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11 March 1932, RGZ 135, 339

Reichsgericht (Second Civil Senate) 11 March 1932, RGZ 135, 339

On 18 January 1928, the plantiff bought from the defendant an oil painting entitled “Oaks at the Water” which was described as an original painting by Jacob I. (Isaakszon) van Ruisdael, together with an expert opinion by the late museum director B which, in the reading of the parties, confirmed that the work was created by this painter. The picture was handed over at once, and RM 15,000 were paid as the purchase price. The plaintiff alleges that the work has not been painted by “the famous master” Jacob I. van Ruisdael, but by his “far less famous cousin and imitator”, Jacob S. (Salomonszson) van Ruysdael.[1] He therefore had the contract rescinded on 18 October 1929 on the ground of mistake, and by this action requires return of the purchase price with interest. Both of the previous instances have rejected the action. The plaintiff’s appeal was dismissed for the following

Reasons:

After a fresh examination, this Senate has decided to adhere to the well-established jurisprudence of this Reichsgericht (references omitted), according to which §§ 459 et seq. BGB on remedies for defective goods, being the more specific regulations of this transaction, take precedence over the general rules for rescission on the ground of mistake (i.e., for lack of an essential characteristic of the purchased goods) under § 119 BGB. This jurisprudence, to which the previous instance has also adhered, is generally recognized and has recently been approved by Düringer, Hachenburg and Werner (HGB, Vol. 4, Einl. no. 142). The plaintiff does not object to this view in general. However, remedies for defective goods under sales law are no longer of any use to him, because he is faced with a defendant who relies on the six months limitation period for actions for the termination of a sales contract due to defects, and because the plaintiff has dropped, as early as in the first instance, his previous allegation that the defendant had acted deceitfully, which would have prevented such limitation of actions. Therefore, the plaintiff seeks to show that the painting is not defective, for it is the original product of another, recognized Dutch master. According to his appeal statement, the present case is one of mutual mistake about the master who had actually painted the work, with the result that the plaintiff was allowed to rescind the contract with a thirty year long-stop period under § 121 II BGB. The Appeal Judge, in the plaintiff’s view, confused a defect on the one hand with a “typical”, and “pure”, lack of will on the other. What had been “delivered” to him were goods which were other than (i.e., an aliud to) those which he had purchased.

The judges of both previous instances are right to object to this view on the ground that this is a contract for the sale of specific goods. What has been purchased is the very painting which has been physically offered for sale; if this painting is handed over, so are the goods which were sold. The appeal cannot challenge such a finding of factual nature; moreover, the appeal is not in a position to assert that the order had been made under the term “Dutch master Jacob I. van Ruisdael”, and what the seller had instead chosen for his performance, and delivered, was the painting by another master, Jacob S. van Ruysdael. … Neither does the allegation merit approval that this was not a defect of the painting. There has been a recent, and particularly extensive debate on what is to be understood by a “defect” within the meaning of § 459 I sent. 1 BGB. According to one view (references to academic writing omitted), this concept requires a disapproved deviation from the norm. This objective requirement must be fulfilled under any circumstances. According to this view, mere deviations from how the parties perceived the goods sold are not sufficient. When the Code mentions “or [fit] for the use foreseen by the contract”, this is, in this view, only relevant for deciding whether or not an existing mistake was relevant. The opposite view is taken by Enneccerus-Lehmann (reference to this and other scholarly works omitted). For them, it is sufficient for a “defect” under § 459 BGB that there is a negative deviation from the quality which must be expected for the use foreseen by the contract. This view conforms with the wording of the Code, according to which use “foreseen by the contract” ranks equal to “normal use”, and this view alone can do justice to the needs of today’s specialized trade in goods. It is therefore this view which should be adhered to, in line with the recent jurisprudence of this Reichsgericht. It is the same view on which, within the last decade, judgments concerning the trade in paintings have been based, judgments which have been delivered not only by the present, but also by other Senates of this Court (references omitted). As concerns the acquisition of paintings by a specific master, the use “foreseen by the contract” is the one which enables the buyer to enjoy the possession of a work specifically of this master, to bury himself in the particular features and painting style of this artist, and to have these always in front of his eyes. Other advantages, in particular those of a pecuniary nature, may go hand in hand with this if the work or the artist enjoy high esteem, but these advantages are not essential. If, then, the work is not by the very artist as whose picture it was sold in the view of both parties, then there always exists a defect in the goods sold. It does not matter then whether this is a copy, or a counterfeit of a painting by this master, or a valuable creation by another painter. The Appeal Judge has left open how the case should be decided if the true painter of the picture is as famous, or even more cherished, than the artist to whom both parties have attributed the painting. The same rule applies to this case as well. This becomes clear at once if one looks at the case where the buyer – as is known to both parties – only collects works by one particular master. It is true that in such a case the purchaser will normally desist from relying on the defect. Rather, what will come to the fore will be the seller’s right to get out of the contract by rescinding it on the ground of mistake under§ 119 II BGB, or by relying on frustration of contract (Wegfall der Geschäftsgrundlage), as happened in RGZ 124, 115 (sale of old Chinese vases as products of modern times), a case on which the appeal relies. On the other hand, no one can talk of defects of the painting and ensuing remedies, or of mistake and rescission, in cases of speculative acquisition. The seller may not only fail to warrant specific qualities (as in the present case), but perhaps even explicitly refuse to warrant any qualities; the buyer may himself reckon that the painting could be by a person other than the named master, e.g. by one of his pupils. But the buyer may nevertheless purchase the painting in the hope that the assumption of both parties is correct. In such a case, the contract does not presuppose that the painting is characterized by having been created by a particular master, even if during negotiations this master has, with more or less certainty, been named as its author.

