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Autocephalous
Greek-Orthodox Church of Cyprus v. Goldberg 717 F.Supp. 1374 S.D.Ind.,1989. Aug. 3, 1989.
Foreign country and church brought action against art dealer and gallery seeking possession of
mosaics stolen from church in the northern (occupied) part of Cyprus and bought by dealer. District Court held: (1) action did not accrue
until plaintiffs, with due diligence, had (or could reasonably have had) notice of
identity of possessor of mosaics; (2) substantive law of Indiana, not
law of Switzerland, governed action; and (3) church was entitled to possession
of mosaics. Ordered accordingly. 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 *1376 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. *1377 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. [FN1] 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. FN1. The Court notes that the defendants have raised the issue of
whether plaintiff the Republic of Cyprus has standing to maintain this suit. In
the complaint, the plaintiff Republic of Cyprus alleges that the Republic and
its citizens “have a recognized and legally cognizable interest in the
four Kanakaria mosaics, and in protecting and preserving them as invaluable
expressions of the cultural, religious and artistic heritage of Cyprus.”
Complaint, ¶ 40. Without extended discussion, the Court concludes that
plaintiff the Republic of Cyprus has a legally cognizable interest in the
mosaics sufficient to confer standing. See, e.g., United States v. Students
Challenging Regulatory Agency Procedures, 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254
(1973). Both the Republic and the Church of Cyprus request that the
mosaics be returned to the Church of Cyprus. The Court has concluded that the
Church of Cyprus is entitled to possession of the mosaics. The Court need not
address further the Republic of Cyprus’s standing. 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 *1378 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 published an authoritative volume on the Kanakaria
Church and its art: The Church of the Panagia Kanakaria at Lythrankomi in
Cyprus: Its Mosaics and Frescoes, authored by A.H.S. Megaw and E.J.W. Hawkins (1977). The four mosaics at issue in this case were once a part of the
original Kanakaria mosaic. These four mosaics depict the figure of Jesus as a
young boy and the busts of the North Archangel, the apostle Matthew, and the
apostle James. Each of the four mosaics measures approximately two feet by two
feet. This brief background enables one to understand the origin of the
four mosaics at issue in this case and their invaluable and irreplaceable
significance to Cyprus’s cultural, artistic, and religious heritage. Had it not
been for an unusual series of events, these four mosaics would probably have
remained in the Kanakaria Church to this day—undisturbed in their
deteriorating but readily recognizable state. B. The Partition of Cyprus Cyprus is an island located in the Mediterranean. The island
covers 3,572 square miles and is smaller than the state of Connecticut. The
population of Cyprus is approximately 696,000. The Cypriot population is
comprised mainly of persons of either Greek or Turkish descent. Today,
approximately 79 percent of the population is made up of persons of Greek
descent, and approximately 18 percent of the population is made up of persons
of Turkish descent. Historically, Greek Cypriots follow the Greek Orthodox
faith; Turkish Cypriots follow the Muslim faith. Cyprus was a British colony from 1878 to 1960, at which time it
became an independent republic. In 1963, civil disturbances broke out between
Greek Cypriots and Turkish Cypriots. United Nations peacekeeping forces were
sent to Cyprus to restore order in 1964. The U.N. forces have remained in
Cyprus ever since. On July 20, 1974, Turkish military forces invaded Cyprus. Turkish
troops landed on the north coast of Cyprus and advanced to Nicosia. By late
August, the Turkish forces had extended their control over the northern 37
percent of the island. This region has remained under Turkish military
occupation since the invasion. After the invasion, the Turkish military established in essence a
puppet government in northern Cyprus called the “Autonomous Cyprus Turkish
Administration.” That government was succeeded in February 1975 by the
“Turkish Federated State of Cyprus.” In 1983, the Turkish Federated
State of Cyprus was succeeded by the “Turkish Republic of Northern
Cyprus.” The Turkish Republic of Northern Cyprus is recognized as a
legitimate government by only one nation in the world: Turkey. It is not
recognized, nor has it ever been recognized, by the United States government.
The United States government recognizes only the plaintiff Republic of Cyprus
as the legitimate government of all the people of Cyprus. The Kanakaria Church is located in the village of Lythrankomi,
which is in an area of northern Cyprus now under Turkish military occupation.
After the 1974 invasion, the Greek Cypriot population of Lythrankomi was
“enclaved” by Turkish military forces. During this time the Greek
Cypriots were denied many basic human rights, including freedom of movement,
medical care, and the ability to earn a living. Many men from the village were
arrested and *1379 detained in Turkish jails;
there they received severe beatings by Turkish soldiers. Despite the hardships that fell on the Greek Cypriot parishioners
of the Kanakaria Church, religious services continued to be conducted in that
church on a regular basis. In July 1976, the pastor of the Kanakaria Church,
Father Antomis Christopher, was forced to flee to non-occupied southern Cyprus
for fear of his life. The church itself was not physically damaged between the
invasion in July 1974 and Father Christopher’s departure in July 1976. By the
end of 1976, all Greek Cypriots in Lythrankomi had vacated the village and had
relocated to southern Cyprus, which is controlled by the plaintiff Republic of
Cyprus. Their departure from northern Cyprus was not voluntary. C. The Theft of the Mosaics Since the 1974 Turkish invasion, the government of the Republic of
Cyprus and the Church of Cyprus have generally been denied access to occupied
northern Cyprus. However, since that time they have received reports from
persons in the occupied area that several churches and national monuments have
been looted and destroyed and that many mosaics, frescoes, and icons in those
churches and national monuments have been stolen or destroyed. [FN2] When Father Christopher fled
occupied northern Cyprus in July 1976, the mosaics were still intact and affixed
to the apse of the Kanakaria Church. Sometime between August 1976 and October
1979, the interior of the Kanakaria Church was vandalized and the mosaics were
forcibly removed from the apse of the church. The mosaics were severely damaged
during their removal. Neither the Republic of Cyprus nor the Church of Cyprus
has ever authorized the removal or sale of the Kanakaria mosaics. [FN3] FN2. Cyprus is not alone in suffering great losses to its cultural
property during times of war. During World War II, many nations suffered such
losses. In response to the widespread theft and destruction of cultural
property during World War II, the United Nations Educational, Scientific and
Cultural Organization (“UNESCO”) convened an international conference
at The Hague in 1954. The conference was held “for the purpose of drawing
up and adopting a Convention for the Protection of Cultural Property in the
Event of Armed Conflict” (“the Hague Convention”). Final Act
of the Intergovernmental Conference on the Protection of Cultural Property in
the Event of Armed Conflict, The Hague, 1954. The nations participating in the conference
agreed “to take all possible steps to protect cultural property”
because they were “convinced that damage to cultural property belonging to
any people whatsoever means damage to the cultural heritage of all mankind
…[,] that the preservation of cultural heritage is of great importance for
all peoples of the world[,] and that it is important that this heritage should
receive international protection.” Id. In the early 1970s, the Sixteenth General Conference of UNESCO
adopted “The Convention on the Means of Prohibiting and Preventing the
Illicit Import, Export and Transfer of Ownership of Cultural Property”
(“the UNESCO Convention”). To date, sixty-one nations have ratified
the UNESCO Convention. In 1983, the United States ratified the UNESCO
Convention with the passage of “The Convention on Cultural Property
Implementation Act,” 19 U.S.C. § 2601 et seq. See also Executive Order No. 12555
(1986). This act provides in part: No article of cultural property documented as appertaining to the
inventory of a museum or religious or secular public monument or similar
institution in any State Party which is stolen from such institution after the
effective date of this chapter [January 12, 1983], or after the date of entry
into force of the Convention for the Party State, whichever date is later, may
be imported into the United States. 19 U.S.C. § 2607. The Hague Convention and the UNESCO Convention are not controlling
in this case; however, they emphasize the importance that the United States and
other countries have placed on restricting international trafficking in stolen
art. FN3. While this action was pending, the Turkish Republic of Northern Cyprus
(“TRNC”) sought permission to intervene as a plaintiff for the
purpose of recovering possession of the mosaics. By order dated May 30, 1989,
this Court denied the TRNC’s motion to intervene because that government is not
recognized by the United States. As previously stated, the Kanakaria Church is
located in an area controlled by the TRNC. The TRNC’s efforts to intervene as a
plaintiff in this case strongly indicate that it, too, never authorized the
removal or sale of the Kanakaria mosaics. D. Cyprus’s Efforts to Recover the Mosaics As previously noted, since the Turkish invasion in 1974, the
Republic of Cyprus has learned of the theft or destruction of *1380 much cultural property in
Cyprus. Many churches, museums, and private collections have been looted, and
other property has suffered destruction or loss. In some instances visitors who
were allowed access to the occupied area would note such losses and report them
to the Republic of Cyprus. It was through one such visitor that the Department
of Antiquities first learned in November 1979 that the mosaics of the Kanakaria
Church were missing. The Department is charged with the responsibility, among
other things, of protecting church property which is either an antiquity or a
national monument. The mosaics fall under this responsibility. Therefore, the
Republic of Cyprus decided to seek recovery of the mosaics. Immediately upon learning that the mosaics were missing, the
Republic of Cyprus contacted UNESCO, informing it of the significance of the lost
art and seeking its assistance. Thereafter, the Republic of Cyprus notified
several people and entities whom it believed could assist it in disseminating
information about the missing mosaics and in recovering them. Cyprus continued
to meet and discuss the situation with UNESCO officials in order to heighten
awareness of Cyprus’s loss of cultural property. Cyprus notified the
International Council of Museums, an organization that coordinates and develops
measures and security for museums throughout the world. It notified the
International Council of Museums and Sites, an organization that works with
restorers and specialists in the preservation of ancient monuments. The
Republic of Cyprus introduced a resolution concerning the missing mosaics to
Europa Nostra, a European organization interested in the conservation of the
architectural heritage of Europe. The Republic of Cyprus sent the Europa Nostra
resolution to the Council of Europe, which it believed would give wide
publicity to the problem. Cyprus’s ambassador and permanent delegate to the
United Nations, Constantine Leventis, assisted in contacting these
organizations. In addition, Ambassador Leventis spoke of the missing mosaics to
individuals from museums, such as the British Museum and the Louvre, and to
individuals from international auction houses, such as Christie’s and
Sotheby’s. The Republic of Cyprus also contacted both European and American
museums about the missing mosaics. It contacted Harvard University’s Dumbarton
Oaks Institute for Byzantine Studies, considered to be the leading center in
the United States for the study of Byzantine art. Dr. Vassos Karageorghis,
Cyprus’s Director of the Department of Antiquities from 1964 to 1989, and
Anthanasios Papageorghiou, Curator of Ancient Monuments in Cyprus since 1962
and currently Acting Director of the Department of Antiquities, disseminated
information about the missing mosaics to their colleagues and scholars
throughout the world by sending letters and by addressing symposia, congresses,
and other such meetings. In addition, the Embassy of Cyprus in Washington, D.C. sent press
releases and mailed information on a routine basis concerning the loss of
Cyprus’s cultural property in general and specifically the missing mosaics.
Such information was disseminated to journalists, Members of Congress,
legislative assistants working in foreign affairs, and individuals in academia,
archaeology, and in organizations who have expressed an interest in Greek and
Cypriot affairs. The Embassy’s mailing list contains several hundred names. The
information sent out from the Embassy often included the speeches given around
the world by Greek Cypriot officials asking for assistance in recovering the
mosaics. Throughout all these efforts, the Republic of Cyprus intended to
disseminate the information that the mosaics were missing, to seek assistance
from those in positions who might be able to aid Cyprus in its efforts, and to
eventually recover lost or stolen cultural properties such as the mosaics. As a
result of these efforts, the Republic of Cyprus has recovered some antiquities,
including frescoes originally from a church in occupied northern Cyprus and
other parts of the original Kanakaria mosaic. Additionally, as a result of
these efforts, the Republic of Cyprus located the mosaics in this case. *1381 E. The Mosaics Resurface Goldberg is president and majority shareholder of Goldberg &
Feldman Fine Arts, Inc. The co-owner of the company is George Feldman who
serves as its vice president. Since becoming an art dealer in 1981, Goldberg
has dealt almost exclusively in 19th and 20th century paintings, etchings, and
sculptures. Goldberg is not, nor does she claim to be, an expert in Byzantine
art. On June 30, 1988, Goldberg flew to Amsterdam, The Netherlands, to
inspect and possibly purchase for a client a painting by Amadeus Modigliani.
