An offer to settle a dispute over the ownership of historic oil paintings with a £20,000 charity donation has been dismissed by Birmingham City Council.

The request came from Julian Nettlefold whose ancestor, the engineer Joseph Henry Nettlefold, bequeathed a collection of 34 oil paintings to Birmingham Museum and Art Galleries in the 19th century, on the proviso they should be kept on display to the public all year round and free of charge.

Mr Nettlefold said he was dismayed to discover Birmingham City Council had sold six of the paintings, by local Victorian artist David Cox, to raise cash for other artworks during the 1960s.

He also found seven of the remaining paintings were now adorning private offices in the Council House, two in the rooms of council leader Mike Whitby.

He first demanded the paintings back, to be displayed instead in the London offices of Guest Kean and Nettlefold (GKN), the firm founded by his great great grand-uncle but said that was turned down.

Mr Nettlefold then investigated the idea of compensation for the sold-off paintings. He asked for the price they were bought for - a modest £265 - plus interest, making a total of about £20,000.

Unwilling to commit to a protracted legal battle, Mr Nettlefold asked officials to compromise and donate the money to an engineering charity, and suggested the cash be raised if necessary by selling off some of the works which are currently mothballed.

That has been rejected by the council which says it now regards selling off bequests as ethically questionable.

"Rather than divvying it up between the family and paying tax on it, we wanted to pay it to the impoverished family of an gifted engineering student, so he or she could study at university," said Mr Nettlefold. "It would compensate the Nettlefold family and what the people of Birmingham who have lost as asset - they would be worth a quarter of a million today. The idea was rejected out of hand."

The city council has always insisted the paintings were a gift rather than a bequest, with J H Nettleford dying before the stipulations were agreed on. Now it claims that in any case, the law of perpetuity means that after 100 years conditions attached to any bequest are now obsolete.

A spokeswoman said: "In a letter we received from Mr Nettlefold he asked us to sell some of the work in order to raise £20,000 to endow an engineering charity.

"We rejected this proposal for two reasons: firstly because he asked us that the work from the collection be sold, which is against the current museum collection policy. Secondly due to the law of perpetuity the conditions of the bequest no longer stand, therefore we have no reason to compensate Mr Nettleford as we are still the rightful owners of the paintings."

However, Mr Nettlefold added: "I asked to see Mr Whitby to discuss the matter, but that was dismissed. It is disgraceful."