LOS ANGELES (Reuters) - A Los Angeles nurse found a stolen Stradivarius cello worth $3.5 million next to a dumpster and planned to turn it into a CD cabinet until she discovered it was the instrument the whole town was searching for, her lawyer says.

The "General Kyd" cello, made in 1684 and named for the man who brought it to England, was returned on Saturday to the Los Angeles Philharmonic, which owns it and offered a $50,000 reward for its return, attorney Ronald Hoffman said Tuesday.

Police said the cello was taken from the porch of principal cellist Peter Stumpf on April 24 by a thief riding a bicycle.

Three days later, nurse Melanie Stevens spotted the cello peeking from its silver case beside a dumpster while she waited at a red light. "She recognized it as a musical instrument case because she plays guitar. She wasn't thinking that it was old," Hoffman said.

Stevens, 30, asked a homeless man to help load it into her car and took it home to show her cabinetmaker boyfriend, Igal Asseraf, to see if he could fix a crack in it.

"She said if you can't fix it, we can turn it into a CD case," Hoffman said.

"We are very lucky that Igal was not a person that works real quickly."

The instrument sat in the couple's spare bedroom until last Friday, when Stevens caught the end of a TV news report on the missing cello, and realized she had found the instrument that all of Los Angeles was looking for.

The couple met detectives from the Los Angeles Police Department's art theft detail, who interviewed them extensively to make sure they were not involved with the theft, the lawyer said.

They also contacted officials at the Los Angeles Philharmonic Association, who were "jubilant" at the rare instrument's return, Hoffman added.

He said Stevens was thrilled to learn that she may receive the $50,000 reward for not turning the cello into a CD case.

"My lowest moment came about three days after the theft when it didn't come back to us right away," said Deborah Borda, president of the Philharmonic Assn., which owns the 17th century cello. "If not three days, then it can disappear for 30 years."

Borda learned Sunday afternoon that a cello had been located in an alley off Fountain Avenue and Griffith Park Boulevard. But she could not view the instrument until the next morning.

"I was up all night," she said. "We went as early as we could the next morning.... When I saw the case, even without opening it, I knew it was it."

... On Monday, violinmaker Robert Cauer examined the instrument for several hours at Parker Center, holding it himself while police dusted it for fingerprints.

The cello is being stored in a climate-controlled vault at Cauer's shop. He said the multiple cracks on the top of the cello were unfortunate, but routine as far as damage goes.

"On a Stradivari, everything is repairable," Cauer said. "I have no worries about the sound and look of the instrument."