settlement
Agreement defeats the Cassirers’ claims for three reasons.
First, TBC argues that Lilly implicitly waived her right to
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 53
seek physical restitution when she accepted the Settlement
Agreement. Second, TBC argues the Settlement Agreement
remedied and resolved the “taking in violation of
international law,” and pending litigation of a claim
involving a taking is required for FSIA jurisdiction. Third,
TBC argues that federal policy on Nazi-looted art requires
honoring the finality of the Settlement Agreement.
In support of its first argument, TBC notes that the
Settlement Agreement states that it “settles all mutual claims
among the parties.” However, Lilly knew that none of the
parties had possession of the Painting or knowledge of its
whereabouts, and the agreement purported to settle claims
only among the parties. Also, the Settlement Agreement
expressly waives Grete Kahn’s right to physical restitution,
but not Lilly’s.
The district court noted that the Bundesgerichtshof
(Germany’s Supreme Court) recently issued a ruling
favorable to the Cassirers’ interpretation of the Settlement
Agreement. In that case, the Nazis misappropriated a
valuable poster collection belonging to a German Jew, Dr.
Sachs. Peter Sachs v. Duetsches Historisches Museum,
BGH, Mar. 16, 2012, V ZR (279/10) (Ger.). In 1961, Dr.
Sachs accepted a settlement agreement through the same
program that Lilly had used, the Brüg, and Dr. Sachs’
settlement agreement stated that it provided “compensation
for all claims asserted in this proceeding.” When Dr. Sachs’
son discovered the posters still existed and were being held
by the German Historical Museum in East Berlin, he sought
physical restitution. The German high court ordered the
German Historical Museum to return the poster collection
even though Dr. Sachs had accepted his settlement
agreement. The German Supreme Court held that Dr. Sachs’
claim for physical restitution was not waived by accepting
54 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
his settlement agreement because his property was
considered lost at the time he accepted the payment. The
court also held that Sachs’ right to physical restitution was
not waived because he had not made an “unambiguous act”
renouncing the right.
The Sachs precedent is on all fours with Lilly’s case.
Therefore, Lilly too did not waive her right to physical
restitution of the Painting by accepting the 1958 Settlement
Agreement. Two other sources of German law support this
conclusion. First, Germany’s Commissioner of the Federal
Government for Matters of Culture and the Media has stated
that, for claims of restitution of artwork in which an earlier
payment under the Brüg was provided, “earlier
compensation payments are not an obstacle to the return of
cultural assets, provided that the amount paid earlier is
reimbursed[.]” Second, the Cassirers provided a declaration
from a German attorney specializing in restitution law who
stated his expert opinion that the Settlement Agreement did
not waive Lilly’s right to physical restitution.
TBC cites to the District Court of Munich’s decision
acknowledging the 1958 Agreement as evidence Neubauer
waived her ownership rights to the painting. But this
decision undermines, rather than advances, TBC’s
argument. The District Court of Munich specifically noted
that Lilly “only waived the restitution claim against
Scheidwimmer as a result of the settlement of 2.28.1958”
(emphasis added). Thus, the German court acknowledged
that Lilly waived any claims against Scheidwimmer, who
was determined not to have possession of the Painting, but it
noted that was the only claim Neubauer waived. This further
supports our conclusion that Lilly did not waive her right to
physical restitution of the Painting.
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 55
TBC’s second argument is that the Settlement
Agreement remedied and resolved the “taking in violation of
international law,” which means this Court does not have
subject matter jurisdiction under the FSIA expropriation
exception to sovereign immunity, 28 U.S.C. § 1605(a)(3).
This section states that a foreign government’s sovereign
immunity is abrogated when:
Rights in property taken in violation of
international law are in issue and . . . that
property or any property exchanged for such
property is owned or operated by an agency
or instrumentality of the foreign state and that
agency or instrumentality is engaged in a
commercial activity in the United States.
28 U.S.C. § 1605(a)(3). According to TBC, the Settlement
Agreement deprives this court of jurisdiction under the FSIA
because the Settlement Agreement provided Lilly
compensation for the loss of the Painting, and therefore no
right in property is still at issue because the Settlement
Agreement resolved the taking in violation of international
law.
TBC is wrong because one of the Cassirers’ “rights in
property taken in violation of international law” remains at
issue. As explained above, the 1958 Settlement Agreement
did not extinguish Lilly’s right to physical restitution of the
Painting. Therefore, the Cassirers still have a property right
(physical restitution) that remains at issue.
