Institutions and collectors now have a new form of Uncle Sam looking over their art transactions: royalty seekers. If you’re planning to sell works by California artists, or works created in our state, you need to know the provisions of a statute currently on the books, as it could impact your pocketbook or those of any auction house or gallery selling works on your behalf.

As the Los Angeles Times and other news outlets have recently reported, the Sam Francis Foundation and other artists or their estates are suing for repeat sale royalties under the California Resale Royalties Act. This legislation, apparently honored more in the breach than in actuality, returns a 5% royalty to artists upon profitable reselling of works at values above $1000. The California law applies to artists living in the state, estates of artists going back 20 years, and/or to sales taking place in the state.

Galleries, major auction houses, and even Ebay are being targeted in lawsuits seeking payment of royalties by well known artists such as Chuck Close, Laddie John Dill and Robert Graham Estate . Similar to “droit de suite” resale royalties laws on the books in many European countries, artists are hopeful that such suits, if successful, will lead to adoption of a national law. The royalty is based on the retail sale price of the artwork, less whatever was originally paid for the work by the current seller. So works purchased years ago and held during decades of appreciation, as often occurred with the top tier of artists, can result in some whopping assessments.

The royalty can apply even if the artist lived in California for as little as two years, and also applies to barter or exchange of works as well as outright sale. Yikes. The fine print can be found in the California Commercial Code, section 986, always our first stop for a rousing read.

Betsy Dorfman

Photo courtesy of the FBI

The FBI has announced recovery and return to Iraq of a variety of pots, terracotta plaques, oil lamps, and other artifacts illegally seized by Department of Defense contractors in 2004. The full article can be found here:

http://www.fbi.gov/news/stories/2011/july/artifacts_070711/artifacts_070711

Estimated at 2,500 to 4,000 years old, the looted goodies were used by the contractors as gifts and bribes, or sold to other contractors who smuggled them into the U.S.  Two of the contractors were prosecuted and are serving prison terms as a result.

Tens of thousands of such artifacts are thought to be circulating in the netherworld of black markets, with the UAE being a major hub of such activity. More than 15.000 items were taken from the National Museum in Iraq alone. Destined for purchase by European and other collectors, smugglers have proven adept at avoiding customs regulations and exporting such goods either deliberately mis-identified as modern pieces or by essentially hiding them in containers and other bulk shipments of legal commodities.

As any shipping professional can attest, there simply isn’t an affordable or rational way for every shipment to be inspected by customs officials. And with terrorism the main focus of interdiction efforts worldwide, who is going to unpack and investigate the provenance of every souvenir pot, fossil, sculpture and ceramic that travels through the worldwide freight system? Unguarded borders also exacerbate the problem, although to a lesser extent. While this latest recovery by the FBI is good news, the problem isn’t going away anytime soon.

Overseas travelers should be aware that most countries have strict laws prohibiting export of  items deemed to be part of their cultural heritage. That cute little clay vase the guy on the corner sold you cheap could get you into big trouble, and as an airline passenger your personal baggage is inevitably screened and inspected. While the law may allow for leniency where the possessor had no way of knowing the item was illegal, items purchased on the street or in a “flea market” setting, and without accompanying paperwork (provenance) may be enough to suggest that you knew, or should have known, that the artifact was possibly, or even likely, illegal. Instead of adding to your knick-knack shelf, you could end up collecting time off for good behavior.

Betsy Dorfman

OK, so you probably know this one… the lines are in fact of equal length. Different cultures, it turns out, react to the puzzle differently. Among westernized nations or where populations encounter right angles with regularity, the illusion holds. Viewers in these “carpentered” cultures are susceptible to the lie. However in more primitive cultures, the lines are more frequently correctly perceived as equal. The how and why specifics of this are of interest, and widely debated in various books and internet citations. I haven’t seen a discussion of this however through the eyes of an artist or sculptor, which thought was the genesis of this entry.

What if the figures above were sculptures rather than line drawings? If we assume that the elements of each are equal in size and weight, then there could be an expectation of parity in the shipping costs. Ah, but unfortunately we have now run afoul of the BSI – Budget Shipper’s Illusion. In fact the two sculptures are identical in shipping terms only if the right angle pieces on the ends of each main member are removable. If they are not removable, then the sculpture at the top would be more expensive to ship. It is longer overall in length, as the “feet” of the arrow or right angle portion extend past the length of the center line. Its volume is thus greater than that of the figure below, and hence it will be more expensive to ship in most cases. In fact it is relatively easy to see that the bottom figure in fact fits readily within the “footprint” of the top figure.

There is nothing in the scientific literature regarding the performance of the hunter gatherers relative to the BSI.  But since, dearth of right angles not withstanding, they had to hunt and then gather, as in lug around, a lot of things, they presumably knew to charge more for a bigger thing than a small one. Unless the big thing was light and the small thing was heavy. But that’s another corollary of the BSI for another day.

Betsy Dorfman

Our sympathies, guys.

Betsy Dorfman

Republican forces in the Iowa House have voted to compel the University of Iowa to sell the centerpiece of its art collection, a Jackson Pollock work, in order to fund scholarships for art students. This is despite opposition from many quarters and is also contrary to the wishes of the donor. Further details here : http://www.dailyiowan.com/2011/02/17/Metro/21449.html

Actually, we think this makes a lot of sense, and is a policy that could and should be applied much more broadly to balance budgets of communities and universities alike.

