Picasso Tug-of-War in San Francisco - San Francisco Museum of Modern Art bringing a lawsuit for an alleged violation of an oral agreement regarding a Pablo Picasso painting - Brief Article

Art in America, June, 2000 by Stephanie Cash, David Ebony

The San Francisco Museum of Modern Art (SFMOMA) recently filed a lawsuit against the heirs of Bay-area philanthropist Madeleine Haas Russell for breach of an oral contract regarding a 1934 painting by Pablo Picasso, Nude in a Black Armchair. The case has raised eyebrows in the art world since it touches upon delicate matters of museum patronage. In recent years, SFMOMA has been engaged in a vigorous acquisition program but has yet to snag a major Picasso to hang on the walls of its Mario Botta-designed building. Ownership of the portrait of Marie-Therese Walter, which had been in the Russell collection since 1969, passed to the Madeleine Haas Russell Revocable Trust after her death last year at the age of 84. Last September, museum officials entered into an oral agreement with the trust, controlled by Russell's heirs, to purchase the Picasso for $44 million. Funding for the purchase, in the form of a partnership, was to be provided by SFMOMA museum trustees Charles and Helen Schwab. The Schwabs were to retain 60 percent ownership of the work, which they would leave to the museum upon their deaths. The museum's 40-percent stake in the painting was to be donated outright by the Schwabs.

The trust, however, decided against the sale and instead shipped the painting, along with 10 other works from the Russell collection, to New York to be offered in a November auction at Christie's. The works, including important pieces by Matisse, Braque, Rodchenko, Schwitters and Segantini, brought a total of $71.4 million. The Picasso went to Leslie Wexner, chairman of the Limited, for $45.1 million, including the auction house fees. The hammer price, $41 million, was $3 million less than the museum had offered to pay.

Lawyers for the trust insist that there was no legally enforceable contract in place to buy the painting and point out that the museum had the opportunity to bid on the work at auction. The museum claims that the painting could have significantly boosted museum attendance. It seeks $18 million in damages, a figure that represents approximately 40 percent of the painting's market value and the portion of the work the museum would have owned had the oral agreement been honored.