No. 98-36015
                                                                                     D.C. Nos.

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-


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.



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.



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-


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.



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.


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.


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.


[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.


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


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).



[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)).


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.


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).


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.


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.


[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-


18 20 F. Cas. 120 (D. Mass. 1862).
19 695 F.2d 893, 901 (5th Cir. 1983).