Goldfield Mines, Inc. v. Hand, 1

• Decision Date: 29 October 1985
• Docket Number: CA-CIV,No. 1,1
• Citation: 711 P.2d 637,147 Ariz. 498
• Parties: GOLDFIELD MINES, INC. an Arizona corporation, Plaintiff-Appellee, v. Darrell G. HAND, Defendant-Appellant. 6833.
• Court: Arizona Court of Appeals

Page 637

711 P.2d 637

147 Ariz. 498

GOLDFIELD MINES, INC. an Arizona corporation, Plaintiff-Appellee, v. Darrell G. HAND, Defendant-Appellant.

No. 1 CA-CIV 6833.

Court of Appeals of Arizona,

Division 1, Department D.

Oct. 29, 1985.

Motion for Reconsideration Denied Dec. 11, 1985.

Hill, Savoy & Ensign by John E. Savoy, Phoenix, for plaintiff-appellee

Meyer, Vucichevich & Cimala, P.C. by George R. Ferrin and Wayne Godare, Phoenix, for defendant-appellant.

OPINION

HAIRE, Judge.

This appeal is from summary judgment in favor of the plaintiff, Goldfield Mines, Inc., in its action to enjoin the defendant, Darrell G. Hand, from exercising dominion or control over, retaining possession of, or removing ore from fifteen unpatented mining claims. On cross-motions for summary judgment, the trial court ruled that Goldfield Mines was entitled to possession of the claims and that Hand had no right, title or interest in any of them. The primary issues on appeal are: (1) Did Goldfield Mines have standing to assert ownership rights in the mining claims? (2) Did Goldfield Mines correctly file the documents required by the 1976 Federal Land Policy and Management Act with the Bureau of Land Management? (3) Were eight claims, located while the land was withdrawn from mineral entry, void, and if so, were Hand's locations in 1981, after the land was reopened, valid? (4) Were three claims void because location notices were initially recorded in the wrong county?

We will discuss the facts as they become relevant to each of the issues.

PLAINTIFF'S STANDING

We first address the threshold issue of whether the plaintiff had an interest in the claims which would permit it to bring this action. A corporation named Goldfield Mines, Inc. (hereinafter Goldfield I), was originally formed in 1949 and acquired the mining claims shortly thereafter. Goldfield I's corporate charter provided for a corporate existence of 25 years. The charter was not renewed and therefore it expired in 1974. Although a five year renewal period is provided by A.R.S. § 10-105, no attempt was made to comply with the renewal statute during the five year period and the corporate charter of Goldfield I was revoked by the Arizona Corporation Commission in 1980.

Within a few weeks after the revocation, the directors and officers of the defunct corporation formed a new corporation with the same name. For convenience, we will generally refer to the new corporation as Goldfield II. The directors and officers intended that Goldfield II would be a continuation of Goldfield I, and toward that end, executed a quitclaim deed purporting to convey the assets of Goldfield I to one of Goldfield II's officers, back-dating the deed to 1974, a date prior to the expiration of Goldfield I's charter. Goldfield II then resolved to "accept" a quitclaim deed of the property back from the officer. It is questionable that this transaction vested ownership of the mining claims in the new corporation in view of Goldfield II's concession that upon the prior dissolution of Goldfield I, ownership of the corporate assets passed to the shareholders. Appellant Hand contends that by the time Goldfield II attempted to obtain the property, the shareholders of Goldfield I owned it and the directors of the new corporation no longer had the power to transfer it to the new corporation.

Accordingly, Hand moved to dismiss Goldfield II's complaint, arguing that Goldfield II had no interest in the mining claims and thus no right to prevent him from relocating them. The trial court summarily denied the motion. On the record presented on appeal, although it appears that the transfer described by Goldfield II did not create in that corporation any ownership interest in the assets of Goldfield I, it is unclear precisely what occurred. A court should not grant a motion to dismiss unless it appears certain that the plaintiff would not be entitled to relief under any state of facts which is susceptible of proof under the claim stated. Chirco Construction Co. v. Stewart Title & Trust, 129 Ariz. 187, 629 P.2d 1023 (App.1981); San Manuel Copper Corp. v. Redmond, 8 Ariz.App. 214, 445 P.2d 162 (1968).

