The Leopold Foundation lent numerous works of art to the Museum of Modern Art ("Museum") for a three-month period. While the pieces were at the Museum, two parties came forward, each claiming the ownership rights to two separate paintings on exhibit. Both parties asserted that they represented the heirs of previous owners of the artwork from whom the paintings were taken by members of the Nazi forces, and which had, over time, passed on to the lender. The heirs demanded that the Museum hold the paintings pending resolution with the lender regarding ownership. The Museum refused to do so, claiming that retention of the paintings would violate its contractual obligations with the lenders and endanger the Museum's good standing with other future non-resident lenders. Pursuant to its investigation into whether the paintings had been stolen by Nazi agents or collaborators, the New York County District Attorney's Office served the Museum with a Grand Jury Subpoena Duces Tecum requiring production of the paintings.

The Museum moved to quash the subpoena, based on the theory that the subpoena duces tecum violated Arts and Cultural Affairs Law § 12.03. The Museum agreed to maintain possession of the paintings pending a decision on this issue. The Supreme Court granted the motion to quash, holding the statute exempted the artwork from grand jury proceedings. The Appellate Divison reversed the Supreme Court's decision and held that this statute only applied to civil disputes and did not limit the subpoena powers of a grand jury. The Court of Appeals reversed the Appellate Division and granted the motion to quash the subpoena.

The Court reasoned that the statute was designed to encourage non-resident lenders to loan artwork to museums in New York by granting full protection against seizures. To force the Museum to produce the painting in compliance with the subpoena duces tecum constituted seizure because it was meaningful interference with the lender's possessory interests.

1. Whether artwork on loan from non-residents for exhibit in New York is protected from seizure under Arts and Cultural Affairs Law § 12.03 in both criminal and civil proceedings.

2. Whether the effect of a subpoena duces tecum for a piece of artwork under Arts and Cultural Affairs Law § 12.03 constitues a seizure.

1. Yes. The legislative intent to eradicate any possible loopholes in Arts and Cultural Affairs Law § 12.03 mandates the application of the statute to both criminal and civil proceedings.

2. Yes. Forcing the artwork to remain in New York beyond the contractual period constitutes a meaningful interference with the lender's possessory interest in the artwork and is therefore a seizure.

State of the Law Before Museum of Modern Art

The exemption from seizure of fine art was derived from a law codified in the early 1900s in section 1404(a) of the New York Code of Civil Procedure. The statute was re-codified a number of times under many different articles. One of the "locations" of this exemption was section 12g of the General Business Law (adopted in 1968). During the development of this exemption, the legislature debated whether to limit the protection to civil seizures. Citing a desire to protect the cultural centers by allowing a free exchange of artwork, the Legislature decided not to adopt this limitation. Since then, the law has not substantially changed and it is currently found in the Arts and Cultural Affairs Law § 12.03.

The issue of whether this subpoena duces tecum constitutes a seizure in violation of this act, had never before officially come before the Court. In Heisler v. Hynes, 42 N.Y.2d 250 (1977), the Court decided that a subpoena of this type was not intended to deprive the custodian of control, but rather to allow a grand jury to see the evidence in question. Similarly, the United States Supreme Court defined seizure as a meaningful interference with the property rights of the owner. United States v. Jacobsen, 466 U.S. 109 (1984).

Effect of Museum of Modern Art on Current Law

The court's decision has three effects. First, it clarifies the scope of Arts and Cultural Affairs Law § 12.03, by broadening the protection against seizure afforded to fine art on loan from non-resident exhibitors to criminal actions, as well as civil actions. Second, the decision limited the use of a subpoena duces tecum, defining it as an impermissible form of seizure, for the purposes of § 12.03.

The court specified that the unconditional language of § 12.03 does not limit the statute to civil matters, thus prohibiting any form of seizure whether in a civil or a criminal matter. The Court invoked the legislative history to support its position, noting the "unyielding" legislative intent to protect the interests of art exhibitors as well as to preserve the state's cultural status through the exhibition of nonresident art. The Court expressly excluded the creation of any exceptions to the statute. Any "loopholes" would complicate the plain language and also frustrate the purpose of the law: to alleviate the fears of potential art lenders. Since a determination that the statute does not apply to criminal matters would constitute a "loophole" sufficient to thwart the legislative intent behind the statute, the Court resolved that the statute's scope goes beyond civil matters. Essentially, the Court's decision prevents the seizure of any work of art on exhibition in New York State for any matter, be it civil or criminal.

Third, the Court's adopted the United States Supreme Court's definition of "seizure" in a property context as, "some meaningful interference with an individual's possessory interests in property." United States v. Jacobsen, 466 US 109, 113 (noting that the N.Y. Court of Appeals had yet to comment upon its meaning). Although this definition would have narrowed the applicability of a subpoena duces tecum, the Court limited its determination to the facts of this case and found a sufficient level of interference with the lender's possessory interests.

Dissent

Judge Smith contended that the majority's decision wrongfully included criminal matters within the scope of § 12.03, which he asserted encompasses only civil processes. The dissent also relied on the plain language of the statute but asserted that the phrase "any kind of seizure" must be taken in the context of the surrounding language which is unique to civil procedure, and not applicable to criminal procedure. The dissent argued that the majority's analysis failed to recognize that § 12.03 is derived from laws of civil procedure which the legislature never intended to apply in criminal proceedings. Judge Smith also argued that the majority's decision regarding the subpoena duces tecum would restrict the People's ability to investigate criminal matters regarding claims of stolen art, by creating an "umbrella of complete immunity" from the criminal and civil process. This is incompatible with the public interest element of § 12.03 which the dissent considered to be a less compelling interest than the investigation of potential crimes

Unanswered Questions

The Court found that the Legislature believed that the public benefit of Arts and Cultural Affairs Law § 12.03 -- the protection against possible cultural loss -- outweighed the need to seize artwork in criminal investigations. The Court seems to lay out a bright line rule against seizures of artwork in criminal proceedings. Are there some situations in which a level of necessity mgith exist that would override the public benefit and therefore permit the seizure? Or is this loophole closed even to the most dire needs in a criminal case due to the broad reading of Arts and Cultural Affairs Law § 12.03?

Survey of the Law in Other Jurisdictions

New York is not alone in exempting loaned artwork from seizure. A new federal law, 22 U.S.C. § 2459 (1999) prohibits the issuance or enforcement of any judicial process, in both federal civil and criminal cases, of certain works of art, or other objects of cultural significance, imported to the United States for temporary exhibition or display. Texas also recently enacted legislation, 1999 Tex. HB 3081 that exempts fine art on loan for an exhibition, or en route to such an exhibition, from being seized.