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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
YUKON RECOVERY, L.L.C.,
Plaintiff-Appellant,
No. 98-36015
v.
D.C. Nos.
CERTAIN ABANDONED PROPERTY, in
CV-96-00270-HRH
rem,
CV-96-00304-HRH
Defendant,
OPINION
OCEAN MAR, INC.,
Claimant-Appellee.
Appeal from the United States District
Court
for the District of Alaska
H. Russel Holland, Chief Judge, Presiding
Argued and Submitted
December 6, 1999--Seattle, Washington
Filed March 7, 2000
Before: Thomas M. Reavley,1 Stephen
Reinhardt and
M. Margaret McKeown, Circuit Judges.
Opinion by Judge Reavley
_________________________________________________________________
1 The Honorable Thomas M. Reavley,
Senior United States Circuit
Judge for the United States Court of
Appeals, Fifth Circuit, sitting by des-
ignation.
2541
COUNSEL
David Bederman, Gambrell Hall, Emory
University, Atlanta,
Georgia, for the plaintiff-appellant.
John A. Treptow, Kessal, Young &
Logan, Anchorage,
Alaska, for the claimant-appellee.
Richard Robol, Colombus, Ohio, for
the amicus.
_________________________________________________________________
OPINION
REAVLEY, Circuit Judge:
This is a contest for salvage rights
to gold cargo in a ship-
wreck lying for a century on the bottom
of the inland passage
near Juneau. Yukon Recovery, L.L.C.
(Yukon) appeals the
judgment in favor of Ocean Mar, Inc.
(Ocean Mar) granting
rights to salvage the SS Islander.
Yukon asserts that the dis-
trict court applied the wrong standard
of proof, erred in its rul-
ing on abandonment, and erred in granting
exclusive salvage
rights to Ocean Mar. We affirm.
2546
HISTORY OF THE CASE
The following facts are undisputed.
The Islander sank in
1901 near Juneau en route from Skagway,
Alaska to Vancou-
ver, British Columbia. The Islander
routinely carried Royal
Canadian mail along with cargo and
passengers. Many
attempts to salvage the Islander were
unsuccessful because
the technology required to conduct
salvage operations at that
depth and water temperature did not
exist at that time. Despite
the lack of technological sophistication,
an ingenious salvage
effort by the salvage company called
the Curtis/Wiley Group
raised approximately two-thirds of
the hull in 1934; however,
60 feet of the forward section had
broken from the vessel and
remained on the ocean floor. Ocean
Mar determined the loca-
tion of the wreck during expeditions
to the site in 1993 and
1994 and executed a salvage contract
in 1995 with Marine
Insurance Company ("MIC")
for salvage of any gold insured
by MIC recovered from the site. In
1996 Yukon mounted an
expedition to the site of the wreck
and recovered a 1930's
whiskey bottle and a light fixture
from the area.
Yukon filed an in rem action seeking
arrest of the artifacts,
title to vessel and cargo at the wreckage
site, exclusive rights
as salvor of the wreckage site and
injunctive relief against
competing salvors. Ocean Mar, having
obtained its salvage
contract from MIC, was en route to
conduct salvage activities
at the site in 1996 when it was notified
of a temporary
restraining order obtained by Yukon.
Ocean Mar appeared in
the action brought by Yukon and filed
a separate action seek-
ing exclusive salvage rights. After
consolidation of the cases,
the district court held a bench trial
on the merits, and entered
findings of fact and conclusions of
law.
The district court found the following
facts by a preponder-
ance of the evidence. The Islander
sank with a large shipment
of gold owned by the Canadian Bank
of Commerce (CBC)
sent by registered mail. MIC insured
the gold and paid a claim
entitling MIC to subrogation rights
in the gold. The gold ship-
2547
ment was contained in a forward
section of the vessel and
therefore remained on the ocean floor
after the 1934 salvage.
Theodore Jaynes, the owner of Ocean
Mar, carried out exten-
sive research into the Islander and
her cargo starting in 1989.
Robert Mester, the owner of Yukon,
conducted far less pri-
mary research and gathered information
largely from other
researchers. Mester acquired portions
of Ocean Mar's propri-
etary funding proposal, which increased
the urgency of his
efforts to mount a competing salvage
effort. Ocean Mar has
all the financial and professional
resources required to salvage
the remaining cargo of the Islander.
Neither Yukon nor Ocean
Mar has obtained or retained actual,
continuous and exclusive
possession or occupancy of the wreckage
site of the Islander
or the surface of the water above the
site.
