UNITED STATES v. COLEMAN
Legal provision: 30 U.S.C. 22
Argument of Frank J. Barry
Chief Justice Earl Warren: No. 630, United States, et. al., petitioner versus Alfred E Coleman, et. al.
Mr. Frank J. Barry: Mr. Chief Justice, may it please the Court.
This case involves the validity of the decision of the Secretary of Interior which invalidated and declared null and void 18 Mining Claims in the San Bernardino National Forest about 40 miles from San Bernardino on the crust to the Mountains near Big Bear Lake.
The claims were located for building stone and they were located in 1959, in 1949, 1951 and 1952 by Mr. and Mrs. Coleman.
The claims are 40 acres each and they extend from the main road, which is the main road to Big Bear highway no. 18 and they rise up on a mountain with a southern and eastern exposure - that is their exposure on those sides of the mountain - overlooking Baldwin Lake, in the distance the Mojave Desert and overlooking Big Bear Lake.
Claims were located for building stone and the principal issue in the case has to do with whether the Secretary of the Interior applied the proper rule when he declared that the time-honored, prudent-manner rule included a rule that there must be a showing that the mining claims or that the product of the mining claims, the building stone could have been marketed prior to July 23, 1955, the date of the Multiple Use Act.
The importance of that date is as follows.
The Multiple Use Act declared that common varieties of sand, stone, gravel and certain other minerals could no longer be deemed to be valuable mineral deposits under the mining law so that the discovery of such commodities on the public land would give one the right to locate and to have a valid mining claim.
The evidence in the case was that the stone was quartzite.
Quartzite is a very hard mineral.
It is a metamorphic mineral, a mineral that has been created by forces of nature acting upon sandstone.
Quartzite occurs on the claims in large, massive chunks.
And by that, I mean cliffs in the mountain itself that it breaks unpredictably; that is to say it doesn't break in slabs.
It breaks in any direction without any prediction as to what it would be, but it is quite colorful.
There are some pictures that indicate that it's a very colorful stone.
It is not – it's got very dominant colors in it - reds and yellows and browns; they are very strong colors.
That the stone has been used and it locally and to some extent, away from the area for building; that, however, it is an unpopular stone in the industry.
One of the witnesses was the principal executive officer or western representative or southern representative of a stone marketing company who testified that the stone was unpopular; that the stone masons didn't like to use it; that it was too hard; that it was too heavy; that it dulled the tools that the stone masons used; that there haven't been any call for it for sometime.
There was some reference to a call about six months ago that caused into make an inquiry among the other suppliers to know if any was available; that he hadn't stocked it for years and that there wasn't any to his knowledge being stocked elsewhere.
The problem of marketability is related to the rule, the prudent-man rule, which is the rule that's been applied by the Department and upheld by this Court, is related to the rule.
Indeed, it is merely an application of the rule to certain types of minerals.
The marketability or excuse me, the prudent-man rule is this: that one does not have a valuable discovery which is essential to the validity of a mining claim, unless he has within the limits of his claim an exposure of mineral and evidence that a man of ordinary -- that would induce a man of ordinary prudence to extend his energy and his labor and his means with a reasonable prospect of developing a valuable mine.
This is the one, the principal, the most important element in mining laws so far as it relates to the public domain.
By failure to comply with this particular provision of mining law or by circumstances that do not qualify, the mining claimant is denied a patent which gives him unrestricted use of the land.
He obtains the title in fee simple without any reservation, without any limitation as to what he would use it for.
He becomes the owner of the land.
Indeed, even before he gets a patent, he has practically the rights of a patentee with the exception that he can't market timber or use other products of the land other than the minerals, the -- except in connection with his mining operation, The prudent-man rule has been applied over the years and from the earliest time, it has been applied with special reference to this type of mineral, which occur so widely that to say merely that you have the mineral would not really be sufficient to say that you can actually make a profit.
Can a man, when he stumbles upon a deposit of sand, justify to himself the expenditure of the labor and the means necessary to develop a valuable mine?
Can he reasonably do this?
This is the test that we have applied.
And if what he is working with is something as common as stone or sand and gravel, the Department has required for years that there be a showing that there be evidence in the record to show that the defendant or that the contestant in the case could establish that he was able to extract the minerals to transport them to market and to dispose of them in the marketplace at a reasonable profit to justify his effort and his expenditure.
This basically is the prudent-man rule.
This is the rule which, as extended to, minerals of this character is known as the rule of marketability.
Justice William J. Brennan: Well is that -- Do I understand that means that the Department standard is present profitable marketability, is that it?
Mr. Frank J. Barry: Only --
Justice William J. Brennan: As opposed to the Ninth Circuit thought, if there was some future hope of profitable market, is that it?
Mr. Frank J. Barry: The Ninth Circuit has indicated in its opinion that what was required by us was an actual showing that there had been minerals marketed at a profit at the time that the application is made.
All the we required is, that there be some showing that you could market it.
Now, that would included indeed some showing, for example, that if I were to invest my money today, that perhaps next Saturday, I would be able to market or at some reasonable time in the future.
