
    MALCOLM WILLIAM MOUAT, PERSONALLY, AS TRUSTEE OF AN EXPRESS TRUST, AND AS ADMINISTRATOR OF THE ESTATE OF MAY PAULA MOUAT, DECEASED v. THE UNITED STATES
    [No. 49896.
    Decided March 2, 1954]
    
      
      Messrs. H. Lowndes Maury and Bodph E. Becker for the plaintiff. Mr. Alfred G. Shone was on the briefs.
    
      Mr. Thomas L. McKevitt, with whom was Mr. Assistant Attorney General Perry W. Morton, for the defendant.
   Jones, Chief Judge,

delivered the opinion of the court:

The plaintiff for himself and other interested parties, and as administrator of the estate of his deceased wife, instituted this suit for the value of certain improvements which it is alleged were taken by the Government and converted to its own use. For simplicity the various parties at interest will be referred to as the plaintiff.

The plaintiff owned three patented tracts and several un-patented lode and placer claims located in Custer National Forest Keserve in Stillwater County, Montana.

On December 20,1941, the plaintiff, as lessor, entered into a 10-year lease contract with the Metals Deserve Company, a government corporation created by the Deconstruction Finance Corporation.

This case concerns improvements on two of these unpat-ented claims.

By the terms of the lease it was agreed that plaintiff would be paid a royalty of at least $10,000 per year on chromite ore and other minerals or metals mined from the leased premises, with a proviso that if operations were suspended for any of several reasons the payment would likewise be suspended for such period, and that on 90 days’ notice and the payment of $1,000 the defendant could terminate the lease.

The lease also contained the following provision :

Upon the expiration of this lease or the termination of this lease for any reason by either party, lessee shall have six (6) months additional time to remove from the leased premises its personal property and its tools, equipment, machinery, tracks ana tramways, but shall leave intact all mine workings and timbering, ties and all excavations, foundations, wooden mine structures, wooden tramway towers and wooden buildings erected upon the demised premises and ore on dumps upon which royalties have not been paid.
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17. Time is of the essence of this agreement * * *.
18. It is mutually agreed that this lease is a Montana contract, and shall be interpreted and construed under and by the laws of the State of Montana.
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20. Lessee agrees with the lessors that unless there is an understanding to the contrary in writing, anything remaining on the premises herein demised and leased upon the termination hereof, for a period of more than sis months after such termination, shall conclusively be deemed to have been abandoned by the lessee in favor of the lessors.
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22. Promptly upon receipt of lessee’s written request, lessors will execute and deliver to lessee a quit claim deed to all of lessors’ right, title, and interest in and to property not to exceed 200 acres, to be designated by lessee for use by lessee for millsites, townsites, stock piling and tailings disposal.

There is no evidence in writing of any variation in these terms. However, in conferences preceding the execution of the lease it was understood that the structures erected by the lessee for use as a townsite and millsite would be built on land to be conveyed by the lessors by quitclaim deed and that the term “wooden buildings” in paragraph 15 would not apply to buildings on the townsite, but would apply to buildings at the millsite, and that the wooden buildings to be left on the premises included tool houses, machine houses and other structures necessary to mining operations.

There was objection on the part of plaintiff to this evidence as an effort to vary the terms of the written lease and on the ground that all previous negotiations were merged in the written instrument. If the provisions of the lease contract are clear it is the generally accepted rule that prior negotiations and conversations may not serve to vary the terms of an unambiguous document that is finally agreed upon.

There was no evidence that the lessors were ever requested to execute or deliver any quitclaim deed to any part of the leased premises and none was executed. The townsite and millsite structures, loading platforms, machine shops, and other improvements were constructed on the leased premises.

On February 16, 1942, the Defense Plant Corporation, a wholly owned subsidiary of the Reconstruction Finance Corporation, acting for itself and the Metals Reserve Company, obtained from the Forest Service, Department of Agriculture, a special use permit for the purpose of carrying on mining operations within the forest reserve. The permit covered the leased lands here involved and some additional areas. The conditions of the permit are set out in finding 5.

During the year 1942 the Defense Plant Corporation constructed within the Lake Placer claims of plaintiff seventy-three 3- and 4-room dwellings, some additional duplexes, bunkhouses, a mess hall, a store building, a first-aid house, a postoffice building and a garage.

The townsite extended beyond the leased premises onto adjacent property.