The district court concluded that
Ocean Mar was the first
in modern times to find, observe, record
and make a timely
claim for the wreckage of the Islander.
Arrest of the light fix-
ture did not entitle Yukon to any priority
over a contract sal-
vor. Because competition would endanger
lives, equipment,
and artifacts, it is unsafe and technically
unfeasible for two
salvors to simultaneously work the
wreckage site. Because it
conducted thorough historical investigation
and was the first
in recent times to locate the wreckage
of the Islander, Ocean
Mar is entitled to exclusive salvage
rights, even absent actual
possession or physical presence at
the site. The district court
concluded that MIC has not abandoned
its rights in the gold
and Ocean Mar is entitled to perform
its salvage contract for
the gold cargo owned by MIC.
The district court dismissed Yukon's
petition, granted
Ocean Mar exclusive rights to salvage
the Islander, and
enjoined Yukon from exploring or conducting
salvage opera-
tions at the Islander site. The district
court ordered Ocean Mar
to submit a salvage plan, keep detailed
records of all property
raised at the wreckage site and sequester
all gold and other
property raised for the determination
of ownership rights
under the court's continuing jurisdiction
over the case.
2548
POINTS OF APPEAL1
Yukon asserts that the district
court should have applied a
clear and convincing standard of proof
to the determination of
MIC's rights in the cargo, and that
the evidence conclusively
establishes that MIC abandoned any
interest it held in the
cargo. Yukon further argues that its
in rem arrest of artifacts
from the wreck site requires the district
court to grant it exclu-
sive rights as salvor in possession.
Alternatively, Yukon
asserts that the district court should
have granted it access to
the wreck as co-salvor.
PROOF OF MIC'S OWNERSHIP
The district court held that, absent
abandonment, MIC is
the owner of the Islander's gold. It
reached this conclusion by
finding that MIC had insured the gold
and paid the insurance
claim, entitling it to subrogation
rights in the gold. Yukon
argues that the district court's finding
of fact is clearly errone-
ous because the court evaluated the
evidence under the wrong
burden of proof.
[1] We reject Yukon's challenge
to the burden of proof
employed by the district court, because
both Yukon and
Ocean Mar agreed below that the question
of the ownership
of the gold was governed by the standard
the district court
employed. Before the district court,
Yukon sought a finding
_________________________________________________________________
1 Yukon has filed a motion to strike
Ocean Mar's brief on the grounds
of lapse of corporate status for failure
to pay Delaware franchise taxes.
Ocean Mar responds with a request to
take judicial notice of its reinstate-
ment. The capacity of a corporation
to sue and be sued is determined
according to the laws of the jurisdiction
where the corporation is orga-
nized. Fed. R. Civ. P. 17(b). Delaware
law provides an automatic three
year extension of corporate existence
for the purpose of prosecuting or
defending any lawsuit begun prior to
or within three years after corporate
dissolution. See City Investing Co.
Liquidating Trust v. Continental Cas.
Co., 624 A.2d 1191, 1195 (Del. 1993)
(citing 8 Del. C. S 278). The motion
to strike is denied.
2549
of fact on this issue under the
preponderance-of-the-evidence
standard. On appeal, however, Yukon
for the first time asserts
that MIC's subrogation rights must
be proved by clear and
convincing evidence. Yukon argues that
the law of Alaska
requires clear and convincing evidence
in the absence of doc-
umentary proof of an insurance policy
and payment of a
claim. Alternatively, Yukon also argues
that it is entitled to
invoke the English law of marine insurance
which requires
proof by a heightened evidentiary standard.
We need not
address Yukon's arguments regarding
choice of law, how-
ever, because it may not now argue
against the
preponderance-of-the-evidence standard
that it asked the dis-
trict court to apply at trial. If the
district court erred (and we
do not suggest that it did), the error
was invited.
[2] Putting aside its untimely argument,
Yukon has not
challenged the sufficiency of the evidence
to support the dis-
trict court's subrogation finding under
the standard of proof
applied at trial. Review of the record
demonstrates that there
is sufficient evidence to support the
district court's finding as
to MIC's subrogation rights in the
Islander cargo under the
preponderance-of-the-evidence standard,
and that the finding
is not clearly erroneous.