The view taken by this Court also serves to maintain for the art trade the limitations which are imposed on the buyer, i.e. by referring him to remedies for defective goods, which are subject to limitations in time. These restrictions are desirable as a matter of legal policy, and have been enforced by this Court in other areas as well (reference omitted). The appeal suggests that the reasoning of the previous instance is flawed, arguing that the esteem which a painter enjoys can change, and that this esteem lies entirely outside of the sphere of legal considerations. However, this accusation is unfounded. As a matter of law, those very conditions of trade and commerce need to be taken into account, which have caused the plaintiff himself to bring an action, by complaining that the painting is a “work of the less significant Jacob Salomonszon van Ruysdael”, who was “a far less famous cousin and imitator of the famous master Jacob I. van Ruisdael”. If these conditions change, it may follow that certain legal principles do not apply, but not necessarily that these principles must be changed. …

The appeal believes that remedies for defective goods with their short limitation period cannot apply to “true arts trade” on the ground that these provisions have been tailored for everyday trade of market and exchange. This view must be rejected. … Deficiencies in the goods purchased which relate to these goods as originating from a certain producer are also relevant in other areas of trade and commerce. If a buyer could rely on remedies for such defects within the long general limitation of actions period of 30 years, this would create as unbearable a situation for the arts trade as it would for any other trade. On the other hand, it is of much less consequence if a buyer is forced to have, within half a year, the goods examined for hidden defects, and objects of art for being authentic. The plaintiff could have carried out such an examination in 1928 just as well as in 1929. The fact that no such limitation is imposed on the seller, who gives up the object sold, and who will rarely continue to follow the fate of these goods, is of a general nature and can be explained on the grounds that no practical need has arisen for such a limitation.

… (there follow comments ons an alleged, but not established practice in the arts trade to take back pictures once it becomes known that they are not authentic.)

Finally, the appeal raises the following argument. If both parties have assumed that, according to B’s expert opinion, this was a “Jacob I. van Ruisdael”, it would be contrary to § 242 BGB if one party could tie the other to a business transaction which was undertaken on such a basis. As demonstrated by the jurisprudence on hyperinflation, even contracts which both parties appear to have fulfilled by perfomance remain subject to considerations under § 242 BGB.

However, the Appeal is wrong in deeming the present case to be one where a contract has only seemingly been fully effectuated. … Presently, the business transaction has been fully effectuated by mutual performance, and normal statutory remedies were available to the plaintiff for a certain time in order to rely on remedies for defects of the goods sold. Statute has deprived the plaintiff of enforcing these remedies by way of action (and under § 478 BGB by relying on these remedies as a defence) once a certain time has lapsed, and once the other party has relied on this lapse of time. It can therefore not be the will of the legislator that one should take the long way of § 242 BGB in order to reinstate the seller’s liability for the defect. Any resorting to the general law of obligations rule of § 242 BGB, and any reliance on the presumption that the work was produced by the artist Jacob I. van Ruisdael as a basis of the transaction (Geschäftsgrundlage), is necessarily as much excluded by the specific law of obligations rule for remedies for defective goods in sales contracts, as is rescission for mistake. The same must also be true for any pre-contractual liability based on – merely negligent – misrepresentations on characteristics of the goods sold (reference omitted). Equally, according to RGZ 128, 211, 215, no action can lie in restitution for the purchase price once the right to terminate the contract for defects has become time-barred.

[1] In all likelihood, the appeal refers to Salomon Jacobszon van Ruysdael (after 1600-1670). While a Dutch master in his own right, his fame does indeed not quite match that of his nephew (not cousin) Jacob Isaackszon van Ruisdael (1628 or 1629-1682). GD