Lindholm v. Brant

Facts

P was introduced to Anders Malmberg, a Swedish art dealer, in the late 1970s or early 1980s during the course of her marriage to Magnus Lindholm (Magnus). Malmberg served as an art advisor to both the P and Magnus. Malmberg assisted P in her purchase of two works of art and assisted Magnus in multiple purchases and sales of works of art. In 1987, P purchased Red Elvis from Malmberg for $300,000. The only written documentation was the invoice that she received from Malmberg, written on Malmberg's stationary. During the process of purchasing Red Elvis, P relied entirely on Malmberg to complete the transaction. P, with the assistance of Malmberg, loaned Red Elvis to the Museum of Modern Art in New York to be included in a Warhol exhibition. A label affixed to the painting indicated that it was owned by a 'private collector' and had been loaned to the Museum of Modern Art by Anders Malmberg. D visited the exhibition, viewed Red Elvis and saw its label, thereby becoming aware that Malmberg was associated with Red Elvis and its owner. In 1996, the Guggenheim Museum decided to sponsor an exhibition of Warhol paintings. Also included were several works of art owned by D, who at this time was a member of the Guggenheim's board of trustees. Germano Celant, a curator of the exhibition, met with D to discuss loaning some of his Warhol artwork to the exhibition. Celant asked D to assist him in obtaining loans of other Warhol artwork for the exhibition, including Red Elvis. D advised Celant that he believed that Red Elvis was owned by a Swedish woman. D referred Celant to Holm and Mayer because he knew that Malmberg was associated with Red Elvis and its owner. P agreed to lend Red Elvis to the exhibition. P requested that the exhibition display Red Elvis with an identification plaque that read ''Private Collection, Courtesy Anders Malmberg, Malmo, Sweden.'' As of September 1998, D knew that P owned Red Elvis and that it was on loan to the Guggenheim for a Warhol exhibition. In 1998, Magnus initiated divorce proceedings against P in Connecticut. P and Malmberg entered into an agreement that designated Malmberg as P's agent for the purpose of selling ''certain works.'' P had neither agreed to sell nor discussed with Malmberg or anyone else the possibility of selling Red Elvis. The family court issued an order requiring P 'to immediately return . . . all artwork and other property which she removed from the marital home whether claimed by Magnus or P' and enjoining P 'from selling property without a court order . . . .' Malmberg was notified of the court order. Malmberg was no longer authorized to sell any property of either P or Magnus. D met with Holm and Malmberg at D's residence. Malmberg and Holm repeated that Malmberg had purchased Red Elvis from P and asked whether D would be interested in purchasing it. D agreed to pay Malmberg 2.9 million dollars for Red Elvis. Malmberg gave the defendant an invoice for the 2.9 million sale, indicating that a $ 900,000 deposit would be required immediately and that the balance would be due by a certain date. D retained counsel to draft a contract and to conduct the necessary lien searches to identify any claims that Magnus might have to the painting. The law firm conducted a lien search and an Art Loss Register search. There were no claims. D's counsel cautioned that these searches only provided 'minimal assurances' that Malmberg had good title to the painting. Holm prepared a letter (the Swedish-English letter) to be signed by P stating that she had good title when she sold the painting to Malmberg. The letter was never signed by P. Holm refused D's counsel a copy of the signed letter. D was told of the response. Malmberg denied counsel's request for an invoice from P to Malmberg.  During this time P agreed to lend Red Elvis to the branch of the Guggenheim located in Bilbao, Spain. Malmberg advised to lend it to the Louisiana Museum in Copenhagen, Denmark. P agreed with Malmberg. D spoke with Elissa Myerowitz, a registrar employed by the Guggenheim, to inquire when his Warhol works of art would be returned to him. D also asked about the current status of Red Elvis. Myerowitz indicated that the painting was being returned to P, who was listed as the lender on the loan forms. P confirmed that Red Elvis was to be released to Malmberg for shipment to the museum in Denmark. D paid the remaining $2 million purchase price to Malmberg's bank account and took possession of Red Elvis. P took no steps to verify that Red Elvis was on display at the Louisiana Museum but, instead, relied on Malmberg's representations that the painting was there. P authorized the sale of Red Elvis for $4.6 million to a Japanese buyer. P authorized Malmberg to ship Red Elvis to Japan. P was unaware that Malmberg already had sold the painting to D in March 2000. P discovered the truth Malberg lied to P about the status. P also informed D. P sued D for conversion, conspiracy to commit fraud, statutory theft, and unjust enrichment.  D claimed he was a buyer in the ordinary course of business pursuant to § 42a-2-403 (2), under which he took all of P's rights to Red Elvis. D presented expert testimony it was the ordinary and customary practice that if an individual regularly worked with a particular art dealer or an art dealer was identified on the identification label of a loaned work of art, inquiries about an art transaction would be presented to the art dealer rather than directly to the principal. Buyers ordinarily and customarily relied on representations made by respected dealers regarding their authority to sell works of art. Purchases and sales of works of art were documented solely by a single invoice from seller to buyer. It was also ordinary and customary to proceed with the purchase of valuable works of art without requesting or receiving documentary proof that the selling dealer had the authority to sell the work of art. The court held that concluded that D had satisfied his burden of proving that he was a buyer in the ordinary course of business, and rendered judgment for D. P appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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