December 12, 1977 12:00 PM

As one of the gloomier masters of abstract expressionism, Mark Rothko liked to describe the subject of his final canvases as “the tragic.” Secretive by nature, he shut hundreds of them away in warehouses to guard against overexposure. “A picture lives by companionship,” Rothko believed. “It dies by the same token. It is therefore risky to send it out into the world. How often it must be permanently impaired by the eyes of the unfeeling.”

In February 1970 Rothko, who suffered from depression, committed suicide in his Manhattan studio by slicing into the crooks of his arms. He was 66. Since then his legacy of nearly 800 paintings has more than justified his dark description of them.

A battle over the multimillion-dollar Rothko estate unearthed one of the New York art world’s most spectacular scandals. It also set off a six-year legal war pitting his most trusted friends—and the most powerful art brokerage house in the world—against his orphaned daughter, Kate, now 26.

Two weeks ago Kate Rothko Prizel won a final victory in the case for herself and her brother, Christopher, 14. A $9.2 million judgment was upheld against Marlborough Gallery, Inc. and the executors her father had appointed to manage his estate: Bernard Reis, now 82, who was Rothko’s accountant; Morton Levine, 55, a professor of anthropology; and painter Theodoros Stamos, 56, a colleague from Rothko’s earliest days.

All three executors were intimate family friends. Reis, who wrote Rothko’s will, had become perhaps his closest personal adviser. Levine was Christopher’s guardian for a short time. “The most shocking was Stamos,” Kate now says. “I have a photograph of myself sitting on his lap at his country house on Long island. They all appeared to be trustworthy. There was no reason to think they wouldn’t be.”

The case eventually became a legal snarl, but certain facts emerged. Paramount among these was that a few months after the suicide the executors sold Marlborough 100 of Rothko’s paintings for $1.8 million, payable without interest over 12 years. The price was only a fraction of their value at the time of his death—and a far smaller fraction of it afterward. In addition, Marlborough received the right to sell all the other paintings on consignment—and collect a higher-than-normal commission of up to 50 percent. Three lower courts ruled—and New York State’s highest court last month agreed—that such a disposition of Rothko’s works was “manifestly wrongful and indeed shocking.” Vindicated, Kate Rothko says, “I guess what bothered me most was the bulk sale and how fast it took place. My father wanted them to be placed carefully, not sold en masse commercially. I wanted to live up to his wishes.”

A Brooklyn College science major when the case began, Kate is now a fourth-year medical student specializing in pathology at Johns Hopkins University in Baltimore. In many respects she is an unlikely conservator of her father’s works. Her interest in becoming a painter lapsed in grade school—”when I realized I had a very hard act to follow.” In the suburban Maryland home she shares with husband llya Prizel, a 26-year-old social worker whom she married in 1974, the only two Rothkos on the walls are museum posters. “I’ve always wanted to have my father’s paintings,” she explains, “but they wouldn’t be safe in the house without security.”

By some accounts, her life with father in an artist’s household was uneasy. Stamos remembers, “She used to say to him, ‘Why don’t you get a job like everybody else?’ ” At the reading of the will, he says Kate remarked, “I don’t want anything—give everything away.” The sentiment, in any case, was moot. Neither she nor Christopher was mentioned in the document.

Kate’s mother, Mary Alice, had already set about rectifying that situation when she died of a stroke six months after her husband’s suicide. Before long a court awarded Kate and her brother half the estate. The other half went to a nonprofit foundation that Rothko founded in his will and tried to endow with all his assets except $250,-000 in cash, his townhouse and its contents (including 40 paintings). He left these to his wife. One expert at the trial valued the warehoused Rothkos at $32 million.

As word of Marlborough’s purchase of the 100 paintings swept the art world—some of them were resold at six to 10 times what the gallery paid for them—Kate went on the offensive. The other side eventually used five teams of lawyers to try to refute her charge that the executors had “wasted the assets” of the estate. After some three million words of testimony in four separate trials, two of the executors were found guilty of conflict of interest—Reis because he was an officer of Marlborough; Stamos because the gallery had begun handling his own paintings just after the deal was struck. Levine broke with the other two during trial, contending that he had been “pressured” into signing the agreement and was victimized by bad legal advice. Nonetheless, he too was held accountable for damages.

A third of the $9.2 million award to the Rothko children was a fine against Marlborough and its founder, Frank Lloyd, 66, for violating an injunction against selling any more paintings before a settlement. (Lloyd admitted selling some Rothkos to pay his legal bills, but insisted he had done so before the court order. Dates on invoices that suggested otherwise, he testified, were typing errors.)

The practical effect of the ruling has been stunning. Lloyd, who makes his home in the Bahamas and runs his Liechtenstein-based art conglomerate from offices all around the world, faces three felony charges and a maximum 12 years in prison if he returns to the U.S. His legal fees may already run as high as $4 million, and he has lost several of his best customers and painters since the Rothko scandal began.

Reis and Levine can look forward to long-term indebtedness to Marlborough, which will probably pay the entire judgment and collect from them. Stamos, who is no longer in the Marlborough stable, has quit painting regularly and fears he could lose his home. “It has wrecked me and my name,” he says. “The whole thing is unfair. In 10 seconds I lost everything I had saved. I am no crook—Rothko knew me, trusted me. We were very close. None of us did anything wrong.”

Kate celebrated the verdict by playing hookey from her 90-hour week at Johns Hopkins to have dinner with her husband at an Italian restaurant. “Usually when we go out it’s McDonald’s,” she says, and is confident that her life will change little for all her newly won millions. “Perhaps after graduation,” she allows, “I may take an academic job at a lower salary.”

The task facing her already—as sole executor of the Rothko estate—is enormous: setting up a Rothko museum, perhaps, or lending groups of paintings to established museums. The IRS awaits her attention to the matter of inheritance taxes. What has she learned from the past six years? “Art is a business,” she says. “Artists always thought they were above it. My father was naive in that sense.”

Artists are unlikely to be as naive in the future. By her victory in court, Kate guarantees that the public will have access to more of Rothko’s work, and her fight against long odds to put a rightful price on it can only help the country’s exploited artists and their heirs. “From now on,” as one lawyer puts it, “a trustee who makes sales that are too low will know a Kate Rothko could be coming after him.”

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