CORRESPONDENCE, DOCUMENTS, FILES, ETC SHOULD NOW REFLECT the NEW CORPORATE NAME)* 0 ^ '/ a F a E Robert L
BEFBCTIVE flKPTEMBER 15. 1QRH
ECHO BAY MINES, INC.
CHANGED ITS CORPORATE NAME TO
ALTA GOLD COMPANY
CORRESPONDENCE, DOCUMENTS, FILES, ETC SHOULD NOW REFLECT THE NEW CORPORATE NAME)* 0 ^ '/ A f A e Robert L. Leclerc
MILNER & STEER
2900 MANULIFE PLACE
10 1 8 0 • \Q\ ST R EET EDMONTON, CANADA TSJ 3V5
TELEPHONE (403) 423-7100
CABLE ADDRESS "MILMAT" TELEX 037-2684 TELECOPIER (403) 425-8369 OATALINE (403) 425-9063
July 24, 1986
Phil,
Regarding my admission to the Colorado Bar, I thought you would be interested in this recent Canadian decision (B.C. Court of Appeal), MEMORANDUM
TO: PGDufford, PDBarber, WCRobtf/SFitz john,) CHensel, PHutchinson, JBerry \I
FROM: CSt. Romain
DATE: December 8, 1985
SUBJECT: Sunnyside Gold Corporation
During the week of December 9, 1985, Sunnyside Gold
Corporation will open its Durango office:
484 Turner Drive Durango, CO 81301 (303) 259-1091
CS:cae Head Office: SUNNYSXDE GOLD CORPORATION Silverton Office: P.O. Box 177 484 TurnerD nDrive • AM E C H 0 BAY COMPANY Durango, CO 81301 Silverton, CO 81433 Phone (303) 259-1091 Phone (303) 387-5533
To: All Concerned
From: Greg Sparks, General Manager
Date; 12/27/85
Re: Durango Office
We are pleased to announce the establishment of the basic f°5 Sunny side Corp. Included herein ¿re working witiTsGC. ^ 0nnatl0n Mhlch y°u should find helpful in
Durancro office:
* address - (as noted above)
* phone - (as noted above).
* telecopier - (303) 259-1094 (temporary only)
* acceptable courier service - any
* office hours - 8:00a to 5:00p mountain time, Mon - Fri
* functions performed - general administration, accounting, purchasing, human resources, property mgt
a key organizational chart - attatched
A Tsoi) ?? r R 0? ? r 247-1176 (Greg Sparks home), (J0J) 2477 79 22877 (Jim Field home)
Silverton office;
* address - (as noted above)
* phone - (as noted above)
* telecopier - (303) 387-5510
te> jV'O, il’.' ' / l / * acceptable courier service - Express Mail only
* office hours 8:00a to 5:00p mountain time, Mon - Fri
* functions performed - production, safety, environmental, security, technical services
* key organizational chart - attatched
* : (303> 247~U76 ‘Greg Sparks home), (303) 387-5814 (Bob Stoughton, staff house), (303) 259-5788 (Bob Purcell home), (303) 387-5384 (Barnev Darnton home) J
Mine Portal:
* phone - (303) 387-5785
Mill:
* phone - (303) 387-5650
Staff House:
* phone - (303) 387-5814
* address - 969 Reese St, Silverton
cc: Echo Bay Mines Ltd., Edmonton office Echo Bay Inc., Reno office Echo Bay, Denver office Round Mtn Gold Corp, Round Mtn office
Milner & Steer, attn: R. L. Leclerc Trigg, Woollett, Olson Consulting Ltd. Welborn, Dufford, Brown, & Tooley -ÎEflÉRAL -ni.-’lî ï ¿G. SPäkKS! :...?ftwa/3^;âs:ci»
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3ECL ¿i-: Ir.y.-'.zlï ; - ! 3:L.'Eî::r;,'“iri£ i-ÎJL^IÎ* :¿:.-.fúCLiK ; • ) ;2. AVIr^Uï •yN» S'KiM* ir^t . J.,.. ,»J ■= .J ' fi! r n M l fc' - •■iil ' i'H U* i Ì . , ..iw i t ' ■- •' - • ’ -- - vol. 07 2SM ^ * 7 H üasfsa.s^ffl
m i m m
. Wadneaday, March 12,19®, Denver, CO AMÇ tîrges GMC Issued Mining Permit
' * WAS^GTON* '"b.C.'-i- ' misting its operatión to an For Gold King Ore Properties The .nation'*, stockpile pro* organization having no „ . gram could be improved upon responsibilities other than ad DENVER, CO — Gerber the north«» half oi tihe Cold gold pot ton. The vein* in the ' by> placing, operation oI it in ministration and manage Energy International, be. an* King extension has identified Gotô ICing/Davis structures theiuuuU of,an organization ment of the stockpile. nounced that it has- been t to date, 50,000 tons of in range in width from 4 to over - that„ba*HMS othpr,v?espon* He pointed out that over issued (via its 88.09% owned dicated reserves of mineable 20 feet. All the veins have un- ■ 8ibilitie«„,4«iilaiedi Simon the years, AMC has urged the subsidiary; Gerber Minerals ¿'.Width, grading O.fruttrtetutfo 'ïùliiilffciSttensions with the" Strauss before theHouse sub* establishment of a quasi Corporation jGMCJ), a Class f^oldj ^ ounces of silver and .potential for high,grade ore,* ■ ^ • committ«*op,Seapower, and public corporation to hold the 110 Mining Permit by the * 2%l combined lead, zinc and shoots. * - Strategic,; and-. Critical, stockpile, empowered to buy State of Colorado. The permit ^Copper per ton. The block is- By summer, ÔMCexpècta 5 V Materials.... or sell commodities as chang will enable GMC to mine the operi on both sides, with vein to lbünch a small scale pro» Strauss, former vice ohair- ing circumstances dictate. Gold King ore properties with ^appearing to connect with ductioti program’Which could manofAsarcoInc., was testi Strauss also said AMC sup initial production commenc known vein structures in the generate multi-millions in fying on behalf of the ports a proposal made several ing in the summer of 1986. historic Gold King Mine, revenues for 1986. Subse* « American Mining Congress. years ago by Sen. James Mc GMC acquired the Gold with the adjacent Sunnyside quent production is schedule The bill before the committee Clure (R-ID) that stockpile King properties in September Mine ore.. bodies.; Additional
Rocky Mountain PAY DIRT for December 1985 Page 13A WELBORN, DUFFORD, BROWN g TOOLEY ROBERT F. WELBORN PHILIP G. OUFFORD ATTORNEYS AT LAW RANDALL J. FEUERSTEIN THOMAS G. BROWN 1700 BROADWAY S. KIRK INGEBRETSEN DALE TOOLEY (1933-1985) DIANE L.BURKHARDT DAVID W. FURGASON DENVER, COLORADO Ö0290-1199 STEPHEN J. SULLIVAN WILLIAM C. ROBB (303) 86I-BOI3 JOHN M. SPILLANE JOHN F. WELBORN ELLEN TOLL WILLIAM A.MCLAIN DOUGLAS P, RUEGSEGGER BEVERLY J. QUAIL EDWARD D, WHITE RICHARD L.FANYO PEGGY J. ANDERSON KATHRYN L. POWERS THEODORE B.ATLASS JOHN F. MECK PHILLIP D. BARBER COUNSEL GREGORY A.RUEGSEGGER December 23, 1985
William H. Rutter, Esq. Sherman & Howard 633 Seventeenth Street, Suite 2900 Denver, Colorado 80202
He: Sunnyside Gold Corporation
Dear Hank:
This letter is a follow-up to our conversation last week regarding the overpayment on 1985 advances for estimated tax payments under the Marcy Lease. Since our conversation, I have briefly spoken with Jim Newcomb from Washington Mining on this same subject. As I explained to Jim, we had attempted earlier this month to reconcile the precise amount due to Washington for the final 1985 advance tax payment. The question arose at that time whether some amount less than $20,600 was owed to Washington. Sunnyside's goal was to avoid making an overpayment in December, but rather to make a payment of only the amount necessary to complete the 1985 tax advances.
We are informed that Washington, in fact, received an additional $11,300 during 1985 for which credit was not given. Had Sunnyside been given proper credit for that amount, Sunnyside would have reduced its December payment to Washington by a like amount. Therefore, we believe it is appropriate that Sunnyside make a payment of $9,300 ($20,600 minus $11,300) as its January, 1986 payment.
We are also attempting to obtain the actual tax figures for 1985 from San Juan County. As soon as that data is available, we will advise you so that the necessary accounting can be completed prior to January 15, as required by the Marcy Lease. WELBORN, DUFFORD, BROWN © TOOLEY
William H. Rutter, Esq. December 23, 1985 Page 2
Best holiday wishes, Let's hope the price of gold keeps going up!
Sincerely,
WELBORN, DUFFORD, BROWN & TOOLEY f i W ) Phillip D. Barber PDB/kw cc: John Azlant Michael Gluckman, Esq. Greg Sparks Jim Field DOCUMENT SUMMARY
Doc: ument T d " aao OD Docurnent Name : ECHO BAY/? 6/86 Operator Kay Author» E4691
Comments Mem u a ssessm u j o r k
STATISTICS
OPERATION DATE TIME WORKTIME KEYSTROKE
Created 06/10/86 00:00 SOI 58 Last Revised / / it Last Printed 06/10/86 00 SOI Last Arch i ved / / onto Diskette
Total Pages« t\ Tota1 Worktime“ SOI Total Lines: 148 Tota 1 Key st. rakes s 58 Pages to be printed s 4 ANDREWS v. LAW SOCIETY OF BRITISH COLUMBIA and ATTORNEY GENERAL OF BRITISH COLUMBIA and democratic society. Alternatively, assuming that the legislature’s objective m enacting the requirement was to ensure that persons admitted to the bar were [Indexed as: Andrews v. Law Soc. of B.C. (B.C.C.A.)] familiar with Canadian institutions and rights and had a commitment to our society and that those concerns were pressing and substantial, it cannot be said British Columbia Court of Appeal, that the means chosen were reasonable and demonstrably justified The require Hinkson, Craig and McLachlin IJ.A. ment did not appear to relate clearly to those ends, much less to have been carefully designed to achieve them with minimum impairment of individual Judgment — May 13, 1986. rights. Constitutional law — Constitution Act, 1982 — Charter of Rights and Freedoms Cases considered — Equality rights — Equality before and under law — National or ethnic origin Dickenson v. Law Soc. of Alia. (1978), 5 Alta. L.R. (2d) 136, 84 D.L.R. (3di — Petitioner seeking declaration that legislation restricting right to practise law in 189, 1ÛA.R. 120 (T.D.) — referred to. province to Canadian citizens unconstitutional — Petition dismissed and appeal allowed — Citizenship requirement unreasonable and unfair and violating s. 15 413 U.S. 717,93S. Ct. 2851,37L. Ed. 2d910(1973)-applied. — Objective of requirement not sufficiently important to override constitu R. v. Big M D rug M a n L id ., [1985] 1 S.C.R. 295, [1985] 3 W.W.R. 481 37 tionally protected right or, alternatively, if sufficiently important, means not ^ ia‘,L^R' (2d) 97> 18 CC C <3d> 385> 18 D-L.R. (4th) 321, 13 C.R.R. 6 4 ’ 85 being reasonable or demonstrably justified. C.L.L.C. 14,023, 60 A.R 161, 58 N.R. 81 — considered. Barristers and solicitors — Admission to the practice of law — Requirement of R. V. Oakes (1986), 50C.R. (3d) 1 (S.C.C.) — applied. Canadian citizenship as prerequisite to practice of law violating s. 15 of Charter Weinstein v. Min. ofEduc.forB.C., 65 B.C.L.R. 46, [1985] 5 W.W.R 724 2ft — Role and privileges of lawyers. D.L.R. (4th) 609 (S.C.) — referred to. The petitioner was a citizen of the United Kingdom who wished to practise Statutes considered law in British Columbia without first becoming a Canadian citizen as required by Barristers and Solicitors Act, R.S.B.C. 1979, c. 26, s 42 [am 1983 c 10 s. 42 of the Barristers and Solicitors Act. He unsuccessfully sought a declaration (Sched. 2)]. that the citizenship requirement violated the Charter of Rights and Freedoms. The chambers judge held that the citizenship requirement did not discriminate Canadian Charter of Rights and Freedoms, ss. 1-15, 23,25, 27. contrary to s. 15 of the Charter as it did not draw an irrelevant or irrational Charter of Rights Amendments Act, S.B.C. 1985, c. 68, s. 105. distinction between people based on an irrelevant or unreasonably emphasized Constitution Act, R.S.B.C. 1979, c. 62, s. 30. personal characteristic. Citizenship was a relevant requirement for the practice Election Act, R.S.B.C. 1979, c. 103, s. 2(l)(è) [re-en. 1985, c. 5, s. 2]. of law given the fundamental role lawyers play in government and the commit Election Amendment Act, S.B.C. 1985, c. 5, s. 2. ment to and knowledge of Canadian society which citizenship implies. The petitioner appealed. Police Act, R.S.B.C. 1979, c. 331, s. 12(5) [am. 1985, c. 68, s. 105], Held — Appeal allowed. Provincial Court Act, R.S.B.C. 1979, c. 341, s. 5 [am. 1984, c. 26, s. 13], Public Service Act, R.S.B.C. 1979, c. 343, s. 34. The question to be answered under s. 15 should be whether the impugned Quebec Charter of Rights and Freedoms, R.S.Q. 1977, c. C-12. distinction is reasonable or fair, having regard to its purposes and aims and its effect on persons it adversely affected. Discrimination must be established by United States Constitution, 14th Amendment. the party asserting it on a balance of probabilities. None of the reasons offered Authorities considered for the requirement of citizenship for the practice of law, that is, the role of Aristotle, Politics, Transi., Barker, Book 3, c. 1, pp. 107-109. lawyers in government and the commitment to and knowledge of Canadian Bayefsky and Eberts, Equality Rights and the Canadian Charter of Rights society which citizenship implies, offered convincing justification for the and Freedoms, c. I, Bayefsky, “Defining Equality Rights”, requirement, whereas the petitioner was clearly prejudiced by it. The petitioner had discharged the onus upon him of showing that the requirement of citizenship Bender, “Justifications for Limiting Constitutionally Guaranteed Rights was unreasonable or unfair and in violation of s. 15 of the Charter. and Freedoms: Some Remarks about the Proper Role of Section One of the Canadian Charter” (1983), 13 Wan. L.J. 669. The onus of proving that a limitation on a Charter right is reasonable and Canadian Bar Association, “A Blueprint for Implementation of Constitu demonstrably justified in a free and democratic society rests upon the party tional Equality Rights ’, Submission of the Canadian Bar Association to the seeking to uphold the limitation and the standard of proof under s. 1 is a Parliamentary Special Committee on Equality Rights, 17th June 1985. preponderance of probabilities. It cannot be said that the objective of the GoId’ A Approach to Equality Rights: A Preliminary Inquiry” citizenship requirement was sufficiently important to warrant overriding the (1982), 4 Supreme Court L. Rev. 131. petitioner’s constitutionally protected right nor could the apparent objectives be said to relate to societal concerns which were pressing and substantial in a free Greenawalt, “A Neighbour’s Reflection on Equality Rights” Rightingthe Balance: Canada’s New Equality Rights (1986), Canadian Human Rights Reporter. Head, “The Stranger in Our Midst: A Sketch ofthe Legal Status of the Alien in Canada”, Canadian Yearbook of International Law (1964), p. 107. violation o f s. 15 ofthe Canadian Charter of Rights and Freedoms. Hogg, Constitutional Law of Canada (1977), p. 417. Hogg, Constitutional Law of Canada, 2nd ed. (1985), p. 800. The petitioner Mark David Andrews is a permanent resident of Canada and a British subject. He obtained a law degree and a I.L.O. Convention Concerning Discrimination in Respect of Employment and Occupation (No. Ill), 362 U.N.T.S. 31, art. 1(1). B.C.L. from the University of Oxford in England. After marrying International Convention on the Elimination ofAll Forms of Discrimination a Canadian citizen taking her legal education at Oxford, he applied Against Women, UN G R A Res. 34/180, GAOR, 34th Sess., Supp. 46, d . 193: for and was granted the status o f permanent resident. M r. Andrews ILM 33, art. 1. and his wife chose to take up residence in British Columbia. He International Convention of the Elimination of All Forms of Racial intends to become a Canadian citizen and to practise law here. Discrimination, 660 U.N.T.S. 195. Law Society of British Columbia, Canons of Legal Ethics. Mr. Andrews has successfully completed the bar admission Smith, “A New Paradigm for Equality Rights”, in Righting the Balance: course and fulfilled all the requirements for admission to the Canada’s New Equality Rights (1986), Canadian Human Rights Reporter. practice of law except that of Canadian citizenship. These include Spitz, “Litigation Strategy in Equality Rights: The American Experience”, a personal interview with a bencher of the law society and a in Weiler and Elliot, Litigating the Values of a Nation: The Canadian Charter of certification by his principal that he is “ a fit and proper person to Rights and Freedoms (1986). be called to the Bar and admitted as a solicitor” . Tarnopolsky and Beaudoin, The Canadian Charter of Rights and Freedoms (1982), Tarnopolsky, “The Equality Rights”. M r. Andrews commenced legal proceedings for a declaration Tarnopolsky, “The Equality Rights in the Canadian Charter of Rights and that the requirement o f citizenship in the Barristers and Solicitors Freedoms” (1983), 61 Can. Bar Rev. 242. Act, R.S.B.C. 1979, c. 26, violates the Charter of Rights and Tupper, Legal Ethics”, Canons of Legal Ethics of Law Society of British Freedoms. Columbia. In reasons reported at B.C.L.R. 363, [1986] 1 W.W.R. Tussman and tenBroek, “The Equal Protection ofthe Laws” (1949), 37 66 .California L. Rev. 341, p. 341. 252,22 D .L.R . (4th) 9, the chambersjudge dismissed his application. UNESCO Convention Against Discrimination in Education (1960) 4^9 He held that a statute does not discrim inate contrary to s. 15 o fth e U.N.T.S. 93, art. 1. Charter unless it draws an irrational or irrelevant distinction between people based on some irrelevant personal characteristic [Note up with 4 C.E.D. (West. 3rd) Barristers and Solicitors, II, 1; 16 C.E.D. for the purpose or having the effect of imposing on certain of (West. lrd)HumanRights, VIII, 9; 4 Can. Abr. (2d) Barristers and Solicitors, II, 1; 7 Can. Abr. (2d) Constitutional Law , XXIV, 1, f, ii, B.j them a penalty, disadvantage or indignity, or denying them an advantage. He went on to find that the requirement that only Appeal from dismissal by T a ylo r J., B.C.L.R. 363, [1986] 66 Canadian citizens are entitled to practise law in British Columbia 1 W.W.R. 252, 22 D.L.R. (4th) 9, of application for declaration is rational and reasonable because of the “ special commitment to that s. 42 o f Banisters and Solicitors Act unconstitutional. the community which citizenship involves” [p. 375]. He further D.G. Cowper, for appellant. found that the requirement of citizenship is not unduly burden D.W. Shaw, Q.C., fo r respondent. some because it results only in a delay which allows an individual, J. Arvay, for respondent Attorney General of British Columbia. through a period of residence, to obtain the knowledge o f Canada necessary to practise here competently, and because people edu (Vancouver No. CA004797) cated abroad occupy a privileged position in being able to enter 13th May 1986. The judgment of the court was delivered by the bar w ithout undergoing studies here. A s fo r s. 7 o fth e Charter, the chambersjudge concluded there was no violation because the M cL achlin J .A .:— citizenship requirement is rationally based and reasonable and is I Introduction therefore not in violation of the principles of fundamental justice guaranteed by that section. This appeal raises the issue whether the requirement of Cana dian citizenship as a prerequisite to the practice of law is in On appeal, the appellant confined his submissions to s. 15 of the Charter; accordingly, it is unnecessary to consider s. 7. Section 15(1) o f the Charter of Rights and Freedoms provides: disadvantage or indignity, or denying them an advantage. Some of the personal characteristics which might form a basis for discrimination are listed in s. 15(1) Every individual is equal before and under the law and has the 15(1), but I do not think this is intended as a complete listing. right to the equal protection and equal benefit of the law without discrimi nation and, in particular, without discrimination based on race, national or Thus, in order to amount to discrimination under s. 15(1), the per ethnic origin, colour, religion, sex, age or mental or physical disability. sonal characteristic on which a distinction is based must either be one w hich is entirely irrelevant in the context in which the distinction is made The provision of the Barristers and Solicitors Act which it is or one which is given a significance clearly beyond that which could alleged, violates s. 15 states: reasonably be justified in such a context — the distinction must in this sense be irrational. [The italics are mine.] 42. The benchers may call to the Bar of the Province and admit as solicitor of the Supreme Court The respondents urge that definition on this court. The (a) a Canadian citizen with respect to whom they are satisfied that he appellant, on the other hand, submits that the chambers judge erred in importing the requirement of irrationality into the term The appellant submits that the ultimate answer to the In summary, none of the reasons offered tor the requirement respondents’ contention that the requirement of citizenship is of citizenship for the practice of law offers a convincing justifica reasonable because of lawyers’ involvement in the process of tion for it. On the other hand, the requirement is clearly prejudi government is found in the history of the requirement in this and cial to the appellant and those similarly placed. Having met all the other provinces. other requirements for the admission to the bar. the appellant is nevertheless unable to gain admission to practise because he is The requirement of citizenship was first adopted in British not yet a Canadian citizen. 1 find that the appellant has discharged Columbia in 1971. Prior to that the requirement was that the the onus upon him of showing that the requirement of citizenship applicant be a British subject. At an earlier period yet, the Rules for admission to the practice of taw is unreasonable or uniair. I of the Law Society required that candidates be on the voters’ list. conclude that the appellant has established a violation o l his rights This was, incidentally, at a time when inclusion on the voters’ list under s. 15 o f the Charter. was a prerequisite for numerous economic activities and when Asians were barred from voting: Head, “ The Stranger in Our IV. Whether limitation of the appellant’s rights is justified under s. 1 of Midst: A Sketch of the Legal Status of the Alien in Canada” , the Charter Canadian Yearbook of International Law (1964), p. 107. Section 1 of the Charter provides: The fact is that citizenship was not seen as essential to the 1. The Canadian Charier of Rights and Freedoms guarantees the rights practice o f law in this province p rior to 1971. It is still not viewed and freedoms set out in it subject only to such reasonable limits prescribed as such in most jurisdictions; only two other provinces require by law as can be demonstrably justified in a free and democratic society. lawyers to be citizens. In the tradition o f the British Commonwealth, citizenship has never been a requirement for the right to practise The principles governing the application o f s. I of the Charter law . These facts belie the contention that citizenship is vita lly and have been recently discussed in J?. v. Oakes. They may be summa integrally connected with the lawyer’s role in society. rized as follow s. The onus of proving that a limitation on any Charter right is commitment to our society and that these concerns are pressing reasonable and demonstrably justified in a free and democratic and substantial, it cannot be said that the means chosen — the society rests upon the party seeking to uphold the limitation. requirement of citizenship — is reasonable and demonstrably Limits on constitutionally guaranteed rights are clearly excep tions to the general guarantee. The presumption is that Charter justified. It does not appear to relate clearly to those ends, much rights are guaranteed unless the party invoking s. 1 can bring its e lf less to have been carefully designed to achieve them with mini within the exceptional criteria justifying their being limited. mum impairment of individual rights. The standard of proof under s. 1 is a preponderance of For these reasons I conclude that the respondents have not probabilities. Proof beyond a reasonable doubt would be unduly established that the appellant’s right under s. 15 to be adm itted to onerous on the party seeking to lim it the right because concepts the practice of law, notwithstanding that he is not a Canadian such as “ reasonableness” , “justifiability” and “ free and demo citizen, should be limited by the operation of s. 1. cratic society” are not amenable to such a standard. V. Conclusion Two criteria must be satisfied to establish that a limit is reasonable and demonstrably justified in a free and democratic The appeal is allowed. society. First, the objective to be served by the measures limiting a Charter right must be sufficiently important to warrant overrid Appeal allowed. ing a constitutionally protected right or freedom. The standard must be high to ensure that trivial objectives or those discordant with the principles of a free and democratic society do not gain protection. A t a minimum, an objective must relate to societal concerns which are pressing and substantial in a free and demo CABRE EXPLORATION LTD. v. ARNDT cratic society before it can be characterized as sufficiently important. Second, the party invoking s. 1 must show the means to be [Indexed as: Cabre Explor. Ltd. v. Arndt] reasonable and demonstrably justified. This involves a form of Alberta Queen’s Bench, proportionality test involving three important components. To Dea J. begin w ith , the measures must be fa ir and not arbitrary, they must Judgment — April 8 , 1986. be carefully designed to achieve the objective in question and rationally connected to it. In addition, the means should impair Constitutional law — Constitution Act, 1982 — Charter of Rights and Freedoms — Equality rights — Section 26(9) of the Surface Rights Act giving surface the right in question as little as possible. Lastly, there must be a owner preferential position with respect to costs — Surface owner and mineral proportionality between the effects of the limiting measure and owner not similarly situated — Section 26(9) not violating s. 15 of Charter. the objective — the more severe the prejudicial effects of a Constitutional law — Status to attack validity — Under Charter of Rights and measure, the more important the objective must be. Freedoms — Corporate entity having direct pecuniary interest in validity of impugned legislation — Corporate entity granted standing. For the reasons already discussed, it cannot be said that the Mines and minerals — Oil and gas — Surface rights compensation — Section objective to be served by the requirement that a member of the 26(9) of Surface Rights Act giving surface owner preferential position with British Columbia bar be a citizen is sufficiently important to respect to costs — Surface owner and mineral owner not similarly situated — warrant overriding the appellant’s constitutionally protected right. Section 26(9) not violating s. 15 of Charter. The apparent objectives of the requirement, whatever validity The applicant operator was the lessee of mines and minerals underlying the they may have, cannot be said to relate to societal concerns which lands of the respondent owner. In other proceedings, the operator was success are pressing and substantial in a free and democratic society. ful in obtaining a variation of the award of compensation by the Surface Rights Alternatively, assuming that the legislature’s objective in enact Board to the owner. Pursuant to s. 26(9) of the Surface Rights Act, costs of the appeal were to be paid on a solicitor-client basis by the operator to the owner ing the requirement was to ensure that persons admitted to the bar notwithstanding the operator’s success on the appeal. The operator sought a are familiar with Canadian institutions and rights and have a declaration that s. 26(9) was invalid, as it offended s. 15 of the Charter by treating r . 6 . / WELBORN, DUFFORD, BROWN 6 TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PHILIP G. DUFFORD 1700 BROADWAY S. KiRK INGEBRETSEN THOMAS G. BROWN DIANE L. BURKHAROT DALE TOOLEY (1933-1985) DENVER, COLORADO 60290*1199 STEPHEN J. SULLIVAN DAVID W. FURGASON (303) 061-8013 JOHN M. SPILLANE WILLIAM C. ROBB ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER BEVERLY J. OUAIL EDWARD D. WHITE RICHARD L. FANYO PEGGY J. ANDERSON KATHRYN L. POWERS August 5, 1986 PHILLIP D. BARBER GREGORY A. RUEGSEGGER JOHN F. MECK Robert L. LeClerc, Esq. Milner & Steer 2900 Manulife Place 10280-101 Street Edmonton, Alberta CANADA T5J 3V5 Dear Bobs My employer, Mr. Barber, occasionally reminds me that we should strive to be a full service law firm. Accordingly, I offer you the following. Movies Unlimited, purportedly one of the U.S* largest videocassette mail order houses, has Sherlock Holmes movies in supply. Some of those available are: "Murder by Decree," "Adventures of Sherlock Holmes," "Scandal of Bohemia," etc. For a catalog, send ¿>5.95, refundable with the first purchase, to: Movies Unlimited 6736 Castor Avenue Philadelphia, PA 19149 For more information, you may call toll-free at 1-800-523-0823. As always, we are at your service. Very truly yours WELBORN, DUFFORD, BROWN & TOOLEY Carla St. Romain Legal Assistant CS/ppm Robert L. Ledere MILNER & STEER 2900 MANULIFE PLACE 10180- lOI STREET EDMONTON, CANADA T5J 3V5 TELEPHONE (403) 423-7100 CABLE ADDRESS "MILMAT" TELEX 037-2684 TELECOPIER (403) 425-8389 DATALINE (403) 425-9063 July 21, 1986 Phil, I have crossed off the films I already own. Good Luck and Good Sleuthing. ?S VtK , K & t &=TA it FILMOGRAPH Screenplay: H. Fowler Mear and Artlmr Macrae^ Sherlock Holmes: Arthur Wontncr Dr Watson: lan Fleming Prof Moriam^JLyiT'Hafding 1 nspJkf'STiaae: John Turnbull ""■""Col Sebastian Moran: Arthur Coullett vr 1939 The Hound of the Baskervilles (VSA) Twentieth Century Fox. Director; Sidney Lanfield Screenplay: Ernest Pascal Sherlock Holmes: Basil Rathbcne Dr Watson: Nigel Bruce Sir Henry Baskerville: Richard Greene Beryl Stapleton: Wendy Barrie Dr Mortimer: Lionel Atwill Barryman: John Carradine Mr? Hudson: Mary Gordon John Stapleton: Martin Lowry -TJie-Adveniures-of-Sherl&c-Jt'-H&lmes-^SA)— Twcntieth-Centui y Fox: Director: Alfred Werker Screenplay: Edwin Blum and William Drake Sherlock'R'olnaes: Basil Rathbone Dr Watson: NigeT'Bruce Ann Brandon: Ida Lupino^"-^ Prof Moriarty: George Zucco Insp Bristol: H. E. Clive Mrs. Hudson : Marv Gordon ‘ Tin- Universal Serk^ (I’SA) Director: John Rawlins Screenplay: Lynn Riggs and Robert D. Andrews Sherlock Holmes: Basil Rathbone Dr Watson: Nigel Bruce Kitty: Evelyn Ankers Sir Evan Barham: Reginald Denny- Anthony Lloyd: Henry DauieiT Mrs Hudson: Marv Gofffon 3 9 4 2 Shcrhpk'ffohiics and the Secrcl Weapon (working title: Sherlock Tfolmes Fights Back) Director: Roy William Neill ’A. |nv*>^ »*4 ,<****. fwiipwr s u r> i„ u iSJi- 'SiiY W ti V. • d, X- - w •—< •; au*.. «-*T * . ^-.c^vt *< #• " r c. f -t . I,]!-1- ■ FIL M O C. R A V H Y _&«m»t>lay; JMwOT 1943 Shcrlock Holmes in Washington Director: Rov William Neill Screenplay: Bertram Millhauser and Lynn Riggs (from a story by Bertram Millhauser) Sherlock Holmes: Basil Rathbone Dr Watson: Nigel Bruce William Raster: Henry Danicll Stanley: George Zucco Na n c y Partridge: Majorie Lord Senator Babock: Thurston Hall 1943 Sherlock Holmes Faces Death ^ Director/Producer: Roy \\ illiam Neill Screenplay: Bertram Millhauser (loosely based on The Musgrme Ritual) Sherlock Holmes: Basil Rathbone Dr Watson: Nigel Bruce Sally Musgrave: Hillary Brooke Dr Sexton: Arthur Marpetson Captain Vickery: Milburn Stoiu- lnsp Lestrade: Dennis Hocy Mrs Hudson : Mary Gordon 1944 Spnler Woman Director.Producer: Roy William Neill Screenplay: Bertram Millhauser Sherlock Holmes: Basil Rathbone Dr Watson: Nigel Bruce Andrea Spedding: Gale Sondergaard Norman: Vernon Downing lnsp Lestrade: Dennis Hoey Mrs Hudson: Mary Gordon 1944 The Scarlet Clan Director/Producer: Roy W illiam Neill ^ Screenplay: Edmund L. Hartmann and Roy William Neill fill; j rifci-vjf,*.. ,»*^,#£0* »«-•*1*-'“*a Lhili1,1 ■'■f'--'-’*'J--aLL;^ 11.081., , .| | - FILMOGRAPHY (from a story by Paul Ganpelm and Brenda Weisberg) Sherlock Holme--: Basil Rathbone I)r Watson: Nigel Bruce Alistair Kamson Potts 'Tanner: Gerald Hamer Lord Penrose: Paul Cavanagb Journet: Arthur Hohl Judge Brisson: Miles Mander Marie: Kay Harding Sgt Thompson: David Clyde 1944 The Pearl of Death Director/Producer: William Roy Neill Screenplay: Bertram Millhauser (loosely based on The Six Napoleons) Sherlock Holmes: Basil Rathbone Dr Watson : Nigel Bruce Giles Conover: Miles Mander Naomi Drake: kvelyn Ankers. The Creeper: Rondo Hatton Insp Lestrade: Dennis Hoey 1945 The House of Fear Director .'Producer: Roy William Neill Screenplay: Roy Chanslor (loosely based on The hive Oiangc 1 ip^j Sherlock Holmes: Basil Rathbone Dr Watson: Nisei Stock Alistair: Aubrey Mather Di Merrival*-: Paul Cavanagh losgravr: Holme- Herbert Mr.- Muntfith: SalU Sheplurd Simp-on: Harry Cording Jib)' Lestrade: Denni> Hoey "!(;:} 3-- -TVir-l Vvma-n-in-tvrtrir- Director 'Producer: Rov V. illiam Neill Screenplay: Bertram Millhauser (loosely ba>ed on TJic^dreniiac of tin Emptx House > ' Sherlock Holme*: Basil R ath b o m ^ "'''' Dr Watson: Nigel 1'ruc^-"-'"^" Prof Moriartyj^-lt'nfy Danieli lnsp 0.rfgS(Tn: Matthew Boulton -•iTydia: Hillary Brooke •4 H,nvvick-:--P-aul-C,a\’;inagh------—~ nv> IE m k Maude: Eve Amber Mrs Hudson: Mary Gordon J 945 Pursuit to Algiers Director/Producer: Roy William Neill Screenplay: Leonard Lee Sherlock Holmes: Basil Rathbone Dr Watson: Nigel Bruce Sheila: Marjorie Riordan Mirko: Martin Kosleck Nikolas: Leslie Vincent Sanford: Martin Lowry 94 b~- Trrror-M" •N-ight — ...... — -— Director/Producer: Roy William Neill Screcnplay: Frank Gruber Sherlock Holmes: Basil Rathbone I)r Watson: Nigel Bruce Major Duncan Bleek: Alan Mowbray Vivian Vedder: Renee Godfrey Lady Margaret: Mary Forbes Train attendant: Billy Bevan Sands: Skelton Knaggs Insp Lestrade: Dennis Hoey Dressed to Kill or Sherlock Uohncf Send Code (GB) Director/Produccr: Ro\ William^ Scrccnplay: Leonard L 1 he wu'h the 1 wisted l.ij- (uBj \ andyke Picture? / Dircctoi : Richard M. Grey Sherlock Holmes: John Longdon / Î >r Watson : Campbell Singer 172 .iiPiwumui 671 * 43-2-104 Highways and Roads 670 State,?; Law reviews. For article, “One Year Review And this section has shifted the responsibility to that effect by th* of Real Property”, see 36 Dicta 57 (1959). for maintenance to the state department of high after such abandoniJSf There is no longer any duty upon a town to ways. Town of Greenwood Village v. District maintain a state highway within the municipal. Court, 138 Colo. 283.332 P.2d 210(1958). that any landowner SUf- Ity. Town of Greenwood Village v. District tion of a state highwL Court, 138 Colo. 283, 332 P.2d 210(1958). paid out of funds alio? manner as other damag 43-2-104. County highway contracts. The state department of highways may also contract with the counties wherein any roads comprising a part of Source: L. 53, p. 5,3^ the state highway system are situated for the maintenance or construction o f such roads directly by the county. Cross references. Forkhiu Stat. 785. For the *‘F d% . 1916”, actually titled ‘'2L Source: L. 53, p. 513, § 4; CRS 53, § 120-13-4; C.R.S. 1963, § 120-13-4. the United States shall ai/$ construction of rural postjl The general assembly has authorized the state of County Comm’rs v. Cottingham, 134 Colo. purposes.”, see 39 Stat.3jj/> highway department to contract with the coun 156,301 P,2d 135(1956). ties for maintenance or construction of state But county may not impose unreasonable 43-2-107, highways lying within a county. The authority regulations upon another agency. While coun to delegate this power is confirmed. Board of ties are charged by law with the responsibility roads which are conL County Comm’rs v. Cottingham, 134 Colo. for county highways and the state highway system, as defined 156,301 P.2d 135(1956). department has authority to contract with the the state highway syj County has duties with reference to highways counties for maintenance or construction of under Its jurisdiction. In the absence of any or improved in acce, state highways lying within a county, a county adopted and approved1 statutory authority to the contrary, it is clear may not impose unreasonable regulations upon that a county does have both general and spe another agency in the performance of its statu (2) Any roads, sir cific duties with reference to the highways state or any of its pollti3 under its jurisdiction. Indeed, the great tory duty. Board of County Comm’rs v. responsibility and control which modern high Cottingham, 134 Colo. 156, 301 P.2d 135 access for the safe anf ways demand make this rule imperative. Board (1956). sons, including those fa curbs at all pedestria® 43-2-105. Secondary road unit. In order that the state of Colorado may be applicable to any avail itself o f the benefits of funds apportioned for expenditure on federal-aid 1975. secondary roads, in conformance with Public Law 769 of the 81st congress amending and supplementing the “ Federal-Aid Road Act o f 1916^ , and any Source: L. 53, p. other subsequent acts o f congress, the state department o f highways is L. 75, p. 1571, § I. $ authorized to establish within its department a secondary road unit to be suit ably organized to discharge to the satisfaction o f the secretary o f commerce 43-2-108. County the duties required. county a primary sy:**f Source; L. 53, p. 513, § 5; CRS 53, § 120-13-5; C.R.S. 1963, § 120-13-5. Source: L. 53, p. J| Cross references: For Public Law 769, see 64 Stat. 785; for the “Federal-Aid Road Act of 1916”, Am. Jur.2d, See 39 A*. actually titled ‘‘An act providing that the United States shall aid the States in the construction Streets, and Bridges, j 3 2 .i; . of rural post roads, and for other purposes.”, see 39 Stat. 355. - jjollK dO. 43-2-109. County 43-2-106. Abandoned state highways. When a portion of a state highway each county shall is relocated and, because o f such relocation, a portion of the route as it ' y \ r °f greatest general existed before such relocation is, in t he opinion o fjh e commission« no longer - H i to that effect by the city council or local governing body, w ithin ninety davs laiün resPonsihflity tate department of Mok after such abandonment by the commissioji. I f it appears to the commission ^ood Village v DiÌ.Ì tH’at'ahy_landownef suffers'damages because o f the abandonment of any por »2 P.2d 210 (1958) Ct tion of a state highway, such damages shall be determined, tendered, and paid out of funds allocated to the state department of highways in the same manner as other damages as provided by law. ment o f highways uprising a part of Source: L. 53, p. 513, § 6; CRS 53, § 120-13-6; C.R.S. 1963, § 120-13-6. =e or construction Cross references. For Public Law 769, see 64 Am. Jur.2d. See 39 Am. Jur.2d, Highways, Stat. 785- For the “Federal-Aid Road Act of Streets, and Bridges, § 138. 1916”, actually titled “An act providing that C.J.S. See 40 C.J.S., Highways. § § 177, •3, § 120-13-4, the United States shall aid the States in the 179. construction of rural post roads, and for other Applied in Williams v. Town of Estes Park, Cottingham, 134 Colo. purposes.”, see 39 Stat. 355. 43 Colo. App. 265, 608 P.2d 810 (1979). t impose unreasonable 43-2-107. Standards of construction. (1) After December 31, 1953, any er agency. While coun- roads which are constructed so as to become a part of the state highway ’ with the responsibility and the state highway system, as defined in this part 1, or any road not on said date a part of ity to contract with the the state highway system which may be added thereto shall be constructed ice or construction of or improved in accordance with standards for highway construction as thin a county, a county adopted and approved by the commission. onuble regulations upon (2) Any roads, streets, or highways constructed after July 1, 1975, by the erformance of its statu- County Comm'rs v state or any o f its political subdivisions shall provide adequate and reasonable >• 156, 301 P.2d 135 access for the safe and convenient movement o f physically handicapped per sons, including those in wheelchairs, across all newly constructed or replaced curbs at all pedestrian crosswalks; except that this subsection (2) shall not o f Colorado may be applicable to any contracts executed or let for bid on or before July I, ture on federal-aid 1975. the 81st congress of 1916” , and any Source: L. 53, p. 514, § 7; CRS 53, § 120-13-7; C.R.S. 1963, § 120-13-7; it of highways is L.75, p. 1571, § 1. oad unit to be suit- Jtary o f commerce 43-2*108. County highway systems. There shall be established in each county a primary system and a secondary system o f county roads. 3, § 120-13-5. Source: L. 53, p. 514, § 8; CR S 53, § 120-13-8; C.R.S. 1963, § 120-13-8. \id Road Act of 1916", tes in the construction Am. Jur.2d. See 39 Am. Jur.2d, Highways, C.J.S. See 40 C.J.S., Highways, § 177. Streets, and Bridges. § 202. >f a state highway 43-2-109, County primary systems. The board of county commissioners of o f the route as it each county shall select the county primary system of roads on the basis mission, no longer of greatest general importance, and the system as selected shall constitute red as abandoned, an integrated system within itself or with the state highway system as defined which such aban- in this part 1. \ of this article. If j as a public high- Source: L. 53, p. 514, § 9; CRS 53, § 120-13-9; C.R.S. 1963, § 120-13-9. become a county t by the board of 43-2-110. Selection by county • notice • secondary system. (1) The initial n o f an ordinance selection of the county road system shall be done in the following manner: 43-2-112 Highways and Roads 674 675 a fixed fee prior to excavation of a roadorhigh* Comm'rs v, CoUingham, \34 Colo. 136, 30] to the owi way for a sanitary sewer pursuant to the statu- P.2d 135 (1956). tory duty of such district. Board of County ject to the doned por portion sh 43-2-U2. Condemnation for county roads. (1) The board o f county com county coi missioners on Us own initiative may lay out, widen, alter, or change any that any la county road, and the board of county commissioners shall cause the county tion of a c road supervisor o f the respective county to survey the proposed road and and paid ir make a written report to the board of county commissioners o f the county, describing the proposed road to be laid out, opened, or changed, as the case Source: 1 may be, and the portions o f land o f each landowner to be taken for that purpose, said report to be accompanied by a map showing the present and Am. Jur.2c proposed boundaries of the portion of the county road to be established, S tre e ts , and E opened, or changed, together with an estimate o f the damages and benefits accruing to each landowner whose land may be affected thereby. If, upon 43-2-114. receipt o f such report, the board o f county commissioners decides that public roads cons interest or convenience will be subserved by the proposed change, said board tem shall t ■ shall certify such proposal to the state highway commission and cause a plat roads, whe ; to be filed in the office o f the county clerk and recorder in a book kept general sta ; for that purpose. mission foi (2) The board o f county commissioners shall tender to each landowner the state hi the amount o f damages as estimated and approved by the board, and the board may designate any person to act as its agent in making such tender. Source: I In estimating the amount of damages to be tendered, due account shall be taken of any benefits which w ill accrue to the landowner by the proposed 43-2-115. action; but the amount of benefit shall not in any case exceed the amount other state i of damages awarded. Any person owning land or having interest in land over way user r which any proposed county road extends, who is o f the opinion that such requiremen tender is inadequate, may personally, or by agent or attorney, on or before this part 1 ten days from the date of such tender, file a written request addressed to certified m the board of county commissioners of said county for a ju ry to ascertain o f such no ; the compensation which he may be entitled to by reason o f damages sustained a grace pen I therefrom. Thereupon, the board of county commissioners shall proceed in quency. If i : the acquisition of such premises under articles 1 to 7 of title 38, C.R.S. The day grace f ; board o f county commissioners also has the power and is authorized to pro counties ur ’ ceed in the acquisition o f lands o f private persons for county roads, under received. P and according to articles I to 7 o f title 38, C.R.S., in the first instance without delinquent i tender or other proceedings under this part 1. Source: L Source: L. 53, p. 516. § 12; CRS 53, § 120-13-12; C.R.S. 1963, § 120-13-12. L. 71, p. n : } Am. Jur.2d. See 26 Am. Jur.2d, Eminent Applied in Board of County Comm’rs v. C .J.S. See 4tt Domain. § § 45-47, Intermountain Rural Elec. Ass’n, 655 P,2d 831 C.J.S. See 20 C,J.S., Counties, § 166. (Colo. 1982). 43-2-116. ; available fr j . s ' 43-2-113. Abandoned county primary roads. When a portion of the county county func i primary system is relocated and because o f such relocation a portion of the roads in an ; route as it existed before such relocation is, in the opinion of the board of counties, up j county commissioners, no longer necessary as part o f the county road sys funds which tem, such portion shall be considered as abandoned, and title to it shall revert tax fund foi 674 675 State, County, and Municipal Highways 43-2-116 ' olo. 156, 301 to the owner o f the land through which such abandoned portion may lie sub ject to the provisions o f part 3 o f this article. I f it appears that such aban doned portion is necessary for use as a secondary road, then such abandoned •unty com- portion shall become a secondary road, upon the adoption by the board o f h a n g e a n y county commissioners o f a resolution to that effect. I f it appears to the board the county that any landowner suffers damages because o f the abandonment o f any por 1 road and tion o f a county primary road, such damages shall be determined, tendered, he county, and paid in the same manner as other damages referred to in this part 1, is the case :n for that Source: L. 53, p. 517, § 13; CRS 53, § 120-13-13; C.R.S. 1963, § 120-13-13. resent and stablished, Am. Jur.2d. See 39 Am. Jur.2d, Highways. C.J.S. See 39C.J.S., Highways. $ 137 id benefits Streets, and Bridges, § 138. /. If, upon that public 43-2-U4. Standards for county primary roads. After December 31, 1953 said board roads constructed by the respective counties as part o f the primary road sys ause a plat tem shall be constructed to general standards acceptable for county primary b o o k k e p t roads, where found practicable by the board o f county commissioners. Such general standards shall conform to those adopted by the state highway com mission for the state highway system for the corresponding class o f road in la n d o w n e r the state highway system. d, and the ich tender, nt shall be Source: L. 53, p. 518, § 14; CRS 53, § 120-13-14; C.R.S. 1963, § 120-13-14, ; proposed h e a m o u n t 43-2-115. Allocations - reports - grace period. The state treasurer or any i land over other state officer so designated shall make complete allocations from high i that such way user revenues to only those counties which have complied with all the i or before requirements o f this part 1. The state agency or department designated in ^dressed to this part 1 to receive county reports shall inform the counties in writing, by 3 ascertain certified mail, o f any delinquencies in reporting and shall forward a copy s sustained of such notice to the state treasurer. Delinquent counties shall be allowed proceed in a grace period o f sixty days after date o f notice in which to rectify the delin :.R.S. The quency. I f the required reports have not been received at the end of the sixty- zed to pro- day grace period, the state treasurer shall withhold the moneys due to such ads, under counties until he has been informed that the required reports have been ice without received. Payments withheld will be paid to the counties upon receipt of the delinquent reports. 20-13-12. Source: L. 53, p. 518, § 15; CRS 53, § 120-13-15; C.R.S. 1963, $ 120-13-15* L- 71, p. 1138, §3; L. 77, p. 1935, § 1. Comm'rs v. C.J.S. S e e 40 C.J.S..Highways, § 176. 655 P.2d 831 43-2-116. Federal aid - matching funds. In the event that any fund becomes available from the federal government for expenditure in conjunction with the county county funds, for the construction, alteration, repair, or improvement of any :ion of the roads in any county, the board o f county commissioners of the respective 3 board of counties, upon approval by the state department o f highways, may use such ro a d sy s- funds which have accrued to their respective counties from the highway users hall revert tax fund for the purpose o f matching the federal funds becoming available P¿/V,JC f ;Cí’ t-0/ M loi -Brv,-Sai-^ ' 'Vforitir !*_. ■ uA fc.& rD yt-.....^ " V h ì i ' i i r ì s j U ù L ^ An^-fc" 3 f f l À ^ h 6 t Y ^ V atttóV' J» (ftOft/W - ...... _, -,. i f toiiüi W'-f' ^¿ j f . rrí>d¿ ú c M j ¿+3Í6'MíHC />0 > -JyrtAí^-H »,'i' tó| _. ío^1 ^ JítCáU^C r-P ÍWU.^ . &U&S ¿nJ d^fwcÄS, to (Ivi. up xï. ù ò \ i f ^ y Ù M J à ^ l U ’" '■",l r t l ù ' ì ò r — iJ ^ u M lv i J)^ u í> ¿/ locnv-h ¿k{im vía_ ’ ' (vijuL -HiirL. i¿ tffítr ¿ i) (^roiu^ , -rtxK- Ä ukm — -Hus K)K jeM ¿ ^ K | ' S f c )# '- usuMlvj ¿¿fc- <^ . lü M f profé/W tòòo-ld i3^ A&ftfjkl\s k J o f t ^ ^ ó M á . 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Case No. • ümforrl n . _ ------M' '»terk PETITION FOR WRIT OF CERTIORARI THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF LA PLATA, a political and governmental subdivision of the State of Colorado, Petitioner, v. FREDERICK MORELAND, Respondent. Appeal from the District Court of La Plata The Honorable James D. Childress Trial Court No. 82 CV 113 OPINION DATED: November 21, 1985 DIVISION III Opinion by JUDGE METZGER Berman and Tursi, JJ., concur Alan E. Johnson Durango, Colorado Attorney for Respondent David Dickinson Durango, Colorado La Plata County Attorney May 30, 1986 HALL & EVANS Richard A. Waltz, #11567 Alan Epstein, #10473 Tabor Center, Suite 1700 1200 Seventeenth Street Denver, Colorado 80202 (303) 628-3300 Attorneys for petitioner TABLE OF AUTHORITIES ...... ii I. OPINION SOUGHT TO BE REVIEWED ...... 1 II. JURISDICTION ...... i III. CERTIORARI ...... ! IV. STATEMENT OF THE CASE ...... 2 V. QUESTIONS PRESENTED ...... 4 VI. ARGUMENT ...... 5 A. Petitioner Owed No Duty to Respondent Under the Circumstances of This Case ...... 5 B. Petitioner Is Immune From Suit Under the Doctrine of Discretionary Immunity and For Public Policy Considerations ...... 8 C. The Trial Court Erred in Failing to Instruct The Jury in Accordance with Petitioner's Tendered InstructionNo. 1 ...... 10 VII. CONCLUSION ...... 11 CERTIFICATE OF MAILING ...... 13 Paqe Anderson v. Munoz, 159 Colo. 229, 411 P.2d 4 (1966) ...... 10 Burchinal v. Gregory, 41 Colo.App. 490, 586 P.2d 1012 (1978) ...... 5 Cooper v. Hollis, 42 Colo.App. 505, 600 P.2d 109 (1979) ...... 8 Federal Insurance Co. v. Public Service Co., 194 Colo. 107, 570 P.2d 239 (1977) ...... 10 Flournoy v. McComas, 175 Colo. 526, 488 P.2d 1104 (1971) ...... H Grogan v. Commonwealth, 577 S.W.2d 4 (Ky. 1979) ...... 9 Iverson v. Solsbery, 641 P.2d 314 (Colo.App. 1982) ...... 5 Mason v. State, 689 P.2d 199 Colo.App. 1984) (cert, granted October 22, 1984 ...... g f 10, 11 Metropolitan Gas Repair Service, Inc. v. Kulik, 621 P.2d 313 (Colo. 1980) ...... 5 Moreland v. The Board of County Commissioners of the County of La Plata, ____ P.2d ____ (No. 83CA1255) (announced November 21, 1985) ...... 1 Nineo v. Hight, 385 F. 2d 350 (10th Cir. 1967) ...... 1 0 , n Quintano v. Industrial Commission, 178 Colo. 131, 495 P.2d 1137(1972) ...... 2, 5, 6, 7 Rich v. City of Mobile, 410 So.2d 385 (Ala. 1982) ...... 8 Shelton v. Industrial Commission, 51 Ohio App. 2d 125, 367 N.E.2d 51 (1976) ...... 9 Cases (cont'd) Paqe Trianon Park Condominiums Association, Inc. v. City of Hialeah, 468 So.2d 912 (Fla. 1985) ...... 9 Trimble v. City and County of Denver, 697 P.2d 716 (Colo. 1985) ...... 8 Troxel v. Town of Basalt, 682 P.2d 501 (Colo.App. 1984) ...... 8 Statutes and Other Authority: C.A.R. 49 ...... x C.A.R. 49(a)(2) ...... x C.R.S. §13-4-108 ...... x C.R.S. (1982 Repl.Vol.10) §24-10-104 ...... 9-10 C.R.S. §31-15-601 ...... 7 C.R.S. §80-2-1 ...... 7 W. Prosser, Torts, §53 (4th Ed. 1971) ...... 5 COMES NOW petitioner, the Board of County Commissioners of La Plata County, by and through its attorneys, hall & EVANS, and, puisuant to C.A.R. 49, herewith submits the following Peti- tion for Certiorari. I• OPINION SOUGHT TO BE REVIEWED Petitioner seeks review of the decision of the Colorado Court of Appeals in Moreland v. The Board of Countv Commissioners of.the County of La Plata, _____ P.2d _____ (No. 83CA1255) (announced November 21, 1985) (Exhibit A). IT- JURISDICTION The decision of the Court of Appeals was entered on November 21, 1985. Petitioner's petition for rehearing was timely filed on December 3, 1985. The Colorado Court of Appeals denied petitioner's petition for rehearing on May 1, l986. This Court has jurisdiction pursuant to 513-4-108, C.R.S. Ill. CERTIORARI C.A.R. 49 invests the Supreme Court with the judicial discretion to review a decision of the Court of Appeals where there are special and important policy reasons therefor. C.A.R. 49(a)(2) also provides that a consideration of this Court in determining whether certiorari should be granted is whether the Court of Appeals has decided a question of substance in a way probably not in accord with applicable decisions of the Supreme Court, as discussed in further detail herein, the Court of Appeals decision in this matter has serious implications regard ing the liability of public entities for building inspections. The decision of the Court of Appeals also interprets the Colorado Governmental Immunity Act in a manner not consistent with the legislative intent or legislative history in that it equates the doctrirre of official immunity with the separate and distinct doctrine of sovereign immunity. Finally, the decision of the Court of Appeals also effectively precludes the continued via bility of this Court's decision in Quintano v. Industrial Commission, 178 Colo. 131, 495 P.2d 1137 (1972). Consequently, certiorari review by this Court is appropriate and necessary. IV. STATEMENT OF THE CASE On January 1, 1974, Resolution No. 1973-130, which was enacted by petitioner on December 31, 1973, went into effect. This resolution adopted the 1973 edition of the Uniform Building Code ("Code"), the Uniform Mechanical Code, the Uniform Plumbing Code, and the National Electrical Code. On April 1, 1974, Richard Yeager was hired as La Plata County's first building inspector. Mr. Yeagers initial responsibility as building inspector was to begin to develop a building department. Because of the rudimentary nature of this one-man building department, and the corollary physical constraints thereby imposed, the county commissioners of La Plata County made a policy decision that the Code provisions regarding the issuance of building permits and building inspections would not be invoked as to existing residential dwellings and dwellings the construction of which had commenced prior to the adoption o£ the Code. Mr. Ron McKuen purchased a lot in Aspen Trails sub division in La Plata County in 1969 or 1970. He began construc tion of the cabin which became the subject of this action in the spring of 1973, before the adoption of the Code by petitioner. Mr. McKnen never installed a guard rail along the north side of the deck. The lack of a guard rail violated §1716 of the Code. By the fall of 1973 Mr. McKuen had begun the foundation work on the cabin. Because of the aforementioned policy decision of the La Plata county commissioners to apply the permit and inspection provisions of the Code prospectively to buildings the construction of which had commenced after the effective date of Resolution No. 1973-130, a building permit was never issued by the La Plata County building department to Mr. McKuen and Mr. Yeager never inspected this cabin. Although a permit was issued to Mr. McKuen by the La Plata County assessor's office pursuant to Resolution No. 1972-25, this latter resolution was enacted prior to the adoption of the Code and did not specify building requirements nor provide for inspections to follow the issuance of the permit. The purpose of these permits was to ensure that new houses were put on the tax rolls. Don Cole, M.D., rented the subject cabin from Mr. McKuen in October of 1980. Dr. Cole became acquainted with respondent in approximately November of 1980. On the evening of March 10, 1982, Dr. Cole, respondent, and another individual were socializing at several bars and restaurant establishments. Later in the evening, Dr. Cole and respondent went back to the McKuen cabin. At approximately 7:20 p.m., respondent decided to leave the cabin and to visit another friend. He walked out of the sliding glass door of the cabin, out onto the deck, and began walking in a northerly direction. He continued walking until he came to the edge of the deck, and then stepped off the deck on the north side and fell to the ground. Respondent sustained a spinal injury as a result of this fall. Respondent thereafter instituted this lawsuit against petitioner. Petitioner filed a motion for summary judgment, contending that, as a matter of law, it owed no duty to respondent under the facts of this case, and that it was immune from suit. The trial court denied this motion, and the case proceeded to trial. The jury found that petitioner was 58% negligent and that respondent was 42% negligent, and that their combined neg ligence caused respondent's injuries. The trial court entered judgment on the jury's verdict. The Court of Appeals affirmed. (Exhibi t A.) V. QUESTIONS PRESENTED A. Whether petitioner owed any duty to respondent under the circumstances of this case. B. Whether petitioner is immune from liability under the doctrine of discretionary immunity, and because of public policy considerations. C. Whether the trial court erred in failing to instruct the jury in accordance with petitioner's tendered instruction No. 1. A. Petitioner Owed No Duty to Respondent Under the Circumstances of This Case. """— *--- ~ A duty, in negligence cases, may be defined as an obligation, to which the law will give recognition and effect, to conform to a particular standard of conduct toward another. W. Prosser, Torts, §53 (4th Ed. 1971). In Colorado, where there is no duty, there can be no actionable negligence. Burchinal v. Gregory, 41 Colo, App. 490, 586 P.2d 1012 (1978). It is for the Court to determine, as a matter of law, the existence and scope of a duty. Metropolitan Gas Repair Service, Inc. v. Kulik, 621 P.2d 313 (Colo. 1980). Whether the law should impose a duty requires a consideration of the risk, foreseeability, and like lihood of injury weighed against the social utility of the actor's conduct and magnitude of the burden of guarding against the injury, and the consequences of placing that burden on the defendant. Iverson v. Solsbery, 641 P.2d 314 (Colo. App. 1982). In the instant case, it is petitioner's contention that important public policy considerations and the general law in Colorado regarding the imposition of statutory duties dictate that a governmental entity should not be held liable for the failure to inspect private homes, at least under circumstances such as are presented herein. Dispositive of the instant action is Quintano v. Industrial Commission, 178 Colo. 131, 495 P.2d 1137 (1972). There, the plaintiff alleged that the machine he had been using in his employment as a die-setter in a plant had malfunctioned and severely injured him, and that this machine had malfunc- tioned in the past, causing injuries to other employees. The plaintiff further alleged that his injuries resulted from the violation by the defendant Colorado Industrial Commission and the individual commissioners of a state statute imposing upon them a duty to inspect all factories such as the one in which plaintiff was working. The trial court entered summary judgment in favor of the defendants. The Court of Appeals affirmed the trial court, and the Supreme Court affirmed the decision of the Court of Appeals. The court initially determined that the Commission itself was insulated from liability because of the doctrine of sovereign immunity. The court noted that although the Colorado Governmental Immunity Act was not yet in effect, the Industrial Commission would still be behind the shield of sovereign immunity in a case such as the principal action after the effective date of the statute. The court went on to hold that the individual commissioners could not be held liable because the statute imposing a duty to inspect did not provide a remedy for private redress: If the General Assembly has the intent that employees and guests may use this statute as the basis for civil liability, then its ex pression of this intent should be loud and clear, i.e., by authorizing the remedy. We hold, therefore, that the petitioner may not use this statute as a basis for recovery. 459 P.2d at 1139. In this case, no remedy is provided in the Code as adopted by petitioner for the nonfeasance of a building inspec tor. Nor is there any applicable statute Such as the one upon which the Qulntano plaintiff sought to predicate his cause of action which would give rise to a cause of action herein. See generally, §31-15-601, C.R.S. Hence, as a matter of law, peti tioner cannot be liable to respondent. Quintano v. Industrial Commission, supra. The Court of Appeals agreed with petitioner that Quintano disposed of the statutory duty issue. The court went on to hold, however, that a common law duty arose, rendering this case one of misfeasance, rather than nonfeasance. The rationale of the Court of Appeals was that petitioner*s conduct in enacting the Code created an affirmative duty to act reason ably in accordance with its enforcement. Hence, the court is essentially holding that by enacting legislation, a governmental entity exposes itself to liability since it thereby creates a common law duty to the entire public to inspect all buildings within the entity's jurisdiction. Under the rationale o f .the Court of Appeals in this case, the defendant Industrial Commis sion of the State of Colorado should have been liable to the plaintiffs under a common law theory since the State of Colorado took the affirmative action of adopting §80-2-1, C.R.S., which charged its Industrial Commission with the inspection of factories, mills, and workshops. If this Court in Quintano had perceived such a duty, it would have so stated in its opinion. The obvious effect of the Court of Appeals opinion in this case is to nullify the viability of Quintano. Since a plaintiff may now sue a governmental entity for taking the affirmative conduct of enacting legislation, it becomes irrele vant that the specific legislation does not contain a remedy for private redress. Petitioner therefore urges this Court to grant certiorari and reaffirm the validity of the Quintano decision by reversing the Court of Appeals decision affirming the entry of judgment by the trial court in favor of respondent. B. Petitioner is immune From Suit Under the Doctrine ot Discretionary immunity and for Public Policv— Consider at ionsT^ 1 *■ In Cooper v. Hollis, 42 Colo. App. 505, 600 P.2d 109 (1979), the Court of Appeals recognized the doctrine of discre tionary immunity. The Court held that discretionary acts are those of a judgmental, planning, or policy nature, while non- discretionary acts are those that involve performance of a mandatory duty at the operational level. This Court recently acknowledged the doctrine of official immunity in Trimble v. City and County of Denver, 697 P.2d 716 (Colo. 1985). Petitioners assert that in this instance to apply the Code prospectively was clearly a planning level decision which is insulated from liability. See Troxel v. Town of Basalt, 682 P.2d 501 (Colo.App. 1984). Support for this proposition is found in the legislative history of the Colorado Governmental Immunity Act. Courts in other jurisdictions have also recognized that the decision to inspect and the inspection of property are activities which must remain immune from civil liability, in Rj.ch v. City of Mobile, 410 So.2d 385 (Ala. 1982). There, the court recognized the split in the law among the various states regarding the issue presented herein. Noting that the outcome of these cases often turned on whether the public duty doctrine would be abolished or adhered to, the court refused to adopt such a facile approach to the problem. The court acknowledged that a municipality is required to provide for the health, safety, and general welfare of its citizenry. While an individ ual homeowner or guest of a homeowner may be affected by the discharge of an inspector's duty, the city's larger obligation to the whole of its resident population must be considered para mount. The court held that: . . . these public policy considerations, however, override the general rule and pre vent the imposition of a legal duty, the breach of which imposes liability, in those narrow areas of governmental activities essential to the well-being of the governed where the imposition of liability can be reasonably calculated to materially thwart the city's legitimate efforts to provide such public services. We readily acknowledge both the difficulty and the risk of error of any attempt to articulate the rule with that degree of definiteness which is easily applicable to varying factual situations. But this pheno menon is no stranger to the Rule of Law generally. We believe the wiser course is to allow the rule to evolve through the judicial process of trial and review on a case by case basis. 410 So.2d at 387. M a o see Grogan v. Commonwealth« 577 S.W.2d 4 (Ky. 1979); Trianon park Condominiums Association, Inc. v. City of Hialeah, 468 So.2d 912 {Fla. 1985). Shelton v. Industrial Commission, 51 Ohio App.2d 125, 367 N.E.2d 51 (1976). These same public policy considerations should dictate that govern mental entities in the state of Colorado should also not be held liable for failures of omission under circumstances such as those presented in this case. The Court of Appeals, relying upon Mason v. state, 689 P.2d 199 (Colo.App. 1984) (cert, granted October 22, 1984), held that the doctrine of official immunity has no applicability to this case. Also relying upon Mason, the court noted that §24- 10-104, C.R.S. (1982 Repl.Vol.10), provides for a waiver of sovereign immunity since the board obtained insurance, in this regard,^petitioner espouses the position taken by the Colorado State Board of Parole in Mason, Case No. 84SC313, c - The Trial Court erred in Failing to Instruct the Jury in Accordance with Petitioner's t enHprp'H— Instruction No. 1. ' ""— “---- If sufficient evidence supports a party's theory of the case, that party is entitled to have a jury instruction as to his legal theory. Federal Insurance Co. v. Public Service Co^, 194 Colo. 107, 570 P.2d 239 (1977). Significantly, a defendant is entitled to an instruction on his theory of defense when evidence is introduced to support such theory. See Anderson v. Munoz, 159 Colo. 229, 411 P.2d 4 (1966). Moreover, it has been held to constitute reversible error for a trial court to refuse to instruct the jury in accordance with a party's theory of the case where evidence is presented in support of the theory. Nineo v. Hight, 385 F.2d 350 (10th Cir. 1967). in this case, petitioner submits that it was entitled to have submitted to the jury its tendered Instruction No. 1, which stated as follows: The defendant. County of La Plata, is not legally responsible to the plaintiff, Frederick Moreland, on his claim of negli gence, if the affirmative defense of honest and reasonable mistake is proved. This defense is proved if you find all of the following: 1. The defendant and/or its employees acted honestly in carrying out their duties and responsibilities; and, 2. The defendant and/or its employees acted reasonably in carrying out their duties and responsibilities. This instruction is based on established Colorado law and is directly applicable to this case. See Flournoy v. McComas, 175 Colo. 526, 488 P.2d 1104 (1971). In this case, the jury was presented with an abundance of evidence concerning the decision of the La Plata county com missioners not to inspect buildings, the construction of which had commenced prior to the adoption of the Code, and with the conduct of Mr. Yeager in light of this directive. There exists no reason why petitioner was not entitled to have the jury instructed that this conduct on the part of petitioner was honest and reasonable. The failure to give this instruction was clearly prejudicial to petitioner and, should this Court decide that petitioner is not absolved of liability as a matter of law, a new trial would be mandated. See Nineo v. Hight, supra. Again, the Court of Appeals in this instance ruled that, by purchasing insurance, petitioner waived the defense of sovereign immunity. Again, petitioner adopts the position taken by the Colorado state Board of parole in the Mason case, cur rently pending before this Court on certiorari in regard to this i ssue. VII. CONCLUSION This case is precedent setting and will have far reaching and ominous effects on public entities at every level in Colorado. Although the issues in this matter only involve a county inspection of one structure within its jurisdiction, the Court of Appeals1 decision effectively impacts on all inspec tions, duties to inspect, failures to inspect and failures to enforce regulations throughout the entire state at every govern mental level. innumerable state, county and municipal regulations laws and codes require inspections to be conducted in order that these enactments might be enforced. The primary concern and purpose of these legislative schemes is to deter conduct adverse to the public's safety and welfare. These codes cannot guarantee that the state and local officials must or will be able to detect, investigate and prosecute each and every violation. This decision will have a chilling effect on govern- mental entities and employees at every level who are acting in good faith in attempting to insure that those persons who are regulated comply with the various legislative enactments. Public policy and previous decisions of this jurisdiction support the proposition that no duty is owed by the Board to the respondent under the facts of this case. For the foregoing reasons, peti tioner urges this Court to grant certiorari in this matter. Respectfully submitted Of HALL & EVANS 1200 Seventeenth Street Suite 1700- Denver, Colorado 80202 (303) 628-3300 I hereby certify that a true and correct copy of the foregoing PETITION FOR WRIT OF CERTIORARI has been mailed, postage prepaid, this SO day of . 1 addressed to; ------' David L. Dickinson, Esq. La Plata County Courthouse 1060 East Second Avenue Durango, CO 81301 Alan E. Johnson, Esq. 3360 County Road 228 Durango, CO 81301 COLORADO COURT OF APPEALS No. 83CA1255 FREDERICK MORELAND, ) ) - . Plaintiff-Appellee, ) v. ) ) THE BOARD OF COUNTY ) COMMISSIONERS OF THE COUNTY OF ) LA PLATA, a political and S governmental subdivision of the ) STATE OF COLORADO, j Defendant-Appellant. ) Appeal from the District Court of La Plata County Honorable James D. Childress, Judge DIVISION III JUDGMENT AFFIRMED Opinion by JUDGE METZGER Berman and Tursi, JJ., concur Alan E. Johnson Durango, Colorado Attorney for Plaintiff-Appellee Hall St Evans Richard A. Waltz Alan Epstein Denver, Colorado Attorneys for Defendant-Appellant Defendant, Che Board of County Commissioners of La Plata County (the Board), appeals the trial court's entry of judgment on a verdict finding the Board negligent in failing to enforce the county's uniform building code and thereby causing injuries to plaintiff, Frederick Moreland, We affirm. Ron McEwan began construction of a cabin In the spring of 1973. He dug a foundation and put reinforcing rods in place, but did not obtain a building permit pursuant to the Chen existing La Plata County Resolution No. 1972-25. This resolution was adopted pursuant to a zoning plan which required building permits in order to build or Improve a structure. In effect, that resolution assessed a tax of $1 per $1,000 of value for the issuance of a building permit. On December 31, 1973, the Board enacted La Plata County Resolution No. 1973-130, which adopted the Uniform Building Code of the International Conference of Building Officials (U.B.C.). The effective date of the resolution was January 1, 1974, and it provided that all construction work performed after that date must conform to the requirements of the U.B.C., with no exceptions. Richard Yeager, La Plata County's first building inspector hired April 1, 1974, was charged with developing a building department and with enforcing the provisions of the U.B.C. and La Plata County Resolution No. 1973-130. Because of the lack of sufficient experienced personnel, the Board adopted a policy that existing residential dwellings and those dwellings whosff construction had commenced prior to January 1, 1974, would not require building inspections, and were not to be inspected. . - In the spring of 1974, McEwan was told by the Rural ; Electrical Association that he must obtain a building permit in order to receive temporary electrical power. McEwan obtained a building permit from the county on April 8, 1974. The permit was issued by the county assessor's office, which had previously issued permits pursuant to La Plata County Resolution No. 1972*25. No plans or blueprints were submitted as required by the U.B.C., nor were any required subsequent inspections of the dwelling performed. However, Yeager did visit.the McEwan cabin for other reasons in the summers of 1974 and 1975. During both visits a deck constructed by McEwan along the west and north sides of the cabin had been completed. During Yeager's 1974 visit there was no guard rail; during his 1975 visit the only guard rail was along the west edge of the deck. Much of the deck, including both the north and west sides, was as much as ten feet above the ground. This was a clear violation of the U.B.C., which required guard rails along decks built more than 30 inches from ground level. Moreland*s accident took place on March 10, 1982. He had gone to visit a friend who was renting McEwan's cabin. Early that evening, Moreland left che cabin, walked off the deck on the north side, and fell to the ground sustaining a spinal injury rendering him a paraplegic. ■ At trial the jury found the Board 58 percent negligent and Moreland 42 percent negligent. This appeal followed. I. The Board first concends that, as a matter of law, it owed no duty to Moreland under the circumstances of this case. We disagree. In order to prove negligence, a plaintiff must show that the defendant, including a public.entity defendant, has a legally imposed duty or a standard of conduct to which the defendant must adhere. Dare v. Sobule, 674 P.2d 960 (Colo. 1984); Justus v. Jefferson County School District R-l, 683 P.2d 805 (Colo. App. 1984)(cert, granted June 25, 1984). The duty may derive from either a statutory standard of conduct or from a judicial or common law standard. Dare v. Sobule, supra. Whether a defendant owes a legal duty to a particular plaintiff and the scope of that duty are questions of law. Metropolitan Gas Repair Service, Inc. v. Kulick, 621 P.2d 313 (Colo. 1980). "Whether the law should impose a duty requires consideration of the risk involved, the foreseeability and likelihood of injury as weighed against the social utility of an actor's conduct, the magnitude of the burden of guarding against the injury or harm, and the consequences of placing the burden upon the actor.'1 Justus v* Jefferson County School District R-l, supra. A, Statutory Duty The Board argues first, and we agree, that Quintano v. Industrial Commission, 178 Colo. 131, 495 P.2d 1137 (1972) is dispositive as to the statutory duty Issue, There, plaintiff alleged that a state statute requiring Inspection of all factories Imposed a duty upon the Colorado Industrial Commission and the individual commissioners to inspect. The supreme court held that the Industrial Commission as a whole was shielded by the doctrine o£ sovereign Immunity and the individual commissioners owed no duty unless there was a clear Indication that the General Assembly Intended the statute to be used as a basis for civil liability. Quintano v. Industrial Commission, supra. See also Martinez v. City of Lakewood, 655 P.2d 1388 (Colo. App. 1982). Therefore, no statutory duty may be found in the absence of a legislative intent to Impose civil liability. Accordingly, since the Board did not Include a civil liability provision In the La Plata County Resolution No. 1973-130, no statutory duty may be Implied. B. Common Lav Duty TiYe Board also argues chat no common law duty arises because this action Involves nonfeasance. Moreland, on the other hand, argues that this Is a case of misfeasance.* We agree with Moreland that, since the Board took affirmative steps to pass and enforce a building code, its negligence and that of its employees could be found to be a cause of Moreland1s Injuries. The issues involved here are similar to those in Justus v. Jefferson County School District R-l, supra, and Gilbert v. City of Arvada, 694 P.2d 847 (Colo. App. 1984)(cert, granted Jan. 14, 1985). In Justus, the Jefferson County School District established a regulation which provided that only students in the upper elementary grades were permitted to ride their bicycles to school. The plaintiff, a first grader, was Injured while riding his bike home from school. In reversing summary judgment for the district, this court ruled that, although the school district ordinarily would not have a duty to protect pupils off school premises, nevertheless, since the school had undertaken such a duty by Its actions and regulations, liability could be found. Similarly, in Gilbert, this court found a duty owed by the defendant city to an injured kindergartener. There, crossing guards were provided at the Intersection where plaintiff was injured following che dismissal of afternoon classes, but no crossing guards were provided for the kindergarcners who were dismissed earlier in the day. Again» the finding of a duty was based upon an undertaking, providing crossing guards for some students, and a subsequent omission, failing to-jxrovide crossing guards for other students. Likewise, in Martinez v. City of Lakewood, supra, the city was found to have assumed a duty to plaintiff by virtue of its having undertaken to correct an area of poor visibility. Here, La Plata County Resolution No. 1973*130 adopted the U.B.C., which clearly required decks more than 30 Inches above ground level to be equipped with a guard rail. McEwan purchased a building permit after the effective date of that resolution. This permit stated that he was to comply with all "laws and regulations in the location, construction and erection" of the structure for which the permit was granted. Xn La Plata County Resolution No. 1973-125, §XIV, entitled "penalty," the Board revealed its intent to apply the U.B.C. to those structures under construction on the date of its adoption, stating: "No person shall commence or continue any work In respect to any building . . . in violation of the provisions of this Resolution." (emphasis added) Nevertheless, similar to the situations in Martinez, Justus, an(* Gilbert, x:he Board here failed to follow Its own regulations by adopting a policy that structures begun before January 1, 1974, would not be inspected. Since the Board took affirmative action to alleviate the hazards of poor construction standards, a common law duty to use reasonable care to protect foreseeable plaintiffs arose. See Martinez v. City of Lakewood, supra. Consequently, the Board’s decision not to enforce che inspection requirement as to structures begun before January 1» 1974, fails to negace the duty which arose by Its affirmative action of adopcing building standard regulations. See Justus v. Jefferson Countv School District R-l, supra ; Gilbert v. City of Arvada, supra. Accordingly, under common law principles, the issue of the Board’s liability to Moreland was a factual question properly submitted to the jury for resolution. IX. The Board, however, contends that the doctrine of official immunity and public policy considerations necessitate a finding of immunity under these facts. We disagree. Under the doctrine of official Immunity, immunity attaches if the official acts which give rise to the complaint are discretionary In nature, and, for purposes of the Immunity doctrine, dlscretinary acts, are those acts of a judgmental, planning, or policy nature. Cooper v. Hollis, 42 Colo. App. 505, 600 P.2d 109 (1979). Here, however, we are concerned with sovereign immunity and Its abrogation under the Governmental Immunity Act. Therefore, the doctrine of official immunity and the distinction between discretionary and non-dlscreclonary acts Is not applicable. Mason v. State, 689 P.2d 199 (Colo. App. 1984)(cert. granted Oct. 22, 1984). ^Moreover, we note that this case arises In the context of the Colorado Governmental Immunity Act. Section 24-10-101, et. seq,, C.R.S. (1982 Repl. Vol. 10). Section 24-L0-.104, C.R.S. (1982 Repl Vol. 10) provides that if: "a public entity provides insurance coverage . . . to insure itself against liability for any injury or to Insure any of its employees against his liability for any injury resulting from an act or omission by such employee acting within the scope of his employment, then such public entity shall be deemed to have waived the defense of sovereign immunity • • * • Here, the Board had obtained insurance to cover the instant liability. Therefore, the Board is not immune from suit. III. Finally, the Board contends that the trial court erred In failing to instruct the jury In accordance with Its tendered Instruction concerning the affirmative defense of honest and reasonable mistake. There was no error here. The honest and reasonable mistake defense is a subpart of the common law doctrine of sovereign immunity. See Flournoy v. McComas, 175 Colo. 526, 488 P.2d 1104 (1971); see also Winters v. City of Commerce City, 648 P.2d 175 (Colo. App 1982). Where, as here, che Governmental Immunity Act applies, the public entity Is deemed to have waived the defense of sovereign Immunity. Mason v. State of Colorado, supra. SUpjf/î,'# rut 1 8 1 I * ' — * ■ 8 1 JU N g COLORADO SUPREME COURT ■- ^ 6 * * V . t) i Case No. ar,ford. C la r k BRIEF IN OPPOSITION TO PETITION FOR WRIT OF CERTIORARI THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF LA PLATA, a political and governmental subdivision of the State of Colorado, Petitioner, vs . FREDERICK MORELAND, Respondent. Appeal from the District Court of La Plata The Honorable James D. Childress Trial Court No. 82 CV 113 OPINION DATED: November 21, 1985 DIVISION III Opinion by JUDGE METZGER Berman and Tursi, JJ., Concur Attorneys for Petitioner: Richard A. Waltz, No. 11567 Alan Epstein, No. 10473 1200 17th Street, #1700 Denver, Colorado 80202 303 628-3300 Attorney for Respondent: Alan E. Johnson, No, 6940 3360 County Road #228 Durango, Colorado 8 1301 303 259-1175 TABLE OF CONTENTS Table of Authorities ii Statement of the Case 1 Argument: A. Did the County Owe A Duty to Moreland? 4 B. Was Moreland's Suit Barred by "Discretionary Immunity”? 8 C. Was Moreland’s Suit Barred by "Official Immunity"? 10 D. Was It Error to Refuse an Instruction on the "Honest & Reasonable Mistake" Defense? 11 E. Is Moreland's Claim Barred On Public Policy Grounds? 11 Certificate of Mailing 13 Cases : Forrest v. County Commissioners 629 P.2d 1105 C Colo.App., 1981)...... 5 Martinez v. City of Lakewood 655 P.2d 1388 (Colo. App., 1982 )...... 8 Mason v. State of Colorado 689 P.2d 199 (Colo.App., 1984)...... 10, 1 1 Quintano v. Industrial Commission 495 P.2d 1137 (Colo., 1972 )...... 5, 6, 7 Stewart v. Schmieder 386 So.2d 1351 (La., 1980 )...... 8 Trimble v. City and County of Denver 697 P.2d 716 (Colo., 1985 )...... 1 1 Other Authorities: Sec. 24-10-102 CRS...... 9 Sec. 24-10-104CHS...... 5, 10, 11 Sec. 24- 10- 106CRS...... 10 Sec. 24-10-106.5 CHS (NEW) Note: Contained in House Bill 1196...... 12 Prosser & Keeton, Torts, 5th Ed., 1984 ...... 1 1 "The Colorado Governmental Immunity Act" Colorado Lawyer, Dec., 1979 ...... 5 "The Colorado Governmental Immunity Act: A Judicial Challenge and the Legislative Response" 43 U . of Colo.Law Rev. , 449...... 