Art Talk is a series of rotating columns which explore current issues in the art market.

    · Limits of Ownership 1
    · Limits of Ownership 2
    · Statute of Limitations
    · The Discovery Rule
    · Nazi Confiscated Art
    · Abandoned Property
    · Taxation



an excerpt from
by Aaron Milrad

The Law Relating to Abandoned Goods

Common Law-Classification of Found Property
In common law, found property is classified into four categories:
1. abandoned property;
2. lost property;
3. mislaid property; and
4. treasure trove.

These categories comprise different entitlements to ownership.60

Abandoned Property-U.S. Law
Property is abandoned when its owner gives it up absolutely, voluntarily relinquishing possession with the intention of terminating ownership and without vesting it in any other person.61 An act of abandonment includes both the intention to abandon and the external manifestation of abandonment in fulfillment of that intention.62

It has been repeatedly held by the courts that intention is the most important factor in determining whether abandonment has occurred, as there can be no abandonment without the intention to abandon. Abandonment is therefore tantamount to throwing away property. The finder of an abandoned object has a right to title to the object against all others, including the former owner.63 Such a finder would acquire title by occupancy, namely by taking possession of "property without an owner" with the intention of appropriating the property for her or his own use.

Special rules of abandonment apply in some cases. For example, the U.S. government may not abandon its title to certain of its property without an act of Congress, although it may abandon the use of such property.64 Also, wrecks (defined narrowly as property cast on shore after a shipwreck and broadly as shipwrecked goods in general) may be treated somewhat differently from other abandoned property. In British common law, a wreck belonged to the Crown unless it was reclaimed by the true owner within a year and a day from the date the goods were seized by the finder. Although that is also accepted in the United States, it has been held in some cases that no length of time will divest the owner of property found afloat in the sea.65 Modern courts tend to take the view that, once abandoned, a wreck has no owner.

Lost Property
Property is legally "lost" when the owner has parted with its possession involuntarily, whether through negligence, carelessness, or inadvertence, and does not know its location. Thus, an object that was voluntarily laid down is not lost, even if the owner has forgotten where it is. (Such an object is classified as "mislaid" property and is discussed below.)

In common law, the finder of lost property acquires title to the property if he or she appropriates it with the intention of taking possession. Merely finding the property does not result in acquisition of title. The title so acquired is good against all but the true owner of the property. However, as is discussed below, this common-law rule has been superseded in many jurisdictions by statutes setting out detailed procedures for dealing with lost goods.

Mislaid Property
When the owner of property voluntarily and intentionally puts property somewhere and subsequently forgets where it is, the property is mislaid. Thus, for example, an art object found carefully concealed is more likely mislaid than lost. In common law, the finder of mislaid property acquires no ownership of the property; it belongs to the owner of the premises on which the property is found, against all but the true owner.66

Treasure Trove
Treasure trove may be seen as a type of mislaid or lost property. It is usually defined as any found gold, silver, coin, or currency concealed by the owner. In order for property to be classified as treasure trove, its owner must be unknown or likely to be dead, as the treasure has been hidden for a long time.67 Usually, if the owner can be identified, the property is not treasure trove. The finder of treasure trove takes title to it against all but the true owner. Some jurisdictions have declined to recognize the concept of treasure trove.68

There has been substantial interest in sunken ships and the artifacts found within and about sunken ships in recent years. The discovery of the Titanic has led to discussions as to the appropriateness of removing artifacts from sunken ships. As well, it has attracted the interest of treasure hunters who seek the lost bullion and treasures of abandoned ships.

In the United States, both the federal government and individual states have passed legislation as "trustees of the public interest" to ensure protection of the historical and archaeological significance of shipwrecks.69

Historically, the British and Canadian courts have found that title to abandoned property found on or under the sea is vested in the Crown. The U.S. rule, however, was that title to such recovered ships and artifacts belonged to the finder unless there was legislation providing that it belonged to the state or federal government. In either situation, the property must have been abandoned; that is, the owner must have expressly and publicly abandoned the property or items recovered from ships sunk long ago, and no owner appears to claim them.70

The U.S. federal government passed the Antiquities Act of 190671 and the Archaeological Resources Protection Act72 of 1979 to assert title to ancient vessels sunk near the coast. The Antiquities Act was an attempt by the United States Congress to deter the plunder of historic American sites. It established a screening process to limit and control access to sites on federal land and required that antiquities be housed in museums or universities.73 However, in Treasure of Salvors Inc. v. Unidentified Wrecked and Abandoned Vessel, the court of appeals ruled that the Antiquities Act applied only to lands owned or controlled by the federal government. Ships outside the territorial waters of the United States are free of any claim by the United States and are "up for grabs."74 For a wreck to fall within the concept of the act, there are three tests that must be met:

1. the wreck must be abandoned;
2. it must be located on the submerged lands of the state in issue; and
3. it must be embedded in the sea floor or determined eligible for listing in the National Register of Historic Places (National Register).

