The opinion of the court was delivered by: SOFAER
On September 27, 1903, at approximately two o'clock in the morning, the barge Harold, carrying 400 tons of lead and silver bullion, pitched violently in the waters of the Arthur Kill, off Staten Island, and dumped most of its cargo. The cargo consisted of 7,678 ingots (or "pigs") of silver, each about eighteen inches long. At the time, the Harold was being towed to the cargo owner, American Smelting and Refining Company ("ASARCO"), in Perth Amboy, New Jersey. ASARCO informed its underwriters, Chubb & Son and British Marine Insurance Company (the "Underwriters"), of the loss, and a dredging and diving operation was immediately commenced. Before the operation was terminated on October 16, 1903, an estimated 85% of the silver was salvaged from an area known as Story Flats, between Sewaren, New Jersey, and Staten Island. The unrecovered cargo is assumed to have been left on the bottom of the Kill.
When the Harold silver fell into the Arthur Kill in 1903, the value of the entire cargo was approximately $ 100,000. N.Y. Times, Oct. 17, 1903, at 1, col. 3. At the high price reached by silver about a year ago, the value of the unrecovered cargo alone was estimated to be between $ 80 and $ 100 million, and the parties believe that, even at current prices, the unrecovered cargo is worth between $ 10 and $ 20 million. As silver prices have increased, both commercial and amateur divers in the United States have taken an increased interest in diving for the treasure. The Treasure Divers' Guide, published in 1972, contains a description of the Harold incident drawn from an article in the New York Times of October 17, 1903, and from other publicly available sources. J. Potter, Treasure Divers' Guide 480-81 (1972).
This case involves a dispute among three separate groups of divers for the right to attempt to salvage any remaining silver from the Harold cargo. The Underwriters, ASARCO, and perhaps others may, at a future time, dispute title to whatever silver is recovered. At present, however, the parties agree that ownership of the silver is irrelevant. The competing groups all base their claims on the maritime law of salvage.
The plaintiffs who commenced this suit-referred to collectively as the "Hener Group"-are amateur divers who sought to enjoin the United States Coast Guard, and, more generally, the United States, from enforcing a safety zone that precluded them from diving operations on and near Story Flats. The intervenor-plaintiff, Ocean Salvage, Inc., comprises divers and investors led by Robert P. Hooper (the "Ocean Group") who also have been prevented from diving in the Coast Guard's safety zone. The intervenor-defendant, American Divers, Inc., is a company recently formed by a third group of divers and investors (the "American Group"), who seek to recover the Harold silver from a stretch of the Arthur Kill that encompasses Story Flats. Although the Coast Guard established the safety zone at the request of the American Group, it asserts that doing so was necessary and within its discretion and disclaims any interest in who may dive or who owns any silver that is recovered. The Coast Guard has joined the parties in asking this Court to answer the underlying questions of maritime law (salvage and ownership), after which it will reexamine its maintenance of the safety zone with a view toward implementing the Court's decision. Transcript of Hearing 14-15 (June 26, 1981).
The Hener Group originally sought a preliminary injunction to prevent the Coast Guard from interfering with its operations. The Ocean Group, seeking to protect its own operations, eventually joined this application; the American Group opposed it. Because the Coast Guard has agreed to the zone's modification to accommodate the judicially declared rights of the parties, however, it was unnecessary and inappropriate to review the legality of plaintiffs' exclusion from the safety zone before determining the rights of the three competing groups.
A several-day hearing was held to afford all interested parties a full opportunity to present testimony and documentary evidence. At its conclusion, the parties agreed to treat the record as complete for a final adjudication of which groups are entitled to attempt to salvage the silver. Transcript of Hearing 876 (July 15, 16, 17, & 22, 1981) (hereinafter cited "Tr."). See Fed.R.Civ.P. 65(a)(2); SEC v. North Am. Research & Dev. Corp., 511 F.2d 1217, 1218 (2d Cir.), cert. denied, 423 U.S. 830, 96 S. Ct. 49, 46 L. Ed. 2d 47 (1975). On the basis of the findings and conclusions set forth below, the Court entered an order on August 17, 1981, that declares that the Ocean Group is entitled to search for silver at the site believed by Robert Hooper to be the original excavation (the "Hooper site") and that the American Group is entitled to act as salvor everywhere else in the Coast Guard's safety zone, except for a buffer zone extending 300 feet in all directions from the Hooper site.