9, 11 COMES NOW the respondent, Frederick Moreland, by his attorney of record, and submits this brief in opposition to the petition for writ of certiorari. I. STATEMENT OF THE CASE In May, 1972, the La Plata County Commissioners adopted a "Model Zoning Resolution" for La Plata County. Pursuant to that resolution, the commissioners, in July, 1972, adopted Resolution 1972-25 which provided that a building permit was required for all construction after September 1, 1972. Resolution 1972-25 was directed at implementing the zoning plan, and getting the new starts on the tax roles. It contained no rules, codes, or regulations other than a payment of a fee for the issuance of the permit. There was no penalty for its violation. On December 31, 1973, the commissioners adopted Resolution 1973-130 which brought all construction work performed after January 1, 1974, under the Uniform Building Code (U.B.C.) with no exceptions. At the time of its passage, Resolution 1973-130 did not exempt construction begun prior to January 1, 1974, and at no later date was the resolution amended to grandfather in construction begun before said date. The resolution provided: "Sec. XIV. Penalty: "(1) No person shall commence or continue any work in respect to any building. ..in violation of the provisions of this Resolution..." (emphasis added) Under both Resolution 1973-130 and the U.B.C., the builder was required to submit plans of the work to be done with his application for a building permit. The building inspector was to inspect the plans, to certify compliance with the U.B.C. before the issuance of a building permit. As the construction progressed, the building inspector was to perform periodic inspections to assure continuing compliance with the U.B.C.. Sec. 1716, U.B.C., required guard rails around all decks which were more than 30 inches above ground level. Building plans were to show the height of all decks. Thus the necessity for guard rails could be determined by the building inspector during the plan check phase, and prior to the issuance of the building permit. McEwan began construction of his cabin in 1973 with no permit. When McEwan resumed construction in 1974 he was told by the R.E.A. that building permits were mandatory. On April 8, 197^, McEwan paid for and received a building permit from Demel who was the county assessor. McEwan had no blueprints for his construction, thus the permit was issued without a plan check by anyone. The issuance of a building permit without a plan check constitutes the first act of negligence by the county. Demel kept one copy of the permit for the tax rolls, and gave the other copy to Yeager, the building inspector. McEwan resumed construction and built a deck along the north and west sides of the cabin. He erected a guard rail along the west edge of the deck, but none along the north edge. The west edge of the deck was ten feet above the ground level. The stairs leading from the ground to the deck were located at the northeast corner of the deck. The testimony regarding inspections by Yeager was conflicting. Yeager admitted that he visited the premises during construction, but denied doing any inspections due to an order by one of the commissioners not to inspect houses which were under construction before January 1, 1974. McEwan testified that Yeager did in fact inspect the premises in 1974 and 1975, when the deck had been completed with no guard rail along its north side. Yeager said nothing to McEwan about guard rails being required. Yeager's failure to properly inspect the premises and require McEwan to erect a guardrail constitutes the second act of negligence by the county. From its initial construction in 1974, until Moreland's injury on March 10, 1982, the deck remained without a guard rail along its north edge. Both Yeager and Knowlton (the current head of the building department) testified that they each had actual knowledge of this U.B.C. violation for years before the accident, but did nothing to have it corrected. This failure to correct a known hazard to human safety, on premises constructed under a building permit issued pursuant to Resolution 1973-130, constitutes the third act of negligence by the county. On March 10, 1982, Moreland, who had been on the premises once before, arrived at the cabin after dark and followed Cole (the tenant) up the stairs, across the deck, and into the house. After a brief visit, Moreland exited the house and walked out onto the dark deck. He found the west guard rail and began following it in a northerly direction. He reached the end of the guard rail and ass'umed he was at the top of the stairs. He began feeling for the top step with his foot, lost his balance and fell. His spine was shattered on the rocks below. La Plata County carried a policy of liability insurance issued by Compass Insurance Company which covered negligent enforcement of the building code. II. ARGUMENT A. Did the County Owe A Duty to Moreland? There are two types of duties: (a) statutory and (b) common law. The issue of whether or not there is a statutory duty running from a governmental entity to an accident victim arises when the victim sues the governmental entity and alleges a failure to take any action to fulfill responsibilities under the particular statute• The Colorado law is clear that the victim may not use the statute to create a duty unless the statute specifically provides for a civil remedy. Quintano v. Industrial Commission , 495 P.2d 1137 (Colo., 1972 ). In Quintano, since the Industrial Commission had taken absolutely no affirmative action to inspect the machinery, the injured plaintiff attempted to create the necessary duty solely from the responsibilities placed upon the Industrial Commission by the statute. Since the statute contained no provisions for a civil remedy, the plaintiff failed. Moreland's suit against the county was not premised upon Resolution 1973-130, or the U.B.C., but was brought under the Colorado Governmental Immunity Act which controls all tort actions against public entities. Sec. 24-10-104 C.R.S., as amended; Forrest v. County Commissioners, 629 P.2d 1105 (Colo. App., 1981). Moreland proved that the county had waived sovereign immunity though the purchase of liability insurance which covered negligent enforcement of the U.B.C.. "...Thus, by obtaining liability insurance for acts for which immunity is not waived under the Act, a public^ entity can actually expand its potential liability, albeit any damages arising from the expanded liability are recoverable solely from the public entity's insurer..." "The Colorado Governmental Immunity Act," Colorado Lawyer, December, 1979, at page 2360. Had La Plata County not obtained liability insurance to cover negligent enforcement of the building code, it would have enjoyed total sovereign immunity from a personal injury suit by Moreland. Once the county waived sovereign immunity through the purchase of insurance, it was to be held to the same standard as any other private litigant as far as the acts of its employees were concerned. Yeager's responsibilities to check plans, make inspections and correct known U.B.C. violations may have arisen from Resolution 1973-130, but the duty to perform those acts with reasonable care arose from principles of common law negligence. The question of duty, and its violation, must be analyzed in terms of the negligent actions of the county employees, and not the acts of the county as an entity. Yeager had an employment responsibility to check plans, conduct inspections and correct known violations pursuant to the requirements of Resolution 1973-130. Under general principles of common law negligence, Yeager was required to perform these duties so as to avoid creating a forseeable risk of harm to others. Quintano deals with the public official who fails to act at all. La Plata County acted affirmatively when its employees issued the building permit to McEwan without a plan check, when Yeager visited the premises during construction and either did no inpection or a substandard one, and when Yeager and Knowlton failed to have a known violation of the U.B.C. (in a building constructed under Resolution 1973-130) corrected. Had La Plata County exercised no control over the McEwan construction, and had the county purchased no liability insurance to cover negligent code enforcement, the statutory duty rule and sovereign immunity would have defeated Moreland, as they did the plaintiff in Quintano. The Court of Appeals' decision in Moreland does not stand for the proposition that "...by enacting legislation, a governmental entity exposes itself to liability since it thereby creates a common law duty to the entire public to inspect all buildings..." Petition for Writ of Certiorari, p. 7. The Court of Appeals was careful to point out that for Moreland to recover he had to prove: (a) enactment of the law, (b) negligent enforcement of the law, and (c) negligent enforcement of the law under circumstances where sovereign immunity has been waived through the purchase of liability insurance. The affirmative action, which may trigger liability, is not in the adoption of the law, but in its enforcement in a negligent manner. This is not a strict liability standard. Since negligence is the basis for recovery, fault, causation and forseeability are all factors which limit the plaintiff's ability to recover against the public entity. La Plata County employes were merely required to exercise due care in checking plans, conducting inspections, and correcting known violations. "...However, once the City attempted to alleviate the problem, an affirmative duty arose, and it had the duty to use reasonable care to protect forseeable plaintiffs.... The duty of the City to the plaintiff, unlike that in Quintano v. Industrial Commission, has its basis in the common law, and has been consistently recognized." Martinez v. City of Lakewood, 655 P.2d 1388 (Colo. App., 1982) at page 1389. In Stewart v. Schmieder, et al., 386 So.2d 1351, a municipality was held liable due to the failure of its building inspector to properly check plans. A proper check would have revealed a design defect which later led to the collapse of the building. The opinions in Quintano, Martinez and Moreland are consistent. They stand for the proposition that, while a public entity may not be liable for totally ignoring a statutory responsibility, if the public entity takes affirmative action pursuant to a law, and sovereign immunity has been waived through the purchase of insurance, its employees must act reasonably, or liability may result if the plaintiff can prove common law negligence, causation and damages. B. Was Moreland's Suit Barred by "Discretionary Immunity"? Moreland's suit was brought pursuant to the "Colorado Governmental Immunity Act" which controls all tort suits against public entities. Prior to the Act, it was necessary to determine if the allegedly tortious act by the public entity was "governmental" or "proprietary." If governmental, total immunity attached immediately. If "proprietary", a further refinement was necessary. Was the tortious act "discretionary" or "ministerial?" If discretionary, then immunity was present. "The Colorado Governmental Immunity Act: A Judicial Challenge and the Legislative Response," 43 U. of Colo. L.R. 449 (p- 454-58). The discretionary immunity defense was abolished in suits brought under the Act. Sec. 24-10-102, C.R.S., as amended, states: "...the distinction for liability purposes between governmental and proprietary functions should be abolished..." Since the discretionary v. ministerial test is a subpart of the governmental v. proprietary distinction, discretionary immunity has been abolished in tort suits brought under the Act. "...Although no reference is made therein to the discretionary-ministerial distinction, by implication it also has been abandoned. Since the Act, as a threshold matter, does not distinguish between governmental and proprietary functions, there is no category of activity to which the secondary distinction is to be applied. "The Colorado Governmental Immunity Act: A Judicial Challege and the Legislative Response", supra, (pgs. 457-58). In any event, Moreland did not complain about any discretionary act or inaction, but rather the ministerial acts of the county employees in negligently enforcing the building code as it applied to the McEwan construction job. Even the county concedes that a building inspection is a non-discretionary act, and must be performed with reasonable care. C. Was Moreland's Suit Barred by "Official Immunity?" Moreland sued the public entity under the Act, and not an individual official. Official immunity refers to the immunity to which the individual official is entitled, and not to entity immunity. Mason v. State, 689 P.2d 199 (Colo. App., 1984) (cert, granted, 1984). The entity, on the other hand, by obtaining liability insurance to cover the particular activity (ie. building code enforcement), waived sovereign immunity "despite any provision of law or this article to the contrary." Sec. 24-10-104(1), C.R.S., as amended. "Official" immunity was retained by the Act because employees or’ public entities were not initially included within the protection of the Act. Sec. 24-10-106(2) C.R.S. as amended. However, the Act was subsequently amended to bring public employees within its protection. In any event, the negligent acts of the employees of the La Plata County building department were not in the realm of discretionary policy decisions. The building officials were negligent in their enforcement of the policy decisions that had been made by the commissioners. See: Trimble v. City and County of Denver, 697 P.2d 716 (Colo., 1985). D. Was It Error to Refuse an Instruction on the "Honest & Reasonable Mistake" Defense? The "honest and reasonable mistake" defense is a sub-part of sovereign immunity. Thus it was eliminated when the county waived sovereign immunity by obtaining insurance. The county is to be treated as any other litigant when sued under Sec. 24-10-104(1) of the Act. Mason v. State, supra. Mo private litigant may assert such a defense. Prosser & Keeton, Torts, Sec. 65-68 (5th Ed., 1984). E. Is Moreland's Claim Barred on Public Policy Grounds? The Petitioner ignores the fact that Compass Insurance Company is the real party at interest in this case. The judgement may be collected only from its assets. Sec. 24-10-104(2) C.R.S. as amended. Compass collected a hefty premium for the policy, and is now attempting to evade its contractual obligations to the County by asserting the very sovereign immunity which the County chose to waive. This dodge was anticipated by the author of "Colorado Governmental Immunity Act: A Judicial Challenge and the Legislative Response," supra, at page 453: "....The only party standing to gain by immunity is the insurer who may raise the defenses of the insured. Yet it seems doubtful that the intent of the legislature was to defeat recovery on a policy by preserving the immunity defense for the sole benefit of the insurer. The net effect would be to give the public nothing for its premium, the insurance company its premium for nothing, and the injured victim nothing to compensate him for his loss..." Finally, the common law duty of due care which ran from the County of La Plata to Moreland, and the breach of which rendered the County liable to Moreland, has been eliminated by the legislature. Sec. 24-10-106.5 C.R.S. has been added to the Act, and will take effect July 1, 1986. It provides in part as follows: "(1)...a public entity...shall not be deemed to have assumed a duty of care...by the adoption or enforcement of a ... regulation to protect any person's health or safety... (2) Nothing in this article shall be deemed to create any duty of care." (emphasis added) Thus the "public policy" arguments offered by the County fall by the wayside. The insurance companies and public entities realized that the decision by the Court of Appeals in Moreland was correct, thus they went to the legislature to get the law changed. WHEREFORE, Respondent prays that the Petition be denied. Respectfully submitted, Q j u * Alan E. Johnson, Mo. b9^0 Attorney for Respondent I hereby certify that a true and correct copy of the aforegoing brief has been mailed, postage prepaid, this 6th day of June, 1986, addressed to: Richard Waltz, Attorney Alan Epstein, Attorney 1200 17th Street, #1700 Denver, Colo. 80202 David L. Dickinson La Plata Co. Courthouse Alan E. Johnson ,• No". 63T4Ö 1060 E. 2nd Ave. Attorney for Respondent Durango, Colo. 81301 .or gas field deems ^nn i^ h ti0n, WarrantS a; d sha11 administer said fund so as to retire such war m part for the con- rnmm??ere at S tl?Tles. and in such manner as the board of countv r highway structures commissioners may prescribe in the issuance thereof subiect tn th* n™;» tions provided in sections 43-2-214 to 43-2-218. ’ hmita- an order entered of county treasurer to rement fund. i963OUn 2 0 ^ n : P ' ?50’ § 51 C S A ’ C ' ,43’ § 160: C R S »■ 120-1-2.; C .R .S. 53, 120-1-18; C .R ,S . 43-2-218. Sections supplemental. Sections 43-2-214 to 43-2-218 are simnlP- mental and in addition to all other powers and authorities by statute or otter wise granted and enjoyed by the respective counties of the state. nd establishment of unty shall thereupon 196^20^8.’ P' 75° ’ § 61 C S A ’ C ' U 3 ' § l6 l! C R S 53' 12°-l-22; C .R .S. lable to such county •vith such additional termine to be neces- P A R T 3 xceed fifty percent ¡hall be held in said it of all outstanding VACATION PROCEEDINGS: ROADS, STREETS, AND HIGHWAYS in accordance with Cross reference: For abandonment of town incorporation, see part 2 of article 3 of title 31. require!01- Denni,ions> As used in this Part unless the context otherwise 53, 120-1-19; C .R .S. h J l l B !°Ck’' me,ans that Portion of a subdivision surrounded by streets however destgnated, or other boundary lines and platted as a block pte ’ tract, square, or other designated unit. 1 ’ :he board of county *oved, by resolution (2) "Owner” or "owner of record” includes any person, firm partner ship, association, or corporation. ’ parIner repair, or improve- the county itself or “Roadway” includes any platted or designated public street allev olorado and with or lsedaPsasud,ay’ aVenUe’ r°ad' °r °'her PUb'ic Way' whether or not il ha* been or the share of such t may by resolution i amount as may be l963OUn20Li4'i: P' “ ° ’ § CSA' C' I43' § 690,; CRS 53' l20' M |; C.R.S. same, said warrants by him offered for varrants outstanding tit,le upon Whenever any ment of all property h„M'2^° 2' ,Ve,Sti"s ?f vacation' (!) roadway has arrants shall run for nr 8HK ed °" the plat of ,ract of la"d or has been conveyed to aiv nf if n“ Ci’UntL ° r' ‘.ncorPorated town or city or by the state or by •ar a rate of interest any of its political subdivisions for use as a roadway, and thereafter i« vacated, title to the lands included within such roadway or so much thereof as may be vacated shall vest, subject to the same encumbrancesjens limita 53, 120-1-20; C .R .S. tions, restrictions, and estates as the land to which it accrues, as follows: nf a «nhH- ^e*eVent uat a roadway which constitutes the exterior boundary v L l ¡n^he oviner °'f !?nd- 'S vaca,ed- *'"« «"d roadvray shall y treasurer of such * -«' - ■“ r?s >n with such highway (b) In the event that less than the entire width of a roadway is vacated 43-2-303. title to the vacated portion shall vest in the owners of the land abutting such of an incorpora^ vacated portion. subdivisions in £ (c) In the event that a roadway bounded by straight lines is vacated, title roadway byany^ to the vacated roadway shall vest in the owners of the abutting land, each (a) The city & abutting owner taking to the center of the roadway, except as provided in nance may vacate paragraphs (a) and (b) of this subsection (I). In the event that the boundary limits of said city lines of abutting lands do not intersect said roadway at a right angle, the municipal corpora land included within such roadway shall vest as provided in paragraph (d) rado. , o f this subsection ( 1). (b) The boan{ (d) In all instances not specifically provided for, title to the vacated road roadway or any «, w ay shall vest in the owners of the abutting land, each abutting owner taking way is not within \ that portion of the vacated roadway to which his land, or any part thereof, (c) If such roa is nearest in proximity. such roadway or; (e) No portion of a roadway upon vacation shall accrue to an abutting of the boards of ci roadway. (d) If said ros may be vacated * of the county and*. Source: L.J9, p: 620, § 2; CSA, C. 143, § 69(2); CR S 53, 120-1-12; C.R.S (2) No roadwij 1963, § 120-14-2. adjoining said n| land with anothe| Cross references. As to designation of prop Vacating resolution is final on enactment, and (3) In the ev<| erty for public use, see § 31-1-108. cannot be rescinded if the rights of third par way or easements Am. Jur.2d. See 39 Am. Jur.2d, Highways, ties have vested. Sutphin v. Mourning, 642 Streets, and Bridges, § § 142,184,185. P.2d 34 (Colo. Ct. App. 1981). gas, water, or sM C.J.S. See 39A C.J.S., Highways, § 137. Recording deed after vacation conveys lots appurtenances, j| By the dedication under section 31-1-108, the only and not vacated street. Since in legal effect nances. !;g original owner divests himself of the power of there was no deed outstanding, the recording (4) Any writtf disposition of the property and vests the city of the original deed after the street vacation to vacate orrel " with this legal power. Buell v. Sears, Roebuck served to convey only the lots and not a por & Co., 205 F. Supp. 865 (D. Colo. 1962), modi tion of the already vacated street. Sky Harbor, in the counties fied,321 F.2d 468 (10th Cir. 1963). Inc, v. Jenner, 164 Colo. 470, 435 P,2d 894 years shall be prj This section vests complete legal title. This section operates to vest in the adjoining owner (1968). roadways. This;« Subsection (1) (a) of this section clearly con action commence not only the title which initially passed to the templates the vacation of the entire roadway. city and county but the complete legal title to Buell v. Sears, Roebuck & Co., 205 F. Supp. aside, modify, orj both surface and subsurface rights to vacated 865 (D. Colo. 1962), modified, 321 F.2d 468 modified, or anns roadway. Buell v. Sears, Roebuck & Co., 321 such notice of F.2d 468 (10th Cir. 1963). (10th Cir. 1963). Section docs not deprive dedicator of property While subsection (I) (b) of this section was been recorded in unconstitutionally. One dedicating highways to designed to cover the vacation of less than the located. t the public by filing plats showing highways entire width of a highway. Buell v. Sears, Roebuck & Co., 205 F. Supp. 865 A R T IC L E 3 FRE Special Highway Construction 43-3-101. Freew PARTI 43-3-214. Succession of powers and The state highway duties. nate any portion ol FREEWAYS AND LOCAL SERVICE 43-3-215. Legislative declaration. 43-3-216. Additional powers. reason of the volui safety of the travc 43-3-101. Freeways — how declared — 43-3-217. Execution, commercial enterprises pro 43-3-218. Bonds legal investments. opposite directions hibited. 43-3-219. Interest earnings. highways with othe 43-3-102, Engineer to divide freeway, from private proper 43-3-103. Engineer may close street or PART 3 (2) Whenever, i road. TOLL ROADS — PRIVATE one ownership is se 43-3-104, Street not to open into free access across the I way. 43-3-301. Grade — width — turnouts. 43-3-105. When local service roads laid 43-3-302. County surveyor to examine. or below or above out. 43-3-303. Lien for tolls. made for such cros 43-3-106. Acquiring land and right-of- 43-3-304. Owners to act as peace offi owner for any legal way. cers. as provided by lav 43-3-107. Acquisition by commissioners 43-3-305. Unlawful collection of tolls — than the difference and state department of penalty. roads shall be use< highways jointly. 43-3-306. Refusing to pay toll — penalty. 43-3-307. Complaint if road not repaired. business or enterpr 43-3-308. Penalty for failure to keep ownership, the chi PART 2 road in repair. roads. TURNPIKES 43-3-309. County to repair — receive (3) N o commert toll. emergency services 43-3-201. Legislative declaration. 43-3-310. Pay of commissioners. 43-3-202. Powers granted to department. 43-3-311. County may sell road. on any property des 43-3-203. Bonds authorized. 43-3-312, Appeal to district court. or highway by the s 43-3-204. Bond details. 43-3-313, Toll roads must be kept in agency. At location 43-3-205. Trust indentures. repair. the state departmen 43-3-206. Payment of bonds. 43-3-314. Complaint to court if road out open into or connec 43-3-207. Bond lien. of repair. lishment and opere 43-3-208. Bond proceeds. 43-3-315. Judgment abates toll charge. 43-3-209. Tax exemption. 43-3-316. Judgment certified to commis users of the freewaj 43-3-210. Refunding bonds. sioners. 43-3-211. Rights of bondholders. 43-3-317. Appeals. Source: L. 41, p 43-3-212. Effect of payment of bonds. 43-3-318. Penalty for illegal toll. 53, § 120-6-1; L . i 43-3-213. No debt authorized. 43-3-319. Execution against toll road. § 120-6-1. / CHAPTER 37 EXTRALATERAL RIGHTS SYNOPSIS § 37.01 Nature of Extralateral Rights [1] Definition and Nature of Extralateral Rights [21 Character of Estate in Granted Veins and Lodes [3] Right of Pursuit Associated with Extralateral Rights 14] Blanket Veins [5] Lodes in Placers § 37.02 Requirements for Exercising Extralateral Rights HI Apex within Boundaries of the Claim [2] Legal, Theoretical, or Judicial Apex [3] Continuity of Vein [4] Parallel End Lines [5] Restriction to Downward Course § 37.03 Relation of Location to Course of Vein as Affecting Extralateral Rights 11] Location Parallel with Course of the Vein [2] Location with Vein Crossing Two Side Lines I3] Location with Vein Departing Through Side Line or Stopping within Location [4] Location with Vein Entering and Departing Through the Same Boundary [5] Extralateral Rights to Lodes with a Wide Apex § 37.04 Extralateral Rights in Secondary Veins [1] Application of Extralateral Rights to Secondary Veins [2] End Lines of Discovery Vein Control [3] Amount of Apex of Secondary Vein within the Claim [4] Relation of Location to Course of Secondary Vein § 37.05 Subsurface Conflicts as to Extralateral Rights [1] General Rules [2] Patented Non-Mining Lands [3] Intersecting Veins [4] Uniting Veins 15] Conflicts on Different Portions of the Same Vein EXTRALATERAL RIGHTS § 37.01 Nature of Extralateral Rights [1] Definition and Nature of Extralateral Rights Extralateral rights are rights to the dip of a vein based on ownership of its apex by means of a valid location. The term "extralateral rights" 1 refers to rights to a vein outside the side line limits of a lode location. The term is used in contradis- tinction to "intraliminal rights" which refers to rights to ore within the limits of a location.2 There is no common law to support the principle of extralateral rights which are purely statutory in origin.3 The statutory authority appears in the Mining Law of 1872 which provides that lode locators: shall have the exclusive right of possession and enjoyment.. .of all veins, lodes, and ledges throughout their entire depth, the top or apex of which lies inside of such surface lines extended downward vertically, although such veins, lodes, or ledges may so far depart from a perpendicular in their course downward as to extend outside the vertical side lines of such surface locations, But their right of possession to such outside parts of such veins or ledges shall be confined to such portions thereof as lie between vertical planes drawn downward as above described, through the end lines of their locations, so continued in their own direction that such planes will intersect such exteiior parts of such veins or ledges.4 Extralateral rights are property rights and other rights in the nature of easements5 1 Ltndley attributed the coining of "extralateral" to Dr. Rossiter W . Raymond, formerly United States Commissioner of Mining Statistics, who introduced it in his paper, “ The law of the Apex,1' XII Transactions o f the American Inst, o f Mining Engineers 387 (1884), 2 Undley on Mines, § 565 at 1251 (3d ed. 1914). The term has been adopted almost universally by the courts, although other terms are sometimes used, such as "extralimital," "extraliminal," “ the right of lateral pursuit,'' and “ apex rights." 2 See § 36.01, supra, discussing intraliminal rights. 3 Arizona Commercial Mining Co. v. Iron Cap Copper Co., 27 Ariz. 202, 232 P. 545, aff'dasmodi fied on rehearing, 29 Ariz. 23, 239 P. 290 (1925), cert, denied, 270 U.S. 642 (1926). See also § 37.01 (2), infra. ♦ 30U.S.C. § 26(1982). 55ee§ 37.01(3], infra. which are granted by the statute in "veins, lodes, and ledges/'* and which attach to lode locations containing the apex7 of a vein which extends® outside the side lines of a location with parallel end lines,9 and which may be exercised (under specified conditions) by following the vein downward10 beneath the surface of certain categories of adjacent lands.11 Extralateral rights are granted by the statute only to lode deposits properly located as lode mining claims.12 Thus, extralateral rights do not apply to placer locations made on placer deposits13 or placer locations improperly made on lode deposits.14 Because of the statutory limitation, extralateral rights do not apply to mill sites,15 tunnel sites,16 or nonmineral land patented under agricultur al, townsite, or other nonmining laws,17 nor to lode locations based upon blan ket veins which lack the required dip.18 Extralateral rights may not be exercised by entering upon the surface of a claim possessed by another,19 and are applica ble only to valuable mineral deposits beatable as lode deposits20 on the public domain.21 Because ownership of an apex by means of a valid location is a prerequisite to the existence of extralateral rights, courts and commentators often refer to the statute creating this unique property interest as the "apex law" and the right • The terms "vein," "lode," and "ledge" are synonymous. ?S e e % 37,02(1], infra. 8 See § 37.02(3], infra. ® See § 37.02[4], infra. 10 See § 37.02(5], infra. n See generally § 37.05, infra. 12 30 U.S.C. § 26(1982). See Carson City Gold & Silver Mining Co, v. North Star Mining Co., 83 F. 658, 663 (9th Cir, 1897), cert, denied, 171 U.S. 687 (1898); Doe v, Waterloo Mining Co,, 54 F. 935, 937 (C.C.S.D. Cal. 1893). See also § 32.02, supra, discussing the characteristics of lode and placer deposits and factors for distinguishing them. 13 30 U.S.C. § 35 (1982) excepts veins from entry and patent as a placer. Such locations are void. See Cole v. Ralph, 252 U.S. 286, 295 (1920). But see § 32,05, supra. and § 37.01(5], infra, as to lodes in placer locations for which a placer locator may obtain rights but not extralateral rights. »5 Walsenv. Gaddis, 118 Colo. 63, 194 P,2d 306, 318 (1948). See generally § 32.06, supra, on mill sites. 16 After discovery of a lode within the tunnel, a surface lode location may be made and, if it contains an apex, extralateral rights attach. See § 32.07(7], supra. Empire Star Mines Co. v. Grass Valley Bullion Mines, 99 F,2d 228,234 (9th Cir. 1938) (agricultur al patent); Amador Medean Gold Mining Co. v. South Spring Hill Gold Mining Co., 36 F. 668 (C.C.N.D. Cal, 1888) (agricultural entry), rev'd on other grounds, 145 U.S. 300 (1892). ( 32.03(3][a], supra, and § 37.01(4], infra. 19 30 U.S.C. § 26 (1982). See § 37.01(3], infra. 20 30 U.S.C. § 23 (1982). See §§ 32.02(2] & .02(4], supra. 21 30 U.S.C. § 22 (1982). See Chapter 6, supra. as "apex rights."« The apex statute and most of the cases construing it are rela tively old, most of the judicial decisions having been made before 1920. Vet the statute has not been amended,23 and the judicial construction of it has not changed since the early years, so the early cases remain of continuing impor tance. Since World W ar II the expenses of exploration and of mining at depths of several thousand feet have impelled miners to seek control of large acreages to assure them of the opportunity to recover their investment.24 If sole control and ownership of deep deposits cannot be achieved, miners frequently enter into joint exploration and development agreements for cooperative efforts.25 Both arrangements have tended to reduce the amount of apex litigation as com pared with early years when litigation between apex claimants was rife.26 [2] Character of Estate in Granted Veins and Lodes The extralateral rights obtained by a lode locator In "veins, lodes and ledges" as specified by the Mining Law of 187227 might be regarded as a modification of the common law maxim that ownership extends from the surface to the cen ter of the earth in vertical planes.28 Strictly speaking, this is not correct because the statutory grant constitutes a severance of the vein from the surrounding soil, is not repugnant to the common law, and should not be so interpreted or construed.29 Rights to veins apexing within a properly located lode mining claim are part and parcel of the location, and at the time a location is perfected the locator obtains a vested estate in the veins throughout their entire length within the statutorily required parallel end lines. 22 See, e.g., Collins v, Bailey, 22 Colo, App. 149,125 P. 543, 548(1912); Neff, "The Law of the Apex— A Continuing Enigma,” 18 Rocky Mt. Min. L. Inst. 387 (1973); Arnold, "Lode Locations: A Specific Question of Extralateral Rights and a Ceneral Theory of Intralimital Rights," 22 Harv L. Rev. 339 (1909). 23 The forerunnerof the apex statute, 30 U.S.C. § 26 (1982), was the Lode Law of 1866, ch. 262, 14 Slat. 251 (surviving portions codified at 30 U.S.C. §§ 43, 46, & 51 and 43 U.S.C, § 661 (1982). Many of the judicial decisions construing the 1866 statute are applicable to the 1872 statute. See § 30.03, supra. 2< S e e § 32.03[3][b], supra. 25 See Title XIII, infra. 26 Neff, "The Law of the Apex— A Continuing Enigma," 18 Rocky Mt. Min. L. Inst. 387,414(1973) (hypothesizing that the extreme cost of proving identity and continuity of veins at great depths will encourage compromise agreements between conflicting claimants), 27 30U.S.C. § 26(1982). 28 See Collins v, Bailey, 22 Colo. App, 149,125 P, 543, 548 (1912) (" 'apex right' is in derogation of the common law which granted to the owner of lands all veins within the vertical lines of his land to the center of the earth"); Duggan v, Davey, 4 Dak. 110, 26 N.W. 887, 890-91 U8Q6), appeal dismissed. 131 U.S. 433 (1889). See § 36.02, supra, as to intraliminal mineral rights based upon common law. 29 3 Lindley on M ines § 568 (3d ed. 1914). See Neff, “ The Law of the Apex— A Continuing Enig ma,'1 18 Rocky Mt. Min. L Inst. 387, 397-402 (1973). The ownership estate in mining claims is subject to limitation and extension. Limitation occurs because a locator is not necessarily the owner of veins and lodes found within his claim; if their apexes are outside his claim, his rights may be subject to another's extralateral rights.30 Extension occurs because by statute a locator owns and therefore is entitled to follow, possess, and mine any vein or lode which apexes within his claim even though it might dip beyond his side lines and under adjoining land.31 The estate granted by the statute is a possessory right to the minerals.32 It is not an easement, although certain easements attach because of the need to dis turb a portion of adjoining rock when following a vein into adjacent lands.33 The exercise of extralateral rights does not depend upon seniority, but follows automatically from location of an apex whenever a claim is staked out in the manner prescribed by the statute,34 provided that the apex dips downward into land not previously appropriated as non-mining land and does not conflict with a prior apex right.35 As with other real property interests, boundaries of extralateral rights to a vein may be fixed by agreement, either a conveyance or a contract.30 Conveyances of extralateral rights, however, require a very clear-cut expression of intent as to whether or not a conveyance of a lode location includes just the minerals within the vertical boundaries of the location or some or all of the extralateral rights.37 While a locator's interest in extralateral ore bodies may be divested by adverse possession, it is settled law that possession of the surface is not necessar ily sufficient possession of the minerals underneath to give title to them.38 30 Grant v. Pilgrim, 95 F.2d 562,565 (9th Cir. 1938); Duggan v. Davey, 4 Dak. 110, 26 N.W, 887, 891 (1886). 31 St. Louis Mining & Milling Co. v. Montana Mining Co., 194 U.S. 235 (1904); Tom Reed Gold Mines v. United E. Mining Co., 24 Ariz. 269, 209 P. 283, 287, cert, denied, 260 U.S. 744 (1922). 32 5ee § 36,03(1], supra. **S e e § 37.01(3], infra. 34 Colorado Cent. Consol. Mining Co. v. Turck, 50 F. 888, 894-95 (8th Cir, 1892). 33 See § 37.05, infra. 36 See Kennedy Mining & Milling Co. v. Argonaut Mining Co., 189 U.S. 1 (1903); Richmond Mining Co. v. Eureka Mining Co., 103 U.S. (13 Otto.) 839 (1880). 37 See Montana Mining Co. v. St, Louis Mining & Milling Co., 204 U.5.204,216-218(1907) (finding that conveyance of lode location by party entitled to the extralateral rights did not transfer vein m total but only the portion between the vertical side lines of the ground transferred); Silver Surprize, Inc. v. Sunshine Mining Co., 15 Wash. App. 1, 547 P,2d 1240 (1976), aff'd, 88 Wash, 2d 64, 558 P.2d 186 (1977). 3«5ee*Cole v. Ralph, 252 U.S. 286(1920); Last Chance Mining Co. v. Bunker Hill & Sullivan Mining & Concentrating Co., 131 F. 579 (9th Cir.), cert, denied, 200 U.S. 617 (1904); Consolidation Coal Co, v. Yonts, 25 F.2d 404, 406 (6th Cir. 1928); Gill v. Colton, 12 F.2d 531, 533 (4th Cir. 1926i; Birmingham Fuel Co, v. Boshell, 190 Ala. 597, 67 So. 403, 404 (1914). [3] Right of Pursuit Associated With Extralateral Rights The Mining Law of 1872 grants to the locator of the apex of a vein the vein throughout its entire depth extended outside of the side lines of his location.39 The right granted is one to follow the vein on its downward course, sometimes called the right of lateral pursuit.40 As a practical matter, a locator often cannot safely or economically mine his vein by following its decline from the surface. This is especially true if the decline undulates, turns, faults, or passes through unconsolidated country rock which will not support a hanging wall. Frequently, therefore, it is necessary to use other land in aid of mining and for the mine workings to consist of vertical shafts which connect to a vein by horizontal adits, cross cuts, and drifts.41 Yet, the statute granting extralateral rights expressly provides that a locator has no right "to enter upon the surface of a claim owned or possessed by another,"42 so there is no surface right of access to an underground vein.43 Similarly, the common law rights of owners of other mining locations and other lands entitle them to the exclusive use and possession of the subsurface of their lands,44 so there is no right of approach by tunnelling through land owned by another.48 In the absence of consent by the landowner46 or legislation allowing condemnation,47 a locator may not enter the subsurface of adjacent land to explore, acquire a right of way, or reach the extralateral extension of his ore body.48 When attempted, such ac tivity may be restrained, or if completed, an action for ejectment will lie.49 Certain rights, however, are integrally associated with the exercise of extra- lateral rights, being necessary or incidental to underground mining outside the boundaries of a claim in pursuit of the extralateral extension of a vein. Assuming 39 30U.S.C, § 26(1982). 40 Si. Louis Mining & Milling Co. v. Montana Mining Co., 194 U.S. 235 (1904); Tyler Mining Co. v, Last Chance Mining Co., 71 F, 848, 851 (C.C.D. Idaho 1895), appeal dismissed, 97 F. 394 (9th Cir. 1899). See § 37.02[5|, infra. 41 See L. Mall, Public Land and Mining Law 160-161 (3d ed. 1981). 42 30 U.S.C. § 26(1982). 43 See St. Louis Mining & Milling Co. v. Montana Mining Co., 113 F. 900,902 (9th Cir. 1902), aff'd, 194 U.S. 235 (1904); Corection Lode, 15 L.D. 67 (1892). 44 Del Monie Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55 (1898). See § 36.02, supra, as to a locator's common law intraliminal rights. 45 St, Louis Mining & Milling Co. v. Montana Mining Co., 194 U.S. 235 (1904) (claimant may not run a tunnel from its mine shaft to the extralateral extension of a vein through nonmineralized territo ry outside his claim); Patten v. Conglomerate Mining Co., 35 L.D, 617, 621 (1907). 46 See § 112.04, infra. 47 See § 112.05, infra. 4fl Richards v. Dower, 64 Cat, 62, 28 P. 113 (1883) (even though no apparent damages would be suffered). 49 Empire Star Mines Co. v. Grass Valley Bullion Mines, 99 F,2d 228, 235 (9th Cir. 1938); Chees- man v. Shreve, 37 F. 36 (C.C.D. Colo. 1888); Richards v. Dower, 64 Cal, 62, 28 P. 113 (1883) (perpetual injunction). legal continuity of a vein,50 without which a locator asserting extralateral rights would be a trespasser, excavating along its course under adjacent mining loca tions and other categories of land is a legitimate exercise of extralateral rights. In doing so, it is usually necessary to disturb rock surrounding the vein in order to pursue the ore zone successfully. Thus, the right exists to excavate necessary workings beyond the vein itself and into the country rock when a vein cannot economically be worked within its own confines because it is too crooked or too narrow.91 This right is analogous to the way of necessity which attaches through the space of intersection of cross veins.52 Because of this right, a surface owner cannot restrain the excavation of necessary ore pockets, shafts, stations, and chutes in his subsurface.53 Easements and rights of way necessary for the practical and economical operation of a mine, such as sublateral tunnels, drain age ways, and railways, may be acquired by condemnation or otherwise as per mitted by state statute.54 [4] Blanket Veins Not all deposits properly located as lodes admit to the possibility of extralater al rights. The Mining Law of 1872's grant of extralateral rights55 contemplates the location and subsequent mining of a typical fissure vein,58 that is, a mineral mass in a more or less vertical position, occupying an extensive crack, break, or fracture in the enclosing country rock which has been filled with mineral mat ter different from the walls, and which outcrops at the surface, or near it, at a point known as the apex.57 The statute grants extralateral rights in all veins which have an apex within a claimant's location, but no extralateral rights are granted 50 5ee § 37.02(3] infra, 51 Twenty-One Mining Co. v. Original Sixteen To One Mine, 255 F. 658 <9th Cir. 1919).5eelron Silver Mining Co. v. Cheesman, 116 U.S. 529 (1886); Collins v. Bailey, 22 Colo App. 419, 125 P, 534 (1912). 52 See Little Josephine Mining Co. v. Fullerton, 58 F. 521 (8th Cir. 1893): Watervale Mining Co. v. Leach, 4 Ariz. 34, 33 P. 418 (1893), appeal dismissed, 159 U.S. 258 (1895); Lee v. Stahl, 9 Colo. 208, 11 P. 77 (1886). See also § 37.05[31, infra, 53 Twenty-One Mining Co. v. Original Sixteen To One Mine, 265 F. 547 (9th Cir. 1920). 54 30 u.S.C. § 43 (1982): "As a condition of sale, in the absence of necessary legislation by Con gress, the local legislature of any State or Territory may provide rules for working mines, involving easements, drainage, and other necessary means to their complete development; and those condi tions shall be fully expressed in the patent." See § 112.05, infra, on condemnation. 55 30 U.S.C. § 26(1982). 56 Cf. Del Monte MiningA Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55,84 (1898), Stevens v. Williams, 23 F.Cas. 40, 44 (C.C.D. Colo. 1879) (Nos. 13,413,13,414) (jury instructions). 57 See § 37.02(1] as to the requirement of an apex. The apex is the uppermost edge of a mineral vein nearest the surface of the ground, whether it outcrops on the surface or not. A Dictionary of Mining, Mineral and Related Terms, (P. Thrush ed. 1968). A ccord Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55, 90-91 (1898); Mining Co. v. Tarbet, 98 U.S. 463, 469(1878); Duggan v. Davey, 4 Dak. 110, 26 N.W. 887,901 (1886), appeal dismissed, 131 U.S. 433 (1889); Stewart Mining Co. v. Ontario Mining Co., 23 Idaho 724,132 P. 787 (1913), aff'd, 237 U.S. 350 (1915). See § 32.03(2][a] discussing the meaning of "apex." without such an apex.5* Many mineral deposits which meet the definition of a "vein " or "lode" do not have an apex. This is especially true of blanket veins, mineralized zones which lie in a more or less horizontal position.89 These wide, bedded formations, while validly located if the deposit meets the definition of a lode,60 do not give rise to extralateral rights because they do not have an apex with the required dip.61. Other reasons have been given for the denial of extralateral rights to lode loca tions made on blanket veins. These are that the apex of a horizontal lode is coex tensive with the side lines,62 making a location so many feet on either side of the center of the vein, as contemplated by the statute,63 a logical impossibility. Also, blanket veins do not meet the statutory provision for extralateral rights which requires that the vein be parallel with the side, but not the end, lines.64 Extralateral rights may be obtained, however, in some lodes which have a wide apex.65 58 Montana Co. v, Clark, 42 F. 626 (C.C.D. Mont. 1890); Tom Reed Gold Mines Co. v. United E. Mining Co., 24 Ariz. 269, 209 P. 283, cert, denied, 260 U.S. 744 (1922); Duggan v. Davey, 4 Dak. 110, 26 N.W. 887, 901-03 (1886), appeal dismissed, 131 U.S. 433 (1889); Jones v. Prospect Mtn, Tunnel Co., 21 Nev. 339, 31 P. 642 (1892). .*» See, e.g., Sowen v. Chemi-Cote Perlite Corp., 5 Ariz. App. 28, 423 P,2d 104, 118-123 (1967) (perlite lying in a horizontal bed "generally parallel with the surface" and found to be from a com mon igneous source, segregated in physical appearance from the overlying volcanic deposits, and, at some indeterminate depth, "not too deep" from underlying volcanic deposits properly locatable as a lode deposit). But see Titanium Actynite Indus, v. McLennan, 272 F.2d 667 (10th Cir. 1960) (disseminated mass of vermiculite extending over 8 to 12 square miles is a placer deposit); Ranchers Explor. & Dev, Co. v. Anaconda Co., 248 F. Supp, 708 (D. Utah 1965) (widespread berylli um-bearing tuff not locatable as lode). See generally § 32.02, supra, on the difficulties of determining whether such widely disseminated deposits are lode or placer deposits. 6® Iron Silver Mining Co. v. Mike & Starr Gold & Silver Mining Co., 143 U.S. 394 (1892). See § 32.03[3][a], supra, for a fuller discussion of the locatability of these deposits. 61 Tom Reed Gold Mines Co. v. United E. Mining Co., 24 Ariz. 269, 209 P. 283 cert, denied, 260 U.S. 744 (1922); Stewart Mining Co. v. Ontario Mining Co., 23 Idaho 724,132 P. 787, 792 (1913), aff'd, 237 U.S. 350 (1915). See Gilpin v. Sierra Nev. Consol. Mining Co., 2 Idaho 662, 23 P. 547 (1890), See a/so Iron Silver Mining Co. v. Cheesman, 8 F. 297 (C.C.D. Colo. 1881), aff'd, 116 U.S. 529 (1886); Iron Silver Mining Co. v. Murphy, 3 F. 368 (D. Nev. 1880); Stevens v, Williams, 23 F. Cas, 40, 43 (C.C.D. Colo. 1879) (Nos. 13,413, 13,414); Brugger v. Lee Yim, 12 Cal, App. 2d 3B, 55 P.2d 564, 570 (1936) ("dip" is a miners' term synonymous with the expression "downward course" used in the statute, and means the direction of the vein in its descent into the earth). 62 United States v. Arizona Manganese Corp., 57 L.D. 558, 566 (1942); Homestake Mining Co., 29 L.D. 689, 691 (1900), 63 30 U.S.C. § 23 (1982) ("No claim shall extend more than 300 feet on each side of the middle of the vein at the surface . . ."). See §§ 32,03(1 ][c], [d], infra, as to this requirement. 64 Cf. Catron v. Old, 23 Colo. 433, 441,48 P. 687, 690 (1897); Rico-Argentine Mining Co. v. Rico Consol. Mining Co., 74 Colo. 444, 223 P. 31 (1924). See § 32.03(2J[b], supra, and § 37.03(5], infra. [5] Lodes in Placers A special problem arises with lodes which exist within placer locations.®« * Placer patents pass absolute title to veins and lodes which apex within a placer claim if they are either known to exist and specifically applied and paid for dur ing patent proceedings or not known to exist on the date of patent application and found later.67 On the other hand, veins or lodes known to exist within plac ers on the date of patent application but not specifically applied and paid for are conclusively excluded from the patent.6® In any event, extralateral rights do not attach to placer claims and, hence, may not be asserted by placer claimants.69 Lode locators may obtain extralateral rights to veins or lodes apexing within placers under certain conditions. Known lodes within placers, unless applied and paid for during patent proceedings, are subject to peaceable appropriation and location as lode mining claims70 to which extralateral rights may attach.71 A previously unknown lode within a patented placer cannot be appropriated by a lode locator since title to it passed with the patent,72 but such situations may give rise to litigation as to whether the lode was known or unknown at the time of the patent application.73 Furthermore, a lode locator may obtain extra- See generally § 32,05, supra, as to lodes within placers. 67 30 U.S.C, § 37 (1992), See Inyo Marble Co. v. Loundagin, 120 Cal, App. 298, 7 P.2d 1067 (1932). See also § 32.02[1], supra. 68 30 U.S.C. § 37 (1982). See Clipper Mining Co. v. Eli Mining & Land Co., 194 U.S. 220, 228 (1904). 69 See Woods v. Holden, 26 L.D. 198, 205-206 (1898) ("It has been indisputably settled,. . . that a placer claimant cannot follow a vein or lode beyond the surface boundaries of this claim extended vertically downward.''). See a/so 2 Undley on Mines § 619 (3d ed. 1914). 70 Clipper Mining Co. v. Eli Mining & Land Co., 29 Colo. 377, 68 P. 286, 289 (1902), aff'd, 194 U.S. 220 (1904); Noyes v. Clifford, 37 Mont. 138, 94 P. 842, 844 (1908) (where a lode is known to exist, and land containing the same is patented as a placer claim, the lode is open for "exploitation and location by any citizen of the United States” ). A ccord Excelsior Iron Mining Co. v. justheim, 122 Utah 573, 252 P.2d 1084, 1086 (1953), See Note, "Known Lodes Within Placers," 3 Calif. L. Rev. 156 (1915). See also, Note, "Lodes in Placers: Presumption Arising from Lapse of Time," 3 Calif. L. Rev. 249 (1915). 71 Excelsior Iron Mining Co. v. Justheim, 122 Utah 573, 252 P.2d I084, 1087 (1953) ("and when the Cora lode claimant filed on this ground, he was entitled to all of the lode which apexed within the fifty feet of surface rights awarded to him by his patent, and he had a right to follow the ore beyond the sidelines to the limits of the ore body. Thus was segregated from the public domain all of the iron ore body contained within the forty-acre placer claim . . ,"), A ccord Daphne Lode Claim, 32 L.D. 513 (1904); Mt, Rosa Mining, Milling & Land Co. v. Palmer, 26 Colo. 56, 56 P. 176,177 (1899). 72 30 U.S.C. § 37 (1982). See Sullivan v, Iron Silver Mining Co„ 143 U.S. 431 (1892), 109 U.S. 550 (1883). 73 Iron Silver Mining Co. v. Mike & Starr Cold & Silver Mining Co., 143 U.S. 394 (1892); United Slates v. Iron Silver Mining Co., 128 U.S. 673 (1888); Noyes v, Mantle, 127 U.S. 348 (1888); Thom as v. South Butte Mining Co., 211 F.2d 105 (9th Cir. 1914); Clark Mont. Realty Co. v. Ferguson, 218 F. 959 (D.C. Mont. 1914); Barnard Realty Co. v. Nolan, 215 F. 996 (D.C. Mont. 1914); Inyo lateral rights to the extralateral extension of the apex of a vein which is within a prior placer location based on the concept of a "legal apex."74 § 37.02 Requirements for Exercising Extralateral Rights [1] Apex within Boundaries of the Claim The Mining Law of 1872 provides for exclusive possession and enjoyment of veins or lodes "the top or apex of which lies inside of such surface lines___ " l Thus, among the limitations governing the exercise of extralateral rights,2 is the universally-stated rule that in order for extralateral rights to obtain, the top or apex of the vein must be found within the surface boundaries of the claim.3 Fur thermore, the length of the apex within the surface boundaries limits the area in which extralateral rights may be exercised 4 As suggested by the statute, the apex of a vein, lode, or ledge is the top or highest point of the vein proper, whether at or below the surface,5 and not a mere spur, feather, or offshoot.• It is the terminal edge from which the vein extends downward to form its dip, and it is the point at which the vein also continues horizontally along its strike.7 Marble Co. v. Loundagin, 120 Cal, App. 298, 7 P.2d 1067 (1932); Mutchmor v. McCarty, 149 Cat. 603, 87 P, 85 (1906), 74 fee Woods v. Holden, 26 L.D. 198 (1898). See generally § 37.02(2], infra, as to legal and theoret ical apex, 1 30 U.S.C. § 26 (1982). 2 Three general conditionsor limitations apply to the exercise of extralateral rights.''One conditions it on the presence of the top or apex inside the boundaries of the claim. Another restricts it to the dip or course downward, and so excludes the strike or onward course along the top or apex. And the last confines it to such outside parts as lie between the end lines continued outwardly in their own direction and extended vertically downward." Jim Butler Tonopah Mining Co. v. West End Consol. Mining Co., 247 U.S. 450, 454-455 (1918). 3 Stewart Mining Co. v. Ontario Mining Co,, 237 U.S. 350 (1915), aff'g 23 Idaho 724, 132 P. 787 (1913); Crant v, Pilgrim, 95 F.2d 562 (9th Cir. 1938). The identity of the apex of a vein with its spurs or extensions is the crucial test which fixes proprietary rights to the vein. See William H. Hoegee Inv. Co. v, Burton Bros., 132 Cai. App. 2d 863, 283 P.2d 314 (1955); Brugger v, Lee Yim, 12 Cal, App. 2d 38, 55 P.2d 564 (1936); Alameda Mining Co. v. Success Mining Co., 29 Idaho 618,161 P. 862 (1916), appeal dismissed, 249 U.S. 622 (1919); Butte & Boston Mining Co. v. Socie- te Anonyme des Mines de Lexington, 23 Mont. 177, 58 P. 111, 113 (1899). See generally § 32.03(2](aj, supra. 4 Del Monte Mining & Milling Co, v. Last Chance Mining & Milling Co., 171 U.S. 55 (1898) (mining locator can have but the same number of feet along the dip of the vein beneath the surface as he has at its apex). Accord Anaconda Copper Mining Co. v. Pilot-Butte Mining Co., 52 Mont. 165, 156 P. 409 (1916). See § 37.03[1], infra. 5 Larkin v. Upton, 144 U.S. 19, 23 (1892). * Stewart Mining Co. v. Ontario Mining Co., 23 Idaho 724,132 P. 787 (1913), aff’d, 237 U.S. 350 (1915) (the highest point of the vein must be along a more or less continuous edge of the vein proper, that is, like the roof of a house and not simply its chimney). See Annot., ''What is 'Top' or 'Apex' of Vein or Lode,'' 1 A.L.R. 418 (1919). See also § 32.03(2], supra. 7 Brugger v. Lee Yim, 12 Cal, App. 2d 38, 55 P.2d 564 (1936) (apex of a vein can be ascertained by following its ascent along the line of its dip or outcropping beyond which it extends no further Hence, the "strike" of a vein is its horizontal course,8 and its "dip" is its down ward course at a right angle to the strike.9 A possible exception to the requirement of an apex within the surface bounda ries is the concept that extralateral rights may be predicated upon a fictional apex.10 In any event, parallel end lines11 and continuity of a vein with an apex12 are required to authorize its pursuit outside the boundaries of a location, but even then extralateral rights exist only for the downward course of a vein.13 [2] Legal, Theoretical, or Judicial Apex "Legal," "judicial," and "theoretical" apex are terms which have been used to express the concept of allowing a locator extralateral rights when a portion of the apex of the vein located by him is held under a prior location or patent without extralateral rights for the corresponding portion of the dip having at tached. The concept is best illustrated by the case of W oods v. Holden in which the Mary Mabel lode claim overlapped the northwest corner of the previously patented Mt. Rosa Placer. The result was that a segment of the lode's apex, but not the entire lode claim, was bisected by the placer.14 Since the lode was un known at the time the Mt. Rosa was patented, the portion of the lode claim and its apex that were within the placer had been conveyed by the patent.15 The vein dipped to the north, away from the placer claim. Since placer locations do not convey extralateral rights,16 limiting the Mary Mabel to extralateral rights for only those portions of the apex not within the Mt. Rosa would leave a portion to the surface of the land); Alameda Mining Co. v. Success Mining Co., 29 Idaho 618,161 P. 862, 865 (1916), appeal dismissed, 249 U.S. 622 (1919). See Stewart Mining Co. v. Ontario Mining Co, 237 U.S. 350, 360 (1915), aff’g 23 Idaho 724, 132 P. 787 (1913): "A n apex is... 'all that portion of the terminal edge of a vein from which the vein has extension downward in the direction of the dip,' And . . . the definition has been approved in Lindleyon Mines, because as therein expressed it involves the elements of terminal edge, and downward course therefrom,' W e may accept the definition." 8 Bruggerv. Lee Yim, 12 Cal, App, 2d 38, 55 P.2d 564(1936). See also Flagstaff Mining Co, v, Tar- bet, 98 U.S. 463, 469 (1878) (course of vein is shown by surface outcrop or surface explorations and workings); Alameda Mining Co. v. Success Mining Co., 29 Idaho 618,161 P. 862 (1916), appeal dismissed, 249 U.S. 622 (1919), 9 Empire Star Mines Co. v, Butler, 62 Cal, App. 2d 466, 145 P.2d 49, 58 (1944) (" 'Dip' is broadly defined as the downward course of a vein, the direction or inclination toward the depth, while 'strike,' at right angles to dip, is used to designate the longitudinal or horizontal course of a vein."); Brugger v. Lee Yim, 12 Cal. App. 2d 38, 55 P,2d 564, 570 (1936). l0 5ee § 37.02(2], infra. 11 See § 37.02[2), infra. M S e e § 37.02[3], infra, 13 See § 37.02[5], infra, 1« Woods v. Holden, 26 L.D. 198, (On Review) 27 L.D. 375 (1898). 15 Woods v, Holden, 26 L.D. 198, 205 (1898). See § 32.05, supra, discussing lodes in placers. l*S e e § 37.01(1], supra. of the dip to which neither party could claim extralateral rights. Instead of allow ing this to happen, the Land Department found that: For the purposes of discovery and purchase under the mining laws, the legal apex of a vein like the Mary Mabel, dipping out of the ground disposed of under the placer or non-mineral laws, is that portion of the vein within the public lands which would constitute its actual apex if the vein had no actual existence in the ground so disposed o i V Because the portion of the apex for which extralateral rights were allowed was not held by the lode locator but owned by the placer patentee, the "legal apex" allowed by the Land Department has also been termed a "theoretical apex."1» The concept of a "judicial apex" arises from a similar situation presented the United States Supreme Court in Del Monte Mining & Milling Co. v. Last C h a n c e Mining & Milling Co.19 Two lode claims had been placed on a winding vein so that they overlapped each other at an angle. Among the questions certified to the court was whether it had been proper for the junior locator to enter the senior location to lay his boundary lines for the purpose of establishing parallel end lines and securing extralateral rights.20 The court held that such was proper.21 It was careful to note that a junior locator cannot obtain rights to the prejudice of a senior locator, but it left open the extent of extralateral rights to which the junior locator was entitled.22 Thus, while the senior locator was enti tled to the full extent of the apex within his location and corresponding extra lateral rights, the Court did not decide whether the junior locator's extralateral rights were to be measured from his location's original end lines or from a false end line drawn parallel to his end lines from the point the apex left his claim.23 Because the claims crossed at an angle, the latter choice would mean that the 17 Woods v. Holden, 26 l.D . 198, 206 (1898). See McElligottv. Krogh, 151 Cal 126, 90 P. 823 (1907) (permitting lode claim overlapping previously patented agricultural land and other granted land). 18 See 1 Lindley on M ines § 312a (3d ed. 1914); C. Costigan, Mining Law % 118m {1908). 19 171 U.S. 55 (1898). 20 Id. at 59. 21 Id. at 84-85.5eeZulaC. 8rinkerhoff, 75 I8LA 179,181, GFS(MIN) 217 (1983), modified, Santa Fe Mining, Inc., 79 IBLA 48, GFS(MIN) 48 (1984), But see Bagg v. New jersey Loan Co., 88 Ariz. 182, 354 P.2d 40, 44 (1960) (in a possessory dispute not involving extralateral rights the court said that it is not competent for junior locators to project their location over a senior location while the senior locator has possession). 22 Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55, 85 (1898): "It may be observed in passing that the answer to this question does not involve a decision as to the full extent of the rights beneath the surface which the junior locator acquires. . . . Perhaps the rights of the junior locator below the surface are limited to the length of the vein within the surface of the territory patented to him, but it is unnecessary now to consider that matter. All that comes fairly within the scope of the question before us is the right of the owners of the Last Chance to pursue the vein as it dips into the earth . , . and to appropriate so much of it as is not held by the prior location of the New York, and to that extent only is the question answered. The junior locator is entitled to have the benefit of making a location with parallel end lines, The extent of that benefit is for further consideration.” 23 Id. See §§ 37.03[2), (3), infra. extralateral extensions of the end lines of the two claims would extend over the vein's dip in diverging directions, leaving a slice in the middle unowned by either party. This has led commentators to suggest that since the senior locator ob tained all that he was entitled to, the junior should judicially be allowed the addi tional slice as though he also held its apex.24 Although differences can readily be found between the two cases, the con cepts of legal, theoretical, and judicial apexes are basically the same in permit ting extratateral rights which could not otherwise be obtained because of prior appropriation of the true apex. In doing so they implicitly engage in a legal fiction that the locator holds more of the apex than he actually does. The real difference is that the application of the doctrine to previously patented placer or nonminer al land has been recognized in W oods v. Holden, while its application to over lapping ¡ode locations, although consistent with case law, is merely conjectural.25 [3] Continuity of Vein While the Mining Law of 1872 grants extralateral rights in "veins, lodes, and ledges throughout their entire depth" to the locator of a vein,25 a claimant of extralateral rights must extablish the continuity of the ore body outside his claim with a vein or lode which apexes within his location.27 This requirement imposes substantial difficulties of proof. A vein usually cannot be directly followed in its downward course because it is discontinuous, even if only for a short distance, and it may twist or turn in such a way that it is mechanically or economically impractical to excavate an incline shaft alongside it.28 For these reasons, extra 24 1 Snyder, Mines § 807 (1902); C. Costigan, M ining Law% 118h (1908). See Arnold, “ Lode Loca tions: A Specific Question of Extralateral Rights and a General Theory of Intralimital Rights," 22 Harv. L. Rev. 266 (1909). 25 See Walrath v. Champion Mining Co., 171 U.S. 293 (1898) (allowing more territory on dip of secondary vein than length of apex held); Bunker Hill & Sullivan Mining & Concentrating Co. v. Empire State-ldaho Mining & Dev. Co., 131 F, 591 (9th Cir, 1904) (allowing extralateral rights mea sured from end line laid across surface of senior location). But see State ex rel. Anaconda Copper Mining Co. v. District Court, 25 Mont. 504, 65 P. 1020 (1901), holding that a junior locator who has no apex within his surface area cannot obtain rights to an apex within other claims. The court rejected the argument that a junior locator might acquire extralateral rights under the surface of prior patented land when (1) the junior locator had to lay his lines upon a senior location to obtain parallelism, (2) the junior had no part of the apex within his claim but a valid discovery otherwise, and (3) a senior locator had the apex but no extralateral rights because he had laid his lines improper ly. 26 30 U.S.C. § 26 (1982). See generally Neff, "The Law of the Apex— A Continuing Enigma," 18 Rocky Mt. Min. L Inst. 387, 411-12 (1973). 27 Iron Silver Mining Co, v, Cheesman, 116 U.S. 529 (1886); Leadville Co. v. Fitzgerald, 15 F. Cas. 98 (C.C.D. Colo. 1879) (No, 8,158), 28 See, e.g., Twenty-One Mining Co, v. Original Sixteen To One Mine, 265 F. 547 (9th Cir, 1920>; Carson City Cold & Silver Mining Co. v. North Star Mining Co., 73 F. 597 (C.C.N.D. Cal. 1896) (strike of vein below surface nearly at right angles to its strike on surface), aff'd, 83 F. 658 (9th Cir. 1897), cert, denied, 171 U.S. 687 (1898). lateral portions of veins are usually pursued by exploratory drilling, and when the locale of an ore body is established, production is often by underground mine workings consisting of vertical shafts from which horizontal adits, cross-cuts, and drifts are run to reach the ore deposits.29 In the early decision of Iron Silver Mining Co. v. Cheesman, still the leading case, the Supreme Court adopted the rule that absolute continuity of a vein need not be shown if the identity of the vein is established between two points sepa rated by minor interruptions, but that if the mineral disappears, or the fissure and its walls disappear, so that the identity of the vein can no longer be traced, the extralateral right is lost.30 This may have been a practical test at the time, but the current practice of exploration by expensive deep drilling cannot meet the requirement of continutiy and usually does not meet the requirement of iden tity if the drill holes are more than a few dozen feet apart.31 Continuity of a vein may, of course, be established by actual mine workings on its downward dip.32 The vein need be continuous only in the sense that it can be traced through the surrounding rock; neither slight interruptions in the ore-bearing rock nor partial closure of the fissure for short distances destroys continuity if either resumes a little further on.33 Continuity may also mean such mineral or geological connection as enables a person to follow the vein along its dip and through obstructions, interruptions, and breaks with reaonable cer tainty that it is the same vein from the apex to the point of controversy.34 If the mineral and fissure are far from the original trend or appear under different geo logical conditions or surroundings, continuity does not exist.35 The presence of 29 See L. Mall, Public Land and Mining Law 160-61 (3d ed. 1981). 30 116 U.S. 5 29 (1886). The court recognized that a vein is "by no means always a straight line of uniform dip, or thickness, or richness of mineral matter throughout its course.'' Id. at 534. 31 E.g., Collins v. Bailey, 22 Colo. App. 149,125 P. 543 (1912) (continuity between an apex and a vein not established over an unexposed distance of 550 feet); Silver Surprize, Inc. v. Sunshine Mining Co., 15 Wash. App. 1, 547 P.2d 1240 (1976) (continuity of extralateral portion of vein not established by drill hole samples taken at intervals of up to 800 feet, aff'd, 88 Wash. 2d 64, 558 P.2d 186 (1977). A ccord Tom Reed Cold Mines Co. v, United E. Mining Co., 24 Ariz. 269, 209 P. 283 (no extralateral rights exist if vein is interrupted "for a very great distance” ), cert, denied, 260 U.S. 744 (1922). 32 Alameda Mining Co. v. Success Mining Co., 29 Idaho 618,161 P. 862 (191 f>), appeal dismissed, 249 U.S. 622 (1919). 33 Cold, Silver & Tungsten, Inc. v. Wallace, 104 Colo. 273, 91 P.2d 975, cert, denied, 308 U.S 612, reh’g denied, 308 U.S. 639 (1939), A ccord Buffalo Zinc & Copper Co, v. Crump, 70 Ark. 525, 69 S.W. 572 (1902). See Hyman v, Wheeler, 29 F, 347 (C.C.D. Colo. 1886). 34 See Butte & Boston Mining Co. v. Societe Anonyme des Mines de Lexington, 23 Mont. 177,58 P, 111, 113-16 (1899). A ccord Fitzgerald v. Clark, 17 Mont. 100, 42 P. 273 (1895), aff'd, 171 U.S. 92 (1898). 35 Tom Reed Gold Mines Co. v, United E. Mining Co., 24 Ariz. 269, 209 P. 283, cert, denied, 260 U.S. 744 (1922). A ccord Utah Consol. Mining Co. v. Utah Apex Mining Co., 285 F, 249 (8th Cir. 1922) (when the mineral and fissure come to an end, the contiguity is gone and so are extralateral rights), cert, denied, 261 U.S. 617 (1923); Cheesman v. Shreeve, 40 F. 787 (C.C.D. Colo. 1889). transverse veins, seams, or spurs does not necessarily destroy continuity of the main vein.36 Likewise, the fact that the vein has step-faulted does not destroy the identity of the vein and abridge the extralateral right.37 It is impossible to prescribe a definite rule as to the degree of continuity or identity which an extralateral right claimant must show to exist between an apex within his claim and the vein he is pursuing under adjoining ground.38 Absolute truth as to the identity of ore bodies found on different levels in an underground mine is difficult to obtain39 and is legally always a question of fact.40 The most that can be said is that identification in some reasonable manner must be made,41 although courts will not accept speculation or conjecture as the re quired proof.42 Because a surface owner is presumed to be the owner of ores found in his subsurface,43 one who asserts extralateral rights to a vein penetrating another claim has the burden of proving that the vein has its apex within his claim.44 The courts have not agreed upon the required degree of proof necessary for the extralateral claimant to establish his right. A majority has required an apex claimant to demonstrate by a preponderance of the evidence that the deposit in dispute is the same vein as that which has its apex within his location.45 Some 36 Pennsylvania Consol. Mining Co. v. Grass Valley Explor, Co., 117 F. 509 (C.C.N.D, Cai. 1902), See Utah Consol Mining Co. v. Utah Apex Mining Co., 285 F. 249 (8th Clr. 1922), (dyke cutting through limestone bedded vein at approximate point where mineralization ended terminated extra lateral rights), cert, denied, 261 U.S. 617 (1923). 37 iron Silver Mining Co. v. Cheesman, 116 U.S. S29 (1886); Original Sixteen To One Mine, Inc. v, Twenty-One Mining Co., 254 F. 630 (D. Cai. 1918) (segment comencing 15 or more feet below fault plane held to be a continuation of the same vein), aff'd, 260 F. 724 (9th Cir, 1919); National Mines Co. v. Charleston Hill Nat'l Mining Syndicate, 205 F. 787 (D.C. Nev, 1912). 38 2 Lind/eyon Mines § 61S (3d ed. 1914). See Silver Surprize, Inc. v. Sunshine Mining Co., 15 Wash. App. 1, 547 P.2d 1240, 1246 (1976), aff'd, 88 Wash. 2d 64, 558 P.2d 186 (1977), 39 justice Mining Co. v. Barclay, 82 F. 554 (C.C.D. Nev. 1897). 40 Silver King Coalition Mines Co, v. Conkling Mining Co., 256 U.S. 18 (1921); Wm. H. Hoegee Inv.Co. v, Burton Bros., 132 Cai. App. 2d 863, 283 P.2d 314 (1955); Walsenv. Caddis, 118 Colo. 63, 194 P.2d 306 (1948). 41 Iron Silver Mining Co. v. Cheesman, 116 U.S. 529 (1886). 42 Collins v. Bailey, 22 Colo. App. 149,125 P, 543(1912); Silver Surprize, Inc, v. Sunshine Mining Co., 15 Wash. App. 1, 547 P.2d 1240 (1976), aff'd, 88 Wash. 2d 64, 5S8 P.2d 186(1977). <3 Bourne v. Federal Mining & Smelting Co., 243 F, 466, 468 (C.C.D. Idaho 1908); Parrot Silver & Copper Co. v. Heinze, 25 Mont. 139, 64 P, 326 (1901). See § 37.01 [2j, supra. 44 Consolidated Wyo. Cold Mining Co. v, Champion Mining Co., 63 F. 540 (C.C.N.D. Cai. 1894); Mount Diablo Milling & Mining Co. v. Callison, 17 F. Cas. 918 (C.C.D, Nev. 1879) (No. 9,886>; Leadville Co. v, Fitzgerald, 15 F. Cas. 98 (C.C.D. Colo. 1879) (No. 8,158); Walsen v. Caddis, 118 Colo, 63, 194 P. 2d 306 (1948); Collins v. Bailey, 22 Colo, App. 149, 125 P. 543, 548 (19I2J; Barker v. Condon, 53 Mont. 585,165 P, 909, 912(1917); Heinz v. Boston & Mont. Consol. Copper & Silver Mining Co., 30 Mont. 484, 77 P. 421 (1904). 45 Utah Consol. Mining Co. v. Utah Apex Mining Co., 285 F. 249 (8th Cir 1922), cert, denied, 26! U.S. 617 (1923); Pennsylvania Consol. Mining Co, v, Crass Valley Explor. Co., 117 F. 509 (C.C.N.D. Cai. 1902); Parrot Silver & Copper Co. v. Heinz, 25 Mont. 139, 64 P, 326 (1901), courts which require a preponderance of evidence to prove continuity have stat ed that there is no established degree of continuity or identity which an extra lateral rights claimant must show,44 but rather that the required showing is de pendent upon the facts of each case.47 [4] Paratlel End Lines The Mining Law of 1872 grants extralateral rights to veins even though they "extend outside the vertical side lines" of the location.48 Another section of the statute, pertaining to the form of a lode claim, provides that "[t]he end lines of each claim shall be parallel to each other," and also provides that a mining claim shall not exceed 1,500 feet in length along the vein.49 The history of disputes over rights to the dip of veins located under the Lode Law of 18 6 6 50 suggests that the requirement of parallel end lines under the 1872 Act was intended to establish more definite boundary planes between adjacent locations.51 This is not, however, the reason assigned to the requirement by the Supreme Court. Instead, the Court believed that Congress expected a lode loca tor to align his location with the course of a vein, thus appropriating the 1,500 feet of vein allowed by the statute, and to use parallel end lines, which, when extended downward, would limit the locator's extralateral rights to the same horizontal length along the vein's dip.52 While a locator may follow his vein in its descent beyond his own side lines into another's territory, he may not follow its strike beyond his end lines.53 Thus, the maximum length of a vein which is granted at the surface as well as in the subsurface is 1,500 feet.54 ■»6 Silver Surprize, Inc. v, Sunshine Mining Co., 15 Wash. App. 1, 547 P.2d 1240(1976), aff'd, 88 Wash. 2d 64, S58 P.2d 186 (1977). 47 Cold, Silver & Tungsten, Inc. v. Wallace, 104 Colo. 273, 91 P.2d 975, cert, denied, 308 U.S. 612, reh'g denied, 308 U.S. 639 (1939). *8 30 U.S.C. § 26(1982). 49 30 U.S.C. § 23 (1982). 50 Act of July 26,1866, ch. 262,14 Slat. 251 (surviving portions codified at 30 U.S.C. §§ 43, 46, 51 and 43 U.S.C. § 661 (1982)). 51 See § 30.03, supra. 52 Del Monte Mining & Milling Co, v, Last Chance Mining & Milling Co,, 171 U.S. 55, 84 (1898». See Bunker Hill & Sullivan Mining & Concentrating Co. v. Empire State Idaho Mining & Dev. Co., 108 F. 189 IC.C.D. Idaho 1900), aff'd, 109 F, 538 (9th Cir.), cert, denied, 186 U.S. 482 (1901); Fitzgerald v, Clark, 17 Mont. 100, 42 P. 273 (1895), aff'd, 171 U.S. 92 (1898). 53 Butter Tonopah Mining Co, v, West End Consol. Mining Co., 247 U.S. 450, 454 (1918); Larkin v. Upton, 144 U.S. 19 (1892); Walsen v. Caddis, 118 Colo. 63, 194 P.2d 306 (1948), 54 Colden Fleece Cold & Silver Mining Co. v, Cable Consol. Cold & Silver Mining Co., 12 Nev. 312 (1877) (Hawley, C.|. concurring), Patents issued for locations made under the Lode Law of 1866, however, are not limited by the Mining Law of 1872 to 1,500 feet along the vein. Ames v, Empire Star Mines Co., 17 Cai, 2d 213,110 P,2d 13 (1941), cert, denied, 314 U.S. 651 (1941), £«?§ 30.03, supra. The statute does not impose a penalty for the lack of parallel end lines,55 but it has been uniformly construed with the section granting extralateral rights to impose a condition upon the exercise of such rights.54 Only extralaterai rights are affected by non-parallel end lines, and the claim itself is not invalid.57 A distinction must be drawn, however, between nonparallel end lines which diverge and those which converge in the direction of the dip. In the case of di verging end lines, courts have uniformly denied extralateral rights,56 and the lo cator has only intraliminal common law rights.59 The reason for the denial is that as the vein descends into the ground, diverging end lines would include an ever increasing amount of it.60 As to converging end lines, there is a split of authority. The strict view applies the statute literally and denies extralateral rights.61 The liberal view permits the right because the wedge-1 ike area of appro priation is smaller than would have been permitted had the lines been parallel.62 In any event, substantial parallelism has been held to be sufficient for purposes of extralateral rights.63 While the length of an end line is not determinative of extralateral rights, it 5* See 30 U.S.C. § 26 (1982). 5« Del Monte Mining & Milling Co, v, Last Chance Mining & Milling Co., 171 U.S. 55, 85 (1898). See Butler Tonopah Mining Co. v, West End. Consol. Mining Co., 247 U.S. 450 (1918); Elgin Mining & Smelting Co. v. Iron Silver Mining Co., 14 F. 377 (C.C.D. Colo. 1882), aff'd, 118 U.S. 196(1886); Daggert v. Yreka Mining & Milling Co., 149 Cal. 357, 86 P, 968, 974 (1906). But see Moody v. General Beryllium Corp., 224 F. Supp. 934, 947 (D. Utah 1963) (under equitable decree of court, end lines of claims intersected by peripheral boundary line established by private contract may be deemed parallel for purposes of extralateral rights between parties and as to third parties). 57 Eureka Consol. Mining Co. v. Richmond Mining Co., 8 F.Cas. 819, 826-28 (C.C.D. Nev, 1877) (No. 4,548); Gibson v. Hjul, 32 Nev, 360, 108 P. 759, 762 (1910). 58 Iron Silver MiningCo.v. Elgin Mining ¿¡SmeltingCo., 118 U.S. 196(1886); Montana Co. v. Clark, 42 F. 626 (C.C.D. Mont. 1890); Daggett v. Yreka Mining & Milling Co., 149 Cal. 357, 86 P. 968 (1906); Quilp Gold Mining Co. v. Republic Mines Corp., 96 Wash. 439, 165 P. 57 (1917), This is not necessarily true, however, as to mining claims located prior to 1872, See § 30.03, supra. 59 Grant v. Pilgrim, 95 F.2d 562 (1938); Doe v, Waterloo Mining Co., 54 F, 935 (C.C.S.D. Cal 1893), aff'd, 82 F, 45 (8th Cir, 1897), 60 5a? Del Monte Mining & Milling Co, v. Last Chance Mining & Milling Co., 171 U.S. 55,85 (1898) (■'the requisition that the end lines shall be parallel was for the purpose of bounding the extralateral rights . . . and the end lines must be parallel in order that going downwards he shall acquire no further length of the vein than the planes of those lines extended downward inclose” ). 61 Iron Silver Mining Co, v. Elgin Mining & Smelting Co., 118 U.S. 196, 208 (1886). 62 Grant v. Pilgrim, 95 F.2d 562, 568 (9th Cir. 1938) (converging lines limit the extralateral area, and, therefore, no one can complain, citing Carson City Gold & Silver Mining Co. v, North Star Mining Co., 73 F, 597, 602 (C.C.N.D, Cal, 1896), aff'd, 83 F. 658 (9th Cir. 1897), cert, denied, 171 U.S. 687 (1898)). «3 Consolidated Wyo.Gold Mining Co. v. Champion Mining Co„ 63 F. 540 (C.C.N.D. Cal. 1894); Tyler Mining Co. v. Sweeney, 54 F. 284, 293 (9th Cir. 1893), See Grant v, Pilgrim, 95 F.2d 562, 568 (9th Cir. 1938) (end lines were "substantially parallel” even though they converged at a six-degree angle). must have sufficient distance to qualify for purposes of the law.64 End lines for the purpose of obtaining extralateral rights, are those originally laid out when a claim is located, and extralateral rights are not affected if prior patented claims necessitate that the territory conveyed by a later patent be bound by a zig-zag end line.65 The United States Supreme Court has established the doctrine that a junior lode locator may enter a senior location for the purpose of making his end lines parallel so as to obtain extralateral rights.66 Explanations for failure to comply with the parallel end lines requirement will not excuse noncompliance.67 While end lines must be parallel in order for the statutory grant of extralateral rights to apply, side lines need not be.68 End lines must be straight and neither broken nor curved, but irregular side lines do not necessarily have an adverse effect upon extralateral rights; side lines may have angles and elbows and be converging or diverging so long as their general course is along the vein and the statutory restriction on width of claims is met.69 However, extralateral rights do not attach to claims staked out in the form of a horseshoe70 or an isosceles triangle,71 because they do not have parallel end lines, and denomination on one side line of such an irregular location as an end line will not be controlling. [5] Restriction to Downward Course The Mining Law of 1872 grants extralateral rights to "veins, lodes, and ledges throughout their entire depth" even though they "depart from a perpendicular in their course downward as to extend outside the vertical side lines" of the location.72 Restricting extralateral rights to the dip or downward course of the vein73 excludes any right to follow the strike or onward course of the vein along ** Belligerent and Other Lode Mining Claims, 35 L.D, 22 (1906), review denied, 36 L.D, 7 (1907); Jack Pot Lode Mining Claim, 34 L.D. 470 (1906) (two-tenths of a foot in length is not an end line within the meaning of the statute). 65 Big Hatchet Copper Mining Co. v. Colvin, 19 Colo. App. 405, 75 P.605 (1904). 66 Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55 (1898). 67 See Montana Co. v. Clark, 42 F. 626 (C.C.D. Mont. 1890). 68 Jim Butler Tonopah Mining Co. v. West End Consol. Mining Co., 247 U.S. 250 (1918); Del Monte Mining & Milling Co. v. Last Chance Mining & Milling C o„ 171 U.S. 55 (1898). 69 Jim Butler Tonopah Mining Co. v. West End Consol. Mining Co., 247 U.S. 250 (1918). 70 Iron Silver Mining Co. v, Elgin Mining & Smelting Co., 118 U.S. 196 (1886) (a nine-sided figure in the shape of a horseshoe with two lines denominated as end lines did not qualify for extralater.il rights because the court held that one of the lines marked is an end line was a side line). 71 Montana Co. v, Clark, 42 F. 626 (C.C.D. Mont. 1890) (triangular claim geometrically could noi have two parallel lines). 72 30 U.S.C, § 26 (1982). 73 King v, Amy & Silversmith Consol. Mining Co., 9 Mont, 543, 24 P, 200 (1890), re v'do n other grounds, 152 U.S. 222 (1894); Tom Reed Gold Mines Co, v. United E. Mining Co., 24 Ariz. 269, 209 P. 283, cert, denied, 260 U.S. 744 (1922). The terms "downward course” and "course down ward" are used interchangeably and signify the course of the vein from the surface toward the center of the earth whether in a perpendicular or on a dip. A vein's "downward course" contrasts with the top or apex.74 Thus, there cannot be extralateral rights in a horizontal vein because it has no downward course.75 Likewise, the upward trend of a vein can not be followed.75 Of course, the dip within the extension of the end lines may be followed to its entire depth, even though it enters another claim.77 The statute does not specify a degree of angle of descent, but it has been sug gested that the angle must not be less than 45' for any substantial distance or the extralateral right will be lost.78 Other courts have rejected any limitation as judicial legislation.79 Under this view, the right to follow the dip of a vein remains if it departs from its apex at any angle other than horizontal because there is a departure from the perpendicular so long as the vein is not at a right angle to the perpendicular.80 § 37.03 Relation of Location to Course of Vein as Affecting Extralateral Rights [1] Location Parallel with Course of the Vein Extralateral rights exist only when certain conditions and requirements have its "strike" or onward course. See King v. Amy & Silversmith Consol. Mining Co., supra; Duggan v. Davey, 4 Dak. 110, 26 N.W. 887 (1886), appeal dismissed, 131 U.S. 433 (1889). 74 Walsen v. Caddis, 118 Colo. 63, 194 P.2d 306 (1948); Stewart Mining Co. v. Ontario Mining Co., 23 Idaho 724, 132 P. 787 (1913), aff'd, 237 U.S. 350 (1915). 75 Butler Tonopah Mining Co. v. West End Consol. Mining Co., 39 Nev. 375,158 P. 876 (1916), aff'd, 247 U.S. 450 (1918); Tom Reed Gold Mines Co. v. United E. Mining Co., 24 Ariz. 269, 209 P. 283 (no extralateral right on a vein if it becomes "flattened and extends from thence horizontally in a departure from the approximate general plane"), cert, denied, 260 U.S. 744 (1922). See § 37.01 [4], supra, as to blanket veins. 76 Tom Reed Gold Mines Co. v. United E. Mining Co., 24 Ariz. 269, 209 P. 283, cert, denied, 260 U.S. 744 (1922); Southern Nev. Gold & Silver Mining Co. v. Holmes Mining Co., 27 Nev. 107, 73 P. 759 (1903). But see Silver Surprize, Inc. v. Sunshine Mining Co., 15 Wash. App. 1, 547 P.2d 1240 (1976) (suggesting that mining upward to establish continuity with an apex at the surface would be possible except for the unfavorable economics— a procedure previous authoritites would not seem to allow), aff'd, 88 Wash. 2d 64, 558 P.2d 186 (1977), 77 Mining Co. v. Tarbet, 98 U.S. 463 (1879); Colorado Cent. Consol. Mining Co. v. Turck, 54 F. 262 (8th Cir.), aff'd, 150 U.S. 138(1893); Arizona Commercial Mining Co. v, Iron Cap Copper Co., 27 Ariz. 202, 232 P. 545, modified on other grounds, 29 Ariz. 23, 239 P. 290 (1925), cert, denied, 270 U.S. 642 (1926). A ccord Iron Silver Mining Co. v. Murphy, 3 F, 368 (D. Nev. 1880). 7* Stewart Mining Co. v. Ontario Mining Co,, 23 Idaho 724, 1 32 P. 787 (1913) (dictum), aff'd, 237 U.S. 350 (1915). 79 Alameda Mining Co. v, Success Mining Co., 29 Idaho 618,161 P. 862 (1916) (extralateral rights must be determined by the course of the vein at the apex at the surface and not at lower levels; there is no degree or angle which would arbitrarily bar extralateral pursuit), appeal dismissed, 249 U.S. 622 11919), Accord Bunker Hill & Sullivan Mining & Concentrating Co. v. Empire State-ldaho Mining & Dev. Co., 134 F, 268 (C.C.D. Idaho 1903). 80 Stevens v. Williams, 23 F. Cas, 44 (C.C.D. Colo. 1879) (No. 13,414), A ccord Leadville Co. v. Fitzgerald, 15 F. Cas. 98 (C.C.D. Colo. 1879) (No. 8,158). been met.1 The relation of a location's boundaries to the course of the vein near est the surface may also abridge or restrict the maximum rights obtainable be cause the location is entitled to only as much horizontal length of the dip as the length of the apex within the surface boundaries.2 The extent of extralateral rights is determined by the course or strike of the vein nearest the surface, and subsurface variations in direction do not affect extralateral rights.3 It has been held that extralateral rights are determined by the actual course of the vein on the ground rather than as shown on the survey plat of a patent.4 The maximum possible extent of extralateral rights is obtained when there has been an ideal location upon an ideal lode, that is, a location with parallel end lines and side lines running generally parallel with the course of a vein which is nearly straight, has continuity and passes out of the location at each end line.5 An ideal location is properly staked out in relation to a vein or lode so that the side lines encompass the course or strike of the vein and the vein bisects each parallel end line.6 Because in an ideal location the strike of the vein located runs the full length of the location, and the surface boundaries of the location are the maximum statutory length of 1,500 feet, its locator is entitled to pursue the vein's dip anywhere between the extensions of the end lines, which is also the maximum allowable distance of 1,500 feet. Often, of course, mining locators mistake the true course of the vein, or the vein itself is irregular, which results in obtaining less than maximum extralateral rights.7 [2] Location with Vein Crossing Two Side Lines Locators often find it difficult or impossible to determine the true direction or course of a vein at the time of location, with the result that the location is 1 Extralateral rights will be denied when a location fails to meet requirements as to apex, parallel end lines, and downward dip; when the location is located as a placer claim or is improperly located as a lode claim; and when the extralateral vein extends into land previously appropriated as non-mining land, or conflicts with a prior apex, or in some instances, prior dip rights. See §§ 37.01 [11, 37.02, supra. 2 Del Monte Mining & Milling Co. v, Last Chance Mining & Milling Co., 171 U.S. 55, 89 (1898). 3 Mining Co. v. Tarbet, 98 U.S. 463 (1879) (the direction of the side lines must correspond substan tially with the course or strike of the vein at its apex near the surface of the ground); Arizona Com mercial Mining Co. v, Iron Cap Copper Co., 27 Ariz, 202, 232 P. 545, 550, modified on other grounds, 239 P, 290 (1925), cert, denied, 270 U.S. 642 (1926); Alameda Mining Co. v. Success Mining Co., 29 Idaho 618, 161 P. 862, 866 (1916) l"[TJhe course of a vein is not determined by its direction at any single given point where the vein is a crooked one. . . . The . , . extralateral rights must be determined by the course of the vein at its apex at the surface of the claim."). 4 Consolidated Wyo. Gold Co. v, Champion Mining Co„ 63 F, 540 (N.D. Cal. 1894), 5 See § 37.02, supra. 6 Silver King Coalition Mines Co. v. Conkling Mining Co., 256 U.S. 18 (1921), A ccord Mining Co. v. Tarbet, 98 U.S. 463 (1879). 7 See Clayberg, “ Extralateral Rights to Quartz Veins Granted by the Act of Congress of May 10, 1872," 1 Calif. L. Rev. 336 (1913); Note, "Extra-Lateral Rights in Mining,” 15 Notre Dame Law. 68, 74 (1939), for discussions of various situations which result in a locator receiving less than the maximum obtainable extralateral rights. laid crosswise instead of lengthwise on the strike. In this event, a locator is often allowed to adjust his location within a statutory period.8 If the statutory time has expired or it is otherwise not possible to change the lines of the location after the course of the vein is acertained, the judicial concept of "false end lines” may apply. Since a vein cannot be pursued on its strike beyond the end lines of a location,5 extralateral rights cannot be exercised when the strike of a vein cross es the side lines. Courts have uniformly recognized, however, that the designa tion of lines by a locator is not controlling and that what were specified as side tines may be regarded as end lines for extralateral rights purposes.10 As ex plained by the Supreme Court: When, therefore, a mining claim crosses the course of the lode or vein instead of being 'along the vein or lode,' the end lines are those which measure the width of the claim as it crosses the lode. Such is evidently the meaning of the statute. The side lines are those which measure the extent of the claim on each side of the middle of the vein at the surface.il Under this doctrine, a locator is entitled to the same rights regarding his new side and end lines as if they were originally located as such.12 Hence, extralateral rights may be fully exercised beyond the originally designated end lines13 and the originally designated side lines define the vertical planes within which the rights may be exercised.14 In order for the side lines to become end lines, they must be opposite and parallel, and the same rules apply as for conventional end lines.15 This "cross-1 ode" type of mining location is the only exception to the rule that the end lines, once located, establish limits beyond which the locator cannot go.16 *5ee §§ 33.04(3] & (4], supra. 9 Southern Nev. Cold & Silver Mining Co. v. Holmes Mining Co., 27 Nev, 107, 73 P. 759, 762 (1903). 10 See, e.g., Consolidated Wyo. Mining Co. v. Champion Mining Co., 63 F. 540,549(C,C,N,D. Cai. 18941. See also § 32.03(1 ](dj, supra. n Argentine Mining Co. v. Terrible Mining Co., 122 U.S. 478,485(1887). AccordSWvw King Coali tion Mines Co. v. Conkling Mining Co., 256 U.S. 18 (1921); King v. Amy & Silversmith Consol. Mining Co., 152 U.S. 222, 228 (1894); Mining Co, v. Tarbet, 98 U.S. 463 (1879); Northport Smelting & Ref. Co. v. lone Pine-Surprise Consol. Mines Co., 217 F. 105 (E.D. Wash. 1920), aff'd, 278 F. 719 (9th Cir. 1922); Tombstone Milling & Mining Co. v. W ay Up Mining Co., 1 Ariz, 426, 25 P. 794 (1883); Round Min. Mining Co. v. Round Mtn. Sphinx Mining Co., 35 Nev, 392, 129 P. 308, 310 (19131. 12 Empire Milling & Mining Co. v. Tombstone Miil & Mining Co., 100 F. 910(C.C.D. Conn. 1900). 13 Silver King Coalition Mines Co. v. Conkling Mining Co„ 256 U.S. 18 (1921). i* Northport Smelting & Ref, Co, v, Lone Pine-Surprise Consol. Mines Co., 271 F. 105 (E.D. Wash. 1920), aff'd, 278 F. 719 (9th Cir. 1922). is Empire State-ldaho Mining & Dev. Co. v, Bunker Hill & Sullivan Mining & Concentrating Co,,131 F. 591, 605 (9th Cir. 1904), cert, denied, 200 U.S. 617 (1906); Last Chance Mining Co. v, Bunker Hill & Sullivan Mining & Concentrating Co., 131 F, 579, 588 (9th Cir. 1904), cert, denied, 200 U.S. 617 (1906). § 37.02(4], supra. 16 Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55,89-90(1898). The false end line doctrine is applicable to the discovery vein only, and cannot be applied to secondary veins so as to create more than one set of end lines for a location.17 Within this limitation, however, any vein can be pursued extralaterally.1* [3] Location with Vein Departing Through Side Line or Stopping Within Location A common cause of a location with a discovery vein which stops within a location is miscalculation of its direction so that the vein is later found to depart from the claim through a side line. Apparently this situation was not contemplat ed by the Mining Law of 1872, but courts have supplied a solution by a legal fiction. The judicial declaration is that extralateral rights obtain, defined by an imaginary line drawn from the point the vein passes out of the claim, opposite and parallel to the end line through which the vein passes.19 The rule is that the end line which is crossed remains an end line for all purposes, and extralater al rights are granted within the area bounded by parallel planes drawn from the end line and the imaginary line.20 The same rule applies if a vein abruptly terminates within a claim after entering through an end line, except that the imaginary line is drawn parallel to the end line at the point the apex terminates.21 If an apex both begins and ends within a claim, the authorities are generally agreed that subsurface rights attach within imaginary planes drawn parallel to the end lines at the points the vein terminates.22 If the vein runs more nearly parallel to the end rather than the side lines, courts will apply the false end line doctrine to the permit the exercise of extralatera! rights.23 17 id. at 89 (the end lines as fixed relative to the discovery vein constitute an absolute limit relative to the appropriation of all other veins within the mining location); Clark-Mont. Realty Co. v. Butte & Superior Copper Co., 233 F. 547 (D. Mont. 1916), aff'd, 248 F, 609 (1918),a(f'd, 249 U.S. 12 (1919). i *S e e § 37.04, infra. 19 Clark v. Fitzgerald, 171 U.S. 92 (1898); Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55, 89 (1898); London Extension Mining Co. v. Ellis, 134 F.2d 405 (10th Cir. 19431; Bourne v, Federal Mining & Smelting Co., 243 F. 466 (C C D . Idaho 1908); Rico-Argentine Mining Co. v. Rico Consol. Mining Co., 74 Colo, 444, 223 P. 31, 33 (1923). 20 Clarke v. Fitzgerald, 171 U.S. 92 (1898); London Extension Mining Co. v. Ellis, 134 F,2d 405 (10th Cir. 1943); Ajax Cold Mining Co. v. Hilkey, 31 Colo. 131, 72 P. 447 (1903). 21 Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55 (1898); Tyler Mining Co. v. Sweeney, 54 F. 284, 293 (9th Cir. 1893); Carson City Cold & Silver Mining Co. v. North Star Mining Co., 73 F. 597 (C.C.N.D. Cal 1896); Wakeman v. Norton, 24 Colo. 192, 49 P. 283 (1897). 22 Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55 (1898). See Work Mining & Milling Co. v. Doctor Jack Pot Mining Co., 194 F. 620, 629 (8th Cir. 1912). 23 See § 37.03[2), supra. (4] Location With Vein Entering and Departing Through the Same Boundary Few cases have ruled on the problem presented by a vein which enters and departs a claim through the same boundary line, and they conflict. However, there would appear to be no less reason for granting extralateral rights in this circumstance than when a vein enters a claim through an end line and departs through a side line.*4 The United States Supreme Court apparently sees no differ ence between the two situations,25 and a series of federal cases suggest that ex tralateral rights may be obtained, as defined by lines drawn parallel to the end lines at the points the vein departs through the side line.26 If a vein enters and departs through an end rather than a side line, the false end line doctrine can apply.27 In any event, extralateral rights are restricted to the amount of apex actually within the claim.28 Hence, if a vein returns to a claim after departing through a side line and then departs through an end or side line, extralateral rights will not be granted for the portion of the apex outside the claim29 unless the legal apex doctrine applies.30 Unfortunately, in the only case directly on point the Colorado Supreme Court stated that extralateral rights could not be obtained when a vein enters and de 24 5 [5] Extralateral Rights to Lodes with a Wide Apex Some lodes have wide apexes so that, when located, they lie within more than one claim, divided by a common side line. Three positions have been taken as to whether extralateral rights can be obtained in these circumstances. First, it has been strictly ruled that in order for a mining locator to be entitled to subsur face rights, he must include within his claim the entire width of the apex.35 Under this view, both mining locators would be denied extralateral rights to a vein bisected by their common boundary line. The second approach is to grant extralateral rights to the senior claimant when the end line extensions of both claims correspond.36 A third, more liberal, position has been adopted which would permit both locators to obtain extralateral rights when the end lines do not correspond. Under this view, the senior locator obtains rights to any conflict area and a junior locator obtains his extralateral rights outside of the conflict area.37 The third rule includes the priority concepts of the second and also recognizes extralateral rights in the junior locator when there is no conflict. It has the advan tage of not establishing underground areas from which minerals are unlikely to be developed, and it is more consistent with the intent of the statute and the 31 Catron v. Old, 23 Colo. 433, 48 P, 687 (1897) (court emphasized the fact that very little of the apex was actually within the claim, and that it did not run parallel with the side lines). 32 Montana Mining Co. v. St. Louis Mining & Milling Co., 204 U.S. 204 (1906); St. Louis Mining & Milling Co. v. Montana Milling Co., 104 F, 644 (9th Cir. 1900). 33 Rico-ArgeniineMining Co. v. Rico Copper Mining Co., 74 Colo. 444, 223 P. 31, 33 (1923) (the court, although dealing with a vein crossing an end line and a side line, said it was compelled "to conclude that extralateral rights are conferred where the discovery vein crosses. . . the same side line twice."). 3* C. Costigan, Mining Law % 1T 8g at 63 (1908), suggests “ the propriety of refusing to follow" the Catron case. See also Clayberg, "Extralateral Rights to Quartz Veins Granted by the Act of Congress of May 10, 1872," 1 Calif L. Rev, 336, 345-347 (1913); Note, "Extralateral Rights in Mining,” 15 Notre Dame Law. 68, 75-76 (1939), 35 Grand Cent. Mining Co. v. Mammoth Mining Co„ 29 Utah 490, 83 P. 648 (1905) (extralateral rights may not be predicated upon such bisected broad lode desposits). The court said: "W hat con stitutes a discovery that will validate a location is a very different thing from what constitutes an apex, to which attaches the statutory right to invade the possession of and appropriate the property which is presumed to belong to an adjoining owner." Id. at 677. A cco rd Big Hatchet Consol. Mining Co. v. Colvin, 19 Colo. App, 405, 75 P, 605, 606 (1904). 