PROOF OF ABANDONMENT2
[3] Yukon argues that two pieces
of evidence conclusively
demonstrate that MIC abandoned any
interest it may have in
the cargo of the Islander. Yukon argues
that MIC's failure to
file a claim in the 1901 admiralty
limitation of liability pro-
_________________________________________________________________
2 Admiralty salvage cases occasionally
employ the term "abandonment"
for two distinct meanings. One meaning
is the same as "derelict" which
refers to circumstances where the master
or owner is no longer in physical
possession of the vessel. Title to
a derelict vessel is held by the owner
unless its title has been "abandoned"
according to the second meaning of
this term, which renders the vessel
subject to the law of finds rather than
salvage. For the sake of clarity, the
term "abandonment" is used here only
to refer to property in which title
has been abandoned.
2550
ceeding brought by Canadian Pacific
Navigation Company
conclusively establishes that MIC abandoned
its interest in the
cargo. The district court found that
it was not unusual that
MIC declined to file a claim, which
was supported by testi-
mony from an expert witness on insurance
practices. This
conclusion is not unreasonable given
that the limitation fund
included only the value of the Islander's
lifeboats and a small
amount of freight due on the voyage.
The only preclusive
effect of failure to file a claim in
the limitation proceeding is
that it bars recovery from CPNC, which
is not the equivalent
of abandonment of title to lost property.
Neither of these parties claim any
connection with the 1934
salvage operation by Curtis/Wiley,
but Yukon claims that this
operation conclusively establishes
MIC's abandonment of any
claim to the cargo. First, Yukon argues
that because the sal-
vage was partially successful, the
district court erred in ruling
that the technology to salvage the
Islander did not exist until
very recently. Because the district
court relied on the lack of
technology as a factor in its determination
that MIC's inaction
did not constitute abandonment, Yukon
argues that the 1934
salvage proves that the district court
should not have relied on
the absence of technology as a factor.
[4] The 1934 salvage effort failed
to bring up the section
of the ship containing the mail gold
storage hold because the
bow of the ship had broken free from
the remainder of the
hull. There is nothing to suggest that
the extremely primitive,
although ingenious, technology utilized
in the 1934 salvage
was a viable method for recovering
the forward section of the
Islander; therefore the failure to
attempt a second salvage with
the same technology does not constitute
evidence of abandon-
ment of the cargo in the forward holds.
Both Yukon and
Ocean Mar used the most modern sonar
and remote diving
technology to locate and explore the
remaining wreckage field
and Yukon cannot reasonably contend
that the same results
could have been accomplished with the
technology available
in the 1930's. It is only by virtue
of modern technological
2551
advances that the current salvage
attempt is within the realm
of possibility. The district court
properly acknowledged that
lack of technology is one factor to
consider in determining
whether inaction constitutes abandonment.
See Deep Sea
Research, Inc. v. The Brother Jonathan.3
[5] Yukon proceeds with an entirely
different tack to argue
that failure to object to the 1934
salvage is direct evidence of
abandonment because MIC should have
asserted its rights
during the commencement of the salvage.
The problem with
this argument is that MIC was not required
to object to the
1934 salvage in order to preserve its
claim to the cargo. Sal-
vage law grants the salvor only a superior
right of possession
to recovered property, and not title,
until a court has passed
on title and a salvage award. See Treasure
Salvors, Inc. v. The
Unidentified Wrecked And Abandoned
Sailing Vessel (Trea-
sure Salvors III);4 Henerv. United
States.5 The 1934 salvor
failed to raise the mail gold, and
title to the gold was not then
at issue.
The district court heard substantial
testimony, reviewed
copious exhibits, and determined from
all the facts and cir-
cumstances that MIC had not abandoned
its rights in the gold.
Neither the limitation proceeding nor
the 1934 salvage consti-
tute conclusive evidence to the contrary.
The district court
applied a preponderance of the evidence
standard to the ques-
tion of abandonment, and the sufficiency
of the evidence to
support the district court's determination
has not been directly
challenged in this appeal.
_________________________________________________________________
3 102 F.3d 378, 388 (9th Cir. 1996)
(Aff'd in part, vacated in part
California v. Deep Sea Research, Inc.,
523 U.S. 491 (1998)).
4 640 F.2d 560, 567 (5th Cir. 1981).
5 525 F. Supp. 350, 357 (S.D.N.Y. 1981).
2552
EXCLUSIVE SALVAGE RIGHTS
[6] Yukon contends that the district
court erred in granting
exclusive salvage rights to Ocean Mar
and not to Yukon.
Yukon argues that the Islander is abandoned
property and
therefore the salvage contract between
Ocean Mar and MIC
is ineffective to confer priority on
Ocean Mar. Yukon further
argues that it is entitled to priority
because it was the first to
file an in rem proceeding and present
artifacts from the wreck
site for arrest. Because the presentation
of artifacts is merely
a jurisdictional mechanism, Yukon is
mistaken in its assertion
that being first to arrive at the courthouse
confers priority
rights as a salvor.