The act then provides that the federal government of the United States may assert title to such wrecks. If title is so asserted, the government may then transfer title to the wreck to the appropriate state for administration, management, and regulation.
Congress then enacted the Abandoned Shipwreck Act of 1987 to protect underwater archaeological treasures in state waters.75

The test for abandonment is the common-law rule of renunciation of title or abandonment inferred by lapse of time and, in the case of wrecks, the failure to pursue salvage efforts by the owner.76

Archaeological Resources Protection Act
The Archaeological Resources Protection Act gave more precise identification than the earlier Antiquities Act to items of cultural significance and their protection. It established a structure to oversee excavation of these items. The archaeological resources were defined as objects more than one hundred years old that constitute "material remains of past human life or activities which are of archaeological significance" and can be removed from federal lands only pursuant to a government permit. If the object is found on tribal land, removal also requires the consent of the tribe, and the object remains the property of the landowner; it must be held in a museum or university and cannot be sold in the private market except to qualifying institutions.78

Place of Finding
In applying the law regarding found property, the place where the object was found may be of significance. This is because property located in a privately owned place is considered to be in the constructive possession and protection of the owner of the place; thus, such property cannot be lost. As property that is not lost cannot be found, the law regarding found goods has no application where a chattel is found in a private place.

In general, when property is found in a place that is not private and is classified as lost property, the finder is not affected by the ownership of the place where it is found.79 However, if the object has been buried or embedded in the soil, the owner of the land takes title against the finder but not against the true owner. Treasure trove is an exception to this rule: the owner of the soil in which treasure trove is found does not acquire title to the treasure by virtue of being the owner of the soil.80

Duties and Liabilities of Finder to Owner
In general, the finder of property must restore the property to its owner if such owner is known. If the owner is unknown, the finder must follow any procedure required by statute for discovering the owner and give any claimant a fair opportunity to inspect the property. It has also been held that the finder of lost property, by taking possession, assumes the duties of a bailee without compensation.81 Such a finder may therefore be liable for any damages caused to the property as a result of not properly carrying out the duties of a bailee, for example, protecting the object.

Statutory Control of Lost (or Found) Goods
Lost property is under statutory control in many jurisdictions. For example, Iowa Code chapter 556F prescribes the following: Any person who finds lost goods or money whose value is at least five dollars must inform the owner, if known. The finder is entitled to ten percent of the value of the goods or money restored to the owner. When the owner is unknown, the finder must, within five days of finding the property, take the property to the county auditor, who enters the description and value of the property, along with the finder's affidavit, into the lost-property book. The finder must then advertise the finding of the property, posting notices at the locations and with the frequency stipulated by the statute. If no person claims the property within twelve months of such posting, the right to property vests irrevocably in the finder. If there is a claimant and the claimant and the finder cannot agree upon true ownership, the matter is to be resolved before a district judge. The statute also stipulates the penalty for failure to comply with the statutory procedure. (Iowa has statutes dealing with property presumed to have been abandoned, also, as in the case of unclaimed funds in a bank account.)

Laws regarding lost goods differ from jurisdiction to jurisdiction. For example, under Michigan's Lost Goods Act, if the true owner is not found within the prescribed time, the value of the goods is divided evenly between the finder and the township in which the goods were found.82

Statutes and Common Law
There are two views as to the scope of the application of statutes such as the Iowa Code discussed above. One view is that such statutes apply only to found property classified under common law as lost property;83 the other view is that statutes concerning lost property apply to all found property, regardless of its common-law category.84

In the former view, lost-goods statutes do not apply to mislaid or abandoned property or to treasure trove (if the jurisdiction recognizes treasure trove); the ordinary rules of common law apply to these categories of found goods. In the latter, broader view, lost-goods statutes have superseded common law, and no preliminary classification of found property is necessary before applying them. The court in the Willsmore case stated that such an expansive interpretation of the Lost Goods Act was desirable because, unlike common law, the act provides certainty of title by vesting clear title after a set period of time; encourages honesty in finders by providing penalties for not complying with the act; provides protection to the finder; and generally provides "a reasonable method of uniting goods with their true owner, and a plan which benefits the people of the state through their local governments."85

About the Author

Aaron M. Milrad is a member of Fraser Milner, Barristers & Soliciters, a Canadian national law firm headquartered in Toronto. At Fraser Milner he provides specialized legal services to clients across Canda, the United States, and other countries who are involved in the visual, performing, and literary arts, music, publishing, media, and mutlimedia. Mr. Milrad also provides consulting services, including strategic planing and marketing for creators, companies, nonprofit organizations, and foundations and tax estate planning for creators, collectors and arts professionals.

To purchase a copy of Artful Ownership, please contact:
American Society of Appraisers, International Headquarters, 555 Herndon Parkway, Suite 125, Herndon, VA 20170

Author's Notes
Note from the Editor

ISBN 0-937828-03-3

Copyright © 2000 by the American Society of Appraisers and Aaron M. Milrad.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical photocopying, recording or otherwise, without the prior written permission of the American Society of Appraisers, P.O. Box 17265, Washington, D.C. 20041. (800)272-8258

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