The Metals Reserve Company paid the plaintiff the minimum royalty for 1942 and the royalty payment for 1943 exceeded the minimum stipulated. Production of ore on the leased premises ceased on October 1,1943. On June 30,1945, by act of Congress, the Metals Reserve Company was dissolved and its functions, assets, and liabilities were transferred to the Reconstruction Finance Corporation which was made subject to all existing liabilities.

By the payment of the required sum of $1,000 and written notice to the lessors on November 19, 1945, the Reconstruction Finance Corporation terminated the lease, effective February 28, 1946. The Reconstruction Finance Corporation, however, did not surrender possession of the leased premises but continued to hold over all of said lands until the close of business on August 31, 1946, at which time the War Assets Administration assumed the actual control and custody of the premises and held them until possession was restored to the lessors by the United States District Court for the District of Montana, pursuant to judgment entered June 11,1949.

The Defense Plant Corporation had on April 16, 1945, declared to the Surplus Property Administration that the improvements at the mine and townsite located on the leased premises and those at the millsite situated on lands which had been acquired by condemnation proceedings were surplus property.

During the 6-month period from February 28 to August 31,1946, certain of the properties as listed in finding 10 were removed from the townsite area on the Lake Placer claims.

After August 31, 1946, the War Assets Administration removed from the Lake Placer leased premises twenty-one 3-room houses which had a market value at that time of $400 each, or a total value of $8,400.

The plaintiff claims compensation under the Fifth Amendment for the properties removed by the Beconstruction Finance Corporation during the 6-month period prior to August 31, 1946, and also for the properties removed by the War Assets Administration from the Lake Placer leased premises after August 31,1946.

Since we regard the provisions of the lease contract as clear, we find the plaintiff is entitled to the value of the properties removed from the leased premises in violation of the terms of the lease agreement.

But here a complicating feature comes into the picture.

On September 17,1946, the plaintiff filed an action against the Beconstruction Finance Corporation and the War Assets Administration in the United States District Court for the District of Montana, seeking further rental payments and in addition the sum of $41,000 for the alleged conversion of the plumbing articles and fixtures; $600 each for the destruction of 22 buildings, and a writ of possession. On motion of the War Assets Administration the suit was dismissed as to that corporation on the ground that it was not subject to suit.

In June 1947, hearings were held before the Acting Manager of the District Land Office, Billings, Montana, in an adversary proceeding instituted by the United States against the plaintiff to cancel the original, first amended, and second amended Lake Placer claims on the ground that they were not based on a valuable mineral discovery. This action was filed during the course of the trial in the District Court. The Acting Manager of the District Land Office held that the Lake Placer claims were invalid, whereupon the District Court, after having heard evidence on the issue took the case under advisement on November 14, 1947. Later, on July 8, 1948, the Acting Director of the Bureau of Land Management affirmed the decision of the Acting Manager of the District Land Office and declared the Labe Placer claims invalid. The Solicitor of the Department of the Interior on January 27, 1949, acting on the appeal of the claimants, pursuant to authority delegated by the Secretary of the Interior, affirmed the decision of the Acting Director of the Bureau of Land Managements, holding the claims to be invalid.

On February 28, 1949, the District Court filed its written opinion in the case holding that plaintiff was entitled to a judgment for immediate possession and for rentals for the years 1944, 1945, and two months of 1946, but also holding that there was an apparent ambiguity in the use of the term “wooden buildings” in paragraph 15 of the lease, and on the basis of parol evidence ruled that the buildings on the Lake Placer claims were not intended to become the property of the lessors upon the termination of the lease. The court concluded that the plaintiffs were the owners of and entitled to the immediate possession of all the leased premises except the Lake Placer claims, “title to which is now awaiting the decision on appeal by the Secretary of the Interior.” The court further held that the [Reconstruction Finance Corporation was the owner of and entitled to the possession of all buildings or structures situated upon the Lake Placer claims without requirement of immediate removal. Both parties appealed.

The Circuit Court of Appeals reversed that part of the lower court’s judgment which held that the [Reconstruction Finance Corporation was the owner and entitled to the possession of all houses, buildings or structures situated upon the leased Lake Placer claims. The reason stated was that the lease was terminated February 28, 1946, and that the 6-month period mentioned in paragraphs 15 and 20 of the lease expired August 81,1946, after which the [Reconstruction Finance Corporation had no right, title or interest in or to any house, building or structure on the said Lake Placer claims. The Circuit Court of Appeals made no ruling or statement with respect to the validity of the Lake Placer claims.

