Title: People ex rel. Illinois Historic Preservation Agency v. Zych
Citation: N/A
Docket Number: 84514
State: Illinois
Issuer: Illinois Supreme Court
Date: April 15, 1999

People ex rel. Historic Preservation v. Zych  (Ill. S.Ct.)

Opinion filed April 15,
1999.
CHIEF JUSTICE FREEMAN delivered the opinion of
the court:
Plaintiff, the State of Illinois ex rel. Illinois
Historic Preservation Agency and Department of Transportation (State), brought this
declaratory judgment action seeking a determination that it owned the remains of the shipwrecked
Lady Elgin under the
Abandoned Shipwreck Act of 1987 (Act) (43 U.S.C. §2101 et seq. (1988)). The trial
court found that title to the wreck belonged
to defendant, CIGNA Property and Casualty Insurance, as the successor in interest to the ship's
original insurer, Aetna Insurance
Company, which had acquired ownership after the ship sank in 1860. The appellate court reversed,
concluding that CIGNA had
abandoned any interest in the ship and that ownership of the wreck thus vested in the State. 292 Ill.
App. 3d 1084. We granted
defendants' petition for leave to appeal (166 Ill. 2d R. 315 ) and now reverse the appellate court and
affirm the circuit court. We
note that two amicus curiae briefs have been submitted in support of the State; one by
Columbus-America Discovery Group, and
another jointly by the following organizations: National Trust for Historic Preservation; Advisory
Council on Underwater
Archaeology; Association for Great Lakes Maritime History; Council of American Maritime
Museums; Institute of Nautical
Archaeology; Landmarks Preservation Council of Illinois, Inc; National Conference of State Historic
Preservation Officers; North
American Society for Oceanic History; Society for American Archaeology; and Society for Historical
Archaeology.
BACKGROUND
As the facts of this case were sufficiently set forth by the
appellate court, we reiterate only those essential to our determination.
The Lady Elgin met her demise in September 1860 as a result of a collision with the
lumber schooner Augusta during inclement
weather. Aetna Insurance Company paid the Lady Elgin's owner, Gurdon S. Hubbard,
$11,993.20 on the loss in full satisfaction
of its obligations under a policy covering the ship and her cargo. Thereafter, the wreckage remained
submerged and undiscovered
until 1989, when defendant, Harry Zych, a professional salvage diver, located it off the coast of
Highland Park. Zych first
participated in an unsuccessful search for the Lady Elgin in 1969, with local divers. In
1971 or 1972, after extensively researching
the shipwreck and its potential location, Zych began his own search for the vessel. Gradually updating
and improving his search
equipment, Zych ultimately located the ship using a "sidescan sonar." Although Zych acknowledged
that his search was not full
time, it was nonetheless arduous. The vessel had broken into pieces and was scattered over several
miles, and proved to be some
distance from the area originally reported. After the shipwreck, the vessel retained very little salvage
value; its primary value
today derives from its historical significance.
Shortly after locating the wreck Zych notified Ivan Avery,
an officer of a CIGNA company, regarding his discovery, prompting
Avery to search CIGNA's archives for documentation concerning the ship. In April 1990, Zych
formed defendant, the Lady Elgin
Foundation (Foundation). The Foundation and CIGNA executed an agreement under which CIGNA
transferred its interest in the
wreckage to the Foundation in exchange for 20% of the gross proceeds from any sale of property or
artifacts subsequently
recovered from the vessel.
Following the disposition of Zych's
in rem admiralty case (see 292 Ill. App. 3d at 1087 (discussing federal litigation)), the
State
commenced the instant action for declaratory and injunctive relief under the Act. The complaint
alleged that the Lady Elgin was
an "abandoned shipwreck" under the Act and that the State was thus vested with title. See 43 U.S.C.
§2105(c) (1994). At the
ensuing bench trial, the State attempted to prove that (1) Aetna had never obtained title to the
shipwreck in the first instance,
because it had refused to accept "abandonment," or ownership of, the wreck; and (2) even if Aetna
had taken title, CIGNA
subsequently abandoned any claim or interest it may have held by failing to make any effort to recover
the ship until it was
discovered by Zych in 1989. The evidence presented consisted of the testimony of several expert
witnesses and six pieces of
correspondence pertaining to the ship which were recovered from CIGNA's archives. When
questioned as to why CIGNA did
not have additional documentation, Avery testified that it was Aetna's practice at that time to keep
policy and claim information
at the field office handling the particular claim. Avery believed it was quite likely that additional
documents pertaining to the
claim of the Lady Elgin had been retained at Aetna's Chicago office; however, that
office had been completely destroyed in the
Chicago Fire of 1871.
