(00:00:00) Artists are becoming more vocal becoming more assertive only through assertive self action can artists achieve any major protection. Decidedly, I think through the laws attorney Michael skinned route has been involved with the problems affecting artist since he began practicing law in Minnesota several years ago. He now lives in Madison, Wisconsin and works for a law firm where a good number of his clients are performing and visual artists one of his extra legal interests is traveling around the Midwest holding workshops and seminars on legal issues in the Arts. And that's what brought him to the Twin Cities a week ago. Although the economic Acumen of visual artists is rapidly improving skin. Rude acknowledges the difficulty of organizing artists as an interest group while those in the Performing Arts have long had unions to represent their concerns visual artists by their very nature seemed reluctant to band together. If an artist is driving a cab 20 hours a week to bring money home to pay the rent and then is working in his A studio for 30 30 hours a week producing work and another 10 hours a week showing portfolio to galleries. There aren't many hours left to join together with other artists to lobby for legislation. I mean, it's a Herculean task to survive as an artist it really is and and we asked a lot of them to do all of these things perhaps the answer is good old-fashioned patronage and perhaps out us ought to be kept that of course is not the prevailing direction of the art World these days so skinned rude advises visual artists to develop a business sense his own theory of the Art Market revolves around these Givens. There are many gifted artists and there is a very limited market those who survive economically and those who don't survive economically are decided by which artists are willing to put time and energy and some effort into business kinds of efforts for their career. It is not enough for an artist to produce. Exquisite work the artist must then take that work in portfolios and show galleries must show people must convince people that their work is not only good but is saleable must convince people that they are they can produce a reliable body of work that galleries can depend on genius is not immediately recognized. You know, I think I think sometimes we have to sell ourselves and artists are included in that artists who were unwilling to spend time thinking about their taxes or thinking about ways to save money or ways to deal in a good solid business sense are in a sense hurting themselves and all of us are hurt by that because all of us are deprived ultimately of seeing that work as a result of artists economic assertiveness. There has been an increase in the tension between artists and the people who sell their work the gallery owners frequently. They seem to be at odds with artists who sell through the Ari's I don't want to paint it as an ongoing struggle because really the to serve each other and their interests are close and yet relations are often strained sometimes by the sheer geographical distance an artist in the midwest could be taking chances sending his or her work to a gallery located in New York or Los Angeles in those situations is very difficult for an artist to discover whether the gallery dealer has in fact sold objects which are consigned to it and what the gallery dealer is doing rather than paying the money to the artist is the gallery dealer is using that money to pay the electric bill for the gallery and other things or whether the gallery dealer has no longer has the object in the gallery, but it shifted to some other people for purchase on approval in other parts of the country that that's common and the artist comes to the gallery and wants the object dealer said it's not here. It's elsewhere. It's very hard to keep tabs on that very hard the best thing about Word of mouth and keeping the artists here to the to the pavement to see how people regard the gallery. Sometimes word gets around to the galleries on Shaky Ground financially where the things are not going. Well, it is best in the situation like that for the artist to get the artworks out of the gallery physically have a gallery in recent years. The rumors of galleries being on shaky grounds have become solid fact, the increasing number of gallery bankruptcies is one of skin drudes biggest worries as is the case in other businesses Liquidators move in sell everything to pay off the creditors for artists who discover their work suddenly locked inside a bankrupt Gallery becoming frozen assets. There's not much they can do in fact a situation like this happened in Milwaukee last year where a gallery went bankrupt in the doors were closed and some $35,000 in debt swirled by the gallery. Mostly the other artists and total of forty five thousand dollars was owed. To all creditors and there was a series of negotiations and finally the Liquidator in that situation simply said, all right artists, you can come and reclaim your work. So I'll compromise if you come and pay me 15% of what you value your objects is and I'll give them back to you and then the Liquidator realize that most of the artists didn't even have 15% in cash of their own works that were in the gallery and there was so much public pressure on the liquid of the finally backed off and simply open the doors and let them come in. Of