Court Opinion

ID: 9559034
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:21:07.123058+00
Date Added: 2024-06-11T09:09:43.392748
License: Public Domain

BERNSTEIN, Justice
(dissenting).
This is an appeal from a judgment entered below quieting title to certain placer mining claims on unappropriated federal government land. Appellants, defendants-below, rested on the evidence elicited in the course of the case made by plaintiffappellee, contending that it revealed the defectiveness of appellee’s title claim, wherefore, by agreement of counsel, the jury/ *104was discharged and the matter was submitted to the court ttpon cross-motions for a directed verdict. The principal question presented is whether the locations made by appellee’s predecessors in title, eight persons forming an association, were invalid because (a) in truth, made for the plaintiff corporation rather than the association members, and (b) therefore violative of the statutory provisions which allow such claims on unappropriated federal government land. (The issue was formally raised by amendment of the answer which, although first denied for the reason that “defendants cannot raise the issue of fraud as a defense”, was later granted and formed the basis of the court’s finding on the subject as hereinafter set forth.) The pertinent statutory provisions are that:
“* * * (W)here placer claims are upon surveyed lands, and conform to legal subdivisions, no further survey or plat shall be required, and all placer-mining claims located after the 10th day of May, 1872, shall conform as near as practicable with the United States system of public-land surveys, and the rectangular subdivisions of such surveys, and no such location shall include more than twenty acres for each individual claimant * * (30 U.S.C.A. § 35) (Emphasis supplied.)
“Legal subdivisions of forty acres may be subdivided into ten-acre tracts; and two or more persons, or associations of persons, having contiguous claims of any size, although such claims may be less than ten acres each, may make joint entry thereof; but no location of a placer claim, made after the 9th day of July 1870, shall exceed one hundred and sixty acres for any one person or association of persons * * (30 U.S.C.A. § 36.) (Emphasis supplied.)
The facts bearing on the issue — of which, unfortunately, the majority opinion fails to take note — are gained chiefly from documentary evidence and the testimony of Burney C. Prigge, the president and a promoter of appellee.
In about April, 1955, Prigge engaged Mark Lintz, an engineer, to assist Prigge in finding a limestone deposit upon the following terms: Whatever claim Lintz had he would deed to Prigge “for a [cash] consideration”; Prigge would form a corporation and Lintz would act as consulting engineer to it for a separate consideration. Thereafter, on June 2, 1955, the appellee was formed as a Delaware corporation. Lintz was paid for his services by the corporation from at least July 5 to October 10, 1955, and, during that time, he was engaged almost continuously in work for the corporation. The last of three contracts with Lintz, dated August 30, 1955, provided that Lintz was “to render his services exclusively to the Corporation”. *105perform such services be assigned to him from time to time by the Board”, act as “Consulting Engineer, Architect and Supervisor” of the proposed project of the corporation and, after Securities and Exchange Commission approval of the corporation’s project was obtained, serve as a consulting engineer for the corporation until August 15, 1962. A further specific provision of the agreement recited that Lintz “shall render his services and full time exclusively to the corporation during the entire period of this agreement unless written permission is obtained from the corporation prior to Lintz’s acceptance of any other propositions from any other person, firm, association or organization.” “ * * * as may
At an unspecified time during the above-described period, Prigge, Lintz and six other persons located limestone deposits in California, Nevada and Arizona (not here involved) and, apparently through Prigge, the individual interests were transferred to the corporation. The six other locators were Vincent F. Denney, identified as a friend of Prigge and an original incorporator and officer of appellee; Adeline Johnson, another original incorporator of appellee; T. C. Kennedy, a member of appellee’s board of directors; Morris M. Mueller, secretary and treasurer of appellee; Mrs. Prigge; and Mrs. Mueller. On or about August 3, 1955 (although Prigge testified that Denney’s stock may have been issued to him as early as June), the corporation issued 500 shares of its ten dollar par value stock to each of the locators other than Prigge (whose compensation will be separately detailed infra) and charged the cost thereof to Prigge, as consideration for the transfer of their claims to Prigge. All this, it should be noted, was before location of the claims here in question.
