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District Court of Appeal, Third District, California.

AMES et ux. v. EMPIRE STAR MINES CO., Limited, et al.

Civ. 6215

Decided: August 22, 1939

Simeon E. Sheffey, of San Francisco, and Richard Belcher, of Marysville, for appellants. Robert M. Searls, of San Francisco, Jones & Finnegan, of Nevada City, and William E. Colby, of San Francisco, for respondents.

This action was brought to prevent defendant from mining beneath the surface of plaintiffs' land and to recover damages for operations carried on there before the action was commenced. The issues as to damages were not tried, counsel having stipulated that the trial of such matters be held in abeyance until after the question of title had been disposed of and settled upon an appeal. On this question of title judgment was rendered in favor of defendant, and plaintiffs appeal therefrom.

The land of appellants, referred to herein as the “Ames” land, may be described for the present purpose as the southwest quarter of section 15, township 16 north, range 5 east, M.D.B. & M. Two quartz mining claims, the Pennsylvania and the Jefferson, which are held by respondent under leases from the alleged owners thereof, are situated in the southeast quarter of section 16 of the same township and, of course, lie to the west of the Ames tract. The mining claims are located on a north and south vein, are the same width (400 feet) and their easterly side lines are approximately parallel to and 200 feet distant from the westerly boundary line of the Ames land. The Jefferson claim extends 750 feet north from the south line of said section 16, and its north end line coincides with the south end line of the Pennsylvania. The latter claim then extends north for a distance of 1540 feet. Section 16 is a so-called school section and therefore the 200–foot strip of land lying between the mining claims and the westerly boundary of appellants' land is so-called school land. It is conceded that the vein dips easterly at an angle of about forty-five degrees and passes under and through the strip of school land and thence under the Ames tract.

As far as the Pennsylvania claim is concerned the controversy is essentially a question of priority of title. Appellants claim title to the Ames tract under a railroad grant by congress which became effective July 25, 1866, 14 Stat. 239, granting certain sections of the public domain to the California and Oregon Railroad Company in aid of railroad construction between Roseville, California, and Portland, Oregon, followed by a patent issued June 14, 1880. Respondent bases its claims on locations allegedly made long prior to 1860, under local mining district rules, followed by recognition by the Mining Act of July 26, 1866, 14 Stat. 251. A patent was issued for the Pennsylvania claim on August 18, 1880. The Jefferson is unpatented. Respondent maintains that its predecessors have worked the two claims since the early days of the California gold rush and have taken therefrom great quantities of valuable minerals.

Assuming for the present that respondent's claims are otherwise valid, we shall proceed first to dispose of the question of priority. On this point appellants urge that when congress passed the act of July 25, 1866, 14 Stat. 239, granting the railroad company certain alternate sections to be earned and selected later, it was a grant in praesenti; that at that time, although many thousands of men were engaged in mining upon the public domain, such men were simply trespassers; that even though their district rules were in many respects recognized as law in disputes between mining claimants, such men had no legal rights as against the government or anyone claiming under it. It is further argued that no legal rights could be acquired in such claims prior to the Mining Act of July 26, 1866, which, it will be noted, became effective one day after the effective date of the railroad grant. It is further contended that although the Mining Act sought to recognize the rights theretofore initiated by miners under their district rules and thus cause the inception of title to such claims to relate back to the time of location, that congress, by the railroad grant, entered into a contractual relation with the railroad company and for this reason and because the grant was a present one had no power to give effect to a mining location that had no legal standing before said contractual relation arose. It is also maintained that even though the railroad grant did not purport to pass mineral lands, when the land department passed upon the character of the land for the purpose of issuing a patent this was necessarily a binding adjudication of the fact that said land and everything beneath the surface thereof was nonmineral and that this finding is conclusive against a collateral attack and thus effectively cut off any rights which might have otherwise intervened. In reply to this, respondent contends that its locations were made long prior to the railroad grant and insists that there was congressional legislation, even before the Mining Act of July 26, 1866, which established the validity of such locations; that when a patent was finally given to the Pennsylvania it related back to the date of location.