course what the Liquidator did then was deprived the other artists who were owed money of the money that the gallery of them you see the I guess what I'm saying is that the fragility of the market is such that this sort of situation is not uncommon. It's easily solvable by state legislation. The state legislation would amend the uniform commercial code to provide an exception for consignment sales in the case of artworks and it would say that where Have art Works in an art gallery and the gallery that such artworks went on consignment are not subject to the claims of creditors of the Gallery New York has done this California has done this a statutory proposal for an amendment in Wisconsin was just just proposed for the legislature. I would hope the Minnesota would follow suit another issue which has become a rallying point for visual artists is resale royalties the situation that's most often quoted in connection with that is is a large sale of Robert rauschenberg's work by the collective effort skull who had been collecting rauschenberg's works for a number of months and years and finally held an auction at which the price is reached incredible levels rauschenberg came up after the auction and accuse skull of taking incredible advantage of rauschenberg scarlet collected these things at at at a small amount of money early in earlier years and is now On them for a fantastic profit four five six times what he bought for them and then some and skull was quite shocked skulls feeling was that here. He had been helping the artist survive during the tough years tough years by buying his work by showing faith in what rauschenberg was doing and nine times out of ten. When a collector does that the artist goes nowhere economically and The Collector winds up with a substantial collection of works that haven't appreciated at all. So it's called use it is a very risky process and when the Judgment does pay off the collector ought to be able to receive the increment value rauschenberg thought about it. Otherwise, he said I've labored these many years and now you are getting the profit and I'm getting nothing in response to that number of artists throughout the country began to suggest a resale royalties. Situation either through legislation or through contract which would provide a portion of the resale profit going back to the original artist. It's like royalties on the sale of books a writer writes a book. He sells the manuscript of the publishing company for for a some and in addition receives royalty on each sale artists got a contract model several years ago formulated by New York. Lawyer Robert / jansky. It works like this the artist sells a painting to a buyer who agrees that if he decides to sell the painting at a later date to someone else a portion of the profit will go back to the artist for jansky suggested 15% as an equitable royalty rate. He also recommended that when the resale occurs the new owner sign a similar agreement thus creating a chain of royalties one year ago the California state legislature decided to draft the presents key idea into law the resale royalty to be paid by all art dealers is 5% The royalty fee goes to the state Arts Council where it's In a special trust fund the artist can then collect his share of resale profits at any time to say the California law has been unsuccessful would be an understatement the moment it went on the books Gallery owners announced a boycott the art dealers feel that this inhibits the sale of artworks, they feel that they were not adequately consulted before the legislation was passed and they argue and I believe with some some success that the only artists who are benefited by this legislation or resale royalty is generally are artists who are at the Pinnacle of their profession most artists do not experience resales successive resales of their Works only artists who have become investment commodities in effect talking about that's correct. That's correct. Only artists who were achieve that Pinnacle of professional success have resale price resale royalty. These coming in and of these schemes and skinned rude notes that young unestablished artists are actually hurt by resale royalty legislation. It's hard enough after all to gain art dealers interest in new unproven talent and then to thrust at them a contract of some size with these sorts of resale royalty Provisions May and may be just enough to kill a sale when the lawmakers were pushing through the resale royalty bill in California artist seem to get a psychological boost. Someone was finally acknowledging their contribution, but as it's turned out skindred feels artists would do better to concentrate on guaranteed economic benefits. And that means some fundamental changes in tax laws as they apply to visual artists recent tightening of rules for business deductions has caused headaches for artists under the provisions workspace must clearly be separated from living space in order to take a legitimate deduction that can be impossible in a warehouse or loftware a kitchen sink doubles as a repository for dirty paint brushes and even greater. Problem is that of charitable deductions? If an artist wishes to make a charitable contribution of the Artists Own work to a museum or other other institution they get as a charitable deduction only the dollar value of the paper or Canvas Plus paint or other