It later appeared, however, that the California, Nevada and Arizona limestone deposits were not suitable for the manufacture of cement. Accordingly, Prigge, Lintz and other locators sought out other deposits and located the claims here in question, Drake Limestone Numbers 1 through 6 and 8 through 27 and Drake Aluminum Silicate Numbers 1 and 2, each claim for 160 acres. Prigge, Lintz, Mueller and a geologist employed by the corporation first entered the lands on August 15, 1955. On September 8, 11, and 15, 1955, the limestone location notices were signed and posted, Prigge signing for the others, and on October 3, 1955, the aluminum silicate location notices were signed and posted, each of the notices being recorded shortly after the date of their signing. The other locators’ claims were then deeded to Prigge, the limestone claims on September 26 and the aluminum silicate claims on October 18, 1955. On October 17, 1955, Prigge deeded the limestone claims, and on October 25, 1955, the aluminum silicate claims, to the *106corporation. The recited consideration for ■each deed was ten dollars (although from Prigge’s testimony it would appear that each signator of the deeds received ten dollars, when paid it is not at all clear). The principal, if not the only, consideration at the time, it is plain, on which appellee relied exclusively in making its motion, was the earlier transmittal of 500 shares of stock to each locator, given, as Prigge readily admitted, “before we ever heard of it [the Drake property].” Prigge viewed the transfer of the Drake claims as “restitution”, the transfer of a good, usuable limestone deposit which the locators had agreed to provide. All of the locators ¿new when they deeded the property to IPrigge that Prigge would transfer the ¡property to the corporation; as Prigge said, “That is what it was acquired for.”
It is thus crystal clear that, whatever were the circumstances of the earlier transactions, the Drake locations were made for the benefit of the corporation, not the named locators, with the understanding that the claims would be deeded to Prigge and thence to the corporation at a convenient time. That conclusion is just as apparent with respect to Prigge and Lintz as it is with respect to the other locators. Although Prigge explained that at the time he and Lintz were acting in “a dual capacity”, for themselves and the company, Prigge having given Lintz permission in this instance to avoid his exclusive services agreement, it is also apparent that in seeking and locating the limestone deposits, both men were acting as employees of the company for the benefit of the company. Indeed, Lintz’s every expense was paid by the corporation, and Prigge as well as the others, as will be seen, had been paid by the corporation for the transfer of the claims well before they were in fact located.
We now come to Prigge’s role in the matter. At least in 1956, when the Securities and Exchange Commission instituted “stop order” proceedings against the registration of shares by appellee, there were 706,680 shares in the company outstanding, 10,110 shares sold for cash at par (Prigge testified that the corporation “never sold anyone stock for any amount other than at par value”- — ten dollars), 33,177 issued to an underwriter in connection with the underwriting agreement of the company and the remainder, 663,393 shares, issued to the promoters of the company. 970 shares were issued to Prigge for wildcat claims other than the Drake claims; 80,000 shares were issued to him in return for some $68,000 and the limestone claims, or, as elsewhere stated by Prigge, on July 8, 1955, two months before the first Drake claims were located, he received $675,000 worth of stock for all of the Drake claims. In all, by 1956, 567,000 shares were owned by Prigge personally. His total contribution to the company was valued at about $88,000, although he testified -that another *107$60,000 was expended by him of which the corporation has no record and for which he did not want the company to pay him and he received no pay, and apparently figured no sum was owing, for his efforts as president of the company.
On the foregoing, the conclusionary finding of the trial court — the only finding made on the subject — was, “as a fact, that there was no fraud in connection with the orig.inal location of said placer mining claims by the original locators, and that no fraud was perpetrated by plaintiff or any of its officers, agents, or employees in the original location of said mining claims * Even disregarding the ambiguity of that finding in the circumstances and according it maximum respect, the force of the recited evidence is such that I see no escape from the conclusion that the attempted locations are invalid because not made in conformity with the governing law of the United States.
The statutory provisions quoted herein-above have been authoritatively read to mean that a qualified individual may locate no more than twenty acres in a single claim (although he may locate as many such claims as he can) ; but that a bona fide association of persons may locate in a single claim the multiple of twenty acres times the number of locators, not to exceed eight, so that eight associates may locate 160 acres in a single claim. Rooney v. Barnette, 9 Cir., 200 F. 700; Hall v. McKinnon, 9 Cir., 193 F. 572; Nome & Sinook Co. v. Snyder, 9 Cir., 187 F. 385; Cook v. Klonos, 9 Cir., 164 F. 529, modified 9 Cir., 168 F. 700; United States v. Chanslor-Canfield Midway Oil Co., D.C.S.D.Cal., 266 F. 142, modified 9 Cir., 266 F. 145, motion to remand granted, 254 U.S. 664, 41 S.Ct. 148, 65 L.Ed. 464; United States v. Brookshire Oil Co., D.C.S.D.Cal., 242 F. 718; Gird v. California Oil Co., C.C.S.D.Cal., 60 F. 531, 545. A corporation is considered an individual person: under the statute and thus itself may locate in a single claim as many as twenty acres, but no more. See 2 Lindley on Mines Section 449 (3d Ed.). However lenient courts have been in permitting actual locators to use the names of distant persons as associated locators, cf. United States v. California Midway Oil Co., D.C.S.D.Cal., 259 F. 343, affirmed 9 Cir., 279 F. 516, they have been insistent that the association be a bona fide one and that no person be allowed to use another person’s name as a dummy for his own, to extend the domain of his single claim to more than the allowable twenty acres. The oft-stated purpose of the statutory rule is that the public domain and the riches imbedded therein should be. distributed “among as large a number as. possible of those who wish to acquire suck land for their own use, rather than to favor a few individuals, who might wish to acquire princely fortunes by securing large tracts of such land,” see Durant v. Corbin, C.C., 94 F. 382, 383, and the cases have *108been decided with a sympathetic appreciation of that purpose. See, in addition to the previously decided cases, United States v. Trinidad Coal & Coking Co., 137 U.S. 160, 11 S.Ct. 57, 34 L.Ed. 640.