Each of the six letters retrieved were drafted in 1860,
either by Aetna's vice-president, Thomas Alexander, or its president, E.G.
Ripley. In the first letter, Alexander informed agents in Aetna's Chicago office, Hunt and Hubbard
(also the ship's owner), that he
had been notified of the loss and that Aetna "hope[d to] escape any claims on *** cargo." The second
letter was from Alexander
to Captain E.P. Dorr, an Aetna agent in Buffalo, New York, noting that the Augusta
had "been libelled for $42,000" and
inquiring whether this had been done at the instance of the owners of the Lady
Elgin. The next letter, to an agent in Cincinnati,
noted that policies covering the Lady Elgin were $5,000 for the hull and $2,500 for the
cargo. In the subsequent letter, Ripley
notified Hubbard and Hunt that Aetna wished to pay the claims on the ship as soon as they could be
proved, and instructed the
agents to prepare the claims and pay them. On October 10, 1860, Alexander again wrote to Hubbard
and Hunt, stating, in
relevant part:
The final letter of
November 15, 1860, from Alexander to Hubbard and Hunt notes the payment of $11,993.20 "in full
of policy
on Lady Elgin."
Evidence of Aetna's Initial
Acquisition of Ownership
The Lady Elgin was a total loss, and Aetna's
payment to Hubbard on the claim considerably exceeded that provided under the
policy for the ship. After an insurer pays a claim on a total loss, it has the prerogative either to reject
or accept "abandonment" of
the remains of the insured vessel. An acceptance of abandonment means that the underwriter is vested
with complete title to the
wreckage including any rights or liabilities that may attach. The expert testimony of Ivan Avery and
George Stellwag established
that once the insurer pays on the loss, ownership of the wreckage passes automatically to that insurer,
and it is unnecessary for
the claimant to make an express tender of abandonment. Avery testified that in 1860, in the vast
majority of cases of total loss,
the practice of underwriters was to accept ownership of the insured wreckage. Avery further testified
that he had "no question"
that Aetna had accepted abandonment of the Lady Elgin. This opinion was partially
based upon the notation in one of the letters
that the Augusta had been "libelled for $42,000." According to Avery, this fact played
a very important role in Aetna's decision
to accept title, because it represented the amount that Augusta was likely going to have
to pay in damages to the owners of the
Lady Elgin. If Aetna accepted abandonment, it would obtain the right to these damages
through subrogation.
The State called Victor Simone as a marine insurance
expert. Simone testified that an insurance company's determination of
whether to accept or reject abandonment is unrelated to its decision to pay a claim, because the latter
decision merely turns upon
whether the claim falls within coverage. Simone testified that it was common for insurance companies
to refuse abandonment,
and that he believed Aetna never acquired title to the Lady Elgin because (1) in
response to a request to admit promulgated by
the State, Aetna conceded that "on October 10, 1860," it had "not accepted" abandonment of the
ship; (2) there was no evidence
that Aetna acquired title; and (3) common sense dictated rejection of the wreckage because it would
be difficult to salvage and
had little salvage value. Addressing the statement in the letter of October 10, 1860, regarding Captain
Dorr's instruction not to
accept abandonment, Simone testified that this clearly showed that Aetna would not accept ownership
of the vessel. Stellwag
gave a contrary opinion, however, testifying that Captain Dorr's "instruction" was merely a
recommendation, and that it was too
early for a final decision by Aetna because the claim on the loss had not yet been paid.
Evidence of CIGNA's Alleged
Abandonment of Ownership
It was undisputed that neither Aetna nor CIGNA had
attempted to salvage the Lady Elgin until Zych discovered the wreck and
entered into the agreement with CIGNA. However, testimony of the parties' experts proved that until
relatively recently, such
efforts would have been extremely painstaking and economically impractical. The State's expert,
Robert Kutzleb, described
various methods available in 1860 by which the lake could be "dragged," and then, when an item was
"snagged," divers
dispatched to retrieve it. Defense experts, however, dismissed this method as impractical in this case
because the Lady Elgin had
broken into many pieces and the bottom of Lake Michigan was replete with rocks and
debris.
Defense expert Martin Klein testified that, as late as 1960,
salvage technology was still "very rudimentary." Klein acknowledged
that the sidescan sonar ultimately used to discover the ship was available in 1967; however, it was
still in its infancy and very
costly. In Klein's opinion, given the existent salvage and navigational technology, the chances of the
Lady Elgin having been
discovered prior to 1989 were "almost negligible." This was primarily because the wreckage was
scattered and proved to be
miles away from the location commonly reported. This was substantially corroborated by Zych, who
also testified as a defense
expert.