tangible materials out of pocket cost to the artist. So if an artist has done a sculpture that's cost the artist 5,000 in materials and and the artist claims that it has a market value 50,000 the artist can only get $5,000. It's a charitable deduction on the Artists Own income tax return. However, if the artist sells the work for $50,000 and whoever buys it turns around and contributes it to to a museum that person will receive a fifty thousand dollar tax deduction. On their tax return skindred would like to see that changed not so much for the artists, but for the viewing public artworks of major American artists are no longer being charitably donated to American museums and other institutions rather. They're being sold many times abroad or in a private collections where even the if the artist might want to charitably donated absence the tax benefit to the artist. He'd rather sell it. What happens is that the American public is then deprived of this object in a public collection for American public viewing and so the loser here really is the American public collections have been hurt by by this tax problem. I don't think it's very meaningful for most artists. However, a charitable deduction is not meaningful for an artist in the 5 to 20 thousand dollar income bracket and many artists live on less than that even but the thorny is tax issue of the mall concerns inheritance and a state law. Artists who have gained Renown can also gain huge estate tax bills. For example sculptor David Smith died with a number of Works in his estate the quartz valued the collection at four million dollars. The executor has then had the burden of paying over two million dollars in estate taxes forcing the immediate sale of many of the works and thus preventing their appreciation in value, but the government has now recognized that economic problem and has provided some relief to permit the payment of taxes over a longer period of time and hardship situations where if we would have to sell art works in the case of David Smith in order to raise money to pay the taxes, we would be allowed to do it over a number of years rather than liquidate the objects immediately and probably at a less than market value in order to raise the money for the taxes Attorney. Michael skinned rude believes. That's a first step but the estate tax issue the resale royalty issue and the gallery bankruptcy issue all reveal a basic problem underlying the economics of visual. How do you determine the true value of an artist's work the criteria are almost ephemeral our inability to come up with definitive yardsticks of judgment and value has created confusion for all parties in the artistic process the Creator the seller and even the audience that's the belief of Robert Hughes art critic for Time Magazine. He spoke this week at Walker Art Center in conjunction with the mark rothko exhibit Tom, Mir Osman had the opportunity to speak with Hughes after his presentation and ask the critic to elaborate on the fragile nature of determining artistic value. (00:14:23) The structure of our prices is inherently irrational. You can take a bag of Wheat and you can say Okay given the supply given the demand this bag a week is wheat as with so much and it's likely to be let's say it's worth $10. What's not good about be worth eleven dollars next year, but it is not going to be worth ten thousand dollars next year. That is because Which or any other commodity has a value which you can talk about in terms of the labor theory of value would cost so much to produce you can speak objectively about the costs. Now. The thing about art is that there is no rational basis for its price. The price of works of art is simply a index of pure irrational desire and nothing is more manipulable as We Know Than desire so consequently more and more you get this weird thing in which the price of works of art is the first thing that people want to know about them because everybody has been educated and had a drummed into them that this is how Works about function they function as a kind of a set of Boolean and more and more their purpose as Boolean takes over from there meaning it substitutes for their meaning it provides them with the new meaning and new identity like somebody getting a fresh passport or fleeing to Brazil with the golden his pocket now the the consequence of this, is that the whole way in which works of dress themselves to somebody going to a museum becomes distorted. I mean I can remember a time and I mean God knows I'm I mean, I'm not Methuselah. I'm no chicken, but I'm not with user I'm 40. I could go in when I first started looking at pictures initially when I left Australia go to a museum spend the whole day in the museum without ever once crossing my mind what these objects might be worth on the ice at auction on the open market it simply never occurred to you. He was simply interested in getting what you could out of them as images, you know as and what they were striving to communicate to you as something other than the facts of economics. And the the and I think it's a great loss that it becomes more and more difficult to do so that the meaning of works of art has the meaning of the market interposed between them and the and the viewer (00:16:38) almost sort of like a game and people talk about art in terms of Investments only. Yes, exactly kind of almost name-dropping