36 Argentine Mining Co. v. Terrible Mining Co., 122 U.S. 478 (1887); United States Mining Co. v. Lawson, 134 F. 769 (8th Cir. 1904), aff'd, 207 U.S. 1 (1907); St. Louis Mining & Milling Co. v. Mon- tana Mining Co., 104 F. 664 (9th Cir. 1900). 37 Empire State-ldaho Mining A Dev. Co. v. Bunker Hill & Sullivan Mining & Concentrating Co., 114 F. 417, 419 (9th Cir.), cert, denied, 186 U.S. 482 (1902). policy of the courts to grant extralateral rights whenever there has been reason able compliance with the law. It appears to be the standard rule.38 § 37.04 Extralateral Rights in Secondary Veins [1] Application of Extralateral Rights to Secondary Veins "Secondary/' "accidental/' and "incidental" are terms commonly applied to apexing veins or lodes other than the one upon which a mining location is based, known as the "primary" or "discovery" vein.1 The Mining Law of 1872 constitutes a grant of rights in all veins or lodes which apex within the surface lines of a mining location,2 and it is settled law that extralateral rights are con ferred in secondary as well as primary veins.3 Thus, extralaterat rights may be based upon "blind" veins or lodes, unknown or undiscovered at the time of location.4 In general, the same conditions and limitations apply to extralateral rights conferred in secondary veins as apply to discovery veins,5 except that rights in secondary veins are further conditioned upon the validity of the location on the discovery vein. [2] End Lines of Discovery Vein Control There can be but one set of end lines for a location, and they limit all veins apexing within the surface lines.6 Hence, extralateral rights in secondary veins are fixed by the end lines of the discovery vein.7 Courts will not create new lines 38 See § 32.03[2][b], supra. 1 See Cosmopolitan Mining Co. v. Foote, 101 F. 518 (C.C.D. Nev. 1900). 2 30 U.S.C, § 26( 1982). Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 53, 88 (1898): Every vein whose apex is within the vertical limits of his (a locator's] surface lines passes to him by virtue of his location. He is not limited to only those veins which extend from one end line to another, or from one side line to another, or from one line of any kind to another, but he is entitled to every vein whose top or apex lies within his surface lines. Not only is he entitled to all veins whose apexes are within such limits, but he is entitled to them throughout their entire depth, 'although such veins, lodes or ledges may so far depart from a perpendicular in their course downward as to extend outside the vertical side lines of such surface locations. In other words, given a vein whose apex is within his surface limits, he can pursue that vein as far as he pleases in its downward course outside the vertical side lines. 3 Ajax Cold Mining v. Hilkey, 31 Colo. 131, 72 P. 447 (1903). 4 Calhoun Cold Mining Co. v. Ajax Cold Mining Co„ 182 U,S, 499, 508 (1901). 5 See §§ 37.01, .02, .03 .supra, and § 37.05, infra. •« Walrath v, Champion Mining Co., 171 U.5. 293, 308, 311(1898); Del Monte Mining & Milling Co. v. Last Chance Mining & Milling Co., 171 U.S. 55 (1898); Ajax Cold Mining Co. v. Hilkey, 31 Colo. 131, 72 P, 447(1903). 7 Work Mining & Milling Co. v. Doctor tack Pot Mining Co., 194 F. 620,629 (8th Cir.), cert, denied, 226 U.S. 610 (1912); Ajax Cold Mining Co. v. Hilkey, 31 Colo. 131, 72 P. 447, 449 (1903) ("The end lines constitute a barrier, beyond which a locator cannot follow a vein on its strike, whether it be a discovery or secondary vein. . . ."). for secondary veins,* Thus, if the discovery vein crosses both side lines, the side lines will be regarded as end lines and will determine extralateral rights in all veins which apex within the claim, even though a secondary vein might perfectly bisect the original end lines.9 Nor can a locator relocate his claim using new end lines so as to expand his extralateral rights in secondary veins which dip outside of the bounding planes of the location of the discovery vein. When such an attempt is made, the side lines of the new location, will be regarded as end lines.10 Hence, it is not possible to obtain extralateral rights in a secondary vein which lies at a right angle to the discovery vein, parallel with the located end lines.11 (3] Amount of Apex of Secondary Vein within the Claim Extralateral rights attach to any secondary vein or lode which apexes within a location without regard to the extent of extralateral rights obtainable in the discovery vein. Hence, the apex of a secondary vein need not be in the same part of a claim as the apex of the discovery vein, and whether it is or not, extra lateral rights to the dip of a secondary vein are defined by vertical planes fixed by the original end lines.12 This is illustrated by the not uncommon situation of a claim inaccurately located so that the discovery vein passes through an end line and a side line. Extralateral rights to the discovery vein are bounded by a vertical plane extended downward from the crossed end line and, under the false end line doctrine, another vertical plane parallel thereto drawn from the point the vein crosses the side line.13 These planes, however, do not limit extra- iateral rights in the secondary vein, which are governed by planes drawn from the original end lines.14 Since the end line bounding planes of the discovery vein fix extralateral rights to secondary veins, it has been argued that the dip of a secondary vein may * Walrath v. Mining Co., 63 F. 552, 557 (C.C.N.O. Cal. 1894) ("The Act of 1872, in granting all other veins that were within the surface lines of previous locations, did not create any new lines for such other veins, nor invest the court with any authority to make new lines for such other veins."), aff'd, 171 U.S. 293 (1898). Accord Cosmopolitan Mining Co. v. Foote, 101 F. 518, 523 (C.C.D. Nev. 1900). 9 Northport Smelting & Ref. Co. v. Lone Pine-Surprise Consol. Mines Co., 278 F. 719 (9th Cir, 1922). See § 37.03[2], supra. Cosmopolitan Mining Co. v. Foote, 101 F.518,521-23 (C.C.D. Nev. 1900). 5eeWalrathv, Min ing Co„ 63 F. 552, 557 (C.C.N.D. Cal, 1894) ("W hen the end lines of a mining location are once fixed, they bound the extralateral rights to all the lodes that are thereafter found within the surface lines of the location."). U Cosmopolitan Mining Co. v. Foote, 101 F. 518 (C.C.D. Nev. 1900). See also § 37.04(4), infra, 12 Ajax Cold Mining Co. v, Hilkey, 31 Colo. 131, 72 P. 447, 450(1903). Id, See § 37.03(3], supra. 14 Ajax Cold Mining Co. v. Hilkey, 31 Colo. 131, 72 P. 447,449 (1903) ("This, however, does not mean that all such veins have exactly the same extralateral rights, nor can it be said that only so much of a secondary vein as apexes within that part of the claim where the apex of the discovery vein is found has such rights."). See § 37,04(4], infra. be followed anywhere between their extensions regardless of the amount of apex within the location. This result has been permitted by the United States Supreme Court,15 but is contrary to the generally accepted principle of mining law that only so much of the dip of a vein may be followed as there is apex within the surface boundaries of the location.14 The legal apex doctrine is an exception to this rule.17 [4] Relation of Location to Course of Secondary Vein The rules concerning extralateral rights in discovery veins also apply to extra lateral rights in secondary veins. Variations in the position of secondary veins in relation to the discovery vein do not alter these rules, but may limit their appli cation. There is no doubt that extralateral rights attach to secondary veins if they are approximately parallel to the discovery vein and are within the parallel planes which measure extralateral rights to it.1® On the other hand, if a secondary vein crosses a location at a right angle to the discovery vein, extralateral rights in the secondary vein cannot be obtained because there is no right to pursue the strike or onward course of the vein.19 Between the two extremes, when the discovery vein and secondary vein do not have the same extent or direction, three views have been expressed. One, now in general disrepute, was to deny extralateral rights beyond the portion of the claim covered by extralateral rights in the discovery vein.28 Another view, founded upon dicta in a Supreme Court decision, would permit extralateral rights within the area bounded by the end lines even though portions of the apex were outside the claim.21 The view accepted by most authorities allows extra lateral rights in secondary veins to the extent of their apex within a claim, limited by bounding planes drawn through the original end lines for the discovery 15 Walrath v. Champion Mining Co., 171 U.S. 293 (1898). The effect of the decision was to grant a greater extent on the dip of a secondary vein than there was apex within the mining claim; the extralateral rights were bounded by the end lines of the discovery vein. This decision is criticized in Zane, "A Problem in Mining Law: Walrath v. Champion Mining Company/' 16 Harv. L. Rev. 94 (1902). Lindley denied that this result was intended by the court. 2 Lindley on Mines § 593 (3d ed. 1914). 16 Bunker Hill & Sullivan Mining & Concentrating Co. v. Empire State-ldaho Mining & Dev. Co., 109 F. 538 (C.C.D. Idaho 1900), aff'g 108 F. 189 (CC.D. Idaho 1900). I7 £ w § 37.02(2],supra. 18 Walrath v. Champion Mining Co., 197 U.S. 193 (1897), A ccord Jefferson Mining Co. v. An- choria-Leland Mining & Milling Co., 32 Colo. 176, 75 P. 1070 (1904), I* Cosmopolitan Mining Co. v. Foote, 101 F. 518 (C.C.D. Nev. 19Ò0). See also i 37.04(2], supra. 20 Jefferson Mining Co. v. Anchoria-Leland Mining Co., 32 Colo. 176, 75 P. 1070 (1904). See § 37.04(3], supra. 21 Walrath v. Champion Mining Co., 197 U.S. 193 (1897), See Zane, "A Problem in Mining Law: Walrath v. Champion Mining Company,” 16 Harv. L. Rev. 94 (1902). vein .«'Under this approach, the fact that the apex of a secondary vein does not cross an end line would be of no consequence,23 nor would its position in a claim, whether the claim be patented or unpatented.24 § 37.05 Subsurface Conflicts as to Extralateral Rights [1] General Rules Conflicts as to extralateral rights may occur underneath mining or non-mining land. In general, all mining lands, whether unpatented or patented, are subject to the exercise of valid extralateral rights, even though the apex itself may be located at a later date than the land under which it dips.1 On the other hand, previously patented non-mining lands are not subject to extralateral rights, pro vided that on the date patent issued the land was not known to be valuable for minerals.2 Unpatented non-mining lands are subject to extralateral rights regard less of the date of mining location. As a general proposition, the locator of an apex may assert his statutory right to the dip irrespective of priority of location and may follow the dip underneath mining land previously located.3 Some courts have held to the contrary in order to prevent intrusion upon the common law rights of a prior dip locator.4 Since statutory enactments modify the common law, intraliminal rights recognized under the common law are subject to the statutory grant of extralateral rights.5 Nevertheless, courts might be particularly reluctant to adhere to this concept against a prior dip locator when a junior apex locator's rights are predicated 22 Ajax Gold Mining Co. v. Hilkey, 31 Colo. 131, 72 P. 447 (1903) (the extralateral rights of the locator of a secondary vein which had a longer apex than the discovery vein with which it united on the dip and passed out the north side line under adjoining land were determined by a line to the east parallel with the west end line). See also Anaconda Copper Mining Co. v. Pilot-Butte Minina Co., 52 Mont. 165, 156 P. 409 (1916). 23 Work Mining & Milling Co. v. Doctor jack Pot Mining Co., 194 F. 620, 629 (8th C ir) cert denied, 226 U.S. 610(1912). 2« Ajax Cold Mining Co. v. Hilkey, 31 Colo. 131, 72 P. 447 (1903). i J e e Clark v. Fitzgerald, 171 U.S. 92 (1898). 2 See § 37.05(2], infra. 3 Colorado Cent. Consol. Mining Co. v. Turck, 50 F. 888, 895 (8th Cir. 1892) ('The statute confer ring the right to follow a lode outside the side lines of a location, when the top or apex of the lode lies within the boundaries of the location, does not, in terms or by necessary implication, limit the exercise of that right, especially where mining claims are involved, to cases where the adjoining claims are held under junior locations or patents, and we think we would not be justified in placing such a limitation upon the right by construction."). A cco rd Cheesman v. Hart, 42 F 98 (C C D Coin 1890). See § 37.01 (2J, supra. ' Van Zan? V- A ? entine Minin8 Co., 8 F. 725 (C.C.D. Colo. 1881) (jury instructions). 5 « § 36.03[2J, supra, discussing common law rights in mining locations. 37,01(2], iu/wa. upon the fiction of a judicial apex® or patent has already issued.7 [2] Patented Non-Mining Lands The Mining Law of 1872 grants extralateral rights to locators and patentees of lode claims, and also makes mineral patents subject to the extralateral rights of subsequent valid apex locations.8 Nonmineral patents, however, neither con fer extralateral rights nor are made subject to extralateral rights by statute.9 Con sequently, disputes as to the exercise of extralateral rights may arise whenever nonmineral patents have been issued for land in the vicinity of either patented or unpatented lode claims. Courts have approached such conflicts using the principle that the United States cannot convey what it no longer owns or what has been specifically re* served from transfer by statute.10 The extralateral rights accompanying a valid mining location cannot be defeated by a subsequent nonmineral patent because the rights vested when the mining claim was perfected and from then on were not the government's to grant.11 On the other hand, when a nonmineral patent has been issued prior to the perfection of a valid mineral location, unless miner § 37,02(2], supra. 7 While there is a presumption that patented nonmineral land does not contain an apex, the pre sumption is rebuttable, and patent proceedings establishing surface rights do not necessarily deter mine extralateral rights. See Butte & Superior Copper Co. v. Clark-Mont. Realty Co., 248 F. 609 (9th Cir. 1918), aff'd, 249 U.S. 12 (1919). But see Pacific Coast Mining & Milling Co. v. Spargo, 16 F. 348 (C.C.D. Cal. 1883), and Amador Medean Cold Mining Co. v. South Spring Hill Cold Min ing Co„ 36 F. 668 (C.C.D. Cal, 1888). Both cases hold that the extralateral rights of appropriators of veins apexing oulside a patented claim apply only when the appropriator's claim was in existence at the time of entry and payment during patent proceedings. 8 See § 37.05(1 ], supra. Cf. Walrath v. Champion Mining Co., 171 U.S. 293 (1898) (a mineral patent is read as if the statute were written in it, whatever the terms of the patent may be). 9 See Empire Star Mines Co. v. Grass Valley Bullion Mines, 99 F.2d 228,234 (9th Cir. 1939); Empire Star Mines Co. v. Butler, 72 Cal. App, 2d 466, 145 P.2d 49 (1944). 10 See Davis's Adm'r v. Weibold, 139 U.S. 507, 529-30 (1891) ("but if the lands patented were not at the time public property, having been previously disposed of, or no provision had been made for their sale, or other disposition, or they had been reserved from sale, the department had no jurisdiction to transfer the land, and their attempted conveyance by patent is inoperative and void''); Amador Medean Cold Mining Co. v. South Spring Hill Cold Mining Co., 36 F. 668, 669 (C.C.N.D. Cal. 1888) (''The United States can undoubtedly grant easements, and other limited rights, in any portion of the public lands, and subsequent purchasers must take them burdened with such ease ments or other rights, but when it has once disposed of its entire estate in the lands to one party, it can, afterwards, no more burden it with other rights than any other proprietor of lands.''); Ames v. Empire Star Mines Co., 17 Cal. 2d 213, 110 P.2d 13, 16 (1941) ("Under the act they acquired legal title to such extralateral rights provided such rights had not been previously conveyed away by the government, for the Mining Act could not, of course, operate to divest private owners of existing vested rights."). 11 Hecla MiningCo. v, Atlas Mining Co., 92 Idaho 476,445 P.2d 225,227-228 (1968) (prior validly located claims which contained an apex carried extralateral rights as against subsequently issued nonmineral patent, and to the extent of conflict the nonmineral grant is void), See Ames v. Empire Star Mines Co., 17 Cal. 2d 213, 110 P.2d 13 (1941), als were reserved or known to exist, the entire interest in the land vested in the patentee, and the subsequent mineral locator obtains no extralateral rights to minerals within the land.12 Nonmineral land grants and patents in the Western mining states generally reserve minerals to the United States, and it has been held that known minerals cannot pass in a nonmineral patent.13 However, it is also a rule that, as against subsequent mineral locators, the absence of valuable minerals is conclusively established by the issuance of a nonmineral patent.14 Therefore, a subsequent mineral locator cannot obtain extralateral rights in patented nonmineral lands by claiming that minerals were in fact known to occur at the time of patent.15 A mineral locator who has perfected his claim prior to issuance of the nonminer al patent, however, will prevail on such a claim by virtue of the fact that his rights vested upon discovery of the minerals.16 Except for cases involving railroad patents,17 the cases are not in agreement 12 Amador Medean Cold Mining Co. v. South Spring Hill Cold Mining C o„ 36 F. 668 (C.C.N.D. Cal. 1888); Reeves v. Oregon Explor. Co., 127 Or, 686, 273 P. 389, 391 (1929) (“ The right of a junior lode claimant, whether his claim be patented or unpatented, to follow the dip of his vein into an adjoining patented or unpatented lode claim, is one which arises under the mining laws, and is confined to titles acquired under the mining laws, and has no application to a case where the vein of a lode claim on its dip extends to lands the title to which has been acquired under agricul tural patents.''), 13 Davis's Adm'r v, Weibold, 139 U.S. 507 (1891), Deffeback v, Hawke, 115 U.S. 392 (1885); Lonely v. Scott, 57 Or. 378, 1 12 P. 172, 174 (1910) ("The rule is, that a patent to government land transfers to the patentee all veins, lodes or other minerals, within its boundaries, unless such mineral deposits were known to exist at the time of the issuance of the patent, in which latter case the known mineral deposits do not pass by the patent."). i< Burke v. Southern Pac, R.R., 234 U.S. 669,691-92 (1914) (“ when a patent issues it is to be taken . . . as affording conclusive evidence of the non-mineral character of the land''); Davis's Adm'r v. Weibold, 139 U.S. 507 (1891); Dredge v, Husite Co., 78 Nev. 126, 369 P. 2d 676, 682 (1962); Reeves v. Oregon Explor. Co., 127 Or. 686, 273 P. 389, 391 (1929). 15 See Burke v. Southern Pac. R.R., 234 U.S. 669, 692 (1914) ("O f course, if the land officers are induced by false proofs to issue a patent for mineral lands under a non-mineral land law, or if they issue such a patent fraudulently or through a mere inadvertence, a bill in equity, on the part of the Government, will lie to annul the patent and regain the title, or a mineral claimant who then had acquired such rights in the land as to entitle him to protection may maintain a bill to have the paten tee declared a trustee for him; but such a patent is merely voidable, not void, and cannot be success fully attacked by strangers who had no interest in the land at the time the patent was issued and were not prejudiced by it.") l* Helca Mining Co. v. Atlas Mining Co., 92 Idaho 476,445 P.2d 225 (1968). ,4ccort/Ames v. Em pire Star Mines Co., 17 Cal. 2d 213, 110 P.2d 13, 16 (1941) (an agricultural patent is conclusive as to the character of the land as against mining claims subsequently located, but such a patent, “ issued merely on the basis of an ex parte hearing on behalf of the claimant to the land, can in no way abrogate the existing vested extralateral rights of parties who had nothing to do with the proceedings"); Chicago Quartz mining Co. v. Oliver, 75 Cal. 194, 16 P, 780 (1888), 17 Burke v, Southern Pac. R.R., 234 U.S. 669 (1914). See Wyoming v. United States, 255 U.S. 489 (1921). See also Northern Pac. Ry., 56 L,D. 201, 203 (1937) (the land department may inquire into the mineral character of railroad land at any time prior to the issuance of patent), as to the date for determining when the rights of a nonmineral claimant vest so as to prevent subsequent mineral claimants from acquiring extralateral rights. Some cases hold that the date of issuance of the nonmineral patent controls,1* while others follow the rule governing mineral patents and hold that the rights of the nonmineral claimant vest once he has done all that he was required to do to receive legal title.19 The specific language in the patents involved and the statutory authority for those patents are important in determining the relative rights of mineral and non mineral patentees. Although most nonmineral grants and patents are in absolute terms and typically transfer to the patentee all unknown veins, lodes, and miner als within the boundaries of the land,20 the language of a particular grant or pa tent should always be consulted for a reservation of minerals. In addition, the legislation authorizing the patent or grant should be consulted because the stat ute controls, and reservations required by statute are effective whether or not expressed in the patent.21 [3] Intersecting Veins The Mining Law of 1872 provides that: Where two or more veins intersect or cross each other, priority of title shall govern, and such prior location shall be entitled to all ore or mineral contained within the space of Davis's Adm'rv. Weibold, 139 U.S. 507 (1891) (the patent to a townsite location is conclusive as to the character of the land as against mining claims subsequently located); Reeves v. Oregon Explor. Co,, 127 Or, 686, 273 P. 389, 392 (1929) (a patent issued under the Timber and Stone Act "is conclusive upon all third parties whose rights did not attach before a patent was issued"). In both bases a mineral entry was made subsequent to the nonmineral patent, and, therefore, it was unnecessary to hold that the nonmineral patentee's rights vested prior to patent issuing in order for the nonmineral patentee to prevail. The Davis case, however, states at p. 528 that, "proceedings for the acquisition of title to a mining claim within a townsite, commenced before the issuance of a townsite patent, could undoubtedly be prosecuted to completion afterwards," and also asserts at p. 521: "There must be some point of time, when the character of the land must be finally deter mined, and, for the interest of all concerned, there can be no better point to determine this question than at the time of issuing patent." It is clear in Davis that the date of patent is considered the date when rights vest in a nonmineral patentee. 19 Wyoming v. United States, 255 U.S. 490 (1920) (nonmineral character of school grant lands de termined and rights vested when lands selected even though minerals were subsequently discovered prior to issuance of nonmineral patent); Amador Medean Cold Mining Co. v. South Spring Hill Cold Mining Co., 36 F, 668, 669 (C.C.N.D, Cal. 1888) (the equitable title to agricultural lands vests in the purchaser immediately upon ihe lawful entry, payment of purchase money, and issue of certifi cate of purchase thereon and cannot be defeated by subsequent mineral grants), See § 12.02(5], supra. 20 Such purported grants are ineffectual against prior valid unpatented mining claims to the extent that extralateral rights in the claims are vested. Hecla Mining Co. v. Atlas Mining Co., 92 Idaho 476, 445 P.2d 225 (1968) (nonmineral patent purporting to grant all rights to the subsurface area, including mineral rights without regard to apexes of veins or lodes, did not negate vested extralateral rights). 21 See § 9,02, supra. See Chapter 9, supra, for comprehensive discussion of federal reserved miner al interests. intersection; but the subsequent location shall have the right-of-way through the space of intersection for the purposes of the convenient working of the mine.“ A basic difficulty in applying this statute is the wide variation and unconventional patterns of most veins and lodes which defy ready classification as intersecting or crossing veins.23 The statute clearly applies where there is an intersection, which ideally involves the crossing of two vein segments resembling the letter “X/' but this is in contrastto a uniting which involves three vein segments resem bling the letter "Y."24 A determination of intersection is always a question of fact which involves the position of the strike, dip, and other physical characteris tics of the vein.25 An intersection can exist within the meaning of the statute even though it is geologically impossible to tell one intersecting vein from the other, as when there is a difference in age and hence an uncertainty as to which vein in fact cuts across the other.26 Exacting geological tests and determinations are unnecessary, however, in that title to the "ore or mineral contained within the space of an intersection" is granted by statute to the prior location.27 In considering the nature and extent of a junior locator's right of way through the "space of intersection," a question arises whether the statute applies to inter sections on the strike as well as on the dip of a vein. The statute is clearly applica ble to dip intersections. The senior locator takes the ore in the "space of intersec tion," subject to a right of way in the nature of an easement in the junior locator to go through the intersection28 and take ore on the dip of his vein.29 The latter's 2a30U.S.C.§41 (1982). 23 E. DeSoto & A. Morrison, Mining Rights on the Public Domain 177,178 (16th ed. 1936): "The U.S. Mining Acts concerning lode claims are based on the supposition or theory that a lode is a straight vein whose course can be redily ascertained and indicated by a straight line or a series of straight lines; and that occasionally such a vein is crossed by another in a similar straight line, merely requiring the right of way to give each claim its proper lode. But in fact the lode is rarely a straight line; it is seldom to be traced without confusion for more than a few hundred feet; and in its course other veins are absorbed into it; and offshoots (not only spurs, but perhaps better developed veins than itself) run about it; and in its extension downward, it invariably dips laterally; and often shows a fork of which both parts approach the surface; and it will divide, and may or may not unite at another point; and it will abut suddenly upon country rock and so be thrown far to one side; and instead of showing distinct lines, mineral veins are as irregular, as disproportioned in length and width, as much intermingled, though on a larger scale, as are the veins in a block of marble." 24 5et?§ 37.05(4], infra. 25 See Empire Star Mines Co. v. Butler, 62 Cal. App. 2d 466, 145 P.2d 49, 62 (1944). 2« Id. "(I]t seems apparent that, while the words 'intersect' and 'intersection' are used to describe the geological process by which one vein cuts across another of earlier formation, in which sense a time element inheres in the use of these words, that they were not used with that limited meaning in the statute___ The statute was designed to regulate subsurface ownership, rather than to describe geological development." 2* See id, at 61-62. 2* Twenty-One Mining Co. v. Original Sixteen to One Mine, Inc., 255 F. 658 (9th Cir, 19191; Water- vale Mining Co. v. Leach, 4 Ariz. 34, 33 P. 418, 422 (1893) ("the ore within the space of intersec tion" is the body of ore contained within "the foot and hanging walls of one lode extended in a general course of that (ode, and the foot and hanging walls of the intersecting lode extended upon its general course"). right is confined to a right of way to drift through, with no estate in, the vein crossed, and all ore must be left as the property of the crossed lode claimant.30 It also seems clear that although the statute speaks of "two or more veins," the same rule applies to a dip intersection of two locations made upon different por tions of one vein.31 With regard to the intersection of the strikes of two veins with conflicting loca tions made over each, there has been confusion as to the application of the stat ute. Early Colorado cases interpreted the statute to both grant a junior locator a right to the portion of his vein within the senior location's boundaries and a right of way for the purpose of its excavation.32 The supreme courts of Arizona33 and California34 rejected the Colorado interpretation of the statute on the basis that under the Mining Law of 1872 the senior locator had by statute35 already acquired the exclusive right to possess the ground covered by his location and all veins which apex within it. This approach was subsequently adopted by the Colorado Supreme Court in overruling its prior decision.36 The court went on, however, to interpret "space of intersection" in the statute to mean the "inter section of the claims," and found that the statutory provision operates to reserve an easement that allows a junior locator a right of way across the senior location.37 The decision was affirmed on review by the United States Supreme Court which agreed with the finding of a right of way but reserved its ruling as to its extent.38 29 Empire State-ldaho Mining & Dev. Co. v. Bunker Hill & Sullivan Mining & Concentrating Co., 121 F. 973 (9th Cir, 1903); Davis v, Shepherd, 31 Colo. 141, 72 P. 57 (1903). 30 Pardee v. Murray, 4 Mont. 234, 2 P. 16 (1882); Watervale Mining Co. v. Leach, 4 Ariz. 34, 33 P. 418 (1893); Wilhelm v, Silvester, 101 Cal, 358, 35 P. 997 (1894); Calhoun Gold Mining Co. v. Ajax Gold Mining Co., 27 Colo. 1, 59 P. 607 (1899), aff'd, 182 U.S. 499 (1901). 31 SeeC . Costigan, Mining Law % 120 (1908), "The principle of the statute covering lodes crossing on the dip is applied, on the theory that the statute is simply declaratory of that law of mining which would apply in the absence of a statute." 32 Hall v. Equator Mining Co„ 11 F. Cas. 222 (C.C.D. Colo, n.d.) (No. 5,931); Branagan v. Dulaney, 8 Colo. 408, 8 P, 669, 671 (1885). See also Pardee v. Murray, 4 Mom. 234, 2 P. 16 (1882). 33 Watervale Mining Co. v. Leach, 4 Ariz. 34, 33 P. 418, 422 (1893) ("The statute does not in any place contemplate a crossing of locations,''). 34 Wilhelm v. Silvester, 101 Cal. 358,35 P. 997, 998 (1894) (inclining towards the view that the statute only applies to intersections on dip). 3* 30 U.S.C, § 26(1982). 3« Calhoun Gold Mining Co. v. Ajax Gold Mining Co., 27 Colo. 1, 59 P. 607, 613, 616 (1899). 37 Id. at 615. 3* Calhoun Gold Mining Co. v. Ajax Cold Mining Co., 182 U,S, 499, 505 (1901); "Section 2336 [30 U.S.C. § 41 ] does not conflict with § 2322 [30 U .S.C § 26], but supplements it. Section 2336 imposes a servitude upon the senior location, but does not otherwise affect the exclusive rights given the senior location. It gives a right of way to the junior location. To what extent, however, there may be some ambiguity; whether only through the space of the intersection of the veins, as held by the Supreme Courts of California, Arizona and Montana, or through the space of intersection of the claims, as held by the Supreme Court of Colorado in the case at bar. It is not necessary to determine between these views. One of them is certainly correct, and therefore the contention of the plaintiff in error is not correct, and, more than that, it is not necessary to decide on this record,” (ReI.19-12/8* Pub.010) [4] Uniting Veins The Mining Law of 1872 provides that "where two or more veins unite, the oldest or prior location shall take the vein below the point of union, including all the space of intersection."39 It has been uniformly ruled in vein junction cases that the senior locator takes the entire vein below the point of union,40 including forks and other splits below the junction into which the vein might later divide.41 The rule of priority of location applies even though a junior locator has been granted a prior patent.42 If two veins unite on their dip and enter into a third mining claim, the third claimant has no right to the veins.43 Whether a junction actually exists is a question of fact, and the same consider ations apply as for intersections.44 Sufficient doubt as to the existence of a junc tion will defeat the assertion that there is one, and it is not necessary to show as a defense that the vein structure is an intersection or otherwise.48 If a junction is shown to exist, however, the junior locator may take the ore in his vein to the boundary of the union, and there is no duty to leave a barrier of ore for the convenience of the senior locator.46 The statute's provision does not apply to veins uniting on the strike, and such veins belong to the senior location in which they apex.47 [5] Conflicts on Different Portions of the Same Vein Two or more mining claims may be staked upon a single vein without conflict ing because their end lines may be placed so that, when projected in the direc tion of the dip, they do not cross and include extralateral territory belonging to the other claim. Conflicts as to extralateral rights on a single vein can arise, » 3 0 U .S .C . § 41 (1932). 40 Calhoun Cold Mining Co. v. Ajax Cold Mining Co., 182 U.S. 499 (1901); Little Josephine Mining Co. v. Fullerton, 58 F, 521, 522 (8th Cir. 1893); Consolidated W yo. Gold Mining Co. v. Champion Mining Co., 63 F, 540 (C.C.N.D. Cal. 1894); Watervale Mining Co. v. Leach, 4 Ariz. 34, 33 P. 418 (1893); Wilhelm v. Silvester, 101 Cal. 358, 35 P. 997 (1894); Stinchfield v. Cillis, 96 Cal. 33, 30 P. 839 (1892); Rico-Argentine Mining Co. v. Rico Consol. Mining Co., 74 Colo. 444, 223 P. 31 (1923). 41 Empire Star Mines Co. v. Butler, 62 Cal. App. 2d 466, 145 P,2d 49, 56-57 (1944). 42 See Champion Mining Co. v. Consolidated Wyo. Gold Mining Co., 75 Cal. 78,16 P. 513 (1888). See also Little Josephine Mining Co. v. Fullerton, 58 F. 521 (8th Cir. 1893); Consolidated Wyo. Cold Mining Co. v. Champion Mining Co., 63 F. 540 (C.C.N.D. Cal. 1894); Lee v. Stahl, 13 Colo. 174, 22 P. 436 (1889); Anaconda Copper Mining Co. v, Pilot-Butte Mining Co., 51 Mont. 443, 153 P. 1006(1915). 43 Roxanna Gold Mining & Tunneling Co. v. Cone, 100 F. 168 (C.C.D. Colo. 1899). 44 See § 37.05(3], supra. 45 Clark-Mont. Realty Co. v, Butte & Superior Copper Co., 233 F, 547, 559 (D. Mont. 1916). See also Keely v. Ophir Hill Consol. Mining Co., 169 F. 601 (8th Cir. 1909). 4« Empire Star Mines Co. v. Butler, 62 Cal. App. 2d 466, 145 ,P.2d 49, 82-83(1944). 47 Book v. justice Mining Co., 58 F. 106 (C.C.D. Nev. 1893); Lee v. Stahl, 13 Colo. 174, 22 P. 436 (1889). however, if the end lines of two locations are laid at such angles to each other that their extensions in the direction of the dip cross each other. This may occur it the strike of the vein is ¡regular, or even if the strike is straight if the end lines of the locations are laid at an angle, perhaps because the direction of the strike was misapprehended. The general rule applicable to the crossing of extralateral rights on the dip of a vein is that priority of location governs as to the conflict area, so the senior locator prevails.48 It is also recognized that a junior locator has the right to follow his vein to the point of conflict, that he has an easement through the conflict area, and that he is entitled to extralateral rights in the extension of his vein be yond the point of conflict.49 This is true even when a junior locator's extralateral plane of rights is wholly bisected by the senior locator's extralateral plane.50 The right of a junior locator to his vein beyond the conflict area obtains from a literal reading of the statute that possessory rights in veins are granted "throughout their entire depth" between the end lines of a location.51 While an easement through the conflict area is not given by the statute, granting such an easement is consistent with the portion of the statute applicable to cross lodes,52 providing the same result for one vein as for two. 4« Argentine Mining Co. v, Terrible Mining Co., 122 U.S. 478 (1887). See § 37.05[3J, supra. ♦9 Bunker Hill & Sullivan Mining & Concentrating Co. v. EmpireStale-ldaho Mining & Dev Co 134 F. 268 (C.C.D. Idaho 1903); Empire State-ldaho Mining & Dev. Co. v. Bunker Hill & Sullivan Minina & Concentrating Co., 121 F. 973 (9th Cir. 1903); Empire State-ldaho Mining & Dev. Co. v Bunker Hill & Sullivan Mining & Concentrating Co., 114 F. 417 (9th Cir. 1902). A ccord Davis v Shepherd 31 Colo. 141, 72 P, 57 (1903). Empire State-ldaho Mining & Dev. Co. v. Bunker Hill & Sullivan Mining & ConcentratinaCo 121 F. 973, 976 (9th Cir. 1903). 5130 u.s.c. § 26 (1982). Even if it were supposed that the junior locator has no right of easement through the conflict area, that would be a mere inconvenience to the junior locator and not a limita tion upon his title beyond the area of conflict. 5* 5ee§ 37.05(3), st/pra, The easement granted by the statute in the case ofcross lodes, or intersect- ing veins, is declaratory of the mining law and “ would probably be recognized in the absence of a statute.. . Empire State-ldaho Mining & Dev. Co. v. Bunker Hill & Sullivan Mining & Concentrat ing Co., 121 F. 973, 977 (9th Cir, 1903). Since the government owns title to all of the land and all of the vein, grants of a portion to /4 and a subsequent portion to 8 would be subject to the rule relative to private conveyances that a right of access is reserved even though not explicitly stated. See Montana Mining Co. v. St, Louis Mining & Milling Co,, 204 U.S. 204, 218 (1907), THE LAW OF THE APEX-A CONTINUING ENIGMA John L. Neff Witherspoon, Ktllay, Dovinpori & Tool• Spofcan«, Woihingfan On M ay 10, 1972, the basic federal location law fo r mining claims on the public domain passed its centen nial, with little public notice. Although the 1872 statute, which was an amendment of the 1866 statute, is relatively b rie f, it has spawned lite ra lly hundreds o f litig a te d cases since its enactment. The most puzzling part of the statute is the section which grants to the locator rights which are commonly known as extralateral rights. For the lawyer trained in common law concepts of property the idea of delineating property rights by the vagaries of geologic formations comes as a distinct shock. Although at a cursory glance the statute makes a modicum of sense, a detailed review of the concept of extralateral rights creates a feeling that somehow a prehistoric mon ster has survived. The law of the apex has left us a fascinating historical legacy, and has left its imprint on the western mining camps. Perhaps the most famous of the battles over con flicting claims to mining rights, principally under the apex concept, were those conducted by F. Augustus Heinze in the Butte District, and by Charles Sweeny in the Coeur d’Alene Mining District of Idaho. The cases arising out of these contests, together with the Leadvxlle cases, settled many of the more obvious problems with the apex law. The intensity of these battles was such that it was reported that at one time Heinze had 133 lawsuits confi pending in the courts, and that litigation dockets in thè Silver Bow County, Montana, were so crowded with min geoli ing cases that ordinary private suits were delayed as appr long as seven years. During the peak of his effort Heinze was reported to have had 37 lawyers working for him Hist< fu ll tim e . 1 It was reported that in 1902 Charles Sweeny had more than thirty cases pending involving the Ward- In ner area of the Coeur d ’Alene Mining District.2 in tl proa traci HISTORY AND EARLY DEVELOPMENT cabli Before discussing the rules which were evolved in the ing ; courts following enactment of the 1872 statute it is ap M ill propriate to review the history of the concepts which whic apparently gave rise to the statute, although the actual C ity considerations involved in enactment of the statute are velo still obscure. 186C peri Pre-1872 claii tres The development of property rights in mineral de ing posits has taken two essentially divergent directions. The posi first of these is the one which is most familiar to the està common-law system, that of granting mineral fights by wor designation of areas of the surface. Under this approach, w or a grant, lease, or other mining right, can be dealt with rigb as property limited by surface boundaries, with the right min to mine for minerals anywhere within the boundaries. upo: The other basic approach is one of granting mining tion rights to a specific geologic structure, or specific vein or but ore body. W ith the almost infinite variety of geological duri t : • Glassock, The War of the Copper Kings, 258 (1935). 2 Fahey, The Ballyhoo Bonanza, 156 (1971). This book contains a o f t good account of the apex litigation in the Wardner area of the Coeur d'Alene Mining District. zq had 133 law suits configurations which can be presented, depending upon igation dockets in the type of mineral deposit, its geologic history, and crowded with min- geologic environment, the problems created by the latter s were delayed as approach are manifold. )f his effort Heinze < working for him History Prior to 1866 02 Charles Sweeny ivolving the Ward- In the United States, in disposing of mineral deposits X D is tric t.2 in the western public lands, Congress tried different ap proaches, including leasing and auctioning off mineral tracts. However, there was no general approach appli ELOPMENT cable to all public lands until enactment of the first min rere evolved in the ing law in 1866. F o llo w ing discovery o f gold at S u tte r’s 72 statute it is ap- M ill in 1848, there was a general rush to C alifo rn ia , he concepts which which was followed by discovery of gold in the Central ilthough the actual C ity-B lackhaw k D is tric t in Colorado in 1858, and de of the statute are velopment of the Comstock Lode in Nevada in the early 1860’s. It is not necessary to review the history of this period in detail, but it is necessary to note that the claimants of minerals in the public lands were legally trespassers during the development of all of these min its in mineral de ing areas. In the course of development of mineral de cent directions. The posits in the mining camps, local legislative bodies were :>st fam iliar to the established, without statutory authority, which developed : mineral rights by working rules for the organized mining camps. It is note tider this approach, worthy that the miners in their approach to mining can be dealt with rights adopted the practice of dividing up rights in a iries, with the right mineral deposit based upon the mineral in place, and not in the boundaries, upon an area of surface land. The concept of appropria f granting mining tion by the discoverer, not of a particular area of land, or specific vein or but instead of a mineral deposit, became well established riety of geological d u rin g the era o f 1848 to 1866.3 There has been much speculation regarding the origin 58 (1935). . This book contains a of the approach taken by the early western miners, but rdner area of the Coeur 3 See 1 LindXey on Mints §$ 40-48 (3d ed. 1914). it is impossible to trace with exactness the origin of the If the vein descends v boundaries similarly d- concepts. Included in the rights claimed by the early vein inclines, the boun miners was the so-called “ dip right,” which gave the clined. The owner alwa^ miner the right to follow his vein on its dip indefinitely, the width of the meer, f so long as he could follow it down on its dip. Lindley into the earth. suggested in his treatise that the origin of the “ dip The practice, as described right” might have been in the early German customs, or lines for the claim which in the practices in Derbyshire, England. fro m the vein as it was The early German practices are best described in De This is a distortion from Re Metallica, which was originally published in twelve approach to mining rig! volumes in Latin in 1556, liberally illustrated with wood proach, but it did give tl cuts. The author of the books was George Bauer, whose covered, with the right to pen name was Georgius Agricola. Agricola’s books were together with a defined b the standard European mining texts for over 200 years, vein. were published in ten editions in three languages, and In his translation of were translated into English by Herbert C. Hoover wrote extensive footnotes (later President of the United States) and his wife, to be mining law, tracing the published in The Mining Magazine, London, in 1912. The charter of the Town of I books were republished in one volume in 1950 by Dover Hoover observed “ Lest Publications, Inc., in the United States. Apex Law was a sin origi In Book IV , Agricola describes the mining practices in tion that it was made us Saxony, around the famous mining center of Freiburg, before Agricola, who will in detail. Basically the practice was to permit free pros precision.” Mr. Hoover pecting in unclaimed lands, and in the event of discovery practices in Derbyshire, . of a vein, a public official, the Bergmeister, reviewed Norman occupation, and the finding and granted the locator his rights of dis English Law, but that thi United States directly fr< covery in the form of a mining claim. The size of the statutory adaptation of tl claim depended upon whether he was the first discoverer, camps did not involve a or whether he had acquired rights along the vein after limited to a location of th* the original discovery, the discoverer obtaining a larger sary surface niva a> might claim. The claims, which were denoted “ meters,” were surprisingly similar to the pattern which ultimately de The Location Law of 18d veloped in the United States, and provided for what must be considered the predecessor of extralateral rights. In The need for a nat rights in the public lands his description of the rights of the discoverer (or loca obvious for many years tor) Agricola recites: ness the origin of the If the vein descends vertically into the earth, the claimed by the early boundaries similarly descend vertically; but if the vein inclines, the boundaries likewise must be in ?ht,” which gave the clined. The owner always holds the mining right for on its dip indefinitely, the width of the meer, however far the vein descends n on its dip. Lindley into the earth. e origin of the “ dip The practice, as described by Agricola, provided for side y German customs, or lines for the claim which remained a constant distance 'land. from the vein as it was followed downward on its dip. best described in De This is a distortion from either a straight geographical 7 published in twelve approach to mining rights or a straight mineral ap illustrated with wood- proach, but it did give the locator the vein he had dis George Bauer, whose covered, with the right to follow it downward on its dip, Agricola’s books were together with a defined buffer zone on either side of his ts for over 200 years, vein. three languages, and In his translation of De Re Metallica, Mr. Hoover H e rb e rt C. H oover wrote extensive footnotes in regard to the history of the es) and his wife, to be mining law, tracing the so-called “ dip right” to the , London, in 1912. The charter of the Town of Iglau adopted in 1249 A.D, Mr. ume in 1950 by Dover Hoover observed “ Lest the Americans think that the tates. Apex Law was a sin original to themselves, we may men he mining practices in tion that it was made use of in Europe a few centuries (g center of Freiburg, before Agricola, who w ill be found to set it out with great s to permit free pros- precision.” Mr. Hoover indicated that he believed the the event of discovery practices in Derbyshire, England, were the result of the Bergmeister, reviewed Norman occupation, and not a natural development of tor his rights of dis English Law, but that the American concept came to the claim. The size o f the United States directly from Germany. However, the pre- as the firs t discoverer, statutory adaptation of the concept in the western mining < along the vein after camps did not involve a surface area, but was instead ror obtaining a larger limited to a location of thè mineral only, with such neces noted “ meers,” were sary surface area as might be required to permit mining. i w hich u ltim a te ly de* rovided for what must The Location Law of 1866 extralateral rights. In The need for a national policy regarding mining te discoverer (or loca- rights in the public lands of the United States was quite obvious for many years prior to 1866, but enactment of a statute had been foreclosed by basic differences in opin Colorado and U ion regarding whether discovery should be the rule or lines were irapo whether some revenue-producing scheme should be surface land wc adopted. Finally the first location law was enacted in 1866, similar to the la constituting a great victory for the western senators in Court, contrary Congress. In a fascinating example of Congressional the 1866 act, fo ! maneuvering, the first location law was enacted under the title to a bill which had been introduced to grant a right- The Act of Ma) of-way to ditch and canal owners in California .4 There was ai The mining law of 1866 provided, in part: affecting placer That no location hereafter made shall exceed 200 feet which constitute in length along the vein for each locator, with an ad know it today w ditional claim for discovery to the discoverer of the lode, with a right to follow such vein to any depth, important provi with all its dips, variations and angles, together with in g law have sui a reasonable quantity of surface for the convenient These are Secti working of the same as fixed by the local rules. . . . 30 U.S.C. §§ 23 In addition, at the time of applying for patent the locator claims and defir was required to file a drawing of the surface claimed, of locators. Un which at least in theory did not need to include any of the provided that ‘ mineral, as long as it included surface lands required for quartz or other working the claim. It will be noted that the additional bar, lead, tin, c claim allowed to the discoverer of the lode bears a strik may be located, ing sim ilarity to the rights accorded the discoverer under exceed 1,500 fe* the ancient German practices described by Agricola. shall not extend A conflict developed between the courts of California m iddle of the vi and Nevada and the courts of Colorado and Utah regard vides for pnrall ing the proper interpretation of the 1866 act, which was pattern of the c finally resolved by the United States Supreme Court. similar to the cl California and Nevada both followed the pattern devel text, i ’¡aims are oped at the Comstock Lode, that of drawing a lode line lodp, ami provid« through the district, and measuring rights on the lode be middh* <>f the veh tween lines perpendicular to the district lode line, lim it T in 1 -»'otion e> ing the dip right between the perpendicular lines.5 The provhi''- for excl of th*‘ surface v, * See Gates, History of Public Land Law Development 711-721 (1068). ® Generally see, Kenny, The Law o f the A p ex 3^-38 (1914). « Ihui ic differences in opin- Colorado and Utah courts took the view that the surface lould be the rule or lines were important, and that the assumption was that scheme should be surface land would be claimed on each side of the lode, tr was enacted in 1866, similar to the later 1872 act. The United States Supreme western senators in Court, contrary to the most reasonable interpretation of )le o f Congressional the 1866 act, followed the Colorado and Utah courts.8 /as enacted under the iced to grant a right- The Act of May 10, 1872 C a lifo rn ia .4 , in p a rt • There was an amendment to the mining law in 1870 affecting placer claims, but the important amendment hall exceed 2 00 feet which constitutes the backbone of the mining law as we locator, with an ad- know it today was the Act of May 10,1872. The two most e discoverer of the vein to any depth, important provisions of the 1872 amendment to the min igles, together with ing law have survived to the present without amendment. for the convenient These are Sections 2 and 3 of the act (now codified as the local rules. . . . 30 U.S.C. §§ 23 and 26), which provide for location of for patent the locator claims and define the right to possession and enjoyment the surface claimed, of locators. Under the location section, Section 2, it is . to include any of the provided that “ mining claims upon veins or lodes of ice lands required fo r quartz or other rock in place bearing gold, silver, cinna d that the additional bar, lead, tin, copper or other valuable deposits . , . he lode bears a strik- may be located, with the limitation that claims shall not the discoverer under exceed 1,500 feet in length along the vein or lode, and :>ed by Agricola. shall not extend more than 300 feet on each side of the courts of California middle of the vein at the surface. This section also pro ado and Utah regard- vides for parallel end lines. It might be noted that the 3 1866 act, which was pattern of the claims established by the 1872 act is quite ates Supreme Court, similar to the claim practice outlined by Agricola in his ed the pattern devel- text. Claims are measured by distance along the vein or f drawing a lode line lode, and provide for a surface buffer on each side of the rights on the lode be- middle of the vein, which must be measured at the surface. ^trict lode' line, lim it- The section establishing possessory rights, Section 3, endicular lines.® The provides for exclusive right of possession and enjoyment of the surface within the lines of the claim, and Caw Development 711-721 >ex 33-38 (1914). « Ibid. [ 0 ] f a ll veins, lodes, and ledges throughout their en of the earliest publishi tire depth, the top or apex of which lies inside of contained in the Repor such surface lines extended downward vertically, al transmitted to Congr though such veins, lodes, or ledges may so far depart from a perpendicular in their course downward as Hayes on February 25, to extend outside the vertical side lines of such sur a number of public lan face locations. But (the locators’) right of possession through the years. In to such outside parts of such veins or ledges shall be mission issued a circulg confined to such portion thereof as lie between verti including the question cal planes drawn downward as above described, the top or apex of a veil through the end lines of their locations, so continued in their own direction that such planes will intersect persons in all walks ^ such exterior parts of such veins or ledges. judges, indicated almc the proper definition o The 1872 act was broad enough to permit a number of given including “ the hi interpretations. Perhaps the most logical interpretation the dictionary definitioi would have been to apply the concepts of the Freiburg vein. ” 7 I t is easy to un District, and permit a “ rake” claim, permitting the lo fused since the term “ e cator to follow downward on dip with a buffer zone 300 ute and was not in comr feet on each side of the vein. Although this is a reasonable In perhaps the first interpretation of the statute, it appears never to have the statute, as amended been considered in the cases. had formerly been Ooi Due to the history of the 1866 act perhaps the next delivered a paper to tl most logical interpretation would have been to stress the Engineers in 1884 revic importance of the vein or lode, making the surface area of the apex to that tim. ancillary to the lode by requiring proof of apex. This cer lished, is 57 pages long, tainly would have been rational In view of the emphasis on the 1872 act He rep which developed regarding discovery of mineral in place. .3 had not been officially The third possible interpretation, the one which ulti copies of jury instruct: mately prevailed, was one in which the claim to a de sources. It is noteworth scribed area of land is preeminent, and considerations extralateral rights in tl of the vein or lode are secondary. eminently un i th e ir en- of the earliest published reviews of the apex law is that inside of contained in the Report of the Public Lands Commission, ically, al transmitted to Congress by President Rutherford B. a r depart Hayes on February 25, 1880. This commission was one of nw ard as a number of public land law review commissions created such sur- lossession through the years. In evaluating the apex law the com s shall be mission issued a circular containing a series of questions, een ve rti- including the question “ What do you understand to be iescribed, the top or apex of a vein or lode?” Answers received from continued persons in all walks of life, from practical miners to intersect judges, indicated almost complete confusion regarding the proper definition of “ apex.” Various answers were t number of given including “ the highest point of the vein,” which is erpretation the dictionary definition of apex, and “ the outcrop of the ie F re ib u rg vein. 5,7 It is easy to understand why the public was con ting the lo- fused since the term “ apex” was not defined in the stat er zone 300 ute and was not in common usage. i reasonable In perhaps the first comprehensive private review of ,rer to have the statute, as amended, Dr. Rossiter W, Raymond, who had formerly been Commissioner of Mining Statistics, ps the next delivered a paper to the American Institute of Mining o stress the Engineers in 1884 reviewing the development of the law urface area of the apex to that time. Dr. Raymond’s paper, as pub ix. This eer lished, is 57 pages long, and is perhaps the first true text ie emphasis on the 1872 act.8 He reported on a number of cases which ral in place, had not been officially reported at that time, obtaining which ulti- copies of jury instructions from newspapers and other im to a de- sources. It is noteworthy that by 1884 the contenders for usiderations extralateral rights in the Leadville District had been so eminently unsuccessful that Dr. Raymond was led to comment that “ the lot of a Leadville locator is truly not a happy one.” After an extensive review of the concepts >ms than it in the 1872 act he concluded that since the grant of the been settled 7 This is set out in Raymond, The Law of the Apex, in X II Trans ere are still actions of the American Institute of Mining Engineers 413-415 (1884). lesired. One » Id. at 387-444. e x tralateral right was an extraordinary one, it was only Although not a jud fair to construe its conditions strictly. For purposes of tion, because of his e: historic interest it might be noted that Lindley attributed ment of the law. Cur the coining of the term “ extralateral ” to Dr. Raymond.9 ing camp of Marysvi The term is non-statutory, and does not appear in the the bar in California literature prior to Dr. Raymond’s 1884 paper. amended. His princi text, Lindley on Min< Judges Who Made the Law tions, in 1897, 1903, e arly m ining cases tc A handful of western federal judges did more to shape text, even in the eari the mining law, and particularly the apex law, than is gen preme Court erally realized. These judges deserve a great degree of . 10 credit for evolving a pragmatic, workable solution to the problems in the mining camps under adverse conditions, JUDICIAL INTERPI not the least of which was an obscure statute. It should Although once in a be noted that during the early period of the 1872 statute ated Congress for en. transportation was poorly developed in the west, and the ern judges did their federal judges moved from court to court, undoubtedly they found it. The co largely by stagecoach and horseback. It is not unusual in the arena of the west the case reports to find the federal judge from Colorado the statute’s history deciding a case in Nevada, or the federal judge from Ne concepts, although t vada deciding a case in Montana. The judges who had the present. most impact include Stephen J. Field, a circuit court judge from California; Moses Hallett, of Colorado; James Presumption of Owi H. Beatty, of Idaho; Thomas P. Hawley, of Nevada; and The relationship oi Hiram Knowles, of Montana. In order to understand the location and the righ difficulties under which these judges labored it must be the apex were exceec recognized that some of them were not law school grad previously indicated uates, and the most usable source of law available to Freiburg District ap most was one of the sets of commentaries on Blackstone in a reported case, j then extant. Nonetheless, the mining law bears the stamp of the trial judges more than is true in most areas of the 10 E.g.. St ii 27 98 U.S. 463 (1879). 28 Eg., K ing v. Amy & Silversmith Copper Min. Co., 152 U.S. 222 (1894); Silver K ing Coalition Mines Co. v. Conkling Min. Co., 250 U.S. 18 (1921). tate Office of U.S.B.L.M. Fed. Cas. No. 13,413 (1879). j The typical textbook upon mining law is replete with U nited States f illustrations of possible configurations of the relationship Co. v, Clark-M of a vein to end lines and side lines. As a practical matter, that the priori! in dealing with apex litigation, the classic textbook illus senior dip loca trations become an oversimplification because the diffi apex location, down dip throi culty is often in defining the configuration of the vein or The second c lode at the surface in the first instance. ior and senior Junior vs. Senior Locations claimants hold d ip going dow The problem of priority of claim, based solely upon resolved by th date of location, has several different manifestations in provides that the area of the apex law. The first of these is when the space of inters senior locator has located on dip, without encompassing right-of-way t'. the apex, and a later locator actually covers the apex in his downward his location. Judge Hallett of Colorado, who deserves The third c< most o f the credit, or blame, as the case m ay be, fo r the senior and jur presumption of ownership by the surface owner, first sug of a common ^ gested in a case heard while he was sitting in Nevada in way the end li 1880 th a t a location made on the dip m ig h t be v a lid against flict. The solut a claim located at a later date higher up on the vein .30 He full extralaten was willing to give the earlier locator the right to pursue extralateral ri downward outside of his claim lines, but was not willing cept fo r that p( to cut off the earlier location made on dip in favor of the ation by the sc later location made on the apex. In the Nevada case he did not apply his concept, but did clearly apply it the next The Broad Loc year in a case in Colorado, Vanzandt v. The Argentine M ining Co.31 In that case Judge H a lle tt instructed the Once Justice jury that the senior location on dip prevailed against the dreds of feet a junior location on the apex. If Judge Hallett *s view had the broad lode prevailed subsequent litigation would have been much lode which is so simplified, because the disputes would largely have been lino of a clain resolved by reference to the dates of location. though the Ut; Judge Hallett’s view did not obtain a substantial fol lowing, and the question was finally resolved by the 32 -’!!> U.S. 12 33 Empire Stati Co., 121 Fed. 973 30 Iron Silver Min. Co. v. Murphy, 3 Fed. 368 (D. Nev. 1880). 34 X. 13 supra. 3« 8 Fed. 725 (Cir. Ct. D. Colo. 1881). -NSTITUTE United States Supreme Court in Butte & Superior Copper ining law is replete with Co. v. Clark-Montana Realty Co.32 in 1919. The court held ations of the relationship that the priority of location had no effect, even though the les. As a practical matter, senior dip location had been patented prior to the junior the classic textbook illus- apex location, and that the owner of the apex could mine fication because the diffi- down dip through the senior location on the dip. nfiguration of the vein or The second configuration causing conflicts between jun istance. ior and senior locators is that of locations in which both claimants hold a valid apex claim, and the veins cross on dip going downward. This is one of the few questions claim, based solely upon resolved by the statute, in 30 U.S.C. § 41, which clearly fferent manifestations in provides that the senior location prevails through the first of these is when the space of intersection, but the junior locator shall have the ip, without encompassing right-of-way through the space of intersection to reach tually covers the apex in his downward extension. Colorado, who deserves The third configuration is the one in which both the the case m ay be, fo r the senior and junior locators have located along the strike g surface owner, first sug- of a common vein, but under circumstances in which the was sitting in Nevada in way the end lines are laid out causes a sub-surface con dip might be valid against flict. The solution has been to give the senior locator his igher up on the vein .30 He full extralateral rights, and to give the junior locator his ocator the right to pursue extralateral rights defined by his end lines extended, ex lines, but was not willing cept for that portion of the vein subject to prior appropri ade on dip in fa v o r of the ation by the senior locator.33 s. In the Nevada case he d clearly apply it the next The Broad Lode nzmult v. The Argentine ge Hallett instructed the Once Justice Field determined that a lode could be hun dip prevailed against the dreds of feet across in the E u reka case,34 the problem of Fudge H a lle tt’s view had the broad lode was created. The broad lode is simply n would have been much lode which is so wide at the surface that it crosses the >u!*■ would largely have been line of a claim, or may cross over several claims. AI es of location, though the Utah Supreme Court had expressed a view obtain a substantial fol- finally resolved by the 32 249 U.S. 12 (1919). 33 Empire State-Idaho Min. & D. Co. v. Bunker Hill & S. Min. & T Co., 121 Fed. 973 (9th Cir. 1903). Fed. 308 (D. Nev. 1880). 34 N. 13 supra. 0. th a t when a broad lode existed no claimant had extralat have had an und< eral rights ,38 when the question reached the United States structure appearc Supreme C o u rt in 1907, in Lawson v. United States Min Court of Nevada.' ing Co,,39 it was held that the senior location prevailed, regarding how th< obtaining the entire width of the vein on its dip. As a to the surface lin< corollary of this rule and an extension of it, in the litiga The difficulty w tion conducted by Sweeny in the Wardner area of the and demonstratin Coeur d ’Alene Mining District over the Bunker H ill lode, reliance is to be x the court held that the junior locator could pick up the first to define the excess of the broad lode not encompassed within the end fissure-type vein-i lines of the senior locator.37 This is only logical since if be established by the senior locator did not encompass the portion of the fault or dike. In lode in question, the junior locator would in fact have vein does not reac prior rights. presents a real pi on fissure-type ve: Blind Apex line and disappea: this type of vein Textwriters have commonly referred to the concept of assume an arbitr an underground or blind apex as a real possibility under m inim um w idth oj the law. In e arly cases there was sometimes an instruction eral. In more diff by the trial judge regarding the possibility. However, the mineralized limes decided case law on underground or blind apexes is de off is the only f qi cidedly limited. may well be litiga In an early contest between a tunnel locator and a sur underground apej face claimant, the United States Supreme Court38 held definitive. I t can that the surface claimant owned all veins which apexed proof and the burc within surface boundaries, without demonstrating how the o f decided cases. b lin d apex could be determ ined. In the 1917 case o f J im Butler Tonopah Mining Co, v. West End Consolidated Conflicts of a No M ining Co.30 a structure was in contest which appears to Prior to tho.ear mittinir >intry for 38 G rand Central Mining Co. v. Mammoth Mining Co., 29 Utah 490, oludod lands valu; 83 Pae. 648 (1905). 30 207 U.S. 1 (1907). was actually issue 37 N, 33 supra. eral or non-miner 38 Calhoun Gold Min. Co. v. Ajax Gold Min. Co., 182 U.S. 499 (1901). ” 247 U.S. 450 (1918). 40 30 NVv 375, 158 no claimant had extralat- have had an underground apex. A cross section of the reached the United States structure appeared in the case report in the Supreme son v. United States Min- Court of Nevada.40 There is no illuminating information senior location prevailed, regarding how the relationship of the underground apex the vein on its dip. As a to the surface lines was determined. tension of it, in the litiga The difficulty with the blind apex is defining the apex te Wardner area of the and demonstrating its location in regard to endlines. If Dver the B unker H ill lode, reliance is to be placed upon a blind apex it is necessary locator could pick up the first to define the apex, and then to locate it. In a typical compassed within the end fissure-type vein it might well be that a blind apex could lis is only logical since if be established by proving that the vein was cut off by a mpass the portion of the fault or dike. In the absence of this, assuming that the cator would in fact have vein does not reach the surface, the dying out of the vein presents a real problem. In some districts, going up-dip on fissure-type veins, the veins simply contract to a hair line and disappear. In order to establish a blind apex on this type of vein it would appear that it is necessary to referred to the concept of assume an arbitrary cut off point, either by defining a is a real possibility under minimum width of vein, or else a minimum grade of min 3 sometimes an instruction eral. In more diffuse type mineralization, such as in the • possibility. However, the mineralized limestone deposits, presumably a grade cut nd or blind apexes is de- off is the only feasible approach to a blind apex. There may well be litigation in the future on the question of the . tunnel locator and a sur- underground apex, but the cases decided to date are not os Supreme Court38 held definitive. It can only be assumed that the difficulty of )d all veins which apexed proof and the burden of persuasion account for the dearth of decided cases. out demonstrating how the In the 1917 case o f J im . West End Consolidated Conflicts of a Non-Mineral Title i contest which appears to Prior to the early part of the century all statutes per mitting entry for non-mineral purposes expressly ex uraoth Mining Co., 29 Utah 490, cluded lands valuable for minerals. Thus, until a patent was actually issued under these entry statutes the min eral or non-mineral character of the land could be ques Id Min. Co., 182 U.S. 499 (1901). 40 39 Nev. 375, 158 Pac. 876 (1916). tioned. However, once a non-mineral patent was issued it was generally held to be conclusive upon the mineral THE IDE character of the land, thus preventing incursion into the land under a claim of extralateral rights.41 However, as The principal a point of interest it might be noted that in a number of located and defi: areas of known mineral value the government granted lines, relate to homestead patents subject to extralateral rights of ad arising out of tl joining mining claimants. v, Ckeeseman c identical. Rights Obtained The requirem* by mine workinj Once an apex has been established and mining has taken same vein or lo< place to demonstrate that the vein or lode passes through workings in the a sideline, the question of how the extralateral extension ture, id e n tity is of the ore body can be reached becomes important. In the such evidence as case o f St. Louis Mining <& Milling Company v. Montana As was indici Mining Company?2 decided in 1904, the U n ite d States continuity is a r Supreme Court took a very narrow view of the right tity can be est granted. The question presented was whether the apex faults is approv claimant could drift through country rock to reach his long as id e ntity downward extension, and thus mine upward, or was re The contest i: stricted to his vein. The court, in a very impractical solu is the matter of • tion of the problem, limited the apex claimant to mining Of course the I downward on dip, staying within the confines of his vein test of the pract or lode. This rule was relaxed somewhat by the Ninth Cir fixed the law foi cuit Court of Appeals in Twenty-One Mining Co, v. Orig must be satisfied inal Sixteen to One Mine,43 decided in 1920. The circuit views were tak- court indicated that if the vein was so crooked or narrow it is easy to und» that it could not be economically worked within its own in g in the case : confines, the apex claimant could excavate such shafts, Court of Appea stations, or pockets, and chutes as were necessary to work court refused t< the vein. This is not a liberal rule, and the right to mine of a known vein on an extralateral extension is still quite limited. labeh'il the proj See 2 American Law of Mining $ 6.39 (1971). ** N, 21 supra, «194 U.S. 235 (1904). 48 22 Colo. App. 43 265 Fed. 547 (0th Cir. 1920). rUTE EVIDENTIARY PROBLEMS il patent was issued ve upon the mineral tg incursion into the THE IDENTITY—CONTINUITY PROBLEM ights.41 However, as The principal evidentiary problems, once the apex is that in a number of located and defined in relationship to the claim boundary government granted lines, relate to the twin tests of identity and continuity lateral rights of ad- arising out of the concepts of the Iron-Silver Mining Co. v, Cheeseman case.44 The problems are related but not identical. The requirement of identity is that the mineral exposed by mine workings at two different points is all part of the and mining has taken same vein or lode. In the absence of exposure by actual ■ lode passes through workings in the intervening portion of the mineral struc xtralateral extension ture, identity is a factual question to be established by nes important. In the such evidence as may be admissible on the point. 7ompony v. Montana As was indicated in the Iron-Silver Mining Co, case, 4, the United States continuity is a requirement which need not be met if iden vv view of the right tity can be established. Thus, minor interruptions by as whether the apex faults is approved in the Iron-Silver Mining Co. case so ry rock to reach his long as identity can be established. > upward, or was re- The contest in this area, and a very current problem, •ery impractical solu- is the matter of quality of proof of identity and continuity. x claimant to mining Of course the Iron-Silver Mining Co. case established a 3 coniines of his vein test of the practical miner, and at least arguably that case hat by the Ninth Cir- fixed the law for all time to come, and the practical miner e Mining Co. v. Orig- must be satisfied. Under this concept some rather extreme l in 1920. The circuit views were taken. A noteworthy case, partially because so crooked or narrow it is easy to understand and contains a cross-section draw orked within its own ing in the case report, is a 1912 decision of the Colorado xcavate such shafts, Court of Appeals. Collins v. Bailey.40 In that case the ■re necessary to work court refused to permit a projection between exposures ind the right to mine of a known vein over a vortical distance of 550 feet, and luite limited. labeled the projection as simply conjecture and specula 44 N. 21 supra. 48 22 Colo. App. 149, 125 Pac. 543 (1912). tion. The court indicated that to conclude that there was one continuous vein between the two points was little short of absurd, and that “ we can find no case wherein Whatever arm such a wild guess has been accepted as proof. In fact the which have the most that can be said in favor of such a conclusion is from future fedt that it is the opinion of an engineer.” rights are firmlj date, and w ill coi As a practical matter at the present time, in planning exhaustion of mi operations mining companies make long projections, has been resolv* either to serve as a basis for exploration activity or to District, by cons serve as the basis of planning actual mine workings. The The same cannot question of whether the practical miner will continue to mining extends < be the test, or whether modern technology demands a lower levels, extr change in the law, is yet to be clearly resolved by the ap plexing problem, pellate courts. It is suggested that the lron-8ilver Mining ous exploration i Co, case is still the definitive law, and there may be re Idaho has been luctance in the courts to establish a more liberal view deeper. In prope: than that of the United States Supreme Court in that wide, in a district case, even though the case was decided in 1886. A t this must be consider point there are extensive and comprehensive geologic re of the problem b views, many prepared by the federal government, of most in that particula: of the major mining districts, which should give more sup been of veins wh port to longer projections, and the development of tech ously, the probh nology in the industry which might be applied to this agreement, o r eh problem has advanced rapidly. There are techniques such pensivo litigation as use of trace elements, induced polarization, and other Most of the pro similar exploration techniques which may have applica meats m the mii tion. In addition, the question of proving continuity be rights for mining tween exposures in mine workings by use of diamond they presumably • drill intercepts is a very current problem. A case relying rights. This, of c heavily upon diamond drill interceptions to bridge a long existing .-hums. S projection has not yet reached the appellate courts. A l procr-duf'' similar though proof by diamond drill cores undoubtedly does law in ■ _ra n| to not reach the dignity of proof by actual mine workings, sortim ; .h i existing such evidence should be valuable in lim iting the length of necessary projections and assist in proving identity be 48 Fryklsind, Ore L tween actual exposures of a vein. County. I ¡.¡ho, L’.S.G. lude that there was FUTURE PROBLEMS o points was little Whatever amendments may be made to the mining law nd no case wherein which have the effect of abolishing extralateral rights is proof. In fact the from future federal grants of mining rights, extralateral uch a conclusion is » rights are firm ly attached to all valid locations made to date, and w ill continue to plague the mine operators until it time, in planning exhaustion of mineral from existing claims. The problem • long projections, has been resolved the simple way in the Butte Mining ation activity or to District, by consolidation of ownership under one title. nine workings. The The same cannot be said of most mining districts, and as ter will continue to mining extends deeper, and exploration is conducted at mology demands a lower levels, extralateral rights w ill continue to be a per resolved by the ap- plexing problem. Since the Second W orld W ar most seri Iron-Silver Mining ous exploration in the Coeur d'Alene Mining District of d there may be re- Idaho has been conducted at depths of 3,000 feet and more liberal view deeper. In properties which are only two or three claims •erne Court in that wide, in a district in which muchmineral appears in what ed in 1886. A t this must be considered as fissure-type veins, the magnitude iiensive geologic re- of the problem becomes clear. It has been observed that ;overnment, of most in that particular district many recent discoveries have ould give more sup- been of veins which have no surface expression.4® Obvi 3velopment of tech- ously, the problem has to be resolved by pre-mining be applied to this agreement, or else create an exposure to extremely ex are techniques such pensive litigation. irization, and other Most of the proposals which have been made for amend may have applica- ments to the mining laws would eliminate extralateral v in g co n tin u ity be- rights for mining rights acquired in the future, although )y use of diamond they presumably would be subject to existing extralateral lem. A case relying rights. This, of course, does not1 resolve the problem of >ns to bridge a long existing claims. Some consideration has been given to a ipellate courts. Al- procedure similar to the 1955 amendments to the mining undoubtedly does law in regard to surface rights, in which claimants as lal mine workings, serting an existing extralateral right in unpatented claims liting the length of roving identity be- 4« Fryklun Even when the to the gold rush ■ and 1850’s, sent» tions of governrr of the nation’s at the national 1 the West. Thest preme Court in » (1865) where th< We cannot shi in fo rm s us tha ritorial), not tional liovernr 'uf • -.,.1 . 1885; IKON SILVER MDONO CO. v. CHEESMAN. 38»: Syllabru. Western States produc® of which is intended fo r m States. Certainly, as Is whioh produce them, f the State. A nd so we jave entered upon their T h f in joing into another State. e Daniel Ball, 10 W all, is begun to move as an >ther, commerce in that commenced.” B ut this idea have been shipped r iS rS S ir * i one State to the other.. vehicles, or even floating y is to commence is no iminary work, performed r in a state of preparation itil actually launched on . to a common carrier for ination is ffot fixed and a disposed of w ithin the .ortation out of the State, ■est, to the dep6 t, is only i m w m * 8-i entirely w ithin the State, p the purpose, of putting 0 part of the exportation i a final journey out of the Affirmed. ether in fieri, and not at to the present case is ob- nd the tax on which was IRON SILVER MINING c o m p a n y * CHEESMAN Sew Hampshire, had not, & Another. 1 on their final voyage or «a»» to the onto™ ooraT o* the m states fob the tad only been drawn down DISTRICT OP COLORADO. he place from which they ■ in the State of Maine, Argued December a , « , 1885-Decided January SB, 1888 should be convenient to ay come precisely w ithin [W i > 'V IRON SILVER MINI* I Opinion of the Court. Opinion of to possess and enjoy that lode or vein by following it when it passes outside 9 i t asserted under a patent from of those vertical line# laterally. But this right is dependent, outside of the lateral limits of the claim, upon its was commenced in the Circuit being the same veinTui that within those limits. For the exercise of this the D istrict of Colorado. The ! right it must appear that the vein outside is identical with and a continua the plaintiff, to the vein at the p< I tion of the one inside those lines. they did not assert a claim unde The acts of Congress use the words vein, lode, or ledge as embracing a more or less continuous body of mineral, lying within a well-defined boundary of proceedings under the mining la other rock, in the mass within which it is found, or, it may be said, to be a tified their possession, unless °plai body of mineral, or a mineral body of rook within defined boundaries inthia There were three trials by jury general mass. in a verdict in favor of the defem A vein is by no means always a straight line or of uniform dip or thickness, or richness of mineral matter, throughout its course. The cleft or fissure in a new trial ordered under the sta which a vein is found may be narrowed or widened in its course, and even the unsuccessful party in such iw olosed for a few feet and then found further on, and the mineral deposit second trial. The second trial may be diminished or totally suspended for a short distance, but, if found jury, and on the third trial thi again in the same course with the same mineral within that distance, its defendants. I t is to review the ji identity may be presumed. But if the mineral disappears, or the fissure with its walls of the same rook dis diot that the present w rit of erroi appears, so that its identity can no longer be traced, the right to pursue it The plaintiff relies on the ao outside of the perpendicular lines of claimants’ survey is gone, ^ owner of a mineral vein covered Whether any deposit of mineral matter, about which a contest arises before a court or jury, has been shown to belong to one of these veins within a prior claim may not only pursue that location, is a question to be decided by the application of these principles to those lines, but may, when the veil all the evidence in the case. of this claim or survey, pursue tha When the court instructs the jury in a manner sufficiently clear and sound aa vertically from the superficial sk to the rules applicable to the case, it is not bound to give other instructions tends. asked by counsel on the same subjoct, whether they are correct or not.^ In pursuit of what is asserted to This was an action in ejectment to recover possession of min on which its patent is located, but eral lands in Colorado. The facts which make the case are of its sidelines, the Iron Silver Mi: stated in the opinion of the court. it called the Lime lode and minin w ith defendants, who wore workin Mr, Walter H. Smith and M r. G. G. Symea for plaintiff in the Smuggler. Of course the d error. sion, could only be deprived of tl superior title in the plaintiff. As Mr. G. 8. Thomas for defendants in error. M r. T. M . P at plaintiff’s patent, when extended v terson was with him on the brief. deposit, did not include the piece . jectof this controversy, plaintiff c. M b. Justice M iller delivered the opinion of the court. ing that this was a part uf the sam The Iron Silver Mining Company brought its suit in the cover, which, passing I'mm his side nature of an action of ejectment against Walter S. Cheesman, tion of that vein as ¿rim > 11„. rig-ht t Walter S. Clarke, and Thomas Bennett, to recover possession I t seems to have b.-rii . «»needed t l of a part of a vein or lode of mineral deposit, the right to which the case, that if plaintiff mold estab T ERM , 1885. IRON SILVER MINING CO. CHEESMAN. 53I if the Court. Opinion of the Court, " ; ein by following it when it passes oatsid« it asserted under a patent from the United ft**« , vu >f the lateral limits of the claim, upon its was commenced in the Circuit fW f T ^ 6 actl°a bin those limits. For the exercise of this the Distriot of Colorado Th« rJpf a + mtet* States for 1 outside is identicai with and a continu*. the plaintiff, to the veki at the n l ? ** denied the titIe ° f ein, lode, or ledge as embracing a more or they did not assert a claim under a p a te n f^ /ld “ )? th°Ugh lying within a well-defined boundary of proceedings under the rainino- law« £ ! t V r y shovv such rich it is found, or, it may be said, to be a tmeU their possession, J - / of rook within defined boundaries iu this ght line or of uniform dip or thickness, - in ave 6diItT n tT Jf4 S ''yin T T ^ ^ aughout its course. The cleft or fissure in a new trial o m I" ^ tttS " te c T 7 “ d rowed or widenod in its course, and even the unsuccessful partv in «noh *• Colorado, which gives found further on, and the mineral deposit tended for a short distance, but, if found second trial Tlfe second Wal°fa^Wl k abS° 1Ute right to thia he samo mineral within that distance, its jwy, and on the third trial t h e reaS°n ° f a dh’ided defendants. I t is to reviow Hi* * a WaS a£am ^or the fissure with its walls of the same rock dis- a., a. „j “ *“■ no longer be traced, the right to pursue it ■ of claimants’ survey is gone, tter, about which a contest arises before a belong to one of these veins within a prior jd by the application of these principles to \ a manner sufficiently clear and sound as 3 , it is not bound to give other instructions )iect, •whether they are correct or not. J ment to recover possession of min- ie facts which make the case are ;ourt. it called the Ltae lode and minfno."^ "bat M r. G. 0 . Symes for plaintiff iu sion, could only be d T rk e d of ■ '**& ia P°SSeS- indants in error. Mr. T, M. Pat- mef, ^red the opinion of the court. Company brought its suit in the aent against W alter S. Cheesman, tuas Bennett, to recover possession mineral deposit, the right to which ■^i3BSBaaKS5Bai OCTOBER TERM , 1885. m IRON SILVER Mil Opinion of the Court. Opinion, c tin uity of his Lim© lode, so a3 to make the defendants* Smug, The act of Congress which gler lode identical with it, he was entitled to recover; and on plaintiff claims is in the folio the other band, if-he did not do this, he had no right to the . Statutes: Smuggler lode, which was in that case a different lode, outside “ Seo. 2322. The locators o f; of the vertical extension of plaintiff’s side lines. made, or which shall hereafter This involved the consideration of the true definition of a lode, or ledge, situated on the lode or vein as used in the acts of Congress on the subject, and assigns, where no adverse claim under what circumstances of continuity and of interruption a eighteen hundred and seventy, vein may be followed in the surrounding rock in which it is with the laws of the United S t found, so as to preserve its identity. and local regulations, not in conJ On this subject a large mass of testimony was given to the btates governing their possessor jury, and to this point the charge of the court was directed. right of possession and enjoym« If there were exceptions taken to the admission of any of within the lines of their locatioi this evidence, or to the refusal to admit other evidence, no as ledges throughout their entire d signment of error is based upon such admission or refusal; but lies inside of such surface lines < the errors assigned relate solely to the charge given by the although such veins, lodes, or le. court to the jury, and to the refusal to give twenty-eight several perpendicular in their course do instructions asked by the counsel of plaintiff. the vertical side lines of such surf As we have already said, the only question for the jury, the of possession to such outside part one on which their verdict depended, was whether plaintiff had be confined to such portions th identified the Lime lode or vein, and traced it continuously planes drawn downward, as abo' from its connection, inside of the lines of its patent, as the same lines of their locations, so continc vein in which defendants were working under the name of the such planes w ill intersect such e Smuggler lode. ledges. And nothing in this sect As the charge of the court was very full and clear as to the or possessor of a vein or lode wl rules of law by which this was to be determined, there is no course beyond the vertical lines c occasion to inquire into the soundness of each of the twenty, surface o f a claim owned or posse eight propositions of plaintiff on the same subject. I f any of I t is obvioua that the vein, Jodi these propositions were covered by the charge made by the tor may have “ the exclusive ria court, there was no obligation on the judge to repeat it in the m ent’Ms one whose apex is foui language of counsel. If there was a conflict in the law as laid extended vertically; and this rig down by the court and that requested by plaintiff’s prayer for in extending downward it may° instructions, the correctness of the charge of the court is raised and extend laterally outside of tl by the exceptions to that charge, and can be best considered in face location. these exceptions. Clymer v. Dawkins, 3 How. 674, 689; What constitutes a lode or vein M ills v. Sm ith, 8 Wall. 27; Indianapolis St. Louis Railroad no easy thing to define. Tn this t Co. v. Horst, 93 U. S. 291; Continental Improvement Co. v. been given. On the circuit it has Stead, 95 U. S. 161. Justice Field, in the Eureka Case Opinion of the Court irt » the defendants’ Smug The act of Congress which confers the right under which plaintiff claims is in the following language of the Revised gled to recover *, and on , he bad no right to the Statutes: “ S e o . 