Autocephalous Church of Cyprus v. Goldberg: The Kanakaria Case in the American Courts

Autocephalous Greek-Orthodox Church of Cyprus and the Republic of Cyprus v. Goldberg & Feldman Fine Arts, Inc., and Peg Goldberg is the American lawsuit over four fragments of the sixth-century apse mosaic of the Panagia Kanakaria at Lythrankomi, a church in the occupied north of Cyprus. The defendants were an Indianapolis art dealer and the Indiana company that owned her gallery in Carmel, which had bought the fragments in Geneva in July 1988. On 3 August 1989 Judge James E. Noland of the federal district court in Indianapolis awarded possession to the Church of Cyprus; the Seventh Circuit affirmed on 24 October 1990, and the Supreme Court declined to hear the case in November 1991 [1; 2]. The fragments went back to Cyprus in 1991 [7]. The judgments settled four questions that still decide such disputes in the United States: which country's law governs a sale made in transit, when the time limit for a stolen object starts to run, what a buyer must check before paying, and whether the decrees of an unrecognised administration can take title away from an owner. The mosaic, its theft and the recoveries before and after are told in the Kanakaria mosaics. The photograph above shows the Archbishopric precinct in Nicosia, where the returned fragments are kept in the Byzantine Museum (photo: NicosiaRepublicCyprus, CC BY-SA 3.0, via Wikimedia Commons).

The parties and the sale the court examined

The plaintiffs were the Church of Cyprus, a religious organisation with its principal offices in Nicosia, and the Republic of Cyprus [1]. The Church owned the Kanakaria church: the Land Registry of the Republic recorded it as part of the Holy Archbishopric, and the Republic's senior counsel testified that the mosaics, as fixtures of the building, belonged to the Archbishop [1]. The Republic sued beside it, with an interest in the mosaics the court held sufficient; both asked that they be returned to the Church [1]. Suit was filed on 29 March 1989, damages were separated from possession, and the bench trial on possession ran from 30 May to 6 June 1989 [1, pp. 1376–1377]. The defendants were the buyer, who had dealt since 1981 "almost exclusively in 19th and 20th century paintings, etchings, and sculptures" and was not, "nor does she claim to be, an expert in Byzantine art", and her company, of which she was president and majority shareholder [1].

According to the court's findings, the four fragments (the Christ child, the north archangel and the apostles Matthew and James) were offered to the buyer in Amsterdam on 1 July 1988 by the Dutch dealer Michel van Rijn, an Indianapolis art dealer and a California attorney, on behalf of a seller in Munich named in the record as Aydın Dikmen, and were handed over in the free port of Geneva airport on 7 July for $1,080,000, of which the seller received $350,000 [1; 2]. The district court spelled his name "Dikman" throughout, noting that the record also had "Dikmen" and "Diekman" [1]. Dikmen was never convicted of anything. The court did not decide who had cut the mosaics from the wall: "it is of no significance whether Aydin Dikman originally stole the mosaics, or who originally stole them" [1, p. 1399]. What mattered was that they had been stolen, a finding it made because the Church had never abandoned the church or authorised their removal [1, p. 1398].

Choice of law: Indiana, not Switzerland

The buyer's strongest legal ground was Switzerland. The sale had been completed there, and Swiss law, unlike the law of any American state, lets a purchaser in good faith acquire title to stolen goods; Swiss law also presumes that a purchaser acted in good faith [1, p. 1400]. If Swiss law applied, the Church would have had to show that she should have doubted the seller's right to sell.

Judge Noland applied Indiana's choice-of-law rules, as a federal court sitting in Indiana had to. Under Hubbard Manufacturing Co. v. Greeson (1987) Indiana uses the law of the place of the wrong only when that place has significant contacts with the case [1, p. 1393]. Switzerland "bears little connection" to it: no party, intermediary or investor was Swiss; the fragments were on Swiss soil no more than four days, stayed in the free port and "never passed through Swiss customs"; most of the negotiation had taken place in the Netherlands; and the Swiss bank through which the loan was paid "merely served as a conduit" [1, pp. 1393–1394]. Its contacts were "fortuitous and transitory" [1, p. 1394]. Indiana, by contrast, was home to the buyer, her company, the bank that lent $1,224,000, several holders of shares in the resale profits and the fragments themselves, and the buyer's own profit-sharing agreement chose Indiana law [1, p. 1394; 2, p. 287].