instead of the true aesthetic appreciation for (00:16:48) him. I'm afraid that that is what a great many of them do now the in or indeed as a you know, can you say that somebody likes something like a picture because it is simply because it's a good investment. (00:16:59) There's over there often some aesthetic component mixed in (00:17:02) very often some aesthetic component mixed in but again, you see the it's just unavoidable these days because I mean if you've got a Picasso that (00:17:13) you know, that somebody is looking for $250,000 and say minor Cuba's (00:17:16) Picasso doesn't even get you a very good (00:17:18) cubes because out that kind of money anymore (00:17:21) then the I mean anybody Who buys that is obviously going to be you know going to have the wheels turning and be thinking well gee no I must be able to get 350,000 for it next year or else I'd put it into Brazilian copper shares or something like that. So the idea of a disinterested appreciation of works of art is I'm afraid becoming more and more remote and not closer and closer to spot the fact that you you know never in the history of the world of you had such a large museum-going audience never of there being so many museums which bring work of art in a disinterested manner in a scholarly context of the attention of people nevertheless. You have this fundamental antipathy between least. I see it as an antipathy between the world of Commerce and the the world Museum practice or kind of sushi. (00:18:11) Do you think that's affecting contemporary artists? (00:18:15) Well, I think it affects everybody. I don't I don't think it makes them paint different pictures or make different sculptures or whatever, but I think it does affect the way that everybody responds to works of art. (00:18:22) Robert Hughes art critic for Magazine (00:18:26) rothko perhaps more than any of his peers and perhaps more than any modern artists of his stature was concerned meticulously concerned with the ultimate placement of his art. He stated as you might have read a picture lives by companionship expanding and quickening in the eyes of the sensitive Observer. It dies by the same token. It is therefore an unfeeling and risky act to send it out into the world true to his word the late artist Mark rothko (00:19:06) died owning most of the works. He created and the settlement of his estate is one of the more fascinating legal sagas in modern art history Mark rothko was one of the master American artists in this Century. He worked with the New York school of painters in the 1940s and became known for his luminous hovering colorful rectangles. One of many forms that linked him with abstract expressionism (00:19:28) rothko became well known in the (00:19:30) 1950s and the skyrocketing value of his art made him a wealthy, man. (00:19:35) And so when rothko took his life (00:19:36) in February 1970 (00:19:38) nearly 800 paintings were bequeathed to the mark rothko (00:19:41) Foundation a nonprofit. Sation founded shortly before his death to ensure the proper placement of his artwork (00:19:48) rothko also left $250,000 in a town house full (00:19:52) of paintings to his widow Mel rothko who survived him by only six months (00:19:57) New York law prohibited the (00:19:58) bequeathing of an entire estate to a nonprofit organization. So half of broth Gogh's paintings was awarded to the foundation and the other half was given to Roscoe's to Children. It was mishandling in the selling of rothko's paintings and the consequent wasting of the family's assets that became the subject of litigation by the family against the three Executives of rothko's will Gus Harrell Assistant Attorney General in New York at the time who participated in the investigation outline the story of the rothko a state proceedings recently before an audience at the Walker Art Center. (00:20:31) Nothing was said in Roscoe's will With regard to how the paintings should be handled or Hell the mark rothko Foundation should handle the paintings. And why that came about became evident also rostow also named three friends as his executor Xin his will there was Bernard rice ultimately to become the key executor because he was a certified public accountant and an elder Statesman in the art world of trading and he understood all of the implications of the value of art he advised many artists and rothko was introduced to the gallery with which he dealt the Marlborough Gallery through Bernard rice. Bernard rice had a wealth of experience and rothko became deeply perhaps morbidly dependent upon him not only with respect to how to deal with his art, but in every personal facet of his life as well. Bernard race had been the accountant for Marlboro galleries, which was headed by the then Tycoon of Modern Art trading Frank Lloyd who had come from London to New York in 1963 and was then introduced to many artists by Bernard rights Bernard rice with the accountant for the Marlborough art galleries. One month before Roscoe's death Bernard rice also became a director and officer of the Marlborough Gallery in New York and subsequent to Roth those death. He began to receive a salary for part-time services. Then the second executor Theodore estamos. He was someone who had been something of a project to rothko and artists who had been noted at one time, but somehow fell in stature at the time of rothko's death and could