TBC’s third argument starts from the premise that this
Court has recognized that U.S. federal policy favors
respecting the finality of appropriate actions taken in foreign
countries to restitute Nazi-confiscated artwork. See Von
Saher v. Norton Simon Museum of Art at Pasadena, 754 F.3d
56 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
712, 721 (9th Cir. 2014). According to TBC, allowing the
Cassirers to continue their suit would “disregard” the
German restitution proceedings and therefore conflict with
federal policy. However, this argument mistakenly assumes
Lilly waived her right to seek physical restitution of the
Painting when she accepted the Settlement Agreement and
that Germany considers the Settlement Agreement to have
extinguished her claim to physical restitution.
G. Spain’s Historical Heritage Law does not prevent
TBC from acquiring prescriptive title to the
Painting.
The Cassirers make yet another new argument on appeal:
TBC could not have acquired title to the Painting through
acquisitive prescription because of Spain’s Historical
Heritage Law (“SHHL”). TBC argues that the Cassirers’
new argument based on the SHHL is also waived because it
too was not argued below. However, this argument is also
not waived because this Court may consider pure issues of
law on appeal even when not raised below. Mercury,
618 F.3d at 992.
The SHHL law creates a comprehensive program for
ensuring that cultural artifacts (including buildings, artwork,
and archeological artifacts) are maintained in Spain for
viewing by future generations of Spaniards. See Preliminary
Title, General Clauses. The Painting was designated part of
Spain’s historical heritage in Real Decreto-Ley 11/1993,
which also authorized and funded the purchase of the
Collection.
Article 28 of the SHHL contains restrictions on the
transfer of movable property that is part of the Spanish
Historical Heritage. Article 28 has three parts. Article 28.1
states, “Movable property declared of cultural interest and
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 57
included in the General Inventory that is in the possession of
ecclesiastical institutions . . . may not be transferred,
whether with consideration or as a gift, or ceded to
individuals or commercial entities. Such property may only
be transferred or ceded to the State, to entities that are a
creation of Public Law, or to other ecclesiastical
institutions.” Article 28.2 and 28.3 state:
2. Movable property that forms part of the
Spanish Historical Heritage may not be
transferred by the Public Administration,
except for transfers between public
administrative entities and as provided for in
articles 29 and 34 of this Law.
3. The property that this article refers to will
not be subject to the statute of limitations.
Under no circumstance shall the provisions
of Article 1955 of the Civil Code be applied
to this property.
According to the Cassirers, SHHL Article 28.3 prevents
TBC from using Civil Code Article 1955 to acquire title to
the Painting.
The phrase in Article 28.3, “[t]he property that this
article refers to” references property described in Article
28.1 and 28.2. Article 28.1 regulates “movable property”
that has two qualities. First, that property must be “declared
of cultural interest and included in the General Inventory[.]”
Second, that property must be “in the possession of
ecclesiastical institutions, in any of their facilities or
branches[.]” Article 28.1 prohibits ecclesiastical institutions
from transferring that property to individuals or commercial
entities. Article 28.2 regulates “movable property that forms
58 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
part of the Spanish Historical Heritage.” Article 28.2
prohibits public administrations from transferring this
property, except via specific transfers authorized by Articles
29 and 34.
Read in context, Article 28.3 constitutes an additional
limitation on the ability of ecclesiastical institutions and
state institutions to alienate movable property of Spanish
historical heritage. Article 28.3 prevents churches or state
entities from losing title to historical heritage property
through the expiration of the statute of limitations, which
confers a substantive right under Spanish law, or through
Article 1955 acquisitive prescription. Therefore, churches
and state institutions cannot evade the restrictions on transfer
described in Articles 28.1 and 28.2 by allowing a private
individual to take possession of the regulated property for
the statutory period. Article 28.3 also preserves public
access to historical heritage property in case churches or
state administrations carelessly fail to take or maintain
possession of that property in a timely fashion. Since Article
28.3 is designed to prevent churches and state institutions
from losing title to historical heritage property, the provision
should not be interpreted to prevent TBC, a state institution,
from asserting title to the Painting through acquisitive
prescription.
H. The district court correctly found that the
application of Article 1955 to vest TBC with title
to the Painting would not violate the European
Convention on Human Rights.
