Annenberg Pays $40.7 Million for 1905 Picasso : Art: “Au Lapin Agile,” a cafe scene, commands the third-highest price ever paid for an artwork.

A rose-period cafe scene by Pablo Picasso sold Wednesday night for $40.7 million--the third highest auction price ever paid for an artwork. The buyer was philanthropist Walter H. Annenberg.

“Au Lapin Agile,” a 1905 portrait of the young Picasso as a harlequin, had been rumored to go even higher, possibly exceeding the record $47.9 million paid last May for “Yo Picasso,” another early self-portrait, and even surpassing the $53.9 million commanded by Vincent van Gogh’s “Irises” two years ago.

But the $40.7-million price was steep enough to reassure the art world that Christie’s rather disappointing sale on Tuesday night may have been an aberration.

“We were hoping that ‘Au Lapin Agile’ would bring a higher price than ‘Yo Picasso,’ but the fact that it’s going to such a great collection makes up for that. I’m really ecstatic about the sale,” said John Whitney Payson, whose sister, Lorinda de Roulet, put the painting on the block.

John L. Marion, chairman of Sotheby’s North America, said the painting will go to the private collection of Annenberg at Rancho Mirage, Calif.

Annenberg did his bidding by phone, although he was in the building in New York at the time, according to Diana Brooks, president of Sotheby’s North America.

“Au Lapin Agile” (“The Lively Rabbit”) is named after a Montmartre cafe frequented by Picasso. He painted himself as a brooding clown with a model, Germaine Pichot, whose rejection of Picasso’s friend, Carlos Casagemas, is said to have led to Casagemas’ suicide. The cafe owner, Frederic Gerard, sits in the background of the picture, strumming a guitar.

Both “Au Lapin Agile” and Van Gogh’s “Irises” came from a family collection built by philanthropist Joan Whitney Payson and bequeathed to her children. John Whitney Payson said he and his sister had each sold one painting when they became “too expensive to keep,” but “no other sales from the collection are under consideration at this time.”

The Picasso sale was the highlight of a highly successful auction of Impressionist and modern art at Sotheby’s. Seventy of the 74 lots offered sold for a total of $269.5 million, a record for any art auction.

Buyers for multimillion-dollar paintings seemed to be in short supply the previous night at Christie’s where nearly a third of the Impressionist and modern works failed to sell. But bidders with deep pockets turned out in full force on Wednesday, snapping up all but one of the most expensive pieces, a Renoir pastel, “Young Girls at the Piano,” valued at $20 million to $30 million.

Sotheby’s chairman and auctioneer Marion credited the success of the sale to “accurate estimates.” Most works sold within or slightly above the pre-sale estimates established by the auction house. “Having paintings go higher and higher every time isn’t the point. Solid estimates and solid prices are more important,” he said.

Except for the Annenberg purchase, the highest priced works went to Japanese buyers. Mountain Tortoise Co. of Tokyo paid $26.4 million for Picasso’s 1932 painting of Marie-Therese Walter, called “The Mirror.” An unidentified Japanese private collector bought Picasso’s 1921 painting, “Mother and Child,” for $18.7 million.

An anonymous Japanese dealer helped to solve Australian businessman Alan Bond’s financial troubles by paying $14.85 million for Eduoard Manet’s painting, “La Promenade.” Bond borrowed about $27 million from Sotheby’s to buy Van Gogh’s “Irises” two years ago and still owes an undisclosed amount on that painting. He sold the Manet from his collection to pay off “a significant part” of his debt, according to Sotheby’s president Diana D. Brooks.

“Entre les Lys,” an 1889 Breton landscape by Paul Gauguin, also sold to a Japanese dealer, for $11 million. It was part of a Swiss family collection that has been on loan to museums in Basel, Zurich and Geneva for more than 40 years. Rudolf Staechelin, who owns the collection, said he had decided to sell one because most of his assets are in art and he wanted to finance a new real estate business.

“I’m very happy with the sale. I was a poor man with beautiful paintings. Now I am a rich man with beautiful paintings, but I will miss the Gauguin,” Staechelin said.

The auction set records for 12 artists including Joan Miro ($9.4 million), Piet Mondrian ($9.6 million), Giorgio de Chirico ($5.3 million) and Juan Gris ($2.6 million).

Sotheby’s Wednesday sale was the final evening event in a two-week round of Impressionist, modern and contemporary auctions. A sale of lower-priced Impressionist and modern works today will wind up the marathon for dealers and collectors.