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Parties Involved:
Herman Ortiz
Appellant
Silbrico Corporation
Appellee

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

SILBRICO CORPORATION, 

an Illinois Corporation, 

Plaintiff/CounterdefendantAppellee, 

FIL.ED 

United States Court of Appeal.s 

Tenth Cirenit 

JUN 2 31989 

ROBERT L. HOECKER 

) Clerk 

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No. 87-2230 

vs. 

HERMAN ORTIZ, 

Defendant/CounterplaintiffAppellant. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW MEXICO 

(D.C. No. CIV-85-159-HB) 

Jonathan B. Sutin of Sutin, Thayer & Browne, Albuquerque, New 

Mexico, for Plaintiff/Counterdefendant-Appellee. 

Steven L. Tucker of Jones, Snead, Wertheim, Rodriquez & Wentworth, 

P.A., Santa Fe, New Mexico, for Defendant/CounterplaintiffAppellant. 

Before HOLLOWAY, Chief Judge, WRIGHT* and BALDOCK, Circuit Judges. 

BALDOCK, Circuit Judge. 

* Honorable Eugene A. Wright, United States Circuit Judge for the 

Ninth Circuit Court of Appeals, sitting by designation. 

Appellate Case: 87-2230 Document: 01019770498 Date Filed: 06/23/1989 Page: 1 
Plaintiff-appellee Silbrico Corporation, as titleholder of a 

perlite processing mill, instituted this suit under 28 u.s.c. 

§ 2201 seeking a declaratory judgment as to the legal effect of 

the mill's surface encroachment upon an unpatented lode mining 

claim owned by defendant-appellant Herman Ortiz. Ortiz 

counterclaimed pursuant to Fed. R. Civ. P. 13 alleging Silbrico's 

breach of a mining lease, forfeiture of the encroaching structure, 

and conversion of eight unpatented lode mining claims. Following 

a bench trial, the district court entered findings of fact and 

conclusions of law in accordance with Fed. R. Civ. P. 52(a). In a 

well-reasoned opinion, the court held that Silbrico had cured its 

breach of the lease and Ortiz had no standing to complain of the 

encroachment in view of section four of the Multiple Use Mining 

Act of 1955, 30 u.s.c. §§ 612. Ortiz appeals only the denial of 

relief with respect to the encroachment issue and his request for 

fees and expenses under an indemnification clause in the lease. 

Appellate jurisdiction arises under 28 u.s.c. § 1291. While we 

review conclusions of law de novo, Fed. R. Civ. P. 52(a) dictates 

that we set aside findings of fact only if clearly erroneous. 

Lujan v. Walters, 813 F.2d 1051, 1058 (10th Cir. 1987). For the 

reasons set forth herein, we affirm. 

Background 

In August 1957, Ortiz located eight unpatented lode mining 

claims in Taos County, New Mexico, respectively referred to as 

Mercy #1 through #8. In December 1960, Ortiz leased the Mercy 

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Appellate Case: 87-2230 Document: 01019770498 Date Filed: 06/23/1989 Page: 2 
claims to United Perlite Corporation. Under the terms of the 

lease, the lessee, in exchange. for royalty payments to the lessor, 

was to mine perlite ore from the claims "for a term of five (5) 

years, and so long thereafter as such ore is produced and shipped 

from said premises in paying quantities." In addition, the lessee 

undertook to "keep the aforesaid claims in good standing" and 

"observe and comply with all applicable Federal and State laws" in 

the operation of the mine. 

United Perlite mined the Mercy claims until October 1969. In 

that month, United Perlite, with Ortiz' written consent, assigned 

the lease to Silbrico. Silbrico expressly agreed to "observe and 

perform all the terms, conditions, obligations and stipulations" 

contained in the lease. During the same period, United Perlite 

also_conveyed to Silbrico certain properties including a perlite 

processing mill thought to sit on a claim separate from·but 

adjacent to the Mercy claims. Silbrico mined the Mercy claims 

without incident until December 1984, when it informed Ortiz that 

royalty payments would cease because his claims had been 

invalidated for noncompliance with the Federal Land Policy and 

Management Act of 1976 (FLPMA), 43 u.s.c. §§ 1701-1784. 

