A California federal judge ruled against a Jewish family who has fought to regain ownership of Camille Pissarro that was seized by the Nazis from a woman attempting to escape in 1939. The judge instead allowed the masterpiece to remain on display in the Spanish Thyssen-Bornemisza Museum in Madrid.

Judge John Walter ruled that under Spanish law, the art museum is the rightful owner of the 1897 Pissarro painting Rue Saint-Honoré, Après-midi, Effet de Pluie. The ruling, which was passed down last week, dismissed the 2005 lawsuit filed by the woman's great-grandchildren against the museum, NBC Los Angeles reported.

However, the judge asked the museum to consider a fair response to the victims of Nazis.

According to NBC, Ava and David Cassirer's lawyer vowed to appeal the court's decision to the 9th US Circuit Court of Appeals in San Francisco. "Museums and governments around the world recognise the need to return Nazi-looted art to its rightful owners," said attorney Laura Brill. "The museum is not doing the right thing here."

The Cassirer's great-grandmother Lilly Cassirer was forced to sell the Pissarro to the Nazis for $360 (£231) and a visa to leave Germany in 1939. Following the end of the Second World War, Cassirer said she accepted the $13,000 in restitution from Germany after the painting was not found.

Painting purchased in 'good faith'

NBC Los Angeles reported that the painting made its way to the US in 1951, after which it was sold among several art collectors and dealers. In 1976, Baron Hans-Heinrich Thyssen-Bornemisza purchased the painting. Hundreds of the baron's art collection were purchased by the Spanish government in 1993 for $338m.

Cassirer's grandson, Claude Cassirer, discovered the masterpiece's location after a friend spotted it in 2000. Following his death, David and Ava became the plaintiffs in the lawsuit along with the United Jewish Federation of San Diego County, according to the Associated Press.

The family claims that the museum ignored notices about the painting's origin and the fact that Pissarro's paintings were frequently seized by the Nazis.

However, the museum's lawyer, Thaddeus Stauber, said the museum purchased the painting in "good faith" and that the Cassirers had been compensated for the painting by the German government.

"The painting has been in the public domain for over 40 years," he said. "If somebody was looking to conceal something, looking to hide the past of a wonderful painting like this doesn't have it put up on public display, have it travel and have it published. They would have sold it in some marketplace."

According to the New York Times, the managing director of the foundation that operates the museum, Evelio Acevedo Carrero said he would consider displaying a plaque that commemorated the artwork's past as a Nazi confiscated masterpiece.