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market for the minerals in the claims. There was only slight evidence as to marketability prior to May 3, 1929. The Department held the claims to be null and void for lack of a showing of marketability during the two periods of time when the land was open to location.
In the ensuing litigation, the claimant contended that conditions in the 1957 period, when the hearing was held, had no bearing on the issue of discovery; that the testimony as to such conditions was irrelevant; and that the only question was whether, in 1922 and the years immediately thereafter, the situation satisfied the Castle v. Womble test. The court rejected the contention, saying
The appellant's contention is erroneous. This court, in the recent case of Adams v. United States, 318 F. 2d 861, dealt with this very question, and held that even though the mining claim there in litigation would, at one time, have satisfied the test, nevertheless the Government rightfully denied a patent to the claimant since, because of changed economic conditions, the claim did not presently satisfy the test. The fact that in Adams the attack was upon the Government's refusal to issue a patent, while in the instant case the Government was seeking to nullify the appellant's claim as to which he had never requested or received a patent, does not distinguish the Adams case from the instant one. The problem in both cases is whether the public lands of the United States should be perpetually incumbered and occupied by a private occupant just because, at one time, he had there a valuable mine which has now been completely worked out; or because he had on his location a mineral which, in the then practice of the building industry, had a market, but which, on account of a change in building practice, no longer has a market or a reasonable prospect of a future market; or because, at the time of his discovery, transportation facilities were available which made exploitation feasible, which facilities are no longer available. (P. 898; italics added.)
The Mulkern case, then, is clear authority for the proposition that although a mining claim may once have been valid because it contained a valuable deposit of mineral the claim will become invalid if the mineral deposit loses its value because of changes in economic conditions, such as the loss of a market or transportation facilities. That the ruling is not confined to instances involving minerals of common occurrence, such as pumice, is plain from the court's statement that the Adams case decided the same question. That case, of course, dealt with
In the Adams case, also, the court ruled that in applying the prudent man rule "evidence as to the cost of extracting the mineral is relevant" and that the Department properly considered evidence on that point with respect to the Adams claims. 318 F. 2d at 870. And, years earlier, the Supreme Court had indicated that “the cost of mining, transportation and reduction" was relevant to determining whether a valid discovery had been made. Cole v. Ralph, 252 U.S. 286, 299 (1920). That case, too, concerned claims located for gold.
Thus, the economic conditions which may be considered in determining whether a valuable mineral deposit has been discovered include such factors as the cost of mining, transporting, and processing the
April 24, 1964
mineral and the existence of a market for the mineral, whether it be deemed one of intrinsic value, such as gold, or one of common occurrence, such as pumice.
In this connection, note should be taken of references by the parties to the Solicitor's opinion of September 20, 1962, supra, on the “Marketability Rule” as applied to the law of discovery. The claimants purport to find comfort in the statement in the opinion that
An intrinsically valuable mineral by its very nature is deemed marketable, and therefore merely showing the nature of the mineral usually meets the test of marketability. 69 I.D. at 146. Claimants state that manganese is an intrinsically valuable mineral and therefore is marketable. This overlooks the fact, however, that the opinion carefully states that showing the mineral discovered to be an intrinsically valuable one only "usually meets the test of marketability” (italics added). The opinion otherwise makes it amply clear that the marketability test
* is in reality applied to all minerals, although it is often mistakenly said to be applied solely to nonmetallic minerals of wide occurrence. Id. Thus, it is entirely proper to require the holder of a claim containing a low grade of an intrinsically valuable mineral to show that there is a market or demand for the mineral in the claim.
What does the application of these rules to the four cases under consideration show!
First, the evidence developed at the respective hearings seems to show that deposits of manganese exist on the claims in question and that some of the manganese is of a grade that was mined and sold in the past from patented manganese claims in the same area and from some of the contested claims themselves. The quantity of such manganese in each claim is not clearly established and it is questionable to what extent minable deposits exist on the claims.
Second, the evidence establishes that, except possibly in the case of the Beecroft claim, all sales of manganese were made during World War II and the post-war period to August 5, 1959, when a Government carlot buying program was in effect. Upon termination of the Government program on August 5, 1959, sales of manganese in the area of the claims, and, indeed, of practically all domestically produced manganese, ceased. This apparently was caused by a break in the price of manganese from around $90 per ton to $40–50 per ton.
Third, up to the time of the respective hearings (the last one being held on March 1, 1963, in the Beecroft case), no further sales of domestic manganese had been made, except possibly in the case of some captive mines owned by steel companies, because no profit could be realized from sales. The market for manganese has been supplied by imported manganese of the same or higher grade.
Fourth, the claims are being held in reserve with the hope and expectation that some day the market will return. However, little basis has been given for this hope or expectation.*
In the hearing on the Beecroft claim, it was asserted by the claimant that manganese was sold from the claim up to August 5, 1960, but there is at least a question whether the proper date was not August 5, 1959 (Beecroft Tr. 60).