The FLPMA required owners of unpatented mining claims located 

prior to the law's effective date of October 21, 1976, to file, 

within three years of that date, location notices with the Bureau 

of Land Management (BLM). 43 u.s.c. § 1744(a). Additionally, the 

law requires annual filing of a "notice of intention to hold" the 

claims or "an affidavit of assessment work performed'' on the 

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Appellate Case: 87-2230 Document: 01019770498 Date Filed: 06/23/1989 Page: 3 
claims during the past year. Failure to file the prescribed 

documents is "deemed conclusively to constitute an abandonment of 

the mining claim[s]". Id. § 1744(c). See United States v. Locke, 

471 U.S. 84 (1985) (upholding constitutionality of FLPMA's 

recording provisions). Despite the clause in the lease requiring 

the lessee to comply with federal law and keep the claims in good 

standing, Silbrico failed to abide by the FLPMA and preserve the 

Mercy claims. In July 1984, BLM invalidated the claims. 

Ortiz became understandably upset when Silbrico informed him 

in December 1984 that his claims had been invalidated and replaced 

by Silbrico Mining Claims #1 through #23. In January 1985, Ortiz 

gave Silbrico notice of default under the mining lease based upon 

its failure to maintain the Mercy claims and pay royalties. 

Silbrico discontinued mining operations on the Mercy claims in 

April 1985 because of mineral exhaustion. As a result of 

settlement negotiations, Silbrico tendered to Ortiz all 

outstanding royalties due under the lease through April 1985. 

Silbrico further proposed to transfer back to Ortiz his original 

interest in the Mercy claims by relocating Mercy #1 through #8 and 

subordinating Silbrico #1 through #23, save for a reservation 

securing Silbrico's right to operate that portion of the 

processing mill situated on Mercy #1 as revealed by a May 1985 

survey. Ortiz accepted the royalties, but demanded that Silbrico 

pay him $4000 per month rent until the encroachment, one-tenth of 

an acre on a twenty-acre claim, was rectified and reclamation was 

complete. 

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Appellate Case: 87-2230 Document: 01019770498 Date Filed: 06/23/1989 Page: 4 
I• 

Applying the Muitiple Use Mining Act of 1955 (Act), the 

district court held that Ortiz had no standing to complain of the 

mine's encroachment because he adduced no evidence at trial of any 

material interference with his own mining activity on Mercy #1. 

Section four of the Act states in pertinent part: 

Rights under any mining claim hereafter located under 

the mining laws of the United States shall be subject, 

prior to issuance of patent therefor, to the right of 

the United States to manage and dispose of the 

vegetative surface resources thereof and to manage other 

surface resources thereof •••• Any such mining claim 

shall also be subject, prior to issuance of patent 

therefor, to the right of the United States, its 

permittees, and licensees, to use so much of the surface 

thereof as may be necessary for such purposes or for 

access to adjacent land: Provided, however, That any 

use of the surface of any such mining claim by the 

United States, its permittees or licensees, shall be 

such as not to endanger or materially interfere with 

prospecting, mining or processing operatjons or uses 

reasonably incident thereto •••• 

30 u.s.c. S 612(b) (emphasis in original). 

A. 

Ortiz initially asserts the district court misapplied the Act 

to Mercy #1. The Act applies only to unpatented mining claims 

located after its effective date of July 23, 1955. Converse v. 

Udall, 399 F.2d 616, 617 (9th Cir. 1968), cert. denied, 393 U.S. 