2322. The locators of all mining locations heretofore 5 a different lode, outside made, or which shall hereafter be made, on any mineral vein, side lines. I the true definition of a lode, or ledge, situated on the public domain, their heirs and igress on the subject, and assigns, where no adverse claim exists on the tenth day of May, ity and ot interruption a eighteen hundred and seventy-two, so long as they comply ling rock in which it is w ith the laws of the United States, and -with state, territorial, and local regulations, not in conflict with the laws of the United itimony was given to the States governing their possessory title, shall have the exclusive ,he court was directed. right of possession and enjoyment of all the surface included the admission of any of within the lines of their locations, and of all veins, lodes, and ait other evidence, no as- ledges throughout their entire depth, the to‘p or apex of which adraisaion or refusal; but lies inside of such surface lines extended downward vertically, the charge given by tho although such veins, lodes, or ledges may so far depart from a . give twenty-eight several perpendicular in their course downward as to extend outside the vertical side lines of such surface locations. But their right ilaintiff. question for the jury, the of possession to such outside parts of such veins or ledges shall was whether plaintiff had bo confined to such portions thereof as lie between vertical id traced it continuously planes drawn downward, as above described, through the end of its patent, as the same lines of their locations, so continued in their own direction that ng under the name of the such planes w ill intersect such exterior parts of such veins or ledges. And nothing in this section shall authorize the locator ■y full and clear as to the or possessor of a vein or lode which extends in its downward be determined, there is no course beyond the vertical lines of his claim to enter upon the surface of a claim owned or possessed by another.” iss of each of the twenty- , same subject. H any of I t is obvious that the vein, lode, or ledge of which the loca the charge made by the tor may have “ the exclusive right of possession and enjoy , judo'e to repeat it in the ment ” is one whose apex is found inside of his surface lines conflict in the law as laid extended vertically; and this right follows such vein, though in .extending downward it may depart from a perpendicular 4 by plaintiff’s prayer for and extend laterally outside of the vertical lines of such sur large of the court ia raised I can be best considered \n face location. W hat constitutes a lode or vein of mineral matter has been »Mns, 3 How. 674, 689; tolis&St. Louis Umlrood no easy thing to define. In this court no clear definition has mtal Improvement Co. V. been given. On the circuit it has been often attempted. Mr. Justice Field, in the Eureka Case, 4 Sawyer, 302, 311, shows $34 OCTOBER TERM, 1885. IBON SILVER Mfl Opinion of the Court, Opinion that the word irfio t always used in thé same sense by scien- | are found in what, when the tiflo works on gçôîôgy and mineralogy, and by those engaged stitute clefts or fissures in t in the actual working of mines. A fte r discussing these sources defined wall above and belt of information, ha-says : Porphyry on one side, above u It is difficult to give any definition of the term as under* other. stood and used in the acts of Congress which w ill not be sub i So long 83 these enclosing ject to criticism. A fissure in the earth’s crust, an opening in I tinuously traced, and the min- its rocks and strata made by some force of nature, in which found between them, there ca the mineral is deposited, would seem to be essential to a lode vein. But sometimes the clc in the judgment of geologists. But, to the practical miner, the called in raining parlance the fissure and its walls are only of importanco as indicating the be scarcely perceptible. Sora boundaries w ithin which he may look for and reasonably fissure disappears entirely and expect to find the ore he seeks. A continuous body of a little further on. Again it ; mineralized rock lying w ithin any other well-defined bounda mg and superposing country i ries on the earth’s surface and under it, would equally consti ceases to be found, but, followi tute, in his eyes, a lode. W e are of opinion, therefore, that the very soon. term as used in the acts of Congress is applicable to'any zone I t also happens that both fisi or belt of mineralized rock lying within boundaries dearly and are found no more in th separating it from the neighboring rock.” off, or so deflected from the o This definition has received repeated commendation in other part of that vein. cases, especially in Stevens v, Williams, 1 McCrary, 480, 488, Of course it is sometimes eas" where a shorter definition by Judge Hallett, of the Colorado all through. I t is also easy to Circuit Court, is also approved, to w it: “ In general it may be vem is run o u t; is ended. said, that a lode or vein is a body of mineral, or mineral body But there are other cases of of rock, w ithin defined boundaries, in the general mass of the is one, where it is a matter of mountain.” such rules for the guidance of tl This lode, ledge, or vein, which may thus be possessed and arriving at a just verdict. enjoyed outside of the lim its of the surface side lines extended "We are not able to see how vertically, must be the same vein or lode on the apex or out trial of the case could have bettf crop of which the claim of the party has been located. He than he has in the charge befo can only go outside of this imaginary perpendicular wall to are taken, and we give here vei possess or enjoy a vein which, being his inside of that artificial to this point, as found in the bill line, he has the right to follow or pursue in its extension Upon the evidence before y outside of these lines. The identity of the vein is, therefore, garded as owning the surface of essential to his right to its possession there. claimed, and all that rightfully g Now, a vein containing the precious metals is by no means law. No question is \m w nted. always a straight line of uniform dip, or thickness, or richness to the Lime location. I foldin'* of mineral matter throughout its course. Generally, the veins ment, the plaintiff must be regart Opinion of the Court. im e sense by scien- aw found in what, when the mineral is taken out of them con l by those engaged Bhtute elefts or fissures in the surrounding rook, with a ’weU- ussing these sources defined wall above and below of different kinds of rook as the terra as under- other ^ °n °De Sid6’ ab°Ve °r bel°W’ and limestone on the lich w ill not be sub ti„™ ' w “ t,hese,enoIo3in8 walls °an be distinctly and con- crust, an opening in of nature, in which foundfoundbftwTenth between them, there min6ral can be matter no doubt of thethat same it is characterthe same 9 essential to a lode la M the cleft between the enclosing rocks, practical miner, the called m mining parlance the country rook, diminishes so as to co as indicating the be scarcely perceptible. Sometimes for a short distance the for and reasonably iontinuous body of aTittle furr,hPearS “ a” 1? aDd ^ “ f° Und distinctly to exist in i °n' gal" rt 18 seen that’ thou«h the underly- velUlefined bounda- g d 3uPerP03ing country rook is there, the mineral denosft 'ould equally consti- i, therefore, that the ™ 6 f ° Und’ bUt’ f° U0WiD« »plicable to* any zone i boundaries clearly and nt° f hapr a that b0th fiSSUre and mineral 00me to an end off or n H Z r 6 m that dire°ti0n’ 0r’if found. “ ^ nraendation in other S t o “hat“ fr0m ^ °riginal liM “ t0 — “ L McCrary, 480, 488, ° ° T ‘V 8 .sometimes ^ to see that it is the same vein ett, of the Colorado aU through. It IS also easy to see in some instances that the n general it may be vem is run o u t; is ended. ¡ral, or mineral body But there are other cases of a class of which that before us general mass of the is one, where it is a matter of extreme difficulty to lay down ich rules for the guidance of the jury as will best aid them in .us be possessed and arriving at a just verdict. jo side lines extended t r i l o f \ rhnn0t ab‘e Sr I™ th6 judge who Presided at a® * on the apex or out- thnn i h Ca30“ uld haTO better discharged this delicate task s been located. He than he has m the charge before us to which the exceptions perpendicular wall to are taken, and we give here verbatim that part of it relating iside of that artificial to this point, as found in the bill of exceptions: g rsue in its extension th0 6Videu00 bef°re you’ these Parties " 6 to be re- :he vein is, therefore, garded! as owning the surface of the land by them respectivelv claimed^ and all that rightfully goes with the surface under the letals is by' no means thickness, or richness o the T ¡I“. *•19 PT ! lied “ t0 thS r,'Sht 0i the Plaintiif ment th 1 t°a on’ Holding by patent from the Govern Generally, the veins ment, tho plaintiff must be regarded as the owner of that «l.im Opinion of the Court. Opinion and all lodes and veins existing therein. The statute gives the relative and not very differei owner of a lode, tha one who may locate it at the top and apex, gives prominence to the mil the right to fo llo irit to any depth, although it may enter the boundaries. land.ad joining. A nd if the Lime location was made on a lode “ Proof of either propositic or vein which descends from thence into the Smuggler location, it may be said without proof < the right of the plaintiff to follow the lode into the Smuggler The proposition of the plainti ground and to take out ore therefrom cannot be denied. Thus, shows that a lode exists in th> the principal question for your consideration is, whether there defined. The defendants der is a lode or vein in the Lime location which extends from that turns on that question. Th claim into the Smuggler claim? If a lode is found in that territory open by the works, claim, all the evidence tends to prove that the top and apex of roents, but so intermingled ivii such lode is in that claim. There is no room for controversy not be regarded as a continue on that point. To determine whether a lode or vein exists, it of a lode or vein. A ll that h. is necessary to define those terms; and, as to that, it is enough rock in place is valuable only to say that a lode or vein is a body of mineral, or mineral-bear the existence of a crevice or 01 ing rock, within defined boundaries in the general mass of the to the other. Excluding the mountain. In this definition the elements are the body of face of the mountain, all thing! mineral or mineral-bearing rock and the boundaries; with either in place. A continuous body of these things well established, very slight evidence may be rock, extending through loose, accepted as to the existence of the other. A body of mineral fully and certainly os that w or mineral-bearing rock in the general mass of the mountain, formation; but if it ja not c so far as it may continue unbroken and without interruption, crevice or opening which is may be regarded as a lode, whatever the boundaries may be. called by that name. In that In the existence of such body, and to the extent of it, bounda and extension which is an esse ries are implied. On the other hand, with well-defined bounda Recognizing this, the plaintiff j ries, very slight evidence of ore within such boundaries will the existence of porphvry and prove the existence of a lode. Such boundaries constitute a opening between them! filled w fissure, and if in such fissure ore is found, although at consider “ The defendants sought to si able intervals and in small quantities, it is called a lode or vein. and disjointed, and the several To maintain the issue on its part, the plaintiff must prove that lode can extend from one claim a lode as here defined extends from the Lime to and into the “ I t is a question to he decid. Smuggler claim. rather than the number of wit “ Reverting to that definition, if there is a continuous body the testimony has on \ nup tnint of mineral or mineral-bearing rock extending from one claim to to you to be worthy .if belief a the other, it must be that there are boundaries to such body and that I believe, gentlrm<-n, is the ' the lode exists. Or if there is a continuous cavity or opening the case. If you timl ¡t affir between dissimilar rocks in which ore in some quantity and return your verdict IV the plaint value is found, the lode exists. These propositions are cor- will find for the defendants.” IRON SILVER m uting CO. CHEESMAN. m f the Court. Opinion of the Court. ; therein. The statute gives tha my locate it at the top and apex> relative and not very different in meaning exceufc that m a * lepth, although it may enter tbo mi- M ^ Sa 'mo location was made on a lode tence into the Smuggler location, How the lode into the Smuggler ■a ? ■ ^ “«< refrora cannot be denied. Thus, r consideration is, whether there ocation which extends from that in? I f a lode is found in that j prove that the top and apex of here is no room for controversy whether a lode or vein exists, it ms; and, as to that, it is enough >ody of mineral, or mineral-bear* claries in the general mass of the i the elements are the body of k and the boundaries; with either ed, very slight evidence may be f the other. A body of mineral general mass of the mountain, >roken and without interruption, formation, but if it Ia not continuous, or is not found in » whatever the boundaries may be. , and to the extent of it, bounda- if ~ it°iacks°the iS & f r hand, with well-defined bounda- and extension which is an essential quality of a lode or vein ore within such boundaries will ). Such boundaries constitute a opening between them, filled with vein matter. re is found, although at consider- antities, it is called a lode or vein, n , \ . e. pendants sought to show that the ground is broken art, the plaintiff must prove that and disjointed, and the several parts so intermingled that no lode can extend from one claim to the other s from the Lime to and into the mther th ^T h f0" t0Kbe“ ^ the wdght of testimony >n, if there is a continuous body S fte s tim n n v l «fatnesses; upon the effect which the testimony has on your minds, accepting that which se.mw cock extending from one claim to } are boundaries to such body and tha^TbeH, W°rtMy °f beHef Und rejectin^ the otber* And :8 a continuous cavity or opening vhich ore in some quantity and ts. These propositions are cor skk r “a'n-» * ■« 58$ ocrrOBBB T E W 188«. CENTRAL R A ILR l S y lla b u s . “ And to so much of sad charge as reada as Mowb: ‘Bat © This was a motionr if it is not continuous or ia not found in a crevice or opening allegations: which is itself continuous, it cannot be called by that name. “ That said action In that case- it lacks the individuality and extension which is delinquent taxes asse an essential quality of a lode or vein.5 To which plaintiffs Equalization of Kentu counsel then and there excepted.” tral Railroad which is I f the language here excepted to stood alone it would be cor assessments were mad rect, though possibly too general or exclusive. Certainly th& General Assembly o ft! lode or vein must be continuous in the sense that it can be A p ril 3, 1878, and ent traced through the surrounding rocks, though slight interru^ ascertaining the value tions of the mineral-bearing rock would not be alone sufficient for taxation, and for tt to destroy the identity of the vein. Nor would a short partial “ Under said act ta: closure of the fissure have that effect if a little farther on it every city, town, and ■ recurred again with mineral-bearing rock within it. And such tucky Central Railroa* is the idea conveyed in the previous part of the charge. On this, have been brought the other hand” said the judge, “ w ith well defined bounda tucky to collect said a ries very slight evidence of ore within such boundaries w ill O f course the assessraei prove the existence of a lode. Such boundaries constitute a are the suits. This is ot fissure, and if in such fissure ore is found, although at consider in the Bourbon Circuit able intervals and in small quantities, it is called a lode or against the plaintiff in affirmed by the Court o The charge seems to us to be as favorable to plaintiffs as the error, the case has beei principles we have laid down would justify. the many suits that ha "We find no error in the record, and the judgment of the pendent upon the decisi< Circuit Court ia therefore “ A ll the cases involve law. F ir st; I t is mainl road and its appurtenam towns, and counties and CENTRAL RAILROAD COMP ANT v. BOURBON contract contained in the COUNTY. limits the exercise of the tiff in error and its said p ORIGINAL MOTION IN A CAUSE FENDING IN ERROR TO THE COURT OF impairs the obligation of APPEALS OF KENTUCKY. the Federal Constitution; Submitted January as, lSSfl.-Declded February 1, 1886. sued for in this action, an Caaes in which the execution of a State revenue law has been enjoined or have no legal basis and n stayed will bo advanced only on motion of the State, or of the party claim tained in said charter lira ing under the law, and on proof that the operations of the State govern its said property for Stat. ment will be embarrassed by the delay. on every one hundred doll L o c a l Government New sletter Column Editors: Victoria M. Bunsen Denver—825-6444 Michael J. Heydt Colorado Springs—578-6670 Amendments to the Colorado Governmental Immunity Act by Chuck Berry and Tami Tanoue The Governmental Immunity Act (“Act")1 H.B. 1196 for the A ct.14 Perhaps because the Act orig originally was enacted in 1971 after the Two important goals ofH .B. 1196 were inally was enacted in response to the Colo Colorado Supreme Court overruled the ju to “clean up” the Act and address some ju rado Supreme Court’s invitation to “restore dicial doctrine of sovereign or governmen dicial constructions which weakened the sovereign immunity and governmental im tal immunity in three separate decisions.2 effectiveness of the Act. munity in whole or in part,”1* the original The Act reinstates governmental immunity The “insurance crisis” also was an im legislative declaration contained little in from tort liability,5 provides six specified portant factor in the enactment of H.B. the way of a legislative rationale for the ex exceptions when governments and officials 1196. Newspaper articles chronicled the istence of the. Act. In recent years, some are not immune4 and sets monetary limi plight of local governments across the state attorneys have expressed concerns about tations on recovery.5 The Act applies to all experiencing cancellation or nonrenewal the ability of some provisions of the Act actions which lie in tort or could lie in tort.* of insurance policies.12 Where insurance to withstand judicial scrutiny. H.B. 1196 All public entities,7 officials and employ was available, it often was unaffordable. buttresses the Act by adding the following ees (whether elected or appointed)8 are The crisis prompted the governor to estab legislative rationale for governmental im covered by the Act. lish the Special Task Force on Tort Liabil m unity: Legislation passed over the years has ity and Insurance to investigate the causes The General Assembly also recognizes amended the Act in several areas. Most of the crisis and recommend solutions.1' that the state and its political subdivi notably, during the General Assembly’s The Colorado Municipal League also es sions provide essential public services 1985 special session, House Bill (“H .B.”) tablished a committee to make recommen and functions, and that unlimited liabil 1001 conformed the immunities and liabil dations on liability issues. ity could disrupt or make prohibitively ities of pubHc officials and emp lo y e with A third important goal of H.B. 1196 was expensive the provision of such essential those^fpuSiicentities.9 As a resutfot to ensure that the Act adequately protects public services and functions. The Gen fl, public officials and employees act public entities and taxpayers from exces eral Assembly further recognizes that ing within the scope of their employment sive or unpredictable liability, particularly the taxpayers would ultimately bear the and not willfully and wantonly also are im in a time of unavailability or unaffordabil fiscal burdens of unlimited liability, and mune from tort liability, except when the ity of insurance. Many of the recommen that limitations on the liability of pub specified exceptions for non-immunity dations of the governor’s Special Task Force lic entities and public employees are nec apply;"1 and the Colorado Municipal League were essary in order to protect the taxpayers iQVvevfr, amendments to tKe“Acrover incorporated into H.B. 1196. against excessive fiscal burdens. It is also the years have been piecemeal and until Some of the significant features ofH .B. H.B. 1196" was passed, no comprehensive 1196 are described below. However, this This month's column was written by Chuck review and update of the Act had been description is only a summary, and the en Berry, a state representative from Colorado made. In addition, some court interpreta tire bill must be read together with the ex Springs and a member of the Colorado tions of the Act appeared inconsistent with isting statutes to obtain an accurate under Springs firm of Quigley, Palermo & Natchez, the purposes of the Act or contrary to sound standing. and Tami Tanoue, Denver, staff attorney of public policy and eroded the effectiveness the Colorado Municipal League, an asso of some provisions of the Act. ciation of244 member municipalities. Law This article describes changes made to yers representing public or private clients Section J: in the areas of municipal, county and spe the Act as a result of H.B. 1196, which gen Section 1 amends the legislative decla cial or school district law are encouraged erally became effective July 1, 1986. ration to provide a public policy rationale to submit columns for publication. ¡¡94 THE COLORADO LA IVYER July recognized that public employees, wheth ice or temperature shall not by itself con sions which potentially expanded liability er elected or appointed, should be pro stitute a dangerous condition. However, for a dangerous condition on a roadway. vided with protection from unlimited lia if there is a particular dangerous accumu Wheeler v. County o f Eagle™ involved bility so that such public employees are lation of water, snow or ice and the public an injury to a person struck by a vehicle not discouraged from providing the serv entity (1) had notice of such accumulation, while walking on a roadway because the ices or functions required by the citizens (2) had reasonable time to act, and (3) failed shoulder allegedly was too narrow and or from exercising the powers authorized to use "existing means available to it” to blocked by trees and bushes. The Court or required by law .16 remove the particular dangerous accumu held that, by not constructing a sidewalk It should be noted that one area of par lation, such accumulation may be found to along a county road, the public entity may ticular concern from a constitutional per constitute a dangerous condition. have breached its duty to maintain a road spective. the monetary liability limits in Section 2 also addresses the status of way safely. The bill addresses this new po the A ct.1' recently was resolved by the volunteers acting on behalf of public enti tential liability by limiting a dangerous con Colorado Supreme Court. In Lee v. Colo ties. An authorized volunteer, defined as dition on a roadway to that which occurs rado Dept, of Health,'* the court unani “a person who performs an act for the bene on the paved portion of a roadway, if paved, mously upheld the constitutionality of the fit of a public entity at the request of and or on the portion customarily used for travel Act's monetary liability limits against an subject to the control of such public entity," by motor vehicles, if unpaved.51 equal protection challenge. is now clearly covered within the definition Stephen v. City and County of Denver'2 Another change made in Section 1 (and of a “public employee." In addition. Sec involved an allegation that the failure to re also appearing in Sections 2,4, 5, 8 and 15 tion 2 provides that a person sentenced to pair a turned stop sign made a street appear of the bill) is to clarify that the Act applies participate in any "useful public service," to be a “through” street and led to a colli to all actions which lie or could lie in ton, rather than only “useful public service” for sion at the intersection. The Court declined “regardless of whether that may be the type alcohol offenses pursuant to CRS § 42-4- to interpret the scope of a dangerous con of action or the form of relief chosen by a 1202(4), is not a “public employee" under dition on a roadway to be limited to “the claimant.” While this presumably was the the A c t.2’ physical condition of a road surface,” The original scope of the A ct,|1J conforming Court noted: “While this interpretation finds amendments were made to make the lan Sections 3 and 12: some support in the statute, we believe that guage consistent throughout the Act. This Prior to H.B. 1196, the Act provided it does not comport with the legislative pur change also is intended to address a Colo that if a public entity purchased insurance pose. . . The Court interpreted the waiv rado Supreme Court decision which implied for an activity for which immunity other er of immunity for a dangerous condition that damages in contract for mental suffer wise existed under the Act, the public en on a roadway to include traffic signs. ing are not subject to the Act’s protections.20 tity was deemed to have waived its immu The bill addresses Stephen by m aking it This change clarifies that, regardless of the nity.34 The Act also provided that if a pub clear that a dangerous condition on a road form in which the cause of action actually lic entity purchased insurance in excess of way is indeed limited to the physical con was brought, the Act applies if the cause of the monetary limits in the Act, then the dition of a road surface: the bill provides action could have been brought in tort. monetary limits of the insurance policy ap that a dangerous condition on a roadway plied rather than the monetary limits in the is one which physically interferes with the Section 2: Act.” Waivers of immunity or monetary movement of traffic.” The bill also pro Section 2 amends the definition of “dan limits often occurred as a result of purchas vides that a physical interference with the gerous condition" in several ways.21 The ing insurance for protection against claims movement of traffic does not include traf enumeration of the facilities in which a under federal law. The Act also had a pro fic signs, signals or markings, or the lack “dangerous condition” can exist is deleted. vision that if coverage in excess of the mon thereof. However, there are three excep This change eliminates the ambiguity re etary limits was obtained for the purpose tions. A physical interference with the sulting from the fact thatCRS § 24-10-106, of protection against federal claims and such movement of traffic may include the fail in which the term “dangerous condition” as purpose was stated in the insurance policy, ure to repair: (1) a stop sign, (2) a yield defined is used, also enumerates the facil the increased limits would apply only to sign which “reassigned the right-of-way,”” ities in which a “dangerous condition” can federal claims.26 However, this provision or (3) a traffic control signal on which con exist. Conforming changes are also made was ineffective because "federal claims flicting signals are displayed,” if such fail to § 24-10-106 {in Section 5 of the bill). In only" insurance apparently was not avail ure is a dangerous condition as defined in addition, the bill provides for a reasonable a b le .21 § 24-10-103(1).îh ness standard in the definition of a “dan One of the most important changes made Also addressed in Section 5 is the Court gerous condition.” in the bill is the removal of this connection of Appeals decision in Mason v. S ta te.'1 A dangerous condition resulting from between the purchase of insurance and Mason involved a wrongful death claim the design of a facility is also addressed. waiver of-the-Arr1? immunity2* orm one- arising from a murder by a person released The bill provides that a dangerous condi Sections 3 and TToTthe biir- from the state reformatory by the State Pa tion shall not exist solely because of the de-. provide that such waivers will no longer role Board. The Court of Appeals held that sign o f any facility, not just those facili-i occur merely by the purchase of insurance under the Act, even though individual of ties formerly enumerated in CRS § 24-10-\ but only when the governing body of a pub ficials may have common-law official im 103(1).22 lic entity chooses to make such waivers by munity, the entity comprising those indi The bill also provides that a dangerous '«solution, and then only to the extent pro- viduals— in this case the Parole Board— condition will not exist solely by virtue of vra^tHor in such resolution^ may not partake of that immunity. H.B. any design inadequacy, not just inadequacy 1196 makes it clear that where a public em of design in relation to present use. Section 5: ployee individually is immune under the Finally, Section 2 provides that the Changes were made in Section 5 to ad doctrine of official immunity, the public mere existence of wind, water, snow, dress some Colorado Supreme Court deci entity also is immune.38 Ci'CtioH 6-' fense (conforming amendments are made S e c tio n 6 addresses a number of deci- in Sections 5, 7 and 10 of the bill). In ad , s which appear to have expanded the dition, if a public entity raises the issue of Scope of duties "assumed" by public enti sovereign immunity prior to or immediate ties. Gilbert v. City o f Arvada,™ involving ly after the commencement of discovery, student struck by a vehicle while walking the bill directs the court to suspend discov home from sc^00^ held l^at a Puhlic en ery except that which is necessary to decide A c c id e n t tity's provision of school crossing guards the issue of sovereign immunity, and to de R econstruction at one time of day created a duty to provide cide such issue on motion.44 school crossing guards at other tim es o f day. S e r v ic e s , Justus v. Jefferson County School District Section 9: In c . involving a student struck by a ve Section 9 addresses some court decisions hicle while riding his bicycle home from which have eroded the effectiveness of the school, held that a public entity’s promul Act’s 180-day notice requirement. In State gation of a school handbook containing a v. Young,4' the Colorado Supreme Court policy on bicycle riding by students resulted held that the notice requirement did not be C o m p l e t e A n a l y s i s o f T r a f f i c in a duty to enforce that policy adequately. gin to run until the claimant had "a reason A c c i o e n t s In v o l v i n g t r u c k s . C a r s . P e d e s t r i a n s a n d C y c l e s Moreland v. Board of County Commis able opportunity . . . to discover the basic sioners,4' involving a person injured when and material facts underlying a claim.” Pur he fell off the deck of a faultily constructed suant to this holding, the court found that building, held that a public entity’s adop under the facts, the notice period began to tion of a building code gave rise to a duty run on the date that the claimant deduced to enforce it. the element of causation. In Nowakowski 70 W. 6TH Av e . The bill addresses the foregoing deci v. Distric t Court,4,1 the court held that com S u it e N o . 416 sions by providing that the performance of pliance with the notice requirement is not D e n v e r . C O 8 0 2 0 4 a service or an act of assistance, or the jurisdictional, but is an affirmative defense. (303) 595-9045 adoption of a policy or regulation for the The bill addresses Young by providing protection of any person’s health or safety, that the 180-day notice period begins to run shall not result in the assumption of a duty after the date of discovery of the injury, re of care where none otherwise existed. In gardless of whether the claimant then knew addition, the enforcement of or failure to all of the elements of a claim or of a cause enforce such a policy or regulation, or the of action for the injury. To address Nowa mere fact that an inspection was conducted kowski, compliance with the notice require in the course of enforcement, shall not give ments is made a jurisdictional prerequisite rise to a duty of care where none otherwise to commencing an action, not merely an BUSINESS VALUATIONS existed. affirmative defense, so that failure to com AND ANALYSIS However, a duty of care may be found ply with the notice requirement forever bars A MBR OSE/M A NA G EM EN T to have been assumed in a situation where the action,4’ ADVISORS, INC. sovereign immunity has been waived pur Section 9 also addresses the problem suant to the A ct42 and a public entity or pub noted by some public entity attorneys that 1200 Lincoln Street Suite 410 lic employee has required a person to per courts sometimes accept clearly inadequate Denver, Colorado 80203 form an act as the result of an inspection or defective notice as being in “substantial” 303/571-0111 or as the result of the application of such compliance with the Act’s notice require APPRAISAL OF TANGIBLE policy or regulation. This section also pro ments. The bill amends the provision in the AND INTANGIBLE ASSETS for vides that it is not intended to relieve a Act requiring ’‘substantial” compliance with public entity of a duty of care expressly im the notice provisions by removing the word • Litigation posed by statute, and clarifies that nothing “substantial.”JX While this amendment may • Tax Planning in the Act shall be deemed to create any duty not have the effect of requiring complete • Divorce Property Settlement of care/-’ technical compliance with the notice pro visions, it is hoped that it will make it less • E S O P s Section 8: likely for a court to find that clearly inade • Buy and Sell Agreements Section 8 addresses the problem noted quate or defective notice is acceptable. by some public entity attorneys that, at trial, In addition, this section addresses the • Compensation Plans courts sometimes declined to decide wheth problem noted by some public entity attor • Equipment Value Tax AIlocations er a public entity might be immune under the neys that when a claimant filed notice con Act until after the jury’s verdict on the ra currently with or just prior to the commence Reports are prepared by Certified tionale that, if the jury found that the pub ment of an action, this prevented the in Mgmt. Consultants and Professional lic entity was not at fault, the issue of im vestigation of the claim and precluded the Engineers munity did not need to be decided. This possible settlement prior to litigation of a CONSULTANTS TO THE LEGAL practice sometimes resulted in costly, pro meritorious claim. The bill provides for a PROFESSION AND GOVERNMENT tracted and unnecessary litigation. mandatory waiting period between the fil TAX AUTHORITIES SINCE 1975 The bill confronts this problem by spe ing of notice and commencement of an ac - EXPERT WITNESS SER VICES - cifically making sovereign immunity a bar tion. The waiting period ends when the to an action rather than an affirmative de claimant receives notice that the public en- 1196 THE COLORADO LA WYER July tity has denied the claim or when ninety Conclusion days has elapsed following the filing of no In Lee v. Colorado Dept, of Health,” tice, whichever occurs first.49 If the waiting the Colorado Supreme Court recognized period would otherwise result in the appli that there are real differences between gov cable statute of limitations running out, the ernmental and private tortfeasors. Public bill also provides for extension of the stat entities are exposed to far greater liability ute of limitations by the time required to than private individuals because of the vast Video Productions comply with the waiting period.3" array of services they provide. Unlike pri vate individuals, public entities may not Section 10: have the option of terminating high-risk Some public entity attorneys noted that Professional, accurate services or going out of business when sub exemplary or punitive damages increasing videotaping services for jected to excessive liability. When public ly are being sought based on allegations entities are subjected to excessive liability, all your needs that a public employee is acting outside the it is the taxpayer who must ultimately bear scope of employment or in a willful and the fiscal consequences. The Act recognizes Demonstrative Evidence wanton manner. In order to discourage un- these differences by providing some pro Tapes meritorious claims, Section 10 of the bill tection from and predictability to public Video Depositions provides that if a plaintiff does not substan liability. It is hoped that H.B. 1196 will Site Investigation Tapes tially prevail in a claim of willful and wan help reinforce the purposes of the Act. Settlement Documentaries ton conduct against a public employee, the Witness Training court shall award attorney fees in favor of NOTES Video Wills the public employee. However, the bill also provides that the court does not need to 1. CRS § 24-10-101 e ts e q . 2. Evans v. Board of County Commission award attorney fees if such award is deter ers, 482 P.2d 968 (Colo. 1971); Flournoy v. Call now for a mined to be “unjust."''1 free brochure or School District No. 1, 482 P.2d 966 (Colo. 1971); and Proffitt v. State, 482 P.2d 965 (Colo. sample demonstration Section 15: Section 15 clarifies that the immunities 1971). provided for public employees in the Act 3. CRS § 24-10-106(1), 4. CRS § 24-10-106( 1 )(a)-(f) and -1 18(2). 198 S. Clarkson, #306 are in addition to any applicable common- 5. CRS § 24-10-114. Denver, CO 80209 law official immunities.“ This section also 6. CRS § 24-10-105. (303) 733-8925 clarifies that a public entity may defend a 7. CRS § 24-10-103(5). public employee against a punitive damage 8. CRS § 24-10-103(4). claim, or pay or settle any punitive damage (5}55th Gen. Assembly, 1st Extraordinary claim against a public employee. The pub SesV(l985). ------. lic entity first must determine by resolution 0gCl£X2IiiM J8i that such defense, payment or settlement lT55th Gen. Assembly, 2d Reg. Sess. is in the public interest.53 (1986), signed by the governor April 29,1986. Rep. Chuck Berry (R-Colo. Springs) and Sen. Section 16: Jim Lee (R-Lakewood) sponsored the bill. Federal claims, particularly claims under 12. See, e.g., Sanko, “Insurance Costs Chok ing State, Cities," Rocky Mountain News, Sept. RONALD B. 42U .S.C. § 1983, are an area of great con cern to public entities. However, these THOMAS C.L Skyrocketing Costs Trigger Anger, Alarm,” claims are largely outside the reach of state INVESTIGATIONS Rocky MountainNews, Nov. 19,1985, at 1-B. law. On the rationale that a state law may CIVIL • CRIMINAL 13. The recommendations of the governor’s affect federal claims to the extent they are Special Task Force are found in Special Task • COMMERCIAL brought in a state court rather than a federal Force on Tort Liability and Insurance, Liabil PERSONAL INJURY court, Section 16 brings such claims within ity Insurance and the Law o f Torts in Colorado INVESTIGATIONS the purview of the Act. The bill provides: (1986). COMPREHENSIVE The provisions of this article shall apply 14. CRS § 24-10-102. PERSONAL a FINANCIAL to any action against a public entity or a 15. Evans, supra, note 2 at 105. BACKGROUND public employee in any court of this state 16. CRS § 24-10-102, as amended by H.B. INVESTIGATIONS having jurisdiction over any claim brought 1196. 17. CRS § 24-10-114. pursuant to any federal law, if such ac 18. 15 Colo.Law. 939 (May 1986)(S.Ct. ASSETS IN EXCESS OF tion lies in tort or could lie in tort regard No. 83SA414, annc'd 3/31/86). POLICY LIMITS less of whether that may be the type of 19. See, e .g ., CRS § 24-10-105, which pro ASSET DETERMINATION action or the form of relief chosen by the vided prior to H.B. 1196 that “(i)t is the intent AND LOCATION claim ant.” of this article to cover all actions which lie in or CERTIFIED LEGAL Section 18: could lie in tort regardless of whether that may INVESTIGATOR Section 18 states that H.B. 1196 became be the type of action chosen by the claimant____" 20. Trimble v. City and County of Denver, effective July 1, 1986, and applies to in 867 S. Colorado Blvd. Ste. 666 697 P.2d 716 (Colo. 1985), Denver, CO 80222 juries occurring on or after such date, ex 21. CRS § 24-10-103(1). Denver (303) 231-6196 cept that Section 14, relating to public en 22. Those formerly enumerated facilities Evergreen (303) 674-6295 tity self-insurance pools, became effective were: a public building, public hospital, jail, upon passage (April 29, 1986). public highway, road or street, public facility i in any park or recreation area maintained prevailed in the absence of the yield sign [e .g ., 43. CRS § 24-10-106.5, as added by H.B. |oCfl public entity, or public water, gas, sanita- a yield sign which changed the rule that the ve 1196. W electrical, power or swimming facility. hicle on the left yields to the vehicle on the right, 44. CRS § 24-10-108, as amended by H B d0!i CRS § 24-10-103(4). CRS § 42-4-601(2)]. 1196. 24 CRS § 24-10-104. 35. An example of a conflicting signal on a 45. 665 P.2d 108, 111 (Colo. 1983), CRS §24-10-U4(2)(a). traffic control signal would be one which dis 46. 664 P.2d 709, 711 (Colo. 1983). S; CRS § 24-10-114(2)(b). played a green light to two intersecting streets. 47. CRS §§ 24-10-109(1) and -U8(l)(a), 27, Supra, note 13 at 96-97. 36. CRS § 24-10-l06(l)(d), as amended by as amended by H.B. 1196, ?8 CRS § 24-10-104, as repealed and re- H,B. 1196. 48. CRS § 24-10-109(1), as amended by H.B. JctedbyH.B. 1196. 37. 689 P.2d 199, 201 (Colo.App. 1984), 1196. 29 CRS § 24-10-114(2), as repealed and re- cert, granted, Oct. J2, 1984. 49. CRS § 24-10-109(6), as added by H.B, JctedbyH.B. 1196. 38. CRS § 24-10-106(3), as added by H.B. 1196. 30. 666 P.2d 559, 561 (Colo. 1983). 1196. 50. CRS § 24-10-109(5), as amended by H.B. 31 CRS § 24-10-106(l)(d), as amended by 39. 694 P,2d 847, 849 (Colo.App. 1984), 1196. cert, granted. Jan. 14, 1985, 51. CRS § 24-10-110(5), as amended by H. B. h b . n 96- 32. 659 P.2d 666, 667-669 (Colo. 1983). 40. 683 P.2d 805, 807 (Colo.App. 1984), 1196. 33. The limitation of a dangerous condition cert, granted, June 25, 1984. 52. CRS § 24-10-118(4), as added by H.B. n a roadway to that which occurs on the paved 41. 15 Colo.Law. l02(Jan. 1986)(App. No. 1196, Portion, if paved, or on the portion customarily 83CA1255, annc'd 11/21/85). 53. CRS § 24-10-118(5), as added by H.B. used for travel by motor vehicles, if unpaved, 42. Such waiver would exist either under 1196. also provides further clarification on this point. the circumstances specified in CRS § 24-10- 54. CRS § 24-10-119, as added by H.B. See note 31 and accompanying text, supra. 106(1) or in a situation where immunity has been 1196. 34. Such a yield sign would be one which waived by resolution. See notes 28 and 29 and 55. Supra, note 18. changed a ‘‘rule of the road” which would have accompanying text, supra. Family Law Newsletter information should come from client coun first activity by counsel in mediation should continued from page 1192 sel first, along with legal advice. be to encourage and participate in gathering There are areas in which it is difficult to true and verifiable data. The more the par distinguish between the giving of legal in ticipants know they must share, the less vice is an opinion about how to act on or formation and legal advice. For example, time will be spent in mediation persuading use the legal information. The practice of there may be some question in the defini them to do so. law is the giving of legal advice. Most me tion of separate and marital property and in Mediation is no more effective with ig diators feel strongly th at they m ust never the definition of “best interest” of children. norant people than is negotiation. Client practice law, whether or not they are prac What about case law interpreting and mod counsel can help with appropriate apprais ticing attorneys. M any law yer-m ediators ifying the statute or the predilections of a als, business balance sheets, tax returns and maintain an active practice in both fields. particular judge or jurisdiction? At what financial statements. The more of this ma They milst not provide both services for the point does telling the mediating parties terial the participants are able and willing same client, even in succession. In this "what the judge might do” or “what most to bring in, the less needs to be generated state, the law yer-m ediator m ay not appear people are doing" slip from facilitation into within the mediation process. with the mediation clients to present the persuasion? When does this pass from The role of client counsel here may be finished agreem ent in court. necessary information into advice? The more one of persuasion than of active in It is probably unwise for the lawyer- answers at present vary with the mediator, formation gathering. Many mediation cli mediator to draft the mediated agreement and counsel would do well to discuss at the ents, brought up perhaps on too much “Perry in legal terminology and format, since this outset with client and mediator where coun Mason,” believe deeply in trial by ambush. creates the clear im pression th at the d o cu sel is expected to fit in with this particular They are convinced that the one secret fact ment will be submitted directly to the court, m ediation. they are holding about the other party or For a non-lawyer-mediator to prepare agree At its best, mediation is the facilitation about their own righteous cause will awe ments in "legalese” risks censure for prac of free will and free choice between in the judge and carry the day in court. Con ticing law w ithout a license. T he sim plest formed people. In many ways, having ac versely, they are convinced that the great route to avoiding eith er risk is to be certain tive, persuasive client counsel frees the secret they are protecting about themselves client counsel is th e first source o f legal in mediation process to be the safe, non- will have similar but opposite results if re formation and the only source of legal ad judgmental sharing of ideas for which it vealed. They will withhold such secret in vice. was designed. Counsel who is too active formation from the mediation process as a In a dissolution, the clearest example of and combative counsel will simply move guaranteed reserve for court. necessary legal information is information the win-lose arena from the courtroom to Client counsel here must help to destroy about tax consequences. No divorce or the mediation center, Being effective client these convictions or mediation cannot pro custody mediation should omit this. The counsel during mediation can be like walk ceed. The client must be told about the dis mediator must be absolutely certain the ing on a high wire. covery process and the legal sanctions if parties thoroughly understand the effect on it is not followed. In this author’s opinion, their taxes of the various options they are Advisory Counsel both litigation and mediation in this coun considering. Mediation can provide this Divorce mediation processes an enor try should be like poker, played with all the ^formation efficiently and in a way which mous amount of information. What the cards face up. 'Jakes certain the parties understand what lawyer learns through conversations with How the data are used in mediation and hear. However, it is even more effec opposing counsel or more formal discov when client counsel can expect to see it de t s if the information obtained in media ery, the mediator must see that the parties pends on the style of mediation in use in tion is a review and not a first hearing. The exchange and examine voluntarily. The that case. The so-called "structured" medi- BY REPRESENTATIVES Berry, Paulson, Singer, Fish, Allison, M.C. Bird, Grant, Hamlin, Mutzebaugh, Schauer, D. Williams, Wright, Bath, M.L. Bird, Bledsoe, Bond, Bowen, Bryan, Campbell, Gillis, Grampsas, P. Hernandez, T. Hernandez, Hume, Markert, Minahan, Moore, Philips, Romero, Swenson, Taylor-Little, and K. Williams; also SENATORS Lee, Allard, Beatty, Bishop, Brandon, Fenlon, McCormick, R. Powers, Rizzuto, Strickland, Traylor, and Wattenberg. CONCERNING THE LIABILITY OF PUBLIC ENTITIES, OFFICIALS, AND EMPLOYEES PURSUANT TO THE "COLORADO GOVERNMENTAL IMMUNITY ACT". 5® 11 enacted by t£e General Assembly of the State of Colorado: SECTION 1. 24-10-102, Colorado Revised Statutes, 1982 Repl. Vol., is amended to read: 24-10-102. Declaration of policy. It is recognized by the general assembly that the doctrine of sovereign immunity, whereunder the state and its political subdivisions are often immune from suit for injury suffered by private persons, is, in some instances, an inequitable doctrine. The general assembly also.recognizes that the supreme court has abrogated the doctrine of sovereign immunity effective July 1, 1972, and that thereafter the doctrine shall be recognized only to such extent as may be provided by statute. THE GENERAL ASSEMBLY ALSO RECOGNIZES THAT THE STATE AND ITS POLITICAL SUBDIVISIONS PROVIDE ESSENTIAL PUBLIC SERVICES AND FUNCTIONS, AND THAT UNLIMITED LIABILITY COULD DISRUPT OR MAKE PROHIBITIVELY EXPENSIVE THE PROVISION OF SUCH ESSENTIAL PUBLIC SERVICES AND FUNCTIONS. THE GENERAL ASSEMBLY FURTHER RECOGNIZES THAT THE TAXPAYERS WOULD ULTIMATELY BEAR THE FISCAL BURDENS OF UNLIMITED LIABILITY, AND THAT LIMITATIONS ON THE LIABILITY OF PUBLIC ENTITIES AND PUBLIC EMPLOYEES ARE NECESSARY IN ORDER TO TO USE EXISTING MEANS AVAILABLE TO IT FOR THE REMOVAL OF SUCH PROTECT THE TAXPAYERS AGAINST EXCESSIVE FISCAL BURDENS. IT IS ACCUMULATION AND WHEN THE PUBLIC ENTITY HAD NOTICE OF SUCH ALSO RECOGNIZED THAT PUBLIC EMPLOYEES, WHETHER ELECTED OR ACCUMULATION AND REASONABLE TIME TO ACT. APPOINTED, SHOULD BE PROVIDED WITH PROTECTION FROM UNLIMITED LIABILITY SO THAT SUCH PU8LIC EMPLOYEES ARE NOT DISCOURAGED (2) "Injury" means death, injury to a person, damage to FROM PROVIDING THE SERVICES OR FUNCTIONS REQUIRED BY THE or loss of property, of whatsoever kind, which, wotrtd—be CITIZENS OR FROM EXERCISING THE POWERS AUTHORIZED OR REQUIRED aetionabie-in-tort if inflicted by a private person, WOULD LIE BY LAW. It is further recognized that the state, its political IN TORT OR COULD LIE IN TORT REGARDLESS'OF WHETHER THAT MAY BE subdivisions, and the public employees of such public THE TYPE OF ACTION OR THE FORM OF RELIEF CHOSEN BY A CLAIMANT. entities, by virtue of the services and functions provided, the powers exercised, and the consequences of unlimited (4) "Public employee" means an officer, employee, or liability to the governmental process, should be liable for servant, OR AUTHORIZED VOLUNTEER of the public entity, whether their actions and those of their agents only to such an extent or not compensated, elected, or appointed, but does not and subject to such conditions as are provided by this include an independent contractor or any person who is article. The general assembly also recognizes the sentenced porSBant-to-3eetion-42*4-1282-{4}—E7Rr57-—19?3t to desirability of including within one article all the participate in any type of useful public service. FOR THE circumstances under which the state, any of its political PURPOSES OF THIS SUBSECTION (4), "AUTHORIZED VOLUNTEER" MEANS subdivisions, or the public employees of such public entities A PERSON WHO PERFORMS AN ACT FOR THE BENEFIT OF A PUBLIC may be liable in actions other-than-eentraet WHICH LIE IN TORT ENTITY AT THE REQUEST OF AND SUBJECT TO THE CONTROL OF SUCH OR COULD LIE IN TORT REGARDLESS OF WHETHER THAT MAY BE THE PUBLIC ENTITY. TYPE OF ACTION OR THE FORM OF RELIEF CHOSEN BY A CLAIMANT and that the distinction for liability purposes between SECTION 3. 24-10-104, Colorado Revised Statutes, 1982 governmental and proprietary functions should be abolished. Repl. Vol., is REPEALED AND REENACTED, WITH AMENDMENTS, to read: SECTION 2. 24-10-103 (1), (2), and (4), Colorado Revised Statutes, 1982 Repl. Vol., are amended to read: 24-10-104. Waiver______of______sovereign______immunity. Notwithstanding any provision of law to the contrary, the 24-10-103. Definitions. (1) "Dangerous condition11 governing body of a public entity, by resolution, may waive means the A physical condition of any-pabiie-baiiding7—pabHc the immunity granted in section 24-10-106 for the types of hospital-;—jaii-;—pabiie—highway;—road-;—or—3treet—-pebiie injuries described in the resolution. Any such waiver may be faeiiity-ioeated-in-any-park-or-reereation-ares-maintained— by withdrawn by the governing body, by resolution. A resolution 8-pabiie-entity—or-pebiie-water-;-ga3—sanitation-;-eieetrieai-; adopted pursuant to this section shall apply only to injuries power-;—or-swimming A facility where-the-physieai-eondition-of occurring subsequent to the adoption of such resolution. saeh-faciiities or the use thereof WHICH constitutes a AN UNREASONABLE risk to the health or safety of the public, which SECTION 4. 24-10-105, Colorado Revised Statutes, 1982 is known to exist or which in the exercise of reasonable care Repl. Vol., as amended, is amended to read: should have been known to exist and which condition is proximately caused by the negligent act or omission of the 24-10-105. Prior waiver of immunity - effect. It is the public entity in constructing or maintaining such facility. intent of this article to cover all actions which lie in TORT For the purposes of this subsection (1), a dangerous condition or could lie in tort regardless of whether that may be the should have been known to exist if it is established that the type of action OR THE FORM OF RELIEF chosen by the claimant. condition had existed for such a period of time and was of No public entity shall be liable for such actions except as such a nature that, in the exercise of dee REASONABLE care, provided in this article, and no public employee shall be such condition and its dangerous character should have been liable for injuries arising out of an act or omission discovered. A dangerous condition shall not exist solely occurring during the performance of his duties and within the because the design of any f a c ilit y s e t —forth—in -- this scope of his employment, unless such act or omission was sttbseet^en— {1} is inadequate, in-re^stion-to-its-present-ase-r willful and wanton, except as provided in this article. THE MERE EXISTENCE OF V4IH0, *ATER, SNOW, ICE, OR TEMPERATURE Nothing in this section shall be construed to allow any action SHALL HOT, VI ITSELF, CONSTITUTE A DANGEROUS CONDITION. which lies in tort or could lie in tort REGARDLESS OF WHETHER NOTHING IN THIS SUBSECTION (.1) SHALL PRECLUDE A PARTICULAR THAT MAY BE THE TYPE OF ACTION OR THE FORM OF RELIEF CHOSEN BY DANGEROUS ACCUMULATION OF WATER, SNOW. OR ICE FROM BEING FOUND TO CONSTITUTE A DANGEROUS CONDITION WHEN A PUBLIC ENTITY FAILS A CLAIMANT to be brought against a public employee except in compliance with the requirements of this article. PAGt 3-MOUSE 811 I NO. 1196 ..oy.r.lQ n i«*oo1ty to FOR •" injury ♦«<* **•-*«■ , condition of any unimproved property, caused by tne ndl . in a oark or section s . , ‘r/ V o 0;1^ 1^ ^ 24-10-106 (1) (t>), ( ‘i982 Real *VoT., a r i amended, and Colorado Revised Statutes. 1982Rep - AOOITION OF A NEW the said 24-10-106 is further amended BY int fluui m The operation and maintenance of any public "^ter StfS5£CriON. to read: facility gas facility, sanitation facility electrical facility, power facility, or swimming facility by such public entity, or-a-dangeroos-condition-existing-thereinr entftf ^ (2) Nothing in this section OR IN SECTION 24-10-104 ^ W s T o T ^ ' t h A ^ V ™ T??E ST a c T!«. OR .THE shall be construed to constitute a waiver of sovereign FORM OF RELIEF CHOSEN BY THE CLAIMANT except as Provided otherwise in this section. Sovereign immunity whetner immunity where the injury arises from the act, or J ^ r e previously— avai-fabie—as—a— defense oi— not?— sna?^—not Be act, of a public employee where the act is the type of act for asserted IS WAIVED fay a public entity as--a--defense m a n which the public employee would be or heretofore has been a c t i o n for-damages for injuries resulting from: personally immune from liab ility. (b) The operation of any public hospital, correctional (3) In addition to the immunity provided in subsection facility, as defined in section 17-1-102, C.R.S., 1973, of (1) of this section, a public entity shall also have the same jail by such public entity; or-a-dangerons-conditTon-extsting immunity as a public employee for any act or failure to act for which a public employee would be or heretofore has been t h e r e i n ? personally immune from liability. (d) A dangerous condition OF A PUBLIC HIGHWAY, ROAD, OR STREET which PHYSICALLY interferes with the movement of SECTION 6. Article 10 of title 24, Colorado traffic on-the-traYe-ied-portion-and-shoaiders-or-carbs ON THE Statutes, 1982 Repl. Vol., as amended, is amended BY IHfc PAVED PORTION IF PAVED, OR ON THE PORTION CUSTOMARILY USED ADDITIO n ’ q F A NEW SECTION to read: FOR TRAVEL BY MOTOR VEHICLES, IF UNPAVED, of any public highway, road, street, or sidewalk w ithin the corporate lim its 24-10-106.5. Duty of care. (1) In order to encourage of any m unicipality, or of any highway which is a part of the the provision of services to protect the public health and federal interstate highway system or the federal safety, and to allow public entities to allocate their lim ited highway system, or of any paved highway which is a part of the fiscal resources, a public entity or public employee shall not federal secondary highway system, or of any paved highway be deemed to have assumed a duty of care where none otherwise which is a part of the state highway system on that portion of existed by the performance of a service or an act such highway, road, street, or sidewalk which was designed and assistance for the benefit of any person. The adoption of a intended for public travel or parking thereon AS USED IN policy or a regulation to protect any person s health or THIS SECTICN, THE PHRASE "PHYSICALLY INTERFERES WITH THE safety shall not give rise to a duty of care on the partof a MOVEMENT OF TRAFFIC" SHALL NOT INCLUDE TRAFFIC SIGNS, SIGNALS, public entity or public employee where none otherwise ex15^ _ OR MARKINGS, OR THE LACK THEREOF, BUT SHALL INCLUDE THE In addition, the enforcement of or failure to enforce any . FAILURE TO REPAIR A STOP SIGN OR A YIELD SIGN WHICH ^ASSIGNED oolicy or regulation or the mere fact that an inspection was THE RIGHT-OF-WAY OR THE FAILURE TO REPAIR A TRAFFIC CONTROL conducted in the course of enforcing such policy or regulation SIGNAL ON WHICH CONFLICTING DIRECTIONS ARE DISPLAYED, IF SUCH shall not give rise to a duty of care where none otherwise FAILURE CONSTITUTED A DANGEROUS CONDITION AS DEFINED IN existed; however, in a situation in which sovereign immunity has been waived in accordance with the provisions of this SECTION 24-10-103 (1); article nothing shall be deemed to foreclose the assumption (e) A dangerous condition of any pab 4 ie-faei*ity 7 - e x e e p t of a duty of care by a public entity or public employee when roads-and-highways— -iocated— in— parks--or recreation *reas? the public entity or public employee requiresany person to pabiie— parking— facilities?— and— pabi-rc— perform any act as the result of such an inspection or as the faciiities-maintained-by-snch-pabiic-ent-ityr PUBLIC HOSPITAL, result of the application of such policy or regulation. JAIL PUBLIC FACILITY LOCATED IN ANY PARK OR RECREATION AREA Nothing in this section shall be construed to relieve a public MAINTAINED BY A PUBLIC ENTITY, OR PUBLIC WATER, GAS, entity of a duty of care expressly imposed under other SANITATION ELECTRICAL, POWER, OR SW IW ING FACILITY- Nothing statutory provision. in this paragraph (e) or in paragraph (d) of this subsection (1) shall be construed to prevent a public entity from PAGE 5-H0USE BILL NO. 1196 attorney general. If the claim is against any other public (2) Nothing in this article shall be deemed to create entity or an employee thereof, the notice shall be presented any duty of care. to FILED WITH the governing body of the public entity or the attorney representing the public entity. SUCH NOTICE SHALL BE SECTION 7. 24-10-107, Colorado Revised Statutes, 1982 EFFECTIVE UPON MAILING BY REGISTERED KAIL OR UPON PERSONAL Repl. Vol., is amended to read: SERVICE. 24-10-107. Determination of liability. EXCEPT AS (5) Any action brought pursuant to this article shall be OTHERWISE PROVIDED IN THIS ARTICLE, where sovereign immunity commenced within the time period provided for that type of is abrogated-as-a-defense NOT A BAR under section 24-10-106, action in articles 80 and 81 of title 13, C.R.S., 1973, liability of the public entity shall be determined in the same relatinq to limitation of actions, or it shall be forever manner as if the public entity were a private person. barred; EXCEPT THAT, IF COMPLIANCE WITH THE PROVISIONS OF SUBSECTION (6) OF THIS SECTION WOULD OTHERWISE RESULT IN THE SECTION 8. 24-10-108, Colorado Revised Statutes, 1982 BARRING OF AN ACTION, SUCH TIME PERIOD SHALL BE EXTENDED BY Repl. Vol., is amended to read: THE TIME PERIOD REQUIRED FOR COMPLIANCE WITH THE PROVISIONS OF SUBSECTION (6) OF THIS SECTION. 24-10-108. Sovereign immunity a bar. Except as provided in sections 24-10-104 to 24-10-106, sovereign immunity shall (6) No action brought pursuant to this article shall be be ava-Hable-to A BAR TO ANY ACTION AGAINST a public entity as commenced until after the claimant who has filed timely notice a-defense-to-an-actton for injury WHICH LIES IN TORT OR COULD pursuant to subsection (1) of this section has received notice LIE IN TORT REGARDLESS OF WHETHER THAT MAY BE THE TYPE OF from the public entity that the public entity has denied the ACTION OR THE FORM OF RELIEF CHOSEN BY A CLAIMANT. IF A PUBLIC claim, or until after ninety days has passed following the ENTITY RAISES THE ISSUE OF SOVEREIGN If-WUNITY PRIOR TO OR filing of the notice of claim required by this section, IMMEDIATELY AFTER THE COMMENCEMENT OF DISCOVERY, THE COURT whichever occurs first. SHALL SUSPEND DISCOVERY, EXCEPT ANY OISCOVERY NECESSARY TO DECIDE THE ISSUE OF SOVEREIGN IMMUNITY, AND SHALL DECIDE SUCH SECTION 10. 24-10-110 (1) (b), the introductory portion ISSUE ON MOTION. to 24-10-110 (1.5). and 24-10-110 (1.5) (a) and (5), Colorado Revised Statutes, 1932 Repl. Vol., as amended, are amended, SECTION 9. -24-10-109 (1), (2) (b), (3), and (5), and the said 24-10-110 is further amended BY THE ADDITION OF A Colorado Revised? Statutes, 1982 Repl. Vol., are amended, and NEW SUBSECTION, to read: the said 24-10*109 is further amended BY THE ADDITION OF A NEW SUBSECTION, to read: 24-10-110. Defense of public employees - payment of judgments or settlements against public employees. 24-10-109. Notice reouired - contents - to whom given - / l ) (b) (I) The payment of all judgments a n d s e t t l e m e n t s of limitations. (1) Any person claiming to have suffered an 1 claims against any of its public employees where the claim injury by a public entity or by an employee thereof while in against the public employee arises out of injuries sustained the course of such employment shall file a written notice as ' from an act or omission of such employee occurring during the provided in this section within one hundred eighty days after performance of his duties and within the scope of his the date of the discovery of the injury, REGARDLESS OF WHETHER employment, except where such act or omission is willful and THE PERSON THEN KNEW ALL OF THE ELEMENTS OF A CLAIM OR OF A wanton or in-the-ease-of-pab}ic-entUTes-other-than-the--state CAUSE OF ACTION FOR SUCH INJURY. Sabatant-rai Compliance with of—Colorado- where the—defense--of sovereign immunity is the notice provisions of this section shall be a condition available-to BARS THE ACTION AGAINST the public entity, and precedent JURISDICTIONAL PREREQUISITE to any action brought provided that the employee does not compromise or settle the under the provisions of this article, and failure of sabatantnai compliance shall be-a-eemp^ete-defense-to FOREVER \claim without the consent of the public entity. BAR any such action. (II) A public entity other-than-the—state--of--6oiorado (2) (b) A concise statement of the FACTUAL basis of the shall be liable for the payment of all judgments and claim, including the date, time, place, and circumstances of settlements of claims against any of its public employees the act, omission, or event complained of; where the claim against the public employee arises out of injuries sustained from an act or omission of such employee (3) If the claim is against the state or an employee occurring during the performance of his duties and within the thereof, the notice shall be presented--*.® FILED WITH the scope of his employment, except where such act or omission is PAGE 7-HOUSE BI1! NO liqfi yauE 7-HOUSE BILL nu. iwo a n d ** * n t a n . ~ ”r T T m ,, ?A-in-u4 (2 ") C o l o r a d o Revised Statutes, /m m u n 1 ty *®**® OTHlKWtSC B*" THE ACJt°~. £ £ 1982 Vol. , REPEALED AMD REENACTED. WITH AMENDMENTS, public employee is operating •*” emergency v^n ic >*■ iS?3~ if provisions of section 42-4-106 (2) a" * (3>?C.K.S *973y to read: the employee does not compromise or settle the claim without the consent of the public entity. 24-10-114. Limitations on judgments. (2) The governing body of a public entity, by resolution, may increase any (1 5) Where a claim against a public employee arises out maximum amount set out in subsection (1) of this section that of injuries sustained from an act or omission of such employee may be recovered from the public entity for the type of injury which occurred or is alleged in the complaint to have occurred described in the resolution. The amount of the recovery that during the performance of his duties and within the scope of may be had shall not exceed the amount set out in such his employment, the public entity shall be liable for the resolution for the type of injury described therein. Any such reasonable costs of the defense AND REASONABLE ATTORNEY FEES increase may be reduced, increased, or repealed by the of its public employee unless: governing body, by resolution. A resolution adopted pursuant to this subsection (2) shall apply only to injuries occurring (a) It is determined at—trial BY A COURT that the subsequent to the adoption of such resolution. injuries did not arise out of an act or omission of such employee occurring during the performance of his duties and SECTION 13. 24-10-115 (3), Colorado Revised Statutes, within the sccpe of his employment or that the act or omission 1982 Repl. Vol., is amended to read: of such employee was willful and wanton. If it is sc determined, THE PUBLIC ENTITY MAY REQUEST AND the court shall 24-10-115. Authority for public entities other than the order such employee to reimburse the public entity, for state to obtain insurance. (3) A public entity, other than reasonable costs AND REASONABLE ATTORNEY FEES incurred by-stieh the state, may establish and maintain an insurance reserve pnblte-entity in the defense of such employee; or fund for self-insurance purposes and may include in the annual tax levy of the public entity such amounts as are determined (5) In any action against a public employee in which it by its governing body to be necessary for the uses and is — alleged EXEMPLARY DAMAGES ARE SOUGHT BASED ON ALLEGATIONS purposes of the insurance reserve fund, subject to the that an act or omission of a public employee was willful and limitations imposed by section 29-1-301, C.R.S., 19?3r—in-the wanton, if the plaintiff fa-Hs-to-prove DOES NOT SUBSTANTIALLY PAGE 9-HOUSE BILL NO. 1196 p.2d 854 (1978) (decided prior to 1979 amend lishes a different notice of claim procedure, it ment). conflicts with the state statutory provisions, No immunity for sister state’s activities in this and when a conflict exists in a matter of both state. Where an injured party is a citizen of this statewide and local concern, the state statute state, injured in this state, and sues in the controls. Lipira v. City of Thornton, 41 Colo. courts of this state, there is no immunity, by App. 401,585 P.2d 932 (1978). law or as a matter of comity, covering a sister Applied in City of Colorado Springs v. state’s activities in this state. Peterson v. State Gladin, 198 Colo. 333, 599 P.2d 907 (1979); of Texas,__ Colo. App.__ , 635 P.2d 241 South of Second Assocs. v. Georgetown,__ (1981). Colo. __ , 609 P.2d 125 (1980]; Forrest v. State statutory provisions control over County Comm'rs,__ Colo. App.___. 629 conflicting city charter. If a city charter estab P.2d 1105(1981). 24-10-103. Definitions. As used in this article, unless the context otherwise requires ^ erQu^ condjtjon,, means the physical condition of any public building, public hospital, jail, public highway, road, or street, public facility located in any park or recreation area maintained by a public entity, or public water, gas, sanitation, electrical, power, or swimming facility where the physical condition of such facilities or the use thereof constitutes ai risk to the health or safety of the public, which is known to exist or which in the exercise of reasonable care should have been known to exist and which con* dition is proximately caused by the negligent act or omission of the public entity in constructing or maintaining such facility. For the purposes of this subsection (1), a dangerous condition should have been known to exist if it is established that the condition had existed for such a period of time and was of such a nature that, in the exercise of due care, such condition and its dangerous character should have been discovered. A dangerous condition shall not exist solely because the design of any facility set forth in this sub section (1) is inadequate in relation to its present use. (2) “Injury” means death, injury to a person, damage to or loss of prop erty, of whatsoever kind, which would be actionable in tort if inflicted by *(3) (a) ^ “ Operation” means the act or omission of a public entity or public employee in the exercise and performance of the powers, duties, and func tions vested in them by law with respect to the purposes of any public hospi tal, jail, or public water, gas, sanitation, power, or swimming facility. (b) T h e term “operation” shall not be construed to include: (I) A failure to exercise or perform any powers, duties, or functions not vested by law in a public entity or employee with respect to the purposes of any public facility set forth in paragraph (a) of this subsection (3); (II) A negligent or inadequate inspection or a failure to make an inspec tion of any property, except property owned or leased by the publicjentuy, to determine whether such property constitutes a hazard to the health or safety of the public. , t e . (4) “Public employee” means an officer, employee, or servant of the public entity, whether or not compensated, elected, or appointed, but does not include an independent contractor or any person who is sentenced pur suant to section 42-4-1202 (4), C.R.S. 1973, to participate in any type of useful ** (5) “ Public entity” means the state, county, city and county, incorporated city or town, school district, special improvement district, and every other 4 different notice of claim procedure, it ts with the state statutory provisions, kind of district, agency, instrumentality, or political subdivision of the state icn a conflict exists in a matter of both organized pursuant to law. Mdie ide and local concern, the state statute Is. Lipira v. City of Thornton, 41 Colo. 01,585 P.2d 932(1978). Source: L . 71, p. 1205, § 1; C .R .S. 1963, § 130-11-3; L . 82, p. 604, § 6. lied in City of Colorado Springs v. , 198 Colo. 333, 599 P.2d 907 (1979); Editor’s note: Section 17 of chapter [66, Session Laws of Colorado 1982 provides that the of Second Assocs. v. Georgetown,__ __ , 609 P.2d 125 (1980); Forrest v. after^ dd'ate,SU eC M) " e" CC" Ve ,U'y '' ,982' and ■">“ « V Comm'rs,__ Colo. App.___, 629 105(1981). Law review. For comment, “The Colorado Governmental Immunity Act: A Prescription v. City and County of Denver, Colo for Retrogression”, see 49 Den. L.J. 567 App.__ ,641 P.2d 295(1981). le, unless the context otherwise (1973), Applied in City of Colorado Springs v. Gladin, 198 Colo. 333, 599 P.2d 907 (1979); Improper maintenance of a stop sign Is not a Adams County School Dist. No. I v. District lysical condition of any public “dangerous condition” under section Court, -- Colo, ___, 61! P,2d 963 (1980); , road, or street, public facility 24-10-106(l)(d) for which the waiver of Jones v. Northeast Durango Water Dist ned by a public entity, or public immunity is specified by this article. Stephen Colo. App.__ , 622 P.2d 92 ( 1980). ’ • swimming facility where the se thereof constitutes a risk to 24-10-104. Availability of insurance - effect. ( 1) Notwithstanding any provi known to exist or which in the sion of law or of this article to the contrary, if a public entity provides insur known to exist and which con- ance coverage provided by an insurance company authorized to do bu^ne« t act or omission of the public m this state to insure itself against liability for any inju y or ?o"any cility. For the purposes of this of |ts employees against hIS liability for any injury resulting from an act 0r 1 have been known to exist if omission by such employee acting within the scope of his employment then i for such a period of time and such public entity shall be deemed to have waived the defense of sovereign f due care, such condition and immunity in any action for damages for any such injury insured aga nst s T covered. A dangerous condition ject to the provisions of subsection (2) of this section. ny facility set forth in this sub- (2) If the defense of sovereign immunity would be available to a Dublic nt use. entity except for the provisions of subsection ( 1) of this section L n dam son, damage to or loss of prop- ages for injury shall not be recoverable in excess of the amount of the insur ctionable in tort if inflicted by ance coverage and shall be recovered from the insurer only. The insurer shall not be named as a party defendant. insurer snail ssion of a public entity or public f the powers, duties, and func- Source: L . 71. p. 1205, § 1; C .R .S. 1963, § 130-U-4. e purposes of any public hospi- •, or swimming facility. and24C iH o 2 .ferenCe: ^ authorization to P ™ « " « ¡durance against liability, see § § 24-10-115 ¡trued to include: owers, duties, or functions not Am. Jur.2d. See 57 Am. Jur.2d, Municipal, e with respect to the purposes prevents general liability insurers from being School, and State Tort Liability. § § 57,58 named as party defendants and does not apply of this subsection (3); Law review. For comment, “The Colorado to prevent public entities from being named as or a failure to make an inspec- Governmental Immunity Act: A Prescription parties, Forrest v. County Comm'rs or leased by the public entity, for Retrogression”, see 49 Den. L.J. 567 Colo. App.__ ,629P.2d 1105(1981). utes a hazard to the health or Applied in American Employers Ins, Co v Public entities not prevented from being Board of County Comm’rs, 547 F.2d 511 (10th named parties by subsection (2). Subsection (2) , employee, or servant of the sleeted, or appointed, but does 24-10-105 Prior waiver of immunity • effect. It is the intent of this article / person who is sentenced pur- to cover all actions which lie in or could lie in tort regardless of whether participate in any type of useful sha I b e L h l i f 6 tyP IV. COMPLIANCE. And failure to move for dismissal until trial Knowledge of an accident by the employees of not waiver of notice. The fact that the defen. a city does not suffice, as formal notice is dants do not move for dismissal until the time required. Jacob v. City of Colorado Springs, of trial does not constitute a waiver of the notice requirement. Jones v. Northeast 175Colo. 102,485P.2d 889(1971). Durango Water Dist., Colo. App. But the giving of notice may be excused under 622 P.2d 92(1980). -- proper circumstances of mental and physical incapacity, the question of sufficiency of the But public entities may be equitably estopped circumstances being one for the jury. Jacob v, from asserting bar of this section to prevent City of Colorado Springs. 175 Colo. 102, 485 manifest injustice. Gray v. Regional Transp. P.2d 889(197!). Dist., 43 Colo. App. 107, 602 P.2d 879 (1979). Exception to notice requirement applies Notice provision of the governmental where disabled person sues by his legal repre immunity article stands as a condition precedent sentative. Antonopoulos v. Town of Telluride to the commencement of an action against a 187 Colo. 392, 532 P,2d 346(1975). public entity. Antonopoulos v. Town of And all persons laboring under general forms Telluride. 187 Colo. 392. 532 P.2d 346 (1975); of disability Included in exception. The excep Jones v. Kristensen. 38 Colo. App. 513. 563 tion to the notice requirement includes all per P.2d 959 (1977). aff'd, 195 Colo, 122, 575 P,2d sons laboring under any of the generally recog 854 (1978); Fritz v. Regents of Univ. of Colo . nized forms of disability as defined in section 196 Colo. 335. 586 P.2d 23 (1978). 13-81-101(3). Antonopoulos v. Town of But only to action brought under this article. Telluride, 187 Colo. 392, 532 P.2d 346( 1975). Compliance with the notice requirement is a condition precedent only to an action brought V, TIME PERIODS. under the provisions of this article. Antonopoulos v. Town of Telluride. 187 Colo. Notice period begins to run In Indemnity 392, 532 P.2d 346 (1975); Jones v. Northeast action when tort-feasor knows of injury. The Durango Water Dist., Colo. Ann running of the 90 (now 180) days as provided in 622 P.2d 92(1980). -- 'this section should not begin to run in an Notice may be given before Injury established. indemnity action until such time as the alleged This section does not preclude a party from tort-feasor receives knowledge of the giving notice prior to the date that the fact of occurrence of a secondary injury. Brady v. injury is established. State Comp. Ins. Fund v. City & County of Denver. 181 Colo. 218, 508 City of Colorado Springs, 43 Colo. App. 112 P.2d 1254(1973). 602 P.2d 88! (1979). And at conclusion of disability for disabled Failure to file written notice Is a complete person. A disabled person is relieved from the defense to any action brought by an injured statutory duty of giving notice until the party against those that fall within this article removal of his disability. At the conclusion of Roberts v, City of Boulder, 197 Colo. 97 <89 the disability, the 90-day (180-day) notice P,2d 934(1979). requirement commences and runs as it would And public entity not liable for judgment against any other claimant. Antonopoulos v against employee. If a claimant fails to give the Town of Telluride, 187 Colo. 392, 532 P.2d 346 notice required by this section, a public entity (1975); Fritz v. Regents of Univ. of Colo., 196 cannot be liable under section 24-10-110 for a Colo. 335, 586 P.2d 23 (1978). judgment against an employee in his individual Notice requirements of this article may be capacity or for the employee's cost of defense modified prospectively without violating the Kristensen v. Jones, 195 Colo. 122. 575 P 2d provisions of section 2-4-303. Adams County 854(1978). School Dist. No. 1 v. District Court, __ Colo.__ ,611 P,2d 963 (1980). Proceedings subject to dismissal for failure to And were so modified for those under disabil allege notice or waiver. By failing to allege ity of minority. All applicable statutes of limita compliance with the condition precedent of tion and notice requirements began to run for notice or waiver, a claim is insufficient, cannot those who attained the age of 18 as of the be cured by amendment, and is, therefore, effective date of the 1977 amendment to subject to dismissal at any stage of the pro section 13-81-101(3). changing the age of legal ceedings. Jones v. Northeast Durango Water disability from 21 to 18. Adams County School Dist., -- Colo. App. __ , 622 P.2d 92 Dist. No. I v. District Court, Colo (1980). 611 P,2d 963 (1980). -- ‘ 24-10-110. Defense of public employees - payment of judgments or settle ments against public employees. (1) A public entity shall be liable for: re to move for dismissal until trial (a) The costs of the defense of any of its public employees, whether such of notice. The fact that the defen* defense is assumed by the public entity or handled by the legal staff of the >t move for dismissal until the time es not constitute a waiver of the public entity or by other counsel, in the discretion of the public entity, where virement. Jones v. Northeast the claim against the public employee arises out of injuries sustained from /ater Dist., __ Colo. App.---, an act or omission of such employee occurring during the performance of : (1980). his duties and within the scope of his employment, except where such act Ic entitles may be equitably estopped o r omission is willful and wanton; and ling bar of this section to prevent niustice. Gray v. Regional Transp. (b) (I) The payment of all judgments and settlements of claims against So. App. 1 0 7 . 602P.2d 8 7 9 ( 1 9 7 9 ) any of its public employees where the claim against the public employee ,n to notice requirement applies arises out of injuries sustained from an act or omission of such employee ibled person sues by his legalrepre- occurring during the performance of his duties and within the scope of his Antonopoulos v. Town of Telluride, employment, except where such act or omission is willful and wanton or, 392,532 P.2d 346(1975). persons laboring under general forms in the case of public entities other than the state of Colorado, where the ty included In exception. The excep- defense of sovereign immunity is available to the public entity, and provided * notice requirement includes all per- that the employee does not compromise or settle the claim without the con ring under any of the generally recog- sent of the public entity. ms of disability as defined in section (II) A public entity other than the state of Colorado shall be liable for 1 ( 3 ) . Antonopoulos v. Town of . |87Colo.392.532P.2d346(1975). the payment of all judgments and settlements of claims against any of its public employees where the claim against the public employee arises out of V. TIME PERIODS. injuries sustained from an act or omission of such employee occurring during period begins to run In Indemnity the performance of his duties and within the scope of his employment, except hen tort-feasor knows of injury. The where such act or omission is willful and wanton, even though the defense of the 90 (now 180) days as provided in tion should not begin to run m an of sovereign immunity is available, when the public employee is operating ty action until such time as the alleged an emergency vehicle within the provisions of section 42-4-106 (2) and (3), isor receives knowledge of the C.R.S. 1973, if the employee does not compromise or settle the claim without nee of a secondary injury. Brady v the consent of the public entity. County of Denver, 181 Colo. 218, 508 (2) The provisions of subsection (1) of this section shall not apply where 54(1973). at conclusion of disability for disabled a public entity is not made a party defendant in an action and such public A disabled person is relieved from tne entity is not notified of the existence of such action in writing by the plaintiff •y duty of giving notice until tne or such employee within fifteen days after commencement of the action. In 1 of his disability. At the conclusion of addition, the provisions of subsection ( 1) of this section shall not apply where .¡ability, the 90-day (180-day) notice such employee willfully and knowingly fails to notify the public entity of ment co m m en ces and runs as it would any other claimant. Antonopoulos v the incident or occurrence which led to the claim within a reasonable time if Telluride, 187 Colo. 392, 532 P.2d 346 after such incident or occurrence, if such incident or occurrence could Fritz v. Regents of Univ. of Colo., 1% reasonably have been expected to lead to a claim. 135, 586 P.2d 23 (1978). (3) (a) It shall be within the discretion of the public entity whether it shall ce requirements of this article may be ed prospectively without violating the assume the defense of its public employee or shall not assume his defense. ions of section 2-4-303. Adams County (b) In the event that the public entity elects to assume the defense of I Dist No. 1 v. District Court, -- its public employee, such defense shall be assumed subject to an agreement ,611 P.2d963 (1980). between the public entity and the public employee: ¡We so modified for those under dlsabil- ninority. All applicable statutes of limita- (I) That such public employee shall reimburse the public entity for reason nd notice requirements began to run for able attorney fees in the event that the court determines that the injuries who attained the age of 18 as of the Jt arise out of an act or omission of such employee occurring during ive date of the 1977 amendment to the performance of his duties and within the scope of his employment or ,n 13-81-101(3), changing the age of lega that the act or omission of such employee was willful and wanton; and ility from 21 to 18. Adams County School No, I v. District Court,__ Colo.-- . (II) That the public entity shall not compromise or settle the claim without .2d 963 (1980). the consent of the employee unless and until it is established that the defense of sovereign immunity is not available to the public entity. payment of judgments or settle- (c) In the event that the public entity elects not to assume the defense entity shall be liable for: °t its public employee, the public entity shall be liable to such public employee for his reasonable attorney fees in prosecuting his own defense, unless the court determines that the injuries did not arise out of an act or omission of such employee during the performance of his duties and within the scope of his employment or that the act or omission of such employee was willful and wanton. If, in the case of public entities other than the state of Colorado, the court determines that the defense of sovereign immunity is not or would not have been available to the public entity, the public entity shall also be liable to the public employee for any judgment or settlement against such public employee. (4) Where the public entity is made a codefendant with its public employee, it shall notify such employee in writing within fifteen days after the commencement of such action whether it will assume the defense of such employee. Where the public entity is not made a codefendant, it shall notify such employee whether it will assume such defense within ten days after receiving written notice of the existence of such action, but in no event later than eighteen days after the commencement of such action. (5) In any action against a public employee in which it is alleged that an act or omission of a public employee was willful and wanton, if the plaintiff fails to prove that such act or omission was willful and wanton, and the court determines that the allegation of willful and wanton conduct was frivolous, the court may award attorney fees against the plaintiff and in favor of the public employee. Source: L . 71, p. 1207, § I; C .R .S. 1963, § 130-11-10; L . 79, p. 863, §3; L .8 1 ,p . 1150, § 1; L , 82. p, 366. § 1. Editor’s note: Section 1 of chapter 98, Session Laws of Colorado 1982. provides (hiit the act amending subsection (I) (b) is effective January 1, 1983. Am. Jur.2d. See 57, Am. Jur.2d, Municipal, And a municipality may provide greater School, and State Tort Liability, § 85. monetary compensation to the victims of torts C.J.S. See 81 AC.J.S., States. § § 122,126. committed by the municipality's own police Law review. For comment, “The Colorado officers than is provided under state statutory Governmental Immunity Act: A Prescription provisions. Frick v. Abell. 198 Colo. 508. 602 for Retrogression”, see 49 Den. L.J. 567 (1973). P,2d 852(1979), Governmental Immunity concerning munici Public entity not liable if required notice not pal police officers matter of concurrent local and given. If a claimant fails to give the notice statewide concern. Governmental immunity for required by section 24-10-109. a public entity tortious acts of municipal police officers and, cannot be liable under this section for a judg specifically, limitations on compensatory dam ment against an employee in his individual ages for personal injuries in actions against capacity or for the employee's cost of his municipal governments, based on such defense. Kristensen v. Jones, 195 Colo. 122. tortious conduct, are matters of concurrent 575 P.2d854(1978). local and statewide concern. Frick v. Abell. Applied in Forrest v. County Comm'rs.__ 198 Colo. 508, 602 P.2d 852 (1979). Colo. App.__ ,629P.2d 1105(1981). 24-10- 111. Judgment against public entity or public employee • effect. (1) Any judgment against a public entity shall constitute a complete bar to any action for injury by the claimant, by reason of the same subject matter, against any public employee whose act or omission gave rise to the claim. (2) Any judgment against any public employee whose act or omission gave rise to the claim shall constitute a complete bar to any action for injury by the claimant, by reason of the same subject matter, against a public entity. commissioner of insurance shall review the school district's his duties and within the scope of his employment, unless the determination of the amount to be raised by said tax levy, act or omission causing such injury was willful and wanton, which review shall be made no later than October 20 of each shall be subject to the following requirements and year. In such review, the commissioner shall determine the limitations, regardless of whether or not such action against, need for continuation of the mill levy for the insurance a public employee is one for which the public entity sight be reserve fund. Subsequent to determination that the amount in liable for costs of defense, ATTORNEY FEES, or payment of the reserve fund is adequate, money for the payment of any judgment or settlement under section 24-10-110: liability and property insurance premiums and for payments into the reserve fund to cover the cost of operations and (a) Fiiing-of-the-netiee-reqaired-by COMPLIANCE WITH THE expected losses out of the insurance reserve fund shall be PROVISIONS OF section 24-10-109, with-the-pabiie-entity; in bucgeted from the school district's general fund. The the form FORMS and within the time TIMES provided by section commissioner of insurance may determine that the insurance 24-10-109, shall be a condition—precedent JURISDICTIONAL reserve levy should be reapplied because the insurance reserve PREREQUISITE to any such action against a public employee, and fund has experienced extraordinary claims. failure of sobstantia* compliance shall be-a-compiete—defense to FOREVER BAR any such action against a public employee. Any SECTION 14. 24-10-115.5 (1), Colorado Revised Statutes, such^ action against a public employee shall be commenced 1982 Repl. Vol., is amended, and the said 24-10-115.5 is within the time period provided for that type of action in further amended BY THE ADDITION OF A NEW SUBSECTION, to read: articles 80 and 81 of title 13, C.R.S., 19?3t relating to limitation of actions, or it shall be forever barred. 