Langbord v. U.S. Dep't of the Treasury

• Decision Date: 29 August 2012
• Docket Number: Civil Action No. 06–5315.
• Citation: 888 F.Supp.2d 606
• Parties: Roy LANGBORD, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF THE TREASURY, et al., Defendants. United States of America, Third–Party Plaintiff, v. Ten 1933 Double Eagle Gold Pieces, Third–Party Defendant-in-rem.
• Court: U.S. District Court — Eastern District of Pennsylvania

888 F.Supp.2d 606

Roy LANGBORD, et al., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF THE TREASURY, et al., Defendants.
United States of America, Third–Party Plaintiff,
v.
Ten 1933 Double Eagle Gold Pieces, Third–Party Defendant-in-rem.

Civil Action No. 06–5315.

United States District Court,
E.D. Pennsylvania.

Aug. 29, 2012.

[888 F.Supp.2d 608]

Walter M. Phillips, Jr., Obermayer, Rebmann, Maxwell & Hippel, Philadelphia, PA, Robin M. Wilcox, Kramer, Levin, Naftalis & Frankel, New York, NY, for Plaintiffs.

Jacqueline Christine Romero, J. Alvin Stout, III, Margaret L. Hutchinson, Michael L. Levy, Nancy Rue, US Attorney's Office, Philadelphia, PA, for Third–Party Plaintiff.

Barry H. Berke, Eric Tirschwell, Kramer, Levin, Naftalis & Frankel, New York, NY, Kevin J. Kotch, Obermayer, Rebmann, Maxwell & Hippel, Philadelphia, PA, for Plaintiffs/Third–Party Defendant-in-rem.

MEMORANDUM
LEGROME D. DAVIS, District Judge.
I. Introduction

This case concerns the rightful ownership of ten (10) gold coins minted by the United States Government here in Philadelphia almost eighty years ago. The coins in dispute, produced by the Philadelphia Mint in 1933, are $20 gold pieces known as “Double Eagles.” Famed sculptor Augustus Saint–Gaudens designed the Double Eagles at the behest of President Theodore Roosevelt, and the coins are still considered among the most beautiful ever crafted by our country.

According to the Government, no 1933 Double Eagles were ever lawfully issued to the public; the vast majority were melted down and formed into gold bars following the Gold Reserve Act of 1934. Nevertheless, some managed to escape the Mint. In the 1940s, the Secret Service traced the leak to George McCann, a Philadelphia Mint cashier, and Israel Switt, a coin dealer and the proprietor of a local antique store.

In 2002, the only '33 Double Eagle then known to exist, a coin once possessed by King Farouk of Egypt, sold at auction for over $7 million dollars. According to Joan, Roy, and David Langbord, the Claimants in this matter, they then discovered in August of 2003 ten (10) more of these precious coins buried at the bottom of a family safe deposit box. Joan Langbord is Joan Switt Langbord, the daughter of Israel Switt. Roy and David are his grandsons. The Langbords eventually notified the Government of their find, and this litigation followed. In essence, both parties want the coins.

Following a lengthy trial, a jury unanimously found that the disputed 1933 Double Eagles were forfeit to the United States Government. In the instant motions, the Claimants challenge this verdict and at the same time contend that the verdict mooted a related declaratory judgment claim, which the Government brought to quiet title to the coins. The motions are now ripe for disposition.

As explained herein, we deny the Claimants' motions in their entirety. We also declare that the coins in question were not

[888 F.Supp.2d 609]

lawfully removed from the United States Mint and, as a matter of law, remain the property of the United States.

II. Factual Background and Procedural History¹A. The Disappearance of the Double Eagles, Placed in Historical Context

When Franklin D. Roosevelt took office on March 4, 1933, four years after the 1929 stock market crash ushered in the Great Depression, the nation was in dire straits. (Tr. 209, at 38–70). Between 1930 and 1933, about five thousand (5,000) banks went out of business, and many depositors lost everything. ( Id.). Amid this crisis, people began to lose faith in paper currency. They ran to the banks in droves, demanding their money in gold—something tangible with an intrinsic value that might survive through troubled times. ( Id.).

Within twenty-four hours of taking office, Roosevelt proclaimed a “bank holiday,” which effectively closed every bank in the country and banned the payout of gold coins.² (Tr. 209, at 43–45). This first “bank holiday” lasted for four (4) days, from March 6 through March 9, 1933. ( Id.; Tr. 209, at 52, 55; Tr. 212, at 112). With his proclamation, Roosevelt hoped to stop gold hoarding and stem the tide of gold—our nation's wealth—that had been rushing out of the country's banks. (Tr. 209, at 43–45). The President went so far as to threaten to make people's names public if they failed to return their gold.³ ( Id.). As expected, gold started flowing back into the country's coffers; returning one's gold was viewed as an act of patriotism. (Tr. 209, 43–47, 62). All of this was front page news around the nation, including in Philadelphia. (Tr. 209, at 56–57, 62). Subsequent proclamations and orders tightened the government's control on gold well beyond March 9th. (Tr. 209, at 46–50; Tr. 212, at 119).

