Orson Welles and the Case of the Missing 'Kane' Oscar

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An Oscar statue stands on the red carpet at the entrance to the Dolby Theatre February 27, prior to the 88th Academy Awards in Hollywood. What happened to the Oscar won by Orson Welles for writing "Citizen Kane" is as intriguing as the movie itself. Lucy Nicholson/Reuters

This article was first published on the Above the Law site.

At the 1942 Academy Awards, Orson Welles won the Best Screenplay Oscar for Citizen Kane. What he did with the statuette next remained a mystery for decades.

When at last the mystery was solved, the Oscar sparked litigation between Welles's daughter, the Academy and a cinematographer with dozens of adult films to his name.

In May 1941, Citizen Kane premiered in New York City. Written, directed, produced and starring Orson Welles, the movie is now regarded as one of the greatest films of all time. Contemporary reviewers praised Citizen Kane as well, and the Academy of Motion Picture Arts and Sciences bestowed nine nominations on the film.

However, it won only one Oscar: "Best Writing" (now known as "Best Original Screenplay") for Orson Welles and co-writer Herman J. Mankiewicz. Welles, no fan of the Academy, did not attend the ceremony.

After winning an Oscar in 1942, Welles continued to work as an actor, director, writer and narrator up until his death in 1985. When Welles's third wife, Paola Mori, died the next year, their daughter Beatrice inherited Welles's estate, including the Citizen Kane Oscar. As a key piece of both Hollywood and Welles family history, the Oscar statuette had considerable value. Unfortunately, no one knew where it was.

Believing the Oscar had been lost or stolen, Beatrice Welles asked the Academy for a replacement. Her father, she told the Academy, lost the Oscar "many years ago through his extensive travelling." The Academy obliged, sending her a replacement Citizen Kane Oscar in 1988.

"Here, Keep This"

In 1994, six years after Beatrice Welles received the replacement Oscar, Sotheby's auction house contacted her with surprising news. It had the original Citizen Kane Oscar.

The Oscar had not been lost or stolen after all. It had been used in 1974 as a prop on Orson Welles's still-unfinished film The Other Side of the Wind. When filming wrapped, Orson Welles handed the statuette to the film's cinematographer, Gary Graver, and said, "Here, keep this." Graver did just that, believing the Oscar was now his. He promptly put it in storage, where it remained until 1994.

Graver continued to work with Orson Welles up until the director's death in 1985. He also built a colorful résumé filming and directing numerous adult films. In 1994, the same year Graver directed Hard-on Copy and Tail Taggers 101, he sold the Citizen Kane Oscar to a company called Bay Holdings for $50,000. Separately, Bay Holdings had agreed with Sotheby's to auction the statuette with a minimum reserve bid of $250,000. When Beatrice Welles learned of the auction, she sued Graver and Bay Holdings to obtain the statuette.

In court documents, Graver claimed that Orson Welles gave him the Citizen Kane Oscar as a gift and as partial compensation for his cinematography work on Welles's films. According to Graver, over the course of their 15-year working relationship, Orson Welles had given him numerous items as a token of friendship—the Citizen Kane Oscar among them.

Providing little reasoning or factual context, the California court found that Orson Welles "did not intend a gift…but rather that Graver would take only custody of the Oscar statuette as any other prop for Orson's use in the future."

The court also determined that Graver had "secreted and hid his possession of the Oscar" until he sold it to Bay Holdings. Although Graver told the court he had received many gifts from Orson Welles, when Graver spoke with Beatrice Welles at her father's funeral in 1985, he did not mention to her that he had the original Citizen Kane Oscar in storage. In fact, Graver told Beatrice Welles that he had nothing of her father's to remember him by except personal memories.

The court found that Bay Holdings, through its president Peter Golding, knew Graver's claim to ownership was questionable, and also knew that Graver had never told Beatrice Welles of the Oscar's whereabouts. Ultimately, the court awarded the Citizen Kane Oscar to Beatrice Welles.