But a hypothetical idea, to put the kind of money it would take into the development of a mining claim to develop a large mine for sand and gravel or for building stone, if I'm going to compete with everyone across the road and on the same side of the road as I am, I wouldn't invest that money unless I had some assurance that I could market the property.
I assume that this is --
Chief Justice Earl Warren: We will recess now.
Mr. Frank J. Barry: ..discussing before the recess the fact that this particular stone that is found on this claim has not been -- is not marketable in the area of Southern California where it's located.
Perhaps, I should detail a bit of the evidence as to what the experience of this particular locator has been on the claim.
Over the period of ten years from the time that the claims were originally located until the hearing, he had sold approximately 1,000 tons of the stone by his estimate which are experts estimated was approximately correct and we don't question and that he got an average of $12 per ton for that thousand tons.
So that his total revenue from the property with respect to the building stone alone would be in the neighborhood of $12,000 over a period of 10 years.
Chief Justice Earl Warren: Gross?
Was that his gross?
Mr. Frank J. Barry: That appears to have been his gross.
Now, he expended a very large amount of money, if this can be attributed to mining.
He spent a great deal of time, which was estimated, I think perhaps the Court could be justified in ignoring the enormous size.
This is the sort of thing that would naturally lend itself to exaggeration.
He valued his time at $3.50 an hour and he said that he worked 300 days a year and that so many hours a day and someone multiplied it out and it came to $157,000 but this is what he had been spending his life on for the past 10 years on these claims and this is the amount of gross sales that he had made.
In addition, he had expended a considerable amount of money.
He had invested money in equipment.
Most of it incidentally, from what appears on the record, equipment that would be suitable for road grading.
The particular work that was done on the claim seems not to have been strictly speaking, coring work.
That is to say he did not excavate far down into the deposit but what he was doing was selecting from the rock slides in a broken pieces of rock that are found rather commonly across the surface of the claims.
He was picking out suitable types of rocks, sorting them out, classifying them and so forth and he would sell some of these rocks.
And as I say, over the period of 10 years, he sold $12,000 worth of rock.
This is what the evidence would show.
Justice John M. Harlan: Lived off of the land?
Mr. Frank J. Barry: He lived on the land.
He had a home there and he lived there with his wife.
There's a picture of the home in the record, a colored picture and it shows it to be a quite and nice little piece of property right on the road.
There are number of roads on the claims that -- I don't know how many miles, I don't know that the record shows.
I know that it's at least 3 ½ miles of roads that go up on the claim.
The claim covers an area of over a square mile or 720 acres and it's approximately -- well, a 640 acres to a claim or to a square mile.
Now, the Department of Interior in its decision, considered how much he had marketed of this stone over a period of time, all of which was in the record, how much he had gotten for it, how much labor he had to expend, how much of the stone there was in the neighborhood.
And in the area in which these claims are located, there are roughly 40,000 or 40 square miles to 28,000 acres of quartzite exposed about a thousand feet thick.
And that's enough quartzite to stretch from here to there or some all sorts of statistics, it could cover the District of Columbia or third of the District of Columbia to a depth of about a thousand feet.
It could -- you can think of it in terms of an enormous amount of stone.
Now, most of the operation that had been conducted as shown by the evidence was, the business of simply sorting the stone that was found on the surface - that is to say he picked out pieces of stone that would be suitable for a particular purpose.
In other words, if wanted to get some slabs, he would look around until he found pieces that broke into slabs and that kind of thing.
And these stones are piled up, in fact I think there are some pictures in the record that show that they were piled up in the vicinity of his home; some of them are flat and so forth and some of them are just chunks.
But most of the stone, the evidence showed, is the type that is massive and that if you try to break it, it breaks in an unpredictable way.
And that if a piece doesn't break out, suitable for the purpose that you need, it can be discarded or put through a crasher to make gravel out of it or something like that, but it wouldn't have any particular use to fill a particular order.
Now, we looked at this case, that is the Department of Interior who looked to the case, made a determination that if this man wanted to develop a mine there and wanted to invest the kind of money he was talking about to start at the top and work down that whole mountain of building stone that he could not have had a market, hot for that quantity but not for any kind of a reasonable operation.
He could not have had a market for his product of his claim.
And, we therefore concluded that he should not get a patent to the public domain to take this land out of the national forest, put it into private ownership for any kind of use because it was very likely, notwithstanding that there's no limitation on what a man does with property after he gets it, that a prudent miner would not develop this property for a mine.
And that is what we're trying to administer when we administered the mining laws in the Department of Interior.
The original law was passed in 1872 at the time when the country, when the laws of the country were intended to encourage people to go out and live upon the land, to fill up the country with people so there'd be some people living out there in these areas in the west.
So there was lavishness about how the public land laws were administered.
Now, the law has not changed but times have changed.
And I don't suggest that we have interpreted the laws any differently than they have been interpreted from the beginning but lots of things have changed.
