A dispute has been settled over the ownership of Absinthe Drinker (Angel Fernandez de Soto), a blue period painting by Pablo Picasso, displayed here at Christie's auction rooms in London in September 2006.A dispute has been settled over the ownership of Absinthe Drinker (Angel Fernandez de Soto), a blue period painting by Pablo Picasso, displayed here at Christie's auction rooms in London in September 2006. (The Associated Press)The heirs of a German Jew who sold his art in the 1930s to keep it out of Nazi hands have quietly settled their claims over three paintings by Pablo Picasso.

The three paintings will remain in the hands of current owners but each has reached a settlement with heirs of Paul von Mendelssohn-Bartholdy, who died in 1935.

Their lawyer issued a statement Wednesday announcing the final stage of the agreement and said a U.S. judge who heard the case had made a significant ruling in the field of Holocaust-recovery art.

The decision by Judge Jed S. Rakoff establishes that victims of Nazi persecution who lost works of art under duress can apply for a remedy under U.S. law without needing to prove that Nazis stole the works.

The paintings affected in the Mendelssohn-Bartholdy case are:

  • The Absinthe Drinker (Angel Fernandez de Soto) (1903) by Pablo Picasso, owned by the Andrew Lloyd Webber Foundation.
  • Boy Leading a Horse (1905) by Picasso, owned by the Museum of Modern Art.
  • Le Moulin de la Galette (1900) by Picasso, owned by the Solomon R. Guggenheim Foundation.

A visitor looks at Pablo Picasso's painting Boy Leading a Horse in Berlin in 2004. It is part of the collection of New York's Museum of Modern Art. A visitor looks at Pablo Picasso's painting Boy Leading a Horse in Berlin in 2004. It is part of the collection of New York's Museum of Modern Art. (Associated Press)Mendelssohn-Bartholdy, a banker, was a nephew of the famous composer Felix Mendelssohn and a descendant of Enlightenment philosopher Moses Mendelssohn.

He sold his valuable art collection, which included five Picassos, to Jewish art dealer Justin Thannhauser in 1934 or 1935 to avoid having it seized. Thannhauser escaped Germany and sold the paintings.

Judge Rakoff ruled that Mendelssohn-Bartholdy "never intended to transfer any of his paintings and that he was forced to transfer them only because of threats and economic pressure by the Nazi government."

That ruling led to a settlement between the museums and Julius H. Schoeps, Mendelssohn-Bartholdy's heir, late in 2009. Schoeps, of New York City, spearheaded the case on behalf of the family.

The agreement with the Lloyd Webber Foundation, which had sought to sell the painting, was reached early this year. The terms of the settlement are confidential, according to John Byrne, Jr., a Washington lawyer who represented Schoeps.