792 F.2d 602 (7th Cir. 1986), 85-2773, Mucha v. King

Docket Nº:85-2773.
Citation:792 F.2d 602
Party Name:Jiri MUCHA, Plaintiff-Appellee, v. Charles KING, Defendant-Appellant.
Case Date:May 22, 1986
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 602

792 F.2d 602 (7th Cir. 1986)

Jiri MUCHA, Plaintiff-Appellee,

v.

Charles KING, Defendant-Appellant.

No. 85-2773.

United States Court of Appeals, Seventh Circuit

May 22, 1986

Argued April 15, 1986.

As Amended June 23, 1986.

Page 603

Richard J. Troy, Sneider & Troy, Chicago, Ill., for defendant-appellant.

John C. Brezina, Brezina & Buckingham, P.C., Chicago, Ill., for plaintiff-appellee.

Before WOOD and POSNER, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.

POSNER, Circuit Judge.

This suit raises interesting legal questions, mainly of the common law of bailments, set against an exotic factual background involving the international art trade. The dispute is over ownership of a painting that, having been given away seven years ago, may today be worth several hundred thousand dollars. The extraordinary if irrelevant coincidence that this is the second case in little more than a year to confront the same three judges of this court with a dispute rooted in the movement known as Art Nouveau should not go unremarked. See Piarowski v. Illinois Community College Dist. 515, 759 F.2d 625, 627 (7th Cir.1985); Buffet-Challie, The Art Nouveau Style 9 (1982). In Piarowski the artist was an imitator of Aubrey Beardsley; in this case it is Alphonse Mucha. A Czech who lived for many years in Paris, and at the turn of the century was one of its most prominent resident artists, Mucha figures importantly in the history of modern art. In some quarters he is regarded as the originator of Art Nouveau, which indeed for a time was called "le style Mucha." He is best known for posters and (like Beardsley) illustrations. See Rennert & Weill, Alphonse Mucha: The Complete Posters and Panels (1984).

In 1983, in a federal district court in Chicago, Jiri Mucha, Alphonse Mucha's only son and a citizen of Czechoslovakia, sued Charles King, basing federal jurisdiction on 28 U.S.C. Sec. 1332(a)(2). The suit sought the return of a painting that Alphonse Mucha had painted in about 1904, and that as late as 1980 was believed lost. See Mucha: 1860-1939, at no. 307 (Editions des musees nationaux, Paris 1980). A seven foot by seven foot oil painting known as "Quo Vadis" or "Petronius and Eunice," and loosely based on the novel that many years later was made into a movie by MGM, see Sienkiewicz, Quo Vadis (1955 [1896]; Halliwell's Film and Video Guide

Page 604

665-66 (4th ed. 1983), it depicts with the sinuous linearity characteristic of Art Nouveau a man and an adoring female slave, in classical pose. The man is a self-portrait of Alphonse Mucha.

In 1979 the Newcomb-Macklin art gallery in Chicago, to which Alphonse Mucha had consigned the painting in 1920, gave it away to a "hot tubs" merchant who in turn sold it to an art dealer from whom King bought the painting in 1981 for $35,000 in cash and merchandise. The painting was in poor condition, and King hired an expert to restore it at a price of $16,500, of which $8,500 has been paid. King testified that the painting might fetch as much as $800,000 today; Jiri Mucha's estimate is $100,000. The painting is in the restorer's custody pending the final decision of this suit and the payment of the balance of her fee.

After a bench trial, the district judge ruled in favor of the plaintiff and ordered King to return the painting and Mucha to reimburse King for the $8,500 in expenses that King had incurred in restoring it. King appeals, arguing that:

1. Alphonse Mucha and his heirs were dispossessed of the painting as a result of its conversion by the Newcomb-Macklin art gallery in Chicago more than five years before this suit was brought; hence Jiri Mucha's right to recover the painting was extinguished by the five-year Illinois statute of limitations applicable to suits for the possession of personal property. Ill.Rev.Stat. ch. 110, p 13-205.

2. Jiri Mucha abandoned all rights in the painting to the gallery in 1958.

3. Jiri Mucha is at most a 50 percent owner of the painting; King, if he doesn't own the whole thing (his first two defenses), owns the other 50 percent.

There are two preliminary issues to be got out of the way. The first is choice of law. The district judge said, "As this Court's jurisdiction is grounded upon the parties' diversity of citizenship, Illinois law governs this case." This implies that in a diversity suit the substantive law of the state where the federal court is located always governs. Not so. The federal court in a diversity suit applies the choice of law rules of the forum state, and those rules may or may not make the substantive law of that state the governing law for the suit. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941); Casio, Inc. v. S.M. & R. Co., 755 F.2d 528, 531 (7th Cir.1985). But this is a harmless error. Where, as in this case, the parties either explicitly or by implication agree to be governed by the substantive law of the forum state, their agreement will be enforced. See id. at 531.

