Peggy Guggenheim – when the heirs and the foundation disagree

Foundations are often established to manage large art collections after the death of the art collector.  Unfortunately, the interests of the collector’s heirs do not always align with those of the foundation, and disputes arise. Such disputes raise the question of the extent of the rights of the heirs when the deceased’s art collection is managed by a foundation. The Tribunal de Grande Instance in Paris had to examine this very question in the context of the Peggy Guggenheim collection, and upheld its previous decision that the existence of any such rights depends on the terms of the gift.

In 1970, Peggy Guggenheim made a gift of her Palazzo Venier dei Leoni in Venice to the Solomon R. Guggenheim Foundation. In 1976, she made a gift to the Foundation of her art collection, composed of 326 works of modern art and glasswork by major artists such as Pablo Picasso, Alexander Calder and Wassily Kandinsky, located in the Palazzo.

Since Peggy Guggenheim’s death in 1979, the Foundation has overseen the conservation and management of her collection, not always to the satisfaction of her heirs. Indeed, the heirs first brought legal action against the Foundation in January 1992, arguing that the Foundation did not respect the terms of the 1976 gift, in which she expressed the wish that her collection remain intact. Specifically, the heirs did not approve of the Foundation’s decision to make changes to the Palazzo and the layout of the collection within it. The heirs wanted the Foundation to move the artworks back to where they had originally been. They also asked the Court to acknowledge their right to request the total or partial revocation of the gift, and requested compensation for moral damages. On 7 December 1994, the Paris District Court dismissed the heirs’ claims.

As a side note, it is worth pointing out that often, when the donor or testator, the heirs, the foundation and the property are located in different countries, the court must ask itself which law should apply to each claim. The analysis of applicable law can be complex. For instance, in the Guggenheim case, the French Court decided that issues related to the gift were governed by Italian law. As the Italian Civil Code provides that issues related to gifts are governed by the law of the country of the donor, and since Peggy Guggenheim was a US national, the Paris District Court, applying Italian law, decided the question under New York law.

The French Court held that, under New York law, the revocation of a gift is possible only if the terms of the gift allow for revocation with property passing to the heirs in circumstances where the foundation has failed to comply with the terms and conditions of the gift.  The Court dismissed the heirs’ claim because the 1976 gift did not require the foundation to abide by any conditions, in particular as to how the collection should be hung in the Palazzo. The Court also dismissed the heirs’ claim for alleged harm to the personality rights and memory of Peggy Guggenheim, finding that the Peggy Guggenheim collection does not constitute “an intellectual work” protected under Italian copyright law. Therefore, the heirs were not entitled to moral damages.

The heirs appealed the decision and later withdrew their appeal, following a settlement with the Foundation. The settlement agreement recognized the Foundation’s exclusive right to exercise control over the collection and its display. Pursuant to the terms of the settlement agreement, the heirs also waived any claim or action against the Foundation concerning all aspects of the management and administration of the Palazzo and the collection.

Almost two decades later, during the Venice Biennale in 2013, the Guggenheim heirs (including the heirs from the previous proceedings and their children) noticed that the Foundation had divided the collection up into several groups, some of which were exhibited outside the Palazzo, and that other artworks had been replaced by works from the Rudolph B. and Hannelore B. Schulhof collection. Further, certain works from the collection of Daisy and Raymond Nasher had been placed in the garden of the Palazzo, which is Peggy Guggenheim’s burial site, with a sign describing the garden as “The Nasher Sculpture Garden”. Arguing that the Foundation was acting in breach of the settlement agreement and that it had “desecrated” Peggy Guggenheim’s grave by transforming the garden into a “commercial profit making place”, causing harm to the dignity of the deceased, the heirs again filed a complaint with the Paris District Court. In their complaint, the heirs petitioned the Court to order the Foundation to display the Peggy Guggenheim collection in the Palazzo as she had originally presented it when she was alive, and to remove the Schulhof, Nasher, and any other collection from the Palazzo and the garden, including the removal of any reference to such collections. As part of their claim, the heirs demanded the revocation of the gift of the collection to the Foundation.

The Paris District Court issued a decision on 2 July 2014, in which it held that it could not revisit the same subject matter on the same grounds. The District Court had already ruled on the heirs’ request for revocation of the donation to the Foundation in December 1994. The Court held that the new circumstances of the exhibition of the Schulhof, Nasher and other collections in the Palazzo did not allow for another decision, given it had already ruled that the heirs’ could not request the  revocation of the gift in absence of any resolutory condition in the deed of gift.

The claim concerning the “desecration” of Peggy Guggenheim’s burial site had not been made in previous proceedings and was therefore allowed and decided under Italian criminal law. The Paris District Court ruled that the heirs had failed to show that the Foundation had disrespected or harmed the integrity of Peggy Guggenheim’s grave by placing a sign dedicated to the Nasher donors and by organising cocktail parties in the garden. The Court found that the Foundation had not treated her remains disrespectfully, dishonourably, or indecently. Hence, the Court dismissed the heirs’ claims.

Pierre Valentin and Anne Laure Bandle