Nowadays, there are all kinds of demands for public land and you will notice in the Briefs that had been filed in this case that we are accused of having engrafted something on the new law, something that isn't authorized by Congress in some sense that we may have violated the rights of the contestee in this case, but I say that the law has not changed.
The old cases support the proposition that one is not entitled to obtain land from the United States from the public domain, unless he can show that he will carry out a policy that Congress was trying to encourage, for example, to encourage the development of mineral resources.
From the very earliest days, we had the rule that that math that we were not giving a mining patent to someone unless on an objective basis, an ordinary prudent man would be one who would spend his time and money to develop the property, to develop a mine.
That was the rule that we adopted from those days.
Now I say that times have changed, because now there are lots of demands for lands and there's a great deal of concern for land.
People need land for cities and for highways and for residences and for all kinds of purposes, for summer homes indeed in any part of the west.
And because times have changed, there's been a good deal more strictness.
Before 1910, there almost was never a mineral examination by a government representative when if someone made an application for mining claim.
That's just an evidence of the attitude that we had about anyone who was applying for a mining claim in those days.
In 1910, we started hiring in the Department of Interior, we started hiring people to – local miners to kind of verify if the allegations that were made in patent applications and tell us was there really a discovery, are these people really entitled to get a patent.
About 1917, the Department started hiring full time mining engineers and geologists to go out and make inspections of claims.
And believe it or not, until 1940, they were still issuing patents without any mineral inspection of the claims by the government at all, but I think the times have changed.
That mineral examiners have become more particular.
They have insisted that they see on the ground the evidence and the facts that justify this man's claim that he can make a business here and make a profit at his business.
And, lawyers and the government are being more strict in the application of rules that have been in the books and that have been spelled out by this Court just this strictly but no more strictly than they're being applied now.
In the Cameron case, which is a very like this case, a case in which the Department had declared invalid mining claims on the rim of the Grand Canyon.
Mr. Cameron refused to leave the property as did Mr. Coleman, after his claims had been made -- declared null and void and the government sued in the nature of ejectment and in that case, the Court applied a strict standard.
It said, you have to have a discovery and the evidence has to be such that a reasonable man would spend his time and money with a prospect of developing a valuable mine.
The evidence in this case didn't show that.
The Circuit Court has said that the Secretary of the Interior, the Department of Interior, had rendered a decision which was arbitrary and capricious and abuse of discretion.
And for what I've been able to see of the case is that means that the Decision that has been rendered in the Department was irrational, but it seems to me that it's a reasonable argument that we would ask this Court to review it.
I would like -- if there are no questions, I would like to save the balance of my time for --
Justice Abe Fortas: Mr. Barry, I notice that the Examiner and the Acting Director of the Bureau of Land Management, each of those in different ways, said that the necessary showing had been made with respect to certain of the 18 claims here.
Mr. Frank J. Barry: That's correct.
Justice Abe Fortas: And the Secretary ruled that the requisite showing had not been made with respect to any of the claims.
Now, is that still debated as to whether it's still a factual controversy as to whether necessary showing has made as to certain of the claims?
Mr. Frank J. Barry: Let me just point this.
I'm sure I won't need to state to you how the Department of Interior operates.
But just as we are asking this Court to reverse the Ninth Circuit, the Forest Service, who conducted this appeal and carried on the prosecution in the lower court, appealed and asked the Secretary to reverse the Director of the Bureau of Land Management.
There is a saying in the Department, I don't know if its common in government at all but you've asked me if it's still debated.
I might say in response that we may be wrong, but we're never in doubt.
But we are -- and we do not believe that there is any question about it; that these claims cannot be marketed.
That is the product of these claims cannot be mark -- A mine cannot be developed there.
It would cause too much money to mine.
There's no evidence in the record to indicate incidentally that one could mine and make a profit, but we're saying that we go a step further.
The evidence that we have is that you could not mine because no one wants to buy this stone.
No substantial number of people want to buy this stone, certainly not enough to justify the United States in disposing of such a large tract to find land.
Justice John M. Harlan: [Inaudible]
Mr. Frank J. Barry: I'm not so sure that there would be -- I think that the Ninth Circuit misstated what the Department of Interior had held.
And if I can refer to the decision of the Ninth Circuit, the Court said that, “The Department had applied a rule in derogation of Castle against Womble and had required that, Castle against Womble is the old case of 1894 that was decided in the Department of Interior, that we had applied a rule that was in derogation of Castle against Womble and had required a showing that right today, that presently, the man was making a profit.
We did not make any such -- we did not apply any such rule.
We applied the rule and you can see by examining, simply they had note in the case that we -- that was decided in the Department.
They had noticed this.
It says, “To satisfy the requirement for a discovery on a building stone claim located before July 23, 1955, it must be shown that the exposed materials a common variety of stone appearing within the limits of the claim, could have been extracted, removed and marketed at a profit prior to that date.
And where a showing is not made, the mining claim is properly declared null and void.”
That was what we held.
And what the Ninth Circuit said that we held was that we had required that there be a showing that there is a present profit being made by the contestee.
We do not require that.
Our marketability test does not require that.