Judgment on the mandate was entered by the United States District Court for Montana on October 13, 1950, in accordance with the decision and opinion of the Circuit Court of Appeals.

Following the decision of the Solicitor of the Department of the Interior in respect to the validity of the Lake Placer claims additional hearings were held in November 1949 before the manager of the District Land Office at Billings, Montana, and on March 14, 1950, the manager by written decision expressed the opinion that a valid discovery had not been made but stated that inasmuch as the defendant, the plaintiff in this case, with the exception of a short time previous to the war had had little time to do any development work on the claims it was recommended that he have more time to conduct his operations to see if he could present evidence that the Lake Placer claims could be developed as a profitable placer operation.

In a written decision dated May 16,1951, the Solicitor of the Department of the Interior acted on the appeal and concluded that the evidence in the record of proceedings warranted a finding that the minerals discovered on the Lake Placer claims were of such nature that they lacked value as marketable commodities and did not come within the category of “valuable mineral deposits” which would “justify a person of ordinary prudence in the further expenditure of his time and means in an effort to develop a paying mine.” Accordingly he affirmed the decision of the Acting Director of the Bureau of Land Management. However, on the ground of newly discovered evidence and errors in the law, the Solicitor of the Department of the Interior reconsidered the decision of May 16,1951, and by written opinion dated January 11, 1954, reversed the ruling and held that the original and first amended Lake Placer claims were valid.

In the meantime evidence had been taken by a trial commissioner of this court on the pending claim. The recommended findings of fact had been filed and the briefs of the parties had been presented. A considerable portion of the briefs of both parties was devoted to the question of the validity of the claims and also to the question of whether, even if the claims were invalid, the lessee had a right to question the lessor’s title while the lessee was in possession under a written lease.

The final decision that the Lake Placer claims were valid makes a considerable portion of the briefs of the respective parties inapplicable to the issue as now presented.

In view of the final decision by the Department of the Interior holding the Lake Placer claims valid, there seems to be no doubt that the plaintiff had the right to possession and had a right to make a lease of the claims to the defendant.

If the matter were before us for decision on the merits, since the provisions of the lease appear to be clear, we would be inclined to hold plaintiff entitled to recover the property, if any, removed from the premises prior to the ending on August 31,1946, of the 6-month period following the cancellation of the lease, and also for the properties removed by the War Assets Administration after that date.

However, the issue as to the properties removed prior to August 31, 1946, was directly involved in the District Court trial and in the opinion by the Circuit Court of Appeals in the case of Reconstruction Finance Corporation v. Mouat, 184 F. 2d 44. We quote from page 48 of the opinion as follows:

The Mouat’s notice of appeal was as follows:

2. Wherein said Judgment fails to adjudicate that the [Mouats] were entitled to a judgment for any sum of money at all for waste as to the removal and conversion of the plumbing fixtures of buildings on the Lake Placer and other strip and waste by destruction of buildings, removal of fixtures, removal of buildings and all waste committed at the leased premises by [¡Reconstruction Finance Corporation].
3. Wherein the said judgment fails to adjudicate that the [Mouats] were entitled to six hundred dollars each, or any sum whatever, for the destruction of twenty-two residence buildings on the said Lake placer.
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The opinion then continues to the effect that there was no substantial evidence that the Reconstruction Finance Corporation committed waste on the leased premises or removed plumbing fixtures from any building thereon or converted such, fixtures to its own use or destroyed any building on the leased premises or removed any property therefrom.

The opinion then states that there was evidence that the War Assets Administration removed plumbing fixtures from the buildings on the leased premises, removed buildings and other property from the leased premises and disposed of such fixtures, buildings and other property, but that that evidence was immaterial for the Reconstruction Finance Corporation was not responsible for acts committed by the War Assets Administration.

In the light of the record before us it seems strange that the Circuit Court should reach the conclusion that there was no evidence of the removal of the property from the premises by the Reconstruction Finance Corporation. However, the issue was directly made in the trial court and in the Circuit Court, and plaintiff having had his day in court on that issue, it is res judicata, in so far as removals prior to August 31, 1946, are concerned. That issue has been directly raised and found against the plaintiff in a forum of his own choosing, and the matter should not be relitigated here.

The removals by the War Assets Administration after August 31,1946, were not involved in that suit and therefore fall into a different category.

We have found that the War Assets Administration removed from the Lake Placer leased premises twenty-one 3-room houses which had a market value at that time of $400 each, or a total value of $8,400. The plaintiff is entitled to recover the sum of $8,400, with interest thereon at the rate of 4 percent per annum from August 31,1946, to date of payment, not as interest but as a part of just compensation.

