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Government sues itself in 1933 $20 dispute

Just when you thought that the Bleak House of coin litigations was percolating toward a trial date early next year, the contest over who owns 10 1933 $20 gold pieces took a strange turn Dec. 2 as the government of the United States of America sued itself – and Israel Switt, the original supplier of the coins to the secondary market, spoke from the grave in an affidavit filed by the Mint.

It actually couldn’t be stranger. But in case you’ve not been following the case, here’s a quick summary. Israel Switt was a jeweler and sometime coin dealer in Philadelphia who, at various times in the 1930s, sold a series of double eagle coins dated 1933 that the U.S. Mint now claims were never lawful legal tender because they were purloined from the Philadelphia Mint by its head cashier.

The government’s theory turns the laws of legal tender and money on their head, and if applied any more widely than this case, would strike at the heart of commerce, for it would essentially make every coin a suspect for theft from the government once it enters the stream of commerce – no matter how it got there. The same paralysis would take place if it was applied to bank notes.

But it’s the same theory that the government used starting in the 1930s and running into the 1950s to recapture nine other double eagles that found themselves in the hands of collectors, all of whom trace their pedigree back to a dealer or someone else who in turn obtained the coins from Switt. He died in 1990 and his wife Elizabeth is also gone.

Inside the family safe deposit box, which daughter Joan Langbord never entered in her parent’s lifetime – it was drilled open after their deaths – they found 10 double eagles, all dated 1933, and sent them along to the government through their lawyer, Barry Berke, to authenticate them as genuine or prove them counterfeit.

Thoughtful Mint employees in the technical section of the Mint said that they were genuine and, by the way, the Mint has no intention of returning them because the coins can’t be legally held. So Mrs. Langbord, and her two adult sons, sued the government for the return of the coins on a theory that the property was theirs and the government had no right to seize it.

The case was brought in the U.S. District Court for the Eastern District of Pennsylvania, just across from Independence Hall, the current Philadelphia Mint, andnot far from jeweler’s row where Switt was licensed to deal in gold after the recall of 1933-1934. It is also not far from where he was arrested for illicit gold transactions.

The coins in question are being held in Fort Knox even as the litigation is consuming hundreds of hours of depositions, and over 120 filed official records with the court. The government recently got into the procedural sticky wicket of suing itself to get legal possession of the coins (it filed an in rem claim under admiralty and seizure rules).

The Mint then admitted all of the government’s 93 allegations, not hard when you stack the deck with the same pabulum that has been regurgitated in other litigations. They cite the 1947 Barnard case in Tennessee where a judge put the burden of proof on the collector to show how and why the coin was legal to own.

They do not answer the question of what effect private gold ownership legalization has; nor the effect of the Coinage Act of 1965, which made legal tender all coins previously produced by the Mint, including the demonetized Trade dollar and, presumably, the 1933 $20. They also cough up the surprise witness, Israel Switt himself.

Says Switt in his affidavit: “My first recollection of having bought and sold 1933 double eagle gold coins was about the beginning of February 1937. This gold coin I received in a collection with other coins, which I purchased under circumstances which I do not remember at this time.

 “This coin I sold to James G. Macallister and also sold Mr. Macallister during the ensuing months of 1937, four similar coins, a total of five. I also sold two of these coins to Ira Reed, 37 S. 18th St., Philadelphia, and two more of the same type of coins to Abe Kosoff, [Kosoff] now located at 50th & Madison Avenue, New York City. These sales to Kosoff and Reed were two or more years after my sales to Macallister.

“These nine coins I distinctly recall having sold but I do not remember when, where or from whom I purchased them, as they were received by me in collections with other coins at different times.”

He then concludes by saying, “I do not have any of these coins in my possession or under my control at this time.”

Government attorneys say in substance he lied. Hard to cross-examine a dead man. They also draw a series of conclusions which are not evidentiary, but are leaps of faith. They reiterate that the coin is illegal, but never satisfactorily answer how one was licensed by them to go to King Farouk in Egypt or how, in the 1990s, they agreed after litigating, to split the proceeds of a $7 million auction with the person who subsequently owned that coin.

For some reason, the same government never felt compelled to account to the true owner of that coin under their theory – the government of Egypt, which seized Farouk’s assets in a 1952 coup d’etat.

So more pleadings and motions and a forthcoming trial. Stay tuned for the next twist.

More Resources:

2010 U.S. Coin Digest, The Complete Guide to Current Market Values, 8th ed.

State Quarters Deluxe Folder By Warmans

Standard Guide to Small-Size U.S. Paper Money, 1928 to Date

Strike It Rich with Pocket Change, 2nd Edition

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