We only require evidence that you could market it if you produced.
No effort was made to do anymore than that in the trial and no such ruling was made by the Department.
If there are no more questions, I'd like to save the balance of my time.
Chief Justice Earl Warren: Mr. Twitty?
Argument of Howard A. Twitty
Mr. Howard A. Twitty: Mr. Chief Justice, may it please the Court?
The issues in this case involve 18 cluster mining claims which were located during the years 1949 through 1950.
They were located pursuant to the Building Stone Law, which is 30 U.S.C. 161.
And that law enacted in 1892 provides that “Lands that are chiefly valuable for building stone, may be located under the law (relating to cluster mining claims).”
In 1958, the contest was filed in this case.
The contest complaint has three charges, three grounds for seeking to hold these claims invalid.
The first ground was that there was -- the lands embraced within the claims are non-mineral in character.
Now, in the evidence in this case and both the hearing examiners, and I believe even in the Brief of the government, it's stated, it's agreed that this land is chiefly valuable for building stone.
The evidence in your case shows that that's the only use that the land could be put.
There's no other -- there was no testimony that it could be used for any other purpose.
So on that charge was met and there's no controverting evidence whatsoever on that.
The second charge in the contest was that minerals have not been found within the limits of the claims in sufficient quantities to constitute a valid discovery.
As Mr. Barry has pointed out, the evidence is clear that on the -- in these claims, these cluster mining claims and in the surrounding area, there is building stone to a depth of a thousand feet.
So that charge is simply met.
There's just no evidence that minerals have not been found in sufficient quantities to constitute a valid discovery.
The third charge related to the amount of work required on each claim is $500 worth of work and they said that on ten of the claims, there had not been $500 worth of work.
The hearing examiner found that, as to five of the claims, Mr. Coleman had established the market and held five valid.
Both sides appealed and the Director of the Bureau of Land Management said three claims and part of the fourth were valid and then it goes to the Secretary and the Secretary decides, as I read his Decision, and this was the Decision written by the Deputy Solicitor for the Department as he's authorized under their regulations.
The Decision was that, “Because this stone is a common variety, and because Coleman had not demonstrated the market prior to the enactment of the Common Varieties Act, July the 23rd 1955, all of the mining claims were invalid”.
Now, the --
Justice Abe Fortas: Well, Mr. Twitty, may I ask you this question?
Does the mining claim, even one would relate to building stone have to be claim for valuable mineral deposits, translating that a “valuable deposit of building stone”?
Mr. Howard A. Twitty: Your Honor, we have pointed out that under the Building Stone Law, it says that “you can locate and you can go on the lands, enter the lands for lands chiefly valuable for building stone.
We say that on that alone, we should be entitled to a patent.
Justice Abe Fortas: But does that mean that the building stone has to be valuable?
Mr. Howard A. Twitty: Chief; it says “chiefly” valuable.
Now, let me answer that question a little more fully, if I may.
We have pointed out that if that is not the rule - there are no laws or cases – and I might state that there interior decisions that are adverse to that position, but our position is that if the law of discovery is the applicable law under Section 30 U.S.C. Section 22, I mean Title XXX U.S.C. Section 22, it speaks of a valuable mineral deposit.
And in Castle versus Womble, which is the case this Court has -- where an early land Department's decision which this Court has followed as recently as in Best versus Humboldt Placer Mining Company, this Court said that what that means, “Is there a valuable deposit?”
Is, it's the prudent-man test whether that would justify a man going on the claims with a reasonable expectation of working the claims and eventually, into some sort of a mining venture.
It is our position --
Justice Abe Fortas: Now, do you agree that that applies to building stone?
Mr. Howard A. Twitty: If the Court rules that -- our argument that just showing building stone chiefly valuable, I mean the lands chiefly valuable for building stone is enough to obtain patent.
If the Court disagrees with that position, then I say that that is the prudent-man test in the construction of Section 30 U.S.C. 22 as the applicable test.
Justice Abe Fortas: So that -- and let me see if I will get a little more clarity on my own mind.
Is there an issue which you are tendering?
Now, this sort, do you contend that you don't have to show that the building stone is valuable but that the land is chiefly valuable for building stone; that there is a difference between those two standards?
Mr. Howard A. Twitty: We have urged that that is a proper construction of Section 30 U.S.C. --
Justice Abe Fortas: In other words, that if the land is absolutely useless except for the building stone and the building stone in totality for the -- for all of the claims as worth a thousand dollars, you would say that's enough.
You don't have to show that the building stone is capable of being mined and sold?
Mr. Howard A. Twitty: That is if you adopt our theory that you can look just to Section 30 U.S.C. 16--
Justice Abe Fortas: And there's no precedent to your theory, is it?
Mr. Howard A. Twitty: There is no Court precedent and I have already advised the Court and I think there are Interior decisions adverse to that position.
Justice Abe Fortas: Yes.
Mr. Howard A. Twitty: I think the -- our basic contention in this case, unless if that argument is not accepted, the basic contention is that the prudent-man test applies to this at the test of discovery on these claims.
