In Matters of Probate: Trust but Verify
May 23, 2017
By Marine Leclinche.
When Anne Marie Rouart, the widow of Denis Rouart – a descendent of the French artist and art collector Henri Rouart – died on December 18, 1993, she left behind a tremendous collection of art. The French masters Manet, Morisot, Degas, Monet, Renoir, and de Corot were each included. Many of the works were also painted by Berthe Morisot, from whom the Rouart family is directly descended. By Rouart’s last will dated October 7, 1992, she left the entire meubles meublants (furniture and decorative pieces) of her apartment in Neuilly-sur-seine, Paris, to her nephew, Yves Rouart. The rest of the art collection was left to the Académie des Beaux-Arts in Paris, which created a Rouart Foundation and transferred to the Marmottan Museum the principle artworks of the Rouart collection. As of today, four paintings remain untraceable.
This article strives to provide an overview of the long process that ensued to recover some of Mrs. Rouart’s long lost paintings, which involves both French and American Law. The Rouarts’ story, despite its complications and its link with fascinating characters, such as the Wildenstein family, is not unique, and serves as a good reminder for art collectors to carefully plan their estates.
The blurry aftermath of the estate of Anne-Marie Rouart
In November 1997, nearly four years following Rouart’s death, the principal artworks originating from the succession were taken to the Marmottan Museum in Paris, as per her will. Nevertheless some paintings left to Yves Rouart and to the Académie were unaccounted for. Part of the problem, according to journalists, was that only about forty artworks were on display at her Paris apartment, while many more were placed in different safes, including one at the Wildenstein Institute (a non-profit organization founded to do art research and edit catalogue raisonné and located in Paris). After Rouart’s death in 1993, the executors assembled her entire collection at her apartment to allegedly develop an inventory in situ. Once there, they apparently took down from the walls all the paintings on display. The removal of the paintings, either knowingly or not, affected the status of the paintings and the final accounting (to the detriment of Yves Rouart’s inheritance) because once the works were unaffixed from the wall they were no longer meubles meublants under article 534 of the French Civil Code. The paintings bequeathed to Yves Rouart became indistinguishable from those bequeathed to the Académie.
In 1997, Yves Rouart initiated a civil action before the Court of First Instance in Nanterre after he read the inventory and realized the actions taken by the executors. While Yves Rouart was trying to identify the artworks that were stored at the Wildenstein Institute, he realized that about forty additional art objects were missing from the accounting. He decided to also sue for theft, concealment and breach of trust in a Paris Criminal Court.
The saga of the missing Rouart art turned out even more incredible when the names of two famous art experts and members of the Académie des Beaux Arts in Paris became linked to the mystery. Guy Wildenstein, son of the art dealer Daniel Wildenstein, and Olivier Daulte, son of the Swiss art publisher François Daulte, were serving as the executors of Rouart’s estate.
In France, a testator can nominate as many executors as he or she wants to be responsible for the administration of the estate. Several forms of will are admissible under French law: a holograph (handwritten) will, a formal notarial will (testament authentique), a mystic will (when given to the notary in front of two witnesses in a closed and sealed envelope), and an international will (subject to the UNIDROIT Convention Providing a Uniform Law on the Form of an International Will, Washington DC, 1973). Under French Law, children of decedents have a natural right to inherit property from their parents by way of a forced heirship system (réserve hériditaire). The executor’s mission is unpaid except if a liberality (a legal deed made inter vivos or testamentary disposition in which a person transfer to another a good or goods belonging to his estate) is made as a gift or bequest (Rouart’s collection was mostly bequeathed to the Académie). The executor assumes contractual responsibility when he or she accepts the mission. This law of testamentary transfer is valid across France. In the United States, however, each state has specific surrogate law governing its law of probate. In New York for example, under Section 2307 of the New York Surrogate’s Court Procedure Act, executors are entitled to collect a fee ranging between 2 and 5% of the total amount of estate money that the executor receives and pays out. If there are several executors, the fee must be apportioned among them, based on the services rendered by each of them. A decedent’s will may also address the subject of bonds and augment the compensation that an executor may collect for his or her troubles.