Cashing in on Kane?

In 2001, Beatrice Welles was struggling financially as result of funding her animal welfare work. With two Oscars on her shelf—the original Citizen Kane Oscar and the replacement—she decided to part with one.

Deciding which of the two statuettes to sell was not difficult. When Beatrice Welles accepted the replacement Citizen Kane Oscar in 1988, she agreed not to sell it without first offering it to the Academy for $1:

Gentlemen:

I hereby acknowledge receipt from you of replica No. 2527 of your copyrighted statuette, commonly known as the "Oscar," as an award for Orson Welles, Original Screenplay – "Citizen Kane". . . .

In consideration of your delivering said replica to me, I agree to comply with your rules and regulations respecting its use and not to sell or otherwise dispose of it, nor permit it to be sold or disposed of by operation of law, without first offering to sell it to you for the sum of $1.00.

Designed to thwart the market for Oscar statuettes, the agreement Beatrice Welles signed was similar to agreements Oscar winners have signed since 1950. While legal luminaries like Richard Epstein have questioned the validity of the agreement, the major auction houses honor it, and generally refuse to offer up Oscars awarded since 1950.

With strings attached to the replacement, and no restrictions on the sale of pre-1950 Oscars, Beatrice Welles decided to sell the original Citizen Kane Oscar. Although parting with this heirloom was difficult for her, Beatrice reasoned that her father "loathed everything that [the Citizen Kane] Oscar represented." So, "to sell the one thing that had no value to him, but was of great value to others, perhaps was not so bad after all."

But, when Christie's informed the Academy of the auction, the Academy persuaded the auction house not to go forward with it. According to the Academy, the agreement Beatrice Welles signed for the replacement Oscar in 1988 granted it rights in the original Oscar as well. The Academy pointed to the agreement's addendum, which stated:

Any member of the Academy who has heretofore received any Academy trophy shall be bound by the foregoing receipt and agreement with the same force and effect as though he or she had executed and delivered the same in consideration of receiving such trophy.

Through the addendum, the Academy sought to capture statuettes previously won, and subject them to the mandatory "$1 buy-back" rule. The Academy considered the original Citizen Kane Oscar to be "heretofore received" by a "member of the Academy." But, Beatrice Welles, not her father, had signed the 1988 agreement. And Beatrice Welles, the Academy admitted, was not a member of the Academy who had previously won an Oscar.

Faced with this factual hurdle, the Academy asked the court to ignore the actual language of the addendum. It claimed that the language was a "technical error"—the result of relying on boilerplate language contained in the standard Oscar winner agreement. The Academy said the court should honor its unwritten intent to restrict the sale of all Oscars regardless of the holder's membership status.

The court declined the Academy's invitation. Instead, the court interpreted the language of the addendum as written. Because that language prohibited Oscar sales by previous Oscar winners—which Beatrice Welles admittedly was not—it could not apply to her sale of the original Citizen Kane Oscar. She was free to sell it.

And the Oscar Goes To…?

Several years later, after the appeals and other legal dust settled, Beatrice Welles sold the Citizen Kane Oscar for an undisclosed sum. In 2011, the Oscar resurfaced and was sold to an anonymous buyer for $861,542.

Although a court determined that Orson Welles did not intend for Gary Graver to permanently keep the Citizen Kane Oscar, nothing could keep Graver from working for Welles—even after the director's death. Graver spent more than 35 years working to complete The Other Side of the Wind—the very movie on which Orson Welles allegedly gifted the Oscar statuette to Graver.

Graver made a rough cut of the film and raised funds for its completion. But legal complications, including a lawsuit by Beatrice Welles, delayed the project. Graver died in 2006, before realizing his goal to release The Other Side of the Wind.

But in 2015, an Indiegogo campaign raised more than $400,000 to complete the film, and the film's IMDB page indicates it may finally be released later this year.

Samantha Beckett (not her real name) is an attorney with more than 10 years of experience.