24-10-115.5. Authority for public entities to pool insurance coverage. (1) Public entities may cooperate with (2) A public employee shall be immune from liability in one another to form a self-insurance pool to provide all or claims ANY CLAIM for injury, whether brought pursuant to part of the insurance coverage authorized by this article or this article, section 29-5-111, C.R.S., the common law, or by section 29-5-111, C.R.S., 39?3t for the cooperating public otherwise, which sre-actionabie LIES in tort OR COULD LIE IN entities. Any such self-insurance pool may provide such TORT REGARDLESS OF WHETHER THAT MAY BE THE TYPE OF ACTION OR coverage by the methods authorized in sections 24-10-115 (2) THE FORM OF RELIEF CHOSEN BY A CLAIMANT, and which arise and 24-10-116 (2), BY ANY DIFFERENT METHODS IF APPROVED BY THE ARISES out of an act or omission of such employee occurring COMMISSIONER OF INSURANCE, OR EY ANY COMBINATION THEREOF. Any during the performance of his duties and within the scope of such insurance pool shall be formed pursuant to the provisions his employment unless the act or omission causing such injury of part 2 of article 1 of title 29, C.R.S. i9?3r was willful and wanton; except that no such immunity may be asserted as-a-defense in an action for--damages for injuries (7) Any public entity pool formed under this article and resulting from the circumstances specified in section under article 13 of title 29, C.R.S., and the members thereof, 24-10-106 (1). may combine and commingle all funds appropriated by the members and received by the pool for liability or property (3) Nothing in this section shall be construed to allow insurance or self-insurance or for other purposes of the pool. any action which lies in tort or could lie in tort REGARDLESS OF WHETHER THAT MAY BE THE TYPE OF ACTION OR THE FORM OR SECTION 15. The introductory portion to 24-10-118 (1) RELIEF CHOSEN BY A CLAIMANT to be brought against a public and 24-10-118 (1) (a), (2), and (3), Colorado Revised employee except in compliance with the requirements of this Statutes, 1982 Repl. Vol., as amended, are amended, and the article. said 24-10-118 is further amended BY THE ADDITION OF THE FOLLOWING NEW SUBSECTIONS, to read: (4) The immunities provided for in this article shall be in addition to any common law immunity applicable to a public 24-10-118. Actions against public____ employees____ - employee. requirements and limitations. (1) Any action against a public employee, whether brought pursuant to this article, (5) Notwithstanding any provision of this article to the section 29-5-111, C.R.S., the common law, or otherwise, which contrary, a public entity may, if it determines by resolution lies in tort OR COULO LIE IN TORT REGARDLESS OF WHETHER THAT adopted at an open public meeting by the governing body of the MAY BE THE TYPE OF ACTION OR THE F0RH OF RELIEF CHOSEN BY THE CLAIMANT, and which arises out. of injuries sustained from an S p f l ’ii tha? it 1s in the P ubH e interest to do so, act or omission of such employee which occurred or is alleged or oav !Ur ;ptn Ployee gainst a claim for punitive damages in the complaint to ha\ie occurred during the performance of empire. punitlve dama9e claim against a public PAGE 11-HOUSE BILL NO. 1196 SECTION 16. Article 10 of title 24, Colorado Revised Statutes, 1984 Repl. Vol., as amended, is amended BY THE ADDITION OF THE FOLLOWING NEW SECTIONS to read: 24-10-119. Applicability of article to claims under federal law. The provisions of this article shall apply to any action against a public entity or a public employee in any court of this state having jurisdiction over any claim brought pursuant to any federal law, if such action lies in tort or could lie in tort regardless of whether that may be the type of action or the form of relief chosen by the claimant. 24-10-120. Severability. If any provision of this article or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the article which can be given effect without the invalid provision or application, and to this end the provisions of this article are declared to be severable. SECTION 17. Repeal. 24-10-110 (3) (a) and (3) (c), Colorado Revised Statutes, 1984 Repl. Vol., are repealed. SECTION 18. Effective date - applicability. This act shall take effect July 1, 1986, and shall apply to injuries occurring on or after said date; except that sections 14, 18, and 19 shall take effect upon passage. SECTION 19. Safety clause. The general assembly hereby r,TA*r-’^> SAFETY CiAimq \ . ©overncr'ii t ^ ^2*? — < r& PAGE 12-H0USE BILL NO. -.1196 GILBERT v. CITY OP ARVADA Colo. 8 4 7 Cite m 694 PJdM7 {Colo.App. 1984) unique facts of this case, The issue decid- construct, or maintain intersection where !en the Parties ed by the court in this case is a narrow one. accident occurred, and (2) material issue of i&ee, not land- I do not understand the opinion as address fact as to whether crossing guards were found for Hum- ing the questions of whether Westmor is supplied to intersection for older school d: ,T he e q u ity entitled to request that the trial court order children when classes were dismissed but ated on appeal, the Lindsays to post a bond under the not kindergarten students precluded sum quity decision statute; and, if the court exercises its dis mary judgment in favor of school district. in its findings cretion in favor of ordering such an under Affirmed in part; reversed in part; re of the parties taking, what remedies, if any, are available manded with directions. p * 518 (1912)’ to Westmor under the forcible entry and Van Cise, J., filed opinion concurring in ¡etainer action, detainer statute, section 13-40-101 to -123, part and dissenting in part. landed with di- 6 C.R.S. (1973), if the Lindsays fail to com iismissed, stat- ply with the court’s order. ery issue ten- 1. A utom obiles <®=»259, 282 be determined, Î <;i City did not negligently design, con adjusted, and \ j-: i?i party may be struct, or maintain intersection where kin e equity suit." dergarten student was struck by automo 25 P. 522, 524. bile, since stop signs were properly in place, there were appropriate stop lines, the conclusion marked cross walks, and pedestrian signs, in th e d istric t Christine GILBERT, a minor by her par there was nothing to obstruct the view, r all the issues ents and next friends, James GILBERT intersection was designed and maintained effect to their and Mary Ann Gilbert, and James Gil* in accordance with nationally recognized opriate relief, bert and Mary Ann Gilbert, individual* traffic engineering standards, and accident termine wheth- ly, Plaintiffs-Appellants, happened, not because of any negligence action pending v. on part of city, but because driver failed to sre was not, a proceed with appropriate vigilance. >t have issued, The CITY OF ARVADA, a municipal cor titution should poration, Jefferson County School Dis 2. Judgm ent «=>181(33) decision on all trict It-1, Defendants-Appellees. In action brought by kindergarten stu No. 81CA1200. dent and her parents against school district seeking recovery of damages for injuries Colorado Court of Appeals, she sustained when she was struck by Div. III. co n cu rs, automobile while walking home from July 5, 1984. school, material issue of fact as to whether îcially concur- crossing guards were supplied to intersec As Modified on Denial of Rehearing tion for older school children when classes Aug. 2, 1984. linion that the were dismissed but not kindergarten stu is upon which Certiorari Granted Jan. 14, 1985. dents, precluded summary judgment in fa m because no vor of school district. de as to the Kindergarten student and her parents îe parties and brought action against driver, school dis I possession of Richard L. Whitworth, Wheat Ridge, for trict, and’city seeking recovery of damages rately only to plaintiffs-appellants. for injuries student sustained when she d be a serious Greengard, Blackman & Senter, Thomas was struck by automobile while walking conclude that S. Rice, Denver, for defendant-appellee The home from school. The District Court, Jef on concerning ferson County, Caspar Perricone, J., en City of Arvada. provision, sec- tered summary judgment in favor of school Wood, Ris & Hames, P.C., F. Michael 1973), to the district and city, and plaintiffs appealed. Ludwig, Jeffrey J. Cowman, Denver, for ’S, S3 Colo. 171. The Court of Appeals, Sternberg, J., held defendant-appellee Jefferson County that (1) city did not negligently design, School Dist, R -l. 848 Colo. 694 PACIFIC REPORTER, 2d SERIES STERNBERG, Judge. because his attention had been dive The plaintiffs, Christine Gilbert and her elsewhere. ^ parents James and Mary Ann Gilbert, ap A traffic engineer produced by the cit peal from summary judgments entered stated in an affidavit that the intersecti * against them in their negligence action was designed and maintained in accordant against defendants Jefferson County with nationally recognized traffic engineer School District R -l and the City of Arvada. ing standards. The plaintiffs presented an We affirm as to the city, but reverse as to affidavit from another engineer to the ef the school district. feet that the city could have installed a The facts are undisputed. At about standard traffic signal light (with pedestri- 11:15 on a February morning in 1978, an push-button control) at the intersection Christine Gilbert, then five years old and and that installation of such a traffic light enrolled in the kindergarten of Lawrence might have prevented the accident. Elementary School, was walking home from school with a classmate. As the chil [1] From the above, we agree with the dren crossed the intersection of Carr Street trial court’s conclusion that there was noth and Grandview Avenue, about five blocks ing to support plaintiffs' allegations that west of the school, Christine was struck the city negligently designed, constructed, and injured by a car driven by Roy Miller. or maintained the intersection. The stop signs were properly in place. There were The plaintiffs brought this action against appropriate stop lines, marked crosswalks, defendants, Miller, the city, and the school and pedestrian signs. There was nothing district, claiming that these defendants to obstruct the view. That more could were negligent and that their negligence have been done, such as push-button stop caused Christine's injuries and her parents’ lights, is irrelevant when what was done expenses on Christine’s behalf. The plain tiffs recovered against Miller, and that conformed to the standards. Also, here judgment is not being appealed. The trial the accident happened, not because of any court entered summary judgments in favor negligence on the part of the city, but of the city and the school district, and the because Miller failed to proceed with appro propriety of these judgments is the subject priate vigilance. Summary judgment was of this appeal. properly entered. I. The Claim Against the City II, The Claim Against the This claim is based on the city's alleged School District negligent design, construction, and mainte nance of the intersection where the acci The plaintiffs' claim against the school dent occurred. We perceive no basis for a district is based on the district's alleged finding of negligence by the city. negligent failure to provide crossing guards or to take other precautionary ac The Carr Street approaches to the inter tion to prevent this type of accident. Be section were controlled by stop signs. The cause we perceive issues of fact which four crosswalks at the intersection were should be resolved by the trier of fact, we clearly marked. There were stop lines and reverse the summary judgment in favor of signs for east and west bound traffic on the school district. Grandview at or near the intersection to indicate the presence of pedestrian chil In the case of Justus v. Jefferson Coun dren. The speed limit was reduced for ty School District R-l, 683 P.2d 805 (Colo. traffic on Grandview during critical hours App.1984) (cert, granted June 25, 1984), the of the school day. The south approach on school district had established procedures Carr Street, from which Miller was driving, for busing students to and from school and presented a clear view of the north cross had prohibited students in the lower walk in which Christine was walking. The grades, which included the six-year-old driver, Miller, struck Christine with his car plaintiff, from riding bicycles to and from GILBERT v . CITY OF ARVADA Cite as 694 P.2d 847 (Colo.App. 1984) school. Teachers were posted at the end of Grier, 43 Colo.App. A verted 395, 608 P.2d 356 the school day to enforce the regulations. (1979), in which plaintiff, a seven year old Upon missing his bus one day, the plaintiff girl, was injured while crossing a street to -he city rode his bicycle to school and was involved reach the school grounds where defendant, s e c tio n in an accident while cycling home. This a fire protection district, was conducting an ttd a n c e court held that, because the school district after-hours show for children on fire pre >gineer- had undertaken a duty to protect its pupils vention. On the subject street there were n ted an off the school premises, a fact question traffic signals which could flash yellow th e ef- existed as to whether the district was negli lights to warn vehicular traffic to slow to alle d a gent in not extending its regulations to 20 miles an hour in the school crossing ed estri- provide protection for the plaintiff. area. The fire district did not have the ’section [2] The facts in the instant case are traffic signals activated. In Turner, this 'ic lig h t even more compelling than those in Justus. court said: Here, there was evidence before the court “In negligence cases, foreseeability [of 'ith th e stating that crossing guards were assigned the risk of an accident and injury] is a is noth- to the subject intersection following the prerequisite to the imposition of a duty, ns th a t afternoon dismissal of all the other classes. ... but whether the law imposes a duty d u cted , Yet, no guards were supplied to supervise does not depend on foreseeability alone. ie sto p kindergarten children in crossing the very There are many other factors which *e w ere same intersection. In our view, if guards must be considered before a court may sw alks, were in fact supplied for this intersection declare, as a matter of law, whether a "jothing when other classes where dismissed, the duty exists. failure to provide guards for the kindergar » could “Here, even if we assume that the risk of >n sto p ten class creates a very real factual issue injury to plaintiff existed and was fore whether the district was negligent in not s done seeable, after considering the likelihood affording protection, similar to that given ), h ere of injury, the magnitude of the burden of the older children, to the youngest, most o f an y guarding against it, and the conse vulnerable children in its care. This issue ty, b u t quences of placing that burden upon the must be resolved by the trier of fact. > appro* defendant, ... and after weighing the n t w as The summary judgment in favor of the social utility of defendant’s fire preven city is affirmed. The judgment entered in tion activities against any culpability or favor of the school district is reversed, and moral blame which might have existed, the cause is remanded for further proceed we conclude that the trial court was cor ings. rect in entering summary judgment for defendant. Whatever duty, if any, the school METZGER, J., concurs. District owed to the public, including this alleged VAN CISE, J., concurs in part and dis plaintiff, to provide a reasonably safe ro ssin g sents in part. means of ingress and egress to and from a ry ac- the school grounds, such duty did not VAN CISE, Judge, concurring in part ,t. Be- include providing a hazard-free crossing and dissenting in part. w hich over a public roadway 150 yards from le t, w e I concur with Part I, but respectfully the area controlled by the District.” *vor o f dissent from Part II of the majority opin Turner is dispositive on the issue of lia ion. bility of the school district in the instant Court' The subject intersection is about five case. And I am not otherwise persuaded \ (Colo. blocks from the school. Crossing guards by the fact that crossing guards were as !4), th e were utilized at the subject intersection signed to the subject intersection following e d u re s during the afternoon school dismissal time the afternoon dismissal of many grades of )ol an d but not when kindergartners were released children. Having the guards present when lo w er in the morning. several times as many children are released ear-old As stated by the trial court, the fact in the afternoon does not make it negligent 1 fro m situation here is analogous to Turner v. not to provide guards when a single grade 850 Colo. 694 PACIFIC REPORTER, 2d SERIES is dismissed in the morning. Nor was with companion when plaintiff was hit in 3. D am ag es there any duty on the part of the school eye. The District Court, Jefferson County, F a c t th; district to provide any guards at the cross Michael C. Villano, J., ordered jury award gun with c ing at any time. Not providing guards at against boy reduced to zero compensatory struck with the crossing is analogous to not activating and $1,000 exemplary damages and entered was irrelevj the flashing yellow lights in the Turner judgment. On appeal, the Court of Ap- form Contri situation. peals, Van Cise, J., held that: (1) fact that in directing This court in Justus v. Jefferson County boy who was shooting BB gun with com tort-feasor School District R-l, 683 P.2d 805 (Colo. panion when plaintiff was struck had no cotort-feaso App.1984), (cert, granted June 25, 1984, right to contribution was irrelevant under reduction o relied on by the majority, stated the gener section of the Uniform Contribution Among fore, aware al rule to be that “[u]nder most circum Tortfeasors Act directing that claim b y am ount stances, there would be no duty as to pro against one joint tort-feasor be reduced by ion’s fathe tection of the pupils off school premises.” amount paid by cotort-feasors, since Act 13-50.5-10! It then went on to hold, in effect, that since pertains only to reduction of injured party’s the school district had undertaken the task 4. D am age claim; therefore, award against boy would of trying to provide protection for its stu W here be reduced by amount paid by companion dents off the school premises, it was obli tion has c and companion's father, and (2) trial court gated so to do at all times and would be sors, one c acted properly in refusing to inform jury of liable if an accident occurred at any time or plaintiff, j fact or amount of settlement and, instead, place where the protection was not provid feasor sho instructing jury to determine whether boy ed. I view that conclusion to be a nonse- of settlen was liable and, if so, to determine full quitur and would not follow it. structed t amount of damages. Since I see no duty to provide crossing liable and guards at an intersection five blocks from A ffirm ed. of plaintil the school, I would affirm the judgment in Sternberg, J., filed opinion concurring 5. E viden favor of the school district. in part and specially concurring in part. M atti Enoch, C.J., filed opinion concurring in m e n t wit O £ KEY NUMBM SYSTEM part and dissenting in part. issu es be o f nonse 1. C ontribution <£=»5(6) plaintiff’i Boy, who was shooting BB gun with ju ry has Gunnar GREENEMEIER, a minor by his companion when plaintiff was hit in eye by it proper parent and next friend, Lois REDING* BB fired by companion, had no right of a n d m at' TON, and Lois Redington, individually, contribution from companion and his fa term ine, Plaintiffs-Appeilants, ther, who settled out of court, pursuant to te r verd: v. statute providing that there is no right of Darwin SPENCER, Defendant-Appellee. contribution in favor of any tort-feasor who Galchii has intentionally, willfully or wantonly No. 82CA1464. GalchinS' caused or contributed to injury, since exem plaintiffs Colorado Court of Appeals, plary damages were awarded against boy. Div. III. C.R.S. 13-50.5-102(3). Hende derson, July 5, 1984. 2. Contribution other Cross reference. As to municipal planning tion— A Viable Alternative'*, see 51 Den. L.J. and zoning, see § § 31-23-101 through 529(1974). 31-23-213. Statute as basis for Jurisdiction. See Board tment Law reviews. For article, “1974 Land Use of County Comm'rs v. Hinton. __ Colo. n v e st* Legislation in Colorado", see 51 Den. L. J. , 548 P.2d 122(1976). 46? (1974). For article, “Inverse Condemna- 30-28-102. Unincorporated territory. The boards of county commissioners ich is of the respective counties within this state are authorized to provide for the Physical development of the unincorporated territory within the county and name for the zoning of all or any part of such unincorporated territory in the man nts in ibsec- ner provided in this part 1. Source: L. 39, p. 294, § 1; CSA, C. 45A, § 1;CRS 53, § 106-2-1; C.R.S. f land 1%3,§ 106-2-1. acres C-«I.S. See 20 C.J.S.. Counties. § 82. and Effective Roadside Sign Law”, see 36 ulting Dicta 475 (1959). vided Law reviews. For article. •‘Effect on Title Violations of Building Covenants and Section delegates authority to county com y-five Zoning Ordinances", see 27 Rocky Mt. L. missioners to zone unincorporated areas. This insid Rev. 255 (1955). For note, “Colorado Cases section is a delegation of authority by the state to the boards of county commissioners °An Zoning— Validity of Zoning Undeveloped of the respective counties to zone unincor igli la- prei>$'‘, see 29 Rocky Mt, L. Rev. 202 (1957). I’0'' article, ’"Colorado Needs a Constitutional porated areas of the state, City of Greeley v. sion“ Ells. 186 Colo. 352,527 P.2d 538(1974), nmis- •art I • ;urity Authority to zone and appoint plannin« Comm'rs v. Simmons. 177 Colo. 347 494 commission. By this and section 30-28-103 the P.2d 85(1972). lations governing its pi commissioners of the respective counties are No clear abuse of discretion shown. Where shall keep a record of authorized to provide for the zoning of all or the question of whether the character of the tion by the public at a any part of the unincorporated territory in neighborhood had changed sufficiently to their county, and they are authorized to justify a change in zoning was fairly debatable to employ experts am appoint a planning commission. Gordon v. and the zoning decision of a board of county necessary for carryinj Board of County Comm'rs, 152 Colo. 376, 182 commissioners was supported by some but not in excess of su P.2d 545 (1963). competent evidence, the certiorari record did commissioners of the Courts should not interfere with decisions of not show a clear abuse of discretion. Board of through gift or other zoning authorities unless the record shows a County Comm’rs v. Simmons. 177 Colo, 347 clear abuse of discretion. Board of County 494 P 2d 85(1972). make use of the expe appropriate federal, si 30-28-103. County planning commission. (1) The board of county com agencies and in partic missioners of any county within the state is authorized to appoint a commis state of Colorado. A sion of five members, to be known as the county planning commission; information, maps, a except that, in counties of the state having a population of fifteen thousand authorized and direct« or less desiring to establish a commission, the board of county commissioners planning commission j may constitute the commission, or the board of county commissioners may advice as they may ha appoint a separate body to serve as the county planning commission. (2) The county pk (2) In addition to the five appointed members, the board of county com and expend all grant missioners shall appoint one of the members of the board as ex officio non federal funds and oth voting member of such commission. Each of such five members of the com mission exists, and to mission shall be a resident of the county and the owner of real property situ and all other legal ent ated therein. The term of appointed members of the commission shall be five sion may provide, v years and until their respective successors have been appointed, but the terms wherever grants, gift; of office shall be staggered by making the initial five appointments for one, such basis. two. three, four, and five years respectively. Source: L. 39, p. (3) The members of the commission shall receive such compensation as p. 179,§ 1; C.R.S. 19 may be fixed by the board of county commissioners, and the board of county commissioners shall provide for reimbursement of the members of the com Function and duty of pi mission for actual expenses incurred. The board of county commissioners initially is to make and adi shall provide for the filling of vacancies in the membership of the commission the physical developme porated territory of a cout and for the removal of a member for nonperformance of duty or misconduct. commission is empowerei The board of county commissioners may appoint associate members of such and to make detailed sur commission, each of whom shall be a resident of the county and the owner accomplish the harmonio of real property situated therein, and, in the event any regular member is temporarily unable to act owing to absence from the county, illness, interest 30-28-105. Regioi in any matter before the commission, or any other cause, his place may be charter cities, the 0 taken during such temporary disability by an associate member designated municipality or groi for the purpose. commissioners of t municipalities is loci Source: L. 39, p. 294, § 2; CSA, C. 45A, § 2; L. 53, p. 225, § 1; CRS or, in charter cities 53, § 106-2-2; L. 59, p. 616, § 1; C.R.S. 1963, § 106-2-2; L. 67, p. 72, § 1. any municipality 01 boards of county c Commission authority. By this and section territory in tjieir county, and they are author 30-2K-10I the commissioners of the respective ized to appoint a planning commission. municipalities is loc counties are authorized to provide for the Gordon v, Board of County Comm'rs, 152 or more counties m zoning of all or any part of the unincorporated Colo. 376, 382 P.2d 545 (1963). mission for any rej governing bodies or 30-28-104. Chairman - rules - staff • information - grants and gifts. (1) The tion of said coopera county planning commission shall elect a chairman from its members, whose (2) The number term shall be for one year, and the commission may create and fill such other ning commission, offices as it may determine. The commission shall adopt such rules and regu removal shall be su h tio ns Governing its procedure as it may consider necessary or advisable and ‘h,.ii a record of its proceedings, which record shall be open to inspec- ton by theVubl" at all reasonable times. The commission has, th<= Buttony m emniov experts and a staff and to pay such expenses as may be deemed necessary for carrying out the powers conferred and the duties prescribed, hut not in excess of such sums as may be appropriated by the board of county commiss?oners of the county or be placed at the disposal of the com ™ «™ through gift or otherw ise. The county planning commission is directed to nnke use of the expert advice and information which may be furnished by ^ppropHate federal, state, county, and municipal officials, departments and ■wencies and in particular by the director of the division of planning of the srite of Colorado. All state officials, departm ents and agencies having information maps, and data pertinent to county planning or zoning are •uithorized and directed to make the same available for the use of the county p S S co m m issio n as well as to furnish such other technical assistance and ■Lilvice as thev mav have available for such purpose. C) The county planning commission is specifically empowered to' recewe ■ind expend all grants, gifts, and bequests, specifically including state and federal funds and other funds available for the purposes for which the com mission exists and to contract with the state of Colorado, the United States. ?ndT o t h e r egal entities with respect thereto. The county planning com m .- s ^ n m a y pro^def within the lim itations of its budget, matching funds wherever grants, gifts, bequests, and contractual ass,stance are available on such basis. ' Source: L. 39, p. 295. § 3: CSA. C. 45A. § 3; CRS 53, § 106-2-3; L. 56, p. 179, § 1; C.R.S. 1963, § 106-2-3. the county in terms of the general welfare of Function and duly of planning commission the inhabitants and the efficient and economic initiallv Is to make and adopt a master plan for the physical development of the unincor use of its land. Johnson v. Board of County porated lerritory of a county. To that end, the Comm’rs, 34 Colo. App. 14. 523 P.2d 159 commission is empowered to employ experts (1974), aff'd suh nom. Colorado Leisure and to make detailed surveys and studies to Prods., Inc. v. Johnson, 187 Colo, 443, 532 accomplish the harmonious development of P.2d 742 (1975). 30-28-105. Regional planning commission. (1) The governing body or« in charter cities the officials having charge of public im provem ents of any municipality or group of municipalities together with «he boards_of county commissioners of any counties in wh.ch suc\m um c pal.ty or gro^p of municipalities is located or of any adjoining counlies; °r he fcovermng todi or, in charter cities, the officials having charge of public'^provem snts of any municipality or group of m unicipalities, acting boards of county com m issioners in which such mumcipahty °* municipalities is located; or the boards of county or more counties may cooperate in the creation of a regionalPlann'"S “ m mission for any region defined as may be agreed upon by sa d c00Pe^ tln6 governing bodies or officials or boards limited to a region within the jurisdi lion of said cooperating governing bodies. rPmnna1 nlan- (2) The number and qualifications of members of any such regional plan ning commission, their terms, and the method of the*L8^ removal shall be such as may be determined and agreed upon by said cooper a tin g governing bodies or officials and boards; but each participating county Law reviews. For or municipality shall be entitled to at least one voting representative. The an Urban Society” , regional planning commission shall elect its chairman, whose term shall be 502 (1956). Foi one year, with eligibility for reelection. The commission may create and fill neering — Legal Si such other offices as it may determine. (3) Any board of county commissioners or other county officials or the 30-28-106. A chief executive officer of any m unicipality, from time to time, upon the county planning request of the commission and for the purpose of special surveys, may assign development of or detail to the commission any members of staffs of county or municipal (2) (a) It i: administrative departments or may direct any such department to make for adopt a region; the commission special surveys or studies requested by the commission. the boundaries (4) The proportion of the expenses of the regional planning commission boundaries of i to be borne respectively by any governing body cooperating in the establish plan is adopted ment and maintenance of the commission shall be such as may be determined ment of its terri and agreed upon by the cooperating bodies or officials or boards, and they section (2). are authorized to appropriate or cause to be appropriated their respective (b) Any plai shares of such expense. deemed an off (5) Within the amounts duly appropriated or otherwise received, the adopted by the | regional planning com m ission has the power to appoint such clerical and (3) (a) The stenographic employees and such technically qualified staff as are necessary maps, plats, ch. to do the work of the commission. The regional planning commission has county or regioi the further power to contract for such other services, facilities, and personnel ment of the terr as it may require within its means, including the services of professional tion, character, planners and other consultants, playgrounds, fo (6) The regional planning commission is specifically empowered to receive grounds, places and expend all grants, gifts, and bequests, specifically including state and and terminals, \ federal funds and other funds available for the purposes for which the com sanitation, tran mission exists, and to contract with the state of Colorado, the United States, acceptance, wit and all other legal entities with respect thereto, The regional planning com abandonment, o mission may provide, within the lim itations of its budget, matching funds places, spaces, wherever grants, gifts, bequests, and contractual assistance are available on acter, location, such basis. developments, \ (7) A regional planning commission shall be a body politic and corporate, o p m e n t a r e a s ; t with power to sue and be sued. It shall be liable on its undertakings, contrac flood control ai tual or otherwise. The individual members thereof and the cooperating gov vation, food anc erning bodies or officials and boards shall not be liable on the undertakings or the protectio of the commission, contractual or otherwise, regardless of the procedure by tion program. which such undertakings, or any of them, may be entered into. (b) Any mas (8) The regional planning commission has the power to adopt articles to t*pn shall be co regulate and govern its affairs, whether as an incorporated association or Political subdi' otherwise, in the performance of the regional planning functions as defined ^consistencies ; by statute; such articles shall contain rules pertaining to the transaction of Mentation purs the com m ission's business. The regional planning commission shall keep 30-26-301. records of its resolutions, transactions, contractual undertakings, findings, (c) The mast and determinations, which records shall be public records. The regional plan ;0r the extrac ning commission has and shall exercise all powers necessary or incidental 34-1-304, C.R.S. to exercise fully the powers and authority conferred in this section. (9) A regional planning commission may. to the extent provided for «n Source: L. ; a resolution adopted by a board of county commissioners, perform the func j?* 6 18, § 3 ; C .F tions of a county planning commission as provided for in this part 1. *S4, 17. (10) Nothing in this part 1 shall preclude participation by any county or . Cross references. / municipality in more than one regional planning commission. , lles, see § 30-11-101 Source: L. 39, p. 295, § 4; CSA, C. 45A, § 4; CRS 53, § 106-2-4; L. p. 181, § 1;L. 59, p. 617, §2;C .R .S . 1963, § 106-2-4; L. 72, p. 498, § 1. ?«*C.^p0ra,e "s Pursuant to section must be determine 3H-6-I22. Blue River Defense Comm. v. Town tion control commission for approval of loca facts, circumstances of Silverthorne, 33 Colo. App. 10. 5|6 p ->d tion for sewage treatment facilities did not ticular case. Di Salle 452(1973), constitute submission to the county planning 261 P.2d 499(1953). Disregard of zoning regulations, Even with commission as contemplated by this section The purpose of thi out definite statutory direction, as found in where one page of the application contained a density of populatii this section, courts of last resort have recog signature of approval on behalf of the plan where not so desi nized that districts, authorities and other state ning commission. Blue River Defense Comm v. Town of Silverthorne. 33 Colo. Apn to’ implies such intend* authorised governmental subdivisions have 516 P.2d 452 (1973). ’ Giggal, 128 Colo. 20! the power to overrule or disregard the restric Courts will Indul tions of county or municipal zoning regula Denver did not need to first obtain the con- favor of a zoning re tions. Reber v. South Ukewood San Dist sent of Arapahoe county to the acquisition, for sumption of constlt 147 Colo. 70. 3f0 !\:d 877 (1961). an airport, of lands already zoned for airport burden upon one w The extent and exact location as referred to purposes by the Arapahoe county officials. invalidity of provit in this section could not be determined in emi City & County of Denver v. Hoard of doubt that the reso nent domain proceeding until the question of Comm'rs, 113 Colo. 150. 156 P.2d 101 (1945), Board of County G necessity had been decided. Miller v. Public Statute as basis for jurisdiction. See Board Colo. 277,493 P.2d Scrv. Co,, 129 Colo, M3. 272 P.2d 283 (1954) of County Comm'rs v. Hinton. Colo v. Board of County appeal dismissed. 348 U.S. 923 7S S Cl Tlx’ __ • MX P.2d 122 (1976), 505 P.2d 958(1973). 99L. Kd. 724(1955). ' ' ' Applied in McArthur v. Zabka, 177 Colo, To sustain an att Application by town to the state water pollu- 337. 494 P,2d 89 (1972). zoning limitation, owner must show tl- 30-28-111. Zoning plan. (1) The county planning commission nf nn„ upon his property v purpose to which ii counts h ^ ’ and UPOn °rder by thC b0ard 0f coumV commissioners in any where the reaso county having a county planning commission shall, m a If» a zonine nhn for ordinace is fairly S d in e bnihT °f tl\ef^njn£P ^rated territory within such county upheld. Famulari /ni n fh h thC full1te?it °f the ^ning resohîÏÏôïrând the maps and renre- Comm'rs, 180 Colo nr Jn recommendations of the commission for the regulation by districts And a board of a legislative body, ha* or zones of the location, height, bulk, and size of buildings and other struc sifying and regulat tures, percentage of lot which may be occupied, the size of fo?s courts and industry, recreatioi other open spaces, the density and distribution of population ’the location it is not the fund and use of bwldmgs and structures for trade, industry, residence^^ recreat on mine how uses shi public act,vit,es, or other purposes, and the uses of landforTrade T d l T y shall be permitted comprehensive zoi secred0The0counIv *;urp?ses* T o.the end that ^equate safety may be County Comm'rs secured, the county planning commission may include in said zonine nlan 277. 493 P. 2d 1358 Thus, whether o Z m ornSf , o o d w M in 8 ' ^ SUch “ « Z t objectionable than runoff chinnH ni- h ,ru['0ff cha™ el ,or basin as such storm or fioodtater determination in runoif channel or basin has been designated and approved by the Colorado respective zoning water conservation board in order to lessen or avoid the hazards to persons Comm’rs v. The P. 2d 1358 (1972). fToodwTr? Pr°Per‘y reSU'tinB früm the accumula“ s " And a zoning c unconstitutional b coum vTi1nethpl!.nvt^ Planning commission or the hoard of adjustm ent of any desirable and con' portion' of ^ ° ! r wers pursuant lo lhis article, may condition any of County Comm the erm /thir. f resol“,lon' amendment thereto, or any exception to 277,493 P.2d 135} à n v ttn rm ! H 7 °1 P^rvation. improvement, or construction of Nor is a zoning 30-28-112. Cotorado^ater cons^vation^Mrd.Channe* and aPPr°V£d by ^ sion shall cert porated terri C.r IT%U m ^ 0 ;2L9'66§, 1!!;42,S§AV C' ^ § ' 0: CRS 53' § '° 6-2-10; thereof or ad county. Aftei § SeC 82 Am' JUr' 2d' Zon,n8' And A m . Ju r. See 82 A r § § 38,45. C .J.S . See 101 C .J.S ., 7?; P™tectln« both urban and nonurban development Purposes set forth. T t of the s ate ?Ô « , K S embly he,,;eb>'.finds a"« declare, that it is the policy Ihe many purposes for •ions may be designed a dcntial surroundînes Fur h T Ih "y d'Sa,bled persons 10 live in "OTmal resi‘ not only the health, saf lishment of state-hVen^H Î if eeneEa* assembly declares that the estab- >ence. order, prosperit tally disabled ner^nn * eroup ^om^s f ° r the exclusive use of developmen- Present and future inhab censed°f StaICW,'de c0ncern and (hat a » « V * a!so, among other purpo use of nrooertv for 1 devel°pm entally disabled persons is a residential °f land uses and distribi for zoning nurnrKpf" ^ purP ° ses- The Phrase “ residential use of property Went and utilization, | base, fostering of the st residentiaf zoning mH 3S *n S subsection <2). includes all forms of residential zoning and specifically, although not exclusively, single-family 30-28-116. Regu county commission im is s io n e rs ment should be conducted in an orderly a judicial proceeding. Monte Vista Profes- rity of this manner bm need no, S,ric,ly conform to .he sional Bl d,.. nc ». O tyo i Mjmte V »U , 35 :mbers and rules of procedure and evidence necessary in Colo. App. 235. 53! P.2d 400 (19/U 2 than half le planning 30-28-118. Appeals to board of adjustment. (1) Appeals to the board of m c o m p e n - adjustment may be taken by any person aggrieved by his inability to obtain hich terms a building permit or by the decision of any administrative officer or agency ie m e m b e r based upon or made in the course of the administration or enforcement ot n t m a y b e the provisions of the zoning resolution. Appeals to the board of adjustment on written may be taken by any officer, department, board, or bureau of the county e unexpired affected by the grant or refusal of a building permit or by other decision T h e b o a rd of an administrative officer or agency based on or made in the course of board, and, the administration or enforcement of the provisions of the zoning resolution. o w in g to The time within which such appeal shall be made, and the form or other ard, or any procedure relating thereto, shall be as specified in the general rules provided Mlity by an by the board of county commissioners to govern the procedure of such board of adjustment or in the supplemental rules of procedure adopted by such cify in its board. , , ,, on, proce- (2) Upon appeals the board of adjustment has the following powers. lall not be (a) To hear and decide appeals where it is alleged by the appellant that m e n t m a y there is error in any order, requirem ent, decision, or refusal made by an p a rt I o r administrative official or agency based on or made in the enforcement of the zoning resolution; . . n e r s m a y (b) To hear and decide, in accordance with the provisions of any such subject to resolution, requests for special exceptions or for interpretation of the map > set forth or for decisions upon other special questions upon which such board is m s o f th e authorized by any such resolution to pass; itent. The (c) Where, by reason of exceptional narrowness, shallowness, or shape d ju s tm e n t of a specific piece of property at the time of the enactment of the regulation f lot lines or by reason of exceptional topographic conditions or other extraordinary he a d m in - and exceptional situation or condition of such piece of property, the strict application of any regulation enacted under this part 1 would result in peculiar :all of the and exceptional practical difficulties to, or exceptional and undue hardship d u re m a y upon, the owner of such property, to authorize, upon an appeal relating to d m in is te r said property, a variance from such strict application so as to relieve such le district difficulties or hardship if such relief may be granted without substantial d e n f o r c e detriment to the public good and without substantially impairing the intent jju s tm e n t and purpose of the zone plan and zoning resolutions. jc e e d in g s (3) The concurring vote of four members of the board in the case of a or failing five-member board and of three mem bers in the case of a three-member tio n s a n d board shall be necessary to reverse any order, requirem ent, decision, or h e o f f ic e determination of any such administrative official or agency or to decide in favor of the appellant. 1 0 6 -2 -1 6 ; Source: L. 39, p. 303, § 17; CSA, C. 45A, § 17; CRS 53, § 106-2-17; C.R.S. 1963, § 106-2-17. not strictly Am. Jur. Sec 82 Am. Jur. 2d, Zoning, permits. Guildner Way, Inc v. Board of I of adjust § § 296-321 Adjustment, 35 Colo. App. 70, 529 P.2d 33- C.J.S. See 101 C.J.S., Zoning, § 210, (1974). , Requirement of hardship relates to vari- Proof required. In order to obtain rezoning arKes, not to special exceptions or special use to permit a use which an applicant seeks, he lUawl..*'.«- C o u n ty the drainage facilities in the drain- ;ated. The subdivision regulations tures. /ider, from any surplus basin funds Source: Amended, L. 77, p - 1453, § 3. - of compliance with the plans for ess of the sum of the drainage fees Cross reference: For duties o f the state B iologist upon receipt of copies ibdivision regulations require such rainage basins shall be adopted pur- SM 5 34-1-103(4). under Constitutional Taxing Limitations'’, see provisions of this section shall not FoT article*' * ‘Property Tax Incentives for 59 Den. L.J. 485 (1982). isting drainage district organized or Implementing S o i l Conservation Programs >val o f s u c h d is tric t. ,-28-137. Guarantee of public Improvements. (3)(a) and (4)(a)(II) amended and 30 _ >9, 1162, §§!,!, 9, 2; (11) added, . _ . ... lïi.nlr V. Board of id (4.3) added, L. 84, pp. 826, 827, jgSSM S8aiSS,‘ P A R T 2 ■Not necessary to pursue administrative reme- ies where county initiates court action to iforce regulations. Although usually" a land- BUILDING CODES wner must first present his objections to land te regulations to the appropriate administra- ve agency before challenging those regula- 30-28-201. Commissioners ma? building code in all ons in the courts, where a board of county board of county commissioners « auth >" Umits of any incorporated emmissioners initiates an action to enforce its ubdivision regulations, a landowner is under or part of the county, and n o t embraced wun^ of the future con- 0 obligation to first exhaust available admin- city or town. Such code shall, p and structures, together with itrative remedies prior to asserting a defense struction or alteration of s tS«SS or in connection therewith. A redicated upon allegations of plumbing and e l e c t n c a l mstaUattjSotherm o ^ ^ a n d lum ns. nconstitutionality. Board of County Comm’rs , Goldenrod Corp., 43 Colo. App. 221, 601 structure means a combination purpose of providing shelter for agn- *.2d 360 (1979). Buildings or structures used for the P Qr pouitry may be excepted, Applied in Stagecoach Property Owners cultural implements, farm produ * ^ ’ j s 0f dwelling, building, or Vss'n v. Young’s Ranch, 658 P.2d 1378 (Colo. Vpp. 1982), The requirements structure. The board of county f the area building code, experts to assist in thepreparatipnofthe text issioners of a county access to public highways. No person (2) B y July 1, 1987, every ioa^ /i^ te r every board of county com- 1 approval to a local authority unless which has enacted a building code, a d shall cnact a building irsuant to section 43-2-147, C.R.S., missioners of a county whichenacts¡a installation 0f fireplaces m subdivision will have access to the code provision to regulate the constru standards shall be the same as or ti the state highway access code. order to minimize emission level . . ti for fireplaces established by nded, L. 82, p. 626, § 32. section 25-7-407, C.R.S. ements. (2) The agencies named in is within thirty-five days after the Source: Amended, L. 84, p. 782, § 2. representative of such plans unless thirty days has been consented to Law reviews. For article. “Syntheti.c Fuels- nty commissioners of the county in Policy and Regulation”, see 51 U. U>io. i-. « ï î FH w SSSE b he failure of any agency to respond Rev. 465 (1980). . , . _nim. id of an extension shall, for the pur Code inapplicable to water proJwt. A coun ty's building code, adopted pursuant to this led an approval of such plan; except 695 F.2d 465 (10th Cir. 1982). ¿ L i e doesnot pertain to the «« * « * » * more dwelling units, a school district diversion boxes, conduits, time limit specific recommendations M ASON v , S T A T E Colo. 1 9 9 Cite M 689 P.2d 199 (Colo.App. 1984) 1. Pardon and Parole «=»56 Doctrine of official immunity pertains Marilyn A. MASON, Individually and as only to individuals and is inapplicable, ei personal Representative of the Estate ther directly or vicariously, to afford immu of Michael D. Mason, Deceased, and as nity to Parole Board or State in action next friend of Christopher Lee Mason, premised on negligence and direct liability a minor, Plaintiffs-Appellants, of Board acting aa entity in release of prisoners and upon imputation of that lia v. bility to State under theory of respondeat STATE of Colorado, Colorado Board of superior. parole, Gordon W. Heggie, individually 2. Pardon and Parole «=»56 and as Chairman of the Board of Pa Official immunity does not extend to role, Daniel Grove, individually and as Parole Board and State since, if every sov Vice-Chairman of the Colorado Board ereign entity were automatically immune of Parole, Richard A. Sutton and John from suit by virtue of vicarious enjoyment M. Zapien, individually and as members of doctrine of official immunity, the abro of the Colorado Hoard of Parole, De- gation of sovereign immunity by General fendants-Appellees. Assembly and Supreme Court would be No'. 82CA1474. rendered meaningless. C.R.S. 24-10-102, 24-10-104(1), 24-10-108. Colorado Court of Appeals, 3. S ta te s «=»79 D iv. II. Since official immunity statute makes June 28, 1984. no mention of government entity vicarious ly enjoying immunity of its officials, Court Rehearing Denied July 26, 1984. of Appeals would not read such provisions Certiorari Granted Oct. 22, 1984. into statute. C.R.S. 24-10-104. 4. States «*112.2(2) Since no single person is empowered to Wife brought a wrongful death action act as agent of Parole Board, in that parol against the Parole Board and the State for ing of inmate requires concurrence of at the death of her husband who had been least two Board members, wife's cause of murdered by an inmate released by the action for wrongful death of lier husband Parole Board. The District Court, Chaffee who was murdered by inmate released by County, Edward 0. Schlatter, J., dismissed Board rested on theory of direct liability the action, and the wife appealed. The for Board’s individual act of negligence Court of Appeals, Berman, J., held that: (1) rather than in respondeat superior for acts the doctrine of official immunity pertains of its agents, and upon imputation of only to individuals and did not apply to Board’s direct liability under theory of re afford immunity to Parole Board or the spondeat superior, to State; thus, wifes State in an action premised on the negli cause of action was not barred by ruling gence and direct liability of the Board act that judgment on merits favorably absolv ing as an entity and upon imputation of ing employees of responsibility acts as bar that liability to the State under a theory of to any action against employer where respondeat superior, and (2) the Parole cause of action against employer rests on Board and the State waived the defense of respondeat superior. C.R.S. 17-2-201(9)(a). sovereign immunity by maintaining liability 5. States «=*112.1(3) insurance, despite any provisions of law to Since Parole Board cannot act other the contrary. than as entity comprised of two or more persons, Board is not principal acting Affirmed in part, reversed in part, and through number of agents, but is entity remanded with directions. 200 Colo. 689 PACIFIC REPORTER, 2d SERIES which may be sued directly and, thus, State Hall & Evans, David R. Brougham, Den al defenda may be sued as Board’s principal, for there ver, for defendants-appellees. In d eed , ov is no immunity protecting State against Colo.A pp. imputation of Board's negligence to it un BERMAN, Judge. su p p o rts i der doctrine of respondeat superior. Plaintiff appeals the trial court judgment the sole q C.R.S. 17-2-201(9)(a), 24-10-104(1). dismissing her claim for damages in a trial cour wrongful death action against defendants. * Board an' 6. States •»191(1.12) We affirm in part and reverse in part tie s /’ see Where State has liability insurance, it On December 3, 1976, the Colorado Vol. 10), i is deemed to have waived defense of sover Board of Parole (Parole Board) granted tif f in *3 eign immunity, despite any provisions of parole to Larry Smith, an inmate at the question, law to the contrary. C.R.S. 24-10-104(1). state reformatory, who had been sentenced th is appe 7. States «»191(1.12) in 1974 to an indeterminate to 30-year term a n d th e 1 Statute which provides that where for aggravated robbery. On February 3, e n titie s" State has liability insurance, it is deemed to 1978, following his release, Smith traveled have waived defense of sovereign immuni to Texas where he murdered 26-year-old ty despite any provisions of law to the Michael Mason, who was the husband of [11 D contrary takes precedence over, and makes plaintiff, Marilyn Mason, and the father of o f Color inapplicable, statute which precludes waiv Christopher Lee Mason, their minor son. n o t only er of sovereign immunity where injury On October 17, 1979, plaintiff filed a im m u n it arises from act, or failure to act, of public complaint on behalf of herself, her son, and official i j employee where act is type of act for which decedent’s estate, for damages for the trine co ; public employee would be or has been per wrongful death of decedent. Plaintiff o ffic ia l- \ sonally immune from liability. C.R.S. 24- claimed that the Parole Board's release of therefor ; 10-104(1), 24-10-106(2). Smith was a violation of § 17-2-201(3)(c), ty immi : C.R.S. (1978 Repl.Vol. 8), in that defend cem e d . 8. P a rd o n a n d P a ro le €=»56 ants knew, or reasonably should have N evei : States «»191(1.12) known, that there did not exist a "strong S ta te c- Parole Board and State waived defense and reasonable probability" that: (1) Smith m unity of sovereign immunity to negligence action would not thereafter violate the law, and' th em a by maintaining liability insurance, despite that (2) Smith's release from institutional ap p ly t any provisions of law to contrary. C.R.S. custody was compatible with the welfare of th e ent 24-10-104(1). society. In short, plaintiff claimed that State c defendants acted negligently and are, 9. A p p eal a n d E r r o r ®=»843(2) th e doc therefore, liable for the claimed damages th e de Court of Appeals did not address issue proximately caused by the negligence. th a n th of whether wife should be precluded from Defendants filed a motion to dismiss on maintaining suit against Parole Board and [21 1 State for wrongful death of her husband grounds that they were immune from liabil th a t if who was murdered by inmate released by ity by virtue of the Colorado Governmental au to tn a Board because of inherent difficulty of Immunity (Sovereign Immunity) Act, § 24- o f vica; Board’s task of predicting who is and who 10-101, e t seq., C.R.S. (1982 R epl.V ol. 10). officio' is not likely to commit future crimes if After a transfer of venue, the motion was eig n i released on parole, sinee appeal was limited treated as one for summary judgment, and an d o1 to resolution only of question of whether the trial court dismissed plaintiff’s action, a n d 2 immunity bars any tort action, regardless holding that all defendants have “total im w ould munity from suit in the circumstances of its merit, by wife against State and n o t p presented by this case,” This appeal fol B oard. in ten t lowed. C o n r. Upon oral argument to this Court, plain 22, 5 Jim Leventhal, P.C„ Jim Leventhal, Den tiff conceded the individual immunity of grow ver, for plaintiffs-appellants. defendant chairman and the other individu (1976 M ASO N v., STATE Colo. 201 C ite s « 689 P J d 199 (Colo.App. 1984) al defendant members of the Parole Board. [3] This interpretation of § 24-10- Indeed, our decision in Cooper v. Hollis, 42 104(1), C.R.S. (1978 Repl.Vol. 10) finds sup Colo.App. 505, 600 P.2d 100 (1979) fully port in other jurisdictions. For example, supports plaintiffs concession. Therefore, the Supreme Court of Vermont, a state the sole question remaining is whether the with a statute (29 V.S.A. § 1403) substan trial court erred in holding that the Parole tially equivalent to § 24-10-104(1), C.R.S. Board and the State of Colorado, as “enti (1982 Repl.Vol. 10), has interpreted its stat ties," see § 24-10-103(5), C.R.S. (1982 Repl. ute as providing that since: Vol. 10), are immune from liability to plain “[t]he immunity waiver elucidated in [the tiff in this action. In determining this statute] makes no mention of the govern question, we note none of the parties to mental unit vicariously enjoying an em this appeal contend that the Parole Board ployee’s immunity, ... [w]e will not strip and the State of Colorado are not "public the statute of its plain meaning nor ig entities” as defined in the above statute. nore the obvious intention of the Legisla tu re .” My Sister’s Place v. City o f Bur I. lington, 139 Vt. 602, 433 A.2d 275 (1981). [1] Defendants, Parole Board and State Similarly, since § 24-10-104, C.R.S. (1982 of Colorado, argue that they are immune Repl.Vol. 10) makes no mention of govern not only under the doctrine of sovereign mental entities vicariously enjoying the im immunity, but also under the doctrine of munity of its officials, we refuse to read official immunity. However, the latter doc such a provision into that statute. trine concerns the immunity to which an We are aware of our ruling that “[w]here official—an individual —is entitled and is, the cause of action asserted against an therefore, inapplicable to the issue of enti employer rests in respondeat superior and ty immunity with which we are here con not on an individual act of negligence, a cerned. See Cooper v. Hollis, supra. judgment on the merits favorably absolv Nevertheless, the Parole Board and the ing the employees of responsibility acts as State contend essentially that official im a bar to an action against the employer.” munity ought to extend, vicariously, to Flournoy v. Say les, 37 Colo.App. 67, 544 them as entities even though it does not P.2d 649 (1975). However, we do not per apply to them directly. They argue that ceive it to be a barrier to plaintiffs cause the entities of the Parole Board and the of action against the two entities heie. State cannot logically be held liable under the doctrine of respondeat superior because [4] The claim for relief here is based on the defendant entities cannot act other a theory of the negligence and direct liabil than through each entity’s employees. ity of the Parole Board as an entity and [2] We disagree for the simple reason upon the imputation of that liability, under that if every sovereign entity were to be a theory of respondeat superior, to the automatically immune from suit by virtue State of Colorado. For, as plaintiff points of vicarious enjoyment of the doctrine of out, the paroling of an inmate requires the official immunity, the abrogation of sover concurrence of at least two Parole Board eign immunity by our General Assembly members, § 17-2-201(9)(a), C.R.S. (1978 and our Supreme Court, see §§ 24-10-102 Repl.Vol. 8). That is, no single person is and 24-10-108, C.R.S. (1982 Repl.Vol. 10), empowered to act as an agent of the Parole would be rendered meaningless. We may Board. Thus, plaintiff’s cause of action not presume that the General Assembly rests on an “individual act of negligence,” intended such an unreasonable result. by the Parole Board as an entity rather Conrad v. City o f Thornton, 36 Colo.App. than in respondeat superior. Therefore, 22, 536 P.2d 855 (1975), rev'd on other the alleged negligence in releasing Smith is grounds, 191 Colo. 444, 553 P.2d 822 attributable only to the entity of the Parole Board and, under respondeat superior, ulti (1976). 2 0 2 Colo. 689 PACIFIC REPORTER, 2d SERIES mately to any principal for which that enti [6-8] Defendants argue, in contrast, ty acted. that they are entitled to immunity by virtue of § 24-10-106(2), C.R.S. (1982 Repl.Vol. [5] That is, § X7—2—201 (9)(a) states pre 10) which precludes a “waiver of sovereign cisely the converse of defendants' conten immunity where the injury arises from the tion that the defendant Parole Board can act, or failure to act, of a public employee not act other than through each individual where the act is the type of act for which m em ber of the Board. The statute clearly the public employee would be or heretofore provides, instead, that the Parole Board has been personally immune from liabili cannot act other than as an en tity com ty.0 However, the emphasized language prised of two or more persons. of § 24-10-104(1), C.R.S. (1982 Repl.Vol. Hence, the Parole Board is not a princi 10) is clear that where the State has liabili pal acting through a number of agents, as ty insurance, as does the State of Colorado, defendants suggest. Rather, it is one of and its Parole Board, such public entities the ‘'entities" under § 24-10-104(1), C.R.S. are deemed to have waived the defense of (1982 Repl.Vol. 10) which may be sued di sovereign immunity, despite any provi rectly and, thus, the State may be sued as sions of law "or of this article” to the the Parole Board’s principal, for there is no contrary. Since § 24-10-106(2), C.R.S. immunity protecting the State against the (1982 Repl.Vol. 10) is a "provision of this imputation of the Parole Board's negli article,” § 24-10-104(1), C.R.S. (1982 Repl. gence to it under the doctrine of responde Vol. 10) takes precedence over and makes at superior. inapplicable § 24-10-106(2), C.R.S. (1982 Repl.Vol. 10). Therefore, sovereign immu II. nity does not stand as a barrier to plain Regarding the specific doctrine of sover tiff’s suit against either the Parole Board eign immunity, plaintiff contends that, pur or the State. See Forrest v. County Com- suant to § 24-10-104(1), C.R.S. (1982 Repl. missioners, 629 P.2d 1105 (Colo.App. 1981). Vol. 10), the Parole Board and the State have each waived the defense of sovereign III. immunity by virtue of maintaining liability Defendants argue finally that plaintiff insurance, as required by § 24-10-116, should be precluded from maintaining a C.R.S. (1982 Repl.Vol. 10). We agree. suit against them because of the inherent difficulty of the Parole Board’s task of Section 24-10-104(1), C.R.S. (1982 Repl. predicting who is and who is not likely to Vol. 10) provides: commit future crimes if released on parole. "Notvnthstanding any provision of law This argument is essentially directed at the or of this article to the contrary, if a m erits of plaintiff’s negligence claim, to- public entity provides insurance coverage wit, whether defendants breached the rele provided by an insurance company autho vant duty of care and whether such a rized to do business in this state to in breach was the actual and proximate cause sure itself against liability for any injury of decedent’s murder and, thus, plaintiffs or to insure any of its employees against injuries. his liability for any injury resulting from an act or omission by such employee [9] We need not address those issues acting within the scope of his employ here since this appeal is limited to a resolu ment, then such public entity shall be tion of only the question of whether immu deemed to have waived the defense of nity bars any tort action, regardless of its sovereign immunity in any action for merit, by plaintiff against the defendant damages for any such injury insured entities. Here, we hold only that the Pa against...." Section 24-10-104(1), role Board and the State of Colorado are C.R.S. (1982 Repl.Vol. 10) (emphasis sup not immune, under the doctrines of sover plied) eign or official immunity, from plaintiff's MASON v. STATE Colo. 203 Cite H 689 P.2d 199 (Colo.App. 1984) w ro n gful death action, which action is liability of the entities of the Parole Board and the State of Colorado, and the cause is based on the alleged negligence of the enti remanded for further proceedings. ty of the Parole Board and upon the impu tation of that alleged negligence, under the KELLY and BABCOCK, JJ., concur. doctrine of respondeat superior, to the State of Colorado. The trial court judgment dismissing NUMB» S«UM> plaintiff’s cause of action is affirmed as to the individual liability of the members of the Parole Board and is reversed as to the JUSTUS v. JEFFERSON COUNTY SCHOOL DIST. R-l Colo. 805 Cite M 683 P J d 80S (Colo.App. 1984) also gone conclude that the court had discretion to review changes in these same factors, and Larry Gene JUSTUS, By and Through w ife had his Conservator, and Father, J.D. Ig m e n t for modify maintenance to insure fairness and JUSTUS, Plaintiff-Appellant, *d testified reasonableness. See In re Marriage of A p ril 1982 Manzo, 659 P.2d 669 (Colo.1983); In re v. Marriage of Jones, 627 P.2d 248 (Colo. JEFFERSON COUNTY SCHOOL DIS 1981); § 14—10—102(2)(b)» C.R.S.1973. S h e h ad TRICT R -l, Defendant-Appellee. w a s dis- [3] We hold that the trial court did not No. 82CA1404. the econo- abuse its discretion in terminating mainte Colorado Court of Appeals, personally nance. It is true, as argued by the wife, Div. I. igner with that the husband's burden to pay mainte »ume to 15 nance was mitigated by the trial court’s Jan. 26, 1984. initial order making maintenance a percent Rehearing Denied March 8, 1984. m a rria g e age of annual gross income. However, the Certiorari Granted June 25, 1984. *d that it decline in husband's income was so precipi to a w a rd tous that it called into question the fairness court fur- of any maintenance requirement. See student and his parents brought neglt- 'no signifi- § 14—10—114(2)(f), C.R.S.1973. This is par- gence action against county school district t em ploy ticularly true considering the brevity of the arising out 0f student’s injury in off-prem- in g “diffi- marriage and the wife s long history of jgea bicycle-automobile accident. The Dis- e n t.” T he independence. See § 14-10-114(2)(d), C.R. trict Court( j efferson County, James D. S.197S. Zimmerman, J., entered summary judg- vman, 653 Further, we find no error in the court’s ment in favor of school district, and appeal :enda that remark that it never "intended" mainte- was taken. The Court of Appeals, Pierce, )Ie,” and nance to be permanent. The court's state- J., held that school, by its rules and regula- mrty seek- ments at the hearing on the original decree tions, assumed a duty to prevent plaintiff t property indicate that it believed the wife could pro- student, a first grader, from leaving school to support vide for herself, but would need mainte- grounds on a bicycle, he a rg u e s nance for a reasonable time in order to Reversed and remanded, h e re dem - re-establish her career. See § 14—10— t terminat- 114(2){b), C.R.S.1973 (1982 Cum.Supp.). ree. However, the court concluded that a rea- 1. Negligence <®=,2, 136(14) sonable time had elapsed by the time of the Before liability can be found in any hat uncon- modification hearing, and it was no longer negligence action, including those against a ) is meas- fair for the husband to bear the conse- public entity, existence of duty of care a n d ju s t” quences of wife’s failure to find substantial must be determined, which is a question of \m ey, 631 employment. law . conclude ì s ta n d a rd Order affirmed. 2. Negligence «=»2 n m ainte- Whether the law should impose a duty In o u r TURSI and BABCOCK, JJ., concur. of care requires consideration of risk in m an w as volved, foreseeability and likelihood of inju ig re e m e n t ry as weighed against social utility of an •ior to the actor’s conduct, magnitude of burden of lent. guarding against injury or harm, and con sequences of placing burden upon the ac m e n t an d to r. .intenance 3 included 3. Schools «»89.2 82 Cum . A school has a duty to supervise its ,nces, w e students when they are on its premises. 8 0 6 Colo. 683 PACIFIC REPORTER, 2d SERIES 4. Schools £»89.2 The school had established procedures Under most circumstances, a school for busing students to and from school, and has no duty of care to protect its pupils off had provided this information to parents in school premises; a school may, however, pamphlet form. Plaintiff was among the through its actions and policies undertake students eligible to ride a bus. The pamph such a duty. let also set forth rules and regulations which provided that only students in the 5. Schools «»89.2 fourth, fifth, and sixth grades were grant Where school, by its rules and regula ed permission to ride bicycles back and tions, undertook to restrict those students forth to school. who would be permitted to travel to and School officials had implemented the poli from school by bus or bicycle so that only cy by establishing a plan for supervising students in fourth, fifth and sixth grades students leaving the school by bike or bus. were granted permission, it implemented The plan included the posting of teachers in those regulations by placing teachers on front of the school at the time school was guard to enforce the regulations and in dismissed, to enforce the school's rules and form parents that regulations were en regulations and to observe and ascertain forced, and school was also aware of off- the safe departure of all students from premises dangers to young students, it as school whether by bus or bicycle. There sumed a duty of care to prevent plaintiff, a was evidence presented from which a jury first grade student, from leaving the could conclude that school officials could grounds on a bicycle. have foreseen the happening of this acci dent, if the school’s on-premises precau tions were not successfully implemented. Davidovich & Welton, Charles Welton, Denver, for plaintiff-appellant. [1,2] Before liability can be found in any negligence action, including those Madden & Strate, P.C., George J. Strate, against a public entity, the existence of a Robert J. Carlson, Wheat Ridge, for de- duty of care must be determined, which is fendant-appellee. a question of law. Wheeler v. Baker, 636 P.2d 1326 (Colo.App. 1981); Salazar v. City PIERCE, Judge. of Sheridan, 44 Colo.App. 443, 618, P.2d Plaintiff, Larry Gene Justus, a minor, by 708 (1980), Whether the law should impose his father and conservator, J.D. Justus, a duty requires consideration of the risk appeals from a summary judgment entered involved, the foreseeability and likelihood against him by the trial court in a negli of injury as weighed against the social gence action against defendant, Jefferson utility of an actor’s conduct, the magnitude County School District R-l. We reverse of the burden of guarding against the inju and remand for a trial on the merits. ry or harm, and the consequences of plac The various documents submitted to the ing the burden upon the actor. Iverson v. court for determining the motion for sum Solsbery, 641 P.2d 314 (Colo.App.1982). mary judgment indicate that plaintiff was The issue here is whether the school dis six years old and enrolled at an elementary trict had a duty to protect its students from school within the district. His usual meth foreseeable harm against conditions exist od for travelling to and from school was to ing off school district premises, under the ride a school bus provided by the district. circumstances of this case. The trial court ruled that there was no such duty. We On the day he was injured he missed the d isag ree. bus and, without his parents’ knowledge, rode his bicycle to school. After school, he [3,4] A school has a duty to supervise was riding his bicycle home when he was its students when they are on its premises. involved in an accident with an automobile. Carroll v. Fitzsim m ons, 153 Colo. 1, 384 PEOPLE IN INTEREST OF M.H. Cite M 683 P J d 807 (CoIo.App. 1984) p 2d 81 (1963). Under most circumstances, Here, the breach of duty, if any, oc there would be no duty as to protection of curred at the time the six-year old plaintiff the pupils off the school premises. See left the school ground on his bicycle when Turner v. Grier, 43 CoIo.App. 395, 608 school personnel were supposedly on guard P.2d 356 (1979). A school may, however, against this unauthorized method of trans through its actions and policies, undertake portation by a first grader. such a duty, and we rule that it did so here. We add the admonition stated by the See Wright v. Arcade School District, 230 c o u rt in Flournoy: Ca!.App.2d 272, 40 Cal.Rptr. 812 (1964). “It is to be noted that this holding in no [5 ] The school, by its rules and regula way imputes any validity or lack of valid tions, undertook to restrict those students ity to the merits of plaintiffs’ claim who would be permitted to travel to and against the School District ... from school by bus or bicycle. It imple The summary judgment is therefore re mented these regulations by placing teach versed and the cause remanded for trial on ers on guard to enforce the regulations, the issues of whether the duty was breach and it informed the parents that the regula ed, and, if such breach of duty did occur, tions were in force. The school was also whether it was a cause of the injuries suf aware of off-premiaes dangers to students fered by plaintiff, and, finally, if so, what of plaintiffs age. It therefore assumed a damages may have been sustained. duty to prevent a first grade student from leaving the grounds on a bicycle. BERMAN and METZGER, JJ., concur. This case is analogous to Flournoy v. McComas, 175 Colo. 526, 488 P.2d 1104 (1971), where the complaint alleged negli I KfY NUMBIR SYSIEM? gence on the part of school officials for not having sufficient personnel available to protect children crossing a busy street ad jacent to the school. There, the children were to engage in school activities on the other side of the street, but the allegations The PEOPLE of the State of Colorado, were similar to those here in that they Petitioner-Appellee, In the Interest pertained to the failure of school officials of M.H., Child, to fulfill a duty owed to students on or near the premises of the school. and concerning J.H., There, the court stated: Respondent-Appellant. “Liability for the alleged negligence of No. 82CAI486. [the school district defendants] must rest upon a factual determination of whether Colorado Court of Appeals, the negligence of [a third defendant] was Div. II. reasonably foreseeable and within the Feb. 2, 1984. risks created by their alleged negligent failure to provide adequate supervision Rehearing Denied March 8, 1984. and care. Certiorari Denied June 25, 1984. “[I]t cannot be said, as a matter of law, Appeal was taken from order of the from the language of the complaint that District Court, Arapahoe County, Joyce [the school district] defendants, by rea Steinhardt, J., which terminated parental son of their alleged negligence, respec rights. The Court of Appeals, Smith, J., tively, did not proximately cause the held that testimony by psychiatric and psy death of plaintiffs' decedent — ” chological witnesses as to mother's mental }$ Coto ß f f f ' 1^1 °[ Co¡ CLpp S ~ lt ° r- / ^ ? 7 9 . S é c o a 5 ^ 4 ,U >.«.•>— ptc/i-i O /.i u Ct'/iìffcc'TZf... c^_ a & t u Æ ~ Ì J è > g J Î Ï Ï Z ^ / t t û l s ? C u * ( £ ò j ^ j ' \ l l h v ,® u * j £ £ L ¿ f? & - d/q/3/ ° 1 ^ ) /àtttutz- kJicj^iZAir^ d&uMl^j lornmM&Lsr&j-s ~/a ni&teLsuJ ^ usöYßüi ^aryiCt^xtXjsv 6ß ffa dou-ul^j- gtuß , efe C n ^p o oeo_> CI pUJo^a IX^ilX-mQ flu tij CUPá 1/lq-j (U¡mn^LA(UJY^Ja^ Cuiíu ¡ nctiuidLoiA-ll^. Íuüú-Qjl ilih-tL trdlcA ) c n ^ Ob0£wr\{°r Öüuraxg'ö-' 'ßür iñsu (jilA±K ^ a - . ( p u & ß m r Q uáM cL &ÿ iA&- buA.JxXjvfl-* i h $ J CMjjfSj £ p u S ! /'/.& o. ¿?0ö C /9<*öy 3* <53,£ F !p ^ k /S 9 0 tuda. OL dÿ O- (I& î u m J ^ dß CLCÉX / t e a (A-\ ¿ £ & s r x x ~ g,<_ ¿?*> ¿14^tyvL-ÿ iû C U Ú Íh-e-^ - 9 f X X f i w c é f - # £ ¿Wrf ¿ ^ ~ d & O C U ^ C o m /TÌM XUJSrUAS* ... qJ.,. 'A u t(¡*¿ % rfy iñdhtfcLc-u.^ j\¿ ts f-Lúc¿voJL^ ■ CLMYS -fo b tù ^ TÍUÁ a c ts üLfíd^r Í&-~ M í^/ tlhfl£J~<~' h O A y & u & e j fr>- Uúe &-tdjtHa^p dá^-C. O t t l A 4 j l A O o b l í U i . £ v \ ^ ¿ ú s ¿Z ^5 <-5¿V b o f ¿ ¿ ¿ ¿ ( tJ L - r -^ or ¿It^rc& à òr cua*j>u^>f&. f~í / J U A f * S Í y^e A o o K v. ß d L t n o ^ 7 3 C i t o , 5 ^ C ^ ^ 3 ^ ) ~ tuj SìWUjJju on doiLtdg, com ryujmjm-^o u j c u f f t o l ¿ Cl j ^ L L h é i j ìnipcsefl CLfC’Yi Qo a_ ¿ o i / Ä ìnt-tnos. Qf cl p v M U c &j a ì ^ )yujj& ~ ¿e. ¿ l, . pLitOù, CIMC! VU* ìhcUvi'cLuuJl ìr^uAadicU. nuli): ipe fadjY& lM dj. cß Q t äßßj W ¿l /X /Js& uL ÇiYOSf’Ç- Jilê fhûl OûUAA±ÙA L&J l ì o J d b L ( a t ò r é ^ Pr*L dàU Aitu dom ¡rviJj^üÄjsywv^ß-^- n j ^ z LAJJo&l for ìr^lU ujbù ^O LJ-K^O ü^ ( h ^ ß x J M J c K ^ t u t u ^ o 102 THE COLORADO LA WYER January The Board of County Commissioners of the County of La Plata, Husband first contends that the trial court failed specifically a political and governmental subdivision of the State of to follow the order of remand and, thus, committed error. He Colorado, argues that the trial court lacked jurisdiction to do more than Defendant-Appellant. merely enter findings of fact concerning its original order and that, consequently, its second order is void. This argument is Decided November 21, 1985. without merit. A void judgment is a judgment entered where jurisdictional defects exist, and is a nullity. Davidson Chevrolet, Inc. v. City Appeal from the District Court & County of Denver, 138 Colo. 171, 328 P.2d 377 (1958). An o f La Plata County erroneous judgment is one rendered in accordance with the method of procedure and practice allowed by law, but contrary Honorable James D. Childress, Judge to the law. Davidson Chevrolet, Inc. v. City & County of Denver, supra. If the trial court has jurisdiction, it may correct an erroneous judgment. See Yordlng v. Walker, 683 P,2d 788 Alan E, Johnson, for Plaintiff-Appellee. (Colo. 1984); City of Grand Junction v. District Court, 193 Colo. 419, 566 P.2d 1077 (1977). Hall & Evans, Richard A. Waltz, Alan Epstein, for Here, the remand order was sufficiently broad to encompass Defendant-Appellant. the trial court’s action. The remand order returned jurisdiction to the trial court for an explanation of the basis for its child support determination. See Yording v. Walker, supra: City of Grand Junction v. District Court, supra. Division HI. No jurisdictional defects existed which would render the sec ond order void. Rather, the trial court correctly recognized that, Opinion by JUDGE METZGER. as a matter of law, its first order had become erroneous in light of the holding in In re Marriage of Lamm, supra. Because of the broad language of the order of remand and the change in Defendant, the Board of County Commissioners of La Plata the law, the trial court acted correctly. County (the Board), appeals the trial court’s entry of judgment Husband’s argument, if taken to its logical conclusion, would on a verdict finding the Board negligent in failing to enforce the have us reverse a trial court’s order because it correctly followed county’s uniform building code and thereby causing injuries to the law. This we will not do. plaintiff, Frederick Moreland. We affirm. U. Ron McEwan began construction of a cabin in the spring of Husband and the Colorado Bar Association as amicus curiae 1973. He Hug a foundation and put reinforcing rods in place, argue that the present system of awarding child support needs to but did not obtain a building permit pursuant to the then exist be modified and made more uniform. They urge this court to ing La Plata County Resolution No. ¡972-25. This resolution mandate the use of a formula method to calculate child support. was adopted pursuant to a zoning plajr which required building The case-by-case method, currently used in Colorado, allows a permits in order to build or improve/ a structure. In effect, that trial court in its discretion to order either party to pay an resolution assessed a tax of $1 per $1,000 of value for the is amount “reasonable or necessary” for child support after consid suance of a building permit. ering all relevant factors. Section 14-10-115, C.R.S. Husband On December 31, 1973, the Board enacted La Plata County and the Colorado Bar Association submit that this case-by-case Resolution No. ¡973-130, which adopted the Uniform Build determination fails to provide uniformity of results, thus leading ing Code of the International Conference of Building Officials to perceived inequities and thereby increasing litigation and con (U.B.C.). The effective date of the resolution was January I, tributing to non-payment of support obligations. 1974, and it provided that all construction work performed after They ask that we require the exclusive use of a formula that date must conform to the requirements of the U.B.C., with method of determining child support similar to that adopted in no exceptions. Sm ith v. Sm ith, 290 Or. 675, 626 P.2d 342 (1981). See also Richard Yeager, La Plata County’s first building inspector Hamilton v. Hamilton, 290 S.E.2d 780 (N.C. App. 1982). The hired April I, 1974, was charged with developing a building de formula approach takes into account the income of both parents partment and with enforcing the provisions of the U.B.C. and and leaves the determination of the needs of the child to the La Plata County Resolution No. 1973-130. Because of the trial court. For example, if the non-custodial parent earns two- lack of sufficient experienced personnel, the Board adopted a thirds of the total parental income, he or she would pay two- policy that existing residential dwellings and those dwellings thirds of the amount of support as determined by the trial court. whose construction had commenced prior to January I, 1974, The trial courts in this state are imbued with broad discretion would not require buildi'ng inspections, and were not to be in in determining child support, and may consider all methods of spected. computation argued. We decline to mandate the exclusive use of In the spring of 1974, McEwan was told by the Rural Electri the proposed formula, because to do so would invade the prov cal Association that he must obtain a building permit in order to ince of the General Assembly. receive temporary electrical power. McEwan obtained a building The order is affirmed. permit from the county on April 8, 1974, The permit was issued by the county assessor’s office, which had previously issued per JUDGE BERMAN and JUDGE TURSI concur. mits pursuant to La Plata County Resolution No. ¡972-25. No plans or blueprints were submitted as required by the U.B.C., nor were any required subsequent inspections of the No. 83CA12S5 dwelling performed. However, Yeager did visit the McEwan cabin for other rea sons in the summers of 1974 and 1975. During both visits a Frederick Moreland, deck constructed by McEwan along the west and north sides of Plaintiff-Appellee, the cabin had been completed. During Yeager’s 1974 visit there v. was no guard rail; during his 1975 visit the only guard rail was ¡986 COLORADO COURT OF APPEALS ¡03 along the west edge of the deck. Much of the deck, including district, this court ruled that, although the school district both the north and west sides, was as much as ten feet above the ordinarily would not have a duty to protect pupils off school ground. This was a clear violation of the U.B.C., which required premises, nevertheless, since the school had undertaken such a guard rails along decks built more than 30 inches from ground duty by its actions and regulations, liability could be found. level. Sim ilarly, in Gilbert, this court found a duty owed by the de Moreland’s accident took place on March 10, 1982. He had fendant city to an injured kindergartener. There, crossing guards gone to visit a friend who was renting McEwan’s cabin. Early were provided at the intersection where plaintiff was injured fol that evening, Moreland left the cabin, walked off the deck on lowing the dismissal of afternoon classes, but no crossing guards the north side, and fell to the ground sustaining a spinal injury were provided for the kindergartners who were dismissed earlier rendering him a paraplegic. in the day. Again, the finding of a duty was based upon an un At trial the jury found the Board 58 percent negligent and dertaking, providing crossing guards for some students, and a Moreland 42 percent negligent. This appeal followed. subsequent omission, failing to provide crossing guards for other T. students. The Board first contends that, as a matter of law, it owed no Likewise, in Martinez v. City of Lakewood, supra, the city duty to Moreland under the circumstances of this case. We disa was found to have assumed a duty to plaintiff by virtue of its gree. having undertaken to correct an area of poor visibility. In order to prove negligence, a plaintiff must show that the Here, La Plata County Resolution No. 1973-130 adopted defendant, including a public entity defendant, has a legally im the U.B.C., which clearly required decks more than 30 inches posed duty or a standard of conduct to which the defendant above ground level to be equipped with a guard rail. McEwan must adhere. Dare v. Sobule, 674 P.2d 960 (Colo, 1984); purchased a building permit after the effective date of that reso Justus v. Jefferson County School District R-l, 683 P.2d 805 lution. This permit stated that he was to comply with all “laws (Colo. App. 1984)(cert. granted June 25, 1984). The duty may and regulations in the location, construction and erection” of the derive from either a statutory standard of conduct or from a ju structure for which the permit was granted. dicial or common law standard. Dare v. Sobule, supra. In La Plata County Resolution No. ¡973-125, §XIV, enti Whether a defendant owes a legal duty to a particular plain tled “penalty,” the Board revealed its intent to apply the U.B.C, tiff and the scope of that duty^ are questions of law. to those structures under construction on the date of its adop Metropolitan Gas Repair Service, Inc. v. Kulick, 621 P.2d tion, stating: "No person shall commence or continue any work 313 (Colo. 1980). in respect to any building . . . in violation of the provisions of “Whether the law should impose a duty requires consideration this Resolution.” (emphasis added) Nevertheless, similar to the of the risk involved, the foreseeability and likelihood of injury as situations in Martinez, Justus, and Gilbert, the Board here weighed against the social utility of an actor’s conduct, the mag failed to follow its own regulations by adopting a policy that nitude of the burden of guarding against the injury or harm, and structures begun before January I, 1974, would not be in the consequences of placing the burden upon the actor.” spected. Justus v. Jefferson County School District R-l, supra. Since the Board took affirmative action to alleviate the haz A. ards of poor construction standards, a common law duty to use Statutory Duty reasonable care to protect foreseeable plaintiffs arose. See The Board argues first, and we agree, that Quintano v. Martinez v. City of Lakewood, supra. Consequently, the Industrial Commission, 178 Colo. 131, 495 P.2d 1137 (1972) Board’s decision not to enforce the inspection requirement as to is dispositive as to the statutory duty issue. There, plaintiff al structures begun before January 1, 1974, fails to negate the duty leged that a state statute requiring inspection of all factories im which arose by its affirmative action of adopting building stand posed a duty upon the Colorado Industrial Commission and the ard regulations. See Justus v. Jefferson County School individual commissioners to inspect. The supreme court held that District R-l, supra; Gilbert v. City of Arvada, supra. the Industrial Commission as a whole was shielded by the doc Accordingly, under common law principles, the issue of the trine of sovereign immunity and the individual commissioners Board's liability to Moreland was a factual question properly owed no duty unless there was a clear indication that the Gen submitted to the jury for resolution. eral Assembly intended the statute to be used as a basis for civil II liability. Quintano v. Industrial Commission, supra. See also The Board, however, contends that the doctrine of official im Martinez v. City of Lakewood, 655 P.2d 1388 (Colo. App. munity and public policy considerations necessitate a finding of 1982). Therefore, no statutory duty may be found in the absence immunity under these facts. We disagree. of a legislative intent to impose civil liability. Under the doctrine of official immunity, immunity attaches if Accordingly, since the Board did not include a civil liability the official acts which give rise to the complaint are discretion provision in the La Plata County Resolution No. 1973-130, ary in nature, and, for purposes of the immunity doctrine, dis no statutory duty may be implied. cretionary acts, are those acts of a judgmental, planning, or pol B. icy nature. Cooper v. Hollis, 42 Colo. App. 505, 600 P.2d 109 Common Law Duty (1979). Here, however, we are concerned with sovereign immu The Board also argues that no common law duty arises be nity and its abrogation under the Governmental Immunity Act. cause this action involves nonfeasance. Moreland, on the other Therefore, the doctrine of official immunity and the distinction hand, argues that this is a case of misfeasance. We agree with between discretionary and non-discretionary acts is not applica Moreland that, since the Board took affirmative steps to pass ble. Mason v. State, 689 P.2d 199 (Colo. App. 1984)(cert. and enforce a building code, its negligence and that of its em granted Oct. 22, 1984). ployees could be found to be a cause of Moreland’s injuries. Moreover, we note that this case arises in the context of the The issues involved here are similar to those in Justus v. Colorado Governmental Immunity Act. Section 24-10-101, et. Jefferson County School District R-l, supra, and Gilbert v. seq„ C.R.S. (1982 Repl. Vol. 10). Section 24-10-104, C.R.S. City of Arvada, 694 P.2d 847 (Colo. App. 1984)(cert. granted (1982 Repl Vol. 10) provides that if: Jan. 14, 1985). In Justus, the Jefferson County School District “a public entity provides insurance coverage . . . to insure itself established a regulation which provided that only students in the against liability for any injury or to insure any of its employees upper elementary grades were permitted to ride their bicycles to against his liability for any injury resulting from an act or omis school. The plaintiff, a first grader, was injured while riding his sion by such employee acting within the scope of his bike home from school. In reversing summary judgment for the employment, then such public entity shall be deemed to have 104 THE COLORADO LA WYER January waived the defense of sovereign immunity . . . reputation evidence; and (3) it was adduced before the victim Here, the Board had obtained insurance to cover the instant lia testified and, thus, before her credibility was in issue. Because bility. Therefore, the Board is not immune from suit. we do not view this testimony as being governed by CRE III. 608(a), we reject this contention. Finally, the Board contends that the trial court erred in fail CRE 608(a) is identical to its federal counterpart, which ing to instruct the jury in accordance with its tendered instruc addresses impeachment of a witness by opinion or reputation tion concerning the affirmative defense of honest and reasonable evidence of his untruthful character. See III D. Louisell & C. mistake. There was no error here. M ueller, Federal Evidence §303, et seq. (1979). The rule pro The honest and reasonable mistake defense is a subpart of the vides: common law doctrine of sovereign immunity. See Flournoy v. "The credibility of a witness may be attacked or supported by McComas, 175 Colo. 526, 488 P.2d 1104 (1971); if* also evidence in the form of opinion or reputation, but subject to Winters v. City of Commerce City, 648 P.2d 175 (Colo. App these limitations: (I) The evidence may refer only to character 1982). Where, as here, the Governmental Immunity Act applies, for truthfulness or untruthfulness, and (2) evidence of truthful the public entity is deemed to have waived the defense of sover character is admissible only after the character of the witness eign immunity. Mason v. State of Colorado, supra. Conse for truthfulness has been attacked by opinion or reputation evi quently, the public entity is to be treated as any other private li dence or otherwise.” tigant. See Martinez v. City o f Lakewood, supra. Because no By its literal terms, CRE 608(a) does not require that all evi private litigant may assert the “honest and reasonable mistake” dence probative of credibility be presented in the form of opin defense in a negligence action, W. Prosser »Sc O. Keeton, Torts ion or reputation testimony and we do not so interpret it. The §§65-68 (5th ed. 1984), neither may the Board. Accordingly, the rule merely states limitations on the use of. that kind of credibil trial court correctly refused the tendered instruction. ity evidence. Here, the mother testified to the fact that Social The judgment is affirmed. Services had suggested counseling, but no opinion was offered JUDGE BERMAN and JUDGE TURSI concur. and the victim’s reputation for truthfulness was not addressed. Therefore, CRE 608(a) does not apply. The propriety of receiving this testimony is governed by CRE 402 and 403. Defendant contends that these ruled require rejec No. 83CAI387 tion of the testimony because it was irrelevant and prejudicial. Again, we disagree. The People of the State of Colorado, Relevent evidence is evidence having any tendency to make a Plaintiff-Appellee, fact more or less probable than it would be without the evidence. v. CRE 401. Although relevant evidence may be excluded on Ronald Elwood Myers, grounds of prejudice, confusion, or waste of time, see C R E 403, Defendant-Appellant. such determinations are within the sound discretion of the trial court, People v. More, 668 P.2d 968 (Colo. App. 1983), and, absent abuse of that discretion, will not be disturbed on appeal. Decided November 21, 1985. See People v. Lowe, 660 P.2d 1261 (Colo. 1983). The mother's testimony that the victim had undergone coun Appeal from the District Court seling at the suggestion of “Social Services” is relevant to the of Adams County occurrence of the sexual assault. Further, we conclude that its admission was not unduly prejudicial and, therefore, we cannot Honorable Philip F. Roan, Judge say that the trial court abused its discretion in admitting it. People v. Lowe, supra. II. Duane Woodard, Attorney General, Charles B. Howe, Chief Defendant next contends that the jury was not clearly in Deputy Attorney General, Richard H. Forman, Solicitor structed as to the definition of “sexual contact.” We disagree. General, Cynthia L. Nimerichter, Assistant Attorney General, The instruction provided in part: for Plaintiff-Appellee. ‘“Sexual contact’ is an intentional touching of another person’s intimate parts by the actor, or of the actor’s intimate parts by David F. Vela, Colorado State Public Defender, Scott the other person, or the intentional touching of the clothing cov Jurdem, Deputy State Public Defender, for Defendant- ering the immediate area of the other person's or actor’s inti Appellant. mate parts if that sexual contact is for the purposes of sexual ar ousal, gratification, or abuse.” Defendant argues that the trial court erred in failing to instruct the jury that the phrase “if that sexual contact is for the Division I. purposes of sexual arousal, gratification, or abuse" modifies all acts within the definition, and not merely the last antecedent. Opinion by JUDGE STERNBERG. Defendant claims that without further instruction the jury was likely to assume that the qualifying phrase, “for the purposes of sexual arousal, gratification, or abuse” did not relate to "the in The defendant, Ronald Elwood Myers, appeals the judgment tentional touching of another person’s intimate parts.” of conviction entered upon a jury verdict finding him guilty of Initially, we note that defendant neither objected to this in sexual assault on a child. We affirm. struction nor raised the alleged error in his motion for new trial. I. Therefore, we may not reverse defendant’s conviction absent a Defendant first argues that the trial court erred in allowing showing of plain error. People v. Constant, 645 P.2d 843 the victim’s mother to testify that the Department of Social (Colo. 1982); People v. Trujillo, 682 P.2d 499 (Colo. App. Services had suggested that the victim receive counseling follow 1984). We conclude that no error, much less plain error, oc ing the assault. He asserts that admission of this evidence vio curred. lates CRE 608(a) because: (1) the testimony is probative of the Although no Colorado case has directly responded to defend credibility of the victim; (2) it was not in the form of opinion or ant's argument, other cases have applied the qualifying phrase to WELBORN, DUFFORD, BROWN Ô TOOLEY RANDALL J. FEUERSTEIN R OB E R T F. W E L B O R N ATTORNEYS AT LAW S. KIRK INGEBRETSEN PHILIP G. DUFFORD 1700 BROADWAY DIANE L. BURKHARDT THOMAS G. BROWN STEPHEN J. SULLIVAN DALE TOOLEY {1933-1963) DENVER, COLORADO &0290-1199 JO H N M. S P IL L A N E DAVID W. FURGASON (303) 861-8013 E L L E N T O L L WILLIAM C. ROBB DOUGLAS P. RUEGSEGGER JOHN F. WELBORN E D W A R D D. W H IT E BEVERLY J, OUAIL PEGGY J. ANDERSON RICHARD L. FANYO KATHRYN L, POWERS P H IL L IP D. B A R B E R June 18, 1986 GREGORY A. RUEGSEGGER JOHN F. MECK Ms. Mary L. Andersen San Juan County Clerk P.O. Box 455 Silverton, CO 81433 R e : Sunnyside Gold Corporation/Standard Metals Dear Mary: I received information regarding the amount of consideration for the warranty deed from Standard Metals Corporation to Sunnyside Gold Corporation pertaining to five parcels in the Town of silverton, which previously was sent for recording. The total amount of consideration was $125,492.85. Accordingly, enclosed is our check for the documentary fee in the amount of $12.55. Should any further questions arise, please feel free to telephone me. Thank you for your continued assistance. Very truly yours, WELBORN, DUFFORD, BROWN & TOOLEY Carla St. Romain Title Clerk/Legal Assistant CS/kw Enclosures cc: Mr. Dennis Krantz 3 6 0 6 A WELBORN, DUFFORD, BROWN, & TOOLEY ATTORNEYS AT LAW UNITED BANK OF DENVER, N.A. 1700 BROADWAY United Bank Center DENVER, COLORADO 80290 1700 Broadway Denver, Colorado 80274 23-7/1020 22442W-4ST Rocky MognlaH Bark Noi« WELBORN, DUFFORD, BROWN, & TOOLEY ATTORNEYS AT LAW______;______PAYE Ei DETACH THI9 STATEMENT BEFORE DEPOSITINO. DISCOUNT OR N ET AMOUNT DESCRIPTION AMOUNT DEDUCTION DATE INVOICE NO. Recording Fee (60) Echo 12.55 1160 E4691001 June 18/ 1986 NOTICE OF TRANSFER Colorado State Office Bureau of Land Management 2020 Arapahoe Street Denver, Colorado 80205 Attention: Case Files Section Ladies and Gentlemen: Pursuant to 43 C.F.R. § 3833.3 (1985), the undersigned hereby states that, effective November 19, 1985, ownership of certain interests previously held by Standard Metals Corporation in unpatented mining claims situate m San Juan County, Colorado, more particularly described m Exhibit hereto, has been transferred to: Sunnyside Gold Corporation Building D 484 Turner Drive Durango, Colorado 81301. Please amend your records accordingly. As evidence of your receipt, please date-stamp the enclosed copy of this Notice and return it to this office. Thank you for your assistance. Very truly yours, SUNNYSIDE GOLD CORPORATION B y ? ______.