In ruling in favor of defendants, the trial court first
rejected the State's contention that Aetna had refused abandonment, and
concluded that the company had accepted title to the wreckage in 1860 when it paid the claim under
the policy. The court then
went on to find that the State had failed to prove that CIGNA subsequently abandoned its interest.
The court was persuaded by
the fact that CIGNA had preserved for 129 years the six pieces of correspondence evidencing its
coverage of the ship, certain
details of the claim, and its payment on the loss. The court further found that CIGNA's failure to
search for the wreckage was
justified by the fact that the necessary equipment to conduct such a search was unavailable until the
1970s.
On appeal, the court agreed with the trial court that Aetna
had acquired title to the shipwreck in 1860; however, with one justice
dissenting, the court reversed the determination that CIGNA had not subsequently abandoned its
interest. The court accepted the
State's argument that, "as a matter of law, Aetna abandoned any interest when it made no effort to
recover the wreckage, did not
explore the possibility of recovering the wreckage, and displayed no interest in the ship for a period
of 129 years." 292 Ill. App.
3d at 1094. The appellate court placed particular emphasis on CIGNA's failure to attempt to locate
the shipwreck even after the
technology to do so became available in the late 1960s or 1970s.
ANALYSIS
The Act provides that states have management
responsibilities over a broad range of resources, including "certain abandoned
shipwrecks, which have been deserted and to which the owner has relinquished ownership rights with
no retention." 43 U.S.C.
§§2101(a), (b) (1994). Under the Act, a state is vested with title to any such shipwreck which is, in
relevant part, (1) embedded
in the submerged lands of that state; or (2) on the state's submerged lands and included in or
determined eligible for inclusion in
the National Register. 43 U.S.C. §§2105(a), (c) (1994). The Act itself does not define the term
"abandoned"; however, the
Supreme Court recently directed that the meaning of "abandoned" under the Act be determined in
accordance with its meaning
under admiralty law. California v. Deep Sea Research, Inc., 523 U.S. 491, ___,140 L. Ed. 2d 626, 640, 118 S. Ct. 1464, 1473
(1998).
We first consider the State's contention that Aetna never
accepted title to the shipwreck in the first instance. The courts below
concluded that Aetna had succeeded to ownership in 1860 when it paid insurance on the loss. In
support of its argument that
Aetna had rejected such ownership, the State again points to the evidence upon which it relied in the
trial and appellate courts:
(1) the letter of October 10, 1860, from Alexander to agents Hubbard and Hunt, noting Captain
Dorr's "instructions not to
accept an abandonment of the vessel"; and (2) the alleged concession by CIGNA in its response to
the State's request to admit
facts.
We disagree with the State's argument. First, it was
undisputed that shortly after the October 10, 1860, letter was written, Aetna
paid Hubbard $11,933.20 on the loss. The expert testimony showed that under established maritime
law, title passes
automatically to the insurer upon payment of the loss, unless the insurer affirmatively rejects such
title. This principle is
recognized in the regulations promulgated under the Act, which state:
See also
Deep Sea Research, Inc. v. Brother Jonathan, 883 F. Supp. 1343, 1351 (N.D. Cal.
1995). We find no evidence that
Aetna rejected such a passage of title. In fact, Avery testified that most insurers in Aetna's position
did accept abandonment, and
that he had no doubt that Aetna had done so in this case. As to Alexander's statement in the October
10 letter, we agree with the
opinion of defense expert Stellwag that it appeared to reflect merely Captain Dorr's opinion or
recommendation rather than any
final decision by Aetna to reject abandonment.
The State also points to one of its requests to admit facts,
which sought an admission that "Aetna refused or declined to accept
abandonment of the Lady Elgin." CIGNA responded: "Admitted that on October 10,
1860, an abandonment of the Lady Elgin
was not accepted by Aetna." (Emphasis added.) We agree with the appellate court that
this statement does not mean that
ownership was conclusively refused by Aetna or that it was not later accepted. This is especially so
in light of CIGNA's response
to a subsequent request to admit by the State, which provided that "[a]t no time did Aetna or CIGNA
accept an abandonment of
the Lady Elgin," and to which CIGNA replied, "DENIED."
