Palmer v. Dredge Corp.

398 F.2d 791, 1968 U.S. App. LEXIS 6357
CourtCourt of Appeals for the Ninth Circuit
DecidedJune 26, 1968
DocketNos. 21435, 21436
StatusPublished
Cited by9 cases

This text of 398 F.2d 791 (Palmer v. Dredge Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Palmer v. Dredge Corp., 398 F.2d 791, 1968 U.S. App. LEXIS 6357 (9th Cir. 1968).

Opinion

HAMLEY, Circuit Judge:

These are consolidated appeals from judgments entered in companion district court cases involving the validity of thirty-six sand and gravel mining claims located on public lands. All of the claims are owned by The Dredge Corporation (Corporation), which is the plaintiff and appellee in each case.

Twenty-eight of the claims are involved in a suit in which E. J. Palmer, Nevada State Supervisor, Bureau of Land Management (Bureau), United States Department of the Interior (Department), and others, are defendants and appellants. The remaining eight claims are involved in a suit in which J. Russell Penny, a successor state supervisor of the Bureau, and others, are defendants and appellants.1

All of the claims, based on the asserted discovery of sand and gravel deposits, were located on various dates ranging from July 12 to July 28, 1952. In order for these claims to be valid it is necessary that the discovered mineral deposits be “valuable.” Rev.Stat. 2319 (1875), 30 U.S.C. § 22 (1964). The Secretary of the Department is charged with seeing that valid claims are recognized, invalid ones are eliminated, and the rights of the public preserved. Cameron v. United States, 252 U.S. 450, 460, 40 S.Ct. 410, 64 L.Ed. 659.

In fulfillment of this responsibility, a contest proceeding was initiated before the Bureau on October 4, 1955, involving the twenty-eight claims embraced in the Palmer case. In the charges it was alleged, among other things, that minerals have not been found within the limits of the claims in sufficient quantity or quality to constitute a valid discovery. On December 18, 1957, a similar contest proceeding was instituted involving the eight claims embraced in the Penny case.

“[W]here minerals have been found and the evidence is of such a character that a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success, in developing a valuable mine, the requirements of the statute have been met.”

In determining the validity of these claims the critical question of fact was whether the discovered deposits of sand and gravel were “valuable” within the meaning of 30 U.S.C. § 22. The general test applied by the examiner in ascertaining whether the deposits were valuable was the “prudent man” test which the Secretary has been using since 1894.2 As a further refinement of the test, the examiner held, relying on Layman v. Ellis, 52 L.D. 714 (1929), and subsequent opinions of the Solicitor General, that in the case of a mining claim located for sand and gravel it must be shown that the deposits can be extracted, removed, and marketed at a profit — the so-called “present marketability” test.

Taking into consideration the evidence produced at the agency hearing, and applying the tests referred to above, the examiner in the contest involving the twenty-eight Palmer claims determined that twenty-two claims were null and void for lack of a valid discovery of minerals. He held that there was a valid discovery as to the remaining six claims in that case and that those claims were valid.

Both the Corporation and the Government appealed to the Director of the Bureau. The Director entered a decision holding that all twenty-eight claims were null and void for lack of a valid discovery of minerals, thereby affirming the examiner as to twenty-two claims and reversing him as to six. The Corporation appealed to the Secretary of the Interior (Secretary). The deputy solicitor of the [793]*793Department, acting on behalf of the Secretary, affirmed the decision of the Director.

In the contest involving the eight Penny claims, the examiner, appraising the evidence in the light of the tests referred to above, determined that all eight claims were null and void for lack of a valid discovery of minerals. The Corporation appealed to the Director of the Bureau who entered a decision affirming the examiner’s decision. The Corporation then appealed to the Secretary. The deputy solicitor, acting on behalf of the Secretary, affirmed the decision of the Director.3

The Corporation then commenced these two actions in the United States District Court for the District of Nevada, injunc-tive and declaratory relief being sought. In each case defendants moved for a summary judgment, and the motions were granted. Appeals were taken and we reversed without reaching the merits, holding that plaintiffs had been denied the right of oral argument on the motions for summary judgment. Dredge Corporation v. Penny, 9 Cir., 338 F.2d 456.

After the eases were returned to the district court oral argument was had on the motions for summary judgment, and the motions were denied. The cases were thereafter submitted for decision, on March 21, 1966, under the terms of a pretrial order, the administrative record, briefs and oral argument.

Before decisions were rendered by the district court, this court, on June 21, 1966, filed an opinion in Coleman v. United States, 9 Cir., 363 F.2d 190, adhered to on petition for rehearing, 379 F.2d 555. In that opinion, this court disapproved the Department’s rule, applied by the agency in Coleman and in the cases now before us, that for sand and gravel deposits to be regarded as “valuable” within the meaning of 30 U.S.C. § 22, it must be shown that the mineral can presently be extracted, removed and marketed at a profit.

On the authority of the decision of this court in Coleman, the district court, on August 8, 1966, entered judgments for plaintiffs in the Palmer and Penny cases. The court ordered that those cases be remanded to the Department for further consideration in the light of Coleman. These appeals followed.

Having in view the primary basis for the district court judgments, it is not surprising that a substantial part of the briefs on appeal in the eases now before us are devoted to the question of whether our Coleman decision is controlling so as to require affirmance of the district court judgments. Appellee Corporation, of course, takes the position in its brief that we must affirm in the light of our opinion in Coleman.

Unfortunately for the Corporation, however, our Coleman decision was reversed by the Supreme Court just eighteen days before the oral argument on these appeals. United States v. Coleman, 390 U.S. 599, 88 S.Ct. 1327, 20 L.Ed.2d 170, decided April 22, 1968. The Supreme Court held that the so-called “present marketability” test is a logical complement to the “prudent man” test and an appropriate way to identify, with greater precision and objectivity, the factors relevant to a determination that a mineral deposit is “valuable.”

The Supreme Court decision in Coleman necessarily presents the Palmer and Penny appeals in a new posture, which counsel for the parties recognized at the oral argument.

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398 F.2d 791, 1968 U.S. App. LEXIS 6357, Counsel Stack Legal Research, https://law.counselstack.com/opinion/palmer-v-dredge-corp-ca9-1968.