only be compared to Roscoe as a second-rate kind of artist in terms of commercial recognition. For him it would become important to be placed with the mark rothko with the Marlborough galleries becoming part of the Marlborough stable might enhance his career and place him in a position where he would be as successful as his counterparts that were represented by Marlboro at the time. And then a third friend Morton Levine a professor of anthropology who happened to be unemployed at the time of rothko's death one who sought out Roscoe's friendship and was obviously deeply impressed that Rosco would indeed associate and befriend him and one who willingly gave his consent to further actions in order to remain in the position in which he would have enjoyed as executor of the estate. Now these three men. Swiftly after off goes death started to negotiate a transaction concerning the entire collection of art that rothko died owning with Marlborough galleries. This in the face of an evident. Violent conflict of interest on behalf of Bernard rights who is both fiduciary on behalf of the estate of Mark rothko and a director and therefore if I do Sherry on behalf of the Marlborough art galleries, and it's officer. They proceeded swiftly and they proceeded secretly Mel Roscoe the Widow who had no interest at that time in the residue but had exerted a right on behalf of her children was given little and probably no information as to the executives intention to enter into a transaction with Marlboro. The mark rothko Foundation the recipient of one half of the estate and its collection. Consisted of six directors three of whom were these same Executives. They duplicated as directors of the mark rothko foundation and Bernard rice there to could easily assert a dominant position and influence the direction of Affairs. The directors met after Rosco's death and they met during the time when the executives were negotiating with Marlborough as to the disposition of the entire Estates paintings, but they never breathe a word to the directors of the foundation who were never Executives of the estate or made privy to anything that was going on in the estate all proceeded secretly meetings were held in the foundation immediately before a transaction was consummated at about the time. In fact when it was and immediately thereafter, but not a word was said not a word was said that the entire collection was to be put at Marlboros disposal. And this was done through two contracts. Executed in May 1973 months after rothko's death and only after a few days of negotiations. Bernard race had done some very ingenious things to try to engineer. And Stage the situation so that the transaction could go through. He knew what the prices of rothko's paintings were because he was an inside accountant at Marlborough who had been selling rothko's paintings and an adviser to Roth go with regard to his contracts with Marlboro and other sales to collectors. but he said nothing to the other executor 's They retained one appraiser Daniel Satan Berg who really was the husband of a an art dealer himself being a musician. To appraise the paintings. And he came in with an appraisal which even the executor is in their later. Testimony admitted was absurd. But he didn't tell them that Satan Berg had been entering into joint Enterprises with the Marlborough Galleries and that there was an additional conflict of interest. Nor did he tell them as later evolved in the testimony that the appraisal was in fact typed on Bernard Rice's typewriter. Nor did he tell them as was learned much later that in fact it was Bernard rights who made this ridiculously low appraisal and not the appraiser. Moreover the appraiser found its ways into the hands of the adversary Frank Lloyd with whom they were going to negotiate a deal. So what did Frank Lloyd do? He said well, I'll buy 100 paintings. And Bernard rice made it easy for him to gain access to the entire collection to select whatever 100 he wanted to purchase. And none of the executives said a word about what paintings should be sold. And they did indeed sell 100 among the finest paintings in the estate to Marlboro at right and consigned the entire balance to Marlboro for a period of 12 Years. No one was told about the transactions and time passed and gradually as it would be in the art world people began to surmise that something indeed had been done. Kate rothko who is then represented by a legal guardian and an attorney on his behalf? Began to ask questions and finally more than a year later in June 1971. There began to be a disclosure of the contract in question. Slowly first the contract of sale and then the consignment contract were finally made known to the representatives for rothko's children when they read the contracts, they started the litigation at the end of 1971 and the beginning of 1972. Under the applicable New York state law the Attorney General is designated as having the responsibility for safeguarding the interests of nonprofit organizations. And because half of the estate was going to the mark rothko Foundation a nonprofit organization the Attorney General entered the proceeding and he began to become aware of what was going on. Inquiries were made to directors of museums. To Art historians to dealers to collectors and there was remarkably for my point of view certainly a remarkable coincidence and concurrence of agreement as to the terms of the contracts. Within a range, I would say of 10% All of them came in with estimated values of the works that were the same. All of them knew that the entire State should not have been disposed of all of them knew that the action should not have been taken so quickly and so blindly without appraisals without records of sales without testing the market. Now the actual terms with the following. 