The availability of a Modigliani painting for sale was brought to Goldberg’s
attention by Robert Fitzgerald, an art dealer from Indianapolis whom she
“had known [ ] casually since 1980 or '81.” Tr. 433. It was
Fitzgerald who had located the purported Modigliani; he was to help facilitate
the sale. In Amsterdam, Goldberg met Fitzgerald. Fitzgerald then took Goldberg
to meet the owner of the painting. After inspecting the painting, Goldberg
developed doubts “about being able to prove the authenticity of the
painting.” Tr. 438. At this point, the sale of the Modigliani painting
fell through. After the Modigliani sale fell through, Fitzgerald mentioned to
Goldberg another deal. On July 1, 1988, Fitzgerald informed Goldberg that he
was aware of four early Christian mosaics that were for sale. Later that day,
Fitzgerald introduced Goldberg to Michel van Rijn, a Dutch art dealer, and
Ronald Faulk, an attorney from California. Goldberg knew very little about van
Rijn or Faulk. She was told, however, that van Rijn was once convicted in
France for forging Marc Chagall’s signature to prints of that artist’s work and
that he also had been sued by an art gallery “[f]or failure to pay
money.” Tr. 539. [FN4] She was also aware that Faulk was in Europe to act as attorney
for Fitzgerald and van Rijn. FN4. Goldberg testified that van Rijn also told her that he was a
descendant of Rembrandt on his father’s side and of Rubins on his mother’s
side. Tr. 462. No other evidence supporting this claim was introduced, however. At this July 1st meeting, van Rijn showed Goldberg photographs of
the four Byzantine mosaics, and she immediately “fell in love” with
them. Tr. 447. van Rijn told her that the seller requested $3 million for the four
mosaics. She was also told that the seller was interested in selling the
mosaics quickly because he “had recently become quite ill and had [a] cash
problem.” Tr. 457. All of the information that Goldberg received regarding the
mosaics and the seller came from Fitzgerald, van Rijn, or Faulk. [FN5] van Rijn told Goldberg that
the seller of the mosaics was a Turkish antiquities dealer. In addition, he
told her that the seller had “found” the mosaics in the rubble of an
“extinct” church in northern Cyprus while serving as “an
archaeologist from Turkey assigned to northern Cyprus.” Tr. 456. According
to van Rijn, the seller had been granted permission by Turkish Cypriot
authorities to retain the mosaics and, in the late 1970s, to export them to Germany.
Goldberg was not told the identity of the seller at the initial meeting on July
1st; however, two days later she was told that the seller was a man named Aydin
Dikman. [FN6] FN5. Fitzgerald testified at trial; a deposition of Faulk was admitted
into evidence and has been reviewed by the Court; van Rijn, however, did not
testify, nor was he deposed. FN6. In the record, the seller’s surname is spelled as
“Dikman,” “Dikmen,” and “Diekman.” Throughout
this memorandum entry, the Court will refer to the seller as
“Dikman.” Previously, on June 28, 1988, Faulk went to meet with Dikman in
Munich, Germany. Faulk was sent to meet with Dikman at the direction of his
clients, van Rijn and Fitzgerald. It is interesting to note that Fitzgerald
sent Faulk to meet with Dikman even before Fitzgerald mentioned the mosaics
deal to Goldberg. In Munich, Faulk discussed a possible sale with Dikman, and
Dikman gave him photographs of the mosaics. At the July 1st meeting in Amsterdam, Goldberg knew that Faulk and
Dikman had met earlier to discuss the sale of the mosaics. *1382 Goldberg asked Faulk to
travel to Munich to inform the seller of her interest in purchasing the
mosaics. At Goldberg’s direction, Faulk met with Dikman on July 1st and 2nd.
Faulk was shown documents that Dikman claimed were proof that the mosaics had
been exported properly from northern Cyprus. Faulk returned to Amsterdam on
July 2nd and reported to Goldberg that, in his opinion, the export documents
appeared to be in order. At trial, the defendants offered Exhibits 702, 3015,
and 3016, as support for their contention that Goldberg reasonably believed the
mosaics had been properly exported. None of these documents, however, even
mentions Dikman or the four mosaics at issue in this case. For example, exhibit 702 is a sales invoice from a
“Goklaney’s Cash & Co.” to an individual named Helga Bechly. The
invoice refers to five floor mosaics, not the four wall mosaics at issue in
this case. The Court is at a loss to understand how this sales invoice substantiates
the defendants’ contentions that Dikman found the mosaics in the rubble of an
extinct church, and that Turkish Cypriot officials authorized the export of the
mosaics. On July 3, 1988, while still in Amsterdam, Goldberg negotiated an
agreement with van Rijn, Fitzgerald, and Faulk, whereby “the parties
agree[d] to acquire the mosaics for their purchase price of $1,080,000
(U.S.).” Exhibit 700. The agreement also provided that the parties would
split the profits made on any future resale of the mosaics as follows: Goldberg
& Feldman 50 %; Fitzgerald 22.5 %; van Rijn 22.5 %; and Faulk 5 %. Id. This agreement was executed
on July 4th in Amsterdam. Id. Later, Goldberg and Fitzgerald traveled to Geneva, Switzerland, to
investigate a lead on a second possible Modigliani and to examine the mosaics.
On July 5th, Faulk and Dikman transported the mosaics by airplane from Munich
to Geneva. The mosaics were stored in crates in the free port area of the
Geneva airport. The mosaics never passed through Swiss Customs. After arriving in Geneva, Faulk and Dikman met Goldberg in the
free port area of the airport. This was the only time that Goldberg met Dikman.
Dikman introduced himself to Goldberg and then left. In the presence of Faulk,
Goldberg then inspected the four mosaics. Upon seeing the mosaics, she
“was in awe” and wanted to buy them “more than ever.” Tr.
486. She was concerned, however, about their deteriorating condition. Goldberg testified that while she was in Geneva she inquired as to
whether the mosaics had been reported as stolen or missing and whether any
applicable treaties might prevent the mosaics from being imported into the
United States. She testified that she contacted, by telephone, the
International Foundation for Art Research (“IFAR”) in New York and
UNESCO’s office in Geneva. In addition, Goldberg claims she telephoned customs
offices in the United States, Germany, Switzerland, and Turkey. F. Goldberg Secures Financing Goldberg has done business with Merchants National Bank of
Indianapolis (“Merchants”) for about five years. Her principal
contact at the bank is Otto N. Frenzel III, Vice Chairman of Merchants National
Bank & Trust Company of Indianapolis and Chairman of the Board of Merchants
National Corporation. Goldberg and Frenzel have known each other for several
years and have developed a good friendship. In addition, Frenzel and his wife
have purchased art from Goldberg on several occasions, and Merchants has
requested Goldberg’s assistance in evaluating whether to loan money for art
purchases. In Amsterdam, while contemplating the purchase of the Kanakaria
mosaics, Goldberg knew she would have to borrow a substantial amount of money
if she were to purchase the mosaics. She called Frenzel at his home to discuss
possible financing from Merchants. Frenzel indicated that if Goldberg were
certain about the propriety of purchasing the mosaics, he would attempt to
arrange a loan for her. Frenzel *1383 referred her loan request to Timothy Massey, Vice President of
the Professional Banking Department. Frenzel testified that he can recommend
individuals for loans by volunteering to a loan officer his impressions of an
individual’s background, what he might know about a person, and what a person’s
expertise might be. Frenzel told Massey that Frenzel thought that Goldberg was
a very bright individual with regard to art, that she was credible, and that
she had a great deal of expertise. Frenzel also indicated to Massey that he,
Frenzel, was comfortable with Goldberg. Goldberg testified that she told Frenzel and Massey that the bill
of sale of the mosaics to her would reflect a purchase price of $1.2 million.
She further testified that she told Frenzel that out of this amount, she would
either keep or receive back from the seller ten percent of the amount, or
$120,000, to pay for her expenses, such as insurance, shipping, restoration,
and operation of the business. Massey testified in his deposition that he
understood the purchase price to be $1.2 million, and that he did not know at
the time of the loan that she intended to keep ten percent of the loan. Frenzel
testified in his deposition that he understood the purchase price to be $1.2
million. After Goldberg arrived in Switzerland, Merchants agreed to loan
her $1,224,000 for the purchase of the mosaics. Goldberg signed a business
promissory note binding Goldberg & Feldman Fine Arts, Inc. as a corporation
and herself individually on the loan. She also signed a security agreement
offering the mosaics as security for the loan. Upon returning home to Indiana,
Goldberg signed an additional agreement with Merchants, granting the bank five
percent of the profits of the resale of the mosaics, not to exceed $175,000. G. Goldberg Purchases the Mosaics The sale and transfer of the mosaics was originally scheduled for
July 5th; however, a delay in securing financing from Merchants prevented
Goldberg from consummating the sale on that date. The $1.2 million from
Merchants did not arrive at a bank in Geneva until July 7th. The $1.2 million
was in $100 bills and was placed in two carrying bags. Of the $1.2 million,
Goldberg kept $120,000 in cash, and gave the remaining $1,080,000 to Faulk and
Fitzgerald for the purchase of the mosaics. Goldberg testified that she did not know how the $1,080,000 was to
be divided among the seller and the middlemen. She testified that she thought
the middlemen would receive a small amount as commission, such as $80,000.
However, the remaining $1,080,000 was actually divided as follows: —$350,00 to Dikman as payment for the mosaics; —$282,500 to van Rijn as a commission; —$297,500 to Fitzgerald as a commission; —$70,000 to an attorney in London; —$80,000 to Faulk for legal fees and/or assistance in
facilitating the sale. Tr. 318-20. Upon completion of the sale on July 7th, Dikman issued
a “General bill of sale” to Goldberg & Feldman Fine Arts, Inc.
Exhibit 9. The bill of sale lists $1.2 million as the price Goldberg paid for
the mosaics. Id. On July 8, 1988, Goldberg returned with the mosaics to the United
States. Goldberg insured the mosaics for $1.2 million and declared their value
at U.S. Customs to be $1.2 million. As previously noted, Goldberg paid $1.08
million for the mosaics. H. Significant Events in Indiana Goldberg returned to Indiana with the four mosaics and with
approximately $70,000 of the $120,000 she kept from the Merchants loan. In
Europe she spent approximately $50,000 on conversion charges, shipping and
insurance, and the purchase of four paintings and a small piece of art in The Netherlands.
Goldberg testified that she deposited the remaining $70,000 in several of her
bank accounts in Indiana. Exhibits 2201 through 2209 show a series of deposits,
each under $10,000, in various business or personal accounts of Goldberg. At
some point after Goldberg returned to Indiana with the mosaics, Frenzel and
another *1384 Indiana resident, Dr.
Stewart Bick, acquired interests in the resale profits of the mosaics. Frenzel personally loaned Goldberg $25,000 in an unrelated art
transaction. Frenzel stated in his deposition that the terms of the loan were
ten percent interest and a two percent interest in the resale profits of the
mosaics. Additionally, at some point after Goldberg’s return to Indiana,
Dr. Bick and Frenzel together acquired an interest in the resale profits of the
mosaics. Fitzgerald testified that he and van Rijn each sold half of their
interest in the resale profits to Dr. Bick. Dr. Bick gave them $780,000 for
such interests. Fitzgerald received $375,000 for his half of his interest. As
van Rijn and Fitzgerald each originally owned 22 1/2 percent of the resale
profits, this sale of interests to Dr. Bick gave him a 22 1/2 percent interest
in the resale profits, and left van Rijn and Fitzgerald with a 22 1/2 percent
interest. Of this percentage, Dr. Bick sold an eight percent interest to
Frenzel for $390,000. Frenzel testified that he gave $390,000 of his own money
to Dr. Bick and acquired the additional eight percent interest. This, when
combined with Frenzel’s two percent noted earlier, provides Frenzel with a
total of ten percent interest in the resale profits. Massey testified in his
deposition that Merchants loaned Dr. Bick $390,000. It was Massey’s
understanding that, with Dr. Bick’s borrowed $390,000 and with Frenzel’s
personal $390,000, Dr. Bick and Frenzel purchased and owned an interest in the
resale profits of the mosaics. Goldberg intended to sell the mosaics. Beginning in the fall of
1988, she contacted at least two people in an attempt to market and sell the
mosaics. By October 1988 Goldberg had discussed the sale of the mosaics with
Dr. Geza von Habsburg, an art dealer operating out of Geneva and New York. In
October of 1988 von Habsburg contacted Dr. Marion True of the Getty Museum in
California and discussed whether the Getty would be interested in purchasing
the mosaics. Dr. True explained that the Getty does not collect Byzantine art
and told von Habsburg that, because of her close working relationship with
Cyprus, it would be necessary for her to contact her friend Dr. Vassos
Karageorghis about the mosaics. Dr. True had developed a working relationship
with Dr. Karageorghis, and he had often spoken to her of Cyprus’s attempts to
recover the mosaics. Dr. True then called Dr. Karageorghis, who told her that
export of the mosaics was not authorized by Cyprus and that the mosaics she
described were the mosaics which Cyprus had been so interested in recovering.
