717 F.Supp. 1374 (S.D.Ind. 1989), IP 89-304, Autocephalous Greek-Orthodox Church of Cyprus v. Goldberg & Feldman Fine Arts Inc.

Docket Nº:IP 89-304-C.
Citation:717 F.Supp. 1374
Party Name:AUTOCEPHALOUS GREEK-ORTHODOX CHURCH OF CYPRUS and The Republic of Cyprus, Plaintiffs, v. GOLDBERG & FELDMAN FINE ARTS, INC., and Peg Goldberg, Defendants.
Case Date:August 03, 1989
Court:United States District Courts, 7th Circuit, Southern District of Indiana
 
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Page 1374

717 F.Supp. 1374 (S.D.Ind. 1989)

AUTOCEPHALOUS GREEK-ORTHODOX CHURCH OF CYPRUS and The Republic of Cyprus, Plaintiffs,

v.

GOLDBERG & FELDMAN FINE ARTS, INC., and Peg Goldberg, Defendants.

No. IP 89-304-C.

United States District Court, S.D. Indiana, Indianapolis Division.

Aug. 3, 1989

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John David Hoover and Sally F. Zweig, Johnson, Smith, Densborn, Wright & Heath, Indianapolis, Ind., and Thomas R. Kline, Thomas E. Starnes, Douglas E. Lavin and June L. Walton, Manatt, Phelps, Rothenberg & Phillips, Washington, D.C., for plaintiffs.

Joe C. Emerson and Joseph H. Yeager, Jr., Baker & Daniels, and Ezra H. Friedlander, Friedlander & Kirsh, Indianapolis, Ind., for defendants.

MEMORANDUM OF DECISION AND ORDER

NOLAND, District Judge.

Summary of Decision

In this case the Court is asked to decide the right of possession as between the plaintiffs, the Autocephalous Greek-Orthodox Church of Cyprus ("Church of Cyprus") and the Republic of Cyprus, and the defendants, Peg Goldberg ("Goldberg") and Goldberg & Feldman Fine Arts, Inc., of four Byzantine mosaics created in the early sixth century. The mosaics, made of small chips of colored glass, were originally affixed to and for centuries remained in a church in Cyprus, a small island in the Mediterranean. In 1974, Turkish military forces invaded Cyprus and seized control of northern Cyprus, including the region where the church is located. At some point in the latter 1970s, during the Turkish military occupation of northern Cyprus, the mosaics were removed from their hallowed sanctuary. The plaintiffs claim that the Church of Cyprus has never intended to relinquish ownership of the mosaics, that

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the mosaics were improperly removed without the authorization of the Church or the Republic of Cyprus, and that the mosaics should be returned to the Church. The defendants, on the other hand, claim that export of the mosaics was authorized by Turkish Cypriot officials, and that in any event Goldberg should be awarded the mosaics because she purchased them in good faith and without information or reasonable notice that they were stolen. Having heard and reviewed all the evidence in the case, the Court concludes that possession of the mosaics must be awarded to the plaintiff, the Autocephalous Greek-Orthodox Church of Cyprus.

The Court concludes that because the place where the mosaics were purchased, Switzerland, has an insignificant relationship to this suit, and because Indiana has greater contacts and a more significant relationship to this suit, the substantive law of the state of Indiana should apply to this case. Under Indiana law, a thief obtains no title to or right to possession of stolen items. Therefore, a thief cannot pass any right of ownership of stolen items to subsequent purchasers. Because the mosaics were stolen from the rightful owner, the Church of Cyprus, Goldberg never obtained title to or right to possession of the mosaics. Under this analysis of Indiana law, it is unnecessary to consider whether Goldberg exercised good faith or due diligence in obtaining possession of the mosaics.

In the alternative, the Court considers the issues under Swiss law. Under Swiss law, in certain situations a thief may sell and pass good title to stolen items to a good faith purchaser. Whether one qualifies as a good faith purchaser is determined by evaluating certain factors. These factors are evaluated to determine whether the purchaser knew that the seller lacked title, or whether an honest and careful purchaser would have had doubts with respect to the seller's capacity to transfer property rights, and if so, then whether the purchaser reasonably inquired about the seller's ability to pass good title. Evaluating those factors under the facts of this case, the Court concludes that Goldberg is not a good faith purchaser under Swiss law. This is so because suspicious circumstances surrounded the sale of the mosaics which should have caused an honest and reasonably prudent purchaser in Goldberg's position to doubt whether the seller had the capacity to convey property rights, and because she failed to conduct a reasonable inquiry to resolve that doubt.