For the reasons that follow, we are of the opinion that the solution of the problems now before the court does not depend upon the validity or effect of early mining district regulations and that it was not necessary for respondent to show that its rights originated prior to July 26, 1866.

The railroad grant of July 25, 1866, is similar to many other such grants made about that time. Section 2 provided, in part, “That there be, and hereby is, granted to the said companies, their successors and assigns, for the purpose of aiding in the construction of said railroad * every alternate section of public land, not mineral, designated by odd numbers, to the amount of twenty alternate sections per mile (ten on each side) of said railroad line; and when any of said alternate sections or parts of sections shall be found to have been granted, sold, reserved, occupied by homestead settlers, preempted, or otherwise disposed of, other lands, designated as aforesaid, shall be selected by said companies in lieu thereof.” Section 10 provided, “And be it further enacted, That all mineral lands shall be excepted from the operation of this act; * Provided, That the term ‘mineral lands' shall not include lands containing coal and iron.”

The effect of such grants has been discussed many times by the federal courts. In Barden v. Northern Pacific Railroad Company, 154 U.S. 288, 14 S.Ct. 1030, 1033, 38 L.Ed. 992, the court was confronted with much the same question as is presented here, except that it differed from this in the very important particular that in that case no patents had been issued. The railroad company was claiming under an act passed July 2, 1864, 13 Stat. 356. It had proceeded with the construction of the road, commissioners had been appointed by the President to pass upon the work and their report had been filed and approved. Thereafter the sections, including that in dispute, had been listed and the lists had been accepted by the local land office and fees paid. In the year 1888, before any patent had issued to the railroad company, veins of rock in place bearing gold and silver were found in one of the sections so listed and were located as mining claims. Thereupon the railroad company commenced the action to establish its right to such veins. Its case was based in part upon the contention that the grant of July 2, 1864, was a grant in praesenti; that as the land was not known mineral land at the time of the passage of the act, or at least at the time the section was listed, no rights could be acquired by subsequent mining locations. Speaking on behalf of the court, Mr. Justice Field said: “It is also true that the grant was one in praesenti, of lands to be afterwards located. From the immense territory from which the sections were to be taken, it could not be known where they would fall until the line of the road was established. Then the grant attached to them, subject to certain specified exceptions; that is, the sections, or parts of sections, which had been previously granted, sold, reserved, occupied by homestead settlers, or preempted, or otherwise disposed of, were excepted, and the title of its other sections or parts of sections attached as of the date of the grant, so as to cut off intervening claimants. In that sense the grant was a present one. But it was still, as such grant, subject to the exception of mineral lands made at its date, or then excluded therefrom by conditions annexed. Whatever the location of the sections, and whatever the exceptions then arising, there remained that original exception declared in the creation of the grant. The location of the sections, and the exceptions from other causes, in no respect affected that one, or limited its operation. * The policy of congress as expressed in its numerous grants of public lands to aid in the construction of railroads, has always been to exclude the mineral lands from them, and reserve them for special disposition, as seen in the following acts, among others:” (Then are listed a number of such acts including the California and Oregon Railroad Act of July 25, 1866.) “In all of these cases, and in all grants of public lands in aid of railroads, minerals (except iron and coal) have uniformly been reserved, and in no instance has such a grant been held to pass them. Patents issued after an examination and determination of the fact by the government whether portions of the land embraced in such grants did or did not contain other minerals, have been held as conclusive in subsequent controversies, and of this we shall speak hereafter; but grants in aid of railroads (and we speak of no other grants) before such determination and issue of a patent have never been held to pass other than iron or coal, and it is only with other minerals, and with lands containing them, that we are concerned in this case.” The court then held that the mining locations made twenty-four years after the effective date of the act of congress, but before the issue of patent, created valid claims and that the railroad company had acquired no rights therein. The facts that the road had been located, the sections listed, and the land paid for at the local land office were held not to bar the rights of the mineral claimants. To the same effect are Northern Pacific Railroad Co. v. Sanders, 166 U.S. 620, 17 S.Ct. 671, 41 L.Ed. 1139, and Wyoming v. United States, 255 U.S. 489, 490, 41 S.Ct. 393, 65 L.Ed. 742.