______Gregory B. Sparks Mine Manager EXHIBIT A TO Claim Name CMC Number Claim Name CMC Number American Tunnel No. 2 6346 Copper Boy No. 1 77872 American Tunnel No. 3 35586 Copper Boy No. 2 77873 Andes Lode 69946 Copper Boy No. 3 77874 Apollo 10 70248 Cortina 70254 Argentine Extension 70249 Cummingtonite 11730 Basque Millsite 5462 Dives Millsite 5463 Bear No. 12 77877 Doe 71064 Belinda 70250 Doggy Wog 11728 Betsey 70251 Dynasty Millsite 5470 Big Mac 70252 Echo 160683 Birdbath Millsite 191873 Empire 77841 Bob No. 11 201342 Empire No. 1 77842 Bob No. 12 201343 Empire No. 10 77851 Bob No. 15 201344 Empire No. 2 77843 Bob No. 17 201345 Empire No. 3 77844 Bob No. 18 201346 Empire No. 4 77845 Bob No. 20 200831 Empire No. 5 77846 Bob No. 21 201347 Empire No. 6 77847 Bob No. 23 200833 Empire No. 7 77848 Bob No. 24 201348 Empire No. 8 77849 Bob No. 25 201349 Empire No. 9 77850 Bob No. 26 200834 Equestrian Placer 104609 Bob No. 27 201350 Ezra R Ext 70255 Bob No. 28 200835 Float Gold Placer Tract A 77882 Bob No. 29 201351 Float Gold Placer Tract C 77883 Bob No. 30 201352 Florence Fraction 79237 Bob No. 31 201353 Flower 1494 Bob No. 32 201354 Flower No. 1 1495 Bob NO. 33 201355 Flower No. 2 1496 Bob No. 34 201356 Fobie 70256 Bob No. 35 201357 Francis No. 1 77880 Bob No. 38 201358 Franco Millsite 5465 Boston Amended 71062 G. Q. Fraction 79233 Boulder Mt No. 1 MS 5467 Gladstone Millsite 82529 Boulder Mt No. 2 MS 5466 Goat 71065 Boulder Mt No. 3 MS 5469 Golden Fleece No. 1 77862 Bryce 160685 Golden Fleece No. 2 77863 Buck 71063 Golden Fleece No. 3 77864 Buckhorn 70253 Golden Fleece No. 4 77865 Byron No. 1 77868 Golden Fleece No. 5 77866 Byron No. 2 77869 Golden Fleece No. 6 77867 Byron No. 3 77870 Grace S. 1501 Byron No. 4 77871 Comstock Fraction 79235 Oriental Lode 69947 Gretchen 70257 Overflow Millsite 48417 Harold Amended 71066 69951 p.S. Millsite 5452 Hi Ho Silver Lode 69948 Independence Fraction 79234 Parrado Lode 160686 Paymaster Ext Lode 6342 Jarvis 70264 jay Bird 70258 Peggy pickup Fraction 79232 Jessica 160144 70259 Plumbers Millsite 5453 John B 5468 John and Mary Lode 69950 Powerline Millsite 5461 Pronto Amended 71078 Juan Carlos Millsite 71079 Karla Millsite 5460 Protected Amended 71067 S.G.M. 77879 Kid 70265 Kinnear 1502 Sam Savage Sam Millsite 5459 Knob 71068 6339 Shenandoah Millsite 5464 La Bolsa Lode 1493 Marge Millsite 5457 Silver Queen Millsite 1 1482 Mastadon Millsite 71076 Silverado No. 10 1491 McCarty No. 10 35580 Silverado No. Silverado No. 2 1483 McCarty No. 11 35581 Silverado No. 3 1484 McCarty No. 16 35582 Silverado NO. 4 1485 McCarty No. 17 35583 NO. 5 1486 McCarty No. 18 200722 Silverado Silverado No. 6 1487 McCarty No. 19 200723 NO. 7 1488 McCarty No. 20 200724 Silverado NO. 8 1489 McCarty No. 58 200845 Silverado 200846 Silverado No. 9 1490 McCarty No. 59 77881 McCarty No. 8 35578 Slide Snowdr ift No. 1 177989 McCarty No. 9 35579 Snowdrift No. 2 177990 McNamee 1500 Snowdrift No. 3 177991 Mexia 77857 Snowdrift No. 4 177992 Mexia No. 2 77858 Snowdrift NO. 5 177993 Mexia No. 3 77859 N o . 6 177994 Mexia No. 4 77860 Snowdrift Snowdrift No. 7 177995 Mexia No. 6 77861 Snowdrift No. 8 177996 Midas 160684 St. Joe Amended 71081 Midnight 70260 71074 Standard 71080 Midway No. 10 5454 Midway No. 31 71075 Surprise Millsite 71071 Tempest Tunnel Site 77878 Midway No. 7 160682 Midway No. 8 71072 Tiros Tom Moore No. 1 77852 Midway No. 9 71073 70261 Tom Moore No. 2 77853 Ming Tom Moore No. 3 77854 Miriam 1492 Tom Moore No. 5 77855 Molly B 70262 77875 Tom Moore No. 6 77856 Nantucket No. 1 77823 77876 Treasure Mountain Nantucket No. 2 77824 79236 Treasure Mountain No. 1 Neptune Fraction 77833 5455 Treasure Mountain No. 10 New Deal Millsite 77834 70263 Treasure Mountain No. 11 Nimon Treasure Mountain No. 12 77835 Northern Pacific Amended 71077 Treasure Mountain No. 13 77836 Occidental Lode 35585 Treasure Mountain No. 14 77837 Treasure Mountain No. 15 77838 Treasure Mountain No. 16 77839 Treasure Mountain No. 17 77840 Treasure Mountain No. 2 77825 Treasure Mountain No. 3 77826 Treasure Mountain No. 4 77827 Treasure Mountain No. 5 77828 Treasure Mountain No. 6 77829 Treasure Mountain No. 7 77830 Treasure Mountain No. 8 77831 Treasure Mountain NO. 9 77832 Tricky Dick Millsite 5458 Tube Stake 11729 W.Y.O.D. 1497 W.Y.O.D. No. 1 1498 W.Y.O.D. No. 2 1499 Watergate Millsite 5456 Whitehawk 70244 zzyzzx 160146 8288D WELBORN, DUFFORD, BROWN 8 TOOLEY R OB E RT F. WELBORN ATTORNEYS AT L A W RANDALL J. FEUERSTEIN PHILIP G. DUFFORD 1 70 0 BROADWAY S. KIRK INGEBRETSEN THOMAS G, BROWN DIANE L.BURKHARDT DALE TOOLEY (1933-1985) DENVER,COLORADO Ô0290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JO H N M. S P IL L A N E (303) 861-8013 WILLIAM C.ROBB E L L E N TOLL JO H N F. W E L B O R N DOUGLAS P. RUEGSEGGER WILLIAM A. MCLAIN EDWARD D. WHITE BEVERLY J. QUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L. POWERS P H IL L IP D. B A R B E R GREGORY A. RU EG S EGG ER JO H N F. M ECK June 6, 1986 Gary L. Greer, Esq. Sherman & Howard 2900 First Interstate Tower North 633 Seventeenth Street Denver, CO 80202 Re: Sunnvside Gold Corporation Dear Gary: At our meeting today with the Gerber Minerals people, Dr. Free stated that you might supply us with a copy of the underlying lease documents relating to the Gold King Extension claims. At your convenience, would you please have a copy of those documents delivered to me. Thank you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/slf Frank J. Stelnegger Vice President BCE D evelopm ent Properties Inc. Cushman Realty Corporation ; i ; ? iiit ; 370Seventeenth St., Sto.4000 • Denver, Colorado00202 • 303/629-5003 ¡< I, ; i,i ;; < :-i - ■ a 4 I V W ï b W MOU! Michael H. O’Brien Vice President BCE Development Properties Inc. .■a '•i-ViVr.-ri.w,. ,• uic-.uii.-.iK;.'-;'.' Cushman Realty Corporation h ‘ i>,lllh' 1 1 Ul) 370 Seventeenth St., Ste. 4000 • Denver, Colorado 60202 • 303/629-5083 i) ' * company Lease Critique Echo Bay Mines, Ltd. Republic Plaza Denver, Colorado June 3, 1986 The following comments and recommendations are made regarding the Lease of office space and Office Construction Agreement proposed by BCE Development Properties, Inc. to Echo Bay Mines, Ltd. Article 3.01 In the footnote following the double asterisks at the bottom of page 2, delete the phrase, "whichever is earlier." Article 3.03 This Article should be ammended to provide that Tenant shall have the right to cancel the Lease in the event that due to Landlord's act or omission, Landlord is unable for any reason to substantially complete the demised Premises in accordance with Tenant's plans and specifications and obtain a Certificate of Occupany by September 1, 1986 subject only to delay resulting from force majeur, by giving Landlord sixty (60) days written notice. Notwithstanding the Tenant's right to cancel as of September 1, 1986, subject to force majeur, Tenant shall have the absolute right to cancel for any reason by giving the Landlord sixty (60) days written notice if Landlord has not substantially completed the demised Premises pursuant to Tenant's plans and specifications and obtained a Certificate of Occupancy on or before October 31, 1986. In addition to the above, Landlord will reimburse Tenant for any rent or related expenses or penalties incurred by Tenant as a result of delayed occupancy of Tenant's premises beyond September 1, 1986. Article 4.04 In the last sentence, after the word Rent, / the phrase should be inserted, "or obligations incurred under the Lease." This is to make it clear that only rent incurred under the Lease shall survive the expiration or earlier termination of the Lease. Echo Bay Mines, Ltd. June 3, 1986 Page 2 Article 5.03 Should be amended to provide that notwithstanding the foregoing in the event Tenant has obtained Landlord's written consent to an assignment or sublease pursuant to Article 11.00 hereof Tenant may vacate that portion of the premises to be assigned or sublet. Article 7.02 In the second line after the word notice, the phrase should be inserted, "plus a reasonable period to cure, not to exceed thirty (30) days." In the last line, the 20% fee for overhead and supervision is too high. We should adjust it to 12% for contractor’s general conditions, fee and overhead. Article 7.03(d) In the second line, strike the words "performance and payment bonds" and insert the phrase, "evidence reasonably satisfactory to Landlord of Tenant's ability to pay." Performance and payment bonds do not guarantee payment but only the right to litigation and substantially increase cost by virtue of the premiums. Article 10.01(b) At the end of this clause insert the phrase, "except caused by Landlord's negligence,". Article 11.01(a) Delete the phrase, "parent or wholly owned subsidiary corporation" and replace with the phrase, "related entity or affiliate." Article 11.01(b) Before the word "opinion", delete the word "sole" and insert the word "reasonable." Article 11.02 Before the word "written" insert the word "reasonable" and before the word "opinion" insert the word "reasonable." Article 11.03 In the first line delete the phrase, "to a named third party"; on the third line insert the words "to be" between the words rent and U .i- '■ offered and two words later delete the word f, ! "that" and insert the word "a" before third party; and in the second sentence on the fourth line of the paragraph delete the phrase, "to a named third party." Echo Bay Mines, Ltd. June 3, 1986 Page 3 Article 11.04 In the sixth line delete the phrase, "a building in the same city in which" and on the seventh line, after the word "Building", delete the phrase, "is located and which is owned or managed by Landlord or any affiliate of Landlord"; and on the eight line delete the phrase, "as established by Landlord." In the last sentence of Article 11.04, delete the phrase, "upon Landlord's approval of any" and insert the phrase, "if no profits are available under an" and after the word "charge" insert the phrase, "not to exceed $ 1 ,000." Article 17.03 Beginning at the end of the third line, delete the phrase, "that is a second or more inferior lien against the Building or Land,". Article 17.05(b) In the first line after the third word from the end, "Purchaser," insert the phrase, "and Tenant." Article 20.15 In the last line after "Tremont Street" insert the word "exposure." Exhibit A This exhibit should conform to final configuration established by the space plan. Exhibit B Section 3.02 Clarification is required from the Landlord regarding the phrase, "shall include a portion of unallocated space in the building as determined by Landlord." Exhibit D Article 21.02(c) Delete the second and third lines and replace with the phrase, "the same as the terras of this Lease except there shall be no Article 21." In the fourth line, delete the phrase, "owned or managed by Landlord." Echo Bay Mines, Ltd. June 3, 1986 Page 4 Article 22.04(b) This paragraph should be mpdified to provide for binding arbitration as set forth in the Letter of Intent. Article 23.03(c) In the last line before the semi-colon insert the phrase, "in addition to the ceiling and ceiling components installed by the Landlord including building standard lighting, HVAC, fire protection, ceiling grid and tiles, currently valued at approximately $8.17 per rentable square foot." Article 23.03(d) In the second line after the third word, "that," insert the phrase, "the space is contiguous and that." Article 23.03(f) After the word "in," in the second line, delete the remainder of the sentence and insert the phrase, "this Lease." Exhibit D - 1 This exhibit should be changed to conform with the results of the final space plan. Echo Bay Mines, Ltd. June 3, 1986 Page 5 Office Construction Agreement Paragraph 3 Commencement of Business At the end of the second line, delete the phrase, "the earlier of." Paragraph 4 Commencement Date Add the following language: "Tenant shall have the right to cancel the lease in the event that due to Landlord's act or omission Landlord is unable for any reason to substantially complete the demised premises in accordance with Tenant's plans and specifications and obtain a Certificate of Occupancy by September 1, 1986 subject only to delay resulting from force majeur, by giving Landlord sixty (60) days written notice. Notwithstanding Tenant's right to cancel as of September 1, 1986 subject to force majeur, Tenant shall have the absolute right to cancel for any reason by giving Landlord sixty (60) days written notice if Landlord has not substantially completed the demised premises pursuant to Tenant's plans and specifications and obtained a Certificate of Occupancy on or before October 31, 1986. In addition to the above, Landlord will reimburse Tenant for any rent or related expenses or penalties incurred by Tenant as a result of delayed occupancy of Tenant's premises beyond September 1, 1986." Space Planning Allowance it should be determined and discussed with the Landlord as to what fee they will contract for with the space planner for Tenant design, construction drawings, engineering and space planning, and any excess remaining in the $1.25 per square foot should be allocated to Tenant towards his cost for the space planner's fees for furniture selection. Echo Bay Mines, Ltd. June 3, 1986 Page 6 Schedule 1 Article 3.02 Landlord should be required -to provide a schedule for completion of the Premises with specific agreed upon deadlines by which Tenant has to provide information to conform with such schedule. Article 6.02 Reference is made to an amount set forth in paragraph 13 of the Construction Agreement. Clarification is needed as to what paragraph is being referenced. Article 7.07 Delete. Article 7.08 At the end of the paragraph add, "no fees shall be charged Tenant under this Article if the firm of Flack & Kurtz is used for the examination of Tenant's plans and specifications and for inspection of work performed by Landlord's and Tenant's contractors and workmen." Article 8.01 In the next to the last line the percentage should be reduced from 14% to 7%. D a v i s , G r a h a m & S t u b b s ATTORNEYS AT LAW WASHINGTON O.C. OFFICE SUITE 4700 COLORADO NATIONAL BUILDING OFFICE 370 SFVFNTEKNTH STREET S U IT E bO O SUITE 2400 IOOI TWENTY-SECOND STREET, N.W. POST OFFICE SOX 165 950 SEVENTEENTH STREET WASHINGTON, D.C. 20037-1803 DENVER, COLORADO BO2OI-0IS5 POST OFFICE BOX 185 TELEPHONE 202-822-8660 DENVER, COLORAOO 00201-0185 TELEPHONE 303-595-4949 TELEPHONE 303-892-9400 TELECOPIER 303-893-1379 SOUTHEAST OENVER OFFICE TELEX 240451 DGS DVR S U IT E 3 0 0 CABLE DAVGRAM, DENVER 7800 EAST UNION AVENUE CHRISTOPHER L. RICHARDSON DENVER, COLORADO 80237-2753 8 9 2 - 7 4 2 0 TELEPHONE 303-694-4464 June 3, 1986 Phillip D. Barber, Esq. Welborn, Dufford, Brown & Tooley 1700 Broadway, #1100 Denver, Colorado 80290-1199 Re : Standard Metals Corporation Dear Phil: Enclosed is a copy of the receipt for the certificate of deposit relating to the funds received yesterday from Echo Bay. As soon as the attestation arrives, I will also forward that to you. We have yet to receive the Order from Judge McGrath relating to the funds, but I can assure you that no distributions will be made in any event prior to June 20 or thereabouts. Very truly yours, Christopher L. Richardson for DAVIS, GRAHAM & STUBBS CLR/jag Enclosure HAND DELIVERED 'Ph'l- f ) b í\ dfrorowfck COLORADO NATIONAL BANK | C N B OF DENVER h =: ( « Ö M 5 3 fé « r r r r s Funds Management Phone 893-1862 Post Office Box 5168 'm u m ? Denver, Colorado 80217 iMtntVtHSESlOl) TRAOE DATE REFERENCE NO WE PURCHASE THE FOLLOWING 06/02/86 06/02/86 027960 PAR VALUE RATE MATURITY DATE PRICE YIELDBASIS : SETTLEMENT UATE 725,000.00 6.0 06/03/1986 101.37931034 6.00 06/02/86 REPURCHASE AGREEMENT ¡PRINCIPAL 1735,000.00 COLLATERAL: U S TREASURY BONDS 7 7/8 BOND 93 7.87500% DUE 02/15/1993 CUSIP 912810CA4 1 DAYS @ 6.00000 % SECURITY NUMBER SALESMAN SK/CUSTOMER NO. ACCOUNT NO. 30 RSA027960 RET 306010 0070-08-4 NET AMOUNT 735,000.00 PAYMENT ANO OELIVERY INSTRUCTIONS STANDARD METALS CORP tfE CHARGE YOUR CHECKING ACCT C/O GLENN KELLER PO BOX 185 DENVER/ CO 80201 m W o Q Q Q < £ b- / Davis, G raham 8 c S t u b b s ATTORNEYS AT LAW WASHINGTON D.C. OFFICE SUITE 4700 COLORADO NATIONAL BUILDING OFFICE 370 SEVENTEENTH STREET S U IT E 5 0 0 SUITE 2400 POST OFFICE BOX 185 IOOI TWENTY-SECOND STREET, N.W. 950 SEVENTEENTH STREET WASHINGTON, D.C. 20037-1603 DENVER, COLORADO 80201-0185 POST OFFICE BOX IS5 TELEPHONE 202-822-3660 DENVER, COLORADO 80201-0185 TELEPHONE 303-595-4949 TELEPHONE 303-892-9400 TELECOPIER 303-893-1379 SOUTHEAST DENVER OFFICE TELEX 240451 DOS DVR S U IT E 3 0 0 CABLE DAVGRAM, DENVER 7800 EAST UNION AVENUE CHRISTOPHER L. RICHARDSON DENVER, COLORADO 80237-2753 8 9 2 - 7 4 2 0 TELEPHONE 303-694-4464 May 29, 1986 HAND DELIVERED Phillip D. Barber, Esq. Welborn, Dufford, Brown & Tooley 1700 Broadway, #1100 Denver, Colorado 80290-1199 Re: Standard Metals Corporation Dear Phil: Enclosed is a copy of the Warranty Deed relating to the various properties in Silverton. As I noted on the phone, unfortunately there is no attestation. The original has been sent by overnight mail to New York to obtain the attestation and will be returned by Monday, June 2. I have signed the Joint Application for Order Authorizing Direct Payment to Disbursing Agent, and it will be filed with the Court this afternoon. I will attempt to have a copy delivered to the Judge's chambers. I have noted that the amount to be deducted from the $750,000.00 is $14,087.14, which amount reflects the proration of certain water permit fees. It is also my understanding that Standard Metals is to pay the difference between the amount billed by San Juan County for property taxes relating to certain leases held by Standard Metals and the amount Standard Metals previously paid for such properties upon closing on November 19, 1985. According to my calculations, that amount is $267.99 ($2,329.00 billed less $2,061.01 paid on closing). I have instructed Richard Rankin to send a check for $267.99 to Jim Fields. Hopefully, this resolves the loose ends outstanding between Echo Bay and Standard Metals, at least temporarily. phillip D. Barber, Esq. May 29, 1986 Page Two I again appreciate your organization and thoroughness in resolution of the issues. Very truly yours, Christopher L. Richardson for DAVIS, GRAHAM & STUBBS CLR/jag cc : Richard Rankin WELBORN, DUFFORD, BROWN 6 TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PH ILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L. BURK HARDT DALE TOOLEY (I933-I9fi5) DENVER, COLORADO 80290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. RO BB (303) 861-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A-MCLAIN EDWARO D. WHITE BEVERLY J. OU Al L PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L.PO W ER S PHILLIP D. BARBER GREGORY A. RUEGSEGGER JOHN F. MECK June 2, 1986 Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 Seventeenth Street, Suite 4700 Denver, Colorado 80202 Rej Standard Metals Corporation Dear Chris: Thank you for your May 29, 1986 letter. The only item on which we may be at odds relates to the property taxes. I will need to do a bit of investigation to determine that the property taxes from those claims were, in fact, included in the credit given to Echo Bay. If they were, Sunnyside agrees that Standard does not have to pay those taxes twice. Sincerely WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/slf WELBORN, DUFFORD, BROWN © TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PH ILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT DALE TOOLEY (1933-1935) DENVER, COLORADO 80290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. RO BB (303) 861-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J. OUAIL PEGGY J. ANDERSON RICHARD L.FANYO May 29, 1986 KATHRYN L. PO W ERS PHILLIP D. BARBER GREGORY A. RUEGS EGG ER JOHN F. MECK HAND-DELIVERED Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 Seventeenth Street, Suite 4700 Denver, Colorado 80202 Re: Sunnyside Gold Corporation Dear Chris: Enclosed are the originals of the following documents: 1. Joint Application for Order Authorizing Direct Payment to Disbursing Agent; and 2. Order Authorizing Direct Payment to Disbursing Agent. You will note that we have pro-rated the amounts attributable to the water discharge permits, as you requested. After you have signed the Joint Application, would you please have it filed with the Bankruptcy Court. Assuming that we receive the necessary deeds and personal property titles, Echo Bay will be in a position to wire transfer the money on Monday, June 2, 1986. Would you please return a date-stamped copy of the Joint Application and Order for our files. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/slf Enclosure STANDARD METALS CORPORATION, Case No. 84 B 00945 M a Delaware corporation, Debtor. ORDER AUTHORIZING DIRECT PAYMENT TO DISBURSING AGENT The Court having reviewed the Joint Motion of Debtor and Creditors' Committee concerning establishing an escrow account and the retention of a disbursing agent, and having reviewed the Joint Application for Order Authorizing Direct Payment to Disbursing Agent, and being further advised DOES HEREBY ORDER as follows: Sunnyside Gold Corporation and Echo Bay Inc. are hereby authorized and directed to pay, through direct wire transfer or other means, the sum of $735,912.86 to Davis, Graham & Stubbs as Disbursing Agent, in full satisfaction of the June 1, 1986 payment obligation of Sunnyside Gold Corporation and Echo Bay Inc., as provided in their November 19, 1985 Asset Sale and Purchase Agreement, and General Transfer, Assignment and Bill of Sale with Standard Metals Corporation. Dated this _____ day of ______, 1986. BY THE COURT: Judge John F. McGrath United States Bankruptcy Court Judge STANDARD METALS CORPORATION, Case No. 84 B 00945 M a Delaware corporation, Debtor. JOINT APPLICATION FOR ORDER AUTHORIZING DIRECT PAYMENT TO DISBURSING AGENT Standard Metals Corporation ("Standard") through its undersigned counsel, and Echo Bay Inc. ("Echo Bay") and Sunnyside Gold Corporation ("Sunnyside") through their undersigned counsel, jointly move this Court for entry of its Order (in the form submitted herewith) authorizing direct payment to Standard's disbursing agent. As grounds for this Joint Application, the applicants hereto state the following grounds: 1. Standard, Echo Bay and Sunnyside entered into that certain Asset Sale and Purchase Agreement, and General Transfer, Assignment and Bill of Sale, both of which are dated November 19, 1985 ("the Agreements"). 2. Pursuant to the Agreements, Echo Bay and Sunnyside are obligated to advance to Standard the sum of $750,000 on June 1, 1986, to be credited against any net profits interest that may be earned by Standard pursuant to the said Agreements. 3. Echo Bay and Sunnyside have paid a total of $14,087.14 since November 19, 1985 (the date of closing), in satisfaction of debts and obligations incurred by or accruing to Standard prior to November 19, 1985. Standard, Echo Bay and Sunnyside mutually acknowledge that the sum of $14,087.14 should be reimbursed to Sunnyside and Echo Bay, and further acknowledge that the said sum of $14,087.14 should be deducted from the $750,000 payment due to Standard on June 1, 1986. 4. Davis, Graham & Stubbs have previously been appointed as the Disbursing Agent for Standard pursuant to the May 6, 1986 Order of this Court. Account No. 0070084 at the Colorado National Bank has been established as the repository for funds held by the Disbursing Agent. 5. Echo Bay and Sunnyside propose that the net sum owed to Standard, i.e., $735,912.86, be wire-transferred directly to the said Account No. 0070084, upon approval of said wire transfer by this Court. WHEREFORE, the applicants hereto jointly move this Court to enter its Order in the form submitted herewith, authorizing a direct payment to Standard's Disbursing Agent in the amount of $735,912.86, in full satisfaction of Echo Bay's and Sunnyside's June 1, 1986 payment obligations under the Agreements. Dated this day of May, 1986. Respectfully submitted, WELBORN, DUFFORD, BROWN & TOOLEY BV : Phillip D .( Barber 1700 Broadway Denver, Colorado 80290-1199 Telephone: (303) 861-8013 Attorneys for Echo Bay Inc. and Sunnyside Gold Corporation DAVIS, GRAHAM & STUBBS By:______Chris Richardson Suite 4700 370 Seventeenth Street Denver, CO 80202 Telephone: (303) 892-9400 Attorneys for Standard Metals Corporation I hereby certify that I have served a true and correct copy of the foregoing JOINT APPLICATION FOR ORDER AUTHORIZING DIRECT PAYMENT TO DISBURSING AGENT by placing same in the United States mail, postage prepaid, this _____ day of May, 1986, addressed to the following: Howard Tallman Harry L. Simon, P.C. United States Trustee Suite 300 202 Columbine Building 4155 East Jewell Avenue 1845 Sherman Street Denver, CO 80222 Denver, CO 80203 Morris B. Hoffman Glen E. Keller, Jr. Mosley, Wells, Johnson & Ruttum Christopher Richardson 303 East 17th Avenue, Suite 400 Davis, Graham & Stubbs Denver, CO 80203 370 17th Street, Suite 4700 P. O. Box 185 K.K. Summers, Esq. Denver, CO 80201-0185 Golden, Mumby, Sommers & Livingston Mesa United Bank Center Darrell G. Wass 2808 North Avenue Stephen W. Seifert Grand Junction, CO 81501 Caroline C. Fuller Fairfield and Woods Deborha Freis Shpall 950 17th Street, Suite 1600 H. Thomas Coghill Denver, CO 80202 Coghill & Goodspeed, P.C, 1600 Broadway, Suite 1430 William H. Rutter Denver, CO 80202 Sherman & Howard 633 17th Street, Suite 2900 John Richards Lee Denver, CO 80202 Patriot. T. Canning Securities and Exchange Jack L. Smith Commission Morris B. Hecox 219 South Dearborn, Room 1204 Holland & Hart Chicago, IL 60610 555 17th Street, Suite 2900 Denver, CO 80202 Lawrence A. Kellogg Finley, Kumble, Wagner, Heine, Michael E. Katch Underberg, Manley & Casey Katch, Anderson & Wasserman 1000 Flagship Center 1410 Grant Street, Suite D-110 777 Brickell Avenue Denver, CO 80203 Miami, FL 33131 Michael A. Berman Alan D. Sweetbaum Office of the General Counsel Scheid & Horlbeck Securities and Exchange 633 17th Street, Suite 3100 Commission Denver, CO 80202 450 Fifth Street, N.W. Washington, D.C. 20549 Garry R. Appel Rothgerber, Appel, Powers & Johnson One Tabor Center, Suite 2800 1200 17th Street Denver, CO 80202 Jonathan I. Blackman Richard B. Herzog, Jr. Cleary, Gottlieb, Steen Bisbee, Parker & Rickertsen & Hamilton The Chandler Building, 4th Floor One State Street Plaza 127 Peachtree Street, N.E. New York, NY 10004 Atlanta, GA 30303 Richard L. Bond Sidney B. Brooks, P.C. Stewart D. Aaron The Chancery, Suite 902 Dorsey & Whitney 1120 Lincoln Street 350 Park Avenue Denver, CO 80201 New York, NY 10022 James Aronstein Nicholas E. Chimicles Parcel & Mauro Greenfield, Chimicles & Lewis Suite 3600 One Haverford Centre 1801 California Street 361 West Lancaster Avenue Denver, CO 80202 Haverford, PA 19041 Gary J. Ceriani Philip Seaton Dan L. Cartin Kozlof, Seaton & Romanini Davis & Ceriani, P.C. 1110 Wynwood Avenue Suite 400, Market Center Cherry Hill, NJ 08002 1350 17th Street Denver, CO 80202 Michael E. Romero Isaacson, Rosenbaum, Woods Paul G. Hyman, Jr. Levy & Snow, P.c. Holme, Roberts & Owen 633 17th Street, Suite 2300 1700 Broadway, Suite 1800 Denver, CO 80202 Denver, CO 80290 Robert H. Levin Adelman, Lavine, Krasny, Gold and Levin Two Penn Center Plaza, Suite 1900 Philadelphia, PA 19102 WELBORN, DUFFORD, BROWN ß TOOLEY ROBERT F. WELBORN A T T O R N E Y S AT LAW RANDALL J. FEUERSTEIN S. KIRK INGEBRETSEN PH ILIP G. DUFFORD 1700 BROADWAY DIANE L.BURKHARDT THOMAS G.BROWN STEPHEN J. SULLIVAN DALE TOOLEY (I933-I98S) DENVER, COLORADO 60290-1199 JOHN M. SPILLANE DAVID W. FURGASON (303) 861-8013 E L L E N T O L L WILLIAM C.ROBB DOUGLAS P. RUEGSEGGER JOHN F. WELBORN EDWARD D. WHITE WILLIAM A. MCLAIN PEGGY J. ANOERSON BEVERLY J. QUAIL RICHARD L.FANYO KATHRYN L. POWERS PHILLIP D. BARBER GREGORY A.RUEQSEGGER JO H N F. MECK May 29, 1986 Mr. Jim Fields Sunnyside Gold Corporation 484 Turner Drive Durango, CO 81301 Re: Settlement Statement Dear Jim: Enclosed is a copy of the Settlement Statement from the closing with Standard Metals on November 19, 1985. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY phillip D. Barber PDB/Slf Enclosure Head Office: SUNNYSIBE GOLD CORPORATION Silverton Office: Building D AN ECHO BAY COMPANY P.O. Box 177 484 Turner Drive Silverton, CO 81433 Durango, CO 81301 Phone (303) 387-5533 Phone (303) 259-1091 May 27, 1986 Rich Rankin Standard Metals Corp. Olympic Tower 645 5th Avenue New York, New York 10022 Dear Rich: Attached is the detail of Standard's debts and obligations paid by Sunnyside Gold Corporation as addressed in the le tte r attached dated May 16, 1986. If you should have any questions, please give me a call. Vet ' turs, James/t. Field, Manager Finance and Administration JEF/dlc Enclosures cc: Phil Barber WELBORN, DUFFORD, BROWN 8 TOOLEY RANDALL J, FEUERSTEIN ROBERT F. WELBORN ATTORNEYS AT LAW S. KIRK INGEBRETSEN PHILIP G. DUFFORD 1700 BROADWAY DIANE L.BURKHARDT THOMAS Q. BROWN STEPHEN J. SULLIVAN DALE TOOLEY (1933-1905) DENVER,COLORADO Ö0290-U99 JOHN M. SPILLANE DAVID W. FURGASON (303) 861-8013 ELLEN TOLL WILLIAM C. RO B B DOUGLAS P. RUEGSEGGER JOHN F, WELBORN EDWARD D. WHITE WILLIAM A.MCLAIN PEGGY J. ANDERSON BEVERLY J. QUAIL RICHARD L.FANYO KATHRYN L.POWERS PHILLIP D. BARBER GREGORY A. RUEGSEGGER JOHN F. MECK May 16, 1986 HAND DELIVERED Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 Seventeenth Street, Suite 4700 Denver, CO 80202 Re: Sunnyside Gold Corporation Dear Chris: Sunnyside Gold Corporation ("Sunnyside") has previously submitted to Standard Metals Corporation ("Standard") a Warranty Deed covering various parcels of real property located in San Juan County, Colorado, for signature by Standard. The purpose of that Warranty Deed was to vest Sunnyside with record title to certain properties which were owned by Standard in San Juan County at the time of closing, but which were not included in the various schedules at closing. We have not yet received the signed Warranty Deed. In addition, we still await Standard's return of the titles to the various vehicles and drilling equipment which were requested some time ago. Since the closing date, Sunnyside has paid a number of Standard's debts and obligations which accrued prior to closing. Those items are as follows: Date paid Payee/Description Amount 1/28/86 Colorado Dept, of Health/Waste water $6,710.00 discharge permits for due date 7/1/85 n (Terry Tunnel - $940.00; 'nv,' ¡;-y t> . oy American Tunnel - $1,440.00; Mayflower Mill - $4,330.00) 2/06/86 San Juan County Commissioners/Maintenance and coal for Old Hospital office building (7/18/85 thru 11/19/85) WELBORN, DUFFORD, BROWN Ë TOO LEY Christopher L. Richardson, Esq. May 16, 1986 Page 2 2/12/86 Joy Manufacturing Company/Advance royalty payment due 11/4/85 2/11/86 Town of Silverton/Water, sewer (delinquent 655.77 for 3rd quarter and half of 4th quarter, 1985) 5/14/86 Joy Manufacturing Company/reimbursement for 509.50 1983 property taxes 5/14/86 Joy Manufacturing Company/reimbursement for 479.76 1984 property taxes TOTAL As you are aware, Echo Bay is obligated to make a payment to Standard on June 1, 1986. This payment represents an advance against the 30% net profits interest reserved by Standard in its sale to Sunnyside. Sunnyside intends to deduct from that payment those items listed above. Because Sunnyside has not received the various titles to the real and personal property described above, Sunnyside will value that property and deduct that value from the payment which it will make to Standard's estate unless the necessary documentation to vest Sunnyside with title to the property described above is delivered to Sunnyside. We anticipate petitioning the Bankruptcy Court in advance of June 1 to determine to whom this payment should be made. Therefore, if Standard intends to convey the described items to Sunnyside, we would need to have your response on this matter no later than May 21 to assure proper time to complete the necessary paperwork. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/kw cc: Mr. Jim Field M r , Dennis Krantz Mr, John Azlant SUNNYSIDE GOLD CORPORATION DURANGO, COt.O Head Office: SUNNYSIDE GOLD CORPORATION Silverton Office: Building D AN ECHO BAŸ COMPANY1 P.O. Box 177 484 Turner Drive Silverton, CO 81433 Durango, CO 81301 Phone (303) 387-5533 May 15, 1986 Phone (303) 259-1091 Telecopy (303) 387-5310 Telecopy (303) 259-5450 Phil Barber WELB0RN, DUFF0RD, BROWN & T00LEY 1700 Broadway, Suite 1100 Denver, Colorado 80290-1199 Re: Detail of Expenses Paid on Behalf of Standard Metals Corporation Dear P h il: The follow ing is a detail o f expenses paid by Sunnyside Gold Corporation on behalf of Standard Metals Corporation. We are also en closing copies o f invoices and vouchers which relate to these expenses. Date Paid Payee/Descri ption Amount 1/28/85 Colorado Dept, o f Health/Waste water discharge 6,710.00 permits for due date 7/1/85 2/ 6/85 San Juan County Commissioners/Maintenance and 1,850.03 coal for office building (7/18/85 thru 11/19/85) 2/ 12/86 Joy Manufacturing Company/Advance royalty pay 8 ,000.00 ment due 11/4/85 2/ 11/86 Town of Silverton/Water, sewer (delinquent for 655.77 3rd quarter and half of 4th quarter, 1985) 5/14/86 Joy Manufacturing Company/1983 property taxes 509.50 5/14/86 Joy Manufacturing Company/1984 property taxes 479.76 TOTAL: $ 18,205.06 If there are any questions, please call me. truly yours./' E. Field / inager / 'Finance and Administration JEF/dlc Enclosures ’ORT-VR.MCZRi ' ' C^„.ORADD DEPARTMENT QF HEAL! PUN DATE HATER QUALITY .CONTROL DIVISION 01/03/B6 AT 17132 « 2 H E, tlTH AVE, DENVER, CO* 80220 TELEPHONEl 320-0333 STATEMENT UF FEES WASTEWATER DISCHARGE PERMIT JANUARY 3i 1966 i*IT NUMBER I C U " 0 ’.)3t>0Sb FACILITY TYpEl hARURQCK m IHIIvG COUMTfl 3A* JOAM MXW£ CENTERING 0.050«,999 MUD 7 » # # <= L SUNNY8IUE GOLD CORPORATION P.O. BOX ZH7 SIlVERTUNf CO« 81 <133 ,3 ChftRGEDi AMOUNT jiVi'lUAL ADMINISTRATION FEE JUL 1, 1965 THRU JUh 30, 1986 940,00 v TOTAL CHARGES DUE 02/07/86 940,00 !t CHECKS PAYAHLE TOl j COLORADO UEPT OF HEALTH, DEPARTMENT «00 ;. / ______;■ IiXL^JL..i£IIL-IilUK-££EMl-mj:-!UER_[:ii:i-^.üJJK-f:HECK. -î-l l Ejij3u.aE_.PHLiP£H-Chfnin — ...... CUT HERE -...... :^iLJLtiiuaji^uu;bA 3£ü^-itiaL.üii_À autoaaji£uiJu r*ÏT NUMBERi CQ-P036056 aur/wYaiPfe gold cuRPur 5ILVERT0N, CO, t STATEMENT UF FEE6 WASTEWATER DISCHARGE PERMIT JANUARY 3, 1986 WIT NUMBER $ CU-0027529 FACILITY TYPE« HARDRCJCK M Ü U N 0 COUNTY! SAN JUAN MINE DEWATERING U O MBU & OVER /î/flfrt CO W If C SUNNY3IDE GOLD CORPORATION P.O. 9CJX 2^7 SlLVERTONf CO & 1 «433 ;S CHARGEDi AMOUNT iNrtUAL- ADMINISTRATION FEE JUL I« 1985 THRU JUN 30, 1986 1 ,W.Q 0 TOTAL CHARGES DUE 02/07/66 i . w . o o ;E CHECKS PAYABLE TO« COLORADO DEPT OF HEALTH, DEPARTMENT 4QÚ íü ¿ £ R „ c a « 6 Jia ¿ a , ' l£L£A¿EL-mt¿l.lE--inüH-fi£R>!!.l.T. NUMBKh nM vm ...... «...... CUT HERE iMIT NUMbEfiI CO-0027529 SÜNNY8IDE GOLD CORPORATION P.U. BOX 247 ! SILVEHTON, CO 61433 COLORADO DEPARTMENT OF HEAL'!n RUN DATE ^'ATER QUALITY CONTROL DIVISION g i/G 3 /0 * AT 17132 4210 E, UTH AVE, 0ENVER , CO, 00220 TELEPMUUEI 320-9333 STATEMENT OF FEES WASTEWATER DISCHARGE PERMIT JANUARY 3» 1986 .PIT N U ^dtR i C0«»ooo0426 FACILITY TYPE9 HARDROCK MINING county i saw ju an MINE DEWATER+MILLING,DISCHARGE SUNNYSIDE GOLD CORPORATION P.O. BOX 247 SILVERTON, CO. 91433 :S Crl ArtGED I AMOUNT ,MUAL ADMI^IS fRATIQN FEE JUL 1, 1 9fi5 THRU JIJN 30, 1986 4 .3 3 0 .0 0 TOTAL CHARGES DUE 0 2 /0 7 /0 6 4 .3 3 0 .0 0 .E CHECKS PAYABLE TO| COLORADO DEPT >JF HEALTH, DEPARTMENT 400 M iM HFP ON ...... CUT HERE i^A L lE -D R T_AQtmEfiS„ „flELHJiJ. wiT NUMfciERl C 00 0 0 0 42 6 3U,V,‘IY 3 Il>E GOLD CORPORATION P .U . BOX 247 ZEZZZgeZZZZZ aiLVERTOfv, .CO. •51*33 TQî Sag Juan County Board of Comm. DR. OFFICE OF ^an ^uan County Treasurer piH SAN JUAN COUNTY, COLORADO 2M Standard Metals Corporation [¡L^' P 0 Box 247______Silverton, Colo. 81433 =■- / ca MAINTENANCE OF OFFICE RUII.DING 7-18 Coal purchased in the amount of I ,| : | | i| ¡! 1421 58 As of Nov. ¡19, Coal left in coaljbin 110.5 ton at $58.00 p w 609 00 812 58 FURNACE:TENDER-WAGES PAID i ;July, Aug. Sept. & Oct. „ j19 ¡hours in November at $7.64 ii*1037 ! 45 ,(* ^Includes Soc. Sec.) jj ! Total !. ..$1850 i 03 M —Standard ™ TOWN OF SILVERTON DR P.O. Box 65 SUverton, Colorado 81433 WATER AND SEWER BILLING FOR PROPERTIES IN SILVERTON, COLORADO. 1315 Snowden San Juan Co Hospital (3/4 of 4th quarter and all deliquent) 249.04 - ¿ ¿ U t J / o Hwy 110 quonset Istqt. '86 + deliquent 88.47 Hwy 110 office 1st qt '86 + deliquent 113.60 969 Reese St 1st qt '86 + deliquent 170.06 805 Empire 1st q t '86 + deliquent 214.27 941 Reese 1st q t ’ 85 + deliquent 132.30 TOTAL AMOUNT 967.74 C0Py 0F NEW CARDS- RATES WENT UP r , t ' ste EFFECTIVE 1-1-86. , . i f t - - I ' & 'r> " . > vJr’ ■ H TOWN of SILVERTONl j a ü j. a isos *N Office of the Mayor '«.•''îî; . ; •• 'Cn/.Tiyii fj! !■. COLO. P.O. Box 250 Silverton, Colorado 81433 387-5522 January 10, 1986 Sunnyside Gold Corporation Silverton, Colorado 81433 Dear Sirs: This is to inform you that the water/sewer/sanitary landfill charges on the following properties in Silverton are delinquent} in addition the 1st Quarter 1986 charges are due by January 31. The following amounts, delinquent and 1st Quarter 1986, are due on the properties as listed below: 1315 Snowden (San Juan County Hospital) 375.15 Highway 110 - quonset 88.47 Highway 110 - office 113.60 969 Reese Street 170.06 805 Empire Street 214.27 941 Reese Street 132.30 Total Due 1093.85 Water service to the above listed properties will be discontinued if payment of the above amount is not received by the Town of Silverton on or before January 31, 1986. By Town Ordinance water service is to be discontinued to delinquent accounts. We realize that you have not assumed ownership of all of these properties? however, we understand that you are using, or may be planning to use, the above listed properties. We did want to let you know that these properties had delinquent water/sewer/sanitary landfill charges and that service would be discontinued if payment was not received by January 31, 1986. Sincerely, ( 7 ? iâ : l U ,â - __ SMC Marianne Fearn Town Clerk cc Town Board County Commissioners Voucher Number:. ^ J,- ï< a . t ■ Purchase Order No.:______0 ■ / - } //- ZSD Payment Dato: **>0 - / / ' k //> , ¿ 0 f / 4 3 3 V u ' r i ¿ ¿ é / O ù ù (Payee and Remittance Address) □ PARTIAL □ COMPLETE INVOICE ACCOUNT CODE INVOICE DESCRIPTION AMOUNT DATE NUMBER (As Needed) Sy =?•//■ fYO^Sk* (pC>cn b U U / â t o / V V Arf-7:iT*, : .-/ ' . / V . \ ■ ' ' / Ì ^ ' ^ / / / • , \ / O t J . - J - / / - 1 \ / ( \ U - fi T< 7 . TOTAL ^ Quantity Compared to Receiver: ______ I Price Compared to P.O.: ______\ O ' /■' j Extensions and Footings Checked by:______Entered by:____>><■( Approved: '///•■} - *■* y ’ TV Date:. / : H- \ VENDOR NAME AND ADDRESS: ini.'ih o f ^i!yf.rioi y.o. Ÿ m (ff. 6 i)yec/on , Co ? M '& VOUCHER # 0044G7 QUANTITY COMPARED TO RECEIVER VENDOR it _ I P iolo PRICE COMPARED TO P.O. INV. TYPE 0 ) 2 EXTENSIONS/FOOTINGS CHECKED INV. DATE -.4 /l/ 2 1 ? INVOICE AMOUNT ?j f o 3 VOUCHER PREPARED BY: ~ U A IN V* # ______2 fO h Q -U -^ P.O. // .r u n v x VENDOR ZIP CODE /, |/j APPROVED'■ t-lllo-fi ~ n .Q > PAYMENT DATE: ¿A CK. DATE TERMS 1 (DT) CK. it / s i -1 t u A r c DISTRIBUTION V UESCKI PTION AMOUNT ACCOUNT/COST CENTER (AS NEEDED) M ? y ? O lllO- iiOHoiO r f '"V.- • (-1 ^ b o o o ù \ f \ V ...... y DISCOUNT GROSS AMT. XI ' ' i BATCH IU: O p ' t 3 0 ENTERED liV: f’n ./f ' DATE: _j/j 'JI !•}•[>__ M Sunnyside Gold Corp. ™ TOWN OF SILVERTON DR P.O. Hox (W Silverton, Colorado 81433 2 quarter, 1986 Service Through June , 1986 Namp: Sunnvside Gold Corporation San Juan County Hospital 1315 Snowden water 69.22^ ^ sewer 37.76^ if delinquent Balance 256.61 / j o i r ' ¿ - i x r x v - «/'I 3 6 & r3 C y l »3 i A b i o fl API* & W0 6 H I ■ rclUCCK ‘.« W '1 w punAM50,wxc». * JOY MANUFACTURING COMPANY DENVER EQUIPMENT DIVISION 021 SO. SIERRA MADRE P. O. BOX 340 COLORADO SPRINGS, COLORADO 80901 Phono: (303) 471-3443 Fb x : 303-471-4469 May 9, 1986 TW X: 910-920-4999 - Telex: 45-2442 - Cabl«»: DECO Mr. Dennis V. Krantz, Property Manager Sunnyside Gold Corporation 484 Turner Drive, Building D Durango, Colorado 81301 Dear Mr. Krantz: Enclosed is a copy of the 1985 tax b ill for Joy's mining claims at the Sunnyside Mine. Joy has paid th is b i l l in fu ll. As we recently discussed, and pursuant to the terms of our lease, please remit to Joy the full amount o f th is b i11. Also, our rcords show we have not invoiced the previous year's taxes. We were able to locate the tax b ills fo r 1983 and 1984. Enclosed is a copy. Please remit with your 1985 tax payment, the amount due for 1983 and 1984. Our on-site files did not contain the tax bills for 1981 and 1982. If your records show the taxes for these years, please also remit this amount. If not, we will continue to look for the tax bills. Thanks fo r your cooperation. We look forward to receiving your prompt payment fo r the tax b ills outlined above. Very tru ly yours, DENVER EQUIPMENT DIVISION JOY MANUFACTURING COMPANY t / 9 3 - ° e KWJips Enclosure 7 H.HQ<)m*M1VVrWW ¿Àfc JUÂrt COUNTY TREASURER P.O. Box 368 Silverton. Colorado 81433 TAX NOTICE FOR 1983 TAXES fteefelwf of: Return This Notice With Your Remittance 7 t 7 5 lot lArrorAcrruRino co* Check here If receipt is desired □ SOI GRANT ST. PITTSBURGH» PA. 15219 I » i j JOY MANUFACTURING CO. Check here If receipt is desired □ 301 GflANT ST. PITTSBURGH, PA. 15219 .'U g FRACTION ■ EUREKA 16795 2.580 130 ASSESSED TOTAL TAX DUE $ SCELIA VALUATION * ~ 7 2 - 0 0 ¥ 7 9 ' EUREKA 16795 3.700 190 SCLIA NO. 2 PLEASE NOTE 210 -EUREKA' 16795 1.703 Taxes are due on January 1 st of the following year in which they DRTLAND are assessed. EUREKA 18733 10.300 520 Taxes are payable only In HALF or FULL. DUENA NO. 6 First Half Due by February 28. Second Half Due by July 31 or EUREKA 16649 10.081 500 Full amount due by April 30. After August 1, the Full Tax draws 3UBNA NO. 7 Interest at the rate of 1% per month in addition to 1% per month 7.004 353 accrued on the 1st Half from March 1st. EUREKA 16649 Payments must be received in treasurer's office on or before due 3UENA NO. 8 dates to avoid penalty Interest charges. EUREKA 16649 8.098 400 Personal property and Mobile Home-taxes remaining unpaid are rANDARD Ip a r t) advertised In September and subject to collection by distraint and •EUREKA-- 1470*..... 4.64? 2?0 salg JBA BILL. Real Property Tax will be advertised for sale for delinquent taxes 280 on or about November 1 each year: The sale will begin by or before EUREKA 16795-*' 5.519 the Second Monday inDecember. Inquiries regarding assess JKON ments should be made to the County Assessor. EUREKA- 16795 ; 8.093»* 400 5M> CUP'UILl* SXTiT •• ‘There will be a $5.00 service charge-for any checks returned to EUREKA 15684B 5.ooa 250 this office by your bank. “ Th« actual General lund m ill levy for IFAYETTE HILtf SITE • * ii : ,r- e‘ 1?*85 I* 37.*6 mills In School Distflcl 5.000 250 No. Ono wllh Iwi»dqu.-wtw8 located In EUREKA 15681B San Juan Counly. ,C. M. MILLSITB The general Juno mill levy »or 1985 EUREKA-■20726 — 4.435 2?0 woold have been 48.83 mills In School Mafca Checks Payable To: Dlslricl No, One with hwKfqua/lers iLB MILLSETE located In San .luan County il had SAN JUAN COUNTY TREASURER been no slate revcnuos estimated lo ba EUREKA 16276B 5.000 250 received by this dlslricl during caiendar IRAH Change of Address, If Any: year 1935. 5UREKA 5502 8 .500 , 430 To: ______DEPENDENCE EUREKA L8733 10.236 510 AD CARBONATE EUREKA ,16795 7.246 360 CKLNGBIRD NOTE: DELINQUENT INTEREST TABLE ON REVERSE SIDE Catherins E. Martínez, Treasurer POST OFFICE BOX 368 S1LVERTON. COLO 81433 PAID IN 303-387-5488 TAXABLE YEAH ------r > T i . i _ á k TAX NOTICE ^ C Q rU . ? v 7 T - ______— | f ü l L P a y m e n t s e c o n d h ECP K E E p t h i s COPY FOP YOUR RECORDS is a ; OTHER CHARGES F I R S T H A L F PARCEL NUMBER DISTRICT s e e b a c k o f ------0 6 THIS NOTICE ------G 4 G." 5 € -KI------a ' i o . 5 0 .77 - 7 5- DELO. INTEREST JOY MANUFACTURING CO ADVERTISING 301 GRANT STREET FEES OTTTSFtlJRGH. PA FEES ------— ------ e u r e k a m n g . d i e t . CLAIM NAME SURVEY NO. RCRES CECELIA 16795 3.780 c - f n A ß < i . Davis, G raham 8c S t u b b s ATTORNEYS AT LAW COLORADO NATIONAL BUILDING OFFICE WASHINGTON D.C. OFFICE SUITE 4700 370 SEVENTEENTH STREET SUITE £400 S U IT E 5 0 0 POST OFFICE BOX IB5 950 SEVENTEENTH STREET IOOI TWENTY-SECOND STREET, N.W. POST OFFICE BOX 185 WASHINGTON, D.C. 20037-IS03 DENVER, COLORADO 60201-0185 DENVER, COLORADO 80201-0185 TELEPHONE 202-822-8660 TELEPHONE 303-595-4949 TELEPHONE 303-892-9400 TELECOPIER 303-893-1379 SOUTHEAST DENVER OFFICE TELEX 240451 DGS DVR S U IT E 3 0 0 CABLE DAVGRAM. DENVER 7800 EAST UNION AVENUE DENVER, COLORADO 80237-2753 CHRISTOPHER L. RICHAROSON TELEPHONE 303-694-4464 892-7420 May 21, 19 8 6 phillip D. Barber, Esq. Welborn, Dufford, Brown & Tooley 1700 Broadway, #1100 Denver, Colorado 80290-1199 Re: Standard Metals Corporation Dear Mr. Barber: At Mr. Richardson's request, I have enclosed a copy of the JOINT MOTION OF DEBTOR AND CREDITORS' COMMITTEE FOR DISTRIBUTION OF CERTAIN FUNDS HELD BY THE DEBTOR AND APPROVAL OF DISBURSEMENT PROCEDURE UNDER DEBTOR'S PLAN OF REORGANIZATION and a copy of the ORDER signed by Judge McGrath. Jo Knne Grundy, Secretary WELBORN; DUFFORD, BROWN ß TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PHILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT DALE TOOLEY (1933-1985) DENVER, COLORADO 8 0 290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C.ROBB (303) S6I-SOI3 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A-MCLAIN EDWARD D. WHITE BEVERLY J. OUAIL PEGGY J, ANDERSON RICHARD L.FANYO KATHRYN L.PO W ER S PHILLIP D. BARBER GREGORY A. RU EGS EGG ER JOHN F. MECK May 16, 1986 HAND DELIVERED Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 Seventeenth Street, Suite 4700 Denver, CO 80202 Re; Sunnyside Gold Corporation Dear Chris: Sunnyside Gold Corporation ("Sunnyside”) has previously submitted to Standard Metals Corporation ("Standard") a Warranty Deed covering various parcels of real property located in San Juan County, Colorado, for signature by Standard. The purpose of that Warranty Deed was to vest Sunnyside with record title to certain properties which were owned by Standard in San Juan County at the time of closing, but which were not included in the various schedules at closing. We have not yet received the signed Warranty Deed. In addition, we still await Standard's return of the titles to the various vehicles and drilling equipment which were requested some time ago. Since the closing date, Sunnyside has paid a number of Standard's debts and obligations which accrued prior to closing. Those items are as follows: Date paid Payee/Description Amount 1/28/86 Colorado Dept, of Health/Waste water $6,710.00 discharge permits for due date 7/1/85 (Terry Tunnel - $940.00; American Tunnel - $1,440.00? Mayflower Mill - $4,330.00) 2/06/86 San Juan County Commissioners/Maintenance and coal for Old Hospital office building (7/18/85 thru 11/19/85) WELBORN, DUFFORD, BROWN Ê TOOLEY Christopher L. Richardson, Esq. May 16, 1986 Page 2 2/12/86 Joy Manufacturing Company/Advance royalty 8,000,00 payment due 11/4/85 2/11/86 Town of Silverton/Water, sewer (delinquent 655.77 for 3rd quarter and half of 4th quarter, 1985) 5/14/86 Joy Manufacturing Company/reimbursement for 509.50 1983 property taxes 5/14/86 Joy Manufacturing Company/reimbursement for 479.76 1984 property taxes TOTAL As you are aware, Echo Bay is obligated to make a payment to Standard on June 1, 1986. This payment represents an advance against the 30% net profits interest reserved by Standard in its sale to Sunnyside. Sunnyside intends to deduct from that payment those items listed above. Because Sunnyside has not received the various titles to the real and personal property described above, Sunnyside will value that property and deduct that value from the payment which it will make to Standard's estate unless the necessary documentation to vest Sunnyside with title to the property described above is delivered to Sunnyside. We anticipate petitioning the Bankruptcy Court in advance of June 1 to determine to whom this payment should be made. Therefore, if Standard intends to convey the described items to Sunnyside, we would need to have your response on this matter no later than May 21 to assure proper time to complete the necessary paperwork. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/kw cc: Mr. Jim Field Mr. Dennis Krantz Mr. John Azlant BLM-Love plan stirs By Nttr G.! Ohrtfti** ^ ; ^ ■ Other companies in the area in- \ Baste Iridnstries Corp., Fred F. at Gearhart Industries, telephone 'viS indüde Sw* M M W W »/ l 'C i \ ¡ T - i ''■clade Bint OH Co., Exxon Co. Meissner, exploration manager of area code K&-833-8196 before noon John' Wärme, USA, rhMipft« Petroteora, BWAB ENERGY KOTES Bird Oil Co., and Newton C Page, May I t . ; fe e of US industry yet, reports J.D. Mason, ia e , and, of course, Love OiL ______: . 4 • •• - " . ' president of Newton Texas Royal the president of Denver-based J.D . describes Love Oil’s role a s sta rts a t 5:30 p jq ^ dinner is a t 6:15 tie s Inc. . TbeOstsnd» Sehasl sM flaes, U r e Oil Ca, Seems severs! c e a p fe p.m. sa l the presentation at 7 p.m. Fvpioratktn Geosciences Institute from nies and the B are» ef Land Ki*- " hoping nobody steps on us.” The Denver WeQ Logging Soci contact Helen Mansftetd, v For information and reservations, ety has scheduled a little session has schedided a short course« agemest bare nesttated a con Tbs hypothesis is a lot of the call B etty Ran a t 303-741-1517 be tied “Petroleum Geology of tract to expiate e x st 8-5 million .«»D* rocks jouad in the prolific entitled “ How to Make Money Qufc= fo re naea Tsssgay. ha* the Oil Business” fa r K K u o ., : Dearer B asn ¿or Non-Geologi acres & CttFOfiCaeniy, N Jt ? •’Ptrnöan Basin the area's G e tb ti BSaerl^ Cacp. reports , Six people hav* received Cotara* May a in the Radissrm Hotel Pea-i t e a Jan e 8 tram 8 ¿ m . to 438 p.: s h e a o a c ^ tam rvu&tm N dasic cow, JJX repots. i-“’- '-'LewTSetnhssS'advises the cw ' receiving an tBtoticsi C*, and e f aqgKaa* Ptutfegur do School efK tees DfcOnguished ver, 155® Court Place. CaA bar ’ starts at 6:30 pjn. and dinner at. is designed far non-geologists rep o rt ton iis Gold King fcfiaeist^- inked the pact with the BLM, JJ>. The Association for Women Acheivement Awards lor • 1986. sty near Sitvertoi frao MPH They are Ahmed D. Kafadar, 7:38 p-m. The featured speaker is interact with the petroleum ei says, noting that Shell and Sohu Gessdeatists will hold its May - n t t » m d prodoetioa Industry. Ba* Caasattaa ttLifccfTgcc&QBtgr- b a v t about 618,098 a c re s ia. the meeting Wednesday ta the Denver chairman of OEA Inc.; Charles E. an expert oa • money — 1KB. Shsahan, a eed sl agni with fi» ~ H t gwrtngtas) and geophysical < to. a dowed lafened reserves cf ; area. Ptaas are iar stoat Minifies R^aTrirsi Garndens House, East Skaltx, vice president of corporate Ul,W0 toss e i MS «see per ta piimfttwg with Tenneco Inc.; U J. S tent Service, who *21 u a « e p b wSX be described o! seismic to be shot, is addittaB to N&iih Aveaae < and York S tre e t using rode «nM m far th e G dd miw» : magnetoteQnric and asreatagaetic . . P a n G «idam ta wffl present a talk Chari« O. P trtar H, vie« etsS- «boot - «ffltsrfett money. Bell show soma samples, bayonets'* . a te g the F ront Range, cores, and 784,000 tan s t i &5| om osjiiv : surveys. .Abo. there's acomniit- and süde ¿tow on environmental man of Souther« California Gss ^ t e a to d seism ic sec to e s from tn gold oc» far the Gett issue« bec% ocnsfclered by the Co.; Abdnd Axis «. AWsrbso, dt- tsfc* tsy home. For teforaatti*- - pent to dr£L tts*e weBa, Mason tfid nsKrvaUons, can GaS Tridsy ' Desra?' Btstft. listractors ' ' said. S tatt-Legttature.. Social hour re cto r general of projects for Saadi UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO IN BANKRUPTCY In re : STANDARD METALS CORPORATION, Case No. 84 B 00945 M a Delaware Corporation EIN 87-0221756 Debtor. THIS PACKET INCLUDES THE FOLLOWING DOCUMENTS: 1. ORDER APPROVING DISCLOSURE STATEMENT dated May 8, 1986 2. CREDITORS COMMITTEE LETTER TO CREDITORS dated May 7, 1986. 3. Debtor's SIXTH AMENDED PLAN OF REORGANIZATION dated May 7, 1986 ("Plan") 4. DISCLOSURE STATEMENT dated May 7, 1986 5. BALLOT to ACCEPT or REJECT THE PLAN. F a ir f ie l d a n d W o o d s MARY JO GROSS ATTORNEYS ANO COUNSELORS AT LAW O EO R OE C. KEELY R O B E R T A. H O LM ES P E T E » f. BREITENSTEIN JOHN J. SILVER CHARLTON M.CARPENTER 1000 COLORAOO NATIONAL BUILDING JOAN E.SOMMERPELO PATRICK F. KENNEY THOMAS P. KEA RN S HOWARO HOLME 950 SEVENTEENTH STREET R O C C O A. DOOSON JAM ES L. STONE MARY E. M O SE R MICHAEL M. McKINSTRY DENVER,COLORADO ©0202 S T E P H E N W. S E IF E R T JAC K. SPERUNO C H R IS T IN E K. TRUITT R O B E R T L-LO EB, J R . C H R IST IN A N. BEATO N KEVIN 8. PRATT TELEPHONE 1303) 834-6136 BRENT T. JOHNSON DANIEL R. FROST PATRICIA 0. MCORAW D A R R E L L O. WAAS TELECOPIER <303) «91-909« CRAIO A. UM BAUO H S T E P H E N H. LEO NHARDT OP COUNSEL CAROLINE C. FULLER ROYAL C. R U BR IO H T May 9, 1986 MARY E. BRICHNER C H A R L E S J . S E I S E (ieO «-l9 S3 > TO î The Creditors of Standard Metals Corporation This firm has served as counsel to the Official Unsecured Creditors1 Committee in the Standard Metals Corporation bankruptcy. As you know, this has been a long and hard-fought case. Both the Debtor and the Creditors1 Committee have proposed a number of plans of reorganization, none of which have yet been confirmed by the Court. There are a large number of unliquidated and contested claims against this estate which have complicated the reorganization process. Over the last two months, the Creditors' Committee has been engaged in intensive negotiations with the Debtor and with many of the holders of the disputed, contingent, and unliquidated claims against the estate. These negotiations have resulted in the filing by the Debtor of the Plan enclosed herewith. The Disclosure Statement explains the Plan in detail and we encourage you to read both carefully and seek your own independent legal advice before voting. However, after long and intense deliberation, it is the recommendation of the Creditors' Committee that you vote to accept the Debtor's Plan of Reorganization. The Plan provides for a payment to unsecured creditors in the amount of 80% of the Allowed Amount of their claims on the Effective Date of the Plan. Additional payments will be made if the operations of the Debtor produce funds sufficient to make them. We believe that the compromises embodied in the Plan are reasonable and that the Debtor's proposal represents an opportunity for the creditors to realize a substantial portion of their claims almost immediately. We urge you to consider the matter carefully and to vote to accept the Plan. If you would like to discuss the Plan, please feel free to contact either of the undersigned. Very truly yours, Darrell G. Waas Caroline C. Fuller of FAIRFIELD AND WOODS DGWjhc JO Y MANUFACTURING COMPANY DENVER EQUIPMENT DIVISION 021 SO, SIERRA MADRE P. O. BOX 340 COLORADO SPRINGS. COLORADO 80901 Phone: (303) 471-3443 Fax: 303-471-4469 May 9, 1986 TWX: 910-920-4999 - Telex: 45-2442 - Cable: DECO Mr. Dennis V. Krantz, Property Manager Sunnyside Gold Corporation 484 Turner Drive, Building D Durango, Colorado 81301 Dear Mr. Krantz: Enclosed is a copy of the 1985 tax bill for Joy's mining claims at the Sunnyside Mine. Joy has paid this bill in full. As we recently discussed, and pursuant to the terms of our lease, please remit to Joy the full amount of this bill. Also, our rcords show we have not invoiced the previous year's taxes. We were able to locate the tax bills for 1983 and 1984. Enclosed is a copy. Please remit with your 1985 tax payment, the amount due for 1983 and 1984. Our on-site files did not contain the tax bills for 1981 and 1982. If your records show the taxes for these years, please also remit this amount. If not, we will continue to look for the tax bills. Thanks for your cooperation. We look forward to receiving your prompt payment for the tax bi1 Is outlined above. Very truly yours, DENVER EQUIPMENT DIVISION JOY MANUFACTURING COMPANY Contracts*Administrator KWJ:ps Enclosure it iNwvmi^out fe w W m w *ft ¿AN JtlArt COUNTY TREASURER P.O. Box 3S8 Sllvwton, Colorado 81433 TAX NOtlCE FOR 1983 TAXES fttcfetowÎ of: Return This Nolice With Your Remittance ifft 2 0 t lÄTTTIFACTtmiRÖ COé Check here If receipt is desired □ SOI ORAST ST. PITTSBURGH, PA. 15219 . b tfs>5 m C T IO M 150 ____ S~ /\\ , EUREKA 16795 2 .5 3 0 ASSESSED j / / - ^ TOTAL TAX DUES VALUATION (ç G O O ______U f '------1 ^EUREKA dSLlA 16793 , 3.?80 200 CECLIA NO. 2 PLEASE NOTE EUREKA 16795 1.T03 Î 0 0 Po r t l a n d Taxes âre due on January 1st of the following year in which they ; ÄtlttEKA 18733 10.300 500 are assessed. r-,„, Taxes are oavable only tn HALF or f u l l . ftbuEHA SO. 6 500 First Half Due by February 28. Second Half Due by Full amount due by April 30. After August 1, the Full Tax draws M f f i ' S i . r ” interest at the rate of 1 % per month in addition to 1 /. per month 400 c fcURSKA 16649 7*004 accrued on the 1st Half from March 1st. R W Ê H A HO* 8 _ Payments must be received in treasurer’s office on or before due “ fcüREKA Ï6649 8 . 0 7 8 450 dates to avoid penalty interest charges. ara Personal property and Mobile Home taxed r e m a i n i n g unpaid are - **BSSl-'G?81 4.*« 250 advertised in September and subject to collection by distraint and S3Real Property Tax will be advertised for sale for delinquent taxes 300 Ì ’SdnSu> IM « 5.5» on or about November 1 each year. The sale will begin by ^ before the Second Monday in December. Inquiries regarding assess W, KEUREKA °K 16795 « 8.093 n o , 450 ments should be made to the County Assessor. BOLD CUP B IL L S IT E 250 There will be a $5.00 service charge for any checks returned to EUREKA 15684B 5.000 this office by your bank. tÀPAtSTTE HILL SITE 250 The actual ge;»eral fund m ill levy for fcURSKA**15681B 5.000 1984 Is 37.28 milts In School District No. One w it* headauartera located in ' k S * «» SILLS ITE , San Juan County. 250 The oeneral fund m ill levy for 196« EUREKA 2072b 4-435 would have been 54.34 m ills In School ÏALS HILLS ITE UftkA Cheeks Psvabte To : D istrict N O . One with headquarters 16276B 250 S ÎN JUAN COUNTY TREASURER ¡ ^ - ; “ S Ï S Ï S U - EUREKA 5.000 received b y this district during calendar ÌÀRAH Changé of Address, If Any: y*ar 1384 • ÈUREKA. 5 5 0 2 S -W O 450 2 5 0 's TO:______:•* ;•EUREKA 16795 4.105 .ÆklfeftS B. n gUftERA 16795 4.900 250 NOTE: DELINQUENT INTEREST TAB’.E ÖN REVERSE SIDE É AN JUAN COUNTY TREASURER .0. Box-SflS’-* llverton, Colorado 81433 eceived of: TAX NOTICE FOR 1984 TAXES Return This Notice With Your Remittance • i j JOY MANUFACTURING CO, Check here if receipt Is desired □ 301 GÌÌANT ST. PITTSBURGH, PA. 15219 ~*-G FRACTION EUREKA 16795 2.580 130 ASSESSED 2CELIA VALUATION TOTAL TAX DUE $ EUREKA 16795 3.780 190 2CLIA NO. 2 PLEASE NOTE •EUREKA- 16795 1.703 2X0 DRTLAND Taxes are due on January 1st of the following year In which they EUREKA 10733 10.300 520 are assessed. 3UENA NO. 6 Taxes are payable only In HALF or FULL. First Half Due by February 28. Second Half Oue by July 31 or EUREKA 16649 10.081 500 Full amount due by April 30. After August 1, the Full Tax draws 3UESNA HO. 7 interest at the rate of 1 % per month In addition to 1 % per month EUREKA 16649 7.004 353 accrued on the 1st Half from March 1st. 3UENA NO. 8 Payments must be received in treasurer’s office on or before due EUREKA 16649 8.099 400 dates to avoid penalty interest charges. Personal property and Mobile Hometaxes remaining unpaid are fANDARD tp a r t) advertised In September and subject to collection by distraint and • EUREKA-"- 14704. 4.64? 2 ? 0 sale. ; ba BILL Real Property Tax will be advertised for safe for delinquent taxes EUREKA 16793 5.5L9 280 on or about November 1 each yean The saie will begin by or before JKON the Second Monday in December. Inquiries regarding assess* EUREKA ■ 16795 ; 8.093^- 400 menls should be made to the County Assessor. CUp-UTLt* StTiT ' There will be a $5.00 service charge-for any checks returned to EUREKA 15684B 5.00CX 250 this office by your bank. IFAYETTB HILL' StTE , Th® actual general lurxJ m ill levy for s1 1985 Is 37.46 mills In School OlStrlct EUREKA 15681B 5.000 250 No. One with headquarter« locaiM In ,C. M. MILLS ITE San Juan County. EUREKA--20726 - • 4.435 The general fur.o mitt tevy tor I9S5 2?0 would have been 48.88 mills in School ILE «ILLSITE Maho Checks Payable Tot Olslrlcl No. One with heaaquarfers *5AM JH AN rO IIN T Y TR FA ^U R FU located in San.iuan County il men had EUREKA 16276S 5.000 250 2>AN J U A N UNIT IhfcM&Uhttt been no stale revenues estimaied to be tRAH received by thlsdislrict during calendar Change of Address, If Any: year 19B5. 2UREKA 5502 8.500 430 To: DEPENDENCE EUREKA 18733 10.236 510 AD CARBONATE EUREKA 16795 7.246 360 CKLNGBIRD NOTE: DELINQUENT INTEREST TABLE ON REVERSE SIDE Catherine E. Martinez, Treasurer POST OFFICE BOX 368 SILVERTON, COLO 81433 303-387-5488 TAXABLE YEAR P A ID IN KEEP THIS COPY FOR YOUR RECORDS ______- 1 3 0 5 - TAX NOTICE 19S&- OTHER CHARGES F IR S T H A L F SECON i s m s :nt DISTRICT PARCEL NUMBER SEE BACK OF nTQ T 1 ---77-r7fi- 4 0 - THIS NOl'CE -5 A&-. -SO g 4G- 5 € ■40 3 r06 JQY MANUFACTURING CO DELO. INTEREST 301 GRANT STREET ADVERTISING PITTSBURGH, PA FEES 15219 FEES if YOlj Mtii nfct.t'ON'iiFii rn» ’“ IS TOTAL DUE -* t a x Pifts-E rpawnsn t o c.oooccirttny ./»Q3. TOTAL VALUE LAND BUSINESS MOBILE HOME ASSESSED hiOMSSffiiaBZNG- VALUES 7,301- 5 1 - -95q SOUTMWÇST HfQUOS» T O T A L LEVY ENTITY ca it im i s a S W S t BQUfflftESX W»1EB HHE OlST LEVIES 177.4:3 1 2 . .241 3. 33 £S. 4£< NOTE: WITHOUT STATE ASSISTANCE g n — 1 SCHOOL GENERAL FUND LEVY WOULO BE g-1 o g n IN S T E A D O F _3Q DATE ABBREVIATED PROPERTY DESCRIPTION: I PAID BY YOUR CHECK NO. EUREKA MNG. DIST. CLAIM NAME SURVEY NO, ACRES CECELIA 16795 3.780 1 r-y- +— Pb&- f'u r a" ftay Z-- rvLe-Lci'lCJpt7 WELBORN, DUFFORD, BROWN 8 TOOLEY RO BERT r. W ELBO RN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PH ILIP O. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHAROT DALE TOOLEY (1933.1985} DENVER,COLORADO Ö0290-II99 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. RO BB (303) 861-8013 ELLEN TOLL JOHN F- WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J- QUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L.PO W ER S PHILLIP D. BARBER GREGORY A. RU EG 5 EGG ER May 9, 1986 JOHN F. MECK HAND DELIVERED Rodney D. Knutson, Esq. Sherman & Howard 2900 First Interstate Tower North 633 - 17th Street Denver, Colorado 80202 Re: Washington Mining Company March 12, 1985 Agreement Modifying Lease Dear Rodney: Enclosed is a copy of the Agreement Modifying Lease dated March 12, 1985, between Washington Mining Company and Standard Metals Corporation. As I mentioned to you in our telephone conversation, we are wondering whether Standard's interest in the three leases and Exploration and Option Agreement enumerated in paragraph 2 were formally conveyed to Washington by assignment, deed or otherwise. If a copy of the enclosed Agreement is insufficient to determine this, please telephone me and I will attempt to provide any further documentation. Many thanks. Very truly yours, WELBORN, DUFFORD, BROWN & TOOLEY Carla St. Romain Title Clerk/Legal Assistant CS/ppm Enclosure AGREEMENT_MQDIFYING LEASE This Agreement, made as of this 1.2th, day of March 1985, by and between Washington Mining Company, a corporation orga nized and existing under the laws of the State of Maine and autho rized to transact business in the State of Colorado (hereinafter referred to as "Washington") and Standard Metals Corporation, a cor poration organized and existing under the laws of the State or Delaware and authorized to transact business in the State of Colorado (hereinafter referred to as "Standard"); WITNESSETH: United States Smelting Refining and Mining Company (hereinafter referred to as "United States Company") and Marcy- Shenandoah Corporation entered into a Lease as of the 28th day of February, 1959, as subsequently amended on October 26 , 1959, June 1, 1969, July 1 , 1970 and August 1, 1973, covering certain mining prop erty situated in Eureka Mining District, County of San Juan, State of Colorado, particularly described in the Lease. United States Company conveyed said mining property to Washington subject to said Lease, and Standard has succeeded to the interest of Marcy-Shenandoah Corporation in the Lease. Standard is the Debtor-in-Possession in Case No. 84E00945C- pending in the United States Bankruptcy Court for the District of Colorado. On May 9, 1984 Washington filed its proof of claim in Standard's bankruptcy proceeding for unpaid overriding royalties due under the Lease in the amount of 584 ,686 .15 (the "Overriding Royalty Claim"). On May 11 , 1984 , Washington filed its proof of claim in Standard's bankruptcy proceeding in an unliquidated amount for royal ties due under the Marcy Lease attributable to stolen ores for which Standard received partial reimbursement through insurance (the "Theft Claim"). Standard initially objected to the allowance of the Overriding Royalty Claim and the Theft Claim. Thereafter, Standard and Washington entered into a settlement with respect to the Overriding Royalty Claim and the Theft Claim, which settlement was approved by the Bankruptcy Court on January 15 , 1985 after notice and hearing. NOW THEREFORE, pursuant to the terms of the settlement, and in consideration of the mutual promises herein contained, the parties agree as follows: 1. The fourth sentence of Article III, Section 1 of the Lease is hereby amended by replacing such sentence in its entirety with the following sentence: Exhibit G $ 3 l 2 3 « P f - (i i 5 Marcy-shenandoah*s rights in property or prop erty interests which United States Company so elects to acquire shall be deemed subject to all terms of this Lease; provided that if the roy alty payable under any such lease is less than the royalty payable under this Lease, then the royalty payable under this Lease on ores from such property shall be the greater of ten per cent (10%) of the royalty payable under such lease or one-half (1/2) of the difference between the royalty payable under this Lease and the royalty payable under such lease; and pro vided further, that if the royalty under any such lease is the same or greater than the roy alty payable under this Lease then the royalty payable under this Lease on ores frcm such prop erty shall be the royalty payable under any such lease plus ten percent (10%) of that royalty. 2. Prior to the date hereof, Standard's rights in proper ties subject to the following agreements have been acquired by Washington and made subject to the Lease pursuant to Article in, Section 1: a. Mining Lease dated as of October 15, 1960 by and between Mahlon D. Thatcher, Marion Coleman, Rea Westenhaver, and Warren K. Gilbert, as lessors, and Standard, as lessee, as modi fied by the Ratification, Modification and Extension of Belle Creole Lease dated as of January 1 , 1979 (the "Belle Creole Lease" ) ; b. Mining Lease dated October 17 , 1 963 by and between Richard H. Brenneman, et al., as lessors, and Standard, as lessee (the "Brenneman Lease''); c. Mining Lease dated November 4, 1980 between Joy Manufacturing Co., as lessor, and Standard, as lessee (the "Joy Lease"); and d. Exploration and Option Agreement dated November 9 , 1983 between Callahan Mining Corporation and Noranda Exploration, Inc. , on the one hand, and Standard on the other (the "Noranda I Lease"). 3. The Lease is hereby amended by the addition of the fol lowing provision: From and after the date hereof, Standard shall not, without the express, written consent of Washington, amend or modify any lease or other agreement now subject to the Lease (i.e., the Belle Creole 6 á ¿ 3 ú f f f y t Lease, the Brenneman Lease, the Joy Lease, and the Noranda I Lease) and further, shall not amend or modify any lease or other agreement which may hereafter be acquired and made subject to the Lease pursu ant to Article III, section 1. Washington may withhold such consent for any reason, or for no reason, with respect to any amendment or modification proposed by Standard which 'affects, or which might affect, either Washington's overriding royalty under the Lease or the term (i.e., duration) of any lease or other agreement now subject to the Lease, or any lease or other agreement which may hereafter be acquired and made subject to the Lease pursuant to Article III, Section 1. With respect to other amendments or modifications pro posed by Standard, Washington shall not unreasonably withhold such consent. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective, duly authorized offi cers as of the day and year first above written. Attest : WASHINGTON MINING COMPANY By; Alan R. Be-H STANDARD METALS CORPORATION By: Assistant Secretary Boris Gresov President (PA ' ^3 o f f - W STATE OF COLORADO ) d M o a . a * COUNTY OF a Q û SI â KA s L ) .. ' The foregoing instrument was acknowledged before me this day of ______1985 by A la*. l £cLl ______, as i ï i ï M A j j i .//I, -Jppf - • and ______as . •— ...... of Washin^gtoiv Mining Company. WITNESS my hand and official seal. My commission expires ___ U j ? ? . l $ ( s ______, L , ô - J t *.i -A c L Notary Public f'}'tA.'âù'LU.+ *?<îâô ... jfC-3 C*l______Address [SEAL] WELBORN, DUFFORD, BROWN 8 TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PHILIP; G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L. BURKHARDT DACE TOOLEY (IS33-I9Q5) DENVER, COLORADO 60290-1199 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. RO BB (303) 861-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.McLAIN EDWARD D. WHITE BEVERLY J. QUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L. POWERS May 5, 1986 PHILLIP D. BARBER GREGORY A.RUEGSEGGER JOHN F. MECK V. W. Tookey, Assessor Office of County Assessor San Juan County, Colorado Box 596 Silverton, CO 81433 Re: Sunnyside Gold Corporation Dear Mr. Tookey We are in receipt of a copy of your letter dated April 29, 1986. Per our discussions, I believe we have satisfied you that no further deeds are required for the various patented and unpatented mining claims listed in the property schedules to the November 19, 1985 General Transfer, Assignment and Bill of Sale. We are in the proscess of obtaining deeds on the_ various unimproved properties in Silverton which you mention in the last two paragraphs of your April 29 letter, and will send them to you for recording as soon as they are in our possession. Thank you for your courtesies in this matter. Sincerely WELBORN, DUFFORD, BROWN & TOOLEY ' j ix U v V phillip D. Barber PDB/kw Enclosures cc: Dennis Krantz -fr'; t c t ô C r^ ~ )ü L t. WELBORN, DUFFORD, BROWN S TOOLEY RANDALL J. FEUERSTEIN <■ ATTORNEYS AT LAW ROBERT F. WELBORN S.KIRK INGEBRETSEN PH ILIP G. QUFFORD 1700 BROADWAY DIANE L.BURKHAROT THOMAS G. BROWN STEPHEN J. SULLIVAN DALE TOOLEY (1933-1985) DENVER,COLORADO 60290-1199 JOHN M. SPILLANE DAVID W. FURGASON (303) 361-8013 ELLEN TOLL WILLIAM C. R O BB DOUGLAS P. RUEGSEGGER JOHN F. WELBORN EDWARD D. WHITE WILLIAM A. MCLAIN PEGGY J. ANDERSON BEVERLY J. QUAIL RICHARD L.FANYO KATHRYN L.PO W ER S PHILLIP D. BARBER April 24, 1986 GREGORY A.RUEGSEGGER JOHN F. MECK Mr. Michael Gluckman Milner & Steer 2900 Manulife Place 10180 - 101 Street Edmonton, Alberta CANADA T5J 3V5 Dear Michael: Enclosed is the original Asset Sale and Purchase Agreement between Standard Metals Corporation and Echo Bay Inc. which you lent to me for the purpose of recording in the office of the San Juan County, Colorado, Clerk ■and_Recorder. I sincerely appreciate the promptness with which you forwarded the document to me. Kindest personal regards. Very truly yours, WELBORN, DUFFORD, BROWN & TOOLEY 7 Carla St. Romain Title Clerk/Legal Assistant CS/ppm Enclosure April 24, 1986 NOTICE OF TRANSFER Colorado State Office Bureau of Land Management 2020 Arapahoe Street Denver, Colorado 80205 Attention: Case Files Section Ladies and Gentlemen: Pursuant to 43 C.F.R. § 3833.3 (1985), the undersigned hereby states that, effective November 19, 1985, ownership of certain unpatented mining claims situate in San Juan County, Colorado, more particularly described in Exhibit A hereto, has been transferred to: Sunnyside Gold Corporation Building D 484 Turner Drive Durango, Colorado 81301. Additionally, for those unpatented mining claims listed in Exhibit B attached hereto, any reference to ownership by Standard Metals Corporation should be changed in your records to Sunnyside Gold Corporation. As evidence of your receipt, please date-stamp the enclosed copy of this Notice and return it to me. Thank you for your assistance. Very truly yours, SUNNYSIDE GOLD CORPORATION By:______Gregory B. Sparks Mine Manager EXHIBIT A TO Claim Name CMC Number American Tunnel No. 2 6346 Golden Fleece No. 5 77866 American Tunnel No. 3 35586 Golden Fleece No. 6 Andes Lode 77867 69946 Gretchen 70257 Apollo 10 70248 Independence Fraction 79234 Argentine Extension 70249 Jarvis 160686 Basque Millsite 5462 Jay Bird 70258 Belinda 70250 Jessica 160144 Betsey 70251 John B Big Mac 70259 70252 John and Mary Lode 69950 Birdbath Millsite 191873 Juan Carlos Millsite 5461 Bob No. 20 200831 Karla Millsite 5460 Bob No. 21 201347 La Bolsa Lode 6339 Bob No. 23 200833 Marge Millsite Bob No. 24 5457 201348 McCarty No. 8 35578 Bob No. 26 200834 McCarty No. 9 Bob No. 27 35579 201350 McCarty No. 10 35580 Bob No. 28 200835 McCarty No. 11 Bob No. 29 35581 201351 McCarty No. 16 35582 Bob No. 30 201352 McCarty No. 17 35583 Bob No. 31 201353 McCarty No. 18 200722 Bob No. 32 201354 McCarty No. 19 200723 Bob No. 33 201355 McCarty No. 20 200724 Bob No. 34 201356 McCarty No. 58 200845 Bob No. 35 201357 McCarty No. 59 Bob No. 38 200846 201358 Midas 160684 Boulder Mt No. 1 MS 5467 Midnight 70260 Boulder Mt No. 2 MS 5466 Ming 70261 Boulder Mt No. 3 MS 5469 Miriam 1492 Bryce 160685 Molly B 70262 Buckhorn 70253 Nantucket No. 2 77876 Byron No. 4 77871 Neptune Fraction 79236 Comstock Fraction 79235 New Deal Millsite 5455 Cortina 70254 Nimon 70263 Cummingtonite 11730 Occidental Lode 35585 Dives Millsite 5463 Oriental Lode Doggy Wog 69947 11728 Overflow Millsite 48417 Dynasty Millsite 5470 P.S. Millsite 5452 Echo 160683 Parrado Lode 69948 Empire No. 9 77850 Paymaster Ext Lode 6342 Empire No. 10 77851 Peggy 70264 Equestrian Placer 104609 Pickup Fraction 79232 Ezra R Ext 70255 Plumbers Millsite 5453 Florence Fraction 79237 Powerline Millsite 5468 Fobie 70256 Sam 70265 Franco Millsite 5465 Savage Sam Millsite 5459 G. Q. Fraction 79233 Shenandoah Millsite 5464 Silver Queen Millsite 1493 Silverado No. 1 1482 Silverado No. 2 1483 Silverado No. 3 1484 Silverado No. 4 1485 Silverado No. 5 1486 Silverado No. 6 1487 Silverado No. 7 1488 Silverado No. 8 1489 Snowdrift No. 1 177989 Snowdrift No. 2 177990 Snowdrift No. 3 177991 Snowdrift No. 4 177992 Snowdrift No. 5 177993 Snowdrift No. 6 177994 Snowdrift No. 7 177995 Snowdrift No. 8 177996 Surprise Millsite 5454 Tiros 160682 Treasure Mountain No. 6 77829 Treasure Mountain No. 7 77830 Tricky Dick Millsite 5458 Tube Stake " 11729 Watergate Millsite 5456 Whitehawk 70244 Zzyzzx 160146 EXHIBIT B TO Claim Name CMC Number Claim Name CMC Number Bear No. 12 77877 Kinnear 1502 Bob No. 11 201342 Knob 71068 Bob No. 12 201343 Mastadon Millsite 71076 Bob No. 15 201344 McNamee 1500 Bob No. 17 201345 Mexia 77857 Bob No. 18 201346 Mexia No. 2 77858 Bob No. 25 201349 Mexia No. 3 77859 Boston Amended 71062 Mexia No. 4 77860 Buck 71063 Mexia No. 6 77861 Byron No. 1 77868 Midway No. 7 71071 Byron No. 2 77869 Midway No. 8 71072 Byron No. 3 77870 Midway No. 9 71073 Byron No. 4 77871 Midway No. 10 71074 Copper Boy No. 1 77872 Midway No. 31 71075 Copper Boy No. 2 77873 Miriam 1492 Copper Boy No. 3 77874 Nantucket No. 1 77875 Doe 71064 Nantucket No. 2 77876 Empire 77841 Northern Pacific Amended 71077 Empire No. 1 77842 Pronto Amended 71078 Empire No. 2 77843 Protected Amended 71079 Empire No. 3 77844 S.G.M. 77879 Empire No. 4 77845 Silver Queen Millsite 1493 Emp ire N o . 5 77846 Silverado No. 1 1482 Empire No. 6 77847 Silverado No. 2 1483 Empire No. 7 77848 Silverado No. 3 1484 Empire No. 8 77849 Silverado No. 4 1485 Empire No. 9 77850 Silverado No. 5 1486 Empire No. 10 77851 Silverado No. 6 1487 Float Gold Placer Tract A 77882 Silverado No. 7 1488 Float Gold Placer Tract C 77883 Silverado No, 8 1489 Flower 1494 Silverado No. 9 1490 Flower No. 1 1495 Silverado No. 10 1491 Flower No. 2 1496 Slide 77881 Francis No. 1 77880 St. Joe Amended 71081 Gladstone Millsite 82529 Standard 71080 Goat 71065 Tempest Tunnel Site 77878 Golden Fleece No. 1 77862 Tom Moore No. 1 77852 Golden Fleece No. 2 77863 Tom Moore No. 2 77853 Golden Fleece No. 3 77864 Tom Moore No. 3 77854 Golden Fleece No. 4 77865 Tom Moore No. 5 77855 Golden Fleece No. 5 77866 Tom Moore No. 6 77856 Golden Fleece No. 6 77867 Treasure Mountain 77823 Grace S. 1501 Treasure Mountain No. 1 77824 Harold Amended 71066 Treasure Mountain No. 2 77825 Hi Ho Silver Lode 69951 Treasure Mountain No. 3 77826 Kid 71067 Treasure Mountain No. 4 77827 Treasure Mountain No. 5 77828 Treasure Mountain No. 6 77829 Treasure Mountain No. 7 77830 Treasure Mountain No. 8 77831 Treasure Mountain No. 9 77832 Treasure Mountain No. 10 77833 Treasure Mountain No. 11 77834 Treasure Mountain No. 12 77835 Treasure Mountain No. 13 77836 Treasure Mountain No. 14 77837 Treasure Mountain No. 15 77838 Treasure Mountain No. 16 77839 Treasure Mountain No. 17 77840 W.Y.O.D. 1497 W.Y.O.D. No. 1 1498 W.Y.O.D. No. 2 1499 Head Office: SUNNYCIDE GOLD CORPORATION Sllverton Office: Building D ' AN ECHO DAY COMPANY P.O. Box 177 484 Turner Drive Silverton, CO 81433 Durango,,CO 81301 Phone (303) 387-5533 Phone (303) 259-1091 MEMORANDUM TO: Greg Sparks FROM: Dennis Krantz SUBJECT: Cl aims Purchase CEAR #S86-004 DATE: April 23, 1986 The closing date for the purchase of 7 claims authorized by CEAR #S86-004 will be on Friday, April 25, 1986, Four of the seven claims are within 1,000 feet of patented claims subject to the original lease with Washington Mining Co. Washington Mining Co.' is aware that this purchase is in the works since a direct purchase was suggested to them last January. Under historic interpretation of the Washington Lease, Section III, Subsection 1, we must notify Washington Mining Co. of the terms of the agreement "forthwith”, whereupon they have 90 days to acquire the property. I will await your direction in this matter. cc: John Azlant ^/fhil B,arb.er j g ) PPB .... 1t k - Head Office: SÜMNVSIDE GOLD CORPORATION Siiverton Office: Building D AN ECHO DAY COMPANY P.O. Box 177 484 Turner Drive Siiverton, CO 81433 Durango, CO 81301 Phone (303) 387-5533 Phone (303) 259-1091 April 22, 1986 Carla St. Roma in u l a s J Welborn, Dufford, Brown and Tooley ^ tO e u ô t^ * fa u iS *■ 1700 Broadway, Suite 11100 ¿f***3 0£> f ¿y Denver, Colorado 80290 Dear Carla: Enclosed are copies of the Echo Bay calendar and a letter to Mining Company coutersigned by Tim Sadler. I am now sending similar letters to our other lessors. Si ncerely, SUNNYSI DE GOLD CORPORATION ADennis V. - Krantz 1/ Property Manager DVK:mkr Enclosures Head Office: SUNNŸSIDE GOLD CORPORATION Silverton Office: Building D AN ECHO BAY COMPANY P.O. Box 177 484 Turner Drive Silverton, CO 81433 Durango, CO 81301 Phone (303) 387-5533 Phone (303) 259-1091 April 10, 1986 Mr. Timothy Sadler, Manager Washington Mining Company 999 18th Street Denver, Colorado 80202 Dear Tim: In response to our telephone conversation of last week, I am writing this letter to outline for you the quarter system used by Echo Bay and Sunnyside Gold Corporation. Instead of a calendar quarter, this system ends each month on a Friday and each quarter consists of two months having four weeks each and a third month having five weeks. The year 1986 began on December 28, 1985 and the first quarter ended on March 28, .1986. By way of example, I am enclosing a 1986 calendear constructed under this system. The extra one or two days each year are accumulated into a full week, which is added to a year periodically as needed. Since we are keeping our internal accounting and mine activity records on this system to conform with our parent and sister companies, we propose a schedule of reporting of all lease requirements to you on this Echo Bay schedule and calendar. Please signify your approval of this reporting system by signing a copy of this letter and returning.it to us. Sincerely, SUNNYSIDE GOLD CORPORATION Dennis V. Krantz Property Manager DVK:mkr Enclosures APPROVED BY: I ¿W TITLE: ______WASHINGTON MINIÌKING t' COMPANY SUNNY«*!«= GOLD c o m m \ l IQN rum/woo. onuv- 9 MR S IS E e a u b s t o m t ic i ■ i 1ST GUNtTES t m O L £ U fil i «GI ■ USE t *SK 2 *3 Î K3 « ist 3 «ES 4 IEEE 7 t s i g e n t I S K 1 Í lez u KSC 12 sa u : i 3 t ¡ : i J Í i J J J J i : : i i } i i j i j i i ; ¡ J J J J J J F F F F F F F F : F F F F F F F F F F F F F F F F F F F Ä 1 S 1 I II It II i B î u a li B H 1 1 1 N H R S * S s : »IE ------an »:; i 23 Í 5 k 8 » 1« I ! 12 1 J I t 15 U 17 i l h a a s 23 « 2 24 17329:5 31 1 2 î S i T : ■ î io u a a u IS U 17 I S » 20 21 a 2« a 24 27 2H 1 2 S 4 S & 7 0 î 10 U U 13 » is u i7 ia i î n 2 i S 2 24 25 U 27 28 : » 1 " > 2 ----- 5» SQ IB 13 H T* F Ï SA SU ® TU IB TK R s a sa n to u> r e f h s i s a no to u> tb fs SS SU IB Til a I* FÏ sa su m tu n TH ra : s » sa m u j ira th f * a sn m to » m ra SD IW TU U TH F Ï a sn m ra m tu f ï SA S3 IH TU H ™ FR S » S3 BU ID M TH F Ï s * n m TU H TU P. : a i a : 1U SF W? *tï!Q — £ E E : e c E t : **T M» ■ - ■ ■■» f r p t f r s s k w y s id e s u attrattila 3D BUSTES 1984 UU SBtt i n ¡ n i 1 1 } l 1 11 a i) n n r il r i J J J J J 1 1 1 1 1 1 1 1 1 1 1 1 1 } il § « « a t * t a a * » « * A A A A A A A A A A A A A A A A A A » B R I « R It II It H * R II » « « It 21 22 23 24 B Z i ZT S Zi 273 29 30 3t t 2 I 4 S i 7 9 » 10 I I 12 13 ¡4 15 14 1? 18 19 20 79 3 51 1 2 3 4 5 à 7 S ? 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(1 e r «2 e x a K E I 44 ■E3 45 « E t 14 USX 47 e n « « B 44 K E I » e n si IEEK 52 s s s s o a s 0 0 0 0 0 0 3 o a o o o a a o o o a a o o 0 1 0 1 1 1 1 tuoni t 1 0 » 0 Í 8 1 1 B 9 » : s 1STÍ ------n 3 3 30 I I I 1 ; i 7 I M O 11 12 ¡5 14 15 U ¡7 13 19 a 21 22 a 24 a Z i 2? 28 2? 30 51 l 2 i 5 i 7 S ? 10 U 12 13 14 is l i 17 ia i? 20 a S 24 25 Zi 27 3 2? a 1 2 : 4 3 4 7 t 1» M 12 13 14 15 U 17 18 l ì 29 21 22 Z5 24 2 24 • J.1 ? * 3 1 ------Si 5a w w « T» n S# SU IB HI W TH FR Si SO IB TU HJ IH FS SA SI Iß TU ID TH FR sì ss n tu mi ih re s* ss w ra m> t» re S» S I IH HI » TH FR sa s i no Tu n n re SO W TU I Í TU re e» sa re ra n tu fr » SD n TV « T8 re s* a « ro m ih R SA SO M TU *3 IH FR < Li:at ...... 11 H H H 33 OF H l HSKU - E E E £ EE E m a » r f f p p t WELBORN, DUFFORD, BROWN 8 TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PH ILIP G. DUFFORO 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT DALE TOOLEY {1933*1985} DENVER,COLORADO 60290-1199 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M.SPILLANE WILLIAM C.ROBB (303) 861-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A .MCLAIN EDWARO D. WHITE BEVERLY J. OUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L. PO W ERS PHILLIP D. BARBER GREGORY A. RU EG S EG GER JOHN F. MECK April 18, 1986 VIA TELECOPY Mr. Dennis Krantz Property Manager Sunnyside Gold Corporation Building D 484 Turner Drive Durango, CO 81301 Re; Sunnyside Gold Corporation Dear Dennis: Enclosed is a modified version of a Notice to Vendors, Suppliers and Potential Lien Claimants from our files. I hope that it is useful to you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY ( 3 ? ( ,i , 0 - Phillip D. Barber PDB/slf Enclosure NOTICE TO VENDORS, SUPPLIERS AND POTENTIAL LIEN CLAIMANTS Pursuant to C.R.S. § 38-22-105(2), all vendors, suppliers and potential lien claimants are hereby notified that Sunnyside Gold Corporation is the lessee under certain and various mining leases and that Sunnyside Gold Corporation is in possession of and mining this property pursuant to those leases and pursuant to claims which it owns. All suppliers, vendors and potential lien claimants are hereby given notice that the interests of the owner(s) of this property shall not be subject to any lien by any vendor, supplier, or potential lien claimant. Dated: 3 6 3 - 2 .5 ? - / £ > 9 / t o : f V h k i i I s K r a j r f e FROM: P k \ I i3arW- Welborn, Dufford & Brown 1700 Broadway Denver# Colorado 80290-1199 This transmission consists of pages, including this cover sheet. If you encounter any problems in receiving, immediately contact 303-861-8013 WELBORN, DUFFORD, BROWN 8 TOOLEY ROBERT F. WELBORN A T T O R N E Y S AT LAW RANDALL J. FEUERSTEIN PH ILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G.BROWN DIANE L. BURKHARDT DALE TOOLEY (1933-1985) DENVER, COLORADO 60290-1199 STEPHEN J, SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. RO BB (303) 861-3013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J.QUAIL PEGGY J. ANDERSON RICHARD L.FANYO JOHN F. MECK KATHRYN L.PO W ER S COUNSEL THEODORE B.ATLASS PHILLIP D. BARBER GREGORY A.RUEGSEGGER December 11, 1985 HAND-DELIVERED Christopher L. Richardson, Esq. 