That is my --
Justice Abe Fortas: Well, the Solicitor, by correctly understand him, braced with that, doesn't he?
Mr. Howard A. Twitty: He did not agree with it.
It seem to me that in he -- unless I misunderstood him, he said “as to these minerals of common currents, the Department has applied this other test of what we call or say is present marketability.
And we say that it's our position that the prudent-man test is the applicable test.
And as the Court of Appeals pointed out in its decision, market factors are relevant evidence in considering not only the prudent man or whether a prudent man would be justified in going in.
Justice Abe Fortas: I thought he said that test that they applied here was a prudent-man test; that is to say that it must be a deposit or in your case, in occurrence of building stone which the characteristics of which are such that a man of ordinary prudence would spend his time and money to develop it.
Mr. Howard A. Twitty: That is the --
Justice Abe Fortas: And then you said that I understand them to say that that is to test him; that's test was applied here.
What I'm trying to find out is whether we're really dealing, assuming we get beyond your first point which is that if the land is chiefly viable for building stone that then means some indifferent from our valuable deposit of stone.
We get test and I don't agree with you on that.
What I'm trying to get at is whether we then confront a difference between you and the Solicitor with respect to the standard to be applied or a difference between you and the Solicitor with respect to its application in this particular case.
Mr. Howard A. Twitty: The Solicitor, as I understood him, had as an additional test for -- on this building stone cases a test of present marketability.
We have cited in our Brief decisions of the Interior Department where they have called it as an additional test to the prudent-man test on these minerals of common occurrence.
In this -- in the government's Briefs in this case, they went further than that.
They said the present market or ability test or is the same, essentially the same as the prudent-man test and we are maintaining and I think our Brief will point up our argument that this rule of marketability is something that has been developing through the years and is gradually becoming a test that is increasingly astringent.
And as long as were on that subject, I wish to -- I think I can illustrate that.
I pointed out that on my understanding of the Court of Appeals' decision is, that they said marketability was a relevant evidence on question of good faith if Mr. Coleman, and there was no evidence in this case that he did not locate these claims and hold these claims in good faith for this building stone.
But he says, they said: “Those market factors are relevant evidence on a question of good faith and they are also relevant evidence on the question of the prudent-man test.
What the circuit court says, “you can't take just one aspect of the evidence - that is the marketability factors - and apply that to this type of minerals to the exclusion of the other evidence relevant in the prudent-man test and as I read the opinion, that is why they reversed the Secretary's decision.
Mr. Barry has pointed out in this case that this marketability factor is something that he says he argues a little bit that they don't require present marketability.
I say that when they provide, as the decision did in the Secretary's decision did in this case, that unless Coleman could show prior to July the 23rd 1955 that he had a market where he could obtain the profit for his, the building stone, he has applying the present marketability as a test.
Because had this claims been located on July the 2nd, for example of 1955, the test that the Secretary's opinion applied is that on the next day, he would have to show that there was a market for this building stone and with that, we disagree.
In the Brief, they have argued, the government has argued that present marketability is not -- is the proper test to apply as I read the Brief.
I wish to point out two or three decisions of the Interior Department in the past where they certainly did not apply that kind of a test.
The case Freeman versus Summers, --
Justice Abe Fortas: You’re saying that their brief, the government Brief says that present marketability is or is not the proper test.
Mr. Howard A. Twitty: As I read their opinion, they say that they do not use the word “present marketability” but that in substance is what they're saying.
Justice Abe Fortas: You're talking about their opinion or their brief in this Court?
Mr. Howard A. Twitty: The government's brief.
Justice Abe Fortas: Brief in this Court.
Mr. Howard A. Twitty: For example, the --
Chief Justice Earl Warren: What is the Court below relies on in saying that the government used that test?
Mr. Howard A. Twitty: Used the present marketability as the test?
Chief Justice Earl Warren: Present marketability.
Is there anything in the record to indicate what the Court of Appeals relied on in making a statement in its opinion?
Mr. Howard A. Twitty: Well, yes.
I think when the Interior Department or the Secretary's decision said that unless they could show there was a market prior to July 23, 1955 while the claims were invalid, they were applying a rule of present marketability at a profit and that was what it seems to me the Court of Appeals reversed on among other things.
The Court of Appeals said that that's just one aspect of the relevant evidence to establish whether there was a valuable mineral deposit under the prudent-man test.
But when they say, as the Secretary's Opinion did in this case that on that particular day, you had to show marketability of the profit you are applying to test the present marketability.
I think that seems quite clear at least to me.
In the case Freeman versus Summers and this is the case which I did not cite in my Brief.
52 ID 201 in 1927 Oily Shale case, the Interior Department had this to say regarding prospective value and after all that is, speaking a -- that is the other side of the coin as far as present marketability in the profit.
And speaking -- in that Oily Shale case, they said: “While at the present time there has been no considerable production of oil from shale's, due to the fact that abundant quantities of oil had been produced more cheaply from oils, there's no possible doubt of it value and of the fact that it constitutes an enormously valuable resource for future use by the American people.