[7] The premise of Yukon's first
argument is untenable
because the district court's finding
regarding abandonment is
undisturbed on appeal. Even if the
premise were correct and
the cargo had been abandoned, Yukon's
claim to priority does
not flow automatically by virtue of
its filing for in rem arrest.
Filing an in rem arrest of recovered
items merely confers in
rem jurisdiction in the district court
over the recovered prop-
erty. See Martha's Vineyard Scuba Headquarters,
Inc. v. The
Unidentified, Wrecked and Abandoned
Steam Vessel.6 Filing
an in rem petition for arrest of artifacts
does not automatically
confer exclusive rights to a site as
salvor in possession. See
MDM Salvage, Inc. v. The Unidentified,
Wrecked and Aban-
doned Sailing Vessel;7 See also Indian
River Recovery Co. v.
The China;8 Marex Titanic, Inc. v.
The Wrecked And Aban-
doned Vessel, RMS Titanic.9 Because
an in rem complaint and
admiralty arrest of recovered artifacts
merely confer jurisdic-
_________________________________________________________________
6 833 F.2d 1059, 1062 (1st. Cir. 1987).
7 631 F. Supp. 308, 312 (S. D. Fla.
1986).
8 645 F. Supp. 141 (D. Del. 1986) (first
to file in rem complaint enjoined
from salvage activities).
9 805 F. Supp. 375, 377 (E. D. Va.
1992) (exclusive salvage claims
between first to file and intervenor
requires trial on the merits.) (rev'd on
other grounds, 2 F.3d 544 (4th Cir.
1993)).
2553
tion in the district court, and
do not automatically create
exclusive salvage rights, Yukon's basis
for claiming salvor in
possession status fails.
[8] Yukon further challenges the
award of exclusive sal-
vage rights to Ocean Mar. Courts frequently
use actual or
constructive possession of the wreck
site as grounds for a
grant of exclusive salvage rights.
See Treasure Salvors III,
640 F.2d at 572; Hener, 525 F. Supp.
at 357; Cobb Coin Co.,
Inc. v. The Unidentified, Wrecked and
Abandoned Sailing
Vessel.10 To maintain an exclusive
franchise, the salvor must
undertake ongoing salvage operations
with due diligence
which are clothed with some prospect
of success. Martha's
Vineyard, 833 F.2d at 1061. The district
court found that
Ocean Mar had all the resources necessary
to successfully sal-
vage the remaining cargo of the Islander;
however, because
the district court found that neither
Yukon nor Ocean Mar had
obtained actual, continuous and exclusive
possession or occu-
pancy of the wreckage site of the Islander
or the surface of the
water above the site, possession cannot
be utilized to deter-
mine exclusive salvage rights.
[9] The failure of the parties to
engage in ongoing salvage
operations is understandable in light
of the changes in salvage
law wrought by the Abandoned Shipwreck
Act (ASA). 11
Apart from this change, salvage law
encourages salvors to
undertake risks to rescue imperiled
maritime property through
generous salvage awards by admiralty
courts. Treasure Sal-
vors III, 640 F.2d at 567. The expenditures
required to estab-
lish constructive possession and ongoing
salvage operations
for sunken ships were justified by
the prospect of a grant of
exclusive salvage rights and a liberal
award from any sal-
vaged property. Therefore courts could
expect that salvors
would establish occupancy and engage
in ongoing salvage
prior to the institution of legal proceedings.
_________________________________________________________________
10 525 F. Supp. 186, 195 (S. D. Fla.
1981).
11 43 U.S.C. S 2101, et seq.
2554
Under the ASA, however, salvors
seeking to raise long lost
wrecks in state waters can no longer
engage in ongoing sal-
vage operations with confident expectations
of a liberal sal-
vage award to compensate them for the
investment. Under the
ASA, the United States asserts title
to all abandoned ship-
wrecks that are embedded in the submerged
lands of a state,
embedded in the coralline formations
protected by a state on
submerged lands of a state, or on submerged
lands of a state
and either included or eligible for
inclusion in the national
register.12 The ASA transfers title
in all such shipwrecks to the
state in or on the land of which the
shipwreck is located.13 The
laws of salvage and finds do not apply
to shipwrecks subject
to S 2105 of the ASA.14
The ASA creates uncertainty when
a salvor cannot deter-
mine in advance whether a wreck is
"abandoned " or
"embedded" and therefore
subject to the ASA and questions
of fact to be decided by the court.