The Swiss lead
In 1998, Yves Rouart was able to retrieve some of the missing works in Europe, however there were still a number of them unaccounted for. In April, when François Daulte (1924-1998), world renowned art historian and curator from Lausanne, Switzerland died, his heirs Olivier Daulte and Marianne Delafond (a curator at the Marmottan Museum) made an interesting discovery. They found artworks in his Swiss bank safe that they did not know about. Indeed, once the Estates Office in Lausanne published a notice in the press for potential creditors, Yves Rouart warned the Office of his suspicions concerning several artworks. The safe was then opened in the presence of a bailiff and twenty-four artworks originally from Rouart’s estate were discovered, substantiating Yves’ claims. Among them were a landscape by Corot titled Road descending from the town of Volterra, two portraits of Manet by Degas, the Cathedral of Strasburg by Eugène Delacroix, a Tahitian woman by Gauguin, six paintings by Manet, nine by Berthe Morisot, two by Renoir, one by Toulouse-Lautrec and the copy of an Italian painting. Terms of the settlement were not made public but thereafter, the criminal proceeding that Yves initiated in 1997 was dismissed and the parties withdrew before the Nanterre Court of First Instance in December, 2000.
Oddly enough, the Académie, which was bequeathed a large part of Rouart’s collection, neglected to file a complaint in France when it first discovered that some artworks were missing back in 1993. However in 1998, the Académie claimed ownership to the newly found artworks from Daulte’s Swiss vault.
Following the Daulte safe find, from 1998 until 2011, five paintings remained missing. However, old photos of Rouart’s apartment proved that they were on display before her death and thus subject to Yves claims. These included three Manets (La Chanteuse de café-concert, Le Portrait de Mme Manet mère, and Le Jardin de Bellevue); one Corot (La Bohémienne rêveuse); and one Morisot (Chaumière en Normandie). The Morisot was later found in the safe of the Wildenstein Institute.
In 2000, Yves Rouart and the Académie started negotiations. Fifteen artworks were given back to him, making him the owner of forty-eight artworks from the original transaction. Further discovered works were to belong to the Académie.
The Wildenstein twist
In 2011, Guy Wildenstein was accused of underestimating inheritance taxes after the 2001 death of his father Daniel in France. Investigators believed that a complex scheme was created shortly after Daniel Wildenstein’s death, enabling his heirs to hide arts and assets under the ownership of secretive trusts and move artworks between New York and Switzerland. Guy Wildenstein claimed that he was told “that the assets weren’t owned by the family but by independent trusts, and thus need not be disclosed to tax authorities.”
In January 2011, police investigators from the Central Office for the Fight against Trafficking in Cultural Goods (OCBC) seized thirty artworks that were reported stolen or missing by previous owners, during a search of the mysterious vault of the Wildenstein Institute in Paris. While Guy Wildenstein was in custody and interrogated by the Juge d’Instruction (Investigating Magistrate), he admitted that there was no inventory of the vault, which contained dozens of artworks that he did not own.
Yves Rouart, then represented by Serge Lewisch, filed a new criminal complaint against X. Under French law, a complaint against X enables a plaintiff to first file a complaint against an unnamed person: “X”, when the identity of the perpetrator is unknown. The claim, made before the Paris First Instance Court, was for concealment of theft, since Chaumière en Normandie by Berthe Morisot was found in the safe of the Wildenstein Institute after it had been missing for decades. An inquiry was launched to determine how the paintings ended up at the Wildenstein Institute. The aim was to nullify the 2000 transaction between the Académie and Yves Rouart because of the indirect involvement of the Académie in the concealment of the paintings by the executors and their fathers, after having benefited from Yves’ dispossession of his meubles meublants.
