Kasey v. Molybdenum Corporation of America

• Decision Date: 28 August 1964
• Docket Number: No. 18695.,18695.
• Citation: 336 F.2d 560
• Parties: J. Bryant KASEY and Maryann Kasey, Appellants, v. MOLYBDENUM CORPORATION OF AMERICA, a corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

336 F.2d 560 (1964)

J. Bryant KASEY and Maryann Kasey, Appellants, v. MOLYBDENUM CORPORATION OF AMERICA, a corporation, Appellee.

No. 18695.

United States Court of Appeals Ninth Circuit.

August 28, 1964.

J. Bryant Kasey, Maryann Kasey, Las Vegas, Nev., in pro. per.

Everett B. Laybourne, Dennis Keeley, Schultheis, Laybourne & Dowds, Los Angeles, Cal., for appellee.

Before BARNES, HAMLEY and DUNIWAY, Circuit Judges.

BARNES, Circuit Judge.

Appellants brought this diversity action in the district court for recovery of certain mining properties, for an accounting, and for damages. 28 U.S.C. § 1332.¹ Appellee raised the defense, inter alia, that the claim for recovery of the properties was barred by the five year statute of limitations of California Code of Civil Procedure § 318.² After a hearing limited to this particular issue, the district court concluded that the claim for recovery of property was so barred and entered judgment as to that claim pursuant to Fed.R.Civ.P. 54(b). Appellants appeal from that judgment. 28 U.S.C. § 1291. They are acting in propria persona, and this has complicated the appeal.

The facts, as found by the district court, are these: Appellants, as purported owners³ of certain millsites, and named and unnamed unpatented mining claims, including all appurtenances and improvements thereto, entered into an option agreement with the appellee on June 11, 1951, whereby appellee, upon payment of $15,000, was given an option to purchase the properties for $2,000,000, "or such lesser amount as shall be payable hereunder." On September 2, 1951, appellee exercised the option, paying an additional sum of $135,000 pursuant to the terms of the option agreement, making a total of $150,000, and leaving a balance due of $1,850,000, which balance, according to the terms of the option agreement, was "payable, if at all, only when and to the extent that royalties shall become payable to the appellants * * *."

Upon the exercise of the option, and pursuant to the option agreement, appellants and their co-owner, on September 21, 1951, executed and manually delivered to appellee deeds conveying and granting to appellee these millsites and named and unnamed unpatented mining claims, including all appurtenances and improvements thereto. All of these deeds were unconditional and absolute in their terms. Since June 11, 1951, appellee has been in actual, continuous, exclusive, and uninterrupted possession of these properties.

We are also told that shortly after these conveyances, appellee paid appellants and their co-seller $50,000 as an advance on royalties. Appellee later paid appellants and their co-seller about $10,000 more in a series of three payments ending by December 31, 1952. No payments were made thereafter up to the commencement of the suit in 1959.

The district court concluded that from the date of the conveyance appellee owned any and all legal title to the properties which the vendors had had prior to the conveyances. The district court concluded that since appellants had not had sei-sin or possession within five years immediately preceding the filing of this suit (April 8, 1959), the action for recovery of the properties was barred by California Code of Civil Procedure § 318.

The parties have already engaged in several court actions concerning these claims. It is uncontradicted that in one series of state court actions the Kaseys consented to a judgment quieting title in Molybdenum to certain claims (denoted "Sulphide Queen" claims), which overlap some of the properties transferred in the conveyances of September 2, 1951. This consent was required by the option agreement if and when the option was exercised.

In another series of state actions by both the Kaseys and Molybdenum for declaratory and other relief, the California District Court of Appeal rendered judgments, now final, declaring some of the rights of the parties as to these properties. We take judicial notice of these officially reported decisions and refer to them for a better understanding of the complicated factual situation here existing. Kasey v. Molybdenum Corp. of America, 176 Cal.App.2d 346, 1 Cal.Rptr. 393 (1959); Molybdenum Corp. of America v. Kasey, 176 Cal.App.2d 357, 1 Cal. Rptr. 400 (1959).

