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ZYCH v. UNIDENTIFIED

January 4, 1991

HARRY ZYCH, d/b/a AMERICAN DIVING AND SALVAGE CO., Plaintiff,
v.
The unidentified, wrecked and abandoned vessel, believed to be the SB "LADY ELGIN," Defendant


Ilana Diamond Rovner, United States District Judge.


The opinion of the court was delivered by: ROVNER

ILANA DIAMOND ROVNER, UNITED STATES DISTRICT JUDGE

 I. INTRODUCTION

 This admiralty action commenced on August 28, 1989, when plaintiff Harry Zych, doing business as American Diving and Salvage Co., filed an in rem complaint against a shipwreck located in Lake Michigan and believed to be the "Lady Elgin." The complaint asserted that the ship was abandoned and that he was the rightful owner pursuant to the law of finds. The Court issued a warrant for arrest of the vessel on August 28.

 On September 13, 1990, the Court granted the State's motion to dismiss on the ground of immunity. Zych v. Lady Elgin, 746 F. Supp. 1334 (N.D. Ill. 1990). Because there remained an apparent dispute between Zych and the Foundation over ownership of the vessel, the Court did not dismiss the case in its entirety. However, the Court expressed concerns as to whether there was a case or controversy, and it directed Zych and the Foundation (both of whom were represented by the same attorney) to file reports showing why the case should not be dismissed in its entirety. 746 F. Supp. at 1351 n. 16.

 After receiving the parties' submissions, the Court granted the Foundation leave to file its claim and answer on the condition that it retain independent counsel and that plaintiff pursue his adverse claim of title. The Court also set a briefing schedule for dispositive motions. The parties have filed memoranda concerning the merits of the Foundation's claim, and that issue is now pending.

 II. OWNERSHIP

 The Foundation asserts that the Aetna Insurance Co. became the owner of the shipwreck when, in 1860, it paid out $ 11,993.20 on the loss pursuant to an insurance contract covering the vessel and her cargo. In April of 1990, the Foundation executed an agreement with CIGNA, the successor of Aetna. Pursuant to that agreement, CIGNA transferred its ownership interest in the shipwreck to the Foundation in exchange for twenty percent of the gross proceeds of the sale of any property or artifacts from the shipwreck. Accordingly, the Foundation contends that it now has title to the wreck.

 Zych asserts title pursuant to the law of finds. The law of finds awards title of abandoned property to the first finder who takes possession of the property with intent to exercise control over it. See generally Zych, 746 F. Supp. at 1343. Zych concedes the facts alleged by the Foundation but argues that CIGNA abandoned the vessel. The sole dispute between Zych and the Foundation is whether the vessel has been abandoned.

 Abandonment is the voluntary relinquishment of one's rights in a property. Mucha v. King, 792 F.2d 602, 610 (7th Cir. 1986). It occurs "by an express or implied act of leaving or deserting property without hope of recovering it and without the intention of returning to it." Columbus-America Discovery Group, Inc. v. Unidentified, Wrecked and Abandoned Sailing Vessel, 742 F. Supp. 1327, 1335 (E.D. Va. 1990), quoting 3A Benedict on Admiralty § 134 (7th ed. 1980). It must be voluntary, with a positive intent to part with ownership, and without coercion or pressure. Katsaris v. United States, 684 F.2d 758, 762 (11th Cir. 1982).

 To show abandonment, a party must prove (1) intent to abandon, and (2) physical acts carrying that intent into effect. Chemical Sales Co. v. Diamond Chemical Co., 766 F.2d 364, 368 (8th Cir. 1985); Columbus-America, 742 F. Supp. at 1335; Hoelzer v. City of Stamford, 722 F. Supp. 1106, 1111 (S.D.N.Y. 1989); State of Idaho v. Oregon Short Line Railroad Co., 617 F. Supp. 213, 217 (D. Idaho 1985). Abandonment may be inferred from all of the relevant facts and circumstances. United States v. Sylvester, 848 F.2d 520, 525 (5th Cir. 1988); Katsaris, 684 F.2d at 762; Columbus-America, 742 F. Supp. at 1335. A finding of abandonment must be supported by strong and convincing evidence, Chemical Sales, 766 F.2d at 368, but it may, and often must, be determined on the basis of circumstantial evidence. Katsaris, 684 F.2d at 762; Columbus-America, 742 F. Supp. at 1343.

 The first document is a letter dated September 11, 1860, from Thomas Alexander, an officer of Aetna, to Gordon Hubbard and a Mr. Hunt. Hubbard was an agent of Aetna and also owned the Lady Elgin, and Hunt was his partner. In the letter, Alexander states that he has been informed of the ...


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