The other preliminary issue is the standard of appellate review, on which the appellant's brief is silent. It conspicuously lacks any references to the "clearly erroneous" rule that governs our review of findings of fact in a bench trial. Fed.R.Civ.P. 52(a). When pressed at argument on this omission, counsel noted that the facts are uncontested and that decision turns on the legal effect of documents, which he characterized as an issue of law. This is a recurrent misunderstanding and it is worth taking a moment to try to straighten the matter out.

King's counsel was using the word "facts" to describe historical events. This is a common usage. It is a fact that Alphonse Mucha consigned "Quo Vadis" to Newcomb-Macklin in 1920, that Mucha died in 1939, that in 1979 Newcomb-Macklin gave away "Quo Vadis" for nothing, and that in 1981 King bought it from another dealer. None of the material "facts" in this case is in dispute. The only question is their legal significance--a question of law, King argues, and therefore not governed by the clearly-erroneous rule but by a different rule, deferential but less so: that a district judge's view on a question of the law of the state in which he sits is entitled to substantial weight. See, e.g., Goldstick v. ICM Realty, 788 F.2d 456, 466 (7th Cir.1986), and cases cited there.

But one cannot answer the question what is a "fact" without first considering the purpose of the question. The purpose

Page 605

here is to draw the line between the trial judge's responsibility and our responsibility. Rule 52(a) of the Federal Rules of Civil Procedure, in providing that findings of fact made by the district judge in bench trials (and, by interpretation, in all other settings in which district judges are called on to make such findings, Casio, Inc. v. S.M. & R. Co., supra, 755 F.2d at 530) must be upheld on appeal unless found to be clearly erroneous, assigns to the trial judge the responsibility of determining not only the historical events that are relevant to how the case should be decided but also the legal significance of those events. There are exceptions for some constitutional issues, see, e.g., Miller v. Fenton, --- U.S. ----, 106 S.Ct. 445, 88 L.Ed.2d 405 (1985), and cases cited there, but they are immaterial to this case. Here the judge had to determine whether the historical events showed that Alphonse Mucha possessed "Quo Vadis" at specified times. Although possession is a legal concept, whether particular "facts" show possession is itself a "fact" for purposes of separating the trial judge's function from our own. Negligence is another such fact. Facts of this sort, which are found by applying a legal standard to a descriptive or historical narrative, are governed by the clearly-erroneous rule.

Admittedly there is much waffling on this point in the cases, which led the Supreme Court to note in Pullman-Standard v. Swint, 456 U.S. 273, 289 n. 19, 102 S.Ct. 1781, 1790 n. 19, 72 L.Ed.2d 66 (1982) (itself a case involving an inferential fact--discriminatory intent--rather than a legal characterization such as possession), that there "is substantial authority in the Circuits on both sides of" "the much-mooted issue of the applicability of the Rule 52(a) standard to mixed questions of law and fact." In particular, the Second Circuit had long adhered to the view that a finding of negligence is not subject to the clearly-erroneous standard. See Mamiye Bros. v. Barber S.S. Lines, Inc., 360 F.2d 774, 776-78 (2d Cir.1966) (Friendly, J.), and cases cited in 5A Moore's Federal Practice p 52.05, at p. 52-117 n. 14 (2d ed. 1986). But most courts treat legal characterizations (negligence, possession, ratification, principal place of business, etc.) as facts to which the clearly-erroneous standard applies. See 5A id., p 52.05, at p. 52-113 n. 11; 9 Wright & Miller, Federal Practice and Procedure Secs. 2589-90 (1971); Piper Aircraft Corp. v. Wag-Aero, Inc., 741 F.2d 925, 936-36 (7th Cir.1984) (concurring opinion). That is certainly the view of this circuit. See, e.g., Smith v. Chesapeake & Ohio Ry., 778 F.2d 384, 390 (7th Cir.1985); Roland Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380, 385 (7th Cir.1984); Continental Group, Inc. v. Lincoln Land Moving & Storage, Inc., 710 F.2d 368, 372 (7th Cir.1983); Riverway Co. v. Trumbull River Services, Inc., 674 F.2d 1146, 1150 (7th Cir.1982); Glenview Park Dist. v. Melhus, 540 F.2d 1321, 1323 (7th Cir.1976).

Further support for it is found in the Supreme Court's recent decision in Anderson v. City of Bessemer City, 470 U.S. 564, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985), which emphasized that the clearly-erroneous rule applies "even when the district court's findings do not rest on credibility determinations, but are based instead on...

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