As a last salvo, the Cassirers argue, “[a]sssuming
Spanish law strips the Cassirers’ ownership of the Painting,
the law is void under Article 1 of Protocol 1 (“Article 1”) of
the European Convention on Human Rights (the
“Convention”).” Spain is a party to the Convention,
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 59
including Protocol 1. The Convention is supreme over
Spanish domestic law. Article 1 of Protocol 1 states:
Every natural or legal person is entitled to the
peaceful enjoyment of his possession. No
one shall be deprived of his possession except
in the public interest and subject to the
conditions provided for by law and by
general principles of international law.
The preceding provisions shall not, however,
in any way impair the right of a State to
enforce such laws as it deems necessary to
control the use of property in accordance with
the general interest or to secure the payment
of taxes or other contributions or penalties.
In Case of J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land
Ltd v. The United Kingdom, 46 EHRR 1083 (2007) (“Pye”),
a British court had awarded title through adverse possession
to land on which the Grahams had grazed their animals for
twelve years after the grazing agreement with neighboring
real estate developers had expired. Pye ¶ 10–22. The former
landowners asked the European Court of Human Rights
(“ECHR”) to review this decision, and the ECHR, sitting en
banc, ruled that the prescriptive acquisition did not violate
Article I. Specifically, the court held that the application of
Britain’s adverse possession law amounted to a permissible
“control of use” of land within the meaning of the second
paragraph of Article 1. Pye ¶ 66. The court also held that
this adverse possession law was legitimate and in the
“general” (public) interest. Pye ¶ 75. The court further
considered whether the decision struck a fair balance
between “the demands of the general interest and the interest
of the individuals concerned.” Pye ¶ 75. After considering
60 CASSIRER V. THYSSEN-BORNEMISZA COLLECTION
many factors, including the fact that English adverse
possession laws are long established and support reasonable
social policies, the ECHR concluded that the British court
decision did strike a fair balance. Pye ¶ 75–85. The court
noted that “the State enjoys a wide margin of appreciation”
in setting rules for its property system unless these rules
“give rise to results which are so anomalous as to render the
legislation unacceptable.” Pye ¶ 83.
The district court correctly applied Pye and correctly
concluded that “Spain’s laws of adverse possession do not
violate [Article 1].” As in Pye, the operation of Spain’s
acquisitive prescription laws is a permissible “control of
use” of property under Article I that serves the general or
public interest by ensuring certainty of property rights.
Finally, deciding that TBC has acquired title to the
Painting through acquisitive prescription would have struck
a “fair balance” between “the demands of the general interest
and the interest of the individuals concerned.” Admittedly,
the Pye decision was close (ten to seven), and some of the
factors considered by the Pye court do not favor TBC’s
position that Spain’s acquisitive prescription laws strike a
“fair balance.” Nonetheless, Article 1955 is over a century
old and supports reasonable social policies, including
providing a level of protection for possessors. Spain’s
acquisitive prescription laws are not so anomalous as to
render them unacceptable under the European Convention
on Human Rights. But they must be taken as a whole and
when one applies Article 1956, as we must, there is a triable
issue of fact whether title in the Painting vested in TBC.
IV. CONCLUSION
The district court correctly determined that Spain’s
substantive law determines whether TBC can claim title to
CASSIRER V. THYSSEN-BORNEMISZA COLLECTION 61
the Painting via acquisitive prescription. However, we
conclude that the district court interpreted Spain Civil Code
Article 1956 too narrowly. An encubridor within the
meaning of Article 1956 can include someone who, with
knowledge that the goods had been stolen from the rightful
owner, received stolen goods for his personal benefit. Since
there is a genuine dispute of material fact whether TBC knew
the Painting had been stolen when TBC acquired the
Painting from the Baron, the district court erred in granting
summary judgment in favor of TBC on the basis of Spain’s
law of acquisitive prescription since the longer period for an
encubridor to acquire title had not yet run when the Cassirers
brought this action for restitution of the Painting. At the
same time, we conclude that TBC’s other arguments for
affirming the grant of summary judgment that are raised in
TBC’s cross-appeals are without merit. Finally, we
conclude that the Cassirers’ other arguments against
applying Article 1955 in this case are without merit. Given
these holdings, we REVERSE and REMAND to the district
court for proceedings consistent with this opinion.