Under French law, the negotiations that lead to a transaction, such as an agreement with a museum, must be interpreted under article 2044 of the French Civil Code. In his complaint, Yves Rouart’s attorney argued that the transaction between his client and the Académie should have been be invalidated because of the dol from which his client was victim. A dol can either be a false representation, a lie or a fraudulent misstatement. Under former French law, lack of consent such as a dol, is subject to a five-year limitation period from the discovery of the defect. Guy Wildenstein attempted to counter-argue that if any artworks were found they should belong to the Académie and not to Yves Rouart, according to the 2000 deal. This argument was rejected by the Judge d’Instruction and Guy Wildenstein was eventually charged with abus de confiance (breach of trust) under article 314-1 of the French Criminal Code.
On May 2016, after a new search was launched by Swiss prosecutors in the context of the “Panama Papers” scandal, Swiss police officers and police investigators from the OCBC searched the Freeports of Geneva in relation to the Wildenstein lawsuits (Challenges, Oct. 20, 2016). Geneva Freeports are known for holding dozens of masterpieces that are exempted from custom duty and value-added tax, so long as they are not taken out of the Freeport. However, the artworks can still be sold and bought within the Freeport.
In this context, the search of the Geneva premises of Natural Le Coultre (Yves Bouvier, the owner of the company, had already been investigated in a lawsuit for fraud and concealment opposing him to the Russian billionaire Dimitri Rybolovlev), a worldwide artworks transportation company, lead to the discovery of several paintings, but according to the police report, none of them belonged to the Rouart family. Nevertheless, some unnamed Manets were found, and according to the French magazine Challenges, Yves Rouart declared that he was convinced that they were his aunt’s. This was because the Wildensteins owned very few Manets and almost none of them are currently in circulation. Most were owned by museums, while some belonged to private art collections. According to Paul-Albert Iweins, the lawyer of the Académie des Beaux Arts, the Académie now supports the investigations instigated by Yves Rouart and “is very interested by the discovery made in Switzerland” (Challenges, Oct. 20, 2016). The relationship between Yves and the Académie seems to have pacified over the years.
As for the criminal part of the lawsuit, on January 12, 2017, Guy Wildenstein was cleared of the charges of tax fraud and money laundering. However, the acquittal was granted on technical grounds. Olivier Géron, president of the 32nd chamber of the Paris Criminal Court, stated that “a tribunal cannot conclude on the existence of fraud without direct evidence” (Le Monde, Jan. 12, 2017). In addition, there were faults in French tax fraud legislation. Indeed, prior to 2011, there were no laws requiring the disclosure of assets held in a trust. The next day, the newly-created Parquet National Financier (PNF), headed by the Financial District Attorney and placed under the authority of Paris Attorney General, announced its intention to appeal the general acquittal of the Wildenstein heirs.
The Wildenstein trusts
The Wildenstein family created several trusts over many years. The offshore Delta Trust in the Bahamas, created in 1998 by Guy’s father, held almost 2,500 artworks valued around $1 billion before he died (NY Times, Sept. 30, 2016). The Royal Bank of Canada Trust Company (RBCTC Bahamas) was the trustee of the Delta Trust and started to reveal information to the Paris Court of Appeal (in 2016) after they discovered that $250 million of paintings owned by the trust were moved out of the US without their approval. RBCTC Bahamas claimed they reported the paintings to American tax authorities after the discovery of the move. The only role of the trust seemed to have been to sell off paintings to generate revenue for the family, especially for Guy Wildenstein, the beneficiary.
One argument made in defense of Guy Wildenstein, to explain the non disclosure of these trusts to French authorities, was that the trustees rather than the Wildensteins were the owners of the paintings. This was despite the fact that the family, as stated above, made “critical decisions about art sales and demands for distribution of money” (NY Times, Sept. 30, 2016.) The French fiducie inspired by the Anglo-American concept of trust was introduced in French law in 2007. The fiducie is “a contract by which a company (the Settlor or constituant) transfers goods or rights to another person (the Trustee or fiduciaire) who holds these separate from his own property with the remit to manage the property for the benefit of one or more Beneficiaries.” The difference between the French fiducie and the common law trust is that, according to article 2012 the French Civil Code, the fiducie is expressly established by law or contract, whereas a trust is not necessarily contractual. According to article 2011 of the French Civil Code, the independent management of the trust was not respected by the Wildenstein family.