It is so ordered.

Madden, Judge; Whitakek, Judge; and Littleton, Judge, concur.

findings of fact

The court, having considered the evidence, the report of Commissioner Roald A. Hogenson, and the briefs and argument of counsel, makes findings of fact as follows:

1. The plaintiff, Malcolm William Mouat, a citizen of the United States and resident of the State of Montana, maintains this action in his own behalf, also as the duly appointed administrator of the estate of his deceased wife, May Paula Mouat, and as the duly appointed successor of his wife as the trustee of an express trust.

2. On December 20,1941, the plaintiff, M. W. Mouat, and his wife in her own behalf and as trustee for the benefit of various individuals interested in the mining claims involved, as lessors, entered into a written mining lease for a 10-year period with Metals Reserve Company, as lessee, a corporation wholly owned by the United States and created by the Reconstruction Finance Corporation pursuant to Section 5 of the Act approved June 25,1940, 54 Stat. 572.

The lease covered three patented tracts of fee-owned lands and 23 unpatented lode and placer claims located in Still-water County, Montana, in the defendant’s Custer National Forest Reserve.

This case concerns the alleged taking by the defendant of improvements from two of the unpatented claims, designated as the original and first amended Lake Placer claims, at all times located in the forest reserve.

3. Under the terms of the lease, the lessee agreed to pay to the lessors a certain royalty on chromite ore and other minerals or metals mined from the leased premises, the rmnmnm royalty to be $10,000 per year, provided that if the lessee’s operations were suspended by any of various specified causes which included among others, any regulation, restriction, or other act of any government, whether legal or otherwise, the lessee’s obligation to pay the minimum royalty would be suspended during all of such period.

It was further agreed that the lessee on ninety days’ notice to lessors and by payment of $1,000, could surrender and terminate the lease. Other provisions of the lease agreement were as follows:

15. Upon the termination of this lease by either party, lessee shall surrender peaceably the leased premises and appurtenances in good order with all payments and obligations for maintenance thereof and for the maintenance of possessory claims and rights and permits fully met, and the lessors shall have the right to re-enter upon said leased premises owned by them and appurtenances and take full and complete possession of the whole thereof. Upon the expiration of this lease or the termination of this lease for any reason by either party, lessee shall have six (6) months additional time to remove from the leased premises its personal property and its tools, equipment, machinery, tracks and tramways, but shall leave intact all mine workings and timbering, ties and all excavations, foundations, wooden mine structures, wooden tramway towers and wooden buildings erected upon the demised premises and ore on dumps upon which royalties have not been paid.
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17. Time is of the essence of this agreement * * *.
18. It is mutually agreed that this lease is a Montana contract, and shall be interpreted and construed under, and by the laws of the State of Montana.
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20. Lessee agrees with the lessors that unless there is an understanding to the contrary in writing, anything remaining on the premises herein demised and leased upon the termination hereof, for a period of more than six months after such termination, shall conclusively be deemed to have been abandoned by the lessee in favor of the lessors.
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22. Promptly upon receipt of lessee’s written request, lessors will execute and deliver to lessee a quit claim deed to all of lessors’ right, title and interest in and to property not to exceed 200 acres, to be designated by lessee for use by lessee for millsites, townsites, stock piling and tailings disposal.
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31. Lessors warrant their title to and will defend the lessee in the quiet and peaceful possession of said premises and mining claims against all persons * * *.

With respect to the provisions of the above-quoted paragraph 20, there is no evidence in this record of any understanding to the contrary in writing.

4. In conferences preceding the execution of the lease, the provisions of the above-quoted paragraphs 15 and 22 were discussed by the parties, and it was understood that the structures erected by the lessee for use as a townsite and millsite would be built on land to be conveyed by the lessors by quitclaim deed, and that the term “wooden buildings” in paragraph 15 would not apply to buildings on a townsite but would apply to buildings at the millsite, such as loading platforms, drys, machine shops and hoist houses.

There is no evidence that the lessors were requested to execute or deliver to lessee any quitclaim deed to any part of the leased premises for townsite, or other purposes, and no such conveyance was made.

It was the intention of the parties upon the execution of the lease that the lessors would convey land for townsites, that the “wooden buildings” to be left on the leased premises at the termination of the lease included tool houses, machine houses, and other structures necessary to the actual mining operations, and that buildings constructed as a part of a townsite would not be left on the premises upon the termination of the lease.