Appellants have cited a number of cases holding that where patents are issued to agricultural lands title relates back to the date of entry. But these decisions are not controlling in this case so far as the Ames tract is concerned because the patents so issued were authorized by public land acts other than railroad grants. In the Barden and Sanders cases the court was careful to point out that its ruling was confined to cases arising out of grants in aid of railroad construction. The reason given was that such acts differed materially from most other acts granting public lands; that the railroad acts reversed mineral lands and should be strictly construed in favor of the government, and therefore, every opportunity should be given to establish the character of the land as mineral, if that were a fact, in which event the railroad could then make another selection in lieu thereof. In other words, under the railroad grants, the grant was in praesenti as to lands not mineral when patent was issued and then related back to the date of the act, but if before a patent was issued minerals were found and rights thereto fully established by compliance with the mining laws, then such grant never took effect as to such excepted mineral lands. We are therefore of the opinion that if respondent's predecessors made proper discoveries and complied with the mining laws at any time before the patent was issued to the railroad company on June 14, 1880, it was legally possible for them to establish valid mining rights therein notwithstanding the railroad grant or any acts performed by the railroad prior to the issuance of the patent.

But appellants contend that even if this is a correct statement of the law, the patent was based necessarily upon a finding by the land department that the land embraced therein was not mineral in character; that the claimants of the Pennsylvania and Jefferson claims did not adverse the application for the railroad patent and, as stated in the Barden case this finding is “conclusive in subsequent controversies”.

Before taking up the other points it should be said that there was no provision made for adversing such claims. Adverse proceedings relate only to surface conflicts between mineral claimants and there was no opportunity for such a proceeding in any other case. No rights are lost merely because of a failure to adverse a claim when the conflict is between a mineral claimant and one claiming the land under some act other than the mining laws. Creede & C.C. Min. & Mill. Co., v. Uinta Tunnel etc. Co., 196 U.S. 337, 25 S.Ct. 266, 49 L.Ed. 501; Lawson v. United States Mining Co., 207 U.S. 1, 28 S.Ct. 15, 52 L.Ed. 65; Lindley on Mines, [3d ed.] sec. 717. The failure to adverse the railroad application had no effect upon the evidentiary value of the patent to the Pennsylvania.

We have no quarrel with appellants' contention as to the effect, generally of such a determination by the land department. Speaking of this question in Burke v. Southern Pacific R.R. Co., 234 U.S. 669, 34 S.Ct. 907, 913, 58 L.Ed. 1527, the court said: “As has been seen, the exclusion was of ‘all mineral lands.’ It was not a mere reservation of minerals, but an exclusion of mineral lands *. This shows that a determination of the character of the lands, as mineral or nonmineral, was plainly contemplated. * Congress confided the identification of the lands, both included and excluded to the Land Department * The grant * was in praesenti in the sense that the title to the granted lands, when they should be identified, passed as of the date of the granting act; * and so it was that provision was made for issuing patents ‘confirming to said company the right and title to said lands' after construction. * This was obviously the purpose of the patents. They were to be in confirmation of the company's ‘right and title,’ and so were to be the legally appointed evidence that the lands described in them had passed to the company under the grant.” Continuing this discussion, 234 U.S. at page 685, 34 S.Ct. at page 914, 58 L.Ed. 1527, it is said: “As it plainly was not intended that patents should issue for excluded lands, to which the company was not to have any right or title, the direction respecting the issue of patents necessarily carried with it the power and duty of determining in every instance whether the land came within the terms of the grant, or, for any reason, was excluded from it *.” 234 U.S. at page 686, 34 S.Ct. at page 914, 58 L.Ed. 1527, the court quotes with approval from an opinion by Secretary Noble: “ ‘It is not questioned that the Land Department has jurisdiction until patent or certification, * to determine whether any of the lands within the lateral limits of the grant had been, at the time the line of the road was definitely fixed, “sold, reserved, or otherwise disposed of,” or was subject to “a pre-emption or homestead claim,” and therefore excepted from the grant. * It has been the practice of that Department for many years past, to refuse to issue patents to railroad companies for lands found to be mineral in character at any time before the date of the patent.’ ”