100 among the finest paintings were sold out, right? For 1.8 million dollars to be paid over a period of 12 years without interest. Now what was ascertained that even prior to his death this type of painting? Was being sold in the area of 45 to 50 thousand dollars per painting cash. With the obvious increment resulting from rothko's death. And indeed one could more easily perhaps than with any other artist estimate and project an average values because of the consistency of the quality of rothko's works and they were remarkably consistent. After off goes death. In fact, the paintings could be sold for much more indeed as the trial judge later found in his findings of fact (00:33:16) after the case was tried (00:33:19) within a period of four months after the contracts were entered into Marlboro began to sell paintings and within 90 days thereafter it in fact sold 12 paintings from six to eight times the amount they had committed to pay for them. When we entered the proceeding, we alleged that in fact rice and Lloyd knew they were paying nothing for these 100 paintings because it was obvious to their shrewd understanding of the market that all that Marlboro had to do was pay $200,000 down and a hundred and thirty three thousand dollars per year over 12 years and that that meant it could take the paintings. It had so Acquired and by only selling a few make the payments that were due and indeed they did this by the end of that year. They had sold 12 paintings. Not only had they recoup the $200,000 down payment, but they had five additional years payments already in hand and they still had 88 more paintings to Market. Hence, the unconscionability of the sale. The consignment we alleged and argued was part of a preconceived plan by rice and Lloyd not only to take as they did the 100 paintings but to subsequently furtively acquire the best of the remaining paintings which were consigned because Marlboro through its complex of organizations, and they had galleries in London Rome New York Toronto Montreal and a complex of Liechtenstein corporations numbering 21 with which to enter into interlocking transactions and through which to launder Consignment Sales. we claimed in fact what they had in mind was to take the 100 and then the best of the rest through laundering them in non Bonafide as subsequent sales and claiming that they were legitimate But ultimately to be retrieved by the gallery and used for their own purposes and Profit the terms of the consignment agreement alone were outstanding as the trial judge later found to All of the paintings that is approximately 700 that remained after the 100 were sold. All 700 were consigned for a 12-year period irrevocably. They were consigned on a fifty percent commission basis, except of Marlborough sold to another dealer which case the commission was 40% and this week included as the trial judge later did was an unconscionable commission for an artist of rothko's stature who the judge fine found in terms of saleability at the time of his death was second to none of the artists represented by Marlboro with the possible exception of Jackson Pollock. And so these were the terms of the contracts moreover with regard and most significantly perhaps with regard to the consignment contract. No safeguards were introduced. None of the obviously needed safeguards such as Requiring minimum resale prices by the dealer for after all a dealer may take paintings sell them to X Y or Z somewhere in Europe or anywhere in the world and as it turned out they did indeed sell them to people anywhere from Hong Kong to Liechtenstein to London to Lisbon. Can do that have a gentleman or other type of agreement that the alleged purchaser would hold the painting for the dealer for a subsequent sale to a real collector or purchaser for a real pop profit so that the original cell might be made at only a fraction of the real value and the subsequent profit held for the most part by the gallery this type of Safeguard was certainly known to Bernard rice. And was omitted from the contract and we alleged in fact, they did set a foot this plan and began its consummation because shortly after the contracts were entered and Marlboro waited a respectable grace period of four months before entering into any subsequent transactions, they then took 13 of the consigned paintings which included seven Exquisite canvases and other very outstanding papers. And sold them to their own affiliate in Liechtenstein. Now as it later materialized they handed in invoices which not only stated that this sale took effect, but we're in Bernard rice is own letterhead. and the payments involved worm to the estate Were through checks issued by Marlboro and signed by rice as treasurer for Marlboro and then endorsed by rice as executor for the estate. And that would have been the end of the line had there been no lawsuit. When the Lost do commenced they felt this had to be covered up. But their hands