5. On February 16, 1942, the Defense Plant Corporation, also a wholly owned subsidiary of the [Reconstruction Finance Corporation, for the benefit of itself and the Metals Reserve Company, obtained from the Forest Service, Department of Agriculture, a special use permit for the purpose of carrying on mining operations within the forest reserve. The permit included most of the leased lands, together with some additional areas, and covered the original and first amended Lake Placer claims in the following provision:

3. Mine campsite, including all necessary structures, of a permanent or temporary character, for housing employees, mess facilities, shops, recreation room infirmary, warehouses, offices, water system, garbage and sewage disposal systems, light, power and telephone distribution systems, streets or paths, ,road connections, and other structures or facilities necessary for the development of the area as a mine campsite; said mine campsite to be located on an area of approximately 60 acres, located mostly in the NE44 of Sec. 20, T. 5 S., R. 15 E., upon lands now included in unpatented mining claims and upon about 20 acres which now appears to be unclaimed National Forest land;

The permit contained among others the following so-called conditions:

3. This permit is subject to all valid claims. It is issued with the understanding that the permittee has secured or will secure the consent of any person having valid claim to any of the lands authorized to be occupied hereunder. However, the permittee and the Forest Service hereby mutually agree that if any unpatented mining claim covering lands authorized to be occupied by this permit is, in due course of law or regulation, declared or proven to be not valid when the occupancy or use authorized by this permit shall automatically have full force and effect as though the land had not been covered by the unpatented mining claim at the time of issuance of this permit.
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31. It is expressly understood that when the Metals Eeserve Company takes over the interest of the Federal Government in the development and/or operation of the chromium mining operations on the so-called Mouat properties in the Stillwater River drainage in Stillwater and Sweetgrass Counties, for which the Defense Plant Corporation is now responsible, the term ‘‘permittee” as used herein shall be construed to mean Metals Reserve Company instead of Defense Plant Corporation; and the obligations assumed hereunder by the permittee and by the Forest Service shall remain the same as if the permit had originally been issued to the Metals Reserve Company. But this construction of the word “permittee” shall apply only to the Metals Reserve Company; and the transfer of right, title, or interest in or to the structures or facilities for which this permit is issued to any other person, organization, or thing shall terminate this permit.
32. It is hereby mutually agreed that upon the termination of this permit, or upon the decision of the per-mittee to discontinue its interest in the mining operations referred to in Clause 31, the Forest Service and the per-mittee will confer upon the most satisfactory methods of disposing of the structures and facilities built upon the lands authorized to be occupied by this permit. If at that time the mining venture is to be continued by a person or organization other than the permittee, the Forest Service agrees that- any such person or organization designated by the permittee shall receive first consideration in the issuing of new special use permits covering the structures and facilities included m this permit, or other structures and facilities existing at that time but covered by separate special use permits the use or enjoyment of which is essential to the prosecution of the mining work. If no such further work is contemplated, the permittee and the Forest Service will decide upon a course of action to be followed, subject to any Acts of Congress or other statements of public policy regarding the disposition of property held by the permittee; and such course of action may provide that the permittee leave intact all, part or none of the structures or facilities herein above referred to and completely remove others, the decision as to which structures or facilities are to be left intact and which removed to be based on the effect of such action on the public welfare and the extent to which any structures or facilities left in place may be utilized in the future for some worthwhile or useful purpose.

6. In 1942, as a part of the mine townsite, the Defense Plant Corporation constructed within the Lake Placer original and first amended claims, thirty-three 3-room houses, forty 4-room houses, twenty so-called duplexes, four bunkhouses, a mess hall, a store building, a first-aid house, a post office building, and a garage. The townsite otherwise extended beyond the leased premises, with the additional buildings located immediately adjacent to the said Lake Placer claims.

7. In 1943, chromite mining operations were conducted on parts of the leased premises, but not on the Lake Placer original and first amended claims, by the Metals Reserve Company under contract with the Anaconda Copper Mining Company.

In order to divert men employed in the mining of the low-grade chromite ores into the production of more critically needed materials such as copper and zinc, the War Production Board, by its letter dated September 13, 1943, directed the Metals Reserve Company to suspend operations on the leased premises, except for the employment of maintenance men to keep the mine and mill in sufficiently good condition so that operations could be revived in the event that the chromite situation should change for the worse.

