Opinion ID: 1367534
Heading Depth: 3
Heading Rank: 3

Heading: Applicability of Good Faith Doctrine

Text: In its order granting summary judgment, the superior court concluded that Hayes failed to comply with the requirement that a locator of valuable minerals must locate a claim in good faith. The court based its finding of a lack of good faith on the fact that Hayes' staking of the claim was based at least in part on exploratory activity conducted per lease and extension, and that Hayes used information, obtained as [A.J.'s] lessee concerning the value and location of ore on the subject property in locating their competing claims. The court also pointed to Hayes' violation of AS 38.05.130 and 11 AAC 96.140(10) which require posting of a bond to protect the owner of the surface estate prior to mining-related activity. Under Federal mining law, a locator must act in good faith for a claim to be valid. See generally 1 American Law of Mining § 31.08 (Rocky Mountain Mineral Law Foundation ed., 2d ed. 1984). [7] The good faith requirement is an equitable concept which allows courts latitude to fill in obvious gaps in an antiquated statute which is devoid of detail. 1 American Law of Mining § 31.08. We conclude that the court erred in applying the good faith location doctrine in this factual context. A review of cases applying the good faith requirement leads us to conclude that the good faith location doctrine should only be applied as a means of resolving conflicts between parties asserting competing mineral claims. The good faith doctrine is generally used to defeat the claims of a subsequent locator where the subsequent locator engaged in fraud or breached some confidential or fiduciary duty, or where the subsequent locator knew that the claim was occupied by a prior locator, or some combination of these circumstances. See Thompson v. Burk, 2 Alaska 249 (D.Alaska 1904) (Burk, knowing of Thompson's prior claim, staked same property without Thompson's knowledge and later discovered valuable minerals thereon while on the land under a contract with Thompson to prospect it for Thompson); Fisher v. Seymour, 23 Colo. 542, 49 P. 30 (1897) (Seymour, while acting as agent to sell claims for Fisher, arranged to have valuable portion of claim patented to himself and others by what court called gross fraud); Bagg v. New Jersey Loan Co., 88 Ariz. 182, 354 P.2d 40 (1960) (Bagg, while employed to supervise mining operations on employer's claims, located claim to land including portion of employer's claim and made such location with knowledge of employer's prior claim); see also Columbia Standard Corp. v. Ranchers Exploration & Dev., Inc., 468 F.2d 547 (10th Cir.1972) (subsequent locator, with knowledge of claims of prior locator, staked conflicting claims without visual examination to determine extent of senior locator's prior claims), cert. denied, 410 U.S. 991, 93 S.Ct. 1506, 36 L.Ed.2d 190 (1973); Ranchers Exploration and Dev. Co. v. Anaconda Co., 248 F. Supp. 708 (D.Utah 1965) (subsequent locator hired consulting geologist formerly employed by prior locator to provide information and to locate competing claims); Brown v. Murphy, 36 Cal. App.2d 171, 97 P.2d 281 (1939) (Brown, subsequent locator, located claims while on the site under agreement with Murphy, prior locator, permitting Brown to extract ore samples for royalty in anticipation of leasing claims from Murphy; Brown well knew that any rights he had upon the premises were through [Murphy's] right and claim of possession and ownership). Because A.J. does not assert a competing mining claim and because Hayes is not a subsequent locator, we believe that it is inappropriate to apply the good faith doctrine to invalidate Hayes' location. We decline to apply the good faith location doctrine to the facts of this case for two additional reasons. First, the fundamental purpose of the good faith requirement is to further the speedy and orderly development of the mineral resources of the public domain. 1 American Law of Mining § 31.08 (1984). Its application here would defeat Hayes' location when there are no locators with prior or conflicting mining claims and thus would impede, rather than further, the development of the mineral resources owned by the state. Secondly, we do not believe that A.J. should benefit from the application of an equitable good faith doctrine when its own good faith is at issue. While it had a plausible legal argument that it was entitled to the mineral rights in ATS 201, which we ultimately rejected in A.J. II, the fact that it leased the mining rights to Hayes and collected royalties without revealing that its patent from the state reserved the mineral rights to the state places A.J.'s good faith in question. Equity requires that those who seek it shall have acted fairly and without fraud or deceit as to the controversy in issue. Sea Lion Corp. v. Air Logistics of Alaska, Inc., 787 P.2d 109, 114 n. 2 (Alaska 1990). For the above reasons, we reverse the trial court's grant of summary judgment in favor of A.J. and remand for a determination of what rights, if any, Hayes has acquired by staking and recording these claims. [8] REVERSED and REMANDED for further proceedings consistent with this opinion.