The Hener Group's original complaint challenged the Coast Guard's enforcement of a safety zone that excluded Hener from diving in the vicinity of Story Flats. When the complaint was filed, the propriety of reviewing a discretionary Coast Guard order prior to exhaustion of administrative remedies seemed doubtful. Since then, two developments have dispelled any doubts about jurisdiction. First, the Coast Guard has itself sought to have this Court adjudicate the disputes among the competing divers and meanwhile has suspended its own administrative processes. Second, the Ocean Group intervened, filing a complaint that rests jurisdiction squarely on 28 U.S.C. § 1333 (1976), which grants federal courts jurisdiction over all cases that involve admiralty or maritime claims. In the absence of any exhaustion bar, section 1333 supports jurisdiction here. As Judge Randall reasoned in Treasure Salvors, Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 640 F.2d 560, 566-68 (5th Cir. 1981) ("Treasure Salvors III "), jurisdiction lies in federal court to adjudicate a maritime salvage dispute between would-be salvors who submit themselves to the court's in personam jurisdiction. Under Treasure Salvors III, this Court would have jurisdiction even if the cargo sought to be raised were beyond the territorial limits of the United States: although rights to the cargo "may be the subject of the dispute, the adverse parties in this situation are the competing salvors." Id. at 567. In any event, the cargo here is well within this nation's territorial waters, within the control if not the geographic area of this District, and hence within the jurisdiction of this Court. Cf. State of Florida, Dep't of State v. Treasure Salvors, Inc., 621 F.2d 1340, 1346-47 (5th Cir. 1980) ("Treasure Salvors II ") (admiralty in rem jurisdiction generally requires res to be in district but ancillary process available if major portion of res within court's "control").
II. Governing Legal Principles
All the parties contemplate a three-step process for deciding the issues in the case. First, they suggest, this Court should decide who is entitled to salvage the silver, and where in the Kill and under what conditions those who are entitled to salvage may do so. Each of the three competing parties of salvors claims to have been the first salvor, and each claims an exclusive right to search and salvage from part or all of the area known as Story Flats. The Court's salvage decision would be followed by a period during which the parties permitted to salvage would, under judicial and other governmental supervision, attempt to recover the cargo. When salvage operations cease, or at any other time specified by the Court, a second trial would be held, this one limited to the issue of who owns any recovered property. If the Court then found that the property was abandoned, it would distribute the property to its finders. If the Court found that title to the property remained in its prior owner, it would identify and return the property to that owner and go on to determine the appropriate salvage fees. Both the parties that claim title to the silver-the Underwriters and ASARCO-are satisfied to allow the three would-be salvors to compete for the right to salvage; neither attempts to assert its alleged title as a bar to salvage, the Underwriters having expressly abandoned an earlier effort to do so. See Brief on Behalf of Applicants-Interveners at 11-15 (June 26, 1981); Transcript of Hearing 6-7 (July 8, 1981).
The contemplated procedure, under which competing salvage claims are adjudicated before title to the silver is determined, is in fact the proper method for handling this novel case. The propriety of the suggested procedure, however, is far less certain than the parties assume. The law of salvage and the law of finds, not always distinguished by admiralty courts, lead to different results in this case. As a consequence, it is essential to decide which law should govern this proceeding. For several reasons, the law of salvage is the preferable set of principles to apply, even though the property sought to be salvaged may ultimately be found to have been abandoned. Applying that law, the record establishes with little doubt which parties qualify as salvors and are therefore entitled to an opportunity to try to recover the Harold's silver.