The court added, on the evidence of Arthur von Mehren of Harvard Law School, that Swiss rules themselves apply the law of the destination to goods in transit, which here was Indiana [1, pp. 1394–1395]. The Seventh Circuit affirmed on the Indiana analysis alone and held that Indiana law governed "every aspect of this action, from the statute of limitations issues through the application of the substantive law of replevin" [2, p. 287].

Under Indiana law the merits were short. A plaintiff in replevin must show title or right to possession, that the property is unlawfully detained, and that the defendant wrongfully holds it [1, pp. 1396–1397]. Indiana had held since Breckenridge v. McAfee (1876) and Torian v. McClure (1882) that "a thief never obtains title to stolen items, and that one can pass no greater title than one has" [1, p. 1398]. The buyer therefore had no title, whatever her good faith, and the court did not need to decide whether she had acted in good faith under Indiana law [1, p. 1399].

Limitation and the discovery rule

Indiana allowed six years to sue for the recovery of personal property [1, p. 1385]. The Church learned of the theft in November 1979 and sued in March 1989, so if time ran from the discovery of the loss the claim was late. The court held that it ran from a later date: "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" [1, p. 1388]. It followed O'Keeffe v. Snyder (New Jersey, 1980), the Georgia O'Keeffe paintings case [1, p. 1388]. The Seventh Circuit called the requirement that discovery include the holder's identity "eminently sound": an owner of "particular, unique and concealed works of art" has not discovered a claim until it knows "who, or at least where," the holder is [2, p. 289].

The rule protects only a diligent owner, and the court examined the Church's and the Republic's search in detail. From November 1979 the Republic had informed UNESCO, the museum and monument councils and Europa Nostra; its ambassador to the United Nations had spoken to the British Museum, the Louvre, Christie's and Sotheby's; and Vassos Karageorghis and Athanasios Papageorghiou had written to colleagues abroad [1, p. 1380]. The plaintiffs' art expert, the medieval curator of the Walters Art Gallery in Baltimore, testified that in the Mediterranean Cyprus "stands apart" in its efforts to recover such property [1, p. 1389].

The buyer argued that the clock had started much earlier: in 1979; on 10 June 1982, when the Turkish Cypriot paper Ortam ran a headline calling Dikmen an "antique smuggler" and, in the same article, discussed the missing Kanakaria mosaics; and in 1983 and 1984, when other fragments and the Lysi frescoes were recovered with the help of the Menil Foundation [1, pp. 1389–1390]. The court found that the article "did not make any connection between the mosaics and Aydin Dikman", and that the Cypriot officials who handled the 1983 to 1984 recovery were refused the holder's name, because those involved feared reprisals [1, pp. 1390–1391]. In the alternative it held that fraudulent concealment had suspended the time limit at least until the end of 1983 [1, p. 1392]. The Seventh Circuit affirmed on the discovery rule and left the alternative undecided [2, p. 290].

What the buyer checked and what she did not

The findings on the buyer's inquiries came in the district court's alternative analysis under Swiss law. It first listed the circumstances that should have made "an honest and reasonably prudent purchaser" doubt the seller's right to sell [1, pp. 1400–1402]:

• she knew the fragments came from an area occupied by foreign military forces, and she agreed in evidence that their Cypriot origin had set off "warning bells";
• they were unique religious objects that had until recently been part of a building, which, in von Mehren's words, "require an explanation as to how that came about";
• she paid $1.08 million in cash, while every valuation in evidence, including that of the defence's own expert, put them at $3 million to $6 million, and six months later she offered them to the Getty Museum for $20 million;
• she knew almost nothing of the seller, met him once, briefly, and had no document linking him to these mosaics;
• the intermediaries were, in the court's word, "suspect": she knew that one of them had been convicted in France of art forgery, and that all three stood to profit from the sale;
• the deal took a week, from first sight of the photographs on 1 July to the flight home on 8 July.

The plaintiffs' expert summed it up: "All the red flags are up, all the red lights are on, all the sirens are blaring" [1, p. 1402].