In West v. Standard Oil Co., 278 U.S. 200, 49 S.Ct. 138, 141, 73 L.Ed. 265, it is said: “Ordinarily, where an act granting public lands excludes those known to be mineral, the determination of the fact whether a particular tract is of that character rests with the Secretary of the Interior. * If such act provides for the issue of a patent, whether it be to pass the title or to furnish evidence that it has passed, the patent imports that final determination of the nonmineral character of the land has been made. The issue of the patent terminates the jurisdiction of the Department over the land. * And in the courts the patent is accepted, upon a collateral attack, as affording conclusive evidence of the nonmineral character.”

There is no doubt but that the foregoing statement is the generally accepted and generally applicable rule, nor can there be any doubt but that it would apply to this case unless the facts show an exception to it.

Speaking of the conclusiveness of patents, Judge Lindley says, at page 1889 of the third edition of his work on mines:

“The land department is a quasi judicial tribunal, and a patent is the judgment of that tribunal upon the questions presented and a conveyance in the execution of that judgment.

“When it is attacked, two questions are presented. They are, Did the department have jurisdiction to issue the patent and to determine the questions which conditioned its issue? and, Was its judgment induced by fraud, mistake of fact, or error in law?

“With the issuance of the patent the functions of the land department terminate. It is the culmination of the proceeding in rem—the final judgment of the tribunal specially charged with passing the government title. With the title passes away all authority or control of the executive department over the land and over the title which it conveys.

“To the extent that we have already covered the field, it is unnecessary to do more than recapitulate the results heretofore reached as to the force and effect of this judgment.

“(1) A patent for land is the highest evidence of title, and is conclusive against the government and all claiming under junior patents or titles until set aside or annulled. It is not open to collateral attack;

“(2) The land department is a tribunal appointed by Congress to decide certain questions relating to the public lands, and its decision upon matters of fact cognizable by it, in the absence of fraud or imposition, is conclusive everywhere else;

“(3) The government having issued a patent cannot, by the authority of its own officers, invalidate it by the issuing of a second one for the same property;

“(4) A patent may be collaterally impeached in any action, and its operation as a conveyance defeated by showing that the department had no jurisdiction to dispose of the lands; that is, that the law did not provide for selling them, or that they had been reserved from sale, or dedicated to special purposes, or had been previously transferred to others;

“(5) A patent is conclusive evidence that all antecedent steps necessary to its issuance have been properly and legally taken;

“(6) It is conclusive evidence of the citizenship and qualification of the patentee; and,

“(7) In cases of mining patents, that all matters which might have been the subject of an adverse claim have been conclusively adjudicated in favor of the patentee.”

In support of the rules laid down he cites Hardin v. Jordan, 140 U.S. 371, 11 S.Ct. 808, 35 L.Ed. 428; Davis' Administrator v. Weibbold, 139 U.S. 507, 11 S.Ct. 628, 35 L.Ed. 238 and Wright v. Roseberry, 121 U.S. 488, 7 S.Ct. 985, 30 L.Ed. 1039.

Does the patent issued to the railroad company in this case come within any of the exceptions to the rule as to conclusiveness against collateral attack? We think it does.