were tied because a disposition had already been made of some of these 13 paintings. So what they did was to say No, in fact, they weren't sold to an affiliate. That was really just the kind of Consignment although in about two dozen different places. The documents all said it was an outright sale. No, it wasn't that it was really a kind of guarantee. And in fact, they weren't sold to the Liechtenstein affiliate. They were sold to other Liechtenstein corporations. Corporations which have no physical existence concededly except in the file drawer of a Lichtenstein lawyer. I'll go mine or a patriot couldn't stand stalled. We called it a EK and Galleria burn any had in fact, they said made the purchases of these 13 paintings. And they produced documents. We claim were backdated Fabrications to evidence this. But sure enough on the eve of the trial. when after our office had conducted an investigation in Europe and had returned and after on the day before the trial the attorneys for Frank Lloyd and Marlborough had come to our office to try to ascertain what we had discovered in Europe after all that that night when we were going to go into court the next day to commence the trial and after a prolonged period of what we call Discovery processes where the adversary party is required to produce all relevant documents and they said they had On that Eve of trial they then said well after all there are some more documents that are pertinent to this transaction. In fact, what happened to two of the most outstanding paintings was that Galleria Bernini? Within three months of the alleged transfer to itri transferred it to Marlboro and Marlboro sold them to Paul Mellon. And the price to Paul Mellon was three times the amount it had been to Galleria burn any but the estate's share the 50% year was based upon the sale to Galleria Brittany, hence the execution of the plan to take the best of the remaining paintings after taking the 100 and really in effect reacquiring him for Marlboros own interests. Those were the facts which we alleged. And after a protracted strenuous course of litigation involving various rights to have information disclosed as to what Marlboro had in fact done with the paintings. We arrived at trial. And fortunately certainly whatever Impressions many of us have of the art world and the extent to which it involves deceptions many of the leading figures dealers Museum curators came forward to give their affidavits to testify in court on behalf of what we call the petitioners that is on behalf of Kate rothko and the Attorney General people such as Thomas Messer the director of the Guggenheim let off. And we established the importance of rothko's status in art history. And that was followed by testimony by such people as Arnold Glimpse sure who now heads Pace gallery and who represents the estate now and earn spyler one of the outstanding European dealers in modern art and Professor Meyers Shapiro who perhaps has no greater Pier than himself in art history. And in addition to that. There was Ben hello who gave careful the calculated estimates of the value of the paintings? But the trial was perceived prolonged protracted and lasted in fact over a period of eight months. And finally it came to its end and the judge reflectively wrote a long decision. And I would like to call to your attention some of the things that he found in his decision. First he found that there was an extraordinary head-on conflict of interest on behalf of Bernard rice. He said it was obvious that he was serving two masters. He said moreover even without getting into the question of the terms of the contracts and the unconscionable price involved in them. Even without that rice is moves prior to the contracts in staging in engineering the situation through the use of the appraiser the lawyer the lack of getting any information. Funneling information to Lloyd which he should have not had that in itself spelled out a disloyalty upon races part let alone his conflicts of interest. He said in fact he had a conflict and he acted upon it he acted to promote Marlboros interests rather than the Estates. with regard to the artist Theodore estamos He found that he sought Marlboros favor in order to become a Marlboro artist and that in fact within less than six months Thomas at entered into his own contract with Marlboro on more favorable terms for himself. Then he had obtained on behalf of the mark rothko estate and this the surrogate concluded demonstrated his yielding to his conflicts of interest. And that he had to acted disloyal lie, even without considering the terms of the contracts and then there was the third executor Morton Levine. He he found though. He knew there were conflicts of interest and indeed. He had upgraded the other Executives for their conflicts nevertheless docilely and blindly went along with the transaction and condoned it. For this he too was held liable although for a somewhat lesser monetary amount. Now the consequence was that all three executor 's were ousted from their office. They were ousted without the benefit of the otherwise statutory payment of commissions, which they would have received which might have ranged anywhere between a half and three quarters of a million dollars for each of them. They were also disallowed the right to be paid their own counsel fees out of the estate and we do not know how