Justices won't consider case on sunken bullion


WASHINGTON -- An Ohio sea exploration company that invented a robot to go prospecting for California gold -- on the ocean floor -- may get less than the huge payoff it wanted now that its lawyers have been to the U.S. Supreme Court in an unsuccessful search for legal help.

Columbus-America Discovery Group Inc. has been battling in court for more than four years for the right to keep all of the estimated $1 billion worth of gold coins, ingots and bars that its undersea robot has started to pick up from the floor of the Atlantic, about 8,000 feet down.

The gold went down with the S.S. Central America in a heavy storm Sept. 12, 1857, about 160 miles off the South Carolina coast. The Central America, bound for the East Coast, was carrying a cargo of gold being shipped from the California gold fields.

About 450 passengers, including "gold rush" prospectors on their way home, died in the shipwreck; 153 passengers were rescued.

Attempts at salvaging the gold and other valuables from the Central America have been going on since the early 1970s, but no one was successful until Columbus-America found the wreck in 1987.

Two years later, the Columbus company began using its undersea robot to scour the ocean bottom; the robot is capable of picking up objects from the tiny to the very heavy. Since 1989, that device has recovered several hundred million dollars' worth of the treasure.

F. Michael Lorz, a company spokesman, said yesterday that the sunken vessel had more than three tons of gold and that more than a ton has been recovered so far.

With its success at least partly assured, Columbus-America went into court, seeking to get its ownership settled.

Relying on the law's equivalent of the idea of "finders, keepers," the company claimed the entire amount belonged to it. A federal judge upheld that claim.

But the 4th U.S. Circuit Court of Appeals ruled in August that part of the booty must be shared with a group of 25 insurance companies that claim they are the actual owners of the gold. The insurers include those originally interested in trying to salvage the gold -- Atlantic Mutual Insurance Co. and Sun Mutual Insurance Co. Early salvage efforts failed.

The circuit court ruled that the so-called "law of finds" does not apply if an owner shows up with a claim to goods that were located by a treasure-hunting salvager. The finder, the circuit court declared, is entitled to "by far the largest share of the treasure," but not all of it. The own

ers get part of the booty unless they themselves renounced specifically any right to it.

The gold cargo on the Central America had been insured. When Columbus-America went to court to claim all of the gold, the insurance companies that had paid off claims on the insured gold in the mid-1800s showed up to claim ownership themselves. They argued that they had never abandoned their title to the sunken treasure.

Columbus-America tried to take the case on to the Supreme Court, urging the court to rule that when a sunken treasure has been left to lie on the ocean floor, its location not pursued for many decades, it should be treated as the property of no one -- except an ultimate finder.

In a brief order, apparently supported by a unanimous vote, the court refused to hear the appeal, without giving any explanation. The case now goes back to the trial judge to split up the shares of ownership of the cargo as it is brought up.

Mr. Lorz, the Columbus-America's spokesman, said that a trial on the ownership shares is scheduled to start June 29 in Norfolk, Va. The company, using the law as spelled out by the circuit court, will still try to win 100 percent ownership of the gold, Mr. Lorz said.

In a second shipwreck case yesterday, the Supreme Court cleared the way for the U.S. Naval Academy to take ownership of a brass bell recovered from the wreck of a Confederate raiding vessel, the Alabama, which had been sunk by a Union vessel off France in 1864.

Recovered by a British diver in 1936, the bell ultimately was bought in England 14 years ago by a New Jersey antiques dealer, Richard Steinmetz. The Naval Academy refused his offer to sell it, but then the U.S. government moved to claim the bell after the dealer planned to put it up for auction.

Lower courts ruled that the U.S. government had not abandoned its ownership of the vessel, which had been "captured" as a prize of war after it sank. The Supreme Court gave no reason for turning down the antiques dealer who claimed the vessel had been abandoned and thus was open to any claimant under admiralty law's equivalent of the idea of "finders, keepers."


Cases to Be Heard

Home seizures.

The court agreed to define the federal government's power to seize someone's home if the property has been used in drug crimes. A lower federal court, ruling in a case from Hawaii, held that no home may be seized unless the owner is first told of the threat of seizure, and given a chance to challenge it.

Pension plans.

The court agreed to decide whether insurance companies have a legal duty to handle some $565 billion in pension plan assets they are holding to make sure the assets will cover fully the retirement benefits promised by those plans. The issue was taken to the court by John Hancock Mutual Life Insurance Co. in a case involving pension benefits for Unisys Corp. employees.

Thrift executives.

The court said it would rule on a constitutional challenge by thrift institution executives to government orders firing them without a hearing, after the institution failed and was taken over by the Federal Deposit Insurance Corp. The case involves the fired executive vice president of a troubled savings and loan in Oakland, Calif.

Cases Rejected

Video games.

The court cleared the way for a video game company, Lewis Galoob Toys, Inc., to continue selling its Game Genie, which allows the owner of Nintendo games to change the way those games are played. Nintendo of America, Inc., contended that Game Genie, by overriding computer instructions for Nintendo games, was supplanting those copyrighted games by modifying them. A federal appeals court rejected Nintendo's challenge last year.


The court refused to revive a $44 million libel lawsuit filed against Gaithersburg Publishing Co., a subsidiary of The Washington Post Co. and publisher of the weekly Rockville Gazette, and one of its reporters by an unsuccessful city council candidate. The court let stand rulings that the 1989 article Richard L. Arkin sued over was "rhetorical hyperbole" and not libelous.

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