The Kaseys also filed, on December 22, 1953, an action for damages and for rescission of the agreement in the United States District Court, Southern District, Central Division, under Civil No. 16147-T. In the hearing in the district court of the case at bar, the court and Molybdenum's counsel agreed that the district court should and could take judicial notice of the record in Civil No. 16147-T. The Kaseys made no objection. If the Kaseys had done so, Molybdenum's counsel could readily have put into evidence that file, certified by the district court clerk. Since the Kaseys did not object to the district court taking judicial notice of the record in Civil No. 16147-T as it existed in the clerk's office, we hold that the Kaseys waived any such objection, and we likewise take judicial notice of that record. From it we find that the action was dismissed without prejudice as to all plaintiffs on August 8, 1958.

In the case at bar, appellee has counter-claimed for alleged overpayment of royalties. Appellee has apparently also instituted a protective action in the state courts for recovery of that same alleged overpayment.

This is a diversity case, so we look to the law of California. Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. 28 U.S.C. § 1652. Our duty is to arrive at an outcome "substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a State court." Guaranty Trust Co. v. York, 1945, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079, reh. den. 326 U.S. 806, 66 S.Ct. 7, 90 L.Ed. 491. If appellants are barred by the statute of limitations from bringing their claims for recovery of these properties in the California state courts, appellants are barred in the district court. Guaranty Trust Co. v. York, supra.

Thus, the only issue here is whether the action for recovery of the properties is barred by California Code of Civil Procedure, § 318.

I — Is the Property Here "Real Property"?

Ordinarily, one would think the answer would clearly be in the affirmative. But here the parties have offered arguments on this issue.

The property which the appellants wish to recover consists of (1) unpatented mining claims, (2) millsites, and (3) appurtenances and improvements thereto. A millsite is a small parcel of property used by the proprietor of a mine for mining or milling purposes, and is located generally,⁴ but not necessarily,⁵ on nonmineral land.

The California statutes do not expressly state whether mining claims, millsites, and appurtenances and improvements thereto are included within the term "real property."⁶ California Code of Civil Procedure § 17, provides in part:⁷

"The following words have in this code the signification attached to them in this section, unless otherwise apparent from the context:

* * * * * *

2. The words `real property\' are coextensive with lands, tenements, and hereditaments."⁸

Although the legislature has not seen fit to expressly include mining interests within the definition of real property, the relevant case authority all points to the conclusion that mining interests are real property within the meaning of the statute. As early as 1863, in Hughes v. Devlin, 23 Cal. 501, the California Supreme Court stated:

"The defendant contends that the interest of miners in mining claims and ditch property upon the public lands, is not an estate of inheritance, or any of the other kinds of real estate mentioned in the statute; and therefore the same are not liable to be partitioned between the owners under the act. In this he is clearly in error. In Merritt v. Judd (14 Cal. 59 64), this Court say sic, in commenting on the Law of Fixtures: `From an early period of our State jurisprudence, we have regarded these claims to public mineral lands as titles. They are so practically. Our Courts have given them the recognition of legal estates of freehold, and so, to all practical purposes — if we except some doctrine of abandonment, not, perhaps, applicable to such estates — unquestionably they are, and we think it would not be in harmony with this general judicial system, to deny to them the incidents of freehold estates, in respect to this matter.\' So too, they have been held to be `real property,\' respecting which a suit will lie under the two hundred and fifty-fourth section of the Practice Act, against a person claiming an adverse `estate or interest therein.\' (Merced Mining Co. v. Fremont, 7 Cal. 317, 319.) They are held to be real estate within the act relating to the place of trial of civil actions. (Watts v. White, 13 Cal. 321, 324.) So, too, they are held liable to levy and sale on execution, like other real estate. (McKeon v. Bisbee, 9 Cal. 137, 142.)" (23 Cal. at 505-06.)⁹

This reasoning alone would be adequate grounds for finding that these properties are real property.

But the court went on, stating, "The mere right to work such mines, is held to be an incorporeal hereditament in the land of other persons." (23 Cal. at 506.) Cf. Smith v. Cooley, 1884, 65 Cal. 46, 2 P. 880; Payne v. Neuval, 1908, 155 Cal. 46, 99 P. 476. If a right to work a mine is an hereditament in land, certainly a mining claim is not less of an interest in land. The right to take minerals from land is in the nature of a profit a prendre, which is an incorporeal hereditament. See the discussion in Callahan v. Martin, 1935, 3 Cal.2d 110, 118-22, 43 P.2d 788, 101 A.L.R. 871.

The court in Hughes v. Devlin, supra, concluded its opinion with words that have often since appealed to California courts:¹⁰

"Although the ultimate title in fee in our public mineral lands is vested in the United States, yet as between individuals, all transactions and all

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