enormous those counsel fees were. And he subjected them to monetary liabilities along with the Marlborough art gallery and Frank Lloyd. the monetary liability resulted from the following the contracts the court determined would have to be rescinded. This is normally granted the right to a beneficiary where you have a transaction which is deeply infected with conflicts of interest and unfair prices. And of course the beneficiaries in this instance opted to rescind the contract and reacquire the estate's paintings. And so all of the paintings were ordered returned to the estate which Marlboro had Acquired and that is the 100-plus the balance of the consign paintings. However, Marlboro claim that of those paintings it had already sold 140 and hence could not return them. Therefore the court assess monetary damages on the basis of the value of the 140 paintings, which were not returned for a net total of nine point two million dollars to be assessed against the executor, 's and Marlboro except that the assessment against the executor Levine was something less to the tune of 6.4 million dollars course, they did not each have to pay that amount. They were as we would say jointly and severally liable so that if we collected the whole amount from anyone we would not collect from the other but they could if they wish to Attempt to seek a contribution from each other in order to reduce its monetary liability. The court gave Marlboro the option to return paintings, which it had claimed. It's sold to these various persons and entities. This was ardently sought by the beneficiaries indeed. We had moved to hold Lloyd and Marlborough and contempt of court in order to try to demand and require a return of those paintings. They their return was not required but having the option to return these paintings indeed of the 140 paintings 78 were returned and all but one were the paintings which were sold to these mysterious people and entities in bulk sales in Europe (00:52:16) former New York Assistant Attorney General Gus Harrell a specialist in the matter of artists States, but is the rothko case the rule in today's Art Market or is it an unusual and bizarre exception. Once again Time Magazine art? Critic. Robert (00:52:29) Hughes looks the same as the perfumer scandal in England a bit about 15 years ago. You remember that English Minister, you know, Majesty's government was caught consorting with hookers and doing strange Deeds, right and then he lied about it. And then there was a tremendous fuss fact an enormous Fandango. Moral Witch Hunt took place in the in the English, press and Parliament and practically ruined the (00:52:55) poor bastards life. (00:52:57) And then after all this was done, you know after the great cleansing of the house. It happened everybody the politicians the Fleet Street journalists went back to exact doing exactly what they've done before the same amount of whoring and lying didn't matter. So it is with the art World anybody expected a great cleansing wave to run through it as a result of the rothko cases off his (00:53:17) head perhaps some of the things that came out about how the art world in the market Works in that instance in that case our typical but they're certainly not (00:53:26) I don't think the no I wouldn't say that typically I rather the reverse. I mean, I think the I think the Roth case was in a very extreme example, but the fact is that if you have no look the art world is the last Refugee of the last Refuge of true laissez-faire capitalism as it was understood in the 19th century. It doesn't disclose documents. It is not subject to government inspection. Short amounts of money a traded on the art exchange every day, which if they're being traded on the commodity Futures exchange or some analogous Exchange in the world of stocks and bonds would immediately be subject to inspection by the SEC. There is no such inspection by the SEC or any comparable body in the art world and there is not likely to be because the art world has always thrived upon the fact that you cannot apply rational quantification to the price of the objects do it deals in when Frank Lloyd bought rothko's at 18,000 and sold them at 300,000. He was certainly swindling the rothko state but it was also the idea that he was in some way violating the fundamental economics of the of art dealing is an illusion. Naturally. It was an illusion that every dealer other than Frank Lloyd wanted to propagate but the idea that there is some ethical standard whereby Prices of art can be judged. I'm afraid is simply not so do you think there should be any sort of framework for set up for that any sort of yes, I absolutely I do. I think there should be a framework. I think that all men should act just need one another. I think that Jesus Christ should walk upon the Earth tomorrow. I think that Liberty and equality should Reign Over the whole world. However, they do not and they're not likely to in the foreseeable future and I don't know of any way in which such a framework could be set (00:55:18) up Time Magazine art critic Robert Hughes as in many other areas of today's society (00:55:23) new legal ground will continue to be broken in the visual (00:55:26) arts. But without a system for determining the value of artworks, that ground is likely to be muddy. I'm Nancy fusion and I'm Tommy rieman technical director was Paul Kelly.