Justice Hugo L. Black: Where was that case reported?
Mr. Howard A. Twitty: 52 ID 201; in other words and as we all know, the Oily Shale case is not yet in really commercial production but in '27, they said that -- these people were justified.
They allowed those cases to go to a mineral patent because -- Continuing the Court in that case, “It is not necessary in order to constitute a valid discovery under the mining laws sufficient to support an application for patent; that the mineral in its present situation can be immediately disposed of at a profit.
Justice Byron R. White: [Inaudible] I thought was in this case.
May be I haven't understood your –-
Mr. Howard A. Twitty: Which is used?
Justice Byron R. White: Whether or not the Court side or whatever the stone is, is this common stone within that --
Mr. Howard A. Twitty: Common variety, yes I will touch on that.
Justice Byron R. White: Now as I understand it, if we disagreed with the Court of Appeals on that issue, the case would be over with?
Mr. Howard A. Twitty: On the (Voice overlap)
Justice Byron R. White: Without -- its marketability and prudent-man arguments?
Mr. Howard A. Twitty: Yes, that's right.
Justice Byron R. White: Is that true?
Mr. Howard A. Twitty: Yes, because that was --
Justice Byron R. White: The government has two separate arguments here and one of them is this cut that building stone, that quartzite is common building stone and therefore is not patentable under the mining laws at all?
Mr. Howard A. Twitty: That's right.
Justice Byron R. White: And if we agreed with the government on that, we never reach all these other issues?
Mr. Howard A. Twitty: That would be true, yes.
Justice Byron R. White: Alright, would you argue on it?
Mr. Howard A. Twitty: Yes, I'm going to touch, Your Honor.
I went ahead in my arguments in response to some of the questions.
In 1939, in the Sand and Gravel case, this was in United States versus Underwood, the Interior Department spoke that -- in that particular case, the Sand and Gravel was neither presently or prospectively valuable at that time which indicated that at that time, they felt that the doctrine of -- that Sand and Gravel might have a perspective value and rather than present marketability was an applicable test.
That case, which is unreported, is A 22066 dated August the 17th 1939.
And finally, in 1954, in an Interior Department decision, United States versus Mouat 61 ID 289, you can't read the decision but come to the conclusion that the Interior, rather of that opinion felt perspective value which was a proper test to determine whether there was a valuable mineral deposit within the meaning of the mining laws.
I mention those cases merely to illustrate that -- since those cases were decided, the common variety is -- law was enacted in July the 23rd 1955.
And since that time, they have -- you can't find cases where they speak of perspective value.
They have changed their standard.
Now, I maintain to a standard of present marketability at a profit and that is the standard to which we object as a sole test for determining whether there was a valuable mineral deposit of these building stone claims.
Justice Abe Fortas: Well, anything in that opinion except to that effect as I accept the sentence that appears at the bottom, page 12 of the record – bottom of page 12 of the appendix that we have before us and that says that Coleman was required to show that by reason of all pertinent factors including the existence of a present demand before July 23, 1955, the deposit could be mined, removed and disposed of at a profit.
Is there anything else in the opinion other than that that supports your position and that of the Ninth Circuit?
Mr. Howard A. Twitty: The beginning of that paragraph, it states “The only issue in dispute at the hearing on September 16, 1958 was the existence of a market for profitable sales before July 23, 1955”.
And that the sentence, which you read, Mr. Justice Fortas, as I understand, as I read it, they say he was required to show that by reasonable -- all pertinent factors, including the existence of a present demand before July 23, 1955, the deposit upon which his claim was based, they are saying that that is one of the essential factors that they must show.
That is -- that's why --
Justice Abe Fortas: Well, they are certainly saying that that is a pertinent factor and that's I -- it seems to me quiet clear that this is not a model of precision, this language that you and I have been discussing.
And on the other hand, at page 12 of the government's brief, they take a position four square fair list is clearly in favor of the marketability test rather than the present market test.
Mr. Howard A. Twitty: Where was that, Your Honor?
Justice Abe Fortas: Page 12 of their brief.
As distinguished, I would say I think it's fair to say as distinguished from or the rather unclear language in the acting -- in the Deputy Solicitor's opinion on the same issue.
Mr. Howard A. Twitty: In this case, in the government's brief which you refer to, they have pointed on Page 12 too -- first of all, at page 17 they say that “the prudent-man test and the profitable marketability test are not essentially distinct standards.
Rather, the latter is simply a refine of the other”.
Justice Abe Fortas: But there, they are talking about perspective marketability as they make clear, I think that was where in particular at page 12.
Mr. Howard A. Twitty: As I read the government's brief, they do not concede that perspective marketability is an applica -- is proper in testing whether there is a valuable mineral deposit.
Because on page 12 of their brief, they say, “Furthermore, it has never been thought sufficient for a mineral claimant to prove a purely speculative value predicated on some indeterminate future rise in prices or decline in cost.
Validation of claims based on conjectural market fluctuation would merely assist private investors seeking to stockpile the public domain.