Defendants next argue that the appellate court invaded
the province of the trier of fact when it reversed the determination that
CIGNA had not abandoned its interest in the ship. In response, the State argues that Aetna and
CIGNA's "complete disinterest"
in the ship for 129 years, and, in particular, CIGNA's failure to undertake salvage efforts after
technology made it possible in the
1970s, requires a conclusion that CIGNA had abandoned its interest.
In general, a finding of abandonment is considered a
factual determination (Nunley v. M/V Dauntless Colocotronis, 863 F.2d 1190, 1198 (5th Cir. 1989); Friedman v. United States, 347 F.2d 697, 704 (8th Cir.
1965)), which this court will not disturb
unless it is against the manifest weight of the evidence (In re Application of the County
Treasurer, 131 Ill. 2d 541, 549 (1989)).
Where there are different ways to view the evidence, or alternative inferences to be drawn from it,
we accept the view of the trier
of fact as long as it is reasonable. See Application of the County Treasurer, 131 Ill. 2d 
at 549; Commercial Mortgage &amp; Finance
Co. v. Life Savings of America, 129 Ill. 2d 42, 49 (1989); see also Anderson v. City
of Bessemer City, 470 U.S. 564, 573, 84 L. Ed. 2d 518, 528, 105 S. Ct. 1504, 1511 (1985). It is irrelevant whether we may have reached a
different result were we the trier
of fact; it is not the function of this or any other reviewing court to reweigh evidence.
As the Act fails to define abandonment, we look for
guidance to the regulations promulgated under the Act and the definition of
the term under admiralty law. The regulations define "abandoned shipwreck" as "any shipwreck to
which title voluntarily has
been given up by the owner with the intent of never claiming a right or interest in the
future and without vesting ownership in
any other person." (Emphasis added.) 55 Fed. Reg. 50116, 50120 (1990). This definition generally
comports with long-recognized maritime law which characterizes abandonment as the act of leaving
or deserting property without the hope of ever
recovering it or the intention of returning to it. 3A Benedict on Admiralty §134 (7th ed. 1980);
Zych v. Unidentified, Wrecked &amp;
Abandoned Vessel, Believed to be the SB "Lady Elgin", 755 F. Supp. 213, 214 (N.D. Ill.
1991). In order to prove abandonment,
a party must show (1) an intent to abandon, and (2) acts carrying that intent into effect.
Zych, 755 F. Supp.  at 214. As always, the
burden of proving an abandonment lies with the party who relies on it. See generally Brunotte
v. DeWitt, 360 Ill. 518, 533
(1935); Burns v. Curran, 275 Ill. 448 (1916). It is incumbent upon that party to prove,
by strong, convincing and unequivocal
evidence, that the owner freely intended to relinquish ownership. Zych, 755 F. Supp. 
at 214; see also Columbus-America
Discovery Group v. Atlantic Mutual Insurance Co., 974 F.2d 450, 461 (4th Cir. 1992); see
generally Brunotte, 360 Ill.  at 533;
People v. Dorney, 17 Ill. App. 3d 785, 787-88 (1974).
Generally, admiralty law is reluctant to find a repudiation
of ownership. Title to articles lost at sea remains in the owner, and a
salvor does not gain ownership merely by finding the property. 3A Benedict on Admiralty §150, at
11-1 through 11-2 (7th ed.
1980), citing The Akaba, 54 F. 197 (4th Cir. 1893). With these principles in mind,
courts have recognized that when articles are
lost at sea, "lapse of time and nonuser are not sufficient, in and of themselves, to constitute an
abandonment." See Columbus-America, 974 F.2d  at 461, quoting Wiggins v.
1100 Tons, More or Less, of Italian Marble, 186 F. Supp. 452, 456 (E.D. Va.
1960) (requires proof of a "clear and unmistakable affirmative act" indicating purpose to repudiate
ownership).
Nonetheless, it is well established that abandonment can
be either express or implied, and may, and often must, be determined
based upon circumstantial evidence of intent. Moyer v. Wrecked &amp; Abandoned Vessel
Known As the Andrea Doria, 836 F. Supp. 1099, 1105 (D.N.J. 1993), citing Wiggins v. 1100 Tons, More or Less, of Italian
Marble, 186 F. Supp. 452, 456 (E.D. Va.
1960); see also Zych, 755 F. Supp.  at 214. Lapse of time and nonuse may give rise to
an inference of abandonment, particularly
when coupled with a failure to come forward in an action to claim ownership rights (Bemis v.