1025 (1969). Under the Mining Law of 1872, 30 U.S.C. § 26, mining 

claims located prior to July 23, 1955, vested the locator with the 

"exclusive right of possession and enjoyment of all the surface 

included within the lines of their locations." This statute was 

construed to mean that as against parties other than the United 

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Appellate Case: 87-2230 Document: 01019770498 Date Filed: 06/23/1989 Page: 5 
States, the locator had "exclusive right to use the surface of 

this land." United States v. Etcheverry, 230 F.2d 193, 195 (10th 

Cir. 1956). See generally 2 American Law of Mining§ 36.03[1] (2d 

ed. 1984). According to Ortiz, the Mercy lode mining claims were 

located in April 1955 as placer mining claims known as Mercy #1 

and #2. The "Amended Lode Mining Location Notices"· filed in 

August 1957 to "relocate" the two placer claims as eight lode 

mining claims purportedly relate back to the original filing. 1 

Since McEvoy v. Hyman, 25 F. 596 (C.C.D. Colo. 1885), courts 

have recognized a claim owner's right to correct minor defects in 

the record by amending a mineral· location. Thus, an amended 

location has been said to relate back where it changes the name of 

the claim, Johnson v. Young, 34 P. 173, 175 (Colo. 1893), ex~ludes 

excess ground but preserves the original discovery point, Waskey 

v. Hammer, 223 U.S. 85, 91 (1912), corrects the name of the 

locators, Thompson v. Spray, 14 P. 182, 183-85 (Cal. 1887), or 

otherwise changes the record of a location without enlarging the 

rights appurtenant to it, In re R. Gail Tibbetts, 86 I.D. 538, 543 

(1979), overruled in part on other grounds, In re Hugh B. Fate, 

Jr., 86 IBLA 215, 226 (1985). More generally, an amendment will 

"relate back to original, valid although defective locations 

through which the relocator claims." United States v. 

1 Silbrico argues that Ortiz is prohibited from raising the 

relation back issue on appeal because it was not properly 

preserved below. The district court, however, applied the 1955 

Act without notice to either party. When the district court rules 

without affording the parties an opportunity to object, the issue 

is preserved for appeal. Jarvis v. Commercial Union Assurance 

Cos., 823 F.2d 392, 396 (10th Cir. 1987). 

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Appellate Case: 87-2230 Document: 01019770498 Date Filed: 06/23/1989 Page: 6 
Consolidated Mines & Smelting Co., Ltd., 455 F.2d 432, 449 (9th 

Cir. 1971) (emphasis added). Accord R. Gail Tibbets, 86 I.D. at 

541-42. But an "amended" location cannot relate back if the 

original location is·void. See Brown v. Gurney, 201 U.S. 184, 191 

(1906). 

That the same mineral deposit cannot be the basis for both a 

lode and placer claim is beyond doubt. In Cole v. Ralph, 252 U.S. 

286, 295 (1920), Justice Van Devanter, speaking for the Court, 

explained: 

While the two kinds of location--lode and placer--

differ in some respects, a discovery within the limits 

of the claim is equally essential to both. But to 

sustain a lode location the discovery must be of a vein 

or lode of rock in place bearing valuable mineral, and 

to sustain a placer location it must be of some other 

form of valuable mineral deposit, one such being 

scattered particles of gold found in the softer covering 

of the earth. A placer 4iscovery will not sustain a 

lode location, nor a lode discovery a placer location. 

(emphasis added). Accord Titanium Actynite Indus. v. McLennan, 

272 F.2d 667, 668-73 (10th Cir. 1959) (finding that placer 

claimants were entitled to possession as against lode claimants 

becaus~ no veins of mineral-bearing rock were present within claim 

held not clearly erroneous); Duffield v. San Francisco Chem. Co., 

205 F. 480, 486 (9th Cir. 1913) (location of a lode mine as a 

placer is void); Chemi-Cote Perlite Corp. v. Bowen, 72 I.D. 403, 

407 (1965) (same mineral deposit cannot be basis for both a lode 

and placer location). 

Consequently, Ortiz' purported 1957 amendment changing two 

placer claims to what presumably were more properly classified as 

eight lode claims cannot relate back to the original 1955 placer 

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location. "A miner cannot amend a placer location by filing a 

lode location. The two claims are located for altogether 

different reasons." In re Paul Vaillant, 90 IBLA 249, 253 (1986). 

Because the subsequent lode location was necessarily adverse to 

the former placer location, the location date of the Mercy #1 must 

be August 1957 and therefore, the district court properly applied 

the 1955 Act. 