Pursuant to such directive, production of ore on the leased premises ceased on or about October 1, 1943, and was not thereafter resumed.

The Metals Reserve Company paid the plaintiff the sum of $10,000 as a minimum royalty for the year 1942. For 1943, the royalty payments made on the ore produced exceeded the minimum annual payment required.

8. The Metals Reserve Company held possession of the leased premises until by Joint Resolution approved June 30, 1945, 59 Stat. 310, Congress dissolved that company, and transferred all of its functions, powers, duties and authority, together with all of its assets and liabilities, to the Reconstruction Finance Corporation, which was made subject to all existing liabilities, whether arising out of contract or otherwise.

Royalties under the lease were not paid for the year 1944 or any time thereafter, except as they became the subject matter of a judgment obtained by the lessors, as hereinafter set forth.

By payment of the required sum of $1,000 and by written notice received by the lessors on November 19, 1945, the Reconstruction Finance Corporation terminated the lease effective February 28,1946.

9. The Reconstruction Finance Corporation did not surrender possession of the leased premises, but continued to hold over all of said lands until the close of business on August 31,1946, at which time the War Assets Administration assumed the actual control and custody of the premises and held the same until possession was restored to the lessors by the United States District Court for the District of Montana, pursuant to judgment entered June 11, 1949.

The War Assets Administration was established effective March 25,1946, by Executive Order 9689, issued January 31, 1946,11F. R. 1265, to carry on the combined functions of the Surplus Property Administration and the War Assets Corporation, relative to the disposal of domestic surplus property.

On April 16,1945, the Defense Plant Corporation had declared to the Surplus Property Administration that the improvements at the mine and townsite located on the leased premises, as well as those at the millsite situated on lands which had been acquired by condemnation proceedings, were surplus property.

10. During the 6-month period from February 28, 1946, until August 31,1946, the Reconstruction Finance Corporation proceeded with the removal of buildings and equipment from the townsite area on the Lake Placer claims. By August 31,1946, the Reconstruction Finance Corporation had removed the bathtubs, lavatories, toilets, kitchen sinks, water tanks, radiators, oil stoves and similar equipment from all of the buildings. The materials so removed from buildings on the Lake Placer original,,and first amended claims, had a market value of $11,796.52. ,-Iñ addition, one empty building having a market value of $400 was removed from the Lake Placer portion of the leased premises by the Reconstruction Finance Corporation prior to August 31,1946.

11. After August 31,1946, the War Assets Administration removed from the Lake Placer leased premises twenty-one 3-room houses which had a market value at that time of $400 each, or a total of $8,400.

12. On April 17, 1946, May Paula Mouat, purporting to act as trustee for the original locators, filed a second amended Lake Placer claim which sought an increase in the boundaries of the existing Lake Placer claims.

13. On September 17,1946, the plaintiff M. W. Mouat and his wife, May Paula Mouat, in her own behalf and as trustee of an express trust, filed an action against the Reconstruction Finance Corporation and the War Assets Administration in the United States District Court for the District of Montana, wherein they sought (a) the sum of $31,666.66 for rentals for 1943,1944,1945 and two months in 1946, (b) the sum of $41,000 for the alleged conversion of the plumbing articles and fixtures, (c) $600 each for the destruction of 22 buildings, and (d) a writ of possession. On November 12, 1946, a motion to dismiss was filed by the War Assets Administration on the ground that it was not subject to suit, and on November 26, 1946, an answer was filed by the Reconstruction Finance Corporation. The motion to dismiss was granted and the action dismissed on October 27, 1947, as against the War Assets Administration.

14. In June 1947, hearings were held before the Acting Manager, District Land Office, Billings, Montana, in an adversary proceeding instituted by the United States against M. W. Mouat, May Paula Mouat, and the other original locators, to cancel the original,- first amended, and second amended Lake Placer claims on the ground, among others, that they were not based on a valuable mineral discovery.

On November 5, 1947, the' Acting Manager rendered his decision in writing, finding and determining that a prudent man would not be justified in spending time, money, and effort in the hope of developing a paying mine on the original and the two amended Lake Placer locations, and that said claims were invalid.