A. Application of the Law of Finds
The common law of finds treats property that is abandoned as returned to the state of nature and thus equivalent to property, such as fish or ocean plants, with no prior owner. The first person to reduce such property to "possession," either actual or constructive, becomes its owner. R. Brown, The Law of Personal Property 15 (2d ed. 1955). A mere "searcher" has no rights in abandoned property even if he succeeds in locating it; in particular, he has no right to exclude others from the attempt to recover it. Any competing searcher is entitled to enter the area where the abandoned property is and to seek to reduce it to his possession, as long as he acts without infringing on the concurrent rights of other searchers. Annot., 63 A.L.R.2d 1369 (1959).
The burden placed on a finder of abandoned property is illustrated by the early American case of Eads v. Brazelton, 22 Ark. 499 (1861). In December 1854, the plaintiff Brazelton found a wreck that had sunk in the Mississippi River in November 1827 bearing a cargo that included shot and bars of lead. After the boat sank, its owners attempted to salvage its cargo and equipment. Much of the cargo was recovered, but some shot and about 3000 pigs of lead were left in the river, abandoned by the owners. Id. at 502, 508. Brazelton intended to raise the sunken lead and, in January 1855, returned to the wreck with a diving boat. He fastened a buoy to a weight that rested on the wreck and, expecting to begin work the next day, left the site. But the press of other business, and the difficulty and danger of the work, led Brazelton to defer the project. Brazelton waited too long. When he was finally ready and able to begin, and he was heading toward the wreck, his boat was passed in the river by the steam-powered Submarine, No. 4, belonging to Eads & Nelson, a firm of wreckers doing business on the Mississippi. On September 28, 1855, Eads found the wreck and began raising the cargo.
In refusing to recognize any of Brazelton's asserted rights in the wreck, the Court found that the wreck's location had been well known and that Eads had found it without exploiting Brazelton's labors. The Court also observed that, although Brazelton had intended to appropriate the wreck and its cargo to himself, he "had not actually appropriated it to himself (and) his intention to possess was useless without detention of the property." Id. at 511. The Court made clear that "Brazelton's act of possession need not have been manual," but he was required to take "such possession of (the wreck and cargo) as their nature and situation permitted." Id.
The opinion of Justice Fairchild in Eads v. Brazelton accurately and comprehensively sets out the law of finds. It refers to, and relies on, a broad range of authorities for its conclusions, and its premise that a finding requires both intent and some form of possession remains accurate. See Edmonds v. Ronella, 73 Misc.2d 598, 599, 342 N.Y.S.2d 408, 410 (Sup.Ct.1973); R. Brown, supra, at 15-32. According to a modern restatement of the Eads doctrine, "(t) he orthodox view of possession regards it as a union of the two elements of the physical relation of the possessor to the thing, and of intent ... (, but that) power over the thing which the nature of the thing itself permits me to exercise is sufficient." R. Brown, supra, at 21. In Eads, for example, had Brazelton placed his boat over the wreck with the means to raise its valuables, and had he persisted in "efforts directed to raising the lead," his conduct would have constituted "the only effectual guard over it" and thus a judicially recognizable warning that other "longing occupants" would have been obliged to regard. 22 Ark. at 512. See also R. Brown, supra, at 21-22 (possession is the power to exclude others from a "like control," which may be said to exist when others cannot interfere without violating some independent right of person or property).
The law of finds would preclude an award of the property in this case to any of the three competing groups. Although all three groups have made some efforts to locate the Harold silver, none has succeeded. That all three have focused their efforts on Story Flats establishes nothing in their favor. Anyone interested in searching for treasure could readily have discovered from public sources the tale of the Harold and its cargo. However clearly all three intend to take possession of the silver, no silver has been located, let alone possessed or controlled.
