569 N.E.2d 426 (N.Y. 1991)
The Solomon R. Guggenheim Foundation operates the Guggenheim Museum in New York City.1 In 1937 Solomon R. Guggenheim donated to the museum a Chagall gouache known alternately as Menageries or Le Marchand de Bestiaux, painted in 1912.2 The museum tracked the painting on accession cards that recorded loans to other institutions, its return after a 1961-1962 loan, its presence in the museum on April 2, 1965, and an undated later notation that the painting could not be located.3
The museum first realized the gouache was missing sometime in the late 1960s and confirmed the fact during a complete inventory conducted from 1969 to 1970.4 It did not notify the New York City Police, the FBI, Interpol, other museums, galleries, or artistic organizations of the theft.5 In 1974 the museum's Board of Trustees voted to deaccession the gouache and remove it from the museum's records.6
In May 1967 Rachel Lubell and her husband purchased the gouache from the Robert Elkon Gallery for $17,000.7 The invoice and receipt listed the prior owner as a named individual who later proved to be the museum mailroom employee suspected of the theft.8 The Lubells displayed the painting in their home for more than twenty years and exhibited it at the Elkon Gallery in 1967 and again in 1981.9
In 1985 a private art dealer brought a transparency of the painting to Sotheby's for an auction estimate.10 A person at Sotheby's who had previously worked at the Guggenheim recognized the gouache and notified the museum, which traced the painting to Mrs. Lubell.11 On January 9, 1986 the museum's director wrote demanding return of the gouache.12 Mrs. Lubell refused, and the museum commenced this action for recovery of the painting or $200,000 on September 28, 1987.13
In her answer Mrs. Lubell raised affirmative defenses including the statute of limitations.14 The trial court granted her cross motion for summary judgment.15 The Appellate Division modified by dismissing the statute of limitations defense and denying the cross motion for summary judgment, then granted leave and certified the question whether its order was properly made.
Whether the museum's failure to take specific steps to locate the gouache is relevant to the appellant's statute of limitations defense in this replevin action?16
New York follows the demand and refusal rule for accrual of replevin actions against good-faith purchasers of stolen chattels. Under this rule, the statute of limitations begins to run only when the true owner demands return and the possessor refuses.17 The owner's diligence in searching for the property is not a factor in the statute of limitations analysis.18
No. The court determined that the timing of the museum's demand for the gouache and the appellant's refusal to return it are the only relevant factors in assessing the merits of the Statute of Limitations defense.19
The museum made its demand on January 9, 1986, Mrs. Lubell refused, and suit was filed within the three-year period on September 28, 1987.20 The museum's choice not to publicize the theft or notify authorities therefore has no bearing on whether the statute of limitations bars the claim.21
The museum's failure to take specific steps to locate the gouache is not relevant to the statute of limitations defense.22
Whether the demand and refusal rule for accrual of a replevin cause of action against a good-faith purchaser of a stolen chattel requires the true owner to exercise reasonable diligence in locating the chattel before making demand?23
The demand and refusal rule does not impose any requirement that the true owner exercise reasonable diligence in locating stolen property before making demand.24 New York has rejected both a discovery rule and any duty of diligence for statute of limitations purposes in replevin actions against good-faith purchasers.25
No. The court reexamined New York case law and concluded that the Second Circuit in DeWeerth v. Baldinger erred by imposing a duty of reasonable diligence on owners of stolen art.2627
Under the established demand and refusal rule, possession by a good-faith purchaser is not wrongful until demand is made and refused.28 The museum's decision not to notify law enforcement or publicize the theft after discovering the loss in the late 1960s therefore cannot trigger the statute of limitations.29
The court noted that the Legislature had considered and the Governor had vetoed a bill that would have adopted a discovery rule, confirming that the demand and refusal rule remains the law in New York.30 Because the museum's demand in 1986 and the subsequent refusal started the limitations period, the action filed in 1987 is timely regardless of the museum's earlier investigative choices.31
Whether the burden of proving that the painting was not stolen properly rests with the appellant Mrs. Lubell?34
The burden of proving that the painting was not stolen properly rests with the appellant Mrs. Lubell.35
Yes. The court agreed with the Appellate Division that the burden of proving that the painting was not stolen properly rests with the appellant Mrs. Lubell.36 This allocation follows from the established principle that a good-faith purchaser asserting that stolen property was not in fact stolen must carry the burden on that factual issue.37 The court found no merit in the appellant's remaining arguments on this point and affirmed the Appellate Division's allocation of the burden.38
The burden of proving that the painting was not stolen properly rests with the appellant Mrs. Lubell.