15. The Mouat case against the Eeconstruction Finance Corporation was tried in the United States District Court for Montana from November 12 to 14, 1947. The printed record of the District Court is in evidence in the case before this court as plaintiffs’ and defendant’s Joint Exhibit No. 1. The Eeconstruction Finance Corporation defended against the claim for rentals on the ground that the directive of the War Production Board to cease operations suspended the obligation to pay royalties; against the claim for removal of the plumbing articles, fixtures, and buildings, on the ground that under the terms of the lease, the town-site buildings on the Lake Placer claims did not become the property of the lessors; and generally on the grounds that the Lake Placer claims were invalid, and further that Ee-construction Finance Corporation could not be held liable in any event for what happened after the War Assets Administration accepted the declaration of surplus property and took control and custody of the leased premises on August 31,1946.

During the course of the trial, the District Court received in evidence a copy of the written decision of the Acting Manager, District Land Office, at which time the lessors advised the court that an administrative appeal would be taken therefrom.

The District Court took the case under advisement on November 14, 1947.

16. On July 8, 1948, the Acting Director of the Bureau of Land Management acted on the appeal of the Lake Placer claimants; found that there was no competent evidence in the record which showed that there were within the boundaries of the Lake Placer claims chrome ore or other minerals in sufficient quantity or of sufficient quality to justify a reasonably prudent man in expending time and effort in the hope of developing a paying mine; affirmed the decision of the Acting Manager, District Land Office; and declared the Lake Placer claims invalid.

17. On January 27,1949, the Solicitor of the Department of the Interior, acting on the appeal of the claimants to the head of the department, pursuant to authority delegated by the Secretary of the Interior, affirmed the decision of the Acting Director of the Bureau of Land Management, in so far as it held the second amended location of the Lake Placer claim to be invalid.

With respect to the original and first amended locations, he found that the evidence in the record showed that there were within the limits of the claims great quantities of loose rocks containing olivine, serpentine, and pyroxene, and some loose fragments of chromite. He concluded that the opinion evidence in the record with respect to the value of such mineral deposits was indecisive, and that the conclusions of government witnesses were not supported by adequate factual data in the record, showing clearly a lack of economic value in these minerals because of their nature, quality, quantity, location, or other factors. He stated further that the evidence of the claimants was insufficient to establish that the mineral deposits were such as would justify a person of ordinary prudence in the expenditure of time and means to develop a paying mine.

Accordingly, the case was remanded to the Bureau of Land Management for a further hearing and decision on the issue as to whether such minerals constituted valuable mineral deposits.

18. By leave first obtained by the plaintiff lessors, a copy of the above-described decision of the Secretary of the Interior was filed with the District Court on March 8,1949.

On February 28,1949, the District Court filed its written opinion in the case between the plaintiff lessors and the Reconstruction Finance Corporation, in which it was held that the plaintiffs were entitled to a judgment for immediate possession, and for rentals on the basis of the minimum royalty of $10,000 per year for the years 1944, 1945, and two months of 1946, or $21,666.66, and thereafter at the same rate for the holding over of the premises. The court further held that in view of the provisions of paragraphs 20 and 22 of the lease, there was an apparent ambiguity in the use of the term “wooden buildings” in paragraph 15 thereof, and on the basis of parol evidence in the record, ruled that the buildings on the Lake Placer claims were not intended to become the property of the plaintiff lessors upon the termination of the lease. The court held for the Reconstruction Finance Corporation in regard to the ownership of the said buildings.

The court further stated that the court and counsel had been awaiting the outcome of an appeal from the Bureau of Land Management to the Secretary of the Interior relating to the adversary proceeding by the United States to cancel the Lake Placer claims; that the District Land Office and the Bureau had previously decided the question in favor of the United States; that recently the Secretary of the Interior had affirmed the decision holding the second amended Lake Placer claim invalid, but remanded the case to the Bureau on the original and first amended claims for further hearing and decision; and that in view of the court’s holdings, it did not seem necessary to delay further its decision in the case.

19. Findings of Fact, Conclusions of Law, and Judgment were made and entered by the District Court on June 11, 1949. The court concluded that the plaintiffs were the owners of and entitled to the immediate possession of all of the leased premises, except the Lake Placer claims, “title to which is now awaiting the decision on appeal by the Secretary of the Interior.”

The judgment provided that the plaintiffs be restored to possession of all the leased premises, including the Lake Placer original and first amended claims; that the plaintiffs have and recover from the Reconstruction Finance Corporation rentals for the period beginning with the year 1944 and to November 14,1947, in the total sum of $38,722.10, together with interest thereon; and that the Reconstruction Finance Corporation was the owner and entitled to the possession of all houses, buildings, or structures situated upon the Lake Placer claims, without requirement of immediate removal. Both parties appealed from the judgment thus entered.