Dr. True gave Dr. Karageorghis the name of Geza von Habsburg and how to contact
him. In November 1988, Dr. Karageorghis and Papageorghiou, in
conjunction with Cyprus’s Director General of the Ministry of Foreign Affairs,
contacted the Ambassador of Cyprus in Washington, D.C. They informed the
Ambassador of the mosaics’ existence in the United States and suggested that immediate
and discreet action be taken to recover the mosaics. The embassy then began
working with its attorneys, the plaintiffs’ Washington law firm in this case,
to determine the location and possessor of the mosaics. Embassy officials
worked discreetly so as not to put the mosaics in any danger or cause them to
disappear underground again. By January 1989, Goldberg had also contacted her friend and art
mentor Barbara Divver, who is an art dealer in New York. Divver contacted her
friend John Walsh, Director of the Getty Museum, about the Getty’s possible
acquisition of the mosaics. Goldberg and Divver had agreed that if the Getty
Museum eventually purchased the mosaics, Goldberg would give Divver a ten
percent commission. Walsh directed that Dr. True, because she was more familiar
with Cyprus’s situation regarding the mosaics, respond to Divver’s inquiry. Dr.
True spoke with Divver and explained to her substantially the same things she
had discussed with von Habsburg. Dr. True told Divver that Dr. True would report
this contact to the plaintiffs’ Washington law firm and to U.S. Customs, which
she did. *1385 The plaintiffs and their attorneys eventually learned that the
mosaics were in Goldberg’s possession in Indianapolis. The plaintiffs wrote to
Goldberg requesting the return of the mosaics. Upon the defendants’ refusal,
the plaintiffs instructed their attorneys to file suit to recover the mosaics. Throughout this opinion, the Court will discuss such additional
facts as may be necessary to support the determinations reached herein. IV. Statute of Limitations A federal district court sitting in diversity must follow state
statutes of limitations. Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464,
89 L.Ed. 2079 (1945). Moreover, a federal district court sitting in diversity
must follow the choice-of-law rules of the state in which it sits. Klaxon v.
Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Because in
Indiana statutes of limitations are procedural in nature, Indiana choice-of-law
rules state that the statute of limitations of the forum state, Indiana, will
apply. Albrecht v. Indiana Harbor Belt Railroad Co., 178 F.2d 577 (7th Cir.1949), cert.
denied, 339
U.S. 949, 70 S.Ct. 804, 94 L.Ed. 1363 (1950); Dart Industries, Inc. v. Adell
Plastics, Inc., 517 F.Supp. 9 (S.D.Ind.1980); Horvath v. Davidson, 148 Ind.App. 203, 264 N.E.2d
328 (1970). The Indiana code provides in relevant part: The following actions shall be commenced within six [6] years
after the cause of action has accrued and not afterwards. …. Third. For injuries to property other than personal property,
damages for any detention thereof, and for recovering possession of personal
property. I.C. § 34-1-2-1 (Burns 1986). Particularly in light of the
plaintiffs’ claim that the mosaics should be returned to the Church of Cyprus,
the Court concludes that the Indiana statute of limitations providing
specifically “for recovering possession of personal property” governs
the issue of possession of the mosaics. Therefore, the plaintiffs’ action is
governed by a six-year statute of limitations. Sometime between August 1976, when military force and threat of
harm had forced church officials to leave the church involuntarily, and
November 1979, the mosaics were removed from the Kanakaria Church. In November
1979 church and government officials first learned that the mosaics were
missing from the Kanakaria Church. Goldberg acquired the mosaics in July 1988.
The plaintiffs first learned that the mosaics were in Goldberg’s possession in
late 1988. The plaintiffs filed this action against Goldberg in March 1989. The
defendants argue that the plaintiffs’ cause of action first accrued in 1979 and
that, because the complaint was not filed within six years thereof, plaintiffs'
cause of action is barred. The plaintiffs, however, argue that under the
circumstances of this case, they are not barred from recovering the mosaics.
Thus the issue is whether the plaintiffs have filed their complaint in a timely
fashion. A. Policy The courts reflect a strong policy in favor of statutes of
limitations. The Indiana supreme court has stated: Formerly, statutes of limitations were looked upon with disfavor
in that they are invariably in derogation of the common law. “Now,
however, the judicial attitude is in favor of statutes of limitations, rather
than otherwise, since they are considered as statutes of repose and as
affording security against stale claims.” … Such statutes rest upon
sound public policy and tend to the peace and welfare of society and are deemed
wholesome…. They are enacted upon the presumption that one having a
well-founded claim will not delay in enforcing it. Shideler v. Dwyer, 275 Ind. 270, 417 N.E.2d 281, 283 (1981). Further, the *1386 Indiana court of appeals has
ruled that “statutes of limitations are favored by the courts…. [t]hey
are statutes of repose, founded upon a rule of necessity and convenience and
the well-being of society.” Spoljanic v. Pangan, 466 N.E.2d 37, 43
(Ind.App.1984) (citations omitted). These cases indicate that Indiana follows
the policies reflected in statutes of limitation. Accord, O'Keeffe v.
Snyder, 83
N.J. 478, 416 A.2d 862, 868 (1980) (“The purpose of a statute of
limitations is to ’stimulate to activity and punish negligence' and 'promote
repose by giving security and stability to human affairs,' ”) (quoting Wood
v. Carpenter,
101 U.S. 135, 139, 25 L.Ed. 807, 808 (1879)). B. Determination of the Timeliness and Accrual of a Cause of
Action The fact that statutes of limitations exist, however, does not
mean that the timeliness of a claim is determined solely by the mechanical
application of a period of months to a file-stamp date. Rather, under certain
circumstances a court is required to evaluate the timeliness of a claim under
rules and doctrines of law designed to ensure fairness and equity in the
adjudication of claims. The facts of this case warrant that the Court evaluate
the timeliness of the plaintiffs’ claims under the following rules and
doctrines. First, the Indiana supreme court has held that the determination
of when a cause accrues is the court’s responsibility. Burks v. Rushmore, 534 N.E.2d 1101 (Ind.1989).
The applicable Indiana statute of limitations states that actions for the
recovery of personal property “shall be commenced within six [6] years
after the cause of action has accrued and not afterwards.” I.C. § 34-1-2-1.
Regarding the language “after the cause of action has accrued,” the
court has stated that “the legislature designated the reasonable time for
bringing an action and left to the courts the responsibility of determining
when the cause accrues.” Burks, 534 N.E.2d at 1103 (citation omitted). See
also Barnes v. A.H. Robins Co., Inc., 476 N.E.2d 84, 85 (Ind.1985) ( “[i]t is clear this Court has
the authority and responsibility to interpret the intentions of the legislature
by deciding when a cause of action accrues.”). In Burks, supra, the Indiana supreme court
reviewed the rules for determining when a cause of action accrues in Indiana.
The Burks
court noted that the general rule is that the statute of limitations begins to
run when damage was ascertained or ascertainable by due diligence. 534 N.E.2d
at 1104 (citing Barnes, 475 N.E.2d at 86). Thus, this Court notes that in Indiana the
statute generally begins to run when damage was ascertained or by the use of
due diligence could have been ascertained. Second, Indiana recognizes a discovery rule as it may affect the
running of a statute of limitations. In the Barnes case, supra, the Indiana supreme court,
on a certified question from the Seventh Circuit, considered when a cause of
action accrues when the injury to the plaintiff is caused by a disease which
may have been contracted as a result of protracted exposure to a foreign
substance. The court held that “in those circumstances, a discovery type
rule should be applied, and the statute of limitations in such causes commences
to run from the date the plaintiff knew or should have discovered that [the
plaintiff] suffered an injury or impingement, and that it was caused by the
product or act of another.” 476 N.E.2d at 87-88. See also Burks, 534 N.E.2d at 1103; Walters
v. Owens-Corning Fiberglass Corp., 781 F.2d 570, 572 (7th Cir.1986). The court was careful to note
that its adoption of the discovery rule in Barnes was limited to the specific
circumstances before it, i.e., injury as a result of protracted exposure to a foreign substance.
The Court declined to adopt a discovery rule for all tort claims, stating
“that would be going beyond the scope of the inquiry and put us in the
position of issuing an advisory opinion.” 476 N.E.2d at 87. However, it is important for this Court to note the Barnes court’s discussion of the
discovery rule in general. In adopting a discovery rule in the case before it,
the Indiana supreme court discussed the important policies supporting the
discovery rule. The court stated: *1387 Many jurisdictions have responded to the problems presented by
this type of case by adopting a “discovery rule.” The discovery rule
provides that the statute of limitations in this type of cause runs from the
date the negligence was or should have been discovered. The rule is based on
the reasoning that it is inconsistent with our system of jurisprudence to
require a claimant to bring his cause of action in a limited period in which,
even with due diligence, he could not be aware a cause of action exists. 476 N.E.2d at 86. Further, in support of its decision to adopt a
discovery rule, the court observed that “[i]ncreasing numbers of
jurisdictions are adopting some form of discovery rule,” citing recent
cases from 14 states. Finally, the court stated that it had discussed a
discovery rule previously, in Shideler, supra. In that case the court noted
“that in many cases where the discovery rule has been applied or alluded
to, the misconduct was of a continuing nature or concealed …” 417 N.E.2d at 291
(emphasis added). The Indiana supreme court’s adoption of the discovery rule in
Barnes
and its discussion of the policies and other jurisdictions supporting it
indicate Indiana’s willingness to extend the rule to other circumstances, if
appropriate. Third, Indiana recognizes the doctrine of fraudulent concealment
as it may affect the running of a statute of limitations. Indiana has adopted
the doctrine by case law and has reflected the doctrine in a statute. [FN7] The Indiana supreme court
has stated: FN7. I.C. § 34-1-2-9 provides: If any person liable to an action shall conceal the fact from the
knowledge of the person entitled thereto, the action may be commenced at any
time within the period of limitation after the discovery of the cause of
action. See also Walker v. Memering, 471 N.E.2d 1202, 1204 (Ind.App.1984) (by
statute, concealment may extend a statute of limitations). The harshness which may result from the application of a statute
of limitations has been avoided by judicial recognition of certain exceptions.
One of these exceptions is the doctrine of fraudulent concealment which
operates as an equitable doctrine to estop a defendant from asserting a statute
of limitations when he has, either by deception or by a violation of duty,
concealed from the plaintiff material facts thereby preventing the plaintiff
from discovering a potential cause of action. Burks, 534 N.E.2d at 1104 (citations omitted). The Indiana supreme court
has also held that the doctrine of fraudulent concealment has its roots in
equity, and that in general the doctrine operates to disallow a defendant, who
by deceit or fraud prevents a plaintiff from learning of a cause of action,
from taking advantage of his own wrong by asserting the statute of limitations
as a bar to the plaintiff’s action. Guy v. Schuldt, 236 Ind. 10, 138 N.E.2d 891,
894 (1956) (“While a wrongdoer is concealing from an injured person his
wrongful act, the law will not, through a statute of limitations, strip the
injured party of his remedy against the wrongdoer”). See also Snyder v.
Tell City Clinic, 181 Ind.App. 188, 391 N.E.2d 623, 628 (1979) (concealment of
fraud tolls the statute of limitations) (citing Guy v. Schuldt, supra ); Brown v. Gardner, 159 Ind.App. 586, 308 N.E.2d
424, 428 (1974); Ferrell v. Geisler, 505 N.E.2d 137 (Ind.App.1987) (doctrine of
fraudulent concealment as applied in context of medical malpractice). To invoke
the doctrine of fraudulent concealment, Indiana requires that the concealment
be active and intentional, and that such concealment misleads or hinders the
plaintiff’s inquiry or ability to investigate. Morgan v. Koch, 419 F.2d 993, 998 (7th
Cir.1969); Forth v. Forth, 409 N.E.2d 641, 644-45 (Ind.App.1980). See also Lambert v.
Stark, 484
N.E.2d 630, 632 (Ind.App.1985). For a plaintiff to invoke the doctrine of
fraudulent concealment, Indiana requires that the plaintiff exercise due
diligence to investigate the claim and attempt to discover the fraud. As the
supreme court noted in Guy v. Schuldt, supra, If the fraud, although not discovered, ought to have been
discovered, and could have been if reasonable diligence had been exercised by
the plaintiff, the statute will run from the time discovery *1388 ought to have been made. To
prevent the the barring of an action, it must appear that the fraud not only
was not discovered, but could not have been discovered with reasonable
diligence, until within the statutory period before the action was begun. 138 N.E.2d at 896 (citations omitted). See also Morgan v. Koch,
supra, 419
F.2d at 999; Tolen v. A.H. Robins Co., 570 F.Supp. 1146, 1151-52 (S.D.Ind.1983); Lambert, 484 N.E.2d at 632; Estate
of Ballard v. Ballard, 434 N.E.2d 136, 142 (Ind.App.1982). In addition to common law and statutory fraudulent concealment,
Indiana courts have held that equitable estoppel will serve the same purpose
and foreclose the use of a statute of limitations to a defendant who through
fraud or misrepresentation prevents a plaintiff from commencing an action
within the statute’s original time frame. See Donella v. Crady, 135 Ind.App. 60, 185 N.E.2d
623, 625 (1962); Landers v. Evers, 107 Ind.App. 347, 24 N.E.2d 796, 797 (1940). The requirement that
the plaintiff exercise due diligence applies to fraudulent concealment grounded
in equitable estoppel as well. Spoljanic, supra, 466 N.E.2d at 44-45.