A salvor could expend
immense resources to locate, survey
and salvage a wreck only
to have the court later rule that the
salvor is entitled to nothing
because the ASA displaces the law of
salvage. Both of the
parties to this litigation have expended
significant resources
to locate the Islander but prudently
avoided costly salvage
operations which could have resulted
in a total loss under the
ASA. Because neither party established
occupancy and ongo-
ing salvage operations, we must look
to other factors for the
determination of exclusive salvage
rights.
[10] The grant of exclusive salvage
rights is subject to equi-
table considerations. See Treasure
Salvors III , 640 F.2d at 573
("equitable considerations come
into play in determining the
legal protection afforded a finder.");
Hener , 525 F. Supp. at
358 (admiralty courts may be flexible
in determining whether
a salvor has commenced an operation
worthy of protection.);
_________________________________________________________________
12 43 U.S.C. S 2105(a).
13 43 U.S.C. S 2105(d).
14 43 U.S.C. S 2106(a).
2555
See also R.M.S. Titanic, Inc. v.
The Wrecked and Abandoned
Vessel.15 In addition to occupancy
and prospects of success,
courts have looked to a variety of
other equitable factors to
analyze competing salvage claims. For
example, courts con-
sider whether the salvor has conducted
independent historical
research on the vessel and has acted
in good faith. See Deep
Sea Research, Inc. v. The Brother Jonathan.
16 Courts also
grant exclusive rights to the first
finder over subsequent
finders.17 See Martha's Vineyard, 833
F.2d at 1065; The
China, 645 F. Supp. at 144; Deep Sea
Research, 883 F. Supp.
at 1361 (first finder of lost wreck
may acquire exclusive rights
to salvage).
[11] The district court made several
specific findings that
support its decision to grant Ocean
Mar exclusive salvage
rights. The district court found that
Ocean Mar was the first
in modern times to find and claim the
wreckage of the
Islander. The district court also found
that Ocean Mar's
research into the history of the Islander
was by far more thor-
ough than Yukon's. The district court
also found that Yukon's
acquisition of Ocean Mar's proprietary
information concern-
ing the estimated value of the gold
cargo influenced Yukon's
attempt to mount a competing salvage
operation. All of these
findings are supported by evidence
in the record and support
the district court's decision to award
exclusive salvage rights
to Ocean Mar.
[12] The district court also concluded
that Ocean Mar was
entitled to priority by virtue of its
status as a contract salvor.
Yukon contends that the district court
erred in conferring pri-
_________________________________________________________________
15 924 F. Supp. 714, 720 (E. D. Va.
1996).
16 883 F. Supp. 1343, 1362 (N. D. Cal.
1995).
17 The term "Finder" as used
in salvage cases does not necessarily mean
that title to the vessel is abandoned
and therefore subject to the law of
finds. The exclusive rights to salvage
a vessel may be awarded to the first
to discover the location of a lost
ship wreck even if the title to the wreck
is still vested in the original owner.
2556
ority on the basis of contract salvor
status. We find little direct
authority on this point; however, the
precedents that exist sug-
gest that a contract salvor may be
granted priority over a vol-
unteer salvor. See Vol. 3A, M. Norris
Benedict On Admiralty:
The Law of Salvage, S 152 (7th Ed.
rev. 1997); See Quantity
of Iron.18 We also note authority for
the proposition that an
owner may reject salvage by a volunteer.
See Platoro Ltd.,
Inc. v. Unidentified Remains Of A Vessel.19
It is reasonable
that the law should support the right
of an owner to select a
salvor for shipwrecked property rather
than be subjected to a
salvage award granted to a volunteer.
The district court prop-
erly granted priority to Ocean Mar
by virtue of its equitable
claim as first finder and its salvage
contract.
CO-SALVOR STATUS
[13] Yukon argues that the district
court should have
granted it rights as co-salvor of the
Islander. As indicated
above, the first finder is entitled
to exclusive salvage rights so
long as it engages in diligent efforts
clothed in some prospect
of successful salvage. Ocean Mar, as
first finder, is entitled to
this protection and Yukon has not presented
any compelling
reason for departing from the rule.
In addition, the district
court specifically found that co-salvage
would endanger lives,
valuable equipment, and artifacts from
the site because it
would create competition to recover
the gold cargo. The dis-
trict did not err in refusing Yukon's
request for co-salvor sta-
tus.
AFFIRMED.
_________________________________________________________________
18 20 F. Cas. 120 (D. Mass. 1862).
19 695 F.2d 893, 901 (5th Cir. 1983).
2557
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