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'Finders-keepers' rule rejected Court says group that found buried loot can't keep all of it


RICHMOND, Va. -- A federal appeals court has rejected the "finders, keepers" rule for shipwrecked treasure and ruled that salvagers who found up to $1 billion in gold from an 1857 wreck may have to share the booty.

One hundred thirty-five years ago, several insurance companies insured the cargo of the steamship Central America, which was laden with three kinds of gold coins and bricks. The sidewheeler sank in a hurricane 160 miles off Charleston, S.C., on Sept. 12, 1857, and the companies paid the insurance claim.

In 1987, a treasure-hunting group found the muddy wreck and began using a remote-controlled robot to recover the Central America's gold. More than a ton of gold has been pulled from 8,000 feet under water, and a spokesman for the group said the effort could continue for several years.

Half the 16 British and U.S. companies that insured the Central America are still in business. Using newspaper clippings and century-old corporate minutes, the companies filed a legal claim for a share of the treasure.

"Who would abandon millions of dollars' worth of gold?" said Douglas A. Jacobsen of New York City, a lawyer for the insurers. "But insurance companies aren't in the salvage business. Time went by, and now technology made this recovery possible."

In 1990, the U.S. District Court in Norfolk, Va., accepting the principle of finders-keepers, ruled all the treasure belonged to the salvagers. Yesterday, a three-judge panel of the 4th U.S. Circuit Court of Appeals in Richmond reversed that decision and ordered a district court to hold a trial to determine what the companies should receive.

"Although this is a decision that must be left to the lower court," the appeals court ruling said, "we are hazarding but little to say that Columbus-America [the salvagers] should, and will, receive by far the largest share of the treasure."

The ship, bound from Panama to New York City, included many && passengers who had left San Francisco after seeking their fortunes during the gold rush. The vessel, which took 40 hours to sink, took down 425 of the roughly 580 aboard. The others were rescued by passing ships.

"Newspapers reporting the disaster contained vivid accounts of men flinging down their hard-earned treasure in disgust upon realizing their impending doom," yesterday's court opinion said.

Dr. George F. Bass a marine archaeologist at Texas A&M; University, said the Central America may be the most valuable sunken ship ever found. "It's one of the wrecks schoolboys dream about -- one of the great treasure wrecks of all time," he said.

The treasure-hunting consortium, the Columbus-America Discovery Group, based in Columbus, Ohio, is recovering the loot with a device bristling with arms, lights and cameras. The recovered cargo includes a 62-pound gold brick and thousands of uncirculated $20 Double Eagle gold pieces. A vacuum attachment sucks up gold dust.

The 2-to-1 decision yesterday was written by Judge Donald Stuart Russell and joined by Judge Kenneth K. Hall of West Virginia. In a dissent, Judge H. Emory Widener Jr. said, "The passage of over 130 years since the cargo was lost is strong circumstantial evidence of abandonment."

Columbus-America spokesman F. Michael Lorz said the treasure being held "in a vault somewhere in Virginia" but that the exact location is secret.

The 37-degree salt water also preserved two leather passenger trunks containing readable newspapers, a checkbook, and a shirt and full-length dressing gown belonging to a honeymooning couple.

The judges also ordered the lower court to determine whether Columbia University in New York City is entitled to a share of the treasure. In 1984, a Columbia scientist led an expedition that produced a sonar map of a wreck that scientists suspected was the Central America.

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