Further, one Indiana court has held that under equitable estoppel, “[a]
defendant may be prevented from relying upon a statute of limitations by his
own misrepresentations or fraud, even though he has not concealed the cause of
action.” Marcum v. Richmond Auto Parts Co., 149 Ind.App. 120, 270 N.E.2d
884, 886 (1971). C. Application of Law to Case at Bar The Court now applies the rules and principles developed above to
the facts of this case. The Court notes that there is no Indiana case which
controls the issues of when the statute of limitations begins to run and
whether it has been tolled in an action for the replevin of stolen property
such as valuable artwork. Therefore, it is this Court’s responsibility to
determine these issues as an Indiana court would. “The duty of a district
court sitting in diversity faced with a novel [issue] … is to predict, as
best as possible, how an [Indiana] court would decide the issue.” Walters,
supra,
781 F.2d at 572 (citation omitted). Although many of the Indiana cases
discussing the timeliness of claims have been malpractice or products liability
actions, the Court believes that Indiana has developed rules sufficient to
allow this Court to apply them in the context of a replevin action for the
recovery of stolen artwork. Under the facts of this case, the Court concludes
that under Indiana law the plaintiffs’ action is timely filed. The Court holds that the plaintiffs’ cause of action did not
accrue in this case until the plaintiffs, using due diligence, knew or were on
reasonable notice of the identity of the possessor of the mosaics. In this
context a discovery rule should apply and prevent the statute from running
until the plaintiffs knew or reasonably should have known who possessed the
mosaics. The court in O'Keeffe v. Snyder, supra, was faced with a similar
issue. In that case the plaintiff Georgia O'Keeffe filed suit to replevy from
the defendant three small pictures she had painted. She contended that the
paintings were stolen. The defendant contended, inter alia, that the plaintiff’s action
was barred by a six-year statute of limitations. Plaintiff O'Keeffe claimed
that the paintings were stolen in 1946. In 1976, O'Keeffe learned that her
paintings were in the possession of the defendant. She filed suit for their
return in 1976. In determining whether O'Keeffe’s action was filed in a timely
manner, the New Jersey supreme court reviewed its applications of the discovery
rule. It noted that it had adopted the rule in the area of medical malpractice,
and then extended it to other contexts. The court concluded that the discovery
rule applies to an action for replevin of a painting … [the plaintiff’s]
cause of action accrued when she first knew, or reasonably should have known
through the exercise of due diligence, of the cause of action, including the
identity of the possessor of the paintings. 416 A.2d at 870. Similarly, this Court is persuaded that the discovery rule should
apply to this case. *1389 The discovery rule prevents the statute from beginning to run in
situations where a plaintiff, using due diligence, cannot bring suit because he
is unable to determine a cause of action. In a replevin action, a plaintiff
sues a defendant for the recovery of specific property. An element of the cause
of action is the defendant’s wrongful detaining or wrongful possession of the
property sought to be recovered. In order to maintain a replevin action, the
plaintiff must know who is in possession of the property at issue. If a
plaintiff is unable to determine the possessor of stolen items, the plaintiff
cannot maintain a cause of action in replevin. The Court concludes that a plaintiff who seeks protection under
the discovery rule has a duty to use reasonable diligence to locate the stolen
items. See DeWeerth v. Baldinger, 836 F.2d 103 (2d Cir.1987), cert. denied, 486 U.S. 1056, 108 S.Ct.
2823, 100 L.Ed.2d 924 (1988). Determination of due diligence is fact-sensitive
and must be made on a case-by- case basis. O'Keeffe, 416 A.2d at 873. Having
reviewed the facts of this case, the Court is persuaded that the plaintiffs
exercised due diligence in their search to locate and to recover the mosaics. From the time they first learned of the mosaics’ disappearance,
the Republic of Cyprus engaged in an organized and systematic effort to notify
those who might assist them and to seek the return of the mosaics. As
previously set out by the Court, Cyprus has contacted and worked with the
United Nations, UNESCO, museums, museum organizations, leading Byzantine
scholars and curators, and the press. Officials of the Republic of Cyprus have
sent press releases and other information, delivered speeches, and made
numerous personal contacts with individuals reasonably calculated to assist in
recovery of the mosaics. Tr. 80-81, 90-101, 190-206, Leventis Deposition 21-45,
True Deposition 25. Dr. Marion True, Curator of Antiquities at the J. Paul Getty
Museum in Los Angeles, testified that the Cypriots “had brought the loss
of these mosaics to the attention of people who would have been more directly
involved with Byzantine art.” True Deposition 127. Cyprus’s actions were
designed to recover the mosaics at opportunities where the mosaics might be
offered for sale. According to Dr. Gary Vikan, the plaintiffs’ art expert and
Assistant Director for Curatorial Affairs/Medieval Curator of the Walters Art
Gallery in Baltimore, this strategy was “consistent with what is happening
in the art world today, the goal is to stifle the trade at the point of
destination.” Tr. 388. Dr. Vikan further testified that, in his opinion,
the Republic of Cyprus has been duly diligent in its attempts to recover lost
cultural property, including the mosaics. Tr. 342, 382. In fact Dr. Vikan
stated that in the Mediterranean, Cyprus “stands apart” in its
attempts to recover such property. Tr. 342. Dr. Vikan’s testimony on this
issue, as well as the testimony of the Greek Cypriot officials who were
directly involved in these efforts, is credible and persuasive on this issue.
The Court concludes that the plaintiffs have exercised due diligence in their
search for the mosaics. Further, the Court concludes that the plaintiffs did not know and
were not reasonably on notice of the identity of the possessor of the mosaics
until late 1988. The defendants argue that two incidents, an article in a
Turkish publication and the recovery (assisted by the Menil Foundation) of
frescoes and portions of the Kanakaria mosaic, should have put Cyprus on notice
as to who was in possession of the mosaics at issue in this case. The Court
disagrees. A June 10, 1982 article in the Turkish publication Ortam contained the headline
“Antique Smuggler, Aydin Dikmen, [sic] Allegedly to Deposit Money in the
Bank Account of a Judge.” Exhibit 2174. The article reported that Dikman
was wanted for smuggling antique artifacts, that he was arrested and released
shortly thereafter, and that Dikman’s wife had allegedly deposited a large sum
of money in the bank account of a judge. Id. The single paragraph of the
article discussing Dikman linked him by implication to the theft of church
icons from the Girne Castle museum. The majority of the article discussed the
loss of cultural property from churches *1390 and museums in general on the island of Cyprus. The last section
of the article discussed the mosaics missing from the Kanakaria Church. The
article contained two pictures, each of portions of the Kanakaria mosaic. Id. Papageorghiou testified that
the article did not make any connection between the mosaics and Aydin Dikman.
Tr. 173. When Cyprus was made aware of Turkish press reports of missing Cypriot
antiquities, it repeated its systematic steps of notification such as
contacting UNESCO and sending out press releases. Tr. 193-94; Leventis
Deposition 82. The Court concludes that Cyprus took reasonable steps upon
learning of such information. The Court further concludes that nothing in the
Turkish press did or reasonably should have put the Republic of Cyprus on
notice that the mosaics were or could have been in Dikman’s possession. Similarly, Cyprus’s recovery of frescoes and portions of the
original Kanakaria mosaic in 1983 and 1984 with the assistance of the Menil
Foundation in Texas did not and reasonably should not have put Cyprus on notice
of who may have possessed additional portions of the mosaic. A series of events
beginning in 1983 led to the recovery of the frescoes and portions of the
mosaic. In 1983, London-based art dealer Yanni Petsopoulos contacted the Menil
Foundation. de Menil Deposition 18. The Foundation has done business with
Petsopoulos and employed him as a special agent for several years. Hopps
Deposition 65. Petsopoulos had been approached by a man of Turkish nationality
based in Germany (who, unbeknownst to any officials of the Republic of Cyprus
turned out to be Aydin Dikman). Dikman asked Petsopoulos to help sell some
frescoes in Dikman’s possession. Leventis Deposition 47-48. Dikman represented
that the frescoes were from Turkey. Hopps Deposition 73. Petsopoulos contacted
the Menil Foundation about the possible purchase of the frescoes.
Representatives of the Menil Foundation, including Walter Hopps, senior consultant,
and Mrs. Dominique de Menil, president of the Foundation and widow of its
founder, traveled with Petsopoulos to Germany to view the frescoes. In Munich, they met Aydin Dikman, viewed the frescoes, and
discussed their acquisition. Id. at 89. In Dikman’s apartment they observed a mosaic. Hopps
Deposition 68, 91; de Menil deposition 18. Later, Petsopoulos discussed with
Hopps his suspicion that the mosaic was a part of the Kanakaria mosaic.
Petsopoulos decided to research the matter. Petsopoulos’s suspicion raised a
question in Hopps’s mind as to whether the frescoes were actually from Turkey,
or whether they too could be from Cyprus. Hopps Deposition 114-15. The Menil Foundation decided to purchase the frescoes. Hopps
Deposition 98. It was determined that the frescoes were from Cyprus and that
the mosaic seen in Dikman’s apartment was part of the Kanakaria mosaic. Hopps
Deposition 118, 125, 128-29. The Menil Foundation acquired the frescoes for the
Church of Cyprus and reached an agreement which allowed the Menil to exhibit
the frescoes for a period of time before returning them to Cyprus. de Menil
Deposition 13, 32. Petsopoulos devised a plan to recover the Kanakaria mosaic
in Dikman’s possession for the Republic of Cyprus. Petsopoulos went to Dikman’s villa in Turkey. Petsopoulos accused
Dikman of lying to him and to the Menil Foundation about the origin of the
frescoes. The meeting became “stormy” and there ensued an
“enormous emotional explosion.” Hopps Deposition 154-55. Petsopoulos
proposed that to make up for having lied about the frescoes, Dikman should turn
over what portions he possessed of the mosaic. Hopps Deposition 146-47. After
an “emotional fracas,” Dikman agreed and felt that the
“honorable thing to do was to turn over what he had of the mosaics.”
Hopps Deposition 156. Petsopoulos arranged to effect transfer of the mosaics.
Ambassador Leventis secured the recovery of four pieces of mosaic, two of which
Cyprus determined were not genuine. Leventis Deposition 52-53. Dikman represented
to Petsopoulos that he was returning all portions of the mosaic in his
possession. Throughout this series of events, officials of the Republic of
Cyprus questioned *1391 Petsopoulos and Menil
Foundation officials about who was in possession of the frescoes and mosaics,
but no one would reveal such information. Leventis Deposition 48-49, 53; Tr.
207; Hopps Deposition 141- 42, 163. Ambassador Leventis questioned on several
occasions whether the individual from whom the mosaics were recovered possessed
any additional pieces of the mosaic, and he was always told no. Leventis
Deposition 51, 52, 54. Hopps himself did not believe that Dikman possessed any
additional parts of the mosaic. Hopps Deposition 149. Hopps and Petsopoulos did not tell Cypriot officials who had
possessed the frescoes and mosaics because they feared reprisals against any
remaining artwork or against the individuals or families of individuals who
were involved in recovery. Hopps Deposition 150-53. Dr. Karageorghis stated
that he understood this danger, having relayed at least one story of a violent
reprisal in which the quarters of some individuals assisting Cyprus in
recovering some antiquities were bombed. Hopps Deposition 152-53, 165, 187-89. The Court concludes that throughout this series of events, the
plaintiffs were not nor should they reasonably have been on notice of the
possessor of the mosaics at issue in this case. The plaintiffs made diligent
inquiries of those involved. However, the plaintiffs never learned of any
identity or information sufficient to put them on notice of whom to investigate
or of who possessed the mosaics. It was reasonable for both those involved in
recovering antiquities for Cyprus and Greek Cypriot officials to fear reprisals
against individuals or the art itself. It would be pointless and destructive to
require the plaintiffs to have taken additional steps to investigate the
recovery of its property if it was reasonable that such steps might result in
physical harm or destruction to human life or the art itself. Cyprus concluded
that no publicity should be given to the recovery of the mosaics at that time,
believing publicity might affect United Nations’ negotiations involving the
sensitive, political division of Cyprus. Tr. 164. The plaintiffs knew that the defendants were in possession of the
mosaics in late 1988. The plaintiffs exercised due diligence but were unable to
determine who possessed the mosaics until that time. Therefore, the plaintiffs'
cause of action did not accrue until late 1988. The discovery rule prevents the
statute from running until that time because the plaintiffs’ cause of action
did not accrue until they knew or were reasonably on notice of the identity of
the possessor of the mosaics. See O'Keeffe, supra. [FN8] Accordingly, as the
plaintiffs’ complaint was filed in March of 1989, it is within the six-year
statute of limitations and is timely filed. FN8. See also 54 C.J.S. Limitations of Actions § 87 (discovery rule extended to
situations in which equity and justice call for its application). [2] Assuming, arguendo, that the discovery rule does
not apply under the facts of this case, the Court concludes that the
plaintiffs’ action is timely filed under the doctrine of fraudulent
concealment. There is support for the proposition that a cause of action for
the replevin of property accrues at the time of the theft. The O'Keeffe court held that apart from
the discovery rule, the statute of limitations in replevin actions
“ordinarily will run against the owner of lost or stolen property from the
time of the wrongful taking….” 416 A.2d at 872. [FN9] However the O'Keeffe court further stated that
this was ordinarily true “absent fraud or concealment. Where the chattel
is fraudulently concealed, the general rule is that the statute is
tolled.” Id. at 872-73 (citations omitted). [FN10] Assuming for purposes of
discussion that the cause of action accrued in this case when the mosaics *1392 were stolen sometime between
1976 and 1979, the Court concludes that the doctrine of fraudulent concealment
operates under the facts of this case to toll the six-year statute of
limitations. [FN11] FN9. See also 51 Am.Jur.2d Limitation of Actions § 124 (general rule is that
statute of limitations begins to run against owner of lost or stolen property
at the time of wrongful possession); 79 A.L.R.3d 847, 851. FN10. See also 51 Am.Jur.2d Limitation of Actions § 124, supra (in presence of fraud or
concealment, statute of limitations does not run); 54 C.J.S. Limitations of
Actions § 88 (general rule is that statute of limitations is tolled by fraud or
concealment); 79 A.L.R.3d 847, 851, 856. FN11. The Indiana supreme court has previously noted that the doctrine
of fraudulent concealment is applicable to many types of cases, including inter
alia for the
conversion of personal property and by an owner for the recovery of lost or
stolen property. Guy v. Schuldt, 236 Ind. 101, 138 N.E.2d 891, 894-95 (1956) (citations omitted). The doctrine operates because the possessor and location of the
mosaics were actively and fraudulently concealed from the plaintiffs. The fact
that the mosaics were stolen and resurfaced in the art world after a period of
approximately nine years indicates by its very nature that the mosaics were
fraudulently concealed from the true owner, the Church of Cyprus. There is no
evidence that the plaintiffs knew or reasonably should have known where the
mosaics were from the time of the theft until 1988. As the court concluded
above, nothing in a Turkish publication in 1982 did or reasonably should have
put the plaintiffs on notice as to the possessor or location of the mosaics.