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Jack L. Smith, Esq. 555 - Seventeenth Street, Suite 2900 Denver, Colorado 80202 Re: November 19, 1985 Escrow Agreement Dear Chris and Jack: This letter is in regard to the November 19, 1985 Escrow Agreement by and between Standard Metals Corporation ("SMC")/ Echo Bay Inc. ("Echo Bay") and Canadian Imperial Bank of Commerce ("CIBC"), a copy of which is attached hereto as Exhibit A ("Escrow Agreement"). On or about November 20, 1985, Echo Bay paid the sum of $10,707.06 to CIBC in accordance with paragraph 1 at page 2 of the Escrow Agreement. Paragraph 2 at page 2 of the Escrow Agreement provides: 2. The remaining amount of $447,543.00, plus accrued interest, less any issuance fee accruing after November 19, 1985 owed to CIBC shall be released and paid to Standard Metals Corporation immeidately upon confirmation by CIBC to Echo Bay of the fact that the CIBC Letters of Credit posted for the benefit of SMC have been released by the Colorado Mined Land Reclamation Board. Issuance fees owed to CIBC accruing after November 19, 1985 shall be first paid to CIBC out of the account before any sums are released to SMC. WELBORN, DUFFORD, BROWN 8 TOOLEY Christopher L. Richardson, Esq. Jack L. Smith, Esq. November 10, 1985 Page 2 Attached hereto as Exhibits B and C respectively, are a letter dated November 27, 1985 from the Mined Land Reclamation Division to Mr. Boris Gressor [sic] and a signed copy of the November 14, 1985 Request for Transfer of Mineral Permit and Succession of Operators ("Request"). The Request was signed on December 2, 1985 by the Division Director. We have spoken with counsel for CIBC and are informed that there are additional fees owed to CIBC in connection with the CIBC Letters of Credit, as contemplated in paragraph 2 at page 2 of the Escrow Agreement. Counsel has informed us that those fees amount to $15.54 per day. Based upon these facts. Echo Bay hereby requests that each one of you (or some other designated officer or attorney-in-fact) sign on the indicated line below as attorney-in-fact for your respective client. By signing below and returning this letter to me, you will be acknowledging on behalf of your client: that there are no sums due and owing to CIBC from any other party hereto, other than the per diem charge of $15.54, which began accruing as of November 20, 1985; that Echo Bay may pay the sum of $447,543.00 (less the CIBC per diem charge), plus accrued interest, to SMC? that upon making such payments. Echo Bay, its officers, employees, agents and attorneys shall be released from any and all liability arising out of or in any way connected with the Escrow Agreement? and that upon payment of the said sums, the Escrow Agreement will have terminated. Upon receipt of your signed acknowledgement, we will immediately distribute 1) the per diem charges to counsel for CIBC, calculated on the basis of $15.54 times the number of days between November 20, 1985 and the date of the disbursement to CIBC, inclusive? and 2) the remaining funds to SMC's counsel pursuant to the November 18, 1985 Order of the United States Bankruptcy Court for the District of Colorado. Thank you for your cooperation. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY phillip D. Barber Attorneys for Echo Bay Inc. Christopher L. Richardson, Esq. Jack L. Smith, Esq. November 10, 1985 Page 3 STANDARD METALS CORPORATION By: L Christopher L. Richardson Its Attorney-In-Fact CANADIAN IMPERIAL BANK OP COMMERCE By: ______Jack L. Smith Its Attorney-In-Fact PDB/slf Enclosure cc: Michael Gluckman, Esq. ATTORNEYS AT LAW SUITE 1200 eOO EAST MAIN STREET 1 6 7 5 E Y E S T R E E T , N. W. ASPEN, COLORADO 8ISII TELEPHONE (303) ©25-3476 WASHINGTON, D. C. 20006 SUITE 2900 TELEPHONE (202) 466-7340 TELECOPIER (202) 466-73B4 555 SEVENTEENTH STREET DENVER,COLORADO WYOMING OFFICE MAILING ADDRESS S U IT E 5 0 0 MONTANA OFFICE 2020 CAREY AVENUE P. O. B O X 8 7 4 9 SUITE 1400 CHEYENNE, WYOMING 82001 DENVER, COLORADO S020I 175 NORTH 27TH STREET TELEPHONE (307) 632-2160 BILLINGS, MONTANA 59101 TELEPHONE (303) 295-0000 TELECOPIER (307) 778-8179 TELEPHONE (406) 252-2166 TELECOPIER (303) 295-8261 TELECOPIER (406) 252-1669 TWX 910-931-0566 S. E. DENVER OFFICE J A C K L. S M IT H CABLE HOLHART SUITE 1250 7QB7 EAST BELLEVIEW AVENUE ENGLEWOOD, COLORADO 60111 TELEPHONE (3 03) 741-1226 January 28, 1986 Phil Barber, Esq. Welborn, Dufford, Brown & Tooley Suite 1100 1700 Broadway Denver, Colorado 80290 Re: Standard Metals Escrow Agreement Dear Phil: Enclosed is a signed copy of your letter of December 11, 1985, authorizing the release of the Escrow fund. The delay was caused by our inability to locate the original of one of the Letters of Credit, but that is now resolved to our satis faction. Thank you for your cooperation in handling the Escrow arrangement. Very truly yours, Jack L. Smith O f HOLLAND & HART J L S :rys Enclosure ccs Christopher L. Richardson, Esq William G. Fry ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PHILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G.BROWN DIANE L.BURKHARDT DALE TOOLEY ((933-1985) DENVER,COLORADO 60290-1199 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. ROBB (303) 861-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J. OUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L.POWERS JOHN F. MECK THEODORE B.ATLASS COUNSEL PHILLIP D. BARBER GREGORY A.RUEGSEGGER December 11, 1985 HAND-DELIVERED Christopher L. Richardson, Esq. 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Jack L. Smith, Esq. 555 - Seventeenth Street, Suite 2900 Denver, Colorado 80202 Re: November 19, 1985 Escrow Agreement Dear Chris and Jack: This letter is in regard to the November 19, 1985 Escrow Agreement by and between Standard Metals Corporation ("SMC"), Echo Bay Inc. ("Echo Bay") and Canadian Imperial Bank of Commerce ("CIBC"), a copy of which is attached hereto as Exhibit A ("Escrow Agreement"). On or about November 20, 1985, Echo Bay paid the sum of $10,707.06 to CIBC in accordance with paragraph 1 at page 2 of the Escrow Agreement. Paragraph 2 at page 2 of the Escrow Agreement provides: 2. The remaining amount of $447,543.00, plus accrued interest, less any issuance fee accruing after November 19, 1985 owed to CIBC shall be released and paid to Standard Metals Corporation immeidately upon confirmation by CIBC to Echo Bay of the fact that the CIBC Letters of Credit posted for the benefit of SMC have been released by the Colorado Mined Land Reclamation Board. Issuance fees owed to CIBC accruing after November 19, 1985 shall be first paid to CIBC out of the account before any sums are released to SMC. Christopher L. Richardson, Esq. Jack L. Smith, Esq. November 10, 1985 Page 2 Attached hereto as Exhibits B and C respectively, are a letter dated November 27, 1985 from the Mined Land Reclamation Division to Mr. Boris Gressor [sic] and a signed copy of the November 14, 1985 Request for Transfer of Mineral Permit and Succession of Operators ("Request"). The Request was signed on December 2, 1985 by the Division Director. We have spoken with counsel for CIBC and are informed that there are additional fees owed to CIBC in connection with the CIBC Letters of Credit, as contemplated in paragraph 2 at page 2 of the Escrow Agreement. Counsel has informed us that those fees amount to $15.54 per day. Based upon these facts, Echo Bay hereby requests that each one of you (or some other designated officer or attorney-in-fact) sign on the indicated line below as attorney-in-fact for your respective client. By signing below and returning this letter to me, you will be acknowledging on behalf of your client: that there are no sums due and owing to CIBC from any other party hereto, other than the per diem charge of $15.54, which began accruing as of November 20, 1985? that Echo Bay may pay the sum of $447,543.00 (less the CIBC per diem charge), plus accrued interest, to SMC; that upon making such payments, Echo Bay, its officers, employees, agents and attorneys shall be released from any and all liability arising out of or in any way connected with the Escrow Agreement; and that upon payment of the said sums, the Escrow Agreement will have terminated. Upon receipt of your signed acknowledgement, we will immediately distribute 1) the per diem charges to counsel for CIBC, calculated on the basis of $15.54 times the number of days between November 20, 1985 and the date of the disbursement to CIBC, inclusive? and 2) the remaining funds to SMC's counsel pursuant to the November 18, 1985 Order of the United States Bankruptcy Court for the District of Colorado. Thank you for your cooperation. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D.^Barber Attorneys for Echo Bay Inc. Christopher L. Richardson, Esq. Jack L. Smith, Esq. November 10, 1985 Page 3 STANDARD METALS CORPORATION By:______Christopher L. Richardson Its Attorney-In-Fact CANADIAN IMPERIAL BANK OF COMMERCE Bys ck hi £>mith Attorney-In-Fact PDB/slf Enclosure cc: Michael Gluckman, Esq ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN S. KIRK INGEBRETSEN PHILIP G. DUFFORD 1700 BROADWAY THOMAS G. BROWN DIANE L. BURK HARDT DALE TOOLEY (1933-1985) DENVER,COLORADO 80290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. ROBB (303) 861-8013 ELLEN TOLL JOHN F.WELBORN DOUGLAS P. RUEGSEGGER EDWARD D. WHITE WILLIAM A.MCLAIN PEGGY J, ANDERSON BEVERLY J.QUAIL RICHARD L.FANYO January 30, 1986 JOHN F, MECK KATHRYN L. POWERS COUNSEL THEODORE B.ATLASS PHILLIP D. BARBER GREGORY A.RUEGSEGGER HAND-DELIVERED Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 - 17th Street, Suite 4700 Denver, Colorado 80202 Re: Echo Bay Inc./CIBC Escrow Account Dear Chris: On January 28, 1986, counsel for the Canadian Imperial Bank of Commerce returned its copy of my December 11, 1985 letter regarding the Escrow Agreement between Standard Metals Corporation, Echo Bay Inc. and the Canadian Imperial Bank of Commerce. I am now in a position to disburse the funds from that account. As of today, the balance in the Escrow Account was $4 53,04 9.57. I am attaching a computer print-out evidencing the balance for your information. Based upon per diem charges of $15.54 times 72 days, CIBC is entitled to a payment in the amount of $1,118.88. The cost of obtaining a Cashier's Check for the remaining balance in the account was $3.00. Therefore, I am remitting to you the United Bank of Denver Cashier's Check No. 607330, payable to Standard Metals Corp., in the amount of $451,927.69. That amount is the balance which remains in the account after deducting the per diem charges and the cost of the cashier's check. Your signature on the line below will acknowledge your receipt on behalf of Standard Metals Corporation of Cashier's Check No. 607330 in the amount of $451.927.69. Please call if you have any questions. Thank you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY phillip D. Barber PDB/slf Enclosure Christopher L. Richardson United Bank Center, 1700 Broadway, Denver, Colorado 8 0 2 7 4 6 0 7 3 3 0 2ü" ’020 United Bank Cashier’s Check “Purchase of an indemnity bond will be reauired before any official check of this Bank will be of Denver replaced in the event it is tost, destroyed, or stolen." National Association Date 01/30/86 Pay To The Order ntSTANDARD METALS CQRP______¡6 ***»4-51,927.69 , 9 2 7 *DOLLARS AND* 6 9 *CENTS Echo Bay Inc./Sunnyside Gold Corp. Authoriz^cTSignature ii,E 0 7 3 3Qiib i: 10 a o o o o v & i : O 10 U 7 V To be deposited pursuant to November 18, 1985 Court Order ROBERT F. WELBORN ATTORNEYS AT LA W RANDALL J. FEUERSTEIN PHILIP G. DUFFORD 1700 BROADWAY S, KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT DALE TOOLEY (1933-1985) DENVER,COLORADO 60290-1199 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. ROBB (303) 861-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A. McLAI N EDWARD D. WHITE BEVERLY J. QUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L.POWERS JOHN F, MECK THEODORE B.ATLASS COUNSEL PHILLIP D, BARBER January 31, 1986 GREGORY A.RUEGSEGGER HAND-DELIVERED Jack L. Smith, Esq. Holland & Hart 555 - 17th Street, Suite 2900 Denver, Colorado 80202 Re; Echo Bay Inc./CIBC Escrow Account Dear Jacks I have received your copy of my December 11, 1985 letter regarding the Escrow Account between Standard Metals Corporation, Echo Bay Inc and the Canadian Imperial Bank of Commerce, which you have signed on behalf of the Canadian Imperial Bank of Commerce. On behalf of Echo Bay Inc., I have disbursed Standard's share of those funds and have computed your client's share as well. I am enclosing Check No. 3 drawn on Account No. 811 354 at the United Bank of Denver, payable to Canadian Imperial Bank of Commerce in the amount of $1,118.88. This amount is based upon per diem charges of $15.54 times 72 days as per the Escrow Agreement. Your signature on the line below will acknowledge your receipt on behalf of the Canadian Imperial Bank of Commerce of United Bank of Denver Check No. 3, drawn on Account No. 811 354, in the amount of $1,118.88. Please call if you have any questions. Thank you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/slf Enclosure ROBERT F. WELBORN A TTO R N E Y S AT LAW RANDALL J. FEUERSTEIN PHILIP 0. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L• BURKHARDT DALE TOOLEY (I033-I96S) DENVER;COLORADO Ô02Ô0-1199 STEPHEN J.SULLIVAN DAVID W, FURGASON JOHN M. SPILLANE WILLIAM C. ROBB (303) 861-8013 ' ELLEN TOLL JOHN F.WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J. OU Al L PEGGY J, ANDERSON RICHARO L.FANYO KATHRYN L.POWERS JOHN F. MECK THEODORE B-ATLAS5 COUNSEL PHILLIP D.BARBER January 31, 1986 GREGORY A.RUEGSEGGER HAND-DELIVERED Jack L. Smith, Esq. Holland & Hart 555 - 17th Street, Suite 2900 Denver, Colorado 80202 Re: Echo Bay Inc./CIBC Escrow Account Dear Jack I have received your copy of my December 11, 1985 letter regarding the Escrow Account between Standard Metals Corporation, Echo Bay Inc and the Canadian Imperial Bank of Commerce, which you have signed on behalf of the Canadian Imperial Bank of Commerce. On behalf of Echo Bay Inc., I have disbursed Standard's share of those funds and have computed your client's share as well. I am enclosing Check No. 3 drawn on Account No. 811 354 at the United Bank of Denver, payable to Canadian Imperial Bank of Commerce in the amount of $1,118.88. This amount is based upon per diem charges of $15.54 times 72 days as per the Escrow Agreement. Your signature on the line below will acknowledge your receipt on behalf of the Canadian Imperial Bank of Commerce of United Bank of Denver Check No. 3, drawn on Account No. 811 354, in the amount of $1,118.88. Please call if you have any questions. Thank you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY phillip D. Barber PDB/slf Enclosure Jack Smith, Esq. 2 3 - 7 /1 0 2 0 '/= .10 fó . Day j $ i. 1 1 ?. 8 8 I't o THE ') lOKDKKOF------'ID f\\A S L rrv^Q- ^xa^-W^WQ'Ca— *£*ò^LììUl^v^ WoZBQ_J)0LLARS g|g United Bank of Denver ,jl G«n!t-n WOO BroMwiy D«nv«f. Colorido 40274 Il £ûOVtr^ O g W i .---- ®i: io 5 0 0 Q Q 7&*: w UN ITFD BANK DF DENVER 1 OWE UNITED BANK CENTER United Bank 1700 BROADWAY Statement For DENVER, COLORADO 80274 UNITED PEftEY MARKET ACCOUNT Bank Telephone Page No. (303) «61*8811 1 X SAFEKEEPING MELBORN DUFFDRß BROWN C TOCLEY Account Number Statement Date TRUST ACCT #3 811 354 DEC 19, 1985 17CO BROADWAY Social Security Number Interest Paid This Year DENVER CÜ « 0 2 9 0 -0 0 0 1 UNKNOWN 2 ,4 7 8 .5 0 G ATI ht-SClMPTIUN WIUDIiAHALSDFPPSITS RALANCE IT (, INN INC f\ Al ANCE MOV 2 0 , 1 9 Ì5 »00 1.1/21 IMPOSIT 447,543.00 447,543.00 I2/2G ff!7rRi: M EAkNEP '?,'t?ß.5C 450,021-50 TOTAL W 1 THDRAl'AL £ /DF:POS ITS .004«Ì0 ,C?I .Cic WH IMG BALANCE 4 5 0 ,0 2 1 .5 0 ------JNTEHEST RATE HISTORY ------ LI ST lb BEL PM ARP THE RATES PA ID (fh YCl»R ACCOUNT DUR1NC THIS STATEMENT PERIOD* PATE5 RAT FS£ A t ^ f 4 . j 7 <:''- y l i n e t h r u 11/21 5-250 T-J V^Y"/’ O U/2? THRU 12/19 7*200 ~ / | 2..(, X AT UNITED KANK, HI Cf-t n PALAT'CFS FARM HIGHER IMPREST PATE V. PALANCE F'ATf;% EFFECTIVE ANNUAL YIELD ■! - .00 - 9 9 9 « *3 9 5.250 5 .31m 1,000-00 - 2 ,4 9 fì . ‘;9 6.750 t : : ? ,500.00 - 9 ,9 9 9 .S 9 7.000 7.750% 10,000.00 - * 9 ,9 9 9 .*)9 7.050 7.303% 50,000.00 - 99,399 *39 ■ 7.100 ? . 3572 .100,000.00+ 7.200 / * 4 (: * *, IT TA If! THIS ST A T E m 'T FOR 19K5 INCOME TAX I IMPOSES UNITED BANK OF DENVER i.A ONE UNITED BANK CENTER li ted Bank 1700 BROADWAY Statement For DENVER, COLORADO 80274 UNITED HOMEY MARKET ACCOUNT Bank Telephone Page No. (303) 861-8811 1 0 SAFEKEEPING WELBORN DUFFORD BROWN £ TOOLEY Account Number Statement Date TRUST ACCT £3 811 354 JAN 22, 1986 1700 BROADWAY Social Security Number Interest Paid This Year DENVER CO 80290-0001 98-00&7947 3*026.07 DATE ULSLkiPTlON ' WITHDRAWALS L't P3S ITS f>AL ANCE BEGINNING BALANCE DEC 19, 19B5 4i>0,02I.i>0 1/23 inTlRfST t AKNLU 3,32b.U7 4b3,049.i>7 TUI AL U lIriDRAWALS/DEPDSlTS .00 3.02B.Ü7 ENDING BALANCE 4t>3 f 0*9*51 ------INTEREST KATE H I S T O R Y ------—»------— LIS1LU i'.f UUJ ARC THE RATES PAID ON YOUR ACCOUNT DURING THIS STATEMENT PERIOD. DATES RATE?; 12/20 THRU 01/22 7.200 ------CURRENT KATES ------AS 11F STATEMENT UATfc AT U M TED BANK , DIGGER BALANCES EARN HIGHER INTEREST RAILS. BALANCE kA 1 L 5. EFFECTIVE AMMUAL YIELD .00 - 999.99 t>.250 S.3695* 1,000.00 - Z,*99.99 6.750 6.902% 2 ,£>00*00 - 9,999.99 7.ÖÜU y.z&osi 10,000.00 - 49,999.99 7.050 7.303* bO ,000.00 - 99,999.99 7.100 7.3 5 75: 100,000.00+ 7.200 7.464% fJPFN AN IRA NOW — THE EARLIER YOU START, THE MORE HONEY YOU ACCUMULATE WITH COMPOUNDED INTEREST 3VER THE YEARS. WELBORN, DUFFORD, B R O W N 8 TOOLEY ROBERT F. WELBORN A TTO R N E Y S AT LAW RANDALL J. FEUERPTEIN PHILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT DALE TOOLEY (I933-I9S5) DENVER, COLORADO 60290-1199 STEPHEN J.SULLIVAN DAVID W. rURGASON JOHN M.SPILLANE WILLIAM C. ROBB (303) 661-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P, RUEGSEGGER WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J- QUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L. POWERS JOHN F. MECK THEODORE B.ATLASS COUNSEL PHILLIP D.BARBER GREGORY A.RUEGSEGGER January 31, 1986 Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Re: CIBC Escrow Account Dear Chris: For your records I am enclosing a copy of the two statements which we received on the CIBC Escrow Account. I thought they might be of use to you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY ,■ ( ) ? T " Phillip D. Barber PDB/slf Enclosure WELBORN, DUFFORD, B R O W N & TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEU ER$TEI N PHILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L. BURKHARDT DALE TOOLEY (1933-1985) DENVER, COLORADO 60290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. ROBB (303) 861-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARO D. WHITE BEVERLY J.OUAIL PEGGY J, ANOERSON RICHARD L.FANYO January 30, 1986 KATHRYN L. POWERS JOHN F. MECK THEODORE B-ATLASS COUNSEL PHILLIP D.BARBER GREGORY A.RUEGSEGGER HAND-DELIVERED Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 - 17th Street, Suite 4700 Denver, Colorado 80202 Re : Echo Bay Inc./CIBC Escrow Account Dear Chris: On January 28, 1986, counsel for the Canadian Imperial Bank of Commerce returned its copy of my December 11, 1985 letter regarding the Escrow Agreement between Standard Metals Corporation, Echo Bay Inc. and the Canadian Imperial Bank of Commerce. I am now in a position to disburse the funds from that account. As of today, the balance in the Escrow Account was $453,049.57. I am attaching a computer print-out evidencing the balance for your information. Based upon per diem charges of $15.54 times 72 days, CIBC is entitled to a payment in the amount of $1,118.88. The cost of obtaining a Cashier's Check for the remaining balance in the account was $3.00. Therefore, I am remitting to you the United Bank of Denver Cashier's Check No. 607330, payable to Standard Metals Corp., in the amount of $451,927.69. That amount is the balance which remains in the account after deducting the per diem charges and the cost of the cashier's check. Your signature on the line below will acknowledge your receipt on behalf of Standard Metals Corporation of Cashier's Check No. 607330 in the amount of $451,927.69. Please call if you have any questions. Thank you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/slf Enclosure Christopher L. Richardson ( . J J) UNITED STATES BANKRUPTCY COURT u H i r ^ S , of cow**“31 4 S FOR THE DISTRICT OF COLORADO „ ' t t o c i o s C k A In re STANDARD METALS CORPORATION Debtor Case No. 84 B 00945 G DISCLOSURE STATEMENT PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE UPON THE DEBTOR'S THIRD AMENDED PLAN OF REORGANIZATION ( ( of property, production and mining assets in San Juan and Ouray County, Colorado. B- Canadian Imperial Sank of Commerce (1981) On November 30, 1981, Debtor entered into a 36,000,000 revolving loan agreement: with CIBC. Debtor is presently in default under “he agreement and no payments have been made under the agreement since January, 1984. As of July 31, 1984, the outstanding balance was $5,450,000, The loan is secured by a pledge of property, production and mining assets in San Juan and Ouray County, Colorado. The total liability of the Debtor to CIBC for both the pre-petition and post-petition loans, including interest, is approximately $9,165,000 and accrues at the rate of 52,660 per day. - C . Intercompany Debt Owing Luke Construction Co. In association with the Debtor's December 22, 1981 purchase of Luke, Debtor received a $1,700,000.00 interest free loan from Luke, the proceeds of which were used in the purchase of Luke. Presently, Debtor owes approximately $1,036,000.00 on the intercompany note, which amount will be reduced to the extent the Debtor is liable on the contingent claim of Continental Casualty discussed herein. D. Commercial Credit Business Loans, Inc. NSR entered into a Loan and Security Agreement with Commercial Credit Business Loans, Inc. ("Commercial Credit") on June 28, 1982. The proceeds of the loan were used by NSR ( c to retire its subordinated debentures held by Debtor. The loan is secured by a pledge of NSR's fixed assets, inventory and accounts receivable and is guaranteed by Debtor. As of May 31, 1984, the outstanding balance on the loan was $1,794,983 . The Debtor has agreed with Commercial Credit to allow a deficiency claim on the guarantee of SI, 000 , 000 after considering the value of the pledged collateral owned by NSR. i • Standard Subordinated Debentures In addition to its lending agreements. Debtor is also subject to long-term indebtedness of $492,000 under its 10*% Convertible Subordinated Debentures. The Debentures are unsecured obligations of Debtor and are subordinated to all Senior Indebtedness. Such Senior Indebtedness includes the Debtor's indebtedness for money borrowed evidenced by notes or other written obligations, indebtedness evidenced by notes, debentures, bonds or other securities sold by it for money and indebtedness of others evidenced by notes or written obliga tions that has been guaranteed by the Debtor, but does not include the Debtor's trade debt or noncontractual claims against the Debtor. rv- LITIGATION, ADMINISTRATIVE PROCEEDINGS AND RISK FACTORS A. Stream Reclassification The Colorado Water Quality Control Commission ("Colorado Commission") held an oversight hearing May, 1985. The results of hearing are not known but will determine ( c whether a rule-making hearing on stream standards will be held at a later date. Debtor participated in the oversight hearing. Standards have oeen proposed for the river into which Debtor has permits to discharge materials from its Silverton mining facilities. If the classicications and standards are adopted as proposed, substantial caoital expenditures would be required to modify the water treatment facilities in order to assure compliance with the new standards. Operating expenses related to compliance would also be significantly increased. There is no certainty that a hearing on these standards will be held and if held, whether the standards will be adopted in whole, in part or at all. 3. Contingent Liabilities. The New Jersey Department of Environmental Protection ("NJDEP") has asserted a contingent, unliquidated claim against the Debtor based upon alleged environmental problems associated with the Pedricktown lead smelting facility pur- chased by NSNJ from NL in February, 1983. NL has attempted to file a contingent claim against the Debtor for any liabilitv it may incur in connection with the NSNJ and NSR smelting facilities. This NL claim was barred by the Court and is presently on appeal to the United States 'District Court for the District of Colorado. Oral argument on this NL claim is scheduled for September 23, 1985. The amounts of the NJDEP and NL claims are not known, but they could be substantial. Debtor has not guaranteed NSNJ's obligations to NJDEP or to NL I c and does not believe -hat the claims can be legally enforced on Debtor simply because Debtor was a 50% owner of NSR which was the parent company of NSNJ. Debtor has not orovided for any payment to NJDEP or NL in its list of liabilities contained herein. The Environmental Protection Agency (EPA) has • — recently sent Debtor a letter under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the superfund law, notifying the Debtor of SPA's plan to take remedial action at the Pedricktown facility. The letter sets forth the possible liability of Standard under CERCLA even though the EPA has made no determination of Debtor's liability. This contingent claim could be substantial although the Debtor vigorously rejects any suggestion that it has liability under the statute or under any theory. Continental Casualty Company (''Continental") has sought to file a claim against the Debtor based on a performance bond issued by Continental and guaranteed by the Debtor, for work performed by Luke. At this time Debtor dees not know if claims will be asserted against the bond by parties affected by Luke's bankruptcy. Should the Debtor be liable under the bond, it presently intends to offset any such liability against the amount owing on the intercompany note to Luke discussed previously. t Dann S. Sheftelman has attempted to file a claim relating to a class action suit brought in the United States District Court for the District of New Jersey. Mr. Sheftelman is seeking to recover approximately 56,600,000 in connection with the issuance of certain industrial revenue bonds by NSNJ. While Mr. Sheftelman's claim in the Debtor's bankruptcy has been barred on procedural grounds, the matter is presently on appeal in the United States District Court, District of Colorado. Oral argument on Mr. Sheftelman's apoeal is scheduled for October 25, 1985. The Sheftelman complaint was certified as a class action on May 3, 1985 in the United States District Court for the District of New Jersey and the suit is in the early stages of discovery. Debtor denies that it may have any liability to Sheftelman and should his claim be permitted to be filed, Debtor intends to dispute it vigorously. NL, a defendant in the Sheftelman suit, has filed a claim in.Debtor's bankruptcy relating to any liability it may incur in connection with the issuance of the NSNJ industrial revenue bonds. Debtor denies that it may have any liability to NL and intends to dispute vigorously NL's claim. Hibernia National Bank of New Orleans ("Hibernia") filed a late claim in January, 1985, which, upon the objection of Debtor, was barred by the Bankruptcy Court. The matter is on appeal and oral argument is scheduled for September 20, 1985. If Hibernia's claim is allowed, it could result in substantial liability.to the Debtor. - 28- c subsequent Trustee in Bankruptcy and his attorneys should the case convert to a Chapter 7 liquidation. The remainder, if any, would then be ratably oaid to the unsecured creditors. The present total of the allowed unsecured claims is approximately $6,536,924. This total dees not reflect any of the contingent claims discussed herein or the claims arising from the rejection of executory contracts and unexpired leases as provided in the Plan, which, if allowed, would increase the unsecured claims. Liquidation of the Debtor would have to provide over $12,000,000 before any sums were received by the general unsecured creditors. Given the range of the appraisal values presented herein, the Debtor is unable to make any estimates on the return, if any, to the general unsecured creditors in a liquidation. VII. FINANCIAL INFORMATION RESPECTING THE REORGANIZED DEBTOR Debtor has prepared financial data which, in the opinion of Debtor, provides adequate information to enable the creditors to make an informed judgment about the Debtor's Third Amended Plan and to exercise their right to vote for acceptance or rejection of this Plan. Debtor is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and files regular reports with the Securities and Exchange Commission which are readily available. Reference is made to such S t a t us of Financial Statements - the Consolidated 3aiance Sheer 3.-0 Censor dated Statement of income (Loss) ^ave seen prepared on the oasis of inrormation cc-np^ed as of rt i d- May, 1985. The company's review or tne status of cerr3 ,n liabilities and ’-■s i : na 1 • ¿a t ion or tne Annual Report has not been ccmpiered. rhe audit of ”hese statements aiso ••’as nor oeen completed, Accordingly, r^e accompanying *inanciai statements are SuOjecr -o ena.nee, ;f any, as reauired, In addit;on, -*e starements of Changes :n Shar*noi ders' and manges n Financial Position and disclosures -sdu'^eo ov gener ai'v accecred accounting pr'^c.aieg .^i-q not included herein. Such statements ana disc-osuras «;i oe included in -ne ^G'^ed financial statements in tre Company's Annual Pepor*', Qiscontinued Operations - The accompanying financial statements ¡nc.uce Standard Metals Corporation, Oeotor-in-Possassion (Standard), Ventures Corporation {an inactive noiding company), '•'vestments in subsidiaries *n -n nave filed petitions under Chapter H or 7 of the Bankruptcy Code have ceen written off }’ ~sr being adjusted for 198*1 losses incurred. These suosidtaries include National Ste-* i defining Company, inc. fNSR) and LuKe Construction Company, Inc, (Luke) Standard's investments ¡n tnese suosidiaries have oeen reduced by tne losses attributaoie ~z 5 ’ a ^ d a r a ' s ownership s.nee their respective acauisition dates. These losses resulted in r«e ives^ents having negative values at Oecemoer 31, 1984, which when written-off resulted in gai-'s oeing recorded n m e accompanying Consolidated Statement of income (loss), indepteaness or NSS to Commercial Credi t 3usiness Loans, inc. and Allied Lending Corporation ^hich nad oeen guaranteed by Standard *as added to the investment in NSR and the iiaoiilties reflected in the accompany ng Consolidated Balance Sheet, The net gains recorded were 5493,000 ;or NSR and SI.C6I.000 for Luke, A;so, tne investment in Standard Ventures Limited Partnersn^o nas been written off resulting in a net loss of 52,058,000 as this entity has ceased operations and recoverv of any asse’s >s >n auestion. Broken Ore - Chance in Accounting Principle - "he Company nas cnangea its accounting for broken ore wnicn is primarily located in its Silverton mine. The c o s t of proven ore «as previously expensed as incurred. The cost of preparing and breaking ore is ,-cw nc.uded in inventory until it is processed and sold. The effect of the cnange in accounting principle has been to decrease 1984 income by 5800,000 and to increase income Of prior ve*rs py 53,300,000. •V Liabilities Deferred Under Chapter M - Liabilities of Standard deferr^ ,1cer Chapter II at Oecemoer 3>, !984, consisted of "he roiiowing: Admin i st r a t iv e cI a ims 5 953,445 Priority claims - primarily unemployment t a x e s 75,239 Secured claims: Bank loan dated Novemoer 30, 1981 5 , 4 : 0 , 0 0 0 InstalIment notes 1 1 3 , 3 7 1 Accrued interest 5 9 9 , ! 6 0 Unsecured claims: Trade payaoles 2,525 ,526 101 Convertible Subordinated Debentures 4 9 2 , 2 0 0 - Discount and deferred costs 6 9 . 9 6 6 ) - Accrued interest 7 3 . 3 3 0 ( PayaDle to Luke Note oayaoie to former snarenoiders Of Luke 550,000 Payable to Commercial Creoit I ,000,000 Payao I e to Alii e o L e n d in g 534 ,354 513,534,238 Debtor presently estimates the claims to be paid under the Plan as follows; Adm i n i strat i ve and Priority Claims (Classes ! , 2 and 3) 53,000,000 CiBC Pre i Post Petition Claims (Classes 4 and 5) 9,165,000» General Unsecured Claims (Classes 9(a)(b) and (c)) 5,535,924** lOTai 518,701,924 * interest continues ro accumulate at the rate of 52,660 per day. ♦* ’He Class 3(a) Claim or Commercial Credit is valued at 51,000,000: *he Class 3(b) Claim on the Debtor's note to Luke taKes into account the aossiole 5500,000 :iaoility or Oeotor r0 Continental Casualty, Debtor has not developed pro forma projected state ments of income for the years following confirmation of this Plan as the income from the Net Profits Royalty Interest cannot now be estimated with any accuracy. \ to: Q k e & s b t ~ o u q k j FROM: -Phi I lip D •• Barker"' Welborn, Dufford & Brown 1700 Broadway Denver, Colorado 80290-1199 This transmission consists of f ) pages, including this cover sheet. If you encounter any problems in receiving, immediately contact 303-B61-8013 F a i r f i e l d a n d W o o d s Q EO R GE C. KEELY ATTORNEYS AND COUNSELORS AT LAW D A R R E L L O. WAAS MARY E.BRICKNER MARY JO GROSS CHARLES E. MATMESON ROBERT A, HOLMES P E T E R T. BREITENSTEIN 1600 COLORADO NATIONAL BUILDING JOHN J. SILVER CHARLTON H .CARPENTER JOAN E ,SOMMERFELD P ATR IC K T. KEN NE Y 050 SEVENTEENTH STREET THOMAS P. KEARNS HOWARD HOLME ROCCO A. DODSON JAMES L.STONE DENVER, COLORADO 80202 MARY E. MOSER MICHAEL M.MCKINSTRY S T E P H E N W. S E IF E R T JAC K. SPERLINO CHRISTINE K. TRUITT KEVIN B.PRATT TELEPHONE (3031 634-6135 CHRISTINA N. BEATON DANIEL R. FROST BRENT T. JOHNSON TELECOPIER (303) 092-9096 P ATR IC IA 0. M e 0 RAW OP COUNSEL MICHAEL B. CENOWAYS ROYAL C. RUBRIQHT CRAIO A. UMBAUGH ROBERT L.LOEB, JR. STEPHEN H.LEONHAROT CHARLES J, BEISE (1909-1983) January 16, 1986 Ms. Chris Bearman Davis, Graham & Stubbs 4700 Republic Plaza 370 Seventeenth Street P. 0. Box 185 Denver, Colorado 80201 Dear Chris: Re: Standard Metals This will confirm the changes for the examination of the debtor’s officers and directors in the Standard Metals case. As agreed, the depositions will be taken as follows: The deposition of Art Still will be held in our offices on Monday, January 20. at 1:00 p.m . In New York City at the offices of Cleary, Gottlieb, Steen <5c Hamilton, One State Street Plaza, we will take the following depositions: Mr. Gresov January 22 9:30 a.m., Conf. Rm. 2700 Mary DiRenzo January 23 9:30 a.m., Conf. Rm. 2401 If you have any questions, please give me a call. Very truly yours, FAIRFIELD AND WOODS CEM:sh cc: All counsel of record WASHTNGTON MINING COMPANY , n w P.O. Drawer K J A N 1 5 RECt) Miami Beach, Florida 33141 (305) 866-7771 "CERTIFIED MAIL" RETURN RECEIPT REQUESTED January 10, 1986 Mr. James E, Field Sunnyside Gold Corporation Building D 484 Turner Drive Durango, Colorado 81301 Re: 1985 Property Taxes San Juan County Dear Mr. Field: I have enclosed copies of the 1985 property tax assessments from the San Juan County Tax Assessor. The total amount of these assessments for 1985 is $149,540.95. Additionally, I have enclosed a copy of the property tax escrow account for the year 1985. The tax escrow balance at December 31, 1985 is $266,152.69. The following calculations relate to the credit due Sunnyside Gold Corporation, the estimated tax for 1986 and the Sunnyside 1986 tax payment schedule. You will find these calculations in accordance with Section 9 (pages 14 and 15) of that amended agreement dated August 1, 1973 between Washington Mining and Standard Metals and consistent with previous precedents. * 1985 tax overpayment to be applied in 1986. Tax escrow account $ 266,162.21 1985 Tax Assessment 149,540.95 Tax credit for 1986 ? 116,621.26 * Tax estimate for 1986. $ 149,540.95 * Previous years tax assessment. Set by precedent between Standard Metals and Washington Mining Company. Monthly payments of $ 12,461.75 Mr. James E, Fie] January 10, 1986 age 2 * Tax payments for 1986. Tax due in 1986 $ 149,540.95 Tax credit (116,621.26) January payment (9,300.00) Tax Due in 1986 $ 23,619.69 Payment Schedule. November 1, 1986 $ 11,157.94 December 1, 1986 12,461.75 Tax Due in 1986 $ 23,619.69 These tax payments as well as all provisional royalty payments, quarterly royalty settlement payments and overriding royalty payments, should be sent to the address below: Washington Mining Company c/o First Interstate Bank of Utah Main Office 180 South Main Street P. 0. Box 30169 Salt Lake City, Utah 84142 Account # 02-02623-5 Correspondence should continue to be directed to the Miami office. If you have any questions regarding the above calculations or any of the enclosed items, please do not hesitate to contact me. Sincerely, Vincent P. Lee Financial Analyst VPL/dmi .enclosures cc; A. Bell (w/o enclosures) J. Newcomb (w/o enclosures) Mr. P. D. Barber, Esq. Welborn, Dufford, Brown & Tooley Suite 1000 1700 Broadway Denver, Colorado 80290 T r_..—_ 4 - -- ' I • ,ji i I; - - - n 1i " b * c . ! i p*r£. ¡ . j, .. ij /fit-um ... \ X k W- cA . .ITÄX i i: 1 ¡ ;i ! ¡! ¡I 'l^ifnL’cf . .., ;; . . ñ l * i <■' c f 31... í . ï z M ---- ¿i; ■i tCK) ■ !¡ tb e o c - // ! Ziô&zx ;i i . i . ^ \ p \ \ __ ¿ n ? í i ( , í ' : ■ ftp. 1 : ¡oclá^ü íX- ¿? í . ñobs*!, — ^ __ ___ : ; . ...3 j Ì ' ■ ¡ ^ b re . . . . ¿ ü ...... 17ih n ,! . 7-. f^L \-1XJ.rf,-:.A Ifib e c - 'l Zi~ . ¿ 1 * 2 1 1 .1 ** ÍS t >i>! J / C-2.1'! . . ... ^ i . / í i s r i %\e TtV Tiytóí-H/ / ¿ tizñtz-Sl> *> ¡ i ../‘frois& r, ., ■ 10.1 f.# \...... U fe iz z tí > ■ KH 1 . - .. . . / ^ í &H 3 1.... i (j ¡í?%S(j > . / J s r i í s o i i, - . .1 ...... ______,n \ i : Ii ’ i l - .. :|. .l'ìll'ìlsc.'I . . 3?. . y z o .o t...... J'tM'/lSZ-- i--- > : < . -. - - • - • ;;______'ii 1 ... ! '.. iTum _. 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SAN JUAN COUNTY TRIASURIR .Taie . a m .TM :i3fl ¿ AK3*U3 . asroa ' 33A«; >\ea* * • 3mai/cmiaj.3 * J¡ vrlne E. Martinez. Tr«c«ur«r San Juan County . POST O FFICE BOX 3*8 SILVaRTON, COLO 81433 303-387-5458 TAXABLE YEAR PAIO IN HIS COPY FOR YOUR RECORDS 13Û3 TAX NOTICE .1936 SILUA 0 0 0 ag4 RICT PARCEL N U M B I* OTHER CHARGES FIRST HALF SICOND HALF PULI. PAYMINT 3 T 1 -—10-320- A ' i . OV "V. ... «¡AM & 4 ä 2 . S 2 2 4 0 2 . 3 * 4 9 6 3 . 0 7 •» . W A S H I N G T O N M I N I N G C O ...... DCIQ.INTEREST , C/O .SHARON STEEL CORP. . .,Wl:. •> '*&-■ uf ADVIRTISING ...... • .P.O.BOX 291 .¡■■■'■-fu,. . - • • u v FEES M •• , ,V J'1 -» ■■ A'.'Vv. SHARON, PA. PUS y J TUL A«» HOÎ *HfK '* ' . 1 * 1 2 1 0 2 7 0 ...... fi F\^v 'tW A W M l total oui {■/ 4 9 6 3 » 0 7 1S8E0 LANO 1 8UIL0INGS 1 BUSINESS MOOlLl HOME t o t a l v a l u e .UES 7 3.5S3 1 1 . , 7 2 . 3 2 3 TOTAL LEVY TITY nniflQW^ s eaarooL Rni iim ie s T ! WÄ ,,T • ' , ï,W 1 IBS l t 7flfi.fi« 3. 144. fif 33.Sá ’ 1 ea.462 WITHOUT STATE ASSISTANCE Æ b l SCHOOL OENIRAL FUNO LEVY WOULO 8« S I . P K f t INSTEAD OP_ 3 3 , - 3 6 0 EVIATED PROPERTY DISCRIFTION: . .FAIO BY YOUR CHECK NO. 0AT6 V ^ VARrOUS'TW N LOTS IN EUREKA t: 4* b lo ck 1 x o t s 7 - 1 a ■ ‘-itf i i . BLOCK 2 LOTS 11-1S-14-S3-24 JW ; 'J •rlne C. Martinez, Truvurer San Juan County '* -I , POST OFFICE BOX 368 •V , ., •’ v < >’ ' ' 8IIVERTON, COLO 81433 • $,'• * t ' » » * t < 303-387-5488 TAXABLE YEAR PAIO IN ■r.wwv.-J 1 ' 7 T ' V H ------■>■ n i m . ) — TTT-I 11».-----r Tj•.—■H»...... l a n a . i TRICT PARCEL NUMBER OTHER CHARGES FIRST HALF SECONO HALF FULL PAYMENT «ci itGK or C ÎT 1 . ------NV THU NOfKI 7 1 0 0 4 . 1 0 7 1 0 0 4 . 1 C 1.A5 Ififì. 2C ¿WASHINGTON MINING CO • OELO. INTEREST Í 7 Ü 3 S C / O ' ö HARON STEEL CORP. , ADVERTISING >«♦. • ». P.O. BOX 270 T ü. ‘-r ,.t 'i . » FEES i. S W rK ’/tFflRRELL. PO. FEES ...... - X ' (■ voy *«» SC iirX >•»> J.CJÜ1 Q£7.0_ ►A. (Aurtlk- 1* r TOTALISE ¿A2A6fl,_£<; ESSED LANO BUILDINGS BUSINESS MOBILE HOME ■ \ TOTAL VALUE ì ■ i A í T f t 7 R , í ! ’1 S.076.Ê00 •ouTHwttr HlHMOii iTlTY ♦ r . h i W W Y f f lW V . q m i f W K i e R T WAU« »l"l (MÎT 1 • TOTAL LIVY VIES , ' * *1_T 1A-5. .7f q n I ^ D 4 1 . 3 f Ï S 6 I . 4 7 '1 ’ • ’ ■lV.ÍV • * 6 Ö . 4 G 2 WITHOUT STATE ASSISTANCE SCHOOL GENERAL PUNO LIVY WOULD BE . g g Q INSTIAO OF 3 9 , -3feQ_ flg v iA T lO PROPERTY DESCRIPTION: PAIO BY YOUR CHtCK NO. DATE j'v? ^EUREKA WNQ. DIST. ’ i?fCLAIM NAME SURVEY NO ' ACRES PRODUCING MINING CLAIMS ONLY VCVCVIL oc i y \ eü'' •#««••*» lu maiOMM, ll«n«UI«r mn juan uoumy W 8T OFFICE BOX 368 i ; W. •. (.8ILVEHT0N, COLO 01433 • 303*387-3488 TAXABLE YtAft • •* * 8C H 00L GENERAL PUNO LEVY WOULO BE n \ INSTIAO OP I6VIATID PROPERTY DESCRIPTION! PAIO BY YOUR CHECK NO. DATE ■"$& EUREKA MN0. D IST . ^ .-.¿CLAIM .NAME SURVEY NO “ ' ACRES I liAUD ' ’ 9« 1ÖS34 ISO 9. ISO * r « i ' . f^ k 'V , , , ¿VMiî£M,.aihU.*r . : f c ‘ N v : i’ ' -1,. rlna E. Martin«. Treasurer ”**& San Juan County POST OPP1C8 BOX 368 ’ „ * v SIIVERTON, COLO 01439- , ' 303*387*5488 , . * TAXABLE YEAR •• PAID IN is c o p y p p fl y o u r flgcoflcs _____ l Q A K T A X N O T I C E -1356 * 'b i l l * o o o s a p MCT PARCEL NUMBER OTHER CHARGES FIRST HALP SICONO HALP PULL PAYMENT -MV-' MfiK Of> T 1 I---- f lf i- .m . m 31H « .«l - .315.59 JgJJkSS MOGUL M INING COMPANY *<• OÍLQ. INTIRIÎT ,Vr> I C/O SHARON STEEL CORP. TAX DEPT ADVERTISING ;|v P.O. BOX B70 • ^ w*< •»i.PEES FARROW, PA. PEES i* you Art! Ml Ml*1.. UrtUlf »0* Tm', I f i l P 1 0 3 7 0 */» »0 r«».»r* linrv TOTAL O U I/X MUÀB 5SE0 LAND •UILOINOS BUSINESS MQBIL6 HOME .TOTAL VALU! JCS ■ f i ^ a e a - f i ^ g g a TOTAL LEVY TY mW■XS. acdittfiSL s ü u í M e h x . ES «*T ^■h S w .' i p JEVLAR - £ 6 , 4 6 2 VITHOUT 0 T « * ASStSTANCS s n - _ i SCHOOL GENERAL FUNO LEVY WOULD B8 s i . g a o »n s t i a o o p 3 9 . 3 6 0 VIATEO PROWWTY DESCRIPTION: PAIO »Y YOUR CHICK NO, OATt EUREKA" MNG« OIST. ' : CLAIM NAME SURVEY NO - ACRES C A U C A C U fläG ,.,„..460 10. 330 ■ — « - 'T .niffy -f* • In« E . Martinet. Treasurer San Juan County ■ v * J ß 1 POST OFFICE BOX 368 r ’ rf ilLVERTON, COLO 01433 ,.A.; 303-387 5488 TAXABLE YEAR PAID IN ■ ' •iï'.ÎWA y $ COPY FOR YOUR RgCQROS______1 q A I TAX NOTICE — 1 9 f l £ BILL# O O Q f l g * 1CT PAAC8L NUMBER OTHER CHARQES FIRST HALP 3ÍCO NO HALP FULL PAYMENT r 1 I------10-331 m 7 4 9 . 3 £ -..7 4 9 ,.a g WASHINGTON MINING CO. OtlQ. INTIMST ADVERTISING ,'f;...C/O SHARON STEEL CORP. .•r> ATTENi TAX DEPT. ™ - PEES 0. BOX 870 FEES » »0Ü t ^>1« Ul*.“" T••• il niim»’i » r^ntr** TOTAL DUB ;.l..7,.LgftB H pu— pq- 4^g4iìB2P- $ ID LAND BUILOINQS BUSINESS MOBILE HOM I TOTAL VALUI >£3 g u a ^ o .2UASÛ. MCHMCM TY c m M M L ar.ÆPhqoL SOUSES,X JMl p»v TOTAC teVY 18 MU' VITHOUT S T A U A60I8TANC« q n - 1 ! 0CHOOL OlN l^ A L PUNO LEVY WOULD BE m,\ , INSTEAD OP ' T ^ q . g f iQ j&a,.4.6 a. VIAT10 PROPERTY DESCRIPTION', \ PA>Q »V YOUR C H E C K NO. DATE U'V*- EUREKA MNG. DI ST. . : ' ■y- N A M E SU R V E Y NO . AC R E Sc;;. CLAIM NAME SURVEY NO . ACRESc;;. *' .V !¿¿/ m e v r t M ’ lirlno e. Martin«. Trtaiurtr . POST OFFICE BOX M0 i- SILVERTON. :COLO 81433 r 303.387*84« . , ..^w. ----- ‘ ^n .1 r .. i gnn . WéVtìW * ■TfllCT ♦ PARCEL NUMBER OTHER CHARGES FIRST HALF SECONO HALF PULL PAYMENT ... ■ST 1 -- 11WP-03-40 . l R A 7fi, Hi- 144.46 • •• • . . .i. . DCLO. INTEREST i V • . ■ftp' i WASHINGTON MINING CO . ‘ft • C/O «STANDARD METALS CORP. ; '1 ■V-.- AOVERTISINQ •• . . . ft P.O. BOX 247 : • ii>< - :• IVA-I, ¿¿r V PEES i . 1 f. fC^A.O-ZLVCRTONt COLO. ■ PEES .yi. 1* *0U »M urti ion Imi» A lik 23_ TOTAL OtfE «•> 144. 4f 3ESSE0 LAND I BUILOINGS BUSINESS MOBILI HOME TOTAL VALUE iLUU P . l i f t 1 1 ■« e . 110 WUTMWMT NTITY rniflQ W ^ IsctfafflOL RnilfMKlERT WAllH F»M Oil» 1 TOTAL LIVY IVIIS « 1. ' q i . 4q ' . 9É I .... u • 60.462 :: WITHOUT STATE AS9ISTANCI fin-1 8CHCOL GENERAL FUND LEVY WOULO BE INSTEAD OP 39. 36Ô V IRËVIATIO PROPtRTY DESCRIPTION: | PAIO BY YOUR CHECK NO DATI •/.- EUREKA & REO MT. MN0. D IST . }’ 5 CLAIM NAME ‘ BOOK PAGE ACRES *K ID • 213 • 273 20. 66 PROP C-PSS - £-530 ______‘C /»/S TAXABLE - 2076,600 £076.600 2076,600 ¿CC‘*S i0220 5 V < 795328 61301. U F.S rilK ^T -K 1231362 6120L •;.g 9 . -*0 2. 076. £00 S I . 1 S S .3 5 C /D ‘ - 2076600 CDJMTV 9-:», 041. 3d ____S jagKft W*3. OIS^, S-HC-O- 2 . 0 7 6 , fi-OO ------' 1-CKH3 237S600 7DTL £ , 0 7 6 , COÙ S 6*.. 4 7 CLTíI^! NA.ME SLifiV^V • LATES y.lSÍN-i* --•' :- * 'j C 'C .y BAv&íifi'í l c :-£ ^ : i-. 220 - 0 . 3 2 1 C_I*=iX 7 .5 *9 1 CP-hK- JE* EL ^:v---i s. e n 7. £ ? C DOCTOR ' 10. ooo ="RS' l a k e i_AST CHAMC= L IT T L E MBRV ^ a - o o c r a l c d -s. ^E^CPDLIS »arnE* soosn M0ULT3IE LDDE . r WOUMTAIK ff-GE? 5 •«tiSKEGON LODE " n o ;- a m e OREGON c 3Q LOS P P L 0 3 ¿ 1 PALOS # 2 c PÎARL____ ■3RIDE C r - PEQTSCTO* GÜAIL R A Y * p N D - r S r P ü 3 L I C RUBY ¿HÍJSHDKE SILVER Süi¿ SL-NhVSIDE LODE SU*?WYSIDE ANS«* SUNKVSJSE £XT. 'SLM»IY EI._ MO- S22 TGTfrl TA -- 1 ^ , isa. ¿O* P S YK S M i ------71,084-iO PAYHEST 71,084-* iO O ü E D A T £ 1 -- - / E 8 / 6 6 ¡ W T : DliEÍ 7/31/Ó6 W•t-v. & W/^ ' í-r x v*-^ ' / * '* V . - .v 5^-’V* s ' ’>*- ^ : - - ; D IS* SCHOOL - SD-l PROP CLPSS - 6 1 6 0 ti?JBH7K-3T£jN « X T * 1 0 3 ^1 B*JK £1690 6160L C/PI/S TAXABLE - 8 1 , B90 c/ci SHAacfc STSr.. ri ► 37 .3 7 £2 890 LANS O T T E 'fr: Z z .7 ~ ._ _ _ EURSKft y!CB. I) I €7, £iaso ran. COUNTY 3 5 9 .3 3 a.a. Siik r'C. CLfti.'i MA-CE SLRvTY \0 423ES SCHOOL £ 1 , 6 9 0 9 4 9 . IS FdtfR“.-- * • fiLEXANDES iZS C 4 s. :&7 UflTER 2 1 . 8 9 0 tO . 14 ? !'iS 7 0 <*>£ : 3349 10. 331 BLUE HEEL • 6 3 4 9 1 0 .3 3 1 CAMP BIRD 9 . B3S CASnlER ¿.i. ^ *o - 3 0 :* c ^ d s s u s 20- 331 ii DOROTHY 1 0 .2 9 0 EASY STREET ¿9*30 9. 35& EKKA ¿ ¿ 7 3 3 .9 5 0 #1 17533 13. 937 4 EWMA «2 17 52 3 7 . OOO “ANILY 6 .4 9 6 ilA*) F IC T IO N J^lSC* 8 . 731 GOLD PEAK ' 1B333 6 . 42S feCEIV ED i «OFFMAN * 7 8 2 7 .0 6 4 IRON CHftNCctx-CR 13 24 7 1 0 .3 3 1 JAN 6 J3S&- JDS 16 64 9 1 0 .3 3 1 KLONDYKE iS O S l 5 .9 9 1 KLONDIKE «3 13061 s. e& e.' TAX D EPI KJDNX6HT 5&16 S . OOO KILANO 1 6 3 9 3 5 .7 1 0 NAPOLEON 15504 9 . 5 4 3 OCCIDENTAL #3 15504 6. 670 ORIENTAL 5 6 6 4 .6 5 0 PAYMASTER 1301 6 .5 0 0 QAYKftSTER l& o a o 10. 331 PRIDE OF THE fii_ PS 572 1 0 .3 3 0 • * * RED 1 6 6 4 9 6 . 126 ROCK 1S&49 10.000 SMUGGLE! 175d lO . 3 0 0 Dl y/)Q Iflìlp"-"'"' _ ÔB^ G 1 Ci« 3 ^ 0 »CS 53 __ __ 1&6V3 7 . £72_ RÎTÆKA 0. *£393 Ô .6 1 0 STALLS IS0Ê1 4 . £-63 STSPNSER __ ¿3150 1 9 .3 0 1 .3ÜNNE* lT-Otl 5. £-&7 S^DEfW 14 If; 10.330 TSEASURSE < AJ549 £.933 YANKEE &0Y leev? 1 0 .3 3 1 A. D- SEASL 1 7 1 4 1Ü. 330 QLENN _ _ 17 1 5 6 .3 7 0 hrLXEraSAKD :-707 7 . 6 JO KMCKERBOCKS |"*'7 I O . 330 w i _ h i t s 1720 7.760 - SANESBJRS 17S0 a. ICO r TjOWPR l£*?t* tO . 300 i / t f i^ t . z \ e l m k m - y -3. s:s' JUPITER i?crv 7.578 • .-ris-r^a ¿'7- S. ¿40 MINNIE Î7G24 7.61S *DRNIN3 S”Arl I 7034 3 . eeo ^PRS A STRIFES 16233 £ .5 6 1 ' V'NL-S 17034 3. £47 vJ*I>LEIS* 17C3*, 7 .5 0 4 LIN'D. 1 /3 I V . EüRIT^P. MNS. PONY ¿336 a. 100 ANIMAS 1*946. D IS ” . B tL O a FEARLESS 17011 10.331 i »/JiYTESLOO 174Î9 9.569 UNCtM. MK3. DIST. CASHIER 442 10. 300 BILL NO- &24 TOTAL TAX 1,493.64* PAYMENT 1 --- 749.32 PAYMENT 2 ------7 V 3 T S I“ DUE D A T E I ------& /5 Ö /S 6 DATE ZXJE2 7/31/86 DATE PAID DATE PAID mm 70533 OlOOU r.»?/T 1 ---- ftCCT* 1O3E0A 3 \K 72523 LPWD 'wßSHtr^TT^ t^.lKÌKT, ^ VP^ÌOUS TOWN .ars ì n 75S 3 3 TOTL 72.523 3, 1 4 *. 6£> C/O SïfcH- tu - - 7 - Í B _____ SCHOOL 3 3 .5 3 B’_OC* i. LPT: -TT'-fi- - ^-13-2* 7 2 .5 2 3 o n.SSX 5^*______... - - E--CCH *_QTS fcftTSS S-«RD'., >•«* - BL3v-K _0T< 7-26 slcc< W2TS 7-26 BLOCK p. i CF BlGC* BLOCK LOTS l - c 2 t ¿ 3 -3 2 BLOCK • OTS 1» S -l£ f 13--*** £*,31 B*XCK 6 LOTS 17, ££, ¿£’ 23* 30 21, £*-27, BLJjCK 4 LOTS 1 - 1 3 , c LOTS 30-32 BLOCK iû LOTS 6-i -f 1 7 - £3, -27-^, " 1-0-50 BL2CK U LOTS £, 3,5-7. a_QCX l£ LOTS l-SC* DLOCK 13 LOTS fti_L OF SLDCÄ .r &uOCK t* 1 7 -1 9 , 5 _ 3 C K 1 S _LO TS_W ,. 5.3, t< £•£,-32 r B L O C K 1 6 ALL DF &-OCK < ELDC* 17 IQTS 1-4.. 7. «< 12^ 21-23. £7, 2 5 — 32 r BLOCK Id ftLL OF BLDuK BLOCK 13 ftLL^OF_BL^ _ « L B L O C K 20 ftLL Q F g-. OCK SI K-L OF BLOCK | i o S 22 < BLOCK £ 3 A LL OF BLOCK BLOCK £ * LOTS S,£,15, 1&,EU 22. 2S, £ 7 ^3 1— "»LOCA £5^ LOTS £9-30 BLOCK £ 6 fl..L OF BLDC* 9-QCX ¿ 7 ALL C f &-t>C< B»_OCK 31 ftL- C- B.2C.< &LOCK 32 LOTS 27,2S &LCCH 33 UGT5 L 2 - H BLOCK 3* ftj_ 3F B'_BCK BLDCK 33 ALL c- B-OSK BLOCK 3S AL_ 3- 5-OCK aLCCl 37 A L _ C r S - 3 K kECEJVEti BLGCK 3Q p_^ :r 5_o~k S:.GCK 3? A_L o- 2.1L.-C-4 "BLOCK 40 L0T3 »-*, 17, i8,25t dJ(N.s m g LOT 2S BLOCK A 5 LOTS 1,2, 1-—16, 30 H I 0 £ P t BLOCK 42 fl:_L CF SLOCK - 3LCCK *3 flh-l O- B.ClX______BLOCK -rTl c-- S u C C K 4 3 LOT3 1-23 SLOCK *•£ ALL OF SLOCK______BLDC-; V? Oi.L C- S-OCK B.OCK BLOCK ±3 n-s -*1+1 13. iS, 13- ...------—---- - 21, £±>-30 BLOCK 50 LOTS -.¿-ia, £2-27 c l BLOCK SI &_OCK 52 ALL Cr BLCC* - BLOCK 53 ALL CF BLOCK BLOC-4 fy i if w nr« . ------BLOCK S3 LOIS 1-15, JiO-^2 ALL OF BLOCK - BLOCK 56 BLOCK 57 ALL OF RLO^K ------BLOCK 55 LOTS 28-30 TOTAL NUKfsS^r L- LOiS 1*31 BILL NO- 823 TOTAL TAX --- 4,9&S. 07* 2,482.53 PAYMENT 2 --- 2, *62. 5 4 PAYMENT 1 -- 7/31/86 DUE DflTEl -- 2/28/86 I»TE DUES --- DATE PAID DATE PAID n TQ - - ____<^L_c= Jfl SCHOOL - SO-1 PROP CLASS - 6S60 1 * ? • — n - - ? - * •— - • ■* — VAI “ ** /4 ih. /#• « a w a a é r _ X"T SHftRO'x 3“EH^ C a V !. -m HCT# 9492 4870 SÍ50L C/W /S TAXABLE - . 4,870 4, 670 4,870 TAX 3EÍ “- ^7. 42 4670 LiVCD *3. G. SCX 27": * e u r e k a -h * i-870 TOTL J*TY 4. a70 *19.99 1 FftSH^N, =a- CLAIM KfllC » 3 ACRES k-HQOL 4,870 £11.16 _£--2:0Sr7O ÜftL-O î-4 9. 120 *¿«TES 4,870 2.25 CATHERINE 34 7.4¿4 COH*ET ■ - 3* 4.90© s-ü'CY Iáí3¿ 9.637 UKD. 3/5 INT. Ej-'.CW D E iíQLF : a i 3 o 6. 220 1 EVENING STAR ¿7034 7. 50* 1 JUPITER -7D3A. 7.478 LEOÍOR! 10£3C< 3. â4i> i LITTLE TO« 17024 9. 337 ► »as * . 9*S m :k-v i e : '034 7-€.15 1 I 1 »ORKINB S “AR 1732* 9.960 - NEPTUNE 17034 :û . 153 i PLANET !707* 7. 751 STARS C STRIPES - I Ï.2Z2 6.531 U3A*JS '7034 3. 555 VENUS ^7034 9 . 2*7 1 WADLEIGB Î7C34 7.50* ! i eiLL HO- 6 8 6 TOTAL T A X --- 3 3 3 .4 0 * • PAYMENT 1 ------166. 7Q. PAYKEMT 2 ------1 6 6 .7 0 DUE D A TE I ------£ /£ â /Ô S D A TÉ DU E S ------7 /3 1 /8 6 D A TE P A ID ------D A TE P A I D ------j ^ fl >( fl *9 ■? 4M0 n r > » U yftö 4 ÊS j>isr i — ec-:o BQ ANIMAS J«5-_ DÎST. SCHOOL - SD—1 PftOP CLASS - fclfcO *:X«:»4£ Ci-o^SY. ftCCTfc 0610» B^K ' fc23ô616r»X. CTÏ3Ô---- fc7£9ô ’¡5729* C/Z SHAHGrC S ’=r DEPT 125. oo S29B LAND 0.0. BOX ^70 e u r e k a »¿s. d :s ' Ê29Ô T C T L CÛÜMTY 6,236 iss. ia F?“.^ou, PP. CLAr« *S>S SURVEY NQ ACRES SCHOOL 6,398 èi2.6ô Iñl£10270 CAUCACUS A£a I O . 330 UATE3 &. 238 2.32 ÊRftND KQGJL 521 10. 2t»> WEST 570 ?£ET Dr M.E. HARft:3CK 46S 3. S30 BIG AMERICA « 7472 10. 129 BLACK CAT Í7573 «>41 CALUKETE 120ä 9 . £S0 _ CROSSCUT :es23 7 . 6 7 0 2. PLURiBUS 520 10. 330 c J-QLY CfiCSS Í7975 1 . ÖfeS HAgROU 6 RUSS 16523 *. SO7 K.6. 7. 140 ROB THE RASTER 77Ô 6.390 *31 7.S90 SIDE DISH . " 4 7 5 9 . a o a Tt£ft£SA .5S63-A 4. 867 THESE Síi *.S. ÍLESS .3fc ACRE» I39fefi-B l.fiSâ WINCHESTER 467 7.520 YPUM3 16523 6. 433 BILL ?iO- ■542 TOTAL TAX 4 3 1 . IB* PAYWEKT 1 --- 215.59 PAYMENT 2 ¿1*^59 DUE DATEI --- 2/2B/B6 DATE DUES 7/31/âfi DATE PAID --- DATE PAID A4 y A A4 O A y WELBORN, DUFFORD, B R O W N 8 TOOLEY ROBERT F. WEIBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PHILIP G. OUFFORD 1700 BROAOWAY S. KIRK INGEBRETSEN THOMAS G.BROWN OIANE L. BURK HARDT DALE TOOLEY {1933-1985) DENVER,COLORADO 60290-1199 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. ROBB (303) 86 I - 8 O 13 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J. OUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L. POWERS JOHN F, MECK THEODORE B.ATLASS January 7, 1986 COUNSEL PHILLIP D.BARBER GREGORY A.RUEGSEGGER Michael Gluckman, Esq. Milner and Steer 2900 Manulife Place 10280-101 Street Edmonton, Alberta, Canada T5J3V5 Mr. Gregory Sparks Standard Metals Corporation p. 0. Box 247 SilvSrton, Colorado 81433 Mr. John Azlant Echo Bay Inc. Sunnyside Gold Corporation 3300 ManuLife Place 10180 - 101 Street Edmonton, Alberta, Canada T5J 3S4 Robert L. Leclerc, Esq. Milner & Steer 2900 Manulife Place 10280-101 Street Edmonton, Alberta, Canada T5J3V5 Re; December 20, 1985 Letter Gentlemen; Please find enclosed a complete copy of the Disclosure Statement for Fourth Plan of Reoganization Submitted by the Creditors* Committee in reference to Standard Metals Corporation. An incomplete copy of this Disclosure Statement was transmitted to you by letter dated December 20, 1985 from phillip D. Barber. I apologize for any inconvenience this has caused you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Saundra L. Fitzjohn Secretary to Phillip Barber /slf Enclosure ROBERT F, WELBORN ATTORNEYS AT LAW RANDALL J, FEUERSTEIN PHILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G.BROWN DIANE L.eURKHARDT DALE TOOLEY (1933-lSaS) DENVER, COLORADO 60290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. ROBB (303) 3 6 I -8 O 13 ELLEN TOLL JOHN F. WELBORN DOUGLAS P, RUEGSEGGER WILLIAM A. MCLAIN EDWARD D. WHITE BEVERLY J. OUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L. POWERS JOHN F. MECK THEODORE B.ATLASS COUNSEL PHILLIP D. BARBER GREGORY A.RUEGSEGGER December 20, 1985 Robert L. Leclerc, Esq. Milner & Steer 2900 Manulife Place 10280-101 Street Edmonton, Alberta, Canada T5J3V5 Reî Standard Metals Corporation Dear Bob Enclosed is the Disclosure Statement for Fourth Plan of Reorganization Submitted by the Creditors' Committee. I thought you might be interested in the various reserve predictions and the speculation about the value of the Net Profits Interest. Best regards. Sincerely WELBORN, DUFFORD, BROWN & TOOLEY <"•. M • r . fr Phillip D. Barber PDB/slf Enclosure ccs Mr. Michael Gluckmen (w/encl.) Mr. John Azlant (w/encl.) Mr. Greg Sparks (w/encl.) UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO IN BANKRUPTCY In re: STANDARD METALS CORPORATION, Case No. 84 B 00945 G D ebtor. DISCLOSURE STATEMENT FOR FOURTH PLAN OF REORGANIZATION SUBMITTED BY THE CREDITORS' COMMITTEE I. INTRODUCTION This Disclosure Statement is being furnished in connection with the solicitation of acceptances by creditors of the Fourth Plan of Reorganization of the Creditors' Committee (the "Plan") of Standard Metals Corporation (the "Debtor") in connection with the Debtor's reorganization now pending before the United States Bankruptcy Court for the District of Colorado (the "Court") in Case No. 84 B 00945G* The Plan contemplates an orderly liquidation of the Debtor's assets to provide for the payment of creditor claims, and will utilize the proceeds from the previously authorized sale of the Debtor's Sunnyside Mine and related properties to Echo Bay, Inc., for $20,000,000 cash, with the Debtor to retain a 30% Net Profits Interest in Echo Bay's ongoing operations of the Sunnyside Mine. The cash and Net Profits Interest will be held by an independent Trustee, to be appointed by the Court, and used by the Trustee, together with the proceeds from the liquidation of the Debtor's other assets, to pay the claims of the creditors and to provide for the residual interests, if any, of the stockholders. The purpose of this Disclosure Statement is to provide parties entitled to vote with a description of the Plan and other information to aid them in making an informed decision whether to accept the Plan. Copies of the Plan and ballot for acceptance or rejection of the Plan accompany this Disclosure Statement. The Court has fixed the date and time stated in the accompanying Order approving this Disclosure Statement as the last date by which ballots must be filed with counsel for the Committee. No vote received after such time will be counted. All creditors and interest holders will be bound by the confirmed Plan whether such creditor or interest holder voted for the Plan or not. Creditors and interest holders that do not vote are not counted in determining acceptance or rejection of the Plan. Allowance of a claim for voting purposes does not necessarily mean that the claim will be allowed for distribution purposes. All claims to which an objection has been filed will be allowed for distribution only if so determined by the Court. Votes on the Plan may be made by filling out and returning the accompanying ballots to the Counsel for the Committee. The Court has also set the date and time stated in the Order accompanying this Disclosure Statement for the hearing on the confirmation of the Plan. Under the Bankruptcy Code, creditors and interest holders holding claims in a class impaired under a plan are entitled to vote whether or not to accept the plan. At least two- thirds in amount and more than one-half in number of the allowed claims voting in each impaired class of creditors, and at least two-thirds in amount of the allowed interest holders, must accept a plan for a plan to be accepted by that class. In the event a plan is not accepted by the impaired class, the Court may, nevertheless, confirm a plan if it finds that certain other requirements for confirmation under the Bankruptcy Code are met. See Section IX herein for a more complete explanation of obtaining approval of a plan. Although ballots will not be sent to the holders of unimpaired claims, a Form W-9 will be sent with the Disclosure Statement to the holders of claims in such classes to ascertain the tax identification number of each claimant. It is important that the holder of a claim or interest fill out Form W-9 promptly and return it to provide such party's Social Security or other tax identification number in order that distributions to such party are not delayed. The satisfaction of a claim against and/or interest in the Debtor pursuant to the Plan may be subject to Federal tax information reporting and/or withholding, in which case each claimant may be required by law to furnish its Taxpayer Identification Number. In addition, if the satisfaction of a claim or interest is subject to back-up withholding, claimants may be able to avoid back-up withholding only by making the certification described in Form W-9. Claimants who determine that they are required by law or otherwise desire to furnish their Taxpayer Identification Number, or wish to avoid back-up withholding which may otherwise apply, may furnish their Taxpayer Identification Number and/or certification by completing the Form W-9 in accordance with its instructions, applicable law, rules and regulations, and returning it to counsel for the Committee. Failure to complete and return the Form W-9 promptly may delay satisfaction of your claim or interest and/or subject it to back-up withholding and any inquiries you may have concerning your distribution cannot be handled as promptly. If you are entitled to a distribution and do not receive a Form W-9, please contact counsel for the Committee. A Form W-9 will be sent to you promptly. Form W-9 must be filed by mail with counsel for the Committee, Fairfield and Woods, 950 Seventeenth Street, Suite 1600, Denver, Colorado 80202. Please note that if your claim or interest is the result of debentures or common stock held in the name of a nominee, you, as the beneficial holders of debentures or common stock, will receive a Disclosure Statement and ballot directly from your bank or broker nominee. THE NOMINEES WILL SEND THE BENEFICIAL OWNERS SEPARATE INSTRUCTIONS AND ENVELOPES FOR RETURNING COMPLETED BALLOTS. YOU SHOULD FOLLOW THE NOMINEE'S INSTRUCTIONS FOR RETURNING YOUR BALLOT RATHER THAN THE ABOVE INSTRUCTIONS OR YOUR VOTE MAY NOT BE COUNTED. Generally, the nominee will require you to return your ballot directly to him at an earlier date than that set forth above. The financial projections contained herein are based on assumptions as to future events and business conditions. Although an attempt has been made to be cautious with respect to any financial projection or discussion of future events, NEITHER THE CREDITORS' COMMITTEE NOR ITS ATTORNEYS REPRESENT OR WARRANT THE ACCURACY OF THE FINANCIAL PROJECTIONS OR DISCUSSION OF FUTURE EVENTS BEYOND THE DATE OF THIS DISCLOSURE STATEMENT. THE DISCLOSURE STATEMENT CONTAINS A BRIEF SUMMARY OF THE COMMITTEE'S FOURTH PLAN. HOWEVER, THE SUMMARY IS NOT INTENDED TO TAKE THE PLACE OF THE PLAN. EACH CREDITOR IS URGED TO READ THE PLAN IN FULL AND TO CONSULT COUNSEL. NO REPRESENTATIONS CONCERNING THE DEBTOR OR THIS PLAN ARE AUTHORIZED BY THE COMMITTEE OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT. INFORMATION CONCERNING THE DEBTOR ITS ASSETS, OR ITS HISTORICAL FINANCIAL INFORMATION HAS BEEN PROVIDED BY THE DEBTOR OR OBTAINED BY THE COMMITTEE FROM PUBLICLY FILED DOCUMENTS. THE COMMITTEE HAS NOT MADE ANY INDEPENDENT INVESTIGATION INTO THE TRUTH THEREOF AND MAKES NO REPRESENTATION THAT SUCH INFORMATION IS COMPLETE OR WITHOUT INACCURACY. ANY REPRESENTATIONS OR INDUCEMENTS MADE TO SECURE YOUR ACCEPTANCE WHICH ARE OTHER THAN AS CONTAINED IN THIS STATEMENT SHOULD NOT BE RELIED UPON BY YOU IN ARRIVING AT YOUR DECISION. THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF^ THE STATEMENTS CONTAINED HEREIN. Reference in this Disclosure Statement to the "Court" shall refer to the Court in the District of Colorado conferred with authority over the Chapter 11 ease of the Debtor. Terms defined m the Plan and not otherwise specifically defined herein will, when used herein, have the meanings attributed to them in the Plan. II. PREVIOUS PLANS Both the Committee and the Debtor have submitted prior plans of reorganization which culminated m the Amended Joint Plan of Reorganization proposed jointly by the Committee and the Debtor. That plan contemplated the sale of the Debtor-s Sunnyside Mine to Echo Bay for twenty million dollars cash with the Debtor retaining a right to receive y Pep0ent 0f aU fUtUre net Ppofits from Echo Bay's operations of the mine. The plan proposed to pay the allowed and determined claims of the creditors out of the cash proceeds from he sale, with the Debtor to retain the residual cash and the net profits interest to tund the ongoing business operations of the Debtor. A confirmation hearing on the joint plan was held by the Court on October 16, 1985 The evidence introduced at that time indicated that the cash proceeds from the sale would be sufficient to pay all of the fixed and timely filed allowed claims of creditors. However, no provision was made under the plan to pay the contingent claims out of the cash proceeds (see section IV, -CONTINGENT CLAIMS-). Instead, the contingent claims were to be left as nondischarged claims against the Debtor to be satisfied from the Debtor's remaining assets if and when finally determined. The evidence further indicated that the Debtor's assets after confirmation would consist of the retained net profits interest in the Sunnyside Mine and a collection of owned and/or leased nonoperating mines and mineral interests of uncertain and speculative value. After hearing the evidence the Court refused to confirm the joint plan. Significant in the Court's ruling were the findings that the plan did not adequately provide for the holders of contingent claims and that, as to the Debtor's stockholders, the plan appeared to be little more than a "Golden Parachute" for Debtor's management, to be provided for from the continued income from the net profits interest, with little or no benefit to the stockholders. HI. GENERAL BACKGROUND A* Description of Debtor’s Business Debtor was incorporated in January 1954 to engage in mining, which continued to be its principal activity until operations were suspended in 1985 due to a lack of cash. In addition, beginning in 1981, Debtor acquired other companies in an attempt to diversify its operations into the areas of energy-related pipeline construction and lead smelting. Debtor's producing mining property was located in San Juan County, Colorado, and it holds interests in various non-producing properties in Alaska, Arizona, California, Colorado, Maine, New Hampshire and Utah. As of December 31, 1983, the Company also had major commitments in the following entities: 1. The National Smelting & Refining Company, Inc. ("NSR"), incorporated in December 1980, owns a secondary lead smelter in Atlanta, Georgia, which it acquired on June 30, 1981. Debtor purchased 51% of the common stock of NSR on June 30, 1981, and currently owns 50% of such stock. National Smelting of New Jersey, Inc. ("NSNJ"), a wholly owned subsidiary of NSR, was incorporated in December 1982. NSNJ acquired a lead smelter in Pedricktown, New Jersey, in February 1983. 2. Luke Construction Company, Inc. ("Luke"), incorporated in 1955, specialized in the construction of oil field pipelines and related facilities in southern Louisiana. Debtor purchased 100% of the common stock of Luke on December 22, 1981. 3. Standard Ventures Limited Partnership ("SVLP"), formed on February 1, 1982, was established to provide financing and financial services to and to make equity investments in small businesses. Debtor and its wholly owned subsidiary, Standard Ventures Corporation, which was incorporated in 1982, generally have an 80% interest in the profits and losses of SVLP, subject to the terms of the SVLP Partnership Agreement. B. Bankruptcy Filings On March 5, 1984, after efforts to negotiate voluntary restructuring of debt obligations proved unsuccessful, Debtor filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Colorado. On the same date, petitions under Chapter 11 were also filed in the same court by (a) NSR, (b) NSNJ, and (c) Luke. On March 27, 1984, NSNJ converted its Chapter 11 reorganization proceeding to a Chapter 7 liquidation proceeding under the Bankruptcy Code. Luke converted its Chapter 11 reorganization proceeding to a Chapter 7 liquidation on September 4, 1984. NSR has also converted the Chapter 11 case to a Chapter 7 liquidation. The bankruptcy filings were, in the Debtor's opinion, necessitated by severe cash flow shortages, resulting primarily from losses incurred in the operations of NSR, NSNJ and Luke, and by the failure of Debtor and these subsidiaries to meet payment obligations under certain loan and royalty agreements. Debtor's gold, silver and base metal mine in Silverton, Colorado, continued to operate after the filing of the bankruptcy petitions until March 1985. NSNJ has ceased operations, and, as a result of its Chapter 7 filing, the Bankruptcy Trustee for NSNJ has taken possession of all NSNJ assets for purposes of liquidation and payment of obligations. The Trustee abandoned the major assets of NSNJ pursuant to § 554 o f the Bankruptcy Code on August 14, 1984. The Order authorizing the abandonment was reversed on appeal and the NSNJ assets are still within the control of the Chapter 7 trustee. The National Bank of Georgia ("NBG"), as indenture trustee under certain industrial revenue bonds issued by NSNJ, holds a mortgage on the Pedricktown facility. However, NBG has not attempted to assert any of its rights with respect to the NSNJ facility. Debtor presently does not know what the Chapter 7 Trustee intends to do with the Pedricktown facility. Luke has ceased operations since its conversion to Chapter 7 on September 4, 1984, and its assets are being liquidated by the Chapter 7 Trustee. C. Trading of Securities Trading in Debtor's Common Stock was suspended at Debtor’s request on the American, Pacific and Intermountain Stock Exchanges just prior to the filing of the bankruptcy petitions and the Debtor's stock has been delisted on the American Exchange. The Common Stock has continued to be traded in the over-the-counter market. D. Historical Mining Operations 1. General; Debtor's principal mining operations were located in San Juan County, Colorado, near the town of Silverton. The facilities consisted of the Sunnyside Mine, which was an underground vein mine, and the Mayflower Mill, where the ore was processed. Over the three-year period ending December 31, 1984, approximately 75% of Debtor's mining revenues were derived from the sale of gold. The balance of Debtor's mining revenues over that period consists of proceeds from sales of concentrates which also contain silver, lead, zinc, copper and cadmium. Although the mine and mill operated intermittently since the 1890s, operations ceased from 1938 until 1959, at which time Debtor leased the properties from Washington Mining Company and acquired the Mayflower Mill from Marcy-Shenandoah Corporation. At such time, Debtor also obtained an easement from the American Tunnel in order to facilitate access to the Washington inclined shaft. Following some development projects, including renovation of the mill, Debtor began removal of ore from the mine in 1962. Veins providing a source of high grade gold ore were discovered in 1969 and 1970. In 1976, a mill addition was completed and production increased to 1,000 tons per day. In June 1978, Lake Em m a broke through into the mine, causing major damage. A clean-up program was started immediately and mining was resumed in August of 1979 in select areas. The mill was restarted in November 1979 using some stockpiled ore for feed. The flood resulted in completely draining Lake Em m a and a major diversion project was completed in 1982 to prevent water runoff from entering the mine through the Lake E m m a breach. The mill resumed full production and, during 1983, processed approximately 275,000 tons of ore. During 1984, the mill processed 237,969 tons of ore. The decrease in the ore processed was caused by the temporarily slowed production in the latter half of 1984 due to the geologic fault related to the Portland Vein. Rather than actively mining ore during this period, it was necessary to drift toward the offset vein. Due to cash flow problems, the Sunnyside Mine was shut down on March 15, 1985. The mill was closed a week later on March 22, 1985. 2. Reserves; Debtor calculated reserve grade and tonnage at the Sunnyside Mine at least annually. Broken, proven, probable and possible ore designations were determined based on the quality of assay and geologic data available. The designation and grade of reserves were adjusted by taking into account a variety of factors, such as applicable mining methods, known ore trends, continuity of structures, rake of ore shoots and changes in wall rock type. There has been no independent audit on the ore reserves at the Sunnyside Mine since June 1983, when Derry, Michener, Booth and Wahl performed an ore audit for the Debtor. This June 1983 report concluded that Debtor's in-house ore estimates were generally conservative. Reserve estimates prepared by Debtor as of January 1, 1985; January 1, 1984; and January 1, 1983, are as follows: iVOOf i\6S6rV6S Gold Silver Lead Copper Zinc C ategory Tons (oz/ton) (oz/ton) (%) (%) (%) Broken* 215,381 .06 1.6 1 .7 .20 2 .9 Proven 561,700 .12 2.5 2.9 .40 4.5 Probable 693,200 .11 2 .4 3 .4 .37 5 .2 T otal 1,470,281 .11 2.32 2.96 .36 4 .6 January 1, 1984, Reserves Gold Silver Lead Copper Zinc C ategory Tons (oz/ton) (oz/ton) (%) (%) (96) Broken* 262,647 .07 1.8 2.0 .25 3.2 Proven 519,000 .12 2 .4 2.9 .35 4 .6 Probable 661,600 .07 2.2_ 3^0 .30 4.9 T otal 1,443,247 .09 2.2 2.8 .30 4 .5 January 1, 1983, R eserves Gold Silver Lead Copper Zinc C ategory Tons (oz/ton) (oz/ton) (%) (%) (%) Broken* 224,321 .17 2.0 2.3 .30 3 .5 Proven 480,300 .09 2.2 2.9 .30 4.6 Probable 611,300 ^09 1.9 3 .0 .30 4 .7 T otal 1,315,921 .10 2.1 2 .9 .30 4 .4 Over the years, the Debtor succeeded in developing new reserves of similar or greater tonnage as existing reserves were depleted. Reserve estimates of broken, proven and probable ore as of January 1 for each of the last six years are shown in the following table: "Broken" reserves consist of ore that has been drilled and blasted but has not yet been removed from its original situs in the mine. Gold Silver Lead Copper Zinc (oz/ton) (oz/ton) (%) (%) (%) 1985 1,470,281 .11 2.32 2.96 .36 4.6 1984 1,443,247 .09 2.2 2.8 .30 4.5 1983 1,315,921 .10 2.1 2.9 .30 4.5 1982 1,187,852 .13 2.3 3.1 .35 5.2 1981 1,123,979 .20 2.3 3.2 .39 5.3 1980 1,168,986 .17 2.7 3.3 .35 5.6 Since 1971, the Sunnyside Mine generally produced ore at a grade higher than the estimated grade of the reserves. This is the result of two factors. First, the grade of unbroken ore has been conservatively calculated. Second, and more significantly, higher grade veins have been developed and mined (reserves replaced) at a faster rate than lower grade veins. 3‘ Results of Operations; Pre-tax operating results for the Debtor's mining operation of the Sunnyside Mine before any allocation of corporate, accounting and legal costs for the years ended December 31, 1983, 1982, and 1981 are as follows: 1983 1982 1981 Revenues Gold $ 10,225,798 $ 7,599,319 Lead concentrate $ 7,161,477 8,260,511 8,327,775 Zinc concentrate 9,358,849 2,532,803 2,059.460 1,272,163 Total 21,019,112 17,986.554 17,792,489 Expenses Mining & milling 12,987,305 10,803,892 Royalties 12,006,373 1,727,138 2,037,808 Depreciation, depletion 3,526,273 <5c amortization 2,367,590 1,939,403 General <3c admin. 1,433,948 (Silverton) 485.825 435,225 534,753 Total 17,567,858 15,216,328 17,501,347 Operating Profit (Loss) 3,451,254 2,770,226 291,142 Other income (expense): Interest expense (898,917) (1,209,546) Reduction in carrying value of (915,166) non-operating mining assets (1,526,486) Other 26,868 36,132 67,589 Income (loss) before income tax expense $ 1.052.719 $ 1,596,812 $ (556.435) Dry tons milled 274.579 224 ^ 067 198,616 4* Governmental Regulation; Debtor's mining operations have been subject to regulation by federal, state and local authorities concerning environmental, health and safety matters. Some of such matters have been the subject of recent litigation. With the sale of the Sunnyside Mine, such regulation of the Debtor's activities have ceased but they will continue to influence the revenue to be received from the retained Net Profits Royalty Interest. The principal environmental agencies associated with the Sunnyside mining operations are the Colorado Mined Land Reclamation Board ("MLRB"), the Environmental Protection Agency ("EPA") and the Colorado State Health Department as enforcement agents for the Federal Water Pollution Control Act. The M L R B is a state agency which administers the provisions of the Federal Surface Mining Control and Reclamation Act of 1977 and the Colorado Mined Land Reclamation Act of 1976. The purpose of these acts is to ensure that lands used for mining and mining-related purposes are reclaimed in an appropriate manner. All reclamation is required to be underwritten to completion through bonding or presenta tion of another acceptable instrument of surety. Since 1981, Debtor has spent over $1,300,000 on reclamation of lands associated with operations at the Sunnyside Mine. In addition, since 1981, Debtor has incurred capital and operating expenditures of over $2,900,000 in complying with environmental controls standards relating to its mining operations. Required expenditures for environmental compliance are estimated to be approximately $400,000 over the next 5 years. Debtor's estimate of future expenditures and impacts as a result of environmental considerations are based on existing regulations and current plans and projections, and are subject to modification which could be significant in the event of changes in such regulations, plans or projections. IV. CONTINGENT CLAIMS In addition to the claims of creditors which have already been determined, various parties have asserted claims against the Debtor which are currently being disputed. These are as follows: A. The New Jersey Department of Environmental Protection ("NJDEP") has asserted a contingent, unliquidated claim against the Debtor based upon alleged environ mental violations associated with the Pedricktown lead smelting facility purchased by NSNJ from NL Industries in February 1983. N L has filed a contingent claim against the Debtor for any liabUity it may incur in connection with the NSNJ and NSR smelting facilities. The amounts of the NJDEP and NL claims are not known, but they could be substantial. Debtor has not guaranteed NSNJ's obligations to NJDEP or to NL and does not believe that the claims can be legally enforced on Debtor simply because Debtor was a 50% owner of NSR which was the parent company of NSNJ. The Environmental Protection Agency (EPA) has recently sent Debtor a letter under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the superfund law, notifying the Debtor of EPA's plan to take remedial action at the Pedricktown facility. The letter sets forth the possible liability of Standard under CE R C L A even though the EPA has made no determination of Debtor's liability. This contingent claim could be substantial although the Debtor has vigorously rejected any suggestion that it has liabUity under the statute or under any theory. NL has filed a late contingent claim as to any liabilities it might incur to the EPA. The Debtor contests any liability thereunder on the same basis as stated above concerning the claim of NJDEP. The Committee has filed motions to have these contingent claims estimated so that the Debtor's liability, if any, on these claims and the amount thereof can be determined at the earliest possible date. B. Continental Casualty Company ("Continental") has sought to file a claim against the Debtor based on a performance bond issued by Continental and guaranteed by the Debtor, for work performed by Luke. At this time Debtor does not know if claims will be asserted against the bond by parties affected by Luke's bankruptcy. C. Dann S. Sheftelman attempted to file, after the date fixed for filing claims, a claim relating to a class action suit brought in the United States District Court for the District of New Jersey. Mr. Sheftelman is seeking to recover approximately $6,600,000 in connection with the issuance of certain industrial revenue bonds by NSNJ. Mr. Sheftelman’s claim in the Debtor's bankruptcy was denied by the Court, and the Court's decision was affirmed on appeal by the United States District Court, District of Colorado. Mr. Sheftelman has filed notice to appeal the District Court's order to the Tenth Circuit Court of Appeals. The Sheftelman complaint was certified as a class action on May 3, 1985, in the United States District Court for the District of New Jersey. Debtor denies that it may have any liability to Sheftelman and, should his claim be permitted to be filed, Debtor intends to dispute it vigorously. D. NL, a defendant in the Sheftelman suit, has filed a claim in Debtor’s bankruptcy relating to any liability it may incur in connection with the issuance of the NSNJ industrial revenue bonds. Debtor denies that it may have any liability to NL and intends to dispute vigorously NL's claim. E. Hibernia National Bank of New Orleans ("Hibernia") filed a late claim in January 1985 which, upon the objection of Debtor, was barred by the Bankruptcy Court. The matter is pending on appeal. If Hibernia's claim is allowed, it could result in an increase in allowed unsecured claims in the amount of approximately $2,000, 000. It is possible that other contingent claims will be asserted. Debtor and the Committee believe, however, that the June 10, 1984, bar date for claims has greatly limited a party's ability to assert additional claims. Nevertheless, the amount of such claims which may ultimately be allowed by the Court, if any, is unknown at this time. The ultimate allowance of any of the asserted claims which are not presently allowed could increase the size of the Class 5 claims in the Plan and could adversely impact the distribution to the claimants therein. v- ASSETS AVAILABLE TO PAY CREDITORS' CLAIMS The only asset of significant value owned by the Debtor at the time of the filing of the Chapter 11 was the Sunnyside Mine and its related properties and assets. Those properties have now been sold to Echo Bay, Inc., pursuant to an agreement approved by the Court, for cash in the amount of $20,000,000 and a retained Net Profits Royalty Interest (the "Net Profits Interest"). Out of the cash paid by Echo Bay the Debtor was required, by the terms of the contract with Echo Bay, to pay certain secured claims and cure certain lease defaults. As a result, the net cash held by the Debtor after the sale is approximately $9,052,000. That cash is held in an interest bearing account and cannot be used or disbursed except upon separate order of the Court. The Net Profits Interest held by the Debtor gives the Debtor the right to receive 30% of the future "net profits" from Echo Bay's operations of the Sunnyside Mine. The "net profits" from which the Debtor's interest is to be paid is calculated as follows: from the Net Smelter Returns from the ore mined and milled at the Sunnyside Mine and the Mayflower Mill will be subtracted the operating costs of the Mine, the general and administrative expenses attributed to the Mine, capital expenditures and the amortization costs of the $20,000,000 cash payment over the first five years of the operations. Debtor will then receive 30% of the remaining sum which is defined as "Net Profits." (For information on the Debtor's historical mining operations see "GENERAL BA C K G R O U N D - Mining Operations.") Echo Bay has agreed to pay the Debtor an advance against future anticipated royalties the sum °f $______» payable______i n ______, 1986, a n d ______in ______» 1987. Except for this advance payment the Debtor's ability to receive future distributions from the Net Profits Interest is subject to a variety of adverse factors, including the following: A. Lack of Control The Debtor will have no control over Echo Bay's operations or expenditures. Thus Echo Bay can effectively insure no distributions under the Net Profits Interest by simply increasing capital expenditures or otherwise increasing expenses. Commencing January 1, 1987, and for a period of five years, the Debtor will be entitled to receive a minimum payment of $300,000 per year if Echo Bay's net profits are reduced by capital expenditures to the point the Debtor's Net Profits Interest would be reduced below $300,000. However, the minimum guaranteed payment is only required if gold prices average above $375 per ounce during each year. In any event there will be no additional payments to the Debtor until the advance royalties of $______are recaptured by Echo Bay from future sums attributable to the Debtor's interests. B. Fluctuating Market Prices for Mineral?