French Tax authorities are hoping to recover about $600 million in taxes in a civil lawsuit related to the family inheritance of Daniel Wildenstein (is this different from the tax case? or the same). Guy Wildenstein will also have to explain how “he came into possession of paintings seized by police at the Wildenstein Institute in Paris” (Artnet news, Jan. 12, 2017) and why this particular vault did not have any inventory, counter to their general practice of cataloging the contents and listing their owners (a second vault was found and had a complete inventory).
For now, most of the Rouart mystery remains. Some of the artworks are still missing and the roles of Wildensteins and Daultes in this case are unclear. Nobody seems to know when and how the paintings were transferred in Switzerland (no export certificate was issued), or why Olivier Daulte, as the executor of Mrs. Rouart’s estate, did not contact Yves Rouart or the judge in charge of the complaint directly after the discovery of the twenty-four paintings in the safe of his father.
The art market is notoriously opaque and it seems, as demonstrated by the Rouart case, that no one is immune from falling under the spell of the wealth (economic, aesthetic or intellectual) that is contained in artworks. Regardless of the jurisdiction, when valuable art is bequeathed it is beneficial to appoint multiple independent executors and leave specific instructions not only as to what is to be done with the artworks but what are the artworks in the bequest. It is important to keep in mind that during estate proceedings, valuable property can and does go missing. Estate planning with updated lists of property, its locations, and information concerning the last appraisal and its value, are de rigueur to lower the risk of loss (accidental or purposeful).
- Assignation from Yves Rouart to Institut de France and Académie des Beaux Arts de l’Institut de France, TGI de Paris (2011), https://www.lalettrea.fr/C%5Cdc%5CLLA%5Cassignation_wildenstein.pdf
- Harry Bellet, Affaire Wildenstein: relaxe générale pour la famille de marchands d’art et ses conseillers, Le Monde, Jan. 12, 2017, available at http://www.lemonde.fr/societe/article/2017/01/12/affaire-wildenstein-relaxe-generale-pour-la-famille-de-marchands-d-art-et-ses-conseillers-accuses-de-fraude-fiscale_5061456_3224.html#zhUSw1LXcIy0Dymp.99
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- French Civil and Criminal Code, available at https://www.legifrance.gouv.fr/
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- Vincent Noce, Le Mystère de la Dame Rouart, Libération, June 29, 2000, available at http://next.liberation.fr/culture/2000/06/29/le-mystere-de-la-dame-rouart_329053
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- Magali Serre, Les Wildenstein, JC Lattès, 17 avr. 2013.
- Antonin Staub, La fiducie : a form of French trust, Squire Patton Boggs: La revue contrats, obligations, responsabilité, (June 20, 2007) http://larevue.squirepattonboggs.com/La-fiducie-a-form-of-French-trust_a1024.html
- Unknown, Relaxe des Wildenstein : le parquet national financier fait appel, Le Parisien, Jan. 13, 2017, available at http://www.leparisien.fr/faits-divers/relaxe-des-wildenstein-le-parquet-national-financier-fait-appel-13-01-2017-6564264.php
- Robert Williams, Wildenstein Tax Fraud Trial Turns Rowdy in Second Week, Artnet news, Oct. 6, 2016, available at https://news.artnet.com/art-world/wildenstein-tax-fraud-trial-turns-rowdy-688895-688895
* About the Author: Marine Leclinche is a Spring 2017 Legal Intern with Center for Art Law. She is a LL.M candidate at Benjamin N. Cardozo School of Law. She graduated in Intellectual Property law in France (Université Paris II Panthéon-Assas, Master 2 Droit de la propriété littéraire, artistique et industrielle, Class of 2016), and now focuses on art and fashion law. She can be reached at firstname.lastname@example.org.
Disclaimer: This article is intended for educational purposes only.