Upholding a lower court ruling last year, the court said Friday that it was up to ''historians and the public'' to judge the allegations made by Hector Feliciano in his book, ''The Lost Museum: The Nazi Conspiracy to Steal the World's Greatest Works of Art,'' published in France in 1995 and in the United States in 1997 (Basic Books). However, in its written findings, the court went out of its way to praise Mr. Feliciano's method of research and dismissed the Wildensteins' argument that he had acted irresponsibly and negligently.
A spokeswoman for the Wildensteins said the family was ''extremely shocked'' by the ruling and was studying whether a further appeal was justified.
She noted that the court had not endorsed the charges contained in Mr. Feliciano's book.
In a telephone interview from his home in New York, Mr. Feliciano said: ''I used reliable documents. The lawsuit has backfired for the Wildensteins.''
Although the suggestion of collaboration related to Georges Wildenstein, who died in 1963, the case was brought by his son, Daniel, 82, his two grandsons, Guy and Alec, and Wildenstein & Company, which has its headquarters on East 64th Street in Manhattan. They sought damages of six million francs, or $850,000 at today's exchange rate, as well as the removal of all references to the Wildensteins in future editions of ''The Lost Museum.''
The lawsuit formed part of a broader campaign by the Wildensteins to improve their image after a wave of bad publicity had begun to affect their business, one of the wealthiest and most powerful in the art world.
What was most embarrassing was the tabloid coverage of messy divorce proceedings involving Alec Wildenstein in New York three years ago. But, apart from Mr. Feliciano's allegations, the Wildensteins' reputation is also under attack in a separate lawsuit in New York charging that after World War II the Wildensteins recovered several medieval manuscripts looted by the Nazis from the home of a French-Jewish art collector, Alphonse Kann.
In his book, Mr. Feliciano said that Georges Wildenstein had business contacts with a well known Nazi art dealer, Karl Haberstock, shortly before the war, immediately after the occupation of France and sporadically during the course of the conflict, even while in exile in New York. Mr. Feliciano's lawyer, Antoine Comte, presented both the lower court and the appeals court with documentary evidence supporting these charges.
After reviewing these documents, the appeals court said it could not share the Wildensteins' claim that Mr. Feliciano's writing was ''manifestly erroneous.'' It said the documents prove that Georges Wildenstein exchanged letters, did business and had meetings with Haberstock.
It said that ''it is also possible to deduce'' that Georges Wildenstein maintained contact throughout the war with Roger Duquoy, a former employee who ran the Wildensteins' Paris gallery during the war and who also did business with Haberstock.