Page last updated at 14:57 GMT, Tuesday, 3 February 2009

Disputed Picasso works stay in NY

Boy Leading a Horse
MoMA took possession of Boy Leading a Horse in 1964

Two New York museums will hold onto early works by Picasso after reaching an out-of-court settlement with a man who claimed he was the rightful owner.

Jewish scholar Julius Schoeps claimed his great-uncle had been forced to sell Le Moulin de la Galette and Boy Leading a Horse in Nazi Germany.

A trial had been due to start in Manhattan on Monday.

But lawyers for the Museum of Modern Art, the Guggenheim and Mr Schoeps told the court the dispute had been settled.

Judge US District Judge Jed Rakoff concluded last week that the family of Paul von Mendelssohn-Bartholdy, who died in 1935, had produced enough evidence that the paintings had been sold under Nazi duress for the case to go to trial.

Confidential

But Gregory Joseph, a lawyer for the museums, said: "There will be complete peace between the museums and the Mendelssohn-Bartholdy and other heirs.

"The paintings will remain in the museums."

He added that the settlement's "dollar amount" would remain confidential.

Mr Rakoff strongly urged both sides to release terms of the settlement.

He said the heirs invoked "the weight of history on their behalf," and it would be "extraordinarily unfortunate that the public would be left without knowing what the truth is."

The two paintings, which both date from the early 1900s, were sold to the Jewish art dealer Justin Thannhauser in 1934 or 1935.

Duress

Mr Thannhauser fled Germany and spent much of the war in Switzerland.

He sold Boy Leading a Horse to former MoMA chairman William Paley in 1936, who gave it to MoMA in 1964.

He kept Le Moulin de la Galette until 1963, when he gave it to the Guggenheim museum.

The museums had denied that the paintings were obtained under duress, and wrote in a letter to Mr Rakoff two weeks ago that they looked forward to a trial.

"The public surely would want to know now and forever which of those diametrically different views was true, and the great crucible of a trial would have made that known," Mr Rakoff said.

He gave both sides 30 days to explain why the settlement should remain confidential.

In a joint statement announcing the settlement, the museums said the continued ownership of the masterpieces "ensures that members of the public - including millions of visitors, students, scholars, and others - will continue to enjoy them for generations to come".



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