Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 4, 1990 TAG: 9004040383
SECTION: VIRGINIA PAGE: B1 EDITION: METRO
SOURCE: The New York Times
DATELINE: NORFOLK LENGTH: Long
But now, a group of insurance companies is trying to prove they own a big piece of that dream. After all, they say, they or their predecessor companies paid off at least $1.2 million in claims back before the Civil War, when a million dollars was a fantastic sum. Therefore, they say, they are entitled to a share, one worth many millions of dollars.
Tuesday, in federal district court here, the legal battle began on those competing claims.
The salvagers and their backers, most of them from Columbus, Ohio, contended that the insurance companies had no reliable records of shipments or insurance payments. They also asserted that the insurers had long ago abandoned any claim to the wreck's cargo and had made no effort to find it or recover it.
The salvagers, on the other hand, have spent mightily, in time and money. For three frustrating years, at a cost put at more than $10 million, the salvors had meticulously searched the sea floor 160 miles east of Charleston, S.C., for the bones of the Central America.
Time and again their space-age sonar had failed to lead them to the old 300-foot side-wheeler, sunk in 1857 by a late-summer hurricane while on the way to New York with a huge cache of gold from the great California rush.
Then came a "ping" with the right sound, a different echo. The Nemo was dispatched.
The return of the submersible, with its armful of riches, set off joyous celebration among the 160 risk-takers who had put up the money for the search for the Central America's booty, estimated to be worth a billion dollars or more to mints and collectors.
The ghosts of the 420 passengers who went down with the ship - only 125 survived - might remain hidden forever in the 8,000-foot-deep waters of the Atlantic, but the gold was coming up.
And so it did, a gleaming ton of it before storms forced the salvagers to return to port to await the calm summer seas of 1990. The Nemo's operators said there were still 2 tons of coins and bars to be recovered.
Tuesday morning, in the U.S. district court here, a group of insurance companies asserted that the gold, or at least a good part of it, belonged to them. They said they had paid off claims on it - or, in some cases, companies they subsequently bought up had paid the claims - and they demanded their share of the salvage.
"We're not here to claim any passenger gold," said James L. Chapman IV, an insurance company attorney, pointing out that many of the coins and bars on board the Central America belonged to gold companies and other business firms.
In court documents, the insurance companies said that the insurers paid out $1.2 million in claims. At the time they paid off, gold was bringing around $1 an ounce, while today it is selling for $375.30 an ounce.
At one point in Tuesday's proceedings, the judge asked the insurance companies' attorneys how they expected to identify their share of the gold. With no reply forthcoming, the proceedings went on. The insurance companies have yet to cite fixed figures.
"We still don't know who it was that was insured 132 years later," said Richard T. Robol, the salvagers' attorney. "The insurance companies are unable to provide the information."
Thomas Thompson, head of the salvage company, Columbus America Discovery Group, told the court he had spent more than 10 years researching records about the loss of the Central America before he finally was able to put to sea. Mostly, he explained, he was putting together "probability maps" of where the wreck might lie.
"The navigational abilities at the time of the loss were not good," he said. "What did the hurricane do to currents? As the ship sank lower in the water, the currents would have had more and more effect and the winds less and less effect. But we were successful. We brought up a ton of gold."
Too successful, opposing attorneys argued.
They contended the salvage company had relied heavily on an earlier bottom survey produced by a Columbia University study. That, they argued, entitled the university to be a party to the case. The judge on Tuesday allowed the university to intervene.
Further, an attorney was present Tuesday to keep an eye on things for the state of New York, because the ship was headed for New York when it sank.
The judge, Richard B. Kellam, wondered aloud at one point how many other interests might try to weigh in on the case and its tremendous wealth before the matter was finally cleared up.
"I'm going to try all the issues in this in one trial and get it over," he warned attorneys on both sides of the bench.
In fact, there were so many lawyers and so many law documents in the court Tuesday morning that they spilled over into the public seating area. One team used a handcart to haul in its materials.
The case, which for the most part involves admiralty law, a particularly arcane legal concept, has already broken some legal ground.
Kellam ruled shortly after the wreck was discovered that the Columbus salvage team had the right to bring up the gold, though not necessarily the right to claim it, because its robot had photographed the wreck with television cameras and had mechanically recovered parts of it.
Previously, claims to wrecks had been based on whether a diver had reached them, either in person or inside a submersible. The Nemo is unmanned.
The new principle has been dubbed "tele-possession."
by CNB