Therefore, the doctrine of fraudulent concealment continued to run,
uninterrupted. For purposes of this analysis it is sufficient to conclude that
the doctrine tolled the running of the statute throughout 1983. As the
plaintiffs’ complaint was filed in March 1989 and the statute was tolled
throughout 1983, the complaint was filed within the six-year limitation and is
timely. For this reason it is unnecessary for the Court to consider whether the
doctrine tolled the statute beyond 1983. To invoke the doctrine of fraudulent concealment, Indiana requires
that the plaintiff exercise due diligence to investigate the claim and discover
the fraud. Guy v. Schuldt, and cases cited, supra. Church officials and worshipers were forced to
leave the Kanakaria Church and the village of Lythrankomi in 1976. Thereafter
they have been prevented from exercising dominion over the Kanakaria Church.
They experienced the threatened and actual destruction of their civilized
existence and their physical safety. Because of these dangers, the plaintiffs'
belief that they could not visit and worship in the church was reasonable.
Thus, from the time the mosaics were stolen until the plaintiffs first learned
of the theft in 1979, the Court concludes that the plaintiffs were reasonably
unable to exercise due diligence because they were prevented from maintaining
the Kanakaria Church and its property, including the mosaics. Once the
plaintiffs learned of the theft of the mosaics, they exercised due diligence in
searching for them. See discussion supra at p. 1389. The plaintiffs have demonstrated that the doctrine of fraudulent
concealment should operate in this case. [FN12] Because the *1393 limitations period in this case is triggered by a specified
event, i.e., the theft of the mosaics, see Burks, supra, 534 N.E.2d at 1105, the
Court concludes that the statute of limitations was tolled by fraudulent
concealment and equitable estoppel such that the plaintiffs filed their
complaint in a timely manner. Because the Court has concluded that the
plaintiffs were duly diligent and that their action is timely filed, it is
unnecessary to address any of the defendants’ other arguments, such as laches. FN12. One Indiana appellate case has held that concealment of the
identity of a party, as opposed to the concealment of a cause of action, does
not support tolling of the statute under the doctrine of fraudulent concealment.
Landers v. Evers, 107 Ind.App. 347, 24 N.E.2d 796 (1940). However, the Court
concludes that this case is distinguishable from the case at bar. In Landers the plaintiff was in an automobile accident. The defendant gave
his name as “Harold” Evers instead of “Howard” Evers. The
plaintiff sued the wrong person but did not learn this until the statute of
limitations had run. In a suit against the correct defendant, plaintiff
contended that the defendant fraudulently concealed his true identity from her
and should be estopped from relying on the statute of limitations. The trial
court disagreed and entered judgment for the defendant. The Indiana appellate
court affirmed, holding that in Indiana statutory fraudulent concealment
relates to the cause of action and not to the identity of the person against
whom suit may be brought. 24 N.E.2d at 797. However, the court went on to note that the plaintiff in Landers did not exercise due
diligence. The court noted that the plaintiff “was in possession of the
means to ascertain the proper person against whom to bring the action, if
ordinary diligence had been exercised.” Id. (citations omitted). Thus
the court in that case did not decide that fraudulent concealment was
inapplicable as much as it decided that the plaintiff had not exercised due
diligence. The court refused to apply fraudulent concealment or equitable
estoppel because the plaintiff in that case was not duly diligent. In the case at bar this Court does not believe Landers forecloses this Court’s
determinations herein. As discussed above, the Court concludes that as long as
the plaintiff is duly diligent, the inability to discover the possessor of the
stolen mosaics invokes the doctrine of fraudulent concealment and tolls the
running of the statute of limitations for replevin purposes. V. Choice-of-Law A federal district
court exercising diversity jurisdiction under 28 U.S.C. § 1332 must apply state
substantive law. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817,
82 L.Ed. 1188 (1938); DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th
Cir.1987). Moreover, a federal district court sitting in diversity must follow
the choice-of-law rules of the state in which it sits to determine which
state’s substantive law to apply. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020,
85 L.Ed. 1477 (1941); DeValk, 811 F.2d at 329. Therefore, this Court, exercising diversity
jurisdiction over this suit, must apply the choice-of-law rules of the state in
which it sits, namely, Indiana. A. Indiana Law Analysis Indiana’s traditional choice-of-law doctrine was lex loci
delicti commissi, which dictated that the place where the wrong was committed
governed which state’s substantive law to apply. Hubbard Mfg. Co., Inc. v.
Greeson, 515
N.E.2d 1071, 1073 (Ind.1987). This traditional rule has been modified, however.
In W.H. Barber Co. v. Hughes, 223 Ind. 570, 63 N.E.2d 417 (1945), the traditional lex loci rule was modified in the
area of contract law. “The modified rule allowed the state with the most
significant contacts to apply its substantive law even if the breach occurred
in another state.” Hubbard, 515 N.E.2d at 1073. Similarly, in Hubbard, supra, the Indiana supreme court
modified the traditional rule in the area of tort law, and adopted the
“most significant contacts” analysis in torts as well as in
contracts. Id.; see Consolidated Rail Corp. v. Allied Corp., 692 F.Supp. 924, 927
(N.D.Ind.1988). Today, Hubbard is the leading case to discuss Indiana’s choice-of-law rules. [FN13] FN13. No Indiana case discusses choice-of-law rules in the context of a
replevin action. However, Hubbard and Barber are significant in that they demonstrate the Indiana supreme
court’s modifications to Indiana’s traditional lex loci rule. These modifications
clearly indicate Indiana’s shift to the most significant contacts analysis in
choice-of-law determinations. See also Restatement (Second) of Conflict of
Laws § 145
(most significant relationship analysis in torts); § 188 (most significant
relationship analysis in contracts) (1971). Therefore, this Court believes that the analysis set forth in Hubbard provides the proper
analytical framework for the choice-of-law issue presented in a replevin case
such as this. Further, the Court notes that conversion, a cause of action very
similar to replevin, is a tort and therefore would fall under Hubbard’s most significant contacts
analysis for choice-of-law purposes. The fact that conversion would be analyzed
under the most significant contacts approach is further support for this
Court’s decision to analyze this action for replevin under the most significant
contacts approach as well. In Hubbard, the Indiana supreme court adopted a two-step analysis to be used
in determining choice of substantive law. The first step is to consider whether
the place of the wrong “bears little connection” to the legal action.
515 N.E.2d at 1073-74. If the contact is significant, then the Court must apply
the substantive law of the state (or jurisdiction) where the wrong was
committed. Id. The place where the wrong was committed in the present case is
Switzerland; it was there that Goldberg took possession of and control over the
mosaics. Switzerland “bears little connection” to the plaintiffs'
cause of action. Neither the plaintiffs nor the defendants are citizens of
Switzerland. None of the other individuals involved in the sale of the mosaics,
namely, Dikman, Fitzgerald, van Rijn, or Faulk is a citizen of Switzerland. No
Swiss citizen earned a profit on the sale of the mosaics, nor does any Swiss
citizen own any interest in the mosaics. *1394 Switzerland’s lack of significant contacts is also highlighted by
the fact that the mosaics never entered the Swiss stream of commerce. The
mosaics were on Swiss soil no more than four days, [FN14] during which time they
remained in the free port area of the Geneva airport. The mosaics never passed
through Swiss customs. FN14. The mosaics were transported from Munich to Geneva on July 5,
1988, and from Geneva to Indianapolis on July 8, 1988. The defendants stress the fact that the money used to finance the
purchase of the mosaics passed from Merchants Bank in Indianapolis to Goldberg,
via a
Swiss bank. However, the Swiss bank did not loan Goldberg money, nor does it
have any security interest in the transaction. The Swiss bank merely served as
a conduit to pass the funds from Merchants in Indianapolis to Goldberg.
Defendants also dwell on the fact that the sale was consummated in Switzerland
while both the buyer and seller were in that country. However, most of the
negotiations for the sale occurred in The Netherlands, not Switzerland. Any
contacts Switzerland may have had to the transaction at the heart of this suit
were fortuitous and transitory. Switzerland has no significant interest in the
application of its law to this suit. For the foregoing reasons, the Court
concludes that Switzerland “bears little connection” to this suit;
its contacts to this case are insignificant. After a court has determined that the place where the wrong was
committed bears little connection to the legal action, the second step in the Hubbard analysis is to apply
additional factors to determine which state or jurisdiction has the more
significant relationship or contacts. Hubbard, 515 N.E.2d at 1074. Among
the factors a court may consider are: (1) the place where the conduct causing the injury occurred; (2) the residence or place of business of the parties; and (3) the place where the relationship is centered. Id. at 1073-74; see also Gollnick v. Gollnick, 517 N.E.2d 1257, 1058
(Ind.Ct.App.1988). The Court concludes, after weighing these and other relevant
factors, that Indiana has the most significant contacts to this suit.
Therefore, Indiana law applies. Indiana’s contacts to this suit are more significant than those of
any other jurisdiction. Defendant Peg Goldberg is a citizen of Indiana.
Defendant Goldberg & Feldman Fine Arts, Inc. is an Indiana corporation with
its principal place of business in Indiana. The purchase of the mosaics was
effected largely through the efforts of an Indiana art dealer, Robert
Fitzgerald. The purchase of the mosaics was financed by a loan obtained from an
Indiana bank, Merchants; Merchants presently holds a security interest in the
mosaics in the amount of $1,200,000. Several Indiana residents (Goldberg,
Fitzgerald, Dr. Bick, Frenzel) and one Indiana corporation (Merchants) hold an
interest in any profits realized on the resale of the mosaics. The original
resale agreement among Goldberg, Fitzgerald, van Rijn, and Faulk stipulated
that Indiana law would govern any disputes arising out of the agreement. This
indicates Goldberg’s belief that the laws of her home state, Indiana, were more
significant to this transaction. Finally, the mosaics are presently in Indiana
and have been in Indiana since they were transported from Geneva in July 1988.
For these reasons, Indiana has a significant interest in the application of its
law to this transaction. Therefore, the Court concludes that Indiana has the
most significant contacts to this suit. Indiana law applies. B. Swiss Law Analysis The conclusion that Indiana substantive law applies in this case
is bolstered by Swiss choice-of-law principles. As Professor Arthur von Mehren [FN15] testified at trial: FN15. Arthur Taylor von Mehren is Story Professor of Law at Harvard Law
School. Professor von Mehren testified at trial as an expert witness for the
plaintiffs on the subject of Swiss law. In summarizing Swiss law, the Court will cite to the transcript of Professor von Mehren’s
testimony in lieu of citing directly to the Swiss statutes and treatises upon
which Professor von Mehren based his conclusions. The Court is persuaded that
Professor von Mehren’s testimony is supported by applicable Swiss law. *1395 The choice of law rules of another system may assist in certain
cases a forum in determining its ultimate choice of the applicable law…. [I]t
may be of interest to the forum and of help to the forum in reaching a
conclusion to consider what view would be taken by the courts of another legal
order if the matter were before those courts. Tr. 9 (von Mehren). This Court will now examine Swiss
choice-of-law principles for whatever light they may shed on the issue of which
jurisdiction’s substantive law should be applied under the facts of this case.