20. In its decision and opinion of August 10,1950, 184 F. 2d 44, the United States Court of Appeals, Ninth Circuit, dismissed the appeal of the Reconstruction Finance Corporation as a nullity because taken before the judgment of the lower court became final. The Circuit Court, on the appeal of the plaintiff lessors, affirmed the lower court’s failure to award damages for removal of plumbing articles, fixtures, and buildings, for the stated reason that there was “no substantial evidence that Reconstruction Finance Corporation committed waste on the leased premises or removed plumbing fixtures from any building thereon or converted such fixtures to its own use or destroyed any building on the leased premises or removed any property therefrom.”

The Circuit Court of Appeals reversed, that part of the lower court’s judgment in which it was held that the Reconstruction Finance Corporation was the owner and entitled to the possession of all houses, buildings, or structures, situated upon the leased Lake Placer claims. The reason stated was that the lease was terminated February 28, 1946, and the 6-month period, mentioned in paragraphs 15 and 20 of the lease, expired August 31, 1946, after which Reconstruction Finance Corporation had no right, title or interest in or to any house, building, or structure on the said Lake Placer claims.

The Circuit Court of Appeals made no ruling or statement with respect to the validity of the Lake Placer claims. The plaintiff lessors alleged in their statement of points on appeal that the trial court erred in permitting the lessee to introduce evidence to impair or dispute the lessors’ title to the leased Lake Placer claims.

Judgment on the mandate was entered by the United States District Court for Montana on October 13,1950, in accordance with the decision and opinion of the Circuit Court of Appeals.

21. Following the decision of the Solicitor of the Department of the Interior, dated January 27, 1949, additional hearings were held November 8 to 10,1949, before the Manager, District Land Office, Billings, Montana, on the remand of the issue of validity of the original and first amended Lake Placer claims. On March 14, 1950, the Manager by written decision expressed the opinion that a valid discovery had not been made, and stated further that

inasmuch as defendant [Plaintiff ■ M. W. Mouat] has had, with the exception of the short time previous to the war, only since June 1949, to do any development work on the claim, I recommend he should have more time to conduct his hydraulic operations to see if he can present conclusive evidence that he can develop the Lake Placer claim as a profitable placer operation.

On October 31,1950, the Acting Director, Bureau of Land Management by written decision affirmed the determination of the District Manager, and stated in part as follows:

No concrete evidence was submitted which shows that there is within the boundaries of the Lake Placer Mining Claim chrome ore or other minerals in sufficient quality or quantity to justify a reasonably prudent man in spending his time and money in the hope of developing a paying mine. * * *
By a preponderance of the evidence submitted at the two hearings, it does not appear that there has been made a discovery of valuable mineral deposits with the Lake Placer Mining Claim. The Manager’s recommendation that Mr. Mouat be given more time to conduct his hydraulic operation to see if he can present conclusive evidence that he can develop the claim into a profitable placer operation is without merit. Since, Mr. Mouat has had ample opportunity to develop the Mouat properties, both lode and placer.
In view thereof the Manager’s decision on March 14, 1950, is hereby affirmed and the Lake Placer Mining Claim, covered by the original and first amended location, is hereby declared null and void. The defendant has the right of appeal. Any appeal should be filed with the Director, Bureau of Land Management, Washington 25, D. C., within 30 days from receipt of notice hereof.

By written decision dated May 16, 1951, the Solicitor of the Department of the Interior, pursuant to authority delegated by the Secretary of the Interior, acted on the appeal to the head of the department. He concluded that the evidence in the record of proceedings warranted a finding that the minerals discovered on the Lake Placer claims were of such a nature that they lacked value as marketable commodities, and did not come within the category of “valuable mineral deposits” which would “justify a person of ordinary prudence in the further expenditure of his time and means in an effort to develop a paying mine.” Accordingly, he affirmed the decision of the Acting Director of the Bureau of Land Management.

22. On the grounds of newly discovered evidence and errors in law, the Solicitor of the Department of the Interior reconsidered the decision of May 16, 1951, and by written opinion dated January 11, 1954, reversed the ruling and held that the original and first amended Lake Placer claims were valid.

CONCLUSION OF LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes that as a matter of law the plaintiff is entitled to recover, and it is therefore adjudged and ordered that he recover of and from the United States eight thousand four hundred dollars ($8,400) with interest thereon at the rate of 4 percent per annum from August 31,1946, to date of payment, not as interest but as a part of just compensation.  