In this case it is plain from a mere chronological review of the facts that the locators were not acting for themselves, but were dummies for the corporation, or, at best, for Prigge. Indeed, in espousing the view that the locators owed the claims in question to the corporation — and that is the only explanation offered for the lack of consideration for the transfers to Prigge —Prigge in effect conceded it was the corporation, not any individual locator, which was to benefit from the discovery. The names of the locators, then, were as sham, and the corporation must be deemed to have exceeded the bounds of its lawful grasp. Moreover, even if the earlier consideration of 500 shares to each locator other than Prigge be referred to, the taint attaching to the instant claims would not be erased. It is apparent that, from the outset, the venture which resulted in appellee’s claims was Prigge’s venture, or, as he willed it, that of the corporation which he controlled. In deeding the land to Prigge, the locators knew that Prigge would deed it to the corporation and could cause the corporation to issue any number of shares to him in payment for the land, thus, as in fact happened, increasing his share of the holding to far in excess of one-eighth. Accordingly, this is not a case, so far as the evidence discloses, like Borgwardt v. McKittrick Oil Co., 164 Cal. 650, 657, 130 P. 417, 419, where the locators adopted “a corporate management as an appropriate means of regulating and handling their joint interests, and each retaining, through the agency of the corporation, the exact interest in the land which he acquired under his location.” Rather, as in Nome & Sinook Co. v. Snyder, supra, the scheme was that the locators other than Prigge were to have a vastly less than proportionate, if not indeed only a nominal, share of the total holding. True, Lintz would have benefitted handsomely from salaries and bonuses paid by the corporation if it had become a successful enterprise, and perhaps some of the others hoped for as much for themselves. Such expectation or hope might have palliated the locators other than Prigge (none of whom testified for appellee), but it could not serve to satisfy the legal requirement that a claim in excess of twenty acres must be made by a bona fide association of persons, each of whom has truthfully laid claims to a proportionate share of the land encompassed by the total claim. The facts as they appear from this record, however indulgently analyzed, persistently demand the conclusion that the intention of the locators from the outset and the net effect of the transaction here reviewed were to yield to Prigge more than twenty acres of government land, to benefit him by benefit*109ing the corporation which he effectively controlled at all times.
The only remaining question, then, at which point the majority opinion first comes to grips with the problem, is whether the foregoing defect in appellee’s claim may be adjudicated to appellee’s disfavor in this case. One case, decided in 1911, Riverside Sand & Cement Mfg. Co. v. Hardwick, 16 N.M. 479, 120 P. 323, 325, has held that the matter is one in which “The government alone is concerned, and the same is not relevant in a contest between individuals, except in adverse proceedings, wherein the government is a silent party.”1 That ruling was supported in the main by reference to the second edition of Lindley on Mines. Later federal cases, however, ignored Lindley’s statement and ruled that the matter could be asserted in private litigation. See, e. g., Cook v. Klonos and Rooney v. Barnette (decided in 1912 and also ignoring the New Mexico case), both supra. Upon reviewing some of the later authorities, Mr. Lindley in the third edition of his work, Section 450, announced a modification of his view to the effect that the fraudulent character of locations may be investigated and determined in private litigation “where the original parties to the fraud or persons having notice are before the court.” The better view, I think, is, not only that we should defer to the federal cases interpreting the federal statute, but that the federal cases and Mr. Lindley’s later judgment are sound. The government is a party concerned not only where an adverse suit is brought following a patent application, but in every suit involving a claim upon unappropriated government lands. It is from the government that appellee claims to have derived title, and the validity of that title depends on whether the location was perfected in accordance with the terms which the government laid down for such cases, there being no question that appellee was on notice of all that its predecessors in title *110did in that regard. See Belk v. Meagher, 104 U.S. 279, 284, 26 L.Ed. 735.
