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Hayes v. Harang, A.J. Associates, and Alaska Marine Lines (2/12/93), 846 P 2d 131
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Notice: This is subject to formal
correction before publication in the Pacific
Reporter. Readers are requested to bring
typographical or other formal errors to the
attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska
99501, in order that corrections may be made
prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
HOWARD C. HAYES and )
MICHAEL R. HAYES, ) Supreme Court No. S-4837
)
Appellants, ) Superior Court No.
) 1JU-82-2048 Civil
v. )
)
A.J. ASSOCIATES, INC., )
ALASKA MARINE LINES, INC., ) O P I N I O N
GORDON S. HARANG, and )
EILEEN K. HARANG, )
) [No. 3932 - February 12, 1993]
Appellees. )
______________________________)
Appeal from the Superior Court of the
State of Alaska, First Judicial District,
Juneau, Thomas E. Schulz, Judge.
Appearances: Henry J. Camarot,
Anchorage, for Appellants. James N. Reeves,
Gregg B. Brelsford, Bogle & Gates, Anchorage,
for Appellees.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
MOORE, Justice.
A lessee of mining rights on filled tidelands staked a
claim to the mineral estate when he learned of a reservation of
the mineral rights to the state in the patent. The
lessor/surface owner sought ejectment. The lessee, alleging
fraud, counterclaimed to recover the royalties paid under the
lease. The superior court granted summary judgment for the
lessor on the ground that the state did not reserve the minerals
in the fill material. This court reversed, concluding that the
state reserved the mineral rights to minerals in the fill
material, and remanded for further proceedings. On remand, the
superior court granted summary judgment in favor of the surface
owner, concluding that the lessee's location was void ab initio
because of his failure to locate in good faith. We reverse.
I. FACTS AND PROCEEDINGS
A. FACTUAL BACKGROUND
The real estate at issue has been the subject of two
cases decided by this court, State v. A.J. Indus., Inc., 397 P.2d
280 (Alaska 1964), hereinafter "A.J. I"and Hayes v. Alaska
Juneau Forest Indus., Inc., 748 P.2d 332 (Alaska 1988),
hereinafter, "A.J. II."1 As we described the property in A.J. I,
"[it] was created over a period of twenty-five years by the
dumping of rock and tailings on the tidal and submerged lands of
[Gastineau Channel], the rock and tailings being produced by
[A.J. Industries'] nearby mining operation." 397 P.2d at 281.
In A.J. I, we held that A.J. Industries2 had a class I preference
right to acquire the underlying tidelands and submerged lands
from the state under AS 38.05.320. In 1967, the state conveyed
the property, known as Alaska Tidal Survey 201 ("ATS 201"), to
A.J., reserving the mineral rights to itself. 748 P.2d at 334.
In September 1981 Michael Hayes and A.J. executed a
lease, giving Hayes the right to mine a portion of ATS 201.3 The
lease expired in December 1981. While negotiations to renew the
lease were in progress, Hayes continued mining under an oral
extension of the lease. As we noted in A.J. II, "[w]hen
negotiations failed to produce an agreement, Hayes staked mining
claims on the property, contending that the minerals were owned
by the state." 748 P.2d at 334.
Hayes staked these claims, known as Taku Claim Nos. 1
and 2, in July 1982. The area covered by Taku Claim Nos. 1 and 2
is larger than, and encompasses, the area covered by the lease.
Although Hayes' application for a mining lease was rejected by
the Department of Natural Resources (DNR) in November 1988, DNR
issued a production license for the claims in September 1989. In
DNR's view, the production license alone did not allow Hayes to
mine; a lease was required as well.
B. PROCEDURAL BACKGROUND
A.J. filed this action for ejectment. The trial court
granted partial summary judgment in favor of A.J., concluding
that title to the fill material deposited on ATS 201 and rights
to the minerals therein did not pass to the State of Alaska upon
statehood, but were retained by A.J. The trial court permanently
enjoined Hayes from conducting mining operations on ATS 201.
In A.J. II, we reversed the trial court, concluding
that the tailings were real estate, title to which passed at
statehood to the State of Alaska along with title to the
underlying submerged lands. 748 P.2d at 337. We further held
that rights to the minerals contained in the tailings were
reserved by the state in the 1967 deed, and remanded to the
superior court for further proceedings. Id.
On remand, the superior court granted A.J.'s renewed
summary judgment motion. It concluded that Hayes had violated
his obligation to act in good faith in the location of the mining
claim.
In his motion for reconsideration, Hayes argued for the
first time that the state, not A.J., was the owner of ATS 201 and
that the public trust doctrine gave Hayes the right to enter ATS
201 to stake the claims. The superior court denied Hayes' motion
for reconsideration, concluding that the 1967 patent conveyed
title in fee simple, with a reservation of the mineral rights in
the state. The court also concluded that, under this court's
holding in CWC Fisheries, Inc. v. Bunker, 755 P.2d 1115 (Alaska
1988), the public trust doctrine only applies to land under
navigable waters and that, because these lands are not under
water, the doctrine is inapplicable. This appeal followed.
II. DISCUSSION
A. STANDARD OF REVIEW
In reviewing a grant of summary judgment, we must
determine whether there exists a genuine issue of material fact
and whether the moving party is entitled to judgment as a matter
of law. Thorstenson v. ARCO Alaska, Inc., 780 P.2d 371, 374
(Alaska 1989). If the moving party establishes prima facie that
it is entitled to judgment as a matter of law, the party opposing
summary judgment must demonstrate that there exists a genuine
issue of material fact to be litigated. Id. (quoting Wassink v.