The court then looked at what she did. It noted that "all of Goldberg's inquiries took place after July 4, 1988", the date she signed the profit-sharing agreement [1, p. 1403]. She telephoned UNESCO's office in Geneva, but asked about treaties covering removals from northern Cyprus to Germany: "Goldberg inquired about treaties, not about the mosaics. ... In fact, she did not mention the mosaics at all" [1, p. 1403]. She said she telephoned the International Foundation for Art Research in New York, but IFAR had no record of the call, and she had not asked for its formal search, which cost $25 and would have been billed [1, p. 1403]. Her account of calls to customs offices in four countries was uncorroborated [1, p. 1403].

What she did not do was decisive. "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" [1, p. 1403]. She did not contact the authorities in the north whose export permission she relied on, did not contact Interpol, and "did not consult a single disinterested expert on Byzantine art", although a New York dealer had advised her to [1, p. 1404]. The court concluded that she made "only a cursory inquiry" and "did not purchase the mosaics in good faith" [1, p. 1404].

The buyer's case, as the courts recorded it

The judgments set out the defence in full. Her case was that she had bought in good faith in a country whose law protects such a buyer; that she had been told the seller held export permission from the Turkish Cypriot authorities and had been told by the intermediaries' attorney that the export documents he had seen were in order; that she had made inquiries in Geneva; and that the Church, which had known of the loss since 1979, had waited almost ten years and never reported it to IFAR or Interpol [1, pp. 1376, 1382, 1385; 2, p. 289]. On appeal she also argued that the federal court lacked jurisdiction because the Church's citizenship was not proved, and that the northern decrees of 1975 had divested the Church of title [2, pp. 284, 291]. The export papers offered at trial did not mention the seller or these four mosaics [1, p. 1382].

The Seventh Circuit itself acknowledged where the loss fell. "Unfortunately, when these mosaics surfaced they were in the hands not of the most guilty parties, but of Peg Goldberg and her gallery" [2, p. 293]. It added a paragraph addressed to buyers, "Lest this result seem too harsh", noting that buyers can protect themselves [2, p. 294]. The court's sympathy lay with the Church, whose congregation had been forced out of Lythrankomi, and Chief Judge Bauer's closing reserved its condemnation for "those who plundered the churches and monuments of war-torn Cyprus", not for the buyer [2, p. 293].

Scholarship has questioned two parts of the reasoning. Patty Gerstenblith notes that the discovery rule made the courts examine the conduct of the Church, "a daunting task for the Church given that it had virtually no access to the churches in northern Cyprus", rather than that of the purchaser, and calls this "a significant shortcoming" of the approach [3, p. 358]. Mara Wantuch-Thole argues that the court's "most significant relationship" test gave Indiana a weight it did not deserve: the jurisdiction with the closest connection was Cyprus, where the mosaics had been fixed for 1,400 years, and the result shows that such tests can be bent toward an outcome a court favours [4, pp. 241–242]. Neither questions the outcome; Wantuch-Thole's point is that the case "luckily ended with a recovery of the mosaics for Cyprus" by a method that need not have [4, pp. 241–242].

The northern decrees and the parties the court recognised

On 24 May 1989 the self-declared "Turkish Republic of Northern Cyprus" ("TRNC"), recognised only by Turkey, moved to intervene as a plaintiff, claiming the mosaics as its own. The district court refused because "that government is not recognized by the United States", and noted that the motion itself "strongly indicate[s] that it, too, never authorized the removal or sale of the Kanakaria mosaics" [1, pp. 1377, 1379 n. 3].

On appeal the buyer relied on two decrees of 1975 of the "Turkish Federated State of Cyprus", an "Abandoned Movable Property Law" and an "Antiquities Ordinance", which purported to vest abandoned property and all churches and their "movable antiquities" north of the Green Line in that administration [2, p. 291]. The Seventh Circuit, in Chief Judge Bauer's opinion, refused to give them effect. The United States had never recognised the administration, and under Williams v. Bruffy (1878), on the acts of the Confederate states, a breakaway regime's acts stand only if it succeeds. "We will not thus equate simple longevity of control with 'ultimate success'", the court wrote; "the TFSC and the TRNC, neither of which has ever been recognized by the non-Turkish world, only acceded to the control of the northern portion of Cyprus. The Republic of Cyprus remains the only recognized Cypriot government" [2, p. 293]. The decrees "do not divest the Church of its claim of title" [2, p. 293].