We have already held that it was possible for the mineral claimants to acquire mineral rights in land listed to the railroad at any time prior to patent. The patent to the Ames land was issued June 14, 1880. The patent records leading up to the patent of the Pennsylvania claim show that the patent to that claim was issued August 18, 1880, but that the registrar's final certificate of entry and the receipt for the fees paid were issued May 31, 1880, which was fourteen days before the railroad patent was issued. This was the first binding determination by the land department as to the character of the land and when the patent was issued later it related back to the establishment of the mining titles which was at the very latest some time prior to May 31, 1880. This adjudication removed the land from the non-mineral area open to the railroad under its grant and conferred upon the applicants an equitable title therein as of May 31, 1880. Until this determination was cancelled or set aside the land department lacked jurisdiction to grant such land to the railroad company, and for this reason the case comes within exception (4) as shown in Lindley on Mines and in the cases there cited. But it will be argued that the railroad patent, issued fourteen days after the certificate, set aside this determination and did constitute a cancellation of the certificate or the finding as to the mineral character of the vein. But the record shows conclusively that this cannot be the case. The patent records contained no such order and the patent, subsequently issued, recites the fact of the issuance of the certificate on that date and that it is based in part upon it. After this determination by the department the mineral character of the vein was established by competent authority and no rights therein could be acquired unless by compliance with the mining laws. From the date of the issuance of the certificate the claimants had vested rights until the certificate was cancelled. 50 C.J. 920, 924. In Deffeback v. Hawke, 115 U.S. 392, 6 S.Ct. 95, 29 L.Ed. 423, it is said (quoting from syllabus): “No title from the United States to land known at the time of sale to be valuable for its minerals * can be obtained under preemption * laws, or the town-site laws, or in any other way” than by compliance with laws specially providing for disposal of mineral lands. “A certificate of purchase of mineral land upon an entry of the same by a claimant at the local land-office, if no adverse claim is filed with the register and receiver, and the entry is not canceled or disaffirmed by the officers of the land department at Washington, passes the right of the government to him, and, as against the acquisition of title by any other party, is equivalent to a patent. The land thereby ceases to be the subject of sale by the government, which thereafter holds the legal title in trust for the holder of the certificate.” It therefore appears that the vein covered by the Pennsylvania patent was acquired by the mineral patentee in time to cut off any possible rights of the railroad company and the patent, when introduced in evidence by respondent, conclusively established its rights in that segment of the vein.

By an Act of Congress dated March 3, 1853, 10 Stat. 244, the 16th and 36th sections of each township were granted to the state of California for school purposes. The land was then unsurveyed, the survey being approved August 6, 1867. Appellants contend now that this also was a grant in praesenti which took effect prior to the time when the locators of the mines could have acquired a legal title and, therefore, the strip of school land between the Ames tract and the mining claims had passed to the state of California and had cut off any possibility of the locations or patent carrying collateral rights in appellants' land. The question then is, When, if at all, did title to the school land actually vest in the state?

The survey of said lands was approved, as we have already noted, on August 6, 1867. If on that date the lands were known to be mineral, the title did not pass to the state under the terms of the grant; for congress had thereby excluded such mineral lands. If the land was not then known to be mineral the title passed to the state on that date. The act of 1853 made no provision for determining what parts of the land mentioned therein were to be excluded because of their known mineral character. No provision was made for the issuance of patents or for any equivalent action by the land department to evidence the transfer of title and it was therefore necessary to determine, in some other way, whether the land was or was not mineral at the date of the survey. West v. Standard Oil Co., supra, and cases there cited.

Appellants argue that the non-mineral character of the land had been established by the fact that the register of the local land office on March 7, 1871, had certified that there was no claim or filing on the southeast quarter of said section 16 his office and that this “had the effect of a patent”, citing McCormick v. Hayes, 159 U.S. 332, 16 S.Ct. 37, 40 L.Ed. 171, in which the commissioner had certified, and the secretary of the interior had approved the granting of lands to the state for railroad purposes. Saunders v. La Purisima Co., 125 Cal. 159, 57 P. 656, and Worcester v. Kitts, 8 Cal.App. 181, 96 P. 335, are also relied on to support this contention. But since these cases were decided the Supreme Court of the United States in West v. Standard Oil Co., supra, has pointed out the difference between the acts of minor officials of the land office and the acts of the secretary of the interior and has held directly that such acts as the register performed here do not constitute a binding determination in school land cases and no title passes because of them.