Swiss choice-of-law rules also dictate that Indiana substantive law should
control. As a general rule, Swiss law applies the so-called lex situs principle in determining
choice-of-law in cases where the ownership of tangible, movable property is
disputed. Id. at 10. Under the lex situs rule, a forum court must apply the substantive
law of the place where the tangible, movable property was physically located at
the time of its sale. Id. If this general rule applies in the present case, then Swiss law
governs because the mosaics were physically present in Switzerland when the
sale was consummated. However, the general rule does not apply in this case. Swiss law recognizes an exception to the general lex situs rule. As Professor von
Mehren explained, under Swiss choice-of-law rules, an exception is made for situations in which the goods though
physically present, have only a fortuitous and transitory or casual connection
with the legal order in question. This is often expressed as the exception for
goods in transit. Id. at 10, 11. If a transaction falls within this “in
transit” exception, then the law of the situs does not apply; instead, the
law of the place of destination applies. [FN16] Id. at 11. In the case sub judice, the place of destination is
Indiana. Therefore, if the exception for property in transit applies, then
Indiana substantive law governs. FN16. Swiss law is unsettled in this area. The opinion that, under the
“in transit” exception, the law of the place of destination controls
is, according to Professor von Mehren, “[t]he prevailing rule today.”
Tr. 11 (von Mehren). Other authorities argue that the law of the place of
origin would apply. The Court finds persuasive Professor von Mehren’s
conclusion that the law of the place of destination controls when the facts of
a case fall within the “in transit” exception. The Court agrees with Professor von Mehren’s opinion that the
“in transit” exception applies in this case. Id. at 18. The mosaics
were transported from Munich to Geneva. Upon their arrival in Geneva, the
mosaics were placed in storage in the free port area of the Geneva airport; there
they remained in storage for four days until being shipped to Indianapolis. The
mosaics never passed through Swiss customs. The mosaics never entered the Swiss
stream of commerce. Their presence in Switzerland was temporary, as was
intended. Those involved with the transaction intended that if the sale were
consummated, the mosaics were to be shipped to Indiana; if not, the mosaics
were to be returned to Germany. For the foregoing reasons, the Court concludes
that under Swiss law the “in transit” exception to the general lex
situs rule
would apply. Therefore, the law of the place of destination controls, which in
this case is Indiana. Accordingly, Swiss choice-of-law rules would agree with
this Court’s earlier conclusion that Indiana substantive law controls under the
facts of this case. VI. Substantive Law A. Indiana
Substantive Law At every appropriate opportunity in their complaint, the
plaintiffs request that possession of the mosaics be awarded to the plaintiff
Church of Cyprus. Under Indiana law, replevin is the proper legal theory for
the recovery of personal property. “A replevin action is a speedy
statutory remedy designed to allow one to recover possession of property
wrongfully held or detained as well as any damages incidental to the detention.
The only issue necessarily decided in a replevin action is the *1396 right to present possession.”
State Exchange Bank of Culver v. Teague, 495 N.E.2d 262, 266 (Ind.App.1986) (emphasis in
original). Indiana courts have long adhered to this theory. [FN17] Although the
mosaics were originally fixtures, attached to the apse of the Kanakaria Church,
they may be replevied as long as their separate identities may be determined. A
fixture severed from the real property to which it first attached becomes
personal property and may be replevied. I.L.E. Fixtures § 14 (West 1959). [FN18] FN17. “[Our] courts have long held the primary purpose of a
replevin action is to recover the rightful possession of the property.” Kegerreis
v. Auto-Owners Insurance Co., 484 N.E.2d 976, 982 (Ind.App.1985) (citations omitted).
“Replevin is a possessory action, the gist or purpose of which is to
determine the plaintiff’s right to the possession of the property which is the
object of the action and which the defendant has wrongfully taken or has
wrongfully retained…. The primary object is to recover the possession of the
property.” Ring v. Ring, 131 Ind.App. 623, 174 N.E.2d 58, 61 (1961) (citations omitted). Replevin is a possessory action. The purpose of an action in
replevin is to determine who shall have possession of the property sought to be
replevied. Even in causes like the cause at bar, where the plaintiff alleges
that he is the owner of the property sought to be replevied and is entitled to
the possession thereof, the purpose of the cause is to determine whether or not
the plaintiff is entitled to the possession of the property, and it is not the
purpose to determine whether the plaintiff is the owner of the property. Meyer v. Deifenbach, 100 Ind.App. 360, 193 N.E. 693 (1935). “[T]he question of
possession enters into and becomes the very gist of the action of
replevin.” Beatty v. Miller, 47 Ind.App. 494, 94 N.E. 897, 898 (1911). “[I]n an action to
recover the possession of personal property, judgment for the plaintiff may be
for the delivery of the property, or the value thereof in case a delivery
cannot be had, and damages for the detention.” I.L.E. Replevin § 45 (West
1960). The Court notes that Indiana provides a statutory process for
replevin. See I.C. § 34-1-9.1-1 et seq. However, neither plaintiffs nor defendants have
pleaded nor tried the case expressly under these provisions. The parties have
tried the case with reference to causes of action for the recovery of personal
property as found in Indiana case law. The Court finds it unnecessary to refer
to the statutory provisions above in light of its disposition on the merits under Indiana case law. FN18. For a general discussion of replevin and similar actions, such as
claim and delivery, trover, trespass, detinue, and detention, see generally 77 C.J.S. Replevin, §§ 1-6
(“Replevin is a possessory action. The property is the subject of the
action. The gist of the action is plaintiff’s right to immediate possession and
the defendant’s wrongful taking or wrongful or unlawful detention.” Id., § 4; “In the choice of
remedies, as between replevin and trover, or trespass, the preference is with
the former, in that it restores the property itself.” Id., § 6); 66 Am.Jur.2d Replevin,
§§ 1-6. The plaintiffs have requested the return of the mosaics. It is
undisputed that the mosaics are significantly important to the Church and
Republic of Cyprus. Papageorghiou testified that the mosaics have unique
religious and spiritual significance to the Church and Republic of Cyprus. Tr.
84-85. Father Pavlos Maheriotis, Abbot of the Holy Monastery of Machaeras in
Cyprus and a senior official and representative of the Archbishop of the Church
of Cyprus, testified that the Church of Cyprus wants the mosaics returned
because “they are our spiritual treasures. They were once put up on the
wall and they were sanctified through the prayers and through the holy liturgy
and they are part of our Christian life.” Tr. 263. Dr. Vikan, the
plaintiffs’ art expert, testified that wall mosaics were the spiritual and
artistic manifestation of the Byzantium culture. By lining the walls of sacred
places with holy figures, the people of the Byzantine culture “create[d] a
kind of sacred space for worship and veneration within that interior.” Tr.
337-38. Dr. Vikan further testified that the original Kanakaria mosaic is of
even greater significance because only six or seven mosaics survived both the
ravages of iconoclasm, in which “images were outlawed and then they were
consciously destroyed by imperial edict in Byzantium,” and the passage of
time. Tr. 338. Because the plaintiffs have requested the return of their
uniquely valuable mosaics, the Court considers replevin as the more appropriate
characterization of this case, including return of the mosaics as the more appropriate
remedy. Therefore the Court will analyze the plaintiffs’ claims under the
elements of a cause of action for replevin. In Indiana to prove a claim for replevin, a plaintiff must prove
that he has title or *1397 right to ownership, that the property has been unlawfully
detained, and that the defendant is in wrongful possession of the property. Snyder
v. International Harvester Credit Corp., 147 Ind.App. 364, 261 N.E.2d 71, 73 (1970)
(citations omitted); I.L.E. Replevin § 42 (West 1960). The Court now applies
the elements of replevin to the facts of this case. First, the plaintiffs must prove ownership of title or the right
to possession of the mosaics. Indiana courts have held that “[i]n a
replevin action it is fundamental that the plaintiff must prove his right to
possession of the property. He must prove his right to possession on the
strength of his own title, not merely the weakness of the defendant’s title or
right to possession.” Tucker v. Capital City Riggers, 437 N.E.2d 1048, 1051
(Ind.App.1982) (citations omitted). [FN19] Both Theodoros Avraam, a former resident of Lythrankomi, and
Papageorghiou testified that the mosaics in this case are those from the
Kanakaria Church. Tr. 43, 53, 63-68, 82-83, 90. Father Maheriotis testified
that the Kanakaria Church is part of the Church of Cyprus. Tr. 262. He
identified a document, exhibit 2013, as a Certificate of Registration of
Immovable Property by the Land Registry Office of Cyprus. He testified the the
certificate indicates that the Kanakaria Church is a part of the Holy
Archbishopric of the Church of Cyprus, which fact is duly noted by the seal of
the church and the seal of the government. Tr. 262. In addition, Michael
Kyprianou, senior counsel of the Republic of Cyprus in the Attorney General’s
office, testified that the mosaics, as property affixed to the Kanakaria
Church, are owned by the Archbishop of the Church of Cyprus. Tr. 284, 302. The
defendants presented no witnesses to contradict ownership of the mosaics by the
Church of Cyprus. However, in questioning Kyprianou, defendants attempted to
show that the Kanakaria Church is owned by a monastery. Even assuming this to
be true, which the Court does not find as a fact, Kyprianou testified that the
monastery is part of the Church of Cyprus as well. The Court concludes that the
plaintiffs have presented credible and persuasive evidence that the right to
ownership and possession of the mosaics rests with the plaintiff Church of
Cyprus, for all times relevant to this litigation. FN19. See also Hayes v. Harris, 479 N.E.2d 1359, 1361 (Ind.App.1985) (replevin
action requires proof that defendant is in unlawful possession of plaintiff’s
personal property); Aircraft Acceptance Corp. v. Jolly, 141 Ind.App. 515, 230 N.E.2d
446, 449 (1967) (general rule in replevin is that plaintiff must have either a
general or special ownership with a right to possession of the property sued
for at the time the action is commenced); Williams v. Padelinetti, 73 Ind.App. 216, 127 N.E.
158, 159 (1920) (to recover in replevin plaintiff must prove that he was owner
or entitled to possession of item and that defendant had wrongfully taken or
detained item). Second, the plaintiffs must show that the items to be replevied
were unlawfully or wrongfully detained. The mosaics were removed from the
Kanakaria Church at some point between 1976 and 1979, during the Turkish
occupation of northern Cyprus. Father Maheriotis testified that the Church of
Cyprus has never authorized anyone to remove the mosaics or to sell anything
from the Kanakaria Church. Tr. 261-263. Further, Father Maheriotis testified
that the Church of Cyprus does not consider the Kanakaria Church to be
abandoned and that, when civil conditions allow, the Church of Cyprus intends
to re-establish its congregation at the Church. Papageorghiou testified that
the Republic of Cyprus never granted permission to anyone to remove or export
the mosaics of the Kanakaria Church. Kyprianou testified that, under the facts
of this case, the Church of Cyprus has never lost title to the mosaics even
though the Church has not had physical control of the Kanakaria Church since
the Turkish occupation of the region. Tr. 285. He further stated that the
mosaics were removed and carried away without the consent of the Republic of
Cyprus. Tr. 288-89. The defendants presented no credible evidence or persuasive
argument that the mosaics were removed in a manner inconsistent with the above
evidence.
[FN20] *1398 The Court concludes the
following: that the Church of Cyprus has never intended to relinquish title to
or possession of the mosaics; that the Church of Cyprus has never abandoned the
Kanakaria Church or the mosaics; and that the mosaics were improperly removed
from the church, without the authorization or permission of the Church of
Cyprus or the Republic of Cyprus. For purposes of this opinion, the mosaics
were stolen from the church. For these reasons, the Court concludes that the
mosaics were unlawfully detained or taken from the rightful possession of the
Church of Cyprus. FN20. Through their evidence the defendants have attempted to show, inter
alia, that
the mosaics were properly exported and that such removal was authorized by
Turkish Cypriot officials. The Court is not persuaded by these attempts.
Parenthetically, the Court notes that the Turkish Republic of Northern Cyprus,
in its memorandum in support of its motion to intervene in this case, claims
that the mosaics are the property of the Turkish Republic of Northern Cyprus
and that the mosaics were improperly removed from the church in violation of
Turkish Cypriot laws. These assertions cast further doubt on the defendants'
claim that export of the mosaics was authorized by Turkish Cypriot officials. Finally, to recover under replevin, the plaintiffs must prove that
the defendants are in wrongful possession of the mosaics. The defendants
concede that the mosaics are in their possession. Thus the issue is whether the
defendants’ possession of the mosaics is wrongful. As previously noted, the
Court has concluded that the mosaics were stolen. There are long established
rules of law in Indiana that a thief never obtains title to stolen items, and
that one can pass no greater title than one has. Torian v. McClure, 83 Ind. 310 (1882); Breckenridge
v. McAfee,
54 Ind. 141 (1876). Therefore, one who obtains stolen items from a thief never
obtains title to or right to possession of the item. Id. In Breckenridge, supra, one of the plaintiff’s employees wrongfully and
without the plaintiff’s authorization took the plaintiff’s wheat, sold it to
defendants, and absconded with the money. The plaintiff sued for the return of
the wheat, or if that was impossible, for money damages for the value thereof.