First, once you sell off the contents or the best contents of the university and public museums, costs will certainly decline. There will be few if any students and visitors interested in attending – major savings right there.

Second, why not extend the program to include libraries and other cultural institutions? Once emptied of pesky rare books requiring expensive climate controlled storage, library buildings could be converted to high end shopping or other approved GOP use. Museums, too. Many such institutions occupy seriously delicious real estate in major cities around the U.S. Why haven’t other lawmakers thought of this before?

Pretty much all the art anyone would want to see and all the books anyone would want to read or inspect can be accessed online, so these “bricks and mortar” buildings and their contents are passe anyway in the digital age.

To the extent that art and culture is fungible it should be funged and the proceeds spent to reduce deficits. Taxes should also be decreased for high net worth citizens, encouraging them to buy such liquidated art and artifacts and remove them to their secure gated communities. We are sure they will gladly make these treasures available for viewing by any art or other students who might happen by. If that isn’t a win/win what is?

Betsy Dorfman

As a fine art storage facility, we do on occasion become involved in holding art assets on a fiduciary basis for estates or attorneys while various legal entanglements are sorted out. In other words, while people fight over who gets what. The recent court action filed by Victoria Duffy to forestall auction of specified artworks from the estate of her late husband Dennis Hopper is unfortunately typical of the process.

 On more than one occasion we have been asked to remove artworks from a residence in a hurry – on a weekend or late at night – by one spouse or another. Where this was recognizable as a questionable tactic or even admitted as an attempt to shield assets from a pending divorce action, we have declined to become involved. But often we have no idea who the legal owner of items might be. If someone engages us to move artworks to storage or to a third party location we will do so. Galleries often store paintings which they don’t own, and traveling exhibitions consisting of many loaned works are also routinely stored and transported between venues. In these circumstances it is the depositor of the goods who has the right of access to them – at least until proven otherwise.

Record keeping is generally the crux of the disposition matter. For serious collectors as well as the more amateur variety, being able to demonstrate the provenance of an artwork – who acquired it when, and from who, in what order – often settles the issue of legal title. If an artwork is stored by someone who is proven not to have legal title, it can be returned to the rightful owner. As the result of a proper legal action, and once the bills are paid, of course.

Companies like ours keep accurate records, and keep them long term, showing where artworks have been picked up, stored, and delivered. We do this for tax reasons, but such records are also useful to demonstrate chain of custody. Unlike self storage where there is no record of what is stored, we keep itemized inventories of everything on hand, dates in and dates out, and to whom items were released or delivered. If you are trying to hide assets, you’ll probably want to set up a nice web of cardboard holding companies before you call us. On the other hand if you’re looking to have careful inventory documentation, confidentiality, and assurance that proper procedures for access and information control are in place, then a fine art storage provider is your best bet. We’ve got your back. At least until the lawyers get to work.

Betsy Dorfman

The FBI has just launched a new searchable database which lists both images and details of stolen artworks. The National Stolen Art File (NSAF) is a free online tool allowing both the public, law enforcement, and institutions to aid in the identification and recovery of stolen works.  Oh and, yes, art shippers too.

Any item stolen in the U.S. and valued at $2000 or over can be listed. The goal, in addition to recovery, is to provide a forum that will help keep “hot” items off the market in the first place. Collectors and galleries can and should search here if any red flags are raised in the course of their due diligence before acquiring or representing works. The listings cover a variety of works including paintings, sculpture, stamps, pottery, tapestries, books and other cultural heritage artifacts.

The database currently has a library of some 7000 images, and items can be searched by keyword and category, as well as by artist, title, and date range. The FBI website also features stories of both solved and unsolved art thefts — pretty interesting reading from an unlikely source of, albeit cautionary,  entertainment.

Weve had only one encounter over the years with law enforcement seeking information on a possibly forged painting we shipped for a client. Such cases can take years to unfold and prosecute; just discovering the  principal parties to a transaction can be tricky where layers of contacts are deliberately put in place to conceal buyer and/or seller identities. Such concealment isn’t always nefarious — galleries and dealers sometimes have quite Byzantine arrangements involving loans and multipart ownership of pieces which may not be made transparent to the buyer. And which, so long as the artwork and provenance are genuine, will not be made famous online by the FBI.

It remains to be seen if the Internet will prove useful in curbing at least some of the trafficking in stolen art, which the FBI acknowledges to be an age old problem. Time to turn in that Monet you found in the dumpster — everyone is going to recognize it now.

Betsy Dorfman

A longtime friend of FINE ART SHIPPING, Stephen Kanner is remembered at the institution he helped found and fund, the Architecture and Design Museum of Los Angeles. An inclusive retrospective showcases the combination of both classical and very modern sensibilities that were the hallmark of his work. A third generation architect, Stephen took the family firm, Kanner Architects, in new directions and won any number of distinguished awards and prizes for these efforts. The show currently up at “A plus D” also includes family portraits which remind us that this was a vigorous man departed too soon.

L.A. locals will recognize many of his buildings which vary from residences to shopping centers to fast food outlets and a futuristic gas station — lots of “he did that one, too?” moments as you begin to realize the extent of the footprint he leaves on our city. For those who can’t attend, the Museum’s website shows photos of many of Stephen’s projects, definitely worth a look. The exhibition runs through January 16th.

Betsy Dorfman

Speaking of storage issues:

 Needless to say this is now our previously favorite fish market.

And a good idea, too, loading up on that barbecue sauce.

Photo courtesy of Ron Dorfman