Considering the evidence as a whole, it seems inescapable that what sales of manganese have been made from some of the claims and from other patented claims in the area were made during a period of national emergency and of a Government price support program which ended on August 5, 1959, and that the manganese on the claims has had no market since that date because of a 50 percent reduction in the market price which makes it unprofitable to mine and sell domestic manganese today. Outside of some speculation about development of now processes for utilizing low grade manganese economically, there is no evidentiary basis for any reasonable expectation that in the reasonably near future high price levels will return which will make it economic to mine the claims. The fact is that manganese has not been sold from the area in recent years and there is no evidence that sales may reasonably be expected in the future.
In the circumstances, the ruling in the Mulkern case is clearly applicable and it must be concluded that the contested claims are null and void for lack of a present discovery of valuable mineral deposits due to changed economic conditions.5
This makes it unnecessary to consider other issues raised in the appeals, such as whether the claims were properly located as lode claims instead of as placer claims and whether the Shoup claims are invalid because of bad faith on the part of the claimant.
Therefore, pursuant to the authority delegated to the Solicitor by the Secretary of the Interior (210 DM 2.2A (4)(a); 24 F.R. 1348), the decisions of the Assistant Director are affirmed to the extent that they held that some of the contested claims are null and void and reversed to the extent that they held the remaining claims to be valid.
* The evidence referred to up to this point may be found in the transcripts of the various hearings as follows: Denison Tr. 294, 355, 357, 360, 362, 386, 388, 391, 439-441, 455, 456 ; Shoup Tr. I (first hearing) 137, 139, 177, 210, 212, 213; Shoup Tr. II (second hearing) 79, 113-116, 128, 130, 131, 170, 211 ; Smith Tr. 105, 111, 112, 124, 187, 232-233, 237, 243, 257, 263; Beecroft Tr. 33–37, 51, 57, 60, 61, 75–78, 89-91, 97.
8 The burden is on a mining claimant to show by a preponderance of the evidence that he has a valid mining claim. Foster V. Seaton, supra. Thus, the claimants had the burden of showing that their manganese deposits were still valuable under current economic conditions. They clearly did not sustain the burden.
April 24, 1964
Arizona Contest No. Names of Lode Claimant and and Patent Applica. Claims and General Appeal No. tion No. Description of Area
Date of Hearing Examiner Decision and Action Taken
Date of Assistant Director's Decision and Action Taken
Contest No. 10407.
Mineral Patent Application 021383, filed June 4, 1959.
Contest No. 10408.
Mineral Patent Application 021390, filed June 4, 1959.
Leo E. Shoup
Feb. 15, 1963.
Contest No. 10426.
Mineral Patent Application 024012, filed Dec. 4, 1959
B.V.D. Nos. 1 & 2,
Hillcrest No. 22.
11 N., R. 15 E.,
5, & 6, D & W
Nos. 3, 4, & 5.
11 N., R. 14 E.,
8, & 9, B.V.D.
Hillcrest No. 23.
19, T. 11 N., R.
S.R.M., Arizona. All within Coconino
County and the
4, & 5, Black Dia-
the appeal.) Within secs. 19, 20,
29, & 30, T. 14 N., R. 10 E., G. &
S.R.M., Arizona. Manganese Nos. 9
& 10. Within
S.R.M., Arizona. All within Coconino
County and the
24, T. 14 N., R.
S.R.M., Arizona. All within Coconino
Feb. 28, 1962.
Found claims invalid for lack of discovery of valu. able mineral in lodes, rejected patent applications.
Contest No. 10427.
Mineral Patent Application 024013, filed Dec.
Oct. 23, 1963.
Contest No. 10507.
Mineral Patent Application 030459, filed Mar. 6, 1961
Feb. 20, 1963.
Decided April 29, 1964 Contracts: Appeals Questions of law may be determined by the Board of Contract Appeals under
a standard-form Government contract, as well as questions of fact. Contracts: Appeals—Contracts: Contracting Officer—Contracts: Interpre
tation A provision in a standard-form Government contract which specifically grants
the contracting officer authority to decide particular matters does not exempt his decisions upon such matters from review under the “Disputes" clause of the contract, even though the provision is written in terms that call for the exercise of judgment and discretion by him, unless the provision affirmatively discloses an intent that decisions by the contracting officer with
respect to such matters shall be final. Contracts: Appeals—Contracts: Contracting Officer-Contracts: Waiver
and Estoppel Decisions by a contracting officer not to waive the defense that a claim is
untimely are subject to review under a standard-form "Disputes" clause, irrespective of whether the waiver authority of the contracting officer is express, as under the “Changes" clause, or is implied, as under some
provisions of “Protests" clauses. Contracts: Appeals—Contracts: Comptroller General Decisions upon questions of law made by the Comptroller General are with
out binding effect in “Disputes" clause proceedings that have as their subject claims which, although they involve the same problems, are not the same claims, as were the subject of his rulings. In such situations the decisions of the Comptroller General constitute significant and valuable precedents, but should not be followed if outweighed by other precedents.
BOARD OF CONTRACT APPEALS In an interlocutory decision, dated August 27, 1963, and a supplemental decision, dated September 27, 1963, the Board denied motions
1 70 I.D. 400, 1963 BCA par. 3848, 5 Gov. Contr. 501. 2 70 I.D. 434, 1963 BCA par. 3865.