B. 

Although not conceding its applicability, Ortiz next argues 

that the distric~ court misconstrued section four of the Act. 

Ortiz maintains that even after passage of the Act, claim owners 

still enjoy an exclusive right of possession ~s against others 

engaged in mining activity •. While section four is not a model of 

clarity, we believe otherwise. The statute may be read to 

preclude Ortiz from complaining about activities on his claims 

which do not interfere with his ability to prospect, mine or 

process the minerals thereon. See Freese v .• United States, 6 Cl. 

Ct. 1, 14 (1984), aff'd ~, 770 F.2d 177 (Fed. Cir. 1985) (only 

property right in unpatented claims is a right to possession for 

purposes of developing and extracting mineral resources). 

Today, the owner of an unpatented mining claim is entitled to 

nonexclusive access to his mining operations. 43 C.F.R. 

§ 3802.4-2. In holding a claim owner had no legitimate 

expectation of privacy in his claim, the First Circuit recently 

noted that under section four, "any member of the public is free 

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Appellate Case: 87-2230 Document: 01019770498 Date Filed: 06/23/1989 Page: 8 
to picnic on the claim, sleep on it, or watch tumbleweeds blow 

across it." United States v. Fahey, 769 F.2d 829, 837 (1st Cir. 

1985). Similarly, in United States v. Curtis-Nevada Mines, Inc., 

611 F·.2d 1277, 1286 (9th Cir. 1980), the Ninth Circuit held that 

section four affords the public a right of free access to the 

surface of a mining claim for recreational use or access to 

adjacent land: "Congress . limit[ed] the exclusive possession 

of mining claimants so as to permit the multiple use of the 

surface resources of the claims prior to patenting of the claims, 

so long as that use did not materially interfere with prospecting 

or mining operations." Id. at 1283. 

Congress enacted this legislation to combat the ''waste of 

valuable resources of the surface on land embraced within claims.'' 

H.R. 730, 84th_Cong., 1st Sess., reprinted in 1955 U.S. Code Cong. 

& Admin. News 2474, 2479 (hereinafter H.R.). Accordingly, an 

unpatented mining claim is subject to the right of the United 

States, its permittees and licensees "to manage and dispose of the 

vegetative surface resources thereof and to manage other surface 

resources thereof" so long as such shall not ''endanger or 

materially interfere with prospecting, mining or processin9 

operations or uses reasonably incident thereto." 30 U.S.C. 

§ 612(b). In view of the Act's legislative history, its language 

is sufficiently broad to permit surface uses which cannot 

reasonably be said to impede the claim owners mining operations 

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and related activities. H.R. at 2475.2 Because Silbrico is not a 

competing mining claimant and is not interfering with any mining 

activity on Mercy #1, which is exhausted, Ortiz has suffered no 

injury due to the processing mill's encroachment and is entitled 

to neither equitable nor legal relief. 

II. 

Lastly, Ortiz claims a right to attorneys' fees and costs as 

a result of an indemnification provision in the mining lease: "In 

the operation of the said premises, the Lessee ••• shall 

indemnify and save Lessor from any suit, claim or action, 

including the costs of defending the same, arising from Lessee's 

operation, occupancy or use of. the premises.'' The lease, however, 

expired by its own terms in May 1985 when perlite could no longer 

be mined from the Mercy claims in paying quantities. Silbrico 

instituted this action in December 1985. Because it needs no 

lease to continue operating the processing mill, Silbrico is not a 

holdover tenant. Thus, Ortiz cannot now rely on the lease to 

obtain the recovery he seeks. 

The judgment in all respects is AFFIRMED. Each party shall 

bear its own costs on appeal. 

2 Ortiz does not challenge Silbrico's status as a permittee or 

licensee of the United States for purposes of section four. The 

principle that the public has an implied license to use lands 

within the public domain is well established. ~., McKee v. 

Gratz, 260 U.S. 127, 136 (1922); Light v. United States, 220 U.S. 

523, 535 (1911); Buford v. Houtz, 133 U.S. 320, 326 (1890). 

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