Now on our Oil Shale case, there is a situation where the Oil Shale was -- there was no commercial market for it but they held that that was a proper case for them to -- for patent to issue because prudent man, considering their perspective value and the possibilities in the future, would invest money with the hope of developing a pane mining operation.
Now, that is where I strongly disagree with.
In outside of the area of building stone in the area of mines, I'm from Arizona and copper mine is one of the most important, there had been -- the mining today in Arizona, the ores now being mine today just simply could not have been mined 20 years ago because they were higher grade ores being mined at that time but prudent-man 20 years ago would recognize that the situation with -- that technology would have been improved so they'd be in a position today to operate this mines and I say that that is a proper consideration in determining the prudent-man test and that is perhaps one of our basic quarrels with the Interior Department and I'd say that it's a proper test for all kinds of minerals, whether they be metallic minerals or building stone.
Mr. Justice White mentioned the other problem.
Bear in mind that the Interior Department in its decision reached the -- made the conclusion in its decision that this building stone was a common variety and, therefore, this July 23 cut-off date would be the proper date for applying their marketability test.
We have -- we strenuously object to that.
First of all, the Building Stone Act was enacted for stone which -- an Interior decision back in 1891, it held that ordinary building stone just simply could not be located under the mining laws and that was the reason for the enactment of Section 30-161 or the 1892 Act.
There was never, in any of the debates, in the Congress or in any of the Committee Report, there's nothing in the Common Varieties Act that said -- suggest that there was an intention to repeal that law and we maintain that the Building Stone Act is still the law.
The Deputy Solicitor in the Secretary's decision in this case said: “In view of the immense quantities of identical stone found in the area outside the claims, the stone must be considered a common variety”.
We maintain, this is a building stone and the record is -- there is plenty in the record, the government's own witnesses testified that it was a kind of stone that could be -- which was valuable for building purposes and was popular, I might say, and used to great deal in the area, in the vicinity of this building stone claims.
The Deputy Solicitor, where he says that it's a common variety because of the immense quantities of the stone, he is not following their present regulations.
Because their present regulations 43 C.F.R. Section 35 11.1, which I do not have in my brief, says, “mineral materials, which occur commonly shall not be deemed to be common varieties if a particular deposit has a distinct and special properties, making it commercially valuable for use in a manufacturing, industrial or processing operation.
Now in this case, admittedly, these building stone is used for in making -- in the operation of -- I mean in the construction work.
It has special utility.
It has distinct and special properties.
Moreover, and I see my time is up.
Justice John M. Harlan: Can I ask you one question?
Mr. Howard A. Twitty: Yes.
Justice John M. Harlan: Assuming that you are correct, the Court of Appeals is also correct, is that [Inaudible]
Mr. Howard A. Twitty: Yes, Your Honor, I do.
I think --
Justice John M. Harlan: [Inaudible] what?
Mr. Howard A. Twitty: I think this Court has adopted as the proper test the prudent-man test and it's the test applicable to all valuable mineral deposits and that is the test which -- the test Congress has understood the law as to be and it's my position that they cannot legislate that that is the Court's interpretation of what the prudent-man test is and it would be legislation on the part of the Interior Department to engraft a new rule of marketability.
Chief Justice Earl Warren: Mr. Barry?
Rebuttal of Frank J. Barry
Mr. Frank J. Barry: May it please the Court.
First of all, I think perhaps I have to clarify the present marketability rule emphasize again what I said before.
The prudent-man rule, note: “Is cast in terms of a prudent-man”.
It doesn't say anything about the kind of mineral you're going to have or anything else and it's talking about a “prudent-man” in a commercial sense.
What will he spend his money on?
We say and we have reiterated throughout and have often reiterated throughout not only this proceeding but in all discussions with this matter -- on this matter with members of the mining industry and with people that we do business with, we have said all along that the prudent man would ask himself this question.
Now, with respect to copper, I note that in the morning paper that one of the big companies has raised the price of copper to 42 cents a pound.
You can look in the Bureau of Mines Handbook, which is a publication put out annually by the Bureau of Mines or perhaps at intervals every year or so, they put this out and you can find out what the quotation is for almost all minerals.
But what is for saying in graph?
What is it for building stone?
No one knows.
So, we are saying something -- incidentally, there's something else.
If you have copper, you can sell it for that.
If you have gold, you can sell it for $35 an ounce.
Sometimes, you sell it for more but you can sell silver, you can sell all of the metallic minerals and most of the non-common variety minerals can be sold in various places in the country at a price that you can ascertain in advance and that we can ascertain in advance.
But when a man is going to start a sand and gravel operation or a building stone operation, we don't know whether he is going to be able to sell anything or not.
There isn't any place we can turn to see what the quotation is.
So, we have required only that he presents some evidence of marketability.
Now, we're still talking about the prudent-man.
So, the question that was asked: whether we could think about a prospective market.
Of course, we can but it's outside this case.
There isn't one scrap of evidence in this record to indicate that next week or next --
Justice Abe Fortas: I don't believe that's quite --
Mr. Frank J. Barry: I beg your pardon?