Hawkins, 763 P.2d 971, 973 (Alaska 1988)). In reviewing the
grant of a motion for summary judgment this court must take a
view of the facts which favors the non-movant. Loyal Order of
Moose v. International Fidelity Ins. Co., 797 P.2d 622, 628
(Alaska 1990).
B. APPLICABILITY OF PUBLIC TRUST DOCTRINE
In his motion for reconsideration, Hayes maintains that
ATS 201, as "filled tidelands,"was conveyed subject to a public
trust easement for the purposes of navigation, commerce and
fishing.4 He then argues that mining, as "commerce,"is a public
trust activity and concludes that he "cannot be either enjoined
or ejected from utilizing the property for [mining] purposes."
We disagree.
In CWC Fisheries, Inc. v. Bunker, 755 P.2d 1115 (Alaska
1988), we adopted the public trust doctrine as enunciated in
Illinois Central R.R. Co. v. Illinois, 146 U.S. 387 (1892),
stating that:
[T]idelands conveyed to private parties
pursuant to class I preference rights under
AS 38.05.820 were conveyed subject to the
public's right to utilize those tidelands for
purposes of navigation, commerce and fishery.
While patent holders are free to make such
use of their property as will not
unreasonably interfere with these continuing
public easements, they are prohibited from
any general attempt to exclude the public
from the property by virtue of their title.
CWC Fisheries, 755 P.2d at 1121.
Although we recognize that the filling of tidelands
alone may not ease all public trust restrictions,5 we reject
Hayes' contention that mining is a public trust purpose. In
Illinois Central, the United States Supreme Court declared that
title to lands under navigable waters "is a title held in trust
for the people of the state, that they may enjoy the navigation
of the waters, carry on commerce over them, and have liberty of
fishing therein, freed from the obstruction or interference of
private parties." 146 U.S. at 452. This usage implies commerce
in the sense of trade, traffic or transportation of goods over
navigable waters, a meaning which does not include mining.
Most importantly, a mining claim is not a "public use,"
but rather an exclusive, depleting use of a non-renewable
resource for private profit. We believe that even the most
expansive interpretation of the scope of public trust easements
would not include private mining enterprises.6
C. APPLICABILITY OF GOOD FAITH DOCTRINE
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, 49 P.
30 (Colo. 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., 354 P.2d 40 (Ariz. 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 (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, 97 P.2d 281 (Cal. App.
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.
_______________________________
1. The facts set forth in those opinions provide much of
the background necessary and will only be supplemented here as
necessary.
2. A.J. Associates, et al., appellees in this case, are
successors in interest to the appellees in both A.J. I and A.J.
II. See 748 P.2d at 333. Hereinafter, for convenience,
appellees in all three cases will be referred to as "A.J."
3. Both Michael Hayes and his father, Howard Hayes, are
parties to this action. They are hereinafter referred to in the
singular as "Hayes."
4. Hayes' argument that the state did not convey to A.J. a
fee simple interest in ATS 201 is devoid of merit. Under our
statutes and case law, a conveyance of public trust lands
pursuant to a Class I preference right "will be viewed as a valid
conveyance of title, subject to continuing public easements . . .
." CWC Fisheries, 755 P.2d at 1118 (emphasis added); A.J. I, 397
P.2d at 280-87; A.J. II, 748 P.2d at 334.
5. See, e.g. City of Alameda v. Todd Shipyards Corp. , 632
F. Supp. 333, 340 (N.D. Cal. 1986) ("The California courts have
expressly held that filling the land alone does not ease the
trust restrictions."); City of Berkeley v. Superior Court, 606
P.2d 362, 374 n.19 (Cal. 1980) ("[T]he reclamation of tidelands
subject to the public trust doctrine does not, without more,
terminate the trust."), cert. denied, 449 U.S. 840 (1980).
6. See. e.g., Marks v. Whitney, 491 P.2d 374 (Cal. 1971).
The California Supreme Court observed:
Public trust easements are traditionally
defined in terms of navigation, commerce and
fisheries. They have been held to include
the right to fish, hunt, bathe, swim, to use
for boating and general recreation purposes
the navigable waters of the state, and to use
the bottom of the navigable waters for
anchoring, standing, or other purposes. . . .
There is growing public recognition that one
of the most important public uses of the
tidelands . . . is the preservation of those
lands in their natural state, so that they
may serve as ecological units for scientific
study, as open space, and as environments
which provide food and habitat for birds and
marine life, and which favorably affect the
scenery and climate of the area.
Id. at 380 (citations omitted).
7. This requirement is applicable to Alaska mining law by
virtue of AS 38.05.185(c).
8. It is necessary to remand on this issue because it was
not properly presented to the trial court or adequately briefed
on appeal. Many of the pertinent statutes and regulations, as
well as the applicable case law, have not been cited or
discussed. On the record presented, we cannot determine which
DNR internal procedures govern cases, such as this, where a third
person seeks to establish a mining claim on private property in
which the state holds reserved mineral rights. Because this
issue depends, in large part, on the interpretation of state
statutes and regulations governing mining claims, and because the
state has a clear interest in this issue, we advise the parties
to notify the State Attorney General's office so that the state
will have an opportunity to set forth its position.
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