Therefore, principally under Indiana law and alternatively under Swiss law, Goldberg never obtained good title to or the right to possession of the mosaics. The Church of Cyprus, the original and rightful owner of the mosaics, has requested and made a proper showing for the return of the mosaics. The mosaics are unique. The paramount significance of their existence is as part of the religious, artistic, and cultural heritage of the Church and the government of Cyprus, and as a part of the national unity of the Republic of Cyprus. Therefore, the Court orders that possession of the mosaics is awarded to the plaintiff, the Autocephalous Greek-Orthodox Church of Cyprus.

Memorandum of Decision

Trial of this action was to the Court on May 30 through June 6, 1989. This Memorandum of Decision is entered in accordance with Rule 52(a) of the Federal Rules of Civil Procedure, which allows findings of fact and conclusions of law to appear in a memorandum of decision filed by the court.

I. Procedural History

The plaintiffs filed their complaint in this suit on March 29, 1989. On March 31, 1989, the parties entered into an "Agreed Order," which was approved and signed by this Court on that same date. Pursuant to the terms of the Agreed Order, the plaintiffs posted a security bond in the amount of $150,000, and the defendants in turn agreed not to take any "action to alter, destroy, sell, or transfer possession of the four Kanakaria mosaics" identified in the plaintiffs' complaint. In their Agreed Order, the parties also agreed to a trial date of May 30, 1989. The defendants filed their answer on April 19, 1989.

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On May 24, 1989, the Turkish Republic of Northern Cyprus ("TRNC") filed a "Motion to Intervene as Plaintiff." A hearing on TRNC's motion to intervene was held by this Court on May 30, 1989. By order dated May 30, 1989, this Court denied TRNC's motion to intervene and also denied TRNC's motion to stay the trial (which was scheduled to start that same day) pending appeal of the denial to intervene.

Before trial the issue of money damages was separated from this case. Thus, the only issue presently before the Court is who is entitled to possession of the mosaics.

From May 30, 1989, through June 6, 1989, a bench trial was held by this Court. The parties agreed to submit post trial briefs in lieu of closing arguments; those briefs were filed with this Court on July 11, 1989. Finally, by joint stipulation dated June 27, 1989, the parties agreed to extend the March 31st Agreed Order until August 15, 1989.

II. Jurisdiction

This Court has original jurisdiction over the subject matter of this action based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). Plaintiff the Republic of Cyprus is a sovereign nation located on the island of Cyprus in the Mediterranean Sea. 1 Plaintiff Autocephalous Greek-Orthodox Church of Cyprus is a religious organization with its principal offices in Nicosia, Cyprus. Defendant Goldberg & Feldman Fine Arts, Inc. is a corporation organized and existing under the laws of the state of Indiana, with its principal place of business in Carmel, Indiana. Defendant Peg Goldberg is a citizen of the state of Indiana. The amount in controversy in this case exceeds the sum of $10,000, exclusive of interest and costs.

Venue is proper in the United States District Court for the Southern District of Indiana pursuant to 28 U.S.C. § 1391(a).

III. Historical Setting and Factual Background

The facts established by the evidence presented are as follows.

A. The Mosaics of the Church of the Panagia Kanakaria

This case involves a dispute as to the ownership of four Byzantine mosaics. These four mosaics were originally part of a larger mosaic ("the original mosaic"). The original mosaic was affixed to the apse of the Church of the Panagia Kanakaria ("Kanakaria Church") in the village of Lythrankomi, Cyprus, in 530 A.D. Except for a unique quirk of fate, the original mosaic would have ceased to exist a thousand or more years ago. During the period of Iconoclasm (roughly the 8th century), government edicts mandated the destruction of religious artifacts so that such religious "images" would not be the subject of veneration. These iconoclast edicts were responsible for the destruction of many significant religious artifacts. The original Kanakaria mosaic is one of only six or seven Byzantine mosaics to survive the ravages of Iconoclasm and the passage of time.

The original Kanakaria mosaic depicted Jesus as a young boy seated in the lap of his mother, the Virgin Mary, who sat on a throne surrounded by a mandorla of light. The figures of Jesus and the Virgin Mary were bordered on each side by depictions of two archangels. This central composition was in turn bordered by a frieze containing

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the busts of the twelve apostles. The original mosaic was made of small pieces of colored glass referred to in the art world as tesserae.

As stated previously, the original mosaic was affixed to the apse of the Kanakaria Church in the early sixth century. Over the centuries, the mosaic has deteriorated. By 1960, all that remained of the original Kanakaria mosaic was the figure of Jesus, the bust of the North Archangel, and nine of the twelve apostles. Between 1959 and 1967, the mosaic was cleaned and restored under the sponsorship of the Department of Antiquities of the Republic of Cyprus, the Church of Cyprus, and Harvard University's Dumbarton Oaks Center for Byzantine Studies. With the knowledge gained in its efforts to restore the mosaic, Dumbarton Oaks...

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