RMS Lusitania, 884 F. Supp. 1042,
1049 (E.D. Va. 1995), citing Columbus-America, 974 F.2d at 461) or a disinterest in
pursuing salvage efforts (see, e.g., Moyer,
836 F. Supp. at 1105). However, in light of the strong policy against abandonment, an owner is not
required to undertake a
search for the vessel where the lack of technology would make the search infeasible or futile.
Moyer, 836 F. Supp.  at 1105, citing
Zych, 755 F. Supp.  at 216; Deep Sea Research, Inc. v. Brother Jonathan,
102 F.3d 379, 388 (9th Cir. 1996), vacated on other
grounds, 143 F.3d 1299 (9th Cir. 1998).
In this case, the appellate court's reversal was based upon
its conclusion that, as a matter of law, CIGNA had shown complete
disinterest in the ship even after technology existed to find the vessel. Although that court cast its
decision as reduced to a
question of law, we believe it was, instead, an improper reevaluation of disputed facts.
First, the trial court found it significant that for over a
century, Aetna and CIGNA had preserved the six letters which evidenced
Aetna's coverage and ultimate ownership of the Lady Elgin. The appellate court
dismissed this fact by saying that the rationale
for such continued preservation "cannot be known for certain" (292 Ill. App. 3d at 1098); however,
experts Avery and Stellwag
indicated that this manifested the insurers' interest in the ship. Avery further indicated that there most
likely had been additional
documentation concerning the Lady Elgin stored in CIGNA's Chicago office, but that
this office was completely destroyed in the
Chicago Fire. This was appreciable evidence of an intent not to abandon, and the appellate court erred
in disregarding it.
Second, the appellate court focused upon CIGNA's failure
to search for the ship. Expert testimony showed nearly conclusively,
however, that efforts to locate the wreckage prior to the 1970s would have been highly impractical
to virtually impossible.
CIGNA was not required to embark upon an impracticable salvage excursion in order to escape a
finding of abandonment.
Indeed, defense expert Klein gave the opinion that, even in the 1970s, the sidescan sonar was "still
in its infancy," and that in light
of the existent salvage and navigational technology, and the broken condition of the wreckage, any
efforts to locate the ship prior
to 1989 would have proved "almost negligible." Under the facts of this case, a failure to pursue
salvage efforts did not equate to
a "complete disinterest" in the ship. It is significant that as soon as CIGNA learned of Zych's
discovery of the shipwreck, it
immediately entered into an agreement with the Foundation and then came forward to assert its rights
in court. Such
circumstances have been held persuasive proof of an intent not to abandon. Cf.,
Columbus-America, 974 F.2d  at 462; Martha's
Vineyard Scuba Headquarters, Inc. v. Unidentified, Wrecked &amp; Abandoned Steam
Vessel, 833 F.2d 1059, 1065 (1st Cir. 1987).
This is consistent with the Act's regulations, which state that abandonment requires an intent of
"never claiming a right or interest
in the future." The evidence sufficiently showed that CIGNA lacked any intent to relinquish its rights.
Accordingly, the appellate
court erred in substituting its judgment for that of the trial court.
The State and amici assert that the trial
court applied an improper legal standard in considering whether CIGNA abandoned its
interest in the Lady Elgin; specifically, they maintain that the court required proof that
CIGNA have made an express
renunciation of ownership, rather than accepting circumstantial evidence of abandonment. The
requirement of "express
renunciation" was supposedly imposed by the Fourth Circuit's holding in Columbus-America
(see 974 F.2d  at 472 (Widener, J.,
dissenting)), and was specifically rejected by the court in Fairport International Exploration,
Inc. v. Shipwrecked Vessel Known
As The Captain Lawrence, 105 F.3d 1078 (6th Cir. 1997), vacated &amp; remanded
on other grounds,___ U.S. ___, 140 L. Ed. 2d 790, 118 S. Ct. 1558 (1998); see also Brother Jonathan, 102 F.3d  at
388.
We note in passing that the Supreme Court denied
certiorari in the Columbus-America case. However, even assuming,
without
deciding, that the Columbus-America case was wrongly decided, this does not require
reversal of the trial court in this case. We
are not convinced that the trial court here applied the wrong standard, because it specifically observed
that abandonment could be
proved by inference. In any event, we need not accept the trial court's legal conclusion, as long as its
factual determinations are
supported by the record. As stated above, the relevant findings were amply supported in this case.
Thus, there is no basis for any
finding of error.
In light of our result, we do not reach defendants'
remaining contentions.
CONCLUSION
For the foregoing reasons, the appellate court's decision
is reversed, and the judgment of the circuit court is affirmed.
Appellate court judgment
reversed;
circuit court judgment
affirmed.