So far then as the school land is concerned there is nothing in the record here showing in any way that there had ever been a determination of the character of the land embraced in said section 16 prior to the issuance of the Pennsylvania patent. The proceedings on this patent taken before the certificate was issued then constituted the first and only determination that the vein was mineral and did not pass to the state. This finding is conclusive. It should be remembered, in this connection, that the certificate issued prior to the Pennsylvania patent was issued by authority of the secretary and is not to be confused with the character of certificate given by the local register mentioned above.

What we have already said disposes of all the principal questions concerning the Pennsylvania claim and there now remains for consideration the conflict arising from the unpatented Jefferson claim.

Appellants deraign title to the Ames tract through a deed from J.E. Ebert who had succeeded to the railroad title. This deed contained the following reservation: “There is hereby expressly reserved to the said party of the first part, his heirs, executors, administrators, and assigns, the right to follow the Jefferson Gold Quartz Ledge with its dip, and to mine and extract the ores from the same in and upon said land, without disturbing the surface of the said land.”

The rights thus reserved were later conveyed to respondent's lessors and are included in its lease.

If this was a valid reservation it is immaterial so far as this case goes whether respondent, independently of it, has any right to mine beneath the Ames land. If the railroad company owned that portion of the vein which lay beneath its surface but had its apex within the limits of the Jefferson claim and it was reserved from the deed to appellants, and subsequently respondents acquired the rights under it, appellants are in no position to complain. They do not deny the existence of the reservation or that they deraigned title from Ebert, but they seek to avoid its effect (we quote from their Reply Brief) by the following argument: “If the holding of the trial court is correct, that the Jefferson claim has extralateral rights in the Ames tract, then there is nothing for the reservation to operate upon” (citing and quoting from 18 C.J. 344). “On the other hand, if the Jefferson claim has no extralateral rights in the Ames tract, then the reservation is no broader than its terms. Appellants contend that the reservation creates merely a right or privilege.” It is then argued that this is a right or privilege that is not exclusive.

It seems quite obvious that if Ebert had no rights in the vein, then appellants, who acquired whatever rights they now have through the deed from him, could have none. If the Jefferson claim did not have collateral rights—and this is what appellants have maintained throughout this case—then Ebert must have had them. If the deed did nothing more than reserve a “right or privilege” it would still be a complete defense in this action, even though not exclusive.

Appellants appear to have forgotten the nature of this action. This is not a suit to quiet title. By their complaint they alleged that respondent wrongfully entered their land and now wrongfully withholds the possession; that the wrongful acts consist of “entering, mining and extracting minerals, ores, and mineral-bearing rock from certain veins and lodes underlying plaintiffs' land.” They seek to enjoin these acts and recover damages. The answer sets up two special defenses—and we are referring now to the Jefferson segment of the vein only. After denying the charges in the complaint, it sets up the claim under the Jefferson locations and as another special defense it sets up the reservation in the Ebert deed. No cross-complaint was filed. It therefore appears that the only question involved was the right to mine and extract the ores and minerals in this vein. If respondent could establish a right to do this either under the locations or the Ebert reservation, it was sufficient to defeat appellants' demands. It was not necessary to do both. The exercise of the rights mentioned in the reservation is exactly what appellants are seeking to prevent, and they have made no claim that it has resulted in a “disturbance of the surface of the land.”

In view of the nature of this action it is immaterial whether the rights reserved were or were not exclusive, but we do not wish to be understood as holding, by the foregoing discussion, that they were not. The right reserved is not merely to mine and extract ores, but is to mine and extract the ores.

Although we do not find it necessary to decide the point, it might be argued with great force that as we are concerned here with two mining claims on the same vein, and the whole of said vein is in one section of land, that the determination of the land department made before the issue of the certificate and patent fixed the mineral status of the whole vein and of the whole section. Because of the peculiar nature of collateral rights we think that this question might properly be deferred for consideration in some other case where it is necessary.

Many other points have been raised and elaborately argued but what we have said disposes of them. No matter what conclusion we might reach with reference to them, it would not change the result or the effect on the parties to this action.

The judgment is affirmed.

PAULSEN, Justice pro tem., delivered the opinion of the court.

We concur: PULLEN, P.J.; THOMPSON, J.