Nonetheless, the Philadelphia Mint continued producing coins, including the 1933 Double Eagles that are the subject of this suit. (Tr. 209, at 77). In fact, the '33 Double Eagles were made only at the Philadelphia Mint; no other Mint struck these coins.⁴ (Tr. 208, at 144). In layman's terms, a “Double Eagle” is a $20 gold coin. And $20 was a lot of money

[888 F.Supp.2d 610]

back in 1933.⁵ All told, the Philadelphia Mint created 445,500 1933 Double Eagle gold coins. (Tr. 208, at 133–34; G–337). Because gold was a “sacred material” and represented the wealth of America, the Mint kept meticulous records on its gold coins. (Tr. 208, at 134). And, according to the Government's primary expert David Tripp,⁶ many of the Mint's records from the relevant time frame still exist in their entirety today.⁷ (Tr. 208, at 162–75).

Much of the trial testimony focused on the Philadelphia Mint cashier and the records he kept. The Mint cashier is, for all practical purposes, the “gatekeeper” of the coins. (Tr. 208, at 132). He is the last stop, so to speak, before the Mint's coins go out into the real world. ( Id.). In 1933, the Philadelphia Mint cashier was a Mr. Powell, and his assistant was a Mr. Ott. During this period of time, someone in the cashier's office—presumably Powell and/or Ott—tracked the movement of coins, including 1933 Double Eagles, into and out of the office. They did so using two complementary documents—the “cashier's daily settlement” and the “cashier's daily statement.” (Tr. 208, 162–75, 181, 196–98).

The daily settlement reflects the cashier's end-of-day accounting of the money in his control. (Tr. 208, at 196–98). Important to this case, the daily settlement is segregated into three (3) categories of coins: one for the current year's production, i.e., 1933 Double Eagles; one for prior years' coins; and one for circulated coins (for example, coins that had been in commerce but later came back to the Mint as worn). ( Id.). The daily settlement is a handwritten,⁸ unsigned document.⁹ (Tr.

[888 F.Supp.2d 611]

213, at 165, 179). The daily statements, on the other hand, are typed and signed, but they do not reflect the dates of the coins. (Tr. 213, at 165; 214, at 21–22). In addition to tracking gold coins, the cashier's records tracked such minutiae as a three (3) cent payout to a customer who evidently received his money in the form of two (2) 1932 pennies and one (1) 1933 penny. (Tr. 209, at 9–25). As should be apparent, the records are exquisitely detailed.

Relying primarily on the cashier's daily settlements and statements, Tripp reconstructed the day-to-day movement of the 1933 Double Eagles. (Tr. 209, at 26–36).¹⁰ Using these two documents in tandem, along with other Mint records,¹¹ Tripp figuratively followed the coins around the Mint every day from January of 1933 through November of 1934. ( Id.; Tr. 209, at 113–17). By doing so, Tripp accounted for each and every one of the 445,500 1933 Double Eagles and showed that not a single '33 Double Eagle was issued to the public. (Tr. 210, at 39).

Specifically, the 445,500 1933 Double Eagles were delivered to the cashier in ten (10) installments, the first on March 15, 1933 and the last on May 19, 1933.¹² (Tr. 210, at 34–40, 69–71). And remember, Roosevelt's first “bank holiday” forbidding the payout of gold coins took effect on March 6th, nine (9) days before the first shipment of '33 Double Eagles to the Philadelphia Mint cashier. (Tr. 209, at 100–03). What's more, the Mint did not continue shipping gold coins to the Federal Reserve Banks after March 6th. (Tr. 209, at 103–05).

The vast majority of the '33 Double Eagles—445,000 to be exact—were subsequently sealed in a basement vault on June 27, 1933. (Tr. 210, at 40–42, 69–71). The remaining 500 coins were in the cashier's control at one point or another. Of these 500, 446 were reserved and put into a locked pyx box for the annual assay.¹³ (Tr. 210, at 43–51, 69–71). Of these 446, nine (9) were actually destroyed in the annual assay, which took place between February 14 and 15, 1934. ( Id.). The other 437 coins were returned from the assay to the Mint's basement vaults on February 20, 1934. ( Id.). Twenty (20) of the '33 Double Eagles were also destroyed between March and May of 1933 in conjunction with the so-called special assays. (Tr. 210, at 51–55, 69–71; see also G–337).

[888 F.Supp.2d 612]

That left thirty-four (34) coins in the cashier's office. However, records reflect that all these coins were moved to a basement vault on February 2, 1934.¹⁴ (Tr. 210, at 55–56, 69–71). Several months later, in October of 1934, the Mint sent two (2) '33 Double Eagles to the Smithsonian. The Smithsonian confirmed receipt of the coins, which remain there to this day. (Tr. 210, at 60–64, 69–71).

So, as of October of 1934, the Mint's basement vaults housed 445,469 1933 Double Eagles—the 445,000 originally sealed in the vault, plus the 437 returned from the annual assay, plus the 34 returned from the cashier, minus the 2 sent to the Smithsonian. ( See G–337). The other 29 coins had been destroyed during the various assays. ( Id.). Finally, pursuant to the Gold Reserve Act of 1934,¹⁵ the Mints were authorized to begin melting their general stock of gold coin as of August 4, 1934. (Tr. 209, at 95–97). That included, of...