In the Treasure Salvors litigation, Treasure Salvors, Inc. ("TSI"), the group responsible for finding the treasure, was awarded title to and an exclusive right to recover the entire cargo, which was scattered over a wide area and portions of which had not yet been located. See Treasure Salvors, Inc., v. Unidentified Wrecked and Abandoned Vessel, -- - F. Supp. -- , No. 75-1416 (S.D.Fla. July 2, 1981). The facts of that case, however, readily justified a ruling for TSI under the law of finds. TSI had not only the intent to acquire the entire cargo but the proven capacity to do so. More important, TSI had recovered a large part of the cargo and had placed the rest within its possession to the extent consistent with the nature of the cargo, and TSI was engaged in systematic, unrelenting work to recover all the remaining cargo from the entire area over which it was scattered.
The courts involved in the Treasure Salvors litigation relied in part on the law of salvage in awarding TSI exclusive rights to unrecovered cargo. See, e.g., id. at 11 ("(TSI) is engaged in a salvaging operation coupled with a discovery procedure that goes with a "finds' situation ...."); id. at 12 (quoting Judge Mehrtens's original Order of Summary Judgment, dated Feb. 2, 1970, which confounds the law of salvage and the law of finds) ("General principles of maritime and international law dictate that an abandonment constitutes a repudiation of ownership, and that a party taking possession under salvage operations may be considered a finder under the doctrine of "animus revertendi,' i. e., the owner has no intention of returning."). But reliance on salvage law was both conceptually unwarranted and unnecessary in the TSI litigation to achieve an otherwise equitable and proper result. All the parties to that litigation assumed that the cargo had been abandoned, and as between TSI and its two most formidable competitors, the United States and the State of Florida, the issue of ownership to the cargo had already been adjudicated. Treasure Salvors I, supra; Treasure Salvors II, supra. TSI was an adjudicated finder, and hence owner. Here, by contrast, none of the competing parties is a finder. Thus, if the property was in fact abandoned, no party would have the right as a finder to exclude any of the others from participating in the search. Indeed, no party would have the right to exclude any other would-be finder from any area except perhaps the precise location at which each party chose to place its equipment and personnel. The mere chase of silver no more establishes its possession than the chase of wild beasts. See, e.g., Pierson v. Post, 3 Caines 175, 2 Am. Dec. 264 (N.Y.1805).
B. Which Law Governs: Salvage or Finds?
In cases in which property has actually been found, as it was in Treasure Salvors, or in which property has been affirmatively forsaken, see Brady v. The S.S. African Queen, 179 F. Supp. 321, 324 (E.D.Va.1960); Wiggins v. 1100 Tons, More or Less, of Italian Marble, 186 F. Supp. 452, 456-57 (E.D.Va.1960), the distinction between finds and salvage may seem unimportant. But in most salvage cases, including this one, the differences between these two doctrines are highly material. Indeed, Martin Norris, a leading commentator, has expressed concern about the implications of the "(s)everal modern (maritime) cases that have applied the rule of "find' with its concomitant dogma of "finders keepers' to instances of long lost and abandoned wrecks." 3A M. Norris, Benedict on Admiralty: The Law of Salvage 11-14 (7th ed. rev. 1980) (footnote omitted). According to Norris, the law of finds should apply in maritime cases only to long-lost wrecks, openly abandoned property, and things found in seas or rivers that were never the property of any person. Id. at 11-15. In fact, admiralty has historically disfavored the law of finds, preferring instead the distinct policies of the law of salvage.
The law of finds is disfavored in admiralty because of its aims, its assumptions, and its rules. The primary concern of the law of finds is title. The law of finds defines the circumstances under which a party may be said to have acquired title to ownerless property. Its application necessarily assumes that the property involved either was never owned or was abandoned. An owner may rebut that assumption by showing nonabandonment, and the law of finds accommodates this possibility by granting title to the finder against all the world except such an owner. Weeks v. Hackett, 104 Me. 264, 71 A. 858 (1908). To justify an award of title (albeit of one that is defeasible), the law of ...