Judge Richard Cudahy, concurring, put the decrees in international law. The 1954 Hague Convention "may be applicable" because of "the incursion of Turkish armed forces into Cyprus in 1974", and "the attempt of the government established in northern Cyprus by the Turkish military to divest the Greek Cypriot church of ownership of the mosaics might be viewed as an interference of the sort contemplated by the 1954 Hague Convention. If this were the case, the acts and decrees of the northern Cyprus government divesting title to this cultural property would not demand the deference of American courts" [2, p. 296]. From the 1970 UNESCO Convention and the Cultural Property Implementation Act of 1983 he drew the policy that "we should not sanction illegal traffic in stolen cultural property that is clearly documented as belonging to a public or religious institution"; the Dumbarton Oaks monograph of A. H. S. Megaw and E. J. W. Hawkins supplied the documentation [2, pp. 296–297]. The treaties themselves did not decide the case; the district court called them "not controlling" [1, p. 1379 n. 2]. The background is in UNESCO 1970 and the Hague Convention.

The result and the return

The district court ordered that "possession of the mosaics at issue in this case is awarded to the plaintiff, the Autocephalous Greek-Orthodox Church of Cyprus", and chose return of the objects over money damages because the mosaics were unique and mattered above all as part of the religious and cultural heritage of the Church and the Republic [1, pp. 1376, 1404]. The question of damages, separated before trial, was left for later proceedings [1, p. 1404]. The Seventh Circuit affirmed in full and rejected the jurisdictional objection, holding that the Republic's constitution and property law recognised the Church as a distinct legal person [2, pp. 284–285]. The four fragments were returned to Cyprus in 1991, "after Goldberg's appeal failed", in Mark Rose's words; the Supreme Court denied certiorari on 4 November 1991 [2; 7]. They are now in the Byzantine Museum of the Archbishop Makarios III Foundation in Nicosia.

In a private action for replevin, Gerstenblith notes, the owner pays the lawyers and the cost of establishing the facts [3, p. 359]. Such recoveries in the United States are now mostly brought by the federal government through civil forfeiture [3, pp. 359–360].

Why the case is still cited

Gerstenblith treats Goldberg as the starting point of the "first generation" of American cultural-property cases, the private suits in which an owner recovered a stolen object in a state court action [3, pp. 358–359]. It is cited on three points. On limitation, it stands with O'Keeffe as authority that time does not run against a diligent owner until the holder is identified; the California Court of Appeal relied on it in this sense in Naftzger v. American Numismatic Society (1996), a case of coins stolen from a museum [5]. On Swiss law, the Second Circuit cited its account of the Swiss good-faith presumption in Bakalar v. Vavra (2010), a dispute over a drawing lost in the Nazi period [6]. And on non-recognition, it holds at appellate level that the property decrees of the northern administration do not divest the Church of Cyprus of title [2, p. 293].

American import restrictions on Cypriot church material since 1999 work at the border (the US memorandum and the Designated List); Goldberg works after it, in a dispute over title.

What the case means for a buyer today

The age of the mosaics played no part in the reasoning. What decided the case was how and when they had left their owner: they were taken from a church in the occupied north between 1976 and 1979, and nothing in a free-port sale, a bill of sale or papers issued in the north could make that good. Under Indiana law, as in the American private suits generally, a thief passes no title, and the buyer's good faith does not change that [1, p. 1398; 3, p. 359]. Time does not run against an owner who searches diligently until it can find the holder [2, p. 289]. In Goldberg the buyer relied on the law of the country through which the sale passed, and the court applied the law of the place where she lived and the object ended up [1, p. 1394].

The Seventh Circuit listed the checks a buyer should make "especially when circumstances are as suspicious as those that faced Peg Goldberg": "a formal IFAR search; a documented authenticity check by disinterested experts; a full background search of the seller and his claim of title; insurance protection and a contingency sales contract; and the like" [2, p. 294]. The district court added the first step: ask the country and the owner the object comes from [1, p. 1403]. For a Cypriot object the checks are made before payment, not after, and they concern the object's export and title: when it left Cyprus, under which licence or in which collection, and what document proves it. Most Cypriot antiquities on the market left the island lawfully, decades before 1974, and many such histories can be documented; how to document such a history is set out in documenting a lawful history, and how the 1974 date-line shapes the market in the 1974 presumption.