Goldfield II offered, in support of its motion for summary judgment, evidence that it was a successor corporation to Goldfield I with the same shareholders, officers and directors. Goldfield II claimed to have assumed the liabilities of Goldfield I. There is no evidence, however, regarding whether the shareholders were informed of the transfer of ownership, of how many of the original 65 shareholders remained, or of whether and to what extent Goldfield II was acting as the agent of the shareholders in bringing this action. Although Hand alleges that only two of the shareholders of the first corporation are shareholders of the second, there is no substantial evidence to support this allegation. We conclude that the evidence is in conflict as to whether Goldfield II was a successor to Goldfield I and that the trial court did not err in denying the motion to dismiss. There is insufficient evidence, however, in the record to determine Goldfield II's successorship to Goldfield I's interest in the mining claims as a matter of law. This necessitates a remand for the resolution of those issues in which Goldfield II's rights are dependent upon its status as a successor in interest to the rights of Goldfield I. However, a remand will not be necessary as to those claims concerning which Hand has already demonstrated rights superior to any which might be asserted by a successor in interest to the rights of Goldfield I. We now proceed to determine whether any of the claims asserted on appeal by Hand justify the granting of summary judgment in his favor.

COMPLIANCE WITH THE FEDERAL LAND POLICY AND MANAGEMENT ACT

We consider first appellant's contention that all fifteen of Goldfield I's unpatented claims have been forfeited because of Goldfield I's alleged failure to comply with the requirements of the Federal Land Policy and Management Act. The Federal Land Policy and Management Act (FLPMA), 43 U.S.C. § 1701 et seq., was enacted in 1976. For the first time the Act imposed a federal filing requirement for unpatented mining claims. The Act required the owner of an unpatented mining claim to file a copy of the certificate of notice and either an affidavit of assessment work or notice of intent to hold the claim with the local office of the Bureau of Land Management. 43 U.S.C. § 1744. For claims existing prior to October 21, 1976, including the fifteen claims at issue here, the deadline for initial compliance was October 22, 1979. 43 C.F.R. § 3833.1-1. Failure to file by October 22, 1979, as required by the statute, is conclusively deemed to constitute an abandonment of the claim. 43 U.S.C. § 1744(c).

Appellant Hand's activities concerning the claims involved in this action began in early 1981, while he was working for another mining operation in the area. His investigation revealed that the corporate charter of Goldfield I had expired without renewal on September 29, 1974. He found on record a quitclaim deed dated July 10, 1974, by which Goldfield I conveyed the claims to one Gary Nichols. The deed, though dated July 10, 1974, and purportedly executed at that time, was not recorded until 1980. A second quitclaim deed dated and also recorded in 1980, reconveyed the property to Goldfield Mines, Inc. (Goldfield II). From the record presented in the trial court, it is clear that the "1974" deed was actually prepared, executed and delivered in 1980.

Upon examining the federal records, it appeared to Hand that when Del Tierra Engineering and Mining Corporation filed the requisite FLPMA documents in 1979 on behalf of Goldfield I, the claims were not then owned by Goldfield I, but rather had been conveyed to Gary Nichols by the "1974" deed. Hand, assuming that the filing in the name of the defunct corporation was ineffective, entered the property and relocated the claims.

Goldfield II promptly commenced this action seeking to prevent Hand from exercising any dominion and control or retaining possession of the claims. The trial court initially issued a temporary restraining order as requested by Goldfield II, and later awarded summary judgment in Goldfield II's favor without explanation, implicitly ruling that the FLPMA filing in the corporate name was effective, that Hand's attempted relocations had not been successful, and that Goldfield II was a continuation or successor corporation to Goldfield I and could bring this action.

The crux of Hand's argument on appeal is that the expired corporation could not validly take action to comply with the FLPMA requirements, and that therefore the filing, even though complete and timely, was null and void. He argues that A.R.S. § 10-105, the statute Goldfield II relies on as validating the actions of Goldfield I, is inapplicable because the statute was enacted two years after Goldfield I was dissolved for failure to renew its charter. In our opinion, regardless of which statute applies, the result is the same.

The statute in effect at the time of Goldfield's I's dissolution permitted corporations whose charters had expired to continue to act for the purpose of winding up their affairs. A.R.S. § 10-364 (1956). This conforms to the general rule that after the expiration of the period of existence set forth in a corporation's charter, the corporation can act only to wind up its affairs. It cannot carry on new business. See authorities cited in 19 Am.Jur.2d, Corporations § 1646. The corporation may still hold and dispose of its property, collect its assets and discharge its obligations, but only for the purpose of closing its affairs. 19 Am.Jur.2d, Corporations § 1671; 19 C.J.S. Corporations § 1728. Corporations may, as part of the winding up process, file documents required to protect rights in corporate assets. See e.g., Weltsch v. O'Brien, 25 Ariz.App. 50, 540 P.2d 1269 (1975) (decided under §...