Court Rules Salvage Firm Holds Rights to Wrecked Ship

A salvage company, not the state, holds the rights to the wreckage of the steamer Brother Jonathan, which sank off Northern California in 1865 with about 200 people and perhaps a $50-million treasure, a federal appeals court ruled Wednesday.

Upholding a lower court ruling, the 9th U.S. Circuit Court of Appeals said the state had failed to prove that the entire wreck was abandoned while it lay on submerged state lands off Crescent City.

As a result, Deep Sea Research Inc., which located the wreck in 1993 after obtaining rights from the ship’s insurers, can attempt to salvage its contents. Fletcher Alford, the company’s lawyer, said it hopes to start work in the late summer or early fall, when the weather normally is most favorable.

The ship, carrying from 190 to 225 people, sank in July 1865 after hitting a submerged rock in rough weather. It was the worst maritime disaster in North Coast history.

There are no reliable records of the contents, only rumors of gold and artifacts worth between $25 million and $50 million today.

The company can claim ownership on two grounds, Alford said: as successor to the insurance companies’ title to the insured portion of the cargo, an amount yet to be determined, and as the “first finder” of the remainder of the ship and its contents.

“The law says the first finder of abandoned property becomes the owner,” Alford said. He said the company has agreed to pay insurers a percentage of the value of the insured property.

Deputy Atty. Gen. Linus Masouredis said the state was disappointed by the ruling and would study its options. The state could appeal to the U.S. Supreme Court.

After Deep Sea Research used sonar and divers to locate the hulk, the state claimed ownership under the federal Abandoned Shipwrecks Act of 1987. That law applies to wrecks that are abandoned on a state’s submerged lands, if the wreck is either embedded in the sea floor or eligible for listing in the National Register of Historic Places.

During the state’s appeal, the Brother Jonathan was declared eligible for the national register. But the appeals court said the declaration was not enough because the ship was not legally “abandoned.”

The court cited a newspaper clipping provided by Deep Sea Research from the time of the sinking, listing companies that insured the ship’s cargo. Those companies took title to at least part of the wreck by paying insurance claims, and they ultimately transferred title to Deep Sea Research, the court said.