At trial a jury returned a verdict for the plaintiff. The Indiana supreme court
affirmed the judgment, holding as follows: In our opinion, a thief can not [sic] acquire any title to stolen
property, by means of a larceny thereof, and can confer no title thereto on his
vendees; and this is so, whether the larceny thereof is a larceny at common law,
or a larceny thereof as larceny is defined in the modern English and American
authorities. 54 Ind. at 149 (1876). This case clearly stands for the
proposition, then, that a thief never acquires title to stolen property, and
cannot pass any title to any subsequent transferees, including subsequent
purchasers. Similarly, in Torian, supra, the thief rented a piano from the plaintiff.
The thief then sold the piano to the defendant, a good faith purchaser for
value. The plaintiff sued the defendant in replevin for the recovery of the
piano. The trial court found for the plaintiff and ordered a return of the
piano, or in the alternative money damages, and ordered money damages for the
detention of the piano. The Indiana supreme court affirmed the judgment, including
this conclusion of law: that [the thief], at the time he sold the piano to the defendant,
had no title thereto, and could confer none on the defendant, and that the
plaintiff is the owner thereof. 83 Ind. at 311 (1882). This case as well stands for the
proposition that a thief never acquires title to stolen property, and cannot
pass any right to possession of stolen property to a subsequent transferee,
including a bona fide purchaser for value. [FN21] FN21. See also Shearer v. Evans, 89 Ind. 400, 403 (1883) (thief cannot confer
good title to stolen goods); I.L.E. Conversion § 15 (West 1958) (“If the
original conversion was a theft, a purchaser from the thief can generally
acquire no title, regardless of his innocence or good faith in making the purchase”).
Accord, O'Keeffe v. Snyder, 83 N.J. 478, 416 A.2d 862, (1980); Kunstsammlungen Zu Weimar
v. Elicofin,
536 F.Supp. 829, 833 (E.D.N.Y.1981), affirmed, 678 F.2d 1150 (2d Cir.1982). Under Indiana law, as outlined, a thief obtains no title to or
right to possession of stolen items and can pass no title or right to
possession to a subsequent purchaser. *1399 The mosaics were stolen. For purposes of this analysis, it is of
no significance whether Aydin Dikman originally stole the mosaics, or who
originally stole them. Further, it matters not whether Goldberg purchased the
mosaics from Dikman alone, or from Dikman, van Rijn, and Fitzgerald, or from
only van Rijn and Fitzgerald. The evidence of theft and chain of possession
under the facts of this case lead only to the conclusion that Goldberg came
into possession of stolen property. Under Indiana law, she never obtained any
title or right to possession. [FN22] Therefore, the Court concludes that the defendants are in
wrongful possession of the mosaics. FN22. As shown above, under Indiana law even a bona fide purchaser cannot acquire
title to or right to possession of stolen property. Therefore, because the
Court has concluded that the mosaics were stolen, there is no need to determine
whether Goldberg was a bona fide purchaser under Indiana law. The Court notes that in some situations a “middleman,”
for lack of a better term, may obtain voidable title and pass good title to a bona
fide
purchaser for value without notice of the original ownership. One who induces
the original owner by fraudulent representations to sell an item acquires
voidable title to the item. A bona fide purchaser for value, without notice of the
original ownership, may acquire good title to the item from the middleman. Boyer, Survey of the Law of Property, 712-15 (1981). As between
the original owner whose property is stolen and the bona fide purchaser who acquires the
stolen item from a thief, the law will protect the original owner, because he
did nothing and evidenced no intent to part with title to his property. As
between an original owner who intentionally relinquished title to his property
(albeit under fraudulent circumstances) and the bona fide purchaser from a fraudulent
middleman, however, the law will protect the bona fide purchaser. The original
owner lost his protection, ostensibly, when he parted with title to his
property. There is some indication that Indiana follows the voidable title
rule. Alexander v. Swackhamer, 4 N.E. 433, 436 (Ind.1886); Breckenridge v. McAfee, supra, 54 Ind. at 147. However, it
is not necessary to apply this analysis to the facts of this case because there
is absolutely no evidence that the plaintiffs ever intended to part with title
to or possession of the mosaics by sale, export, fraudulent relinquishment of
title, or otherwise. As a matter of law no one in the chain of possession of
the mosaics ever obtained voidable title; thus Goldberg could not be a bona
fide
purchaser under this analysis. Under Indiana law, the Court concludes that the plaintiffs have
made credible and persuasive showings on the elements necessary for the
replevin of personal property. [FN23] The Indiana cases holding *1400 that a thief obtains no title to stolen property recognize a
long- standing rule. The cases establish law which increases in precedental
value over time. As the plaintiffs have proven their case for replevin, the
Court concludes that possession of the mosaics must be awarded to the plaintiff
Church of Cyprus. FN23. At some points counsel have referred to this case in a conversion
context. This Court notes that Indiana recognizes the tort of conversion.
Indiana courts have held that the “essence of every conversion is the
wrongful invasion of a right to, and absolute dominion over property owned or
controlled by the person deprived thereof, or of its use and benefit … the
essential elements to be proved are 'an immediate, unqualified right to
possession resting on a superior claim of title'…. 'In actions for conversion,
it is necessary for the plaintiff to show that before or at the time of the
conversion, he had title, either general or special, to the property in
controversy, coupled with the right of immediate possession, and that the
property had been wrongfully converted by the defendant to his own use.' ”
Noble v. Moistner, 180 Ind.App. 414, 388 N.E.2d 620, 621 (1979). See also Indiana
& Michigan Electric Co. v. Terre Haute Industries, Inc., 507 N.E.2d 588, 610 (Ind.App.1987) (elements of conversion); Howard Dodge &
Sons, Inc. v. Finn, 181 Ind.App. 209, 391 N.E.2d 638, 640 (1979) (elements of
conversion). The intent to convert one’s property is not an essential element. Howard
Dodge & Sons, supra, 391 N.E.2d at 641; Burras v. Canal Construction and Design Co., 470 N.E.2d 1362, 1368
(Ind.App.1984). The general rule in Indiana is that in an action for conversion,
the owner does not seek return of the property, but only money damages for its
value, Plymouth Fertilizer Co., Inc. v. Palmer, 488 N.E.2d 1129, 1130 (Ind.App.1986),
although one Indiana court has held that conversion is “cured” by the
payment of damages or the return of the property, Chesterton State Bank v.
Coffey, 454
N.E.2d 1233, 1237 (Ind.App.1983). Further, in Indiana actions for conversion
are governed by a two-year statute of limitations. French v. Hikman Moving
& Storage,
400 N.E.2d 1384, 1388 (Ind.App.1980) (citation omitted). One Indiana court has
noted that a two-year statute of limitation for conversion is “an
anomaly” when compared to the six-year statute of limitations which
applies to an action to recover personal property. Rush v. Leiter, 149 Ind.App. 274, 271 N.E.2d
505, 508 (1971). The Rush court also noted that at common law the tort of conversion had
two remedies, trover, which resulted in a forced judicial sale of the property,
and replevin, which resulted in recovery of the specific items. 271 N.E.2d at 508. As this Court has previously stated, possession
of the mosaics is the more appropriate remedy in this case, and replevin is the
more appropriate characterization of the case. The Court notes that the elements necessary to prove conversion
are very similar if not identical to those necessary to prove an action for
replevin. This Court believes that under Indiana law, the cause of action for
replevin stands on its own, and proof of a conversion is not a predicate to
recovery in replevin. However, to the extent it may be necessary to support the
decision reached herein, the Court concludes that the plaintiffs have also
proven the elements of a conversion. The plaintiffs’ claim for conversion
accrued when the defendants obtained possession of the mosaics in July, 1988, see
Lee Tool & Mould, Ltd. v. Fort Wayne Parts, Inc., 791 F.2d 605, 608-09 (7th
Cir.1986), and thus the plaintiffs’ filing of their complaint in March 1989 was
properly within the two-year statute of limitations for actions for conversion.
However, the Court states expressly that any rule or conclusion of
law regarding conversion notwithstanding, the Court is of the firm belief that
replevin and possession of the mosaics is the more appropriate characterization
of and remedy for this case. B. Swiss Substantive Law Assuming, arguendo, that Indiana substantive law does not apply in this case, the
Court next considers the issues under Swiss law. Under Swiss law, a purchaser
of stolen property acquires title superior to that of the original owner only
if he purchases the property in good faith. Tr. 19 (von Mehren). A bad faith
purchaser of stolen property never acquires title. Id. at 20. As Professor von
Mehren explained at trial, to conclude that a purchaser did not act in good
faith, a court must either find that the purchaser actually knew that the seller lacked
title, or
find that “an honest and careful purchaser in the particular circumstances
would have [had] doubts with respect to the capacity of the seller to transfer
property rights.” Id. at 24. Swiss law presumes that a purchaser acts in good faith. Id. at 26. However, a plaintiff
seeking to reclaim stolen property may overcome this presumption. Id. To do so he must show that
suspicious circumstances surrounded the transaction which should have caused an
honest and reasonably prudent purchaser to doubt the seller’s capacity to
convey property rights. Id. If the plaintiff shows that the circumstances surrounding the
transaction should have created such doubt, then the defendant purchaser has
the burden of establishing his good faith. A purchaser establishes his good
faith by showing that he took steps to inquire into the seller’s capacity to
convey property rights and that such steps reasonably resolved such doubt. Id. 1. Suspicious Circumstances As previously set forth, under Swiss law, this Court must begin
its analysis by presuming that Goldberg purchased the mosaics in good faith.
The plaintiffs argue that they have overcome this presumption by showing that
suspicious circumstances surrounded the sale of the mosaics sufficient to cause
an honest and reasonably prudent purchaser in Goldberg’s position to doubt
whether Dikman had the capacity to convey property rights. Therefore,
plaintiffs contend, Goldberg cannot rest on the presumption that she purchased
the mosaics in good faith. The Court agrees. Many suspicious circumstances surrounded the sale of the mosaics.
First, Goldberg knew the mosaics came from an area occupied by foreign military
forces. Goldberg testified that at the time of the sale she was aware that
Turkish military forces had invaded Cyprus in 1974 and that the Turks have been
in control of northern Cyprus since that time. Tr. 460. She was told by Michel
van Rijn that the mosaics had been “found” by the seller in the
rubble of an “extinct” church in northern Cyprus and that the church
had been damaged during the Turkish invasion. Tr. 469-70. Goldberg herself
admitted on direct examination that the origin of the mosaics raised suspicions
in her mind: Q. I believe you said that Mr. van Rijn told you these mosaics
were from Cyprus. Did that set off any warning bells in your mind? A. Well,
yes. I mean, I knew that Cyprus had been a British colony for a number of
years. I knew that the island had changed hands, or parts *1401 of it had changed hands many
times, and I did know that at least for the last 14 or 15 years the island had
been divided. Tr. 459-60. Second, the very nature of the items for sale warranted that a
potential purchaser should proceed with caution. As Professor von Mehren
explained: Here we have not an ordinary object, nor do we have an object that
is typical movable property. Instead we have mosaics that are unique, that have
great cultural and artistic value, that have also great economic value. These
mosaics were, up until very recently, not movable property at all. They were
part of a building. They were immovable property. When one has an object that
was not movable property and it then is turned into movable property and
appeared on the market and is of great and unique value, the circumstances
require an explanation as to how that came about. Was this a legitimate series
of events, or not? In addition, these objects are not ordinary commercial objects.
They are objects that have religious and cultural significance. They are the
kind of objects that do not ordinarily enter into commerce, and here they are
in commerce, or being offered for sale. A careful and honest purchaser would
have to understand and explain why … these mosaics should now be offered on
the market. Tr. 27-28 (von Mehren). Third, a vast disparity existed between the appraised value of the
mosaics and the price Goldberg paid for them. Goldberg paid $1.08 million, in
cash, for the mosaics; six months later, she offered to sell them to the Getty
Museum for $20 million. [FN24] Exhibit 52. Prior to her purchase of the mosaics, Goldberg
received an appraisal of their value from van Rijn. He valued the mosaics at
approximately $1.2 million for each of the three smaller pieces and
approximately $2.4 million for the mosaic depicting Christ, or a total of $6
million for all four mosaics. Exhibit 43. Art dealer Robert Roozemond appraised
the value of the mosaics at two million pounds, or approximately $4 million.
Exhibit 44. Robert Fitzgerald, an art dealer with 28 years experience, valued
the mosaics at $3 to $5 million. Tr. 316. The defendants’ art expert, Andre
Emmerich,
[FN25]
estimated the market value of the mosaics to be between $5 and $6 million.
