News:

A Manhattan federal jury will be asked to decide next week if two of the New York art world's most famous names have priceless Picassos with a Nazi past?

Manhattan Federal Judge Jed Rakoff has rejected efforts by the Museum of Modern Art and the Solomon Guggenheim Foundation to toss a suit filed by the heirs of Paul von Mendelssohn-Bartholdy, a Jewish banker in Berlin in the 1930s.

The family wants the museums to turn over Picasso's "Boy Leading a Horse" and "Le Moulin de la Galette" which, they say, the Nazis forced the banker to give to an art dealer in the mid-1930s.

"While the record regarding the transfer of these paintings is meager, it is informed by the historical circumstances of Nazi economic pressures brought to bear on Jewish persons and property or so a jury might reasonably infer," Rakoff wrote.

The heirs "have adduced competent evidence that Paul never intended to transfer any of his paintings and that he was forced to transfer them only because of threats and economic pressures by the Nazi government."

The museums say German-Jewish art dealer Justin Thannhauser sold "Boy" to William Paley, the former MoMA chairman, in 1936 and gave "Le Moulin" to the Guggenheim as a gift in 1964.

The heirs, historian Julius Schoeps, Edelgard von Lavergne-Peguilhen and Florence Kesselstatt, claim there is no record of a sale to Thannhauser. They've agreed to split the proceeds should a jury find they are the rightful owners.

The trial is set to start Monday. The museums declined comment.