Justice Abe Fortas: I don't think it's quite that, Mr. Barry.
The question is whether what was the standard that you used in your opinion?
Mr. Frank J. Barry: Fine.
And the standard that we --
Justice Abe Fortas: And that the standard you used in your opinion, I have to say is -- was not expressed with the typical Interior Department clarity.
Mr. Frank J. Barry: Alright.
Now, we said “Marketability” – ability to be --
Justice Abe Fortas: No, you didn't get it.
You look at page 12 on the record and look at the first sentence to which Mr. Twitty called our attention to.
Mr. Frank J. Barry: Of the brief or the opinion?
Justice Abe Fortas: No, the record, the appendix of the record.
Mr. Frank J. Barry: Alright.
The only issue in dispute at the hearing on September 16th was the existence of a market for profitable sales before July 23, 1955.
Now, in the context of the record, as I say, there's nothing in the evidence to show that the marketability is going to be any different next week or next week, next week or the week after or this week.
Now, let me say this: if evidence was shown that at the time of the hearing, which was subsequent to 1955, the evidence was admitted as to what was marketed afterwards, evidence was admitted as to what demand there was for the stone afterwards, that evidence would relate to whether or not this stone was marketable and whether it could have been marketed, whether it had the ability of being marketed before July 23.
And that evidence had to be in the record in order to establish that building stone was a locatable mineral on that date.
Justice Abe Fortas: I don't agree with you.
Why do you say that?
Mr. Frank J. Barry: I beg your pardon?
Justice Abe Fortas: It's quite conceivable as a theoretical matter anyway that no evidence could have been adduced to show that there was a market on or before July 1955 but that the evidence might have been present, showing that to a reasonably prudent man, this building stone might be saleable in a year.
Mr. Frank J. Barry: Alright, fine.
Justice Abe Fortas: Isn't that conceivable?
Mr. Frank J. Barry: That point is well-made and if that point had been in the record, the language that to be consistent with the rule of the Department of Interior has got the language that has been used in this case might have been modified to say something like this: whether there was before July 23, 1955 evidence that the stone would be marketable, not in the present but possibly in the future.
Justice Abe Fortas: That's a very different matter, that's right.
Mr. Frank J. Barry: Alright, but the evidence in this case --
Justice Abe Fortas: And I think that's what -- I think when you and I are talking about now is what true at the Ninth Circuit.
Mr. Frank J. Barry: Well, I don't know.
I don't think there was anything in our opinion the truth on the Ninth Circuit.
Justice Byron R. White: [Inaudible]
Mr. Frank J. Barry: Now, I do want to say something about the question of the Chief --
Justice Byron R. White: [Inaudible]
Mr. Frank J. Barry: No, it is not.
No, I think that was I beg to differ with counsel.
These are not two separate arguments and for this reason, it's a rather complicated little point.
Congress declared in 1955, as of July 23, 1955, that building that stone, we're getting out of the argument as to whether it's a common variety of whether building stone was included for the moment but they said that stone could no longer be deemed a valuable mineral deposit.
Now after my discussion with Mr. Justice Fortas, what I'm saying is that if the evidence was prior to 1955, that one could reasonably anticipate that he could market a stone, he would have been a prudent man to make an investment.
That might have been what we would have said and we might have validated the claims under those circumstances.
Justice Byron R. White: [Inaudible]
Mr. Frank J. Barry: No, it doesn't apply to any kind of stone whether --
Justice Byron R. White: [Inaudible] variety of stone.
Mr. Frank J. Barry: Alright, let me tell you what it means.
The 55 acts --
Justice Byron R. White: [Inaudible] Act?
Mr. Frank J. Barry: Alright, fine.
The Act says that “A deposit of common varieties of sand, stone, gravel, pumice, pumicite, or cinders shall not be deemed a valuable mineral deposit within the meaning of the mining laws of the United States”.
Now, mind you, this was to take these minerals out of the locatable class or discoverable class after 1955, but it didn't effect valid mining claims theretofore located.
In other words, if the evidence didn't exist that before 1955, before this date in 1955, a man could have marketed his stone at sometime and so that he would be induced as a prudent man to invest his money, then if afterwards such evidence came to light or such evidence was created by a turn of events that suddenly everybody wanted mark – wanted quartzite or something like that but this was not anticipatable anything else in advance, he can no longer get a valid mining claim for building stone, if this is a building stone.
That is the point that I'm making; that these are different, these are really different issues.
The first issue is this: that before if it's a common variety, he could have located such a valuable deposit, he could have located it before 1955.
If it was a common variety and valuable and marketable and everything else, he can't locate it after 1955.
So that really, we have two questions here.
The case was tried in 1958.
The question had to be: did he have a valid mining claim before 1955?
If he did, he gets a patent.
If he didn't, he doesn't.
It doesn't matter if something develops some turn of events that wasn't anticipated before 1955, it doesn't matter that if in the future, in 1970 or 1980, that suddenly there may be a market for this stone.
He can no longer locate, he can no longer validate his claims.