Emmerich Deposition 81. FN24. Goldberg testified that, upon seeing photographs of the mosaics
for the first time, she “fell in love” with them. Tr. 447. The fact
that she quickly offered the mosaics for sale for $20 million discredits her
prior testimony. FN25. Andre Emmerich is an art dealer and the owner of Andre Emmerich
Gallery, Inc., New York, New York. Fourth, Goldberg knew very little about the seller, Aydin Dikman. [FN26] Everything she knew about
Dikman she learned from middlemen: Fitzgerald, van Rijn, and Faulk. She was told
that Dikman was a Moslem Turk attempting to sell Christian mosaics from
northern Cyprus. She was also told that Dikman “found” the mosaics
while he was employed as “an archaeologist from Turkey assigned to
northern Cyprus.” Tr. at 456. The Court believes that a reasonable
purchaser would have found it peculiar that a Turkish archaeologist would be in
the business of selling Cypriot antiquities. As the plaintiffs’ art expert Dr.
Vikan testified: FN26. Goldberg was not told the identity of the seller at her initial
meeting with van Rijn and Fitzgerald on July 1, 1988. It was not until July 3rd
that she was told the seller was a man named Aydin Dikman. the one thing that really strikes me about this as being strange
is that he [Dikman] is an archaeologist. This is a good thing, I guess, but
when in the world did archaeologists get in the business of selling
antiquities? I mean this is bizarre. Tr. 350. In addition, Goldberg met the seller, Dikman, only once. [FN27] That brief *1402 meeting occurred on July 5,
1988, or two days before the sale was consummated. This was the only time
Goldberg and Dikman ever communicated directly with each other. Finally, as
previously discussed, no document such as a bill of sale or export paper links Dikman to these mosaics. FN27. Goldberg testified that on July 5, 1988, she met Faulk and Dikman
in the free port area of the Geneva airport for the purpose of inspecting the
mosaics. The meeting between Goldberg and Dikman was fleeting and proved
uneventful, as described in the following excerpt from Goldberg’s testimony at
trial: Q. What did you say to him [Dikman] and what did he say to you? A. Well, that is about what it was. I had prepared a list of
things that, if possible, to talk about. But I introduced myself and he
introduced himself and we shook hands and the crates containing the mosaics
were opened and he left. Q. Did you perceive that he was—whether or not he was fluent in
English? A. I don't think so. Tr. 484. Attorney Faulk does not remember this meeting between
Goldberg and Dikman and is not sure whether they ever met in person. Faulk
Deposition 228. Fifth, the cast of characters acting as middlemen, namely, Michel
van Rijn, Ronald Faulk, and Robert Fitzgerald, were themselves suspect.
Goldberg knew very little about Michel van Rijn; she first met him on July 1,
1988, or six days before the sale was consummated. She did know, however, that
he was a felon. Goldberg testified that at the time of the sale she knew van
Rijn had been convicted in France for art forgery. She also knew that van Rijn
was being sued by an art gallery for “[f]ailure to pay money.” Next,
Goldberg knew very little about Ronald Faulk. She knew only that he was an
attorney from California and that he was representing Fitzgerald and van Rijn
in this transaction. [FN28] Goldberg was, however, familiar with Robert Fitzgerald, the
principal middleman. She “had known him casually for several years.”
Tr. 533. She knew, for example, that in the past Fitzgerald had used the names
Robert Jones, Robert Jones-Fitzgerald, and Robert Fitzgerald-Jones. Tr. 533.
She also knew that Fitzgerald had been sued for his involvement in a
transaction involving a purported Michelangelo modello. Tr. 323-24, 433-35. In
addition, Goldberg knew that all three middlemen were to profit financially
from the sale of the mosaics. FN28. Attorney Faulk did not represent, nor claim to represent,
Goldberg in this transaction. Finally, the haste with which the transaction was carried out
raises suspicions. Goldberg first learned of the mosaics on July 1, 1988. On
July 4th, she signed a contract with the three middlemen to divide the mosaics'
resale profits. Later on July 4th Goldberg traveled from Amsterdam to Geneva.
There she inspected the mosaics on July 5th. The sale was consummated on July
7th. On July 8th, the mosaics were on an airplane to the United States. The
rush with which this sale took place raises suspicions. As Dr. Vikan testified:
The timing of the sale [raises suspicions]. July 2nd [to] July
7th. What is the big hurry? These things have been in somebody’s warehouse in
Munich for ten years, nine years. Why such a hurry now? If you are in such a
hurry why not put a good faith deposit down, why not put your funds in escrow,
why not write a contract with the contingency this contract will go into effect
on the 1st of September with the delivery of all funds contingent on the
satisfactory resolution of provenance, authenticity, and restorability…. Tr. 352. All of the foregoing sets of circumstances, especially when
considered together, raise significant suspicions. For these reasons, the Court
concludes that suspicious circumstances surrounded this sale sufficient to
cause an honest and reasonably prudent purchaser in Goldberg’s position to
doubt Dikman’s capacity to convey property rights to the mosaics. The Court
cannot improve on Dr. Vikan’s summation of the suspicious circumstances
surrounding this sale: “All the red flags are up, all the red lights are
on, all the sirens are blaring.” Tr. 353. Because such suspicious
circumstances existed, Goldberg cannot rest on the presumption, which she is
afforded under Swiss law, that she purchased the mosaics in good faith. Instead,
Goldberg now bears the burden of establishing her good faith. She may do so by
showing that she took steps to inquire into Dikman’s capacity to convey
property rights to the mosaics *1403 and that such steps reasonably resolved any doubts as to Dikman’s
capacity to convey such property rights. 2. Goldberg’s Inquiry Next, the Court will examine the steps Goldberg took to inquire
into Dikman’s capacity to convey property rights to the mosaics. As a prefatory
matter, the Court notes that all of Goldberg’s inquiries took place after July 4, 1988, which is the
date she signed an agreement with the middlemen to split the profits from any
future resale of the mosaics. Goldberg testified that she telephoned authorities at UNESCO’s
office in Geneva. She cannot recall the name of any individual she spoke with
at UNESCO, Switzerland. Goldberg testified that the purpose of her call was to
determine “whether or not there were any applicable treaties which would
have covered the removal of the items from northern Cyprus in the mid to late
1970s to Germany.” Tr. 497. Thus, Goldberg inquired about treaties, not
about the mosaics. She did not inquire as to whether the mosaics had been
reported as stolen or whether existing claims might exist. In fact, she did not
mention the mosaics at all. Further, Goldberg did not contact UNESCO’s office
in Paris, which is UNESCO’s “central gathering point” for information
concerning art and cultural property. Emmerich Depo. at 73. Goldberg also testified that she telephoned the International
Foundation for Art Research (IFAR) in New York. IFAR is an international
organization that collects information concerning stolen art. Goldberg does not
recall the name of any individual she spoke with at IFAR. No document sent to
or received by IFAR confirms Goldberg’s telephone call. IFAR has no record of
Goldberg’s alleged telephone call in July 1988. IFAR has a procedure whereby a
formal search can be made of its files to determine whether a particular work
of art has been listed as missing or stolen. Lowenthal Deposition 17. The cost
is $25, which is billed to the requesting party. Id. Goldberg did not request
that such a formal search be conducted, nor was she billed for any informal
search IFAR may have conducted of its files in July 1988. Next, Goldberg testified that she telephoned customs offices in
the United States, Switzerland, Germany, and Turkey. She cannot recall,
however, the name of any person she allegedly contacted at any of these customs
offices. She testified that she asked whether the mosaics had been reported as
missing or stolen. Tr. 493-97. Her testimony is not corroborated by a single
document sent to or received from any such customs office. In addition, on
December 18, 1988, Goldberg prepared “an outline” of “the steps
that we [Goldberg and Feldman] took and the knowledge we had of the
pieces.” Tr. 567. No mention is made in this outline of any calls placed
to or contacts made with U.S., Swiss, German, or Turkish Customs. Next, the Court will examine briefly the steps Goldberg failed to
take in determining whether Dikman had the capacity to transfer property rights
to the mosaics. First, and most significantly, Goldberg never contacted the
Republic of Cyprus or the Church of Cyprus, even though she was told the
mosaics came from an “extinct” church in northern Cyprus. Contacting
Cyprus is the first logical and necessary step a potential purchaser should
have taken to determine the provenance of the mosaics. The importance of
contacting Cyprus was highlighted by Dr. Vikan during his direct examination: Q. Assuming that a prudent person did not want to walk away from
this transaction, what, if anything, should that person have done to pursue the
transaction? A. Call the Republic of Cyprus, the only thing you can do. Q. And why, in your view, is that the only thing you can do? A. Because the object is [from] there. I'll use the metaphor of
the smelly fish. The smelly fish is lying in front of you and it ha[s] Cyprus
written on [its] side. The only way you can lift that is to get in touch *1404 with the people who can tell
you the truth. Tr. 353. Second, Goldberg never contacted the so-called Turkish Republic of
Northern Cyprus, formerly known as the Turkish Federated State of Cyprus, even
though she was told that the seller, Dikman, discovered the mosaics while he
was working as “an archaeologist from Turkey assigned to northern
Cyprus.” Goldberg later refers to Dikman as “the official
archaeologist for the northern one-third of Cyprus, known as the Turkish Federated
Republic of Cyprus.” Exhibit 12. By contacting the Turkish Republic of
Northern Cyprus, Goldberg could have verified whether Dikman had ever served as
the “official archaeologist” of that country and whether the mosaics
had ever been exported properly from northern Cyprus. Third, Goldberg failed to contact Interpol, the international
police organization headquartered in France, to investigate whether the mosaics
had been reported as stolen. In light of this, the defendants’ point that
plaintiffs failed to report the theft of the mosaics to Interpol is of little
significance. Finally, Goldberg did not consult a single disinterested expert on
Byzantine art prior to purchasing the mosaics. Goldberg is not, nor does she
claim to be, an expert in Byzantine art. Rather, she deals almost exclusively
in 19th and 20th century American and European paintings, etchings, and
sculptures. Art dealer Barbara Divver suggested to Goldberg that she seek
independent, expert advice from one familiar with Byzantine art, but Goldberg
failed to do so. Even defendants’ own art expert, Andre Emmerich, testified
that an art dealer should secure expert advice before venturing into areas in
which he is not expert. Emmerich Deposition 57-61. As the foregoing discussions indicate, Goldberg made only a
cursory inquiry into the suspicious circumstances surrounding the sale of the
mosaics. Further, the Court has noted additional steps that Goldberg utterly
failed to undertake. Therefore, the Court concludes that Goldberg’s inquiry was
deficient in resolving doubts as to Dikman’s capacity to convey property rights
to the mosaics. In summary, the Court concludes that suspicious circumstances
surrounded the sale of the mosaics which should have caused an honest and
reasonably prudent purchaser to doubt whether Dikman had the capacity to convey
property rights. Further, the Court concludes that Goldberg, in making only a
cursory inquiry into Dikman’s capacity to convey property rights to the
mosaics, failed to take reasonable steps to resolve that doubt. Goldberg did
not purchase the mosaics in good faith. Conclusion Regarding issues of
credibility in this case, the Court finds that the evidence and testimony of
the plaintiffs is more credible and persuasive. Indeed, in many instances the
manner in which the defendants and associated individuals proceeded in this
case reflects negatively on the credibility of the defendants’ case. As previously discussed, under Indiana law and in the alternative
under Swiss law, defendant Goldberg never obtained good title to or any right
to possession of the mosaics. The plaintiffs have made a proper showing in all
respects for the return of the mosaics. The Court concludes that under the
circumstances of this case, possession of the property at issue, and not money
damages in lieu of return of the actual property, is the more appropriate
remedy. Accordingly, the Court orders that the mosaics must be returned to the
true and rightful owner, the Church of Cyprus. The Court notes that damages may be awarded for the loss of the use
of the property in a replevin action. Lou Leventhal Auto Co., Inc. v. Munns, 164 Ind.App. 368, 328 N.E.2d
734 (1975). Before trial, the issue of damages was separated from the issue of
rightful possession of the mosaics. Issues of potential damages and other
counts in the plaintiffs’ complaint remain. For purposes of determining issues
such as damages, remaining claims, and custody or transfer of the mosaics, the
Court will address these matters as necessary *1405 in such further proceedings
as might be required. ORDER This case came before
the Court for trial to determine possession of the mosaics at issue in this
case. Whereupon the Court, having heard and reviewed the evidence and having
reviewed the briefs and submissions of counsel, and being duly advised in the
premises, hereby concludes that possession of the mosaics should be awarded to
the plaintiff, the Autocephalous Greek-Orthodox Church of Cyprus. THEREFORE, IT IS ORDERED, ADJUDGED, AND DECREED that possession of
the mosaics at issue in this case is awarded to the plaintiff, the
Autocephalous Greek- Orthodox Church of Cyprus. IT IS SO ORDERED. |