Nor should it assist appellee to vary the argument, as the majority opinion does, by denominating the action as only a “possessory” one. It has long been acknowledged that “There are two kinds of possessory rights * * * ; one based on [statute], the other resting on mere prior occupation. To maintain a right under the first, plaintiff must show a compliance with the requirements of the statute; to succeed under the second he must show prior possession, without alienation or abandonment, down to the time of the entry complained of.” Rush v. French, 1 Ariz. 99, 154, 25 P. 816, 834. Appellee’s contention — made plain from its complaint, prayer for relief, all subsequent argument and the judgment entered — is, not that it was ousted from prior occupation while diligently working towards discovery, but that its predecessors in title had made a discovery and had done all that was required to perfect the claim in question under the statute, so that, despite lack of actual, possession, appellee could hold the land against all others later in time. The ensuing property right which the judgment as affirmed grants to appellee affords “an exclusive right of possession to the extent of * * * [the] claim as located, with the right to extract the minerals, even to exhaustion, without paying any royalty to the United States as owner, and without ever applying for a patent or seeking to obtain title to the fee”; or would afford the right to obtain a patent; would be “capable of transfer by conveyance, inheritance, or devise”; and, in short, would be “ * * * even without patent, * * * a property right in the full sense, unaffected by the fact that the paramount title to the land is in the United States * * * See Union Oil Co. of California v. Smith, 249 U.S. 337, 348-349, 39 S.Ct. 308, 311, 63 L.Ed. 635. That much, the cases and analysis make plain, a plaintiff cannot obtain without, in accordance with the general rule, see, e. g., Saxman v. Christmann, 52 Ariz. 149, 79 P.2d 520, prevailing upon the strength of his title rather than any weakness in his adversary’s, showing “compliance with requirements of the statute.” For, in such a case, “The plaintiffs may have their title quieted only if they have one * * * ‘The right to the possession comes only from a valid location. Consequently, if there is no location, there can be no possession under it.’ ” Zeiger v. Dowdy, 13 Ariz. 331, 334-335, 114 P. 565, 566; Belk v. Meagher, supra. Exceptions to the general rule — such as that properly invoked where the only weakness in a plaintiff’s title is a failure to perform annual assessment work, on the ground that the plaintiff’s title is not forfeited by such failure until an adverse claim is perfected in accordance with the law applicable to *111relocations (pursuant to which, among other things, a relocator may not show the invalidity of the original location), see National Mill. & Min. Co. v. Piccolo, 54 Wash. 617, 104 P. 128; reversed 57 Wash. 572, 107 P. 353; can hardly be deemed applicable.2
Accordingly, I would hold that the aggrandizement attributable to appellee made its locations invalid and that such invalidity must defeat its claim in the instant action. My certainty of view on that issue has made it unnecessary to consider any of the other assignments of error, as to which I, therefore, express no opinion.
STRUCKMEYER, J., concurs in this dissent.

. One other case, Brassey v. Peck, 63 Idaho 609, 123 P.2d 1014, has repeated the quoted language approvingly. The decision in that case, however, is distinguishable. The problem there was not the use of a dummy without interest, but merely the use of one person’s name without her advance permission. It also may be noted that the Idaho court cited, in addition to the New Mexico case, the earlier edition of Bindley referred to in the text herein, from which it would appear that the later view of Bindley was not called to the court’s attention.
Cases involving challenge to the citizenship of a locator or grantee, of course, are distinguishable because of the special considerations applicable in such cases. In light of the intricacy not infrequently involved in questions of citizenship and the gravity of any decision bearing on the matter, it is understandable that courts should avoid adjudications of citizenship, particularly by state courts generally unfamiliar with attendant problems, without the assistance of government counsel to put forward the government’s position.

. Other cases cited are no more persuasive in avoidance of the general rule. Parker v. Belle Fourche Bentonite Products Co., 64 Wyo. 269, 189 P.2d 882, also involved a question concerning the performance of annual assessment work. Moreover, in passing, the court implied that the use of “dummy locators” would have invalidated the plaintiff’s claim. See 64 Wyo. at page 290-291, 189 P.2d at page 890. In Oroville International Salts Co. v. Rayburn, 104 Wash. 137, 176 P. 14, 15, the court merely held that there was “ample testimony * * * to satisfy a jury of compliance * * * with the requirements of the statute as to their filing on the property as a placer claim and doing all subsequent assessment work,” and the point of quoting from the Piccolo case, supra, is not made apparent. In McInerny v. Allebrand, 107 Cal. App. 457, 290 P. 530, 534 the court found, after analyzing the facts, that the evidence failed to show that plaintiff had made any valid discovery. Accordingly, despite the lack of showing of possessory title by defendant, the court reversed the judgment for plaintiff in reliance on the rule “well established in California that in a possessory action of this character, the plaintiff must rely upon the strength of his own title, rather than the weakness of that of his adversary.” In Lucky Four Gold Mining Co. v. Bacon, 62 Colo. 342, 163 P. 862, plaintiff’s complaint alleged that the defendant had made application for patent to a lode claim in conflict with plaintiff’s claim. When it appeared that defendant had withdrawn his application for patent, the lower court directed a verdict for the plaintiff. On appeal, all that was decided was that the action should have been dismissed because the proof showed no conflict of claims.