* The opportunity for the Debtor to benefit from the Net Profits Interest will, in large part, be determined by the market price of gold and, to a lesser extent, lead, silver, zinc and copper. Neither the Debtor nor Echo Bay has any control over those prices, which fluctuate widely based on such factors as changes in the rate of inflation, changes in international investment patterns, political activities of several producing countries, and shifts in the public and private supply of and demand for gold. The volatility of such price is illustrated by the following table which sets forth the high, low and average price of gold per ounce, as reported by the London Metals Exchange during the past six years: Price of Gold ($ per ounce) Year Low Average High 1985 (to date) $284.25 $308.59 $334.24 1984 307.50 360.49 405.85 1983 374.25 424.18 509.25 1982 296.75 375.79 481.00 1981 391.25 459.72 599.25 1980 481.50 612.56 850.00 1979 227.27 306.69 463.15 The following table analyzes metals sold from the Sunnyside Mine over the 1982-1984 period: Year Ended December 31,______ Metal 1984 1983 1982 Gold (troy ounces) $ 27,337 $ 39,739 $ 37,953 Silver (troy ounces) 360,510 348,095 284,391 Lead (pounds) 9,682,000 8,946,920 9,151,220 Zinc (pounds) 11,706,000 12,054,980 12,169,180 Copper(pounds) 1,432,000 1,155,740 973,400 Cadmium (pounds) 44,238 45,240 46,220 For the Debtor, the percentages of total mining revenues contributed by certain of these metals from 1982 to 1984 are as follows: 1984 1983 1982 Gold 70.0196 72.15% 73.27% Silver 14.91 13.31 10.05 Others, primarily lead and zinc 15.08 14.54 16.68 The Sunnyside Mine and mill have not been operating for several months. Prior to the termination of operations the Debtor, due to a lack of available cash, was unable to maintain the mine, mill and related equipment on a full basis, consumed available inventories of supplies, depleted developed gold reserves, and did little or no mine development work. As a result, any purchaser of the mine will be required to expend significant amounts just to place the mine back in operation. Expenditures for environ mental compliance may also be substantial. (See Governmental Regulation.) Such expenditures will be deducted from cash flows and reduce the possibility of the mine generating net profits, at least in the near future. Further, there can be no assurances that Echo Bay has, or will continue to have, the funding available to do all of the restoration and development work which is needed in order to maximize profits at the mine. To the extent funds are not available to fully restore the mine and mill, production may be decreased and production costs, per ounce of gold produced, increased, all of which would further tend to minimize profits and reduce or eliminate distributions under the Net Profits Interest. In addition to the cash and Net Profits Interest the Debtor owns, either in its own name or in the name of affiliated entities, various undeveloped and/or nonoperating mining interests in Alaska, Arizona, California, Colorado, Maine, New Hampshire and Utah. The Debtor does not have the resources available to develop and operate these properties, and at the present time, due to nondevelopment and/or depressed metals prices, these properties cannot be operated on a profitable basis. There are no current appraisals for these properties. While the properties can be sold, there are no outstanding offers and the price for which a sale might be concluded is unknown. It is likely that any purchasers of any of the properties will want to pay for the properties out of future production rather than present cash payments and any potential return from any of these properties must be regarded as wholly speculative. The Debtor may have claims to assert against its officers and directors for mismanagement of the Debtor's affairs. However, recovery on any such claims would require the initiation of lawsuits against the responsible parties, which would result in significant delays in effecting any recovery, with attendant costs and legal expenses. The Committee is not aware of any other assets of any consequence which may be available for the repayment of creditors’ claims. VI. THE COMMITTEE'S FOURTH PLAN The Committee's Fourth Plan of Reorganization contemplates the utilization of the proceeds from the sale of the Sunnyside Mine to Echo Bay together with any proceeds which can be realized from the liquidation of the Debtor's other assets or from litigation for the purpose of paying the claims of the creditors. Any funds realized after the payment of creditors will be disbursed among the stockholders. In order to implement the Plan the Court will appoint, at the time of the hearing to confirm the Plan, a trustee who or which will be a person or an entity designated by the Creditors' Committee. The Trustee so appointed must be independent and must satisfy the requirements of section 321 of the Bankruptcy Code. The Trustee will have the powers and duties specified in the Plan and by the terms of a Trust Indenture to be entered into by the Trustee. In general those will include the right to take possession and control of all of the Debtor's assets, to sell them, to pay the claims of creditors, and to distribute the balance of the funds, if any, to the Debtor's stockholders. (See section "VII, T H E T R U S T IN D E N T U R E ," for a more detailed description of the Trustee's duties and powers.) As to the Net Profits Interest, it is contemplated that the Trustee will endeavor to sell the interest, if possible. However, due to the uncertain and speculative nature of the Net Profits Interest, it is unlikely that a purchaser can be found who will be willing to pay a satisfactory price. If the Net Profits Interest cannot be sold, the Trustee will retain ownership of the Interest and will use the proceeds therefrom, as and when received, for the payment of claims. Out of the proceeds held by the Trustee, the Trustee will first be required to pay the costs of administration of the Chapter 11, including the fees of the attorneys for the Debtor and the Committee, as allowed by the Court, the unpaid operating costs of the Debtor, and various priority claims for taxes and wages as specified by the Bankruptcy Code. For administrative convenience the Trustee will then pay, in full, the claims of all creditors whose claims are $300 or less (approximately 44 claims). All other creditor claims are aggregated in Class 5, which includes the claims of all other unsecured creditors as, when, and in the amount finally allowed by the Court. Certain of the claims in this class may, as against some or all of the other claims, be subject to subordination in payment either contractually or by reason of equitable principles. The claims of creditors in Class 5 will be paid out of the cash and other assets held by the Trustee, with interest at 8 % per annum from the Effective Date of the Plan until paid. After all claims in Class 5 have been satisfied, the remaining cash will be distributed pro rata among the stockholders (Class 6). In order to evidence the interests of the Class 5 creditors, and their continuing right to payment, the Trustee will issue to such creditors Class "A " Trust Certificates, in the form provided in the Indenture. In like manner, stockholders will receive, upon surrender of their share certificates, Class "B " Trust Certificates evidencing their right to receive distribu tions from the trust estate after the Class "A " certificates are paid in full. All holders of common stock who fail to surrender their share certificates within five years after confirmation of the Plan will lose all rights to share in any distribution from the trust estate. The Trust Certificates to be issued to the creditors and stockholders will be able to be sold, transferred and assigned by the holders thereof. However, there can be no guaranty that a market in the certificates will ever develop or exist. The Plan provides that during the continuation of the Trust the Creditors’ Committee and the Equity Security Holders' Committee, as they exist as of the date of confirmation of the Plan, will continue in existence for the purposes of consulting with and monitoring the activities of the Trustee. The present members of the Committees are: UNSECURED CREDITORS' COMMITTEE Nam e and Company Affiliation Address Phone Glenn Bunce P. O. Box 1866 (303) 245-4068 Crist Machinery 6c Supply Co. Grand Junction, CO 81502 Arthur L. Francisco Box 6 San Miguel Power Association Silverton, C O 81433 Perron R . Oaks P. O. Box 380388 (303) 366-7700 Wagner Equipment Company Denver, CO 80238 Alan R . Peterson P. O. Drawer S (303) 565-8566 C. B. Johnson,Inc. Cortez, CO 81321 Harry L. Simon 4155 E. Jewell Ave., #300 (303) 758-6601 Hibernia Bank Denver, CO 80222 Thomas A. Thornton 777 South Wadsworth Blvd. (303) 989-4921 Bateman Engineering Lakewood, CO 80226 Lawrence Woodard Box 12356, Station F (505) 877-2400 Woodard Explosives Albuquerque, NM 87195 John E. Wreyford 1113 Camina Entrada (505) 334-9444 Industrial Repair Service, Inc. Farmington, NM 87401 Allen Vickers 365 Bugatti Street (801) 972-3333 Boyles Brothers Drilling Salt Lake City, UT 84115 Jim Massie c/o L T V Energy Products Co. (214) 747-9261 Republic Supply Company PO Box 359, Dallas TX 75221 EQUITY SECURITY HOLDERS' COMMITTEE Nam e and Company Affiliation Address Phone David S. Lerner 9400 S. Dadeland Blvd., #120 (305) 665-5700 Dean Witter Reynolds, Inc. Miami, FL 33156 Henry Abrams 16 Beacon Drive (609) 494-6557 Loveladies, N J 08008 Marshal Artime 796 Wilshire Drive (618) 398-2183 Belleville, HI. 62223 Luke E. Grezaffi, Jr. P. O. Box 2618 (504) 868-3030 Houma, LA 70361 George W . Icke 2642 Rimrock Road (608) 271-5414 Icke Construction Co., Inc. Madison, Wise. 53713 Harry L. Simon 4155 E. Jewell Ave., #300 (303) 758-6601 Hibernia National Bank Denver, CO 80222 Paul J. Sturm P. O. Box 287 (414) 596-2511 A. Sturm & Sons Manawa, Wise. 54949 Sheldon M . Weiner 1921 Lee Street (312) 475-0082 Evanston, Ql. 60202 Committee members who die, resign, or become unable to act will be replaced by the remaining members of the affected committee. Committee members will serve without compensation but will be entitled to be reimbursed by the Trustee for their reasonable out- of-pocket costs for performing their duties, and each committee may also be reimbursed for such reasonable costs and attorneys' fees it may incur in the performance of its function. At such time as the Class 5 creditors are paid in full the Creditors' Committee will terminate. As noted above, cash currently available from the sale to Echo Bay is in the sum of approximately $9,052,000. Claims to be paid are estimated to be: Administrative and priority claims $ (D Class 4 (Less than $300) $ 10,000 Class 5 Unsecured Creditors * (1) Includes claims of counsel for the Debtor of $1,200,000 and of counsel for the Committee of $150,000, which claims are subject to hearing and final allowance by the Court. J (2) Includes all allowed unsecured claims, other than Class 4, including the claims of the holders of the 1 0 % Convertible Subordinated Debentures. It excludes any estimate of contingent claims which may be allowed in the future. The Trustee will be unable to make any distributions to the Class 5 unsecured creditors until such time as the contingent claims are finaUy fixed or disallowed unless estimates of such contingent claims can be made and reserves, in amounts satisfactory to the Court, established to provide for such claims if and when allowed. VII. T H E T R U S T IN D E N T U R E On the Effective Date of the Plan the Trustee appointed by the Court will enter into a formal Trust Indenture which will specify his duties and the limits of his authority. The Debtor will transfer and convey all of its property to the Trustee to be dealt with as provided in the Plan and the Indenture. A copy of the Indenture has been filed with the Court and is available for inspection there. A copy can be obtained by interested parties from Fairfield and Woods, counsel for the Committee, 650 Seventeenth Street, Denver, Colorado 80202. The following summary of the Indenture is subject to and qualified by the express terms of the Indenture itself in all respects: The Trustee to serve under the Trust Indenture will be a person or entity designated by the Creditors' Committee at or before the date of confirmation of the Plan. The Trustee must be independent and not affiliated with the Debtor, and must be approved by the Court. The Trustee will take possession and control of all of the assets of the Debtor and will utilize those assets to satisfy the expenses of administration of the Chapter 11, the claims of the creditors, and the interests of the stockholders of Standard Metals. The Trustee will liquidate the Debtor's assets as expeditiously as possible, reducing the assets to cash. However, with respect to the Net Profits Interest, due to the uncertainty of the value of that interest and the possible lack of purchasers, the Trustee will be empowered to hold the Net Profits Interest on a continuing basis, to collect the income therefrom from time to time, and to distribute that income to the parties entitled to the same. The Trustee will have the responsibility to contest any claims and to cause the claims to be finally heard and allowed by the Court. Pending the liquidation of the assets and the final determination of claims, creditors having allowed claims in the estate will receive Class "A " Trust Certificates issued by the Trustee in the amount of their claims. The Trust Certificates will bear interest at the rate of 8 % per annum from the Effective Date of the Plan until paid in full. Payments on the Trust Certificates will be made by the Trustee on a semi-annual basis on May 31 and November 30 of each year out of the proceeds in the hands of the Trustee which are available for the payment of claims. Distributions on the Trust Certificates will first be applied against accrued interest, and the balance to the outstanding principal amount of the Trust Certificates. Stockholders of the Debtor will be required to surrender their stock certificates to the Trustee. As stock certificates are surrendered, the Trustee will issue to stockholders Class "B " Trust Certificates in the quantity of one unit for each share of stock surrendered. Stock certificates which are not surrendered on or before the end of five years from the Effective Date of the Plan will not be entitled to participate in any way in any distributions from the Debtor's estate. There will be no distributions on the Class "B " Trust Certificates until such time as the Class "A " certificates are paid in full and discharged. The Trust Certificates will be transferable on the records maintained by the Trustee or his designated agent. Transfer of the Trust Certificates will be effected by the endorsement and surrender of the Trust Certificate, and a new Trust Certificate will then be issued in its place and stead. The Trust Certificates will be issued by the Trustee under an exemption from the federal and state security laws provided by section 1145 of the Bankruptcy Code. While the Committee believes that the subsequent disposition of the Trust Certificates would be exempt from registration and not subject to holding periods in most circumstances, certain recipients of the securities - those recipients who may be deemed "underwriters" as defined under section 1145(b) of the Bankruptcy Code - may be unable to resell them absent registration of those securities under the 1933 Securities Act and applicable state law. The Committee recommends that creditors and shareholders affected by this risk consult their own counsel. In any event, while the certificates will be salable and transferable, there can be no guarantee that any market will develop in the certificates. The Trustee under the Indenture will have the normal powers held by a bankruptcy or lquidating trustee. These will include powers to collect and hold the assets of the Debtor, to bring suit on any claims belonging to the Debtor including any claims against the former officers and directors of the Debtor for their misfeasance or malfeasance in office, the right to issue the Trust Certificates, and the power to make payments thereon. Certain powers of the Trustee can only be exercised upon prior notice to the members of the Creditors' Committee and the Equity Security Holders- Committee and with the approval of the Court. These restricted powers include the payment of Trustee's fees, the sale of any property having a value in excess of $25,000, and the settlement or compromise of any claims affecting the estate. The Trustee can be removed from his office by order of the Court upon the motion of any cert,ficate holder for cause, which includes but is not limited to theft or embezzlement y the Trustee. The Trustee can also be removed upon the vote of certificate holders holding 7596 of the principal balance outstanding of Class "A " Certificates and 7596 of the units of outstanding Class "B " Certificates. In the event the Trustee dies, is adjudicated to be incompetent or incapable of handling his affairs, has an order for relief entered against him u any bankruptcy or insolvency proceeding, resigns, or is removed, his replacement will be appointed by the Court. The replacement will be required to meet the same qualifications as the original Trustee. The Trustee will incur no liability for his acts unless and to the extent such liability arises from willful fraud, willful misconduct, or gross negligence by the Trustee. The Trustee will be required to post a bond to protect the estate in an amount determined by the Court. The cost of the bond will be an expense of the administration of the estate. The Trustee will be entitled to compensation to be paid out of the assets held by him. The compensation will be in an amount allowed by the Court from time to time, but in no event can such compensation exceed the amount permitted by the Bankruptcy Code, which is equivalent to 3 % of the amount of the monies actually disbursed by the Trustee. The Trustee will be required to maintain adequate records reflecting the disposition of the assets, the amount of money collected, the amount distributed among the creditors and stockholders, the ownership of the Trust Certificates, and the principal amount outstanding on the Class "A " Trust Certificates from time to time. H e will also be required to issue reports at least annually to the holders of the Trust Certificates reflecting the payments made to them and the status of the Trust Estate. The Trust Indenture cannot be amended. The Trust and the Trust Indenture will terminate at such time as all assets of the estate have been distributed, or in any event within 21 years. vm. ALTERNATIVES TO THE COMMITTEE'S PLAN With the sale of the Sunnyside Mine to Echo Bay the Debtor was left with no operating assets and no other assets which are realistically able to be operated. The lack of any realistic operating plan was a significant factor in the Court's refusal to confirm the Joint Plan proposed by the Debtor and the Committee. The Committee believes that the only type of plan which is presently capable of being confirmed is a plan calling for the liquidation of the Debtor's assets, such as the Committee's Fourth Plan. If the Committee's Plan is not confirmed it is probable that the case will be converted to a liquidation case under Chapter 7 of the Bankruptcy Code. Various parties have in fact filed motions to so convert the ease, which motions are pending before the Court. If the case is converted a trustee will be appointed to take possession of the Debtor's assets and to sell them as expeditiously as possible. The Committee believes that liquidation under Chapter 7 is not in the best interests of either the creditors or the stockholders, primarily due to the inflexibility in dealing with the assets which is inherent to a Chapter 7. As noted, in a Chapter 7 all of the assets must be liquidated and sold for cash at the best price available. The Committee believes that the Debtor's assets have value, particularly the Net Profits Interest. However, it is unlikely that a cash purchaser can be found for that interest at any sort of realistic price. Similarly, the other mining interests may have some value if they can be sold based on a payout from future production. On a cash basis, however, such properties probably have little or no value. Thus the Committee believes that conversion to Chapter 7 would be detrimental to the interests of all parties, and therefore urges the creditors and the stockholders to approve the Committee's Plan. IX. MANNER OF VOTING AND CONFIRMATION OF THE PLAN A . Solicitation of Acceptances As previously noted, this Disclosure Statement shall have been approved by the Court in accordance with Code S 1125 before being provided to each Creditor whose claim has been scheduled by the Debtor and to each stockholder of record. Under the Code, your acceptance of the Plan may not be solicited unless you receive a copy of this Disclosure Statement prior to or concurrently with such solicitation. B. Persons Entitled to Vote on the Plan Votes to accept or reject the Plan may be filed by those persons entitled to vote by Bankruptcy Rule 3018. This includes all stockholders and all Class 5 creditors whose claims have either been allowed or estimated for voting purposes. Votes to be Counted. In determining acceptance of the Plan, a vote will be counted if submitted by a holder of an Allowed Claim that is unimpaired: a. Whose claim is duly scheduled by Debtor as undisputed, non contingent and liquidated; or b. Who has timely filed with the Court a proof of claim which has not been disallowed prior to computation of the votes on the Plan. 2- Acceptance by Impaired Classes. Under the Plan, Classes 5 and 6 are impaired. An impaired class of creditors (Class 5) shall be deemed to accept the Plan if at least: a. Fifty percent plus one of the Allowed Claims voting vote to accept the Plan; and b. Two-thirds of the aggregate dollar amount of the Allowed Claims voting vote to accept the Plan. An impaired class of interests (Class 6) shall be deemed to accept the Plan if the Plan is accepted by at least two-thirds of the interests which vote. D- Confirmation of the Plan if One or More Classes Do Not Accept The Bankruptcy Code requires, as a condition to confirmation, that at least one affected class of claims or interests must accept the Plan. If the Plan is accepted by one, but not both, of Classes 5 and 6, the Plan can still be confirmed if the evidence at confirmation supports the proper findings by the Court. With respect to the Class 5 unsecured creditors, the Plan can be confirmed even if they do not accept the Plan if the Court finds that the unsecured creditors will receive, on account of their claims, property of a value, as of the effective date of the Plan, equal to the allowed amounts of their claims or if the stockholders receive nothing with respect to their claims. With respect to the Class 6 claims of the stockholders, the Plan can be confirmed over their negative vote so long as no junior interests are to share in any distributions under the Plan. The Committee believes that the Plan can be confirmed if it is accepted by either Class 5 or Class 6. E. Manner of Voting Votes for or against the Plan may be cast only by completing, dating, signing and causing the baUot form accompanying the Disclosure Statement to be filed with counsel for the Committee on or before______, 198__ . F. Hearing on Confirmation of the Plan The Bankruptcy Court will hold a hearing to determine if the Plan has been accepted by the requisite number of creditors and whether the other requirements for confirmation of the Plan have been satisfied. Each creditor will receive, either with this Disclosure Statement or separately, a notice of the time and place of this hearing. G . Means of Execution of the Plan The Plan is to be implemented pursuant to the provisions of the Bankruptcy Code. Implementation requires and provides for the entry of the Confirmation Order by the Court, the payment of the administrative and priority claims, the payment of the Class 4 claims of creditors whose claims are less than $300, and the execution and implementation of the Trust Indenture. SUPPLEMENTAL FINANCIAL INFORMATION RESPECTING THE DEBTOR Debtor is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and files regular reports with the Securities and Exchange Commission -26- Which are readily available. Reference is made to such reports, and they are incorporated herein by this reference. Reports, proxy statements, and other information concerning Debtor can be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission: at Room 1024, Judiciary Plaza, 450 Fifth Street, N .W ., Washington, D .C . 20549; at Room 1204, Everett McKinley Dirksen Building, 219 S. Dearborn Street, Chicago, Illinois; at Suite 1710, Tishman Building, 10960 Wilshire Boulevard, Los Angeles, California; and at Room 1100, Federal Building, 26 Federal Plaza, N ew York, N ew York. In addition, a copy of Debtor's Annual Report on Form 10-K for 1983, as filed with the Securities and Exchange Commission, was mailed by Debtor to each shareholder of Debtor on or about August 27, 1984. RANDALL J. FEUERSTEIN R OB E RT F. WELBORN ATTORNEYS AT LAW PHILIP G. DUFFORD 1700 BROADWAY S.KIRK INGEBRETSEN DIANE L.BURKHARDT THOMAS G. BROWN DALE TOOLEY (1933-1905) DENVER,COLORADO 60290-1IÖ9 STEPHEN J. SULLIVAN JOHN M. SPILLANE DAVID W. FURGASON (303) 861-8013 E L L E N TO LL W IL L IA M C . R O B B D O U G L A S P. R U E G S E G G E R JOHN F. WELBORN EDWARD D. WHITE WILLIAM A.MCLAIN PEGGY J. ANDERSON BEVERLY J • QUAIL RICHARD L.FANYO JOHN F. MECK KATHRYN L. POWERS COUNSEL THEODORE B.ATLASS PHILLIP D. BARBER GREGORY A.RUEGSEGGER December 6, 1985 Robert L. Leclerc, Esq. Milner & Steer 2900 Manulife Place 10280-101 Street Edmonton, Alberta, Canada T5J3V5 Re: Sunnyside Gold Corporation Dear Bob: Enclosed is a copy of an article from the December 4 issue of The Mining Record and the December 5 issue of The Rocky Mountain News. The other local Denver paper also carried an article yesterday on Sunnyside Gold and I heard a report on National Public Radio regarding the reopening of the mine yesterday as well. It seems as if things are going full speed ahead. Best regards. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY 1 < u ' i Phillip D. Barber PDB/slf Enclosure cc: Mr. John Azlant (w/encl.) Michael Gluckman, Esq. (w/encl.) 1986 Projection Sunnyside Sets Production Goal Of 24,000 Tons Per Month SILVERTON, CO - Pro tional drilling and hauling pre-production work at the jected production for the equipment is being purchased mill will include added flota Sunnyside mine after also. Trailer type dry and tion capacity and some rehabilitation for the next few change room facilities for the upgrading of crushing and months is 192,000 tons for mine have been ordered and screening equipment, accor- 1986 according to Sunnyside are expected about the first of ding to Sparks. Gold Corporation general the year. The new facilities Shift work once the opera manager Greg Sparks. will be "more security tion is running at full tilt is Sparks told the Silverton oriented/* Sparks said. planned for two five-day pro Standard that the production At the mill, a contract has duction shifts at the mine, goal oi 24,000 tons per month been let for replacement of combined with a swing main is expected to be reached by the boiler. A temporary unit is tenance and supply shift. The the third quarter of the com expected the week after mill. Sparks says, will run in ing year. Thanksgiving with the new production six days a week In the meantime, however, one being specially manufac around the clock. Two main work has already started to tured for the facility. Along tenance and repair shifts and bring the mine and mill up to with the boiler will be a new one more production shift optimum efficiency accor heat delivery system. Other round out the week. ding to Sparks. Presently, a local contractor is under con tract with Sunnyside to re move sludge from the settling ponds at Gladstone, a project necessitated by a Colorado Department of Health ruling. Miners Western, Inc. of Denver is under contract to repair and clean up the American Tunnel and replace 21 sets between the F and G levels of the Washington in cline. The balance of the sets were replaced following the 1978 flood from Lake Emma. Miners Western is expected to furnish about four super visory persons and hire around 20 local people for the project. Deadline for the pro ject is December 31. Between now and the end of the year, Sparks will ..bp assembling his key staff of ad ministrative and technical people and department heads along with front line supervi sion. Starting the first of the year, a gradual phasing up to a full compliment by April 1 is planned. Sparks said that a staff of 250 is planned, includ ing non-operational personnel. Work planned for the mine includes major restorative ef forts including the repair of production level haulageways and a large amount of mechanical repair. Addi ASSOCIATED PRESS Doug VanTassel, bartender at the Hub Saloon in Silverton’s Grand Imperial Hotel, is among townspeople welcoming the news that mining activity will resume next spring In the venerable mountain community. SiBwertm mine will reopen Gold, silver to flow again; residents jubilant ruptcy code. Hotel. By DICK FOSTER The loss of 280 high-paying jobs to the “Things were pretty quiet last year. Rocky Mountain News Southern Bureau economy of the Silverton-Ouray area By the time we closed for the season in ------; was a staggering blow. ^ October (1984), a lot of people already The news came just in time for a Unemployment in San Juan County by had left town,” he said. The hotel and holiday celebration: Silverton’s Sunny- last July reached 31.5 percent, and still saloon normally would not reopen until side gold and silver mine, the busted was 26.2 percent in October, more than early spring for tourists, “but they’re mainstay of the tiny mountain commu- four times the 5.8-percent statewide av- talking about opening in January or nity’s economy, will reopen under new erage, Silverton has about 750 people February if the mine opens up.” ownership. unemployed, while Ouray has 684. Echo Bay already has let contracts to The 10th U.S. Circuit Court of Appeals “A lot of people literally packed their re-timber a portion of the mine, to clean in Denver last week cleared the way for bags and took off, looking for work,” sludge ponds, and to refurbish the mill. Echo'Bay Mines Ltd., of Edmonton, Al- said Gerald Swanson, a 45-year resident “We hear that the company wilt start berta, to purchase the mine for $20 mil- who owns Swanson’s Market. taking applications for the mine around lion. The court threw out a request to “Our school, kindergarten through Dec. 15, and should start hiring after the block the sale filed by unpaid creditors 12th grade, had 180 kids last year and first of the year, and begin production at of the previous owner, Standard Metals about 100 this year. We lost a lot of the mine around April,” Swanson said. Inc. families.” Swanson, just selling necessi- The Sunnyside Mine produced 275,000 Echo Bay has announced plans to re- ties, felt the economic pinch. tons of ore during its last full year of sume mining next spring under the “Of course we have a big tourist trade operation, and should produce 190,000 name, Sunnyside Gold Corp. during the summer, but my business is tons while gearing up operations in It was little more than a year ago that still down 20 percent to 22 percent from 1986, said Greg Sparks, former vio« Silverton’s residents faced a winter a year ago,” he said. “Most of that is due president of mining for Standard Mct- bleaker than most in the San Juan to the Sunnyside mine not running.” als, who will stay on at the mine for Mountains of southwestern Colorado. Swanson said “business has been pret- Echo Bay. Standard Metals had run into finan- ty slow” for local service and equipment By 1987, the Canadian firm expects to cial problems, and began laying off min- companies catering to the mining indus- produce 280,000 tons of ore. The compa- ers in September 1984. By March, the try. ny said the mine produced an average of company had furloughed 280 miners, Even the bar trade plunged, said 35,000 ounces of gold and 330,000 closed the mine and filed for protection Doug VanTassel, bartender at the Hub ounces of silver over the last three under Chapter 11 of the.federal M K -,. #»loon in Silverton’s, Grand Imperial. years...... j t - . j . . j » ( . ( .. * , , j - < i ^ -j j K ■•••■’ ■' I, i , > \ \ <■ _____J ______♦ < ______~...... »I ...... j...... ■ ...... t . I " R OB E RT P. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PHILIP Q. DUFFORD 1700 BROADWAY S.KIRK INGEBRETSEN THOMAS G,BROWN D IA N E L. B U R K H A R D T DALE TOOLEY (1933-1905) DENVER, COLORADO 80290-1199 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE W IL L IA M C. R O B B (303) 861-8013 E L L E N TO LL J O H N F. W E L B O R N D O U G L A S P. R U E G S E G G E R WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J. QUAIL P EG G Y J . A N D E R S O N RICHARD L.FANYO KATHRYN L. POWERS J O H N F. M E C K THEODORE B.ATLASS COUNSEL PHILLIP O, BARBER GREGORY A.RUEGSEGGER December 11, 1985 HAND-DELIVERED Christopher L. Richardson, Esq. 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Jack L. Smith, Esq, 555 - Seventeenth Street, Suite 2900 Denver, Colorado 80202 Re; November 19, 1985 Escrow Agreement Dear Chris and Jack: This letter is in regard to the November 19, 1985 Escrow Agreement by and between Standard Metals Corporation ("SMC"), Echo Bay Inc. ("Echo Bay") and Canadian Imperial Bank of Commerce ("CIBC"), a copy of which is attached hereto as Exhibit A ("Escrow Agreement"). On or about November 20, 1985, Echo Bay paid the sum of $10,707.06 to CIBC in accordance with Paragraph 1 at page 2 of the Escrow Agreement. Paragraph 2 at page 2 of the Escrow Agreement provides: 2. The remaining amount of $447,543.00, plus accrued interest, less any issuance fee accruing after November 19, 1985 owed to CIBC shall be released and paid to Standard Metals Corporation immeidately upon confirmation by CIBC to Echo Bay of the fact that the CIBC Letters of Credit posted for the benefit of SMC have been released by the Colorado Mined Land Reclamation Board. Issuance fees owed to CIBC accruing after November 19, 1985 shall be first paid to CIBC out of the account before any sums are released to SMC. Christopher L. Richardson, Esq. Jack L. Smith, Esq, November 10, 1985 Page 2 Attached hereto as Exhibits B and C respectively, are a letter dated November 27, 1985 from the Mined Land Reclamation Division to Mr. Boris Gressor [sic] and a signed copy of the November 14, 1985 Request for Transfer of Mineral Permit and Succession of Operators ("Request"). The Request was signed on December 2, 1985 by the Division Director. We have spoken with counsel for CIBC and are informed that there are additional fees owed to CIBC in connection with the CIBC Letters of Credit, as contemplated in paragraph 2 at page 2 of the Escrow Agreement. Counsel has informed us that those fees amount to $15.54 per day. Based upon these facts, Echo Bay hereby requests that each one of you (or some other designated officer or attorney-in-fact) sign on the indicated line below as attorney-in-fact for your respective client. By signing below and returning this letter to me, you will be acknowledging on behalf of your client: that there are no sums due and owing to CIBC from any other party hereto, other than the per diem charge of $15.54, which began accruing as of November 20, 1985; that Echo Bay may pay the sum of $447,543.00 (less the CIBC per diem charge), plus accrued interest, to SMC; that upon making such payments, Echo Bay, its officers, employees, agents and attorneys shall be released from any and all liability arising out of or in any way connected with the Escrow Agreement; and that upon payment of the said sums, the Escrow Agreement will have terminated. Upon receipt of your signed acknowledgement, we will immediately distribute 1) the per diem charges to counsel for CIBC, calculated on the basis of $15.54 times the number of days between November 20, 1985 and the date of the disbursement to CIBC, inclusive; and 2) the remaining funds to SMC's counsel pursuant to the November 18, 1985 Order of the United States Bankruptcy Court for the District of Colorado. Thank you for your cooperation. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber Attorneys for Echo Bay Inc. Christopher L. Richardson, Esq. Jack L. Smith, Esq. November 10, 1985 Page 3 STANDARD METALS CORPORATION Christopher L. Richardson Its Attorney-In-Fact CANADIAN IMPERIAL BANK OF COMMERCE By: ______Jack L. Smith Its Attorney-In-Fact PDB/slf Enclosure cc: Michael Gluckman, Esq. This Escrow agreement has been made as of the 19th day of November, 1985, between; STANDARD METALS CORPORATION, a corporation incorporated under the laws of the State of Delaware, and the debtor in possession in a reorganization now pending before the United States Bankruptcy Court for the District of Colorado (hereinafter called "SMC"); and ECHO BAY INC., a corporation incorporated under the laws of the State of Delaware, with its principal place of business in Denver, Colorado (hereinafter called "Echo Bay"); and CANADIAN IMPERIAL BANK OF COMMERCE, whose address is Suite 5670, 600 Grant Street, Pittsburg, Pennsylvania 15219 (hereinafter "CIBC"). WHEREAS, SMC and Echo Bay have entered into an Asset Sale and Purchase Agreement as of the 19th day of November, 1985 (hereinafter "Agreement") whereby SMC has agreed to sell and Echo Bay has agreed to purchase certain assets of SMC (hereinafter the "Assets"); and WHEREAS, CIBC has issued certain Letters of Credit on behalf of SMC in a total amount, including fees, of $458 ,250 .06; and WHEREAS, the said Letters of Credit cannot be released except upon order of the Colorado Mined Land Reclamation Board, which Board has its next scheduled meeting on November 25, 1985; and WHEREAS, Echo Bay, through Sunnyside Gold Corporation, will post a Letter of Credit in an amount equal to the principal amount of the Letter of Credit presently issued by CIBC on behalf of SMC, which Letter of Credit by Echo Bay shall replace the CIBC Letters of Credit; and WHEREAS, CIBC has agreed to release certain mortgages and other liens which encumber the Assets which in exchange for certain consideration and in exchange for the establishment of an escrow account into which the amount of $458,250.06 shall be paid. NOW, THEREFORE, SMC, CIBC and Echo Bay agree as follows: 1. Echo Bay shall cause the sum of $458,250.06 to be paid into an interest bearing account at the United Bank of Denver immediately upon execution of this^Escrow Agreement. M//V/ ''»/wL'cf/c/Zt/y /**/ t h a t ac< y o 7, (/£ -fa & t£C 2, The^&irt^'a&ount of $4587^?^Q-t-Q6 , plus accrued Q jO interest, less any issuance fee accruing after November 19, 1985 owed to CIBC shall be released and paid to Standard Metals/ r Corporation immediately upon confirmation by CIBC to Echo Bay Vvf. of the fact that the CIBC Letters of Credit posted for the benefit of SMC have been released by the Colorado Mined Land Reclamation Board. Issuance fees owed to CIBC accruing after November 19, 1985 shall be first paid to CIBC out of the account before any sums are released to SMC. 3. In the event thatj w y dispute exists with regard to the payment of the said $9-^)6-, Echo Bay shall, within five days of receipt of notice of the said dispute, commence a n ' ^ ^ A h interpleader action in the United States District Court for the ^ District of Colorado and pay the said amount of $458 ; 250-r06, 4. Upon either release of the funds to SMC pursuant to paragraph 2 above, or upon commencement of the said interpleader action, Echo Bay shall be discharged from all ^ obligations hereunder and any claims in relation thereto. 5. This Escrow Agreement shall be construed in accordance with the laws of the State of Colorado. Dated this 19th day of November, 1985. ECHO BAY INC. CANADIAN IMPERIAL BANK OF COMMERCE ATTEST: STATE OF COLORADO ) ) SS. CITY AND COUNTY OF DENVER ) -The foregoing instrument was acknowledged before me this f f daY of 1985 , by ______as vice President, and attested to by on behalf of Echo Bay Inc, Notary Pubiic My commission expires: STATE OF COLORADO ) ) S S . CITY AND COUNTY OF DENVER ) fore9°Ì9'9 instrument was acknowledged before me this / r " day of ¿ w 1985 , by s ✓______as President, and attested to by CM * * £; c on behalf of Standard Metals Corporation. "Notary Public My commission expires: _ STATE OF COLORADO ) ) ss. CITY AND COUNTY OF DENVER ) The foregoing instrument was acknowledged before me this _____ day of ______, 1985, by ______as ______, and attested to by on behalf of Canadian Imperial Bank of Commerce Notary Public My commission expires: ______DEPARTMENT OF NATURAL RESOURCES David H. Getches, Executive Director MINED LAND RECLAMATION DIVISION DAVID C. SHELTON, Director Richard D. Lamm G overnor November 27, 1985 Mr. Boris Gressor Standard Metals Corporation P.O. Box 247 Silverton, Colorado 81433 RE: Sunnyside Gold Corporation's "Sunnyside Mine" F ile No. M-77-378, San Juan County Dear Mr. Gressor: On November 25, 1985 the Colorado Mined Land Reclamation Board approved the Transfer of Mineral Permit and Succession of Operator from Standard Metals Corporation to Sunnyside Gold Corporation for the above-captioned operation. Enclosed are the Financial and Performance Warranties o rig inally submitted to the Division and a copy of the Succession of Operator form signed by the Division Director. Sunnyside Gold Corporation is now the permitted operator of the Sunnyside Mine and as such, is responsible for a ll permit provisions as well as those specified in the Mineral Rules and Regulations. If you have any questions, please do not hesitate to contact me. Sincerely, Camille M. Farrell Reclamation Specialist CMF/cj Enclosure(s) cc: Mr. Doug S. Murray Mr. Zach C. M iller 5255F CERTIFIED MAIL - RETURN RRECEIPT NO. P 068 279 631 DEPARTMÉNTOF NATURAL RESOURCES Mn\J90l‘ David H. Getches, Executive Director N U * **. * MINED LAND RECLAMATION DIVISION DAVID C. SHELTON, Director ““ Richard D. Lamm Governor REQUEST FOR TRANSFER OF MINERAL PERMIT AND SUCCESSION OF OP I. RECITALS A. On January 25 » 1978» the Mined Land Reclamation Board of the Colorado Department of Natural Resources (the “State") granted to Standard Metals Corporation______, address P.O. Box 247, ■m i v«rhnn . c o l o r s B14 n ------("Permittee") penult number ¡4-77-378 (the "Permit") pursuant to which Permittee has been conducting a mining and reclamation operation in the County of San Juan » State of Colorado. B. Permittee wishes to assign the permit to Sunnyside Gold Corporation ______, address 3300 Manulife Place. 10180-101 Street.. Edmonton, Alberta. Canada 75J3R4 * Successor Operator^ Successor ) and Successor wishes tooecomesuccessor Permittee under the permit. C. Successor understands that the reclamation plan (the "Plan") required by the permit and by applicable State laws and regulations has not^ been completed and is w illing to assume fu ll responsibility for the completion of the Plan. II. AGREEMENTS Permittee and Successor hereby agree, for their own benefit and for the benefit of the State, such agreements to be effective ipso facto upon the approval by the State of the transfer of the Permit from Permittee to Successor, as follows: 1. Successor has inspected the mining and recjamation operations to its entire satisfaction and is fu lly aware of the condition thereof. Successor understands and accepts a ll of the conditions of the Permit. 2. Successor w ill complete the reclamation plan, and hereby assumes lia b ility for completing such plan as to a ll areas heretofore disturbed, as well as to a ll areas hereafter disturbed. Successor w ill perform a ll of the obligations of the Permittee under the Permit which have not heretofore been performed by Permittee. 3. Successor hereby tenders to the State Its attached Performance and Financial Warranties*, which are to be substituted for the Performance and Financial Warranties heretofore filed by the Permittee, effective upon the release of the latter Warranties, 4. Successor represents to the State that, to the best of its Knowledge, information and belief, it is not in violation of any of the provisions of the Colorado Mined Land Reclamation Act with respect to any other operation conducted Dy 1t in the State of Colorado. Permittee and Successor hereby request the State to consent to the assignment of the Permit, to recognize Successor as Successor Operator under the Permit, and to accept the tendered suDStltute Performance and Financial Warranties in place of the Warranties presently on file with the State. * Attach executed Performance and Financial Warranties. EXECUTED this 14thday of November______, 1935 . Standard Metals Corporation Sunnyside Gold Corporation Name of Permittee Name of Successor By Signature of Officer Signature'of OfficeK Vice-President/ ■ Title Title------Permittee Successor Operator NOTARY FOR PERMITTEE ivly Commission expires NOTARY FOR SUCCESSOR PROVINCE OF « S W ■ ALBERTA, SS. CANADA ) The foregoing instrument was acknowledged before me this 14th day of November_____, 1985, by John L. Azlant as Vice-President or Sunnyside Gold-Corporation / I I S . . 1 NOTARY PUBLIC PROVINCE lOF ALBERTA My Commission expires: NO TIME LIMITATION CONSENT Of STATE (a) Consent is hereoy granted to the transfer of. the Permit aoovt referred to from ______■ ' ___■______t0 ( d ) is hereDy recognized as Successor Operator unaer such Permit. (c) The Performance and Financial Warranty substitution above proposed is hereby accepted and approved. STATE OF COLORADO department of Natural resources MINED LAND RECLAMATION BOARD MINED LAND RECLAMATION DIVISION Date Division Director WELBORN, DUFFORD, BROWN 8 TOOLEY ROBERT F. WELBORN a t t o r n e y s a t l a w RANDALL J. FEUERSTEIN PHILIP G.OUFFORD 1700 BROADWAY S. KIRK IN G EBR ET SEN THOMAS <3. BROWN OIANE L.BURKHAROT DALE TOOLEY (1933-1985) DENVER,COLORADO Ö0290-1199 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE (303) 861-8013 WILLIAM C. R O BB ELLEN TOLL JOHN P. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARO 0- WHITE BEVERLY J. QUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L. PO W ERS April 16f 1986 PHILLIP 0. BA R BER GREGORY A.RUEGSEGGER JO HN F, MECK Ms. Mary L. Andersen San Juan County Clerk P.O. Box 455 Silverton, Colorado 81433 Dear Mary: Enclosed for recording is an instrument entitled Asset Sale and Purchase Agreement, executed by Standard Metals Corporation and Echo Bay Inc. For the cost of recording this instrument, which consists of 73 pages, enclosed is our check in the amount of $219.00. Once recordation is complete, kindly return the original instrument to my attention at the above Denver address. A stamped, self-addressed envelope is provided for return mailing. Should any questions or problems concerning this request arise, please feel free to contact me. Thank you for your continued assistance. Very truly yours, WELBORN, DUFFORD, BROWN & TOOLEY Carla St. Romain Title Clerk/Legal Assistant CS/ppm Enclosure M IL N E R & S T E E R BARRISTERS AND SOLICITORS 975) G .H . S T E E R , O .C .,Q .C. (1886-1975) 2900 MANULIFE PLACE 10180-101 STREET J.D.CREGAN.Q.C. EDMONTON, CANADA T5J 3V5 R L P. MACDONNELL.C M-,Q-C. T. MAYSON.QC. JM . THOMSON,QC. P.L.HERRING,Q.C. J.W . BEAMES,Q.C. A.Y. FLEMING,Q.C. J.E . REDMOND,QC- TELEPHONE (403) 423-7100 G.A.VERVILLE R. A. LUNDRIGAN.Q.C. M.H-DALE.Q.C. E.R.R.CARRUTHERS.QC.* TELECOPIER (403) 423-7876 R.L.LECLERC R, W. POFFENROTH, O.C. D.R. BAILEY D R . THOMAS DATALINE (403) 423-0063 R.H. SHARPLIN C.R. ALLARD* G. A, SA LEM BIER K.D. HOPE CABLE ADDRESS "MILMAT" J.T. PROWSE A.W.A.BELLSTEDT R.J. TURNER G.N. McDERMID, Q.C. TELEX 037*2684 E.H.J.PHOA R.M, FULTON H R. ZECHEL K.D. WAKEFIELD R.A.SPEIDEL* Q.J. DRAPER R.J. COTTER D.R.SOMMERFCLDT M.GLUCKMAN T.W-WAKELING C.E. MOSTERT K.G.N1ELSEN * 1400 WESTERN CANADIAN PLACE J.A.BANCROFT K.P. FEEHAN L.D. LUTIC R.A.MILLER D.G. LOADER S.M. MACLELLAN DT. ROBOTTOM J.T. HENDERSON 700 - 9th AVENUE S.W. B. ZALMANOWITZ M. D. OBERT K.C.DAY L A . WONG CALGARY, CANADA T2P 3V4 D.R. MAH Q.I. WELLS J. H. MAYAN D-B. FOSTER B D. LINNEY D. A, SPEN CER P. VAARTNOU A.B.MOEN M.F.WESOLOWSKI B.W. SUM M ERS A.J. BEAMES L E . LUTZ C.A. LAWRENCE N.J. INIONS N L . BEECH L.M.I. HOULE IN REPLY PLEASE REFER G.D.CHIPEUR B R. BARNES TO EDMONTON OFFICE * DENOTES PROFESSIONAL CORPORATION ^ E C ^ H O N E 1 l i f e 2 2 - 1/M G VIA FEDERAL EXPRESS April 15, 1986 Ms. Carla St. Romain Vielborn, Dufford, Brown & Tooley Attorneys at Law 1700 Broadway, Denver, Colorado, 80290-1199 Dear Carla: Re: Asset Sale and Purchase Agreement between Standard Metals Corporation _____ and Echo Bay Inc. ______ Further to our telephone conversation this afternoon, I am pleased to enclose herewith a manually executed copy of t e above-noted agreement. I understand that once you have had the agreement recorded at the appropriate registry, you will be able to send it back to me. Kind regards to you and please pass on my best to Messrs. Dufford and Barber. Yours very truly, ,MILNE] MG/drl Enclosure WELBORN, DUFFORD, BROWN 8 TOOLEY RANDALL J. FEUERSTEIN ROBERT F. WELBORN a t t o r n e y s a t l a w S. KIRK INGEBRETSEN PH ILIP G. DUFFORD 1700 BROADWAY DIANE L.BURKHARDT THOMAS G. BROWN STEPHEN J.SULLIVAN DALE TOOLEY (I933-I9SB) DENVER,COLORADO Ô0290-1199 JOHN M. SPILLANE DAVID W. FURGASON (303) 361-8013 ELLEN TOLL WILLIAM C. RO BB DOUGLAS P. RUEGSEGGER JOHN F. WELBORN EDWARD D. WHITE WILLIAM A. MCLAIN PEGGY J, ANDERSON BEVERLY J. OUAIL RICHARD L.FANYO KATHRYN L.PO W ER S PHILLIP 0. BA RBER GREGORY A. RUEGSEGGER JOHN F. MECK April 9, 1986 p C Q o Mr. Dan Ritter Sunnyside Gold Corporation 484 Turner Drive Durango, Colorado 81301 Re : Employment Issues Dear Dan: I am enclosing for your information two articles from recent issues of "The National Law Journal" which I thought might be of interest to you. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY phillip D. Barber PDB/slf Enclosure Qt0Q9 05 *I3AN3 'I98h The New York law Publishing Company. VOL. 8—NO. 29 PRICK S2-tm The Weekly Sexvspaper for the Profession MONDAY, APRIL 7, 1986 The scene is set for a dramatic legal collision between the rights of employers and workers. By A lexander Stille National Law Journal Staff Reporter t o ^ r ^ 6 new; inexPensive tests as the antidote to many ailments: employee theft, absenteeism, rising health- itv SturiiP^r tS/-Sh0ddy workmanship and low product] v- THE WAR o n DRUGS — once waged in the poppy fields of miwnt t p i r T CStimatf d that American business loses $33 Turkey and the jungles of Bolivia — now is being- fought in the ouiion a year because of drug use. But critics say drug programs are a seductive quick-fix new t i ^ e t AIdm?S ^ SCh°°1S ° f the United States- Its Arfil i ni ^ Amencan Public, a quarter of whom report answer that is. in fact, incapable of solving the drug problem edly use illegal substances of some kind and sure to create a series of negative side effects. Citing an« ° r i^ 6r the .excl“sive Province of the government, the instances of testing abuse, they challenge both the rciiabilit? anti-drug campaign has been joined by private industry and constitutionality of such testing and predict it will ruin the which is mounting a full-scale assault by instituting drug- careers of tens of thousands of innocent people and trample testing programs among job candidates and employees the civil liberties of millions more. SCreenin^’ which started in the military in With forces on both sides picking up steam, the scene is set i * ^6inff conducted by about one-fourth of the leading- tor a dramatic head-on collision in the courts, as the nation industrial companies in the United States, with drug test! tries to sort out the employer’s right to a drug-free workplace being administered to nearly 5 million Americans last year. and the worker’s right to privacy. Continued on page 23 Insider Arrest AN ASSOCIATE at New York’s Paul. Weiss, Rifkind. Wharton & G a r r i s e s w as ciLarfred w itb « t-»»****••■»“=*“ ■"“ V,"' sition Of a government civil servant Is were mislabeled and tests were bun different from that of someone in pri gled by technicians who often failed to ^ vate Industry. clean bottles adequately, so that the The first major customer for wtde- drug traces from one sample oontami- spread urinalysis testing was the U.S. nated the urine of the person whoa« military, which began Its program in sam ple followed. E rro r rates in labs Is It Legal? 1981 and now performs about half of all used by the Navy, which has done the moat testing, went as high as 87 Continued from paga 1 < testa administered in the nation. ; Civil liberties lawyers say there la percent. To some, the collision of values no little hope of challenging the Defense Because of the problems, the Navy longer la merely a theoretical one. Department's right to perform the tests reinstated some 4,000 sailors. But thou Barbara Luck, a computer program or to discharge those found to be drug sands of others were discharged, many mer for the Southern Pacific Railroad users. Before entering the military, all of whom maintain they have never In San Francisco, waa seated at her members of the service sign a contract tried drugs, desk last July 11 when her supervisor, stating that they will not use drugs and The testing of civilian employees by carrying a glass bottle, came over and federal agencies and local govern asked her to go down the hall to take a the testing, according to the Defense Department, Is a matter of national ments has proceeded more slowly and urine test. In a piecemeal fashion. The Federal She refused and the next da? was security. ^ Railroad Administration and the Fed fired. She sued the railroad, contend But while members of service do not eral Aviation Administration are start ing that unless the company had rea have the right to refuse testing, they son to suspect her, it had no right to ing to use limited testing programs. can contest the results. Because the And various cities have begun requir te st her. Luok v. Southern Pacific m ilitary Initiated such a massive test* PROOF NEEDED: U J. District Chief ing tests of applicants to be police offi Transportation Co., C 84-3-280 (Calif. ing program In an extremely short Judge Harold D. Vletor ef Des Moines, cers, firefighters or ambulance drivers, Super. Ct„ S.F, Cty.), time, Its first years were plagued by Iowa, reinstated a prison guard who among others. The company, naturally, sees things severe problems of unreliability. bad been fired alter refusing to take a The President's Commission on Or differently. “It's a minor Intrusion Studies of the early military drug- urine test, saying officiate needed the ganized Crime would have govern- .. .like going through a metal detector testing sound like a Keystone Kops same kind of specific proof to test a at the airport.” says Robert W. Tag movie: Samples got mixed up, jars man's urine as to search his house. Continued on following page gart, a spokesman for Southern Pacific. This kind of random drug testing, he says, has produced tangible benefits to the company and the public In the 18 months It has been In effeot. "We have reduced our accident rate by 67 per KING FOR cent and we have reduced lost time and Injuries by over 25 percent" The Luok suit does not challenge Southern Pacific's right to ever test anyone under any circumstances, says San Francisco sole practitioner Kath leen Lucas-Wallace, attorney for Ms. HUT BEST SU Luck. “The case will try to define what an employer can do and under what conditions." What bothers Ms. Luok Is that "this was a surprise test, dona at random; no one else In her area was tested," says Ms. Lucas-Wallace. “Barbara asked her supervisor if there were any problems with her work, [and] he said, ‘No,’" Ms. Lucas- Wallace relates. "She asked him If they suspected her of using drugs. They again said, 'No.'" Ms. Lucas-Wallace acknowledges that Southern Pacific may have a le gitimate reason to teat some of Its workers, particularly railroad workers whose jobs may affcct public safety. "Barbara's Job Is totally unrelated to safety,” she says. Ms, Luck had particular reason to be sensitive about her privacy. "She was three months pregnant,” says Ms. Lu- cas-Wallace, "and she hadn't told any one at the company." Ms. Luck was nervous about how the news might af fect her career. "A simple thing like urine can tell you a lot," says Dr. Harold M. Bates, a chemist with Metpath Laboratories of Teterboro, N.J,, which performs drug- teat analyses. It can tell a company whether an employee Is being treated for a heart condition, manic-depres- slon, epilepsy, diabetes or schizophre nia. A company may be tempted to get rid of workers with medical problems, he says, “even though they may be do ing a perfectly good job." Several years ago, Dr. Bates says, a company fired an employee after learn ing from a urine test that he suffered from asthma. ‘‘I Imagine that some of that la still going on," he adds. Balancing the Issues A host of different Issues will be raised by other suits: Are the tests ac curate? Does a company have the right to concern Itself with an employee's private life? Can prosecutors gain ac Most computer systems purchased “off the rack," end up - Thatfc w h y fo r ov e r 15 y e a rs w o V e tailored our;'f cess to records of company testing in falling short in one way or another. Tho reason is, they’re system s to f i t ea ch in d iv id u a l fir m , j . order to further a criminal Investiga only inti Tided to fit the average law firm , First we analyze your needs. Then, by c o n o flf tion? Must employers Inform employ ees their urine samples are being uaed A t C o m p u te r L a w System s, w e re a lize th e re is no powerful state-of-the-art hardware w ith oi ir own to test for drugs? such thing as an average law firm . sophisticated software, we design yoi ir unique systom. ^ The rights of those being tested and Different sizes, different clients. Different ways of But it doesn’t stop there, also the circumstances under which tests d o in g business. service, training, and enhancements.This total system can be performed often depend on the type of employer involved. An Army recruit's rights differ radleally from ' those of a civilian bureaucrat. The po Continued from praoedtng page • throw out * plan by « local gebool not have the aame constitutional pro Job applicants, lawyers »ay, have * 0 « f»r ,: o „ » „ i , , v tections. '.There are no protections for • very few rights. Short of sex, race or privacy in the private sector,'' says Ira age discrimination, an employer can j for a T ^ v 2 n m e r 2 S l0y m CRITICAL: Kurt Dubowskl, a profes sor ol forensic toxicology a t the Uni versity of Oklahoma, says scroening tests are 'often being done surrepti tiously, which I find unacceptable.' Most large corporations, such as Southern Pacific and Du Pont, say they perform confirmation tests on all positiv« results, whether for job appli cants or employees. "I can see Du Pont spending the money on that, but other employers may just say the hell with It," says Joan L. Rosenthal, executive director of the Delaware affiliate of the ACLU. While falling to perform back-up tests on Job applicants may be unfair, it may not be Illegal, according to Thomas E. Geldt of San Francisco's 2 Schächter, Krlstoff, Ross. Sprague & IB E S H®F PIT A IL Curiale. "We don't feel that an employ er Is legally bound to do back-up test solution wont, leave you long in some capabilities or In Minnesota, 1-612-941-380L Find out how to get ing in a pre-employment situation." s h o rt in o th e rs , th e c o m p u te riz e d m a n a g e m e n t sys te m th a tw iU s u it y o u r Two Detroit women have filed suit For more information, call us at 1-800-328-1013. particular needs. Perfectly charging they were denied jobs at the F acet Filter Co. because they were In correctly found to have used marijua na. They are suing the laboratory that did the testing for negligence, claiming Computer Law Systems. Inc. It did not confirm the urinalysis. Both deny using the drug "In any relevant time period prior to the physi- Corporate Headquarters: U000 West 78th S t, Eden Prairie, MN 55344 Condnued on page H Reliability, Constitutionality Of Drug Testing Challenged Continued from page SS To try to resolve the conflict, civil libertarians are trying to come up with cal examination,” and one denied she compromise solutions, and at least has "Ingested marijuana or smoked four states are trying to hammer out any substance of any kind whatsoever drug-testing laws. during the entire 82 years of her life," In Maryland, the state chapter of the according to court papers. Chase v. ACLU has drafted a "model” bill that Quality Clinical Laboratories, C 82- would require companies to prove the 228168-CZ (Clre, Ct., Wayne Cty.). tests they use show impairment or in Meaningful Measurements? toxication on the Job. "What it would Even 11 tests are accurate, there are mean Is that urinalysis would be pro questions whether they can reveal any hibited," says Jay Nickerson, head of thing meaningful about an employee’s the Maryland ACLU. work performance. The testa do not The bill, now being considered by the measure the level of drugs in a per state Legislature, would favor the use son's system but the enzymes into of other methods of drug screening, which the drugs metabolize. such as saliva testing. Residue of mar Certain drugs metabolize more quick ijuana will generally rem ain In the sa ly than others, Alcohol is flushed out of liva for six to eight hours after use, the body within 12 hours, and cocaine toxicologists say. within two or three days, while mari "The saliva test may be the success juana can be detected a couple of ful middle ground between the employ months after It was used. There is even ee's right to privacy and the employer's an instance In which marijuana was right to a drug-free work environment, detected 81 days after it was used, ac says NORML's Mr. Zeese. cording to Professor Dubowskl. "We don't think people have the right to be drunk, stoned or high on the Job," Because of these differing metabolic Tm*nca McCmihy/NV T Pk rates, civil libertarians say, testing says Mr. Glasser. "If Ithe test] was re will punish casual marijuana users lated to Individually observed work-re CHALLENGING PROCESS: Barbara Luck (right), a computer programmer for while workers with heavy drug and al lated problems" and was able to de the Southern Pacific Railroad In San Francisco, was fired for refusing to ake a cohol problems may go undetected. termine im pairm ent on the Job, "we not urtne test. Her lawyer, Kathleen Lucas-Wallaee (left), says the ease will try to only would accept that, we would sup The effect of testing in the Army has define what an employer can do and under what conditions, port It," he adds. been increased use of cocaine and alco drug-testing program and they’ll come hol, says Kevin B. Zeese, executive di But "saliva testing is not a cure-all.” sole practitioner Richard N. DINallo. says Professor Dubowskl, noting that lawyer for Mr. Pettigrew. "They gave to M etpath and say, 'We are going to rector of the National Organization for screen 12,000 employees a year. How the Reform of Marijuana Laws confirmation tests on saliva are diffi him nine or 10 follow-up tests and they cult because the samples are so small. all were negative. Even the doctors at much can you do It for?.'" says Dr. (NORML). The model Maryland legislation does Batos. "We tell them we can do It for The Army Times has reported that the clinic say there was no need for leave open a major avenue for urinaly rehabilitation.” $700,000 a year. They go to another lab the percentage of servicemen using that tells them that they can do It for marijuana dropped from 38 percent to sis testing. "If an employer had a reha Despite continuing negative tests. bilitation program, then the company $500,000 at the same level of quality. 28 percent in the first two years of test Mr. Pettigrew was required to attend would be allowed to perform urlnalyBls meetings at drug groups and submit to And maybe they can, ing, while the percentage of enlisted "But the company will take it a step men who reported that alcohol had af- tests.” says Mr. Nickerson. regular testing. Eventually, Mr. Petti "There is some use for urinalysis as grew filed suit to end the testing, and a further and go to a third lab. Finally foctod their performance had Increased a benevolent, rehabilitative shield,” he they find a lab that In order to get the from 27 percent to 31 percent. Superior Court Judge in San Francisco adds. “If there is rehabilitation, then Issued an Injunction against It. "He business tells them they can do It for "No matter how good the analysis, the employer realizes that he has a $280,000,” he adds. "Now when you the test cannot tell you the Intensity of was demoted the day after the injunc valuable asset in an employee," tion cam e down," says Mr. DiNallo. reach a certain rock-bottom price they the exposure, the size of the dose, the This type of proposal would leave the simply have to cut corners and com time it was taken," says Professor Du- "That precipitated a second suit.” Pet drug programs of many of the big cor tigrew v. Southern Poc»/ic, C 846-343. promise results, When you start going bowski, ''so if you're using the teB t to porations intact. Du Pont. IBM, GM for price that way, you're going to get Punishing the Innocent measure the effect of the drug on a and Southern Pacific all offer drug re a lot of false positives." person, it's essentially useless.” habilitation as an alternative to dis "The real evil of [drug testlngl is that If that starts to happen, the trickle of •'The problem with the test Is that It missal, with Southern Pacific, for It doesn't just punish the guilty, It pun lawsuits challenging testing results says nothing about Job impairment,” example, willing to pay the entire cost ishes the innocent," says Mr. DiNallo. may become a flood. says the ACLU’s Mr. Glasser. “The em of rehabilitation the first time drug use Being labeled a drug user, he says, "When you start to see some large ployer has a legitimate interest In per Is found. The second time, the employ “can ruin your career based on one in court Judgments against employers, I formance on the job, but not to delve ee must bear half the cost. The third accurate test.” think you will see [drug testing) slow Into what people do off the job. If a time, if the employee wants to remain Toxicologists say confirmation test down," says Mr. Zeese. ing has been refined — In particular, person smoked a joint on Saturday, with the company, tho worker must Consensus on Testing whose business is it?" undergo treatment at his or her own through technology called gas chromo- tography/masB spectometry — to a In an attempt to forestall an explo Many companies do think it Is their expense. sion of litigation, tho National Institute But this approach has not kept South point where error rates can be brought business. "The employment relation- close to zero. on Drug Abuse sponsored a major con 1 ship is voluntary," says Mr. Taggart of ern Pacific out of court. In a second ference on testing in the workplace in Incident involving the company. Alan "The real room for error is not with Southern Pacific. "No one has a right the technology but with administrative mid-March, Bringing together civil- to a job. We make one of the conditions Pettigrew, a 30-year-old office manag liberties groups, corporations and sci er, tested positively for cocaine and error,” says Metpath's Dr. Bates, "A of having a Job here that a person be human being has to pick up the sample entists, the conference sought to set up clean of drugs. When you come to work was required to undergo rehabilitation. Mr. Pettigrew maintains the test re and put It in the machine. It may Bound guidelines for drug testing that, while with drops of marijuana used on the voluntary, might provide a roadmap sults were Inaccurate. “The test was a trivial hut It’s not. When the volume of weekend In your system, statistically I work goes up. the error rate goes up. for corporate testing. know that you will cost me more In false positive and he was forced to re That's the scary part. The groups reached a consensus on productivity, in health-care costs and main away from his family for 28 days In a drug clinic," says San Francisco "My company makes millions of dol the following points: In absenteeism." lars doing drug testing, but I wouldn't • All people testod must be informed want somebody taking my urine.” he that they are being tested. adds. “I think It's an Invasion of priva • An employee cannot be tested cy. I would always be afraid that some without a clear job-performance prob body m ight.. .mix up samples. It may lem — either an accident at work or an only happen In one out of 100,000 cases. objective decline In effectiveness at But 1 always have that fear.” work. Laboratories largely are unregulat • All positive tests must be con ed, and the level of quality varies enor firmed through use of alternate tests. mously. In various studies, error rates • Test results must remain confi have generally fluctuated between 3 dential. percent and 20 percent. • Use of urinalysis must be accom "With 4 millton to 5 million people panied by drug rehabilitation. being tested a year, a 1 percent rate of While society Is struggling to find a Inaccuracy means that 40,000 to 80,000 common ground on drug testing, many would be falsely accused,” says expect a storm y period of trial mid er NORML’s Mr. Zeese. ror. But lawyers say It will take years The boom in drug testing may create before abuses and excesses of drug tremendous pressures on laboratories, testing will be modified by UUg'itl°n says Dr. Bates, as they cope with In and legislation. . p \rK U P NEEDED: The Syva Co. of Palo Alto, Calif-i which sells the most creased volume and fierce competition Bays Mr. Taggart of Southern Pae»' for millions of dollars of new business. ic: "We’re all groping In the dark oe "A company will decide to start a cause It's so new." be made without a hackup test. EMPLOYMENT-AT-WILL- THE : Vf DEATH OF A % BISHOP ADAM J. MAIDA RINE? The Church and the Law B y F r e d St r a s s e « ttmaeUer v. ScotMale Memorial BoapUai, I7M«-PR Nuu im I Uw Journal SttH Rrpontf Thus, last June 17 Arison« became the 40th state to deprive employers of the absolute right to ftre an employee for any reason or, perhaps, for no reason at A Bishop Heeds AS NURSE Catherine Sue Wagenaeller saw It, her problems with the boss began when she refused to oV® bo,,oin tor * P«ody of the song "Moon American employers had exercised that power for mver during a group camping trip. It was downhill more than a century over moat workere, except those A Dual ‘Calling’ SST?* clv" or «me fori of u n i^ from there, she contended, and three months later — other employment contract a scant three months after a promotion — the nurse f ?y tha Seottadale. Ari*., Memorial Hospital, Employees accepted this way of doing business as B v E l l e n Z e t t e i . wnue the Arizona Supreme Court conceded (n a „ ;* fd.co"Vmon *•» enshrined It with the lofty title V-mI Ih II,, |.,„ footnote that It lacked expertise in ••mooning," the of the doctrine of employment-at-will." Justices said they did know something about the Today, as with other doctrines that once seemed REEN BAT, Wls. — Ae an attorney who statei s Indecent-expoaure law, And, they concluded If Immutable and In the end only served a passlnt era had practiced in Pennsylvania, Adam J. Ma. Wagenaeller believed ahe had been fired for re- employment-at-will la virtually dead. By the end of Malda loat no time In requesting applica hieing to break that law, ahe waa entitled to have a •court* *n but eight states had denied employ- Gtion form» for a Wisconsin bar license when he Jury weigh her allegation of wrongful diacharge. W& Continued on page e moved here In January IBM. That waa one of his priorities aa he aaaumed a new job — blahop of the Catholic Olooese of Green Bay, Safer for admlaalon to the bar, he had "half of (the formal A»«» out" before Holy Week of th at year. "I wanted to get on with U quickly." recalls Bishop Malda, W, who now Is looking forward to a formal nomination to the State B ar of Wla conain this spring. His current enthusiasm is a change from his reaction 28 yean ago when, as a priest, he hesi tated to respond to a legal calling as well as a religious one. Bishop Malda confesses. Pages In 1M0 Bishop Malda, then asaiitant chancel 15-21 lor of the Catholic Diocese of Pittsburgh, was ordered by his superior. Bishop John Wright, to Firm Megamerger p. 3 go to law school. Youthful rebelliousness may have tempted THE FORMATION of the second-largest firm in the country via a massive merger was eyed with sur LAW OFFICE MANAGEMENT him to dlaregard the directive. He had )uat re Buying Software. ceived hia licentiate in canon law after two prise by many lawyers for a number of reasons, -p. u years of study at Lateran University in Rome, CORPORATE COUNSEL REPORT Currency Reporting ...... and now he waa being told to take claases In Divorce Discretion 5 civil law at Duqueene University In Pittsburgh. p. Career Opportunities: Page 32 Continued on pagt 10 INDIANA’S highest court has ruled that Judge« Lawyers’ Service Mart: Page 35 should not automatically presume that assets be split evenly between divorcing srmisee lavMNmt OpportuHttea: P*e 3 7 Travel Secrtot: P^e 38 f f l f l It aaÙ aa> tM :eitoal «uftireé 4a»«w*/ ' ...... «X r«lying o* such worda, a oase au*.v> ib 'S ¿..:«'.ii',ifc3' ^1 be in Um wafrVg Emptoymerii-at-Win Around thoNatfbn The moat ooromon basis for a suit, however, fa Um company*« personnel >’> ■ feia^«.tw»-tite suan.i. • TTifi-»«!, wtdoh a growing number o* i & j i s : Mofte THAN TWO-TWBOS of American jurfadictiona have abandoned the state« vt«w aa a contract Th« New Jersey Supreme Court ' ’ ysi; «T*tJ0 **?* « .4 4 « t Ï W s . - y . A 9; „*< ■' ■• :.• 1 - '..'‘•■•.I. jr.: r ■--•i:'. ^Ud vtgonu«'ftr Wi ifc«}«* iy>an>J *;Sv»i'i * tapithaB» tav* A 'iM jf f v.-: "Sate «1 . Atparaatly. Uw'«*»***». •ki^caglaa. as« begttnto»#. fa m M art ji***aMMkM» * - ■CUM* hw»yw»:|»J aw n t—«trior«*:--. W b w Ralph H. Baxter oi fU a » at-wta anot t f ^ n i » ' ' '«o'« Orricb, Herrtngtatlt ploy«» a m I M qntek m tfca Mf f w to PjG. first surveyed CaWflrnlAlUnr^ ; ¡'Kta6 lHt’«* m » * f fee Moral is.. .Alt those- whodwcll in th« Kingdom of Quail fi« f Puns are cordially invited.» join The CompanyrThe Wizards and tha oiher . , E^nsion People for the Fifth A n M a l C o rw l Pension S etn ltw In ' the lancf irf Florida. February I7l-W,’:1966, Hyatt Orlando in Kissimmee. Direcr ali queries to Brenda Chatham at 1-80042M IM (in Fkwkla call CXM) 7U*4455>.t' - CORBEL & CO.® 6620 SOUTH POINTDIUVi S., JACKSONVILLE, FL 322J6 \-%xv*a *''iy WASHINGTON MINING COMPANY P. 0. Drawer K Miami Beach, Florida 33141 (305) 866-7771 Mr, Greg Sparks, General Manager Sunnyside Gold Corporation 484 Turner D r., R Idg. D Durango, CO 81301 Dear Greg: This le tte r is an attempt to c la rify lines of communication between Sunnyside Gold Corporation and Washington Mining Company concerning operations in the Silverton area. I have discussed this matter with Jim Field , Denis Krantz and yourself in an effort to determine the needs of Sunnyside Gold Corporation. Let me f ir s t start with Washington Mining Company. Washington would lik e copies of all written communication sent to our Miami Beach office, Attention: Vice President Operations, and also sent to our Denver office, Attention: Manager, Washington Mining Company. Regardless of who the communication is directed to, we would lik e to maintain complete file s at both 1 nr.at.ions. Sunnyside's cooperation in this regard w ill be appreciated, |The only exceptions to this that I can think of are the quarterly reports, seprLrannual reports, d rill logs, and drawings which need only be sent to DenvpTjj The o fficia l address of Washington Mining for purposes of giving notice required under the Marcy Lease as amended, shall be as follows: Washington Mining Company P.O. Drawer K, Room 415 Miami Beach, Florida 33141 Attention: Vice President Operations Copy to: Washington Mining Company One Denver Place, Suite 1000 999 18th Street Denver, Colorado 80202 Attention: Manager, Washington Mining Company {fY»NNY8IPl OOlDCoWOnAîlON F* iRANtìO, COLO Royalty payments should be sent, for deposit only, to Washington's bank account at the following address: Washington Mining Company, In Care Of First National Bank of Utah, Main Office 180 South Main Street P.O. Box 30169 Salt Lake City, Utah 84142 For Deposit Only: Account #0202623-5 I take this opportunity to introduce you to the Washington Mining Company team who may make periodic site visits on the behalf of Washington. Alan Bell, Executive Vice President Jim Newcomb, Vice President Operations Tim Sadler, Manager Washington Mining Company Vince Lee, Financial Analyst B ill Worthington, Manager Exploration Owen Hart, Chief Mine Geologist c. Paul Shank, Mining Engineer Bob Weagel, Consultant It is my understanding that Washington should address the following In d ivi duals concerning matters in their area of responsibility: Greg Sparks, General Manager Matters concerning the general administratlon and a ctiv itie s of Sunnyslde Gold. J1m Field, Controller Matters concerning royalty calculations. Denis Krantz, Property Manager Matters concerning property administration. ¡ > i u * B ill Goodhard, Chief Min^^ßetrTog 1 st Request^^faT^non-interpretlve geologic data. Bruce Green, Chief Mijie--Pntjineer Reques£s^for mine engineering data Counsel representing Washington Mining Company is : Sherman 8 Howard 2900 F irst Interstate Tower North 633 17th Street Denver, Colorado 80202 Attention: Rodney D. Knutson It is my understanding that Sunnyslde Gold is using: Wei born, Dufford, Brown & Tooley 1700 Broadway Denver, Colorado 80290-1199 Attention: Phillip D. Barber ne comment concerning use of out-of-house counsel. In an effort to keep our legal costs down I would prefer that Sunnyslde send information that may need review by counsel directly to me and le t me determine whether or not Washington wants 1t reviewed, or telephone me for approval prior to sending information to our counsel. We are currently developing procedures and spread sheets for royalty calculations. With regard to this we have been 1n contact with Jim Field and Denis Krantz. We have tentatively agreed to meet with Sunnyslde Gold during the fir s t week of April at which time we w ill present the work that we have done to date. I hope you find these suggestions satisfactory and stand ready to modify this outline to meet your needs. It is Washington's desire to develop a good working relationship with Sunnyside Gold. Certainly good ines of communication w ill go a long way toward achieving this goal. Please feel free to contact me by phone or letter to discuss this matter. Very tru ly yours, /tbvjhjli, v Timothy M. Sadler Manager, Washington Mining Company TMS/jmc cc: Alan Bel 1 Jim Newcomb Vince Lee B ill Worthington Owen Hart Bob Weagel Paul Schank WASHINGTON MINING COMPANY P. O. Drawer K Miami Beach, Florida 33141 (305) 866-7771 CERTIFIED MAIL March 18, 1986 Sunnyside Gold Corporation 484 Turner Or., Rldg., "D" Durango, CO 81301 Gentlemen: Pursuant to that certain Lease Agreement dated February 28, 1959, between United States Smelting Refining and Mining Company, as Lessor, and Marcy- Shenandoah Corporation, as Lessee, as subsequently amended, and to which Washington Mining Company is Successor to Lessor's interest, please be advised that the Lessor's address has changed as follows: Washington Mining Company P.O. Drawer K, Room 415 Miami Beach, Florida 33141 Attention: Vice President Operations Copy to: Washington Mining Company One Denver Place, Suite 1000 999 18th Street Denver, Colorado 30202 Attention: Manager, Washington Mining Company Any and a ll future notice or communication pursuant to said Lease Agreement w ill be su fficie n tly given i f deposited in the mail in accordance with A rticle I I I , Paragraph 10, Pages 27 and 28 of the Agreement, and mailed to the above addresses. Very tru ly yours, Timothy M. Sadie Manager TMS/jmc cc: «Jim Newcomb Original Sent Ce T T ’ns F l u g 430 Silverton Office: Head Office: SUNNYSIDE GOIiD CORPORATION P.O. Box 177 Building D AM ECHO BAY COMPANY Silverton, CO 81433 484 Turner Drive Phone (303) 387-5533 Durango, CO 81301 Phone (303) 259-1091 March 25, 1986 Timothy M. Sadler, Manager Washington Mining Company One Denver Place, Suite 1000 999 18th Street Denver, Colorado 80202 Dear Tim: In response to your le tte r of March 17, 1986 outlining lines of communication between Washington Mining Company and Sunnyside Gold Corporation, I have the following comments: 1. We request that you address geology and engineering requests to myself rather than B ill Goodhard and Bruce Greene, and I will act as clearing house for internal distribution as neces sary. Greg Sparks and Jim Field w ill s t ill be your contacts for the areas you have outlined. 2. Reference page three, second paragraph from the bottomregarding use of counsel, we request that you also send information to us for initial reyiew for the same reasons. As. a final item, please note the spelling of my fir s t name. I will rely on you to distribute this information within your organization as you feel necessary. We look forward to meeting with you in April regarding royalty calculations. Sincerely, ! ...... ™ Lv. I Mt I a M • ' ’ • >^ • *---- property Manager DVK:mkr cc; Greg Sparks Jim Field ^/Phil Barber WELBORN, DUFFORD, BROWN 8 TOOLEY ATTORNEYS AT LAW RANDALL J. FEUERSTEIN R OB E RT F, WELBORN S.KIRK INGEBRETSEN 1700 BROADWAY PHILIP G. DUFFORD DIANE L.BURKHARDT THOMAS G. BROWN STEPHEN J. SULLIVAN DALE TOOLEY (I933-I9S5) DENVER,COLORADO 80290-1199 JOHN M. SPILLANE DAVID W. FURGASON (303) 861-8013 E L L E N TO LL WILLIAM C. ROBB DOUGLAS P. RUEGSEGGER J O H N F. W E L B O R N EDWARD D. WHITE WILLIAM A .MCLAIN PEGGY J. ANDERSON BEVERLY J.QUAIL RICHARD L.FANYO KATHRYN L. POWERS P H IL L IP O. B A R B E R GREGORY A. RUEGSEGGER JOHN F. MECK March 20, 1986 Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Re: Sunnyside Gold Corporation Dear Chris: This letter is written in furtherance ofour phone conversation yesterday. I believe we are at a point where Standard and Sunnyside need to resolve the matters set forth in my February 13, 1986 letter to you. For your convenience, a copy of that letter is attached. Standard has previously complied with Sunnyside's request to sign the various Brenneman Lease documents. We appreciated that cooperation. What remains at issue are titles to the vehicles and the assignments of the real property in San Jaun County. We would like to know what Standard intends to do with respect to the Silverton real property and the vehicles. Would you please let me know by April 2 what Standard intends to do in these regards. As I stated on the phone, I believe that Sunnyside will file an application with the Court requesting an order requiring Standard to convey the Silverton real property and the various vehicles to Sunnyside, if we are unable to obtain those assignments voluntarily from Standard. Thank you for your cooperation. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY phillip D. Barber PDB/slf Enclosure RANDALL J. FEUERSTEIN ROBERT F. WELBORN ATTORNEYS AT LAW S. KIRK INGEBRETSEN PH ILIP G. DUFFORD 1700 BROADWAY DIANE L.BURKHAROT THOMAS G. BROWN STEPHEN J.SULLIVAN DALE TOOLEY (1933-1985) DENVER, COLORADO 60290*1199 JOHN M. SPILLANE DAVID W. FURGASON (3 0 3 ) B 6 1 - 8 0 13 ELLEN TOLL WILLIAM C. RO BB DOUGLAS P. RUEGSEGGER JOHN F. WELBORN EDWARD D. WHITE WILLIAM A.MCLAIN PEGGY J. ANDERSON BEVERLY J. QUAIL RICHARD L.FANYO KATHRYN L. PO W ERS PHILLIP D. BARSER GREGORY A. RUEGSEGGER JOHN F. MECK March 20, 1986 Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Re: Sunnyside Gold Corporation Dear Chris: This letter is written in furtherance of our phone conversation yesterday. I believe we are at a point where Standard and Sunnyside need to resolve the matters set forth in my February 13, 1986 letter to you. For your convenience, a copy of that letter is attached. Standard has previously complied with Sunnyside's request to sign the various Brenneman Lease documents. We appreciated that cooperation. What remains at issue are titles to the vehicles and the assignments of the real property in San Jaun County. We would like to know what Standard intends to do with respect to the Silverton real property and the vehicles. Would you please let me know by April 2 what Standard intends to do in these regards. As I stated on the phone, I believe that Sunnyside will file an application with the Court requesting an order requiring Standard to convey the Silverton real property and the various vehicles to Sunnyside, if we are unable to obtain those assignments voluntarily from Standard. Thank you for your cooperation. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY phillip D. Barber PDB/slf Enclosure bcc: Dennis Krantz (w/encl.) t D- I" -PD B — 2" S d u n d fd - Co'rre4po^a1 WELBORN, DUFFORD, BROWN ß TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW PHILIP 0. DUFFORD RANDALL J. FEUERSTEIN (L& 1700 BROAOWAY THOMAS G. BROWN S. KIRK INGEBRETSEN DALE TOOLEY (1933-1985) DIANE L.BURKHAROT DAVID W. FURGASON DENVER,COLORADO Ô0290-I199 STEPHEN J.SULLIVAN WILLIAM C. RO BB (303} 861-8013 JOHN M. SPILLANE JOHN F. WELBORN ELLEN TOLL WILLIAM A.MCLAIN DOUGLAS P. RUEGSEGGER BEVERLY J. QUAIL EOWARD D. WHITE RICHARD L.FANYO PEGGY J. ANDERSON KATHRYN L, PO W ERS March 10, 1986 PHILLIP D. 8ARBCR AV( GREGORY A. RUEGSEGGER JOHN F. MECK Ms. Mary L. Andersen San Juan County Clerk P.O. Box 455 Silverton, CO 81433 Dear Mary: for recordi"g ^ a twenty-page Mining Lease between Richard H. Brenneman, et al., and Standard Metals Corporation. , , ^ Enclosed is our check in the amount of $6 0 .0 0 to cover the cost of recording. Once recordation is complete, kindly return the original instrument to my attention at the above Denver address. A stamped, self-addressed envelope is provided for return mailing. * i-j As P^ease telephone me if I can answer any questions. Thank you for your continued assistance. Very truly yours, WELBORN, DUFFORD, BROWN & TOOLEY Carla St. Romain Title Clerk/Legal Assistant CS :crh Enclosure WELBpRN, DUFFORD, BROWN S TOOLEY ROBERT F. W E I BORN a t t o r n e y s a t l a w RANDALL J. FEUERSTEIN PHILIP G. DUPFORD 1700 SROAOWAY S. KIRK INGEBRETSeN THOMAS G.BROWN OlANE L.eURKHAROT DALE TOOLE/ <1933-1965) DENVER,COLORADO Ô0290-U99 STEPHEN J.SULLIVAN DAVID W .FURG ASO N JOHN M. SPILLANE WILLIAM C. RO B B (303) 861*8013 ELLEN TOLL JOHN P. WELBORN DOUGLAS P. RUEQSEGGER WILLIAM A.MCLAIN EDWARD O. WHITE BEVERLY J. QUAIL PEGGY J. ANDERSON RICHARO L.FANYO KATHRYN L.POWERS March 10, 1986 PHILLIP D. BARBER GREGORY A.RgEGSEGGER JOHN P. MECK HAND DELIVERED R o d n e y D . Knutson, Esq. Sherman & Howard 633 - 17th Street, #2900 Denver, CO 80202 Re : Ratification of Marcy Lease Dear Rodney: Enclosed for distribution and for your file are three copies of the recorded Ratification of Lease, dated effective as of November 19, 1985, between Washington Mining Company, Echo Bay Inc. and Sunnyside Gold Corporation. It was recorded on March 3, 1986 in Book 230 at Pages 870 through 947 of the San Juan County records. Please contact me if there are any questions concerning the enclosed materials. Very truly yours, W E L B O R N , DUFFORD, BROWN & T O O LE Y Carla St. Romain Title Clerk/Legal Assistant CS scrh Enclosure ROBERT F. WELBORN ATTORNEYS AT LAW PHILIP G. DUFFORD RANDALL J. FEUERSTEIN 1700 BROADWAY THOMAS G. BROWN S. KIRK IN G EBR ET SEN DALE TOOLEY (¡933-I985) DIANE L . BURK H ARDT DAVID W. FURGASON DENVER,COLORADO Ö0290-U99 STEPHEN J.SULLIVAN WILLIAM C. R O BB (3 0 3 ) S 6 I - 8 O 13 JOHN M. SPILLANE JOHN F. WELBORN ELLEN TOLL WILLIAM A.MCLAIN DOUGLAS P. RUEGSEGGER BEVERLY J. QUAIL EDWARD D. WHITE RICHARD L.FANYO PEGGY J.ANOERSON KATHRYN L. PO W ERS PHILLIP D. BARBER GREGORY A. RUEGSEGGER JOHN F, MECK March 6, 1986 Rodney D. Knutson, Esq. Sherman & Howard 2900 First Interstate Tower North 633 Seventeenth Street Denver, Colorado 80202 Re : Sunnyside Gold Corporation Dear Rodney At the request of Dennis Krantz, I am forwarding to you an executed copy of the February 14, 1986 Mining Lease Between Richard H. Brenneman, et al. and Standard Metals Corporation. Apparently, Tim Sadler requested a copy of this document. Sincerely WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/slf Enclosure cc: Mr. Dennis Krantz (w/encl.) Michael Gluckman, Esq. (w/encl.) WELBORN, DUFFORD, BROWN 8 TOOLEY ATTO R N EYS AT LAW RANDALL J. FEUERSTEIN ROBERT F. WELBORN S. KIRK INGEBRETSEN 1700 BROADWAY PHILIP G- DUFFORD DIANE L.BURKHARDT T H O M A S G.BROWN DENVER, COLORADO 60290-1199 STEPHEN J.SULLIVAN DALE TOOLEY (1933-1985) JOHN M. SPILLANE DAVID W. FURGASON (303) 861-8013 ELLEN TOLL WILLIAM C. RO BB DOUGLAS P. RUEGSEGGER JOHN F. WELBORN EDWARD D. WHITE WILLIAM A.MCLAIN PEGGY J. ANDERSON SEVERLY J. OUAIL RICHARD L.FANYO KATHRYN L. PO W ERS PHILLIP D. BARBER GREGORY A. RUEGSEGGER March 4, 1986 JOHN F, MECK Mr. Dennis Krantz Property Manager Sunnyside Gold Corporation Building D, 484 Turner Drive DURANGO CO 81301 RE: Standard Metals Corporation Dear Dennis: Enclosed is a copy of Standard Metals Corporation's Application for Authorization to Pay Administrative Expenses. At page A-l, your name and the names of several other former Standard employees appear. You might want to check the amoun listed to assure that they are correct. The Application says nothing about Greg s romoensation. I assume that is because he has filed a separate motion for payment with the court. I will continue to monitor this for you. Good luck. Very truly yours, WELBORN, DUFFORD, BROWN & TOOLEY H\ a I! i phillip D. Barber PDB/imm Enclosure TO: FROM; SUNNYSIDE GOLD CORPORATION - ECHO BAY Building O4* 484 Turner Drive Durango, Colorado 81301 Phone: (303) 259-1091 , Telecopier: 259-W4*^5£ MESSAGE: ' ¿ F / 7 S 7 / 3 LUOOM &<£C £ / '/ > £ < 3 ^ os. THIS TRANSMISSION CONSISTS OF < 3 PAGES, ■ INCLUDING THIS COVER SHEET, MINERALS CORPORATION ^ 2 ' y OfEMMASACSOUAflf »£>& • AVDVUtÖJftfi4!S VW |»MRiO0K(S»1<4*& ♦ PHONE (« $ )*» *« * ^ ' ia»450142KACKfcíXDDV& February 10, 1986 Mr, Greg Sparks Gansral Mana^sr Sunriysida Gold Corporation , 484 'Turner Drive, B34g D Durango, Colorado 81301 Re; Right of Way Agrecmsnt Dear Mr. Sparkst Garber Minerals Corporation ( Gerber) is cwrt'ently applying for a Limitod Irnpact Parmit, from tha Colorado Mined Lard. Reolmation Board* It becana evident whila preparing this • - reclamation plan that due to the Btesp terrain in Gold King basin, mine tailings placed upon Gerber property could move down hill onto proparty claimed by Sunnysi&e Gold Corp oration (Sunnyside)* ; Gerber is * therefore, niKjuasting a "Eight of Way* agrseiTftnti with Sunnyside for the disposal and subsequent reclamation of any and all mine tailings placed on property claims# by Sunnyside. The' area potentially inpacted by Garber and clai/nsd by SunnyBide is to tha south of the Gold King No*tLevei dump and to tho soirthsrest of tha Goia King No* 7 LgvbI dun>*i This area consists of lass than two acres on tha unpatented claims* John & Mary, Paymaster' Ext*, Parra3of and Occidental (see enclosure)* The minfi tailings placed upon tha No. 1 and No* 7 L&vel durpa will ba Subject to tho above ide*roification and agrsamsnt with Pitchfork 'M*, Sunnyside grots to Gerber a right of way for mine tailings disposal and actions necessary for reclamat ion on the above described land claimed, by Sunnyfcide. HEREBY AGPl-SD AND ACKNCWLITM® BY? i y i u U , . Gn&g Sparks Mike Furman Bsmhard Frea General Manager Owner F r e s ü e n t Sunnyside Gold Corporation Pitchfork 'M* Gerber Jjinerals Corporation Datos é4f. /Z / f U , ¿X- t 1'V1 S — "iaO- ^ . V- RO BERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN S. KIRK INGEBRETSEN PH ILIP G. DUFFORD 1700 BROADWAY DIANE L-SURKHARDT THOMAS G. BROWN STEPHEN J. SULLIVAN DALE TOOLEY (IQ33-I9B5) DENVER,COLORADO Ä0290-1199 JOHN M. SPILLANE DAVID W. FURGASON (303) S6I-SOI3 ELLEN TOLL WILLIAM C. ROBB DOUGLAS P. RUEGSEGGER JOHN F. WELBORN EDWARD D. WHITE WILLIAM A.MCLAIN PEGGY J, ANDERSON BEVERLY J.OUAIL RICHARD L.FANYO KATHRYN L. PO W ERS PHILLIP D. BARBER GREGORY A.RUEGSEGGER JOHN F, MECK February 13, 1986 Christopher L. Richardson, Esq. HAND-DELIVERED Davis, Graham & Stubbs 370 - 17th Street, Suite 4700 Denver, Colorado 80202 Re: Sunnyside Gold Corporation Dear Chriss This letter is written to clean up several title matters which have arisen since the November 19, 1985 closing between Standard Metals Corporation, Echo Bay Inc. and Sunnyside Gold Corporation. As you are aware, the November 19, 1985 General Transfer, Assignment and Bill of Sale provides at page 14 : SMC agrees that it will execute and deliver any further instruments of transfer which may be necessary or which may be deemed necessary by Sunnyside to fully vest in Sunnyside all rights, titles and interests of SMC in and to the Purchased Assets. The following items of real property, which are located in San Juan County, Colorado, were apparently owned by Standard Metals Corporation prior to closing: 1. Block 43, Lots 23 and 24, a/k/a 969 Reese Street, Silverton, Colorado (the "pink" or "Staff House"). 2. Block 43, Lots 17 and 18, a/k/a 941 Reese Street, Silverton, Colorado (the "green house"). 3. Block 52, Lots 17 and 18 and the S/2 of Lot 19, Silverton, Colorado (the "Archuleta House"). 4. Block 52, Lots 13 and 14, Silverton, Colorado (mobile home lots). 5. Block 48, Silverton, Colorado ("Old Railroad Building") . Christopher L. Richardson, Esq. February 13, 1986 Page 2 In order to properly vest title in Sunnyside Gold Corporation to the above items of real property, Sunnyside will require a warranty deed from Standard Metals Corporation which can be recorded with San Juan, County. To that end, X have prepared a single warranty deed which conveys these items of real property to Sunnyside Gold Corporation and have attached it to this letter. Please review these documents and let me know if there are any problems with it. I have confirmed that Art Still may attest to Mr. Gresov's signature. In addition to the items of real property, there are apparently three vehicles and three shop-made trailers which were located in San Juan County and were, therefore, part of the transaction between Standard and Echo Bay/Sunnyside. Those vehicles are as follows: 1. 1981 Chevrolet Pick-up, Serial No. 1GCGK24M5BF312641; 2. 1978 Ford Pick-up, Serial No. F26SRCA6912; 3. 1981 Ford 260 Pick-up, Serial No. 1FTHFZ623BPA42966; 4. Shop-made trailer, Vehicle I.D. # ID10-2183 COLO, Title #55E06177 (1959 Model HMDTNK); 5. Shop-made hydromulcher trailer (vehicle I.D. number not known)? and 6. Shop-made trailer with drill core equipment (vehicle I.D. number not known). Although we have requested the titles to these items, we have not yet received them from Standard. In order to properly license them in Sunnyside's name, we need to have the titles transferred to Sunnyside Gold Corporation. Finally, as you are probably aware (and if you are not Chuck Kaiser can fill you in on this), there have been recent negotiations for an amendment to the Brenneman Lease and for a new lease on an additional property owned by the Brennemans. Christopher L. Richardson, Esq. February 13, 1986 Page 3 These items were in the works prior to closing and have recently come to a point where the documents can be signed. I am attaching the two original signed leases between Richard H. Brenneman, et al. and Standard Metals Corporaton, both of which have been signed by the necessary Brenneman_family members. We hereby request that you obtain Standard's signature on these documents. The effective date of the leases will be the date of the last signature. In order to vest title to these leasehold interests in Sunnyside, I have also prepared an Assignment of Leases, conveying Standard's interest in these two Brenneman leases to Sunnyside. The Assignment of Leases is generally in the same form as the assignment which was used at closing. Please let me know if there is any problem with any of these documents. Again, Art Still may attest to Mr. Gresov's signature. Thank you in advance for your cooperation. I understand that Mr. Gresov may be in a position to sign these documents on February 14. You will notice that an impression of Standard's corporate seal should be affixed to the various signature pages. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY r - ' ; r phillip D. Barber PDB/slf-614 9D Enclosure cc: Charles L. Kaiser, Esq. (w/o encl.) WELBORN, DUFFORD, BROWN & TOOLEY ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PHILIP G. DUFFORO 1700 BROADWAY S.KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT DALE TOOLEY (1933*1985) DENVER,COLORADO Ô0290-U99 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE (303) 861-8013 WILLIAM C.ROBB ELLEN TOLL DOUGLAS P. RUEGSEGGER JO HN F. W ELBO RN EDWARD D. WHITE WILLIAM A.MClAIN BEVERLY J. OUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L, PO W ERS PHILLIP D. BARBER GREGORY A. RUEGS EGG ER JOHN F. MECK February 13, 1986 Christopher L. Richardson, Esq. HAND-DELIVERED Davis, Graham & Stubbs 370 - 17th Street, Suite 4700 Denver, Colorado 802Û2 Re : Sunnyside Gold Corporation Dear Chris: This letter is written to clean up several title matters which have arisen since the November 19, 1985 closing between Standard Metals Corporation, Echo Bay Inc. and Sunnyside Gold Corporation. As you are aware, the November 19, 1985 General Transfer, Assignment and Bill of Sale provides at page 14 : SMC agrees that it will execute and deliver any further instruments of transfer which may be necessary or which may be deemed necessary by Sunnyside to fully vest in Sunnyside all rights, titles and interests of SMC in and to the Purchased Assets. The following items of real property, which are located in San Juan County, Colorado, were apparently owned by Standard Metals Corporation prior to closing: 1. Block 43, Lots 23 and 24, a/k/a 969 Reese Street, Silverton, Colorado (the "pink" or "Staff House"). 2. Block 43, Lots 17 and 18, a/k/a 941 Reese Street, Silverton, Colorado (the "green house"). 3. Block 52, Lots 17 and 18 and the S/2 of Lot 19, Silverton, Colorado (the "Archuleta House"). 4. Block 52, Lots 13 and 14, Silverton, Colorado (mobile home lots). 5. Block 48, Silverton, Colorado ("Old Railroad Building"). Christopher L. Richardson, Esq. February 13, 1986 Page 2 In order to properly vest title in Sunnyside Gold Corporation to the above items of real property, Sunnyside will require a warranty deed from Standard Metals Corporation which can be recorded with San Juan, County. To that end, I have prepared a single warranty deed which conveys these items of real property to Sunnyside Gold Corporation and have attached it to this letter. Please review these documents and let me know if there are any problems with it. I have confirmed that Art Still may attest to Mr. Gresov's signature. In addition to the items of real property, there are apparently three vehicles and three shop-made trailers which were located in San Juan County and were, therefore, part of the transaction between Standard and Echo Bay/Sunnyside. Those vehicles are as follows: 1. 1981 Chevrolet Pick-up, Serial No. 1GCGK24M5BF312641; 2. 1978 Ford Pick-up, Serial No. F26SRCA6912; 3. 1981 Ford 260 Pick-up, Serial No. 1FTHFZ623BPA42966; 4. Shop-made trailer, Vehicle I.D. # ID10-2183 COLO, Title #55E06177 (1959 Model HMDTNK); 5. Shop-made hydromulcher trailer (vehicle I.D. number not known); and 6. Shop-made trailer with drill core equipment (vehicle I.D. number not known). Although we have requested the titles to these items, we have not yet received them from Standard. In order to properly license them in Sunnyside*s name, we need to have the titles transferred to Sunnyside Gold Corporation. Finally, as you are probably aware (and if you are not Chuck Kaiser can fill you in on this), there have been recent negotiations for an amendment to the Brenneman Lease and for a new lease on an additional property owned by the Brennemans. Christopher L. Richardson, Esq. February 13, 1986 Page 3 These items were in the works prior to closing and have recently come to a point where the documents can be signed. I am attaching the two original signed leases between Richard h . Brenneman, et al. and Standard Metals Corporaton, both of which have been signed by the necessary Brenneman family members. We hereby request that you obtain Standard's signature on these documents. The effective date of the leases will be the date of the last signature. In order to vest title to these leasehold interests in Sunnyside, I have also prepared an Assignment of Leases, conveying Standard's interest m these ^ two Brenneman leases to Sunnyside. The Assignment of Leases is generally in the same form as the assignment which was used at closing. Please let me know if there is any problem with any of these documents. Again, Art Still may attest to Mr. Gresov's signature. Thank you in advance for your cooperation. I understand that Mr. Gresov may be in a position to sign these documents on February 14. You will notice that an impression of Standard's corporate seal should be affixed to the various signature pages. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY . „ - e - i phillip D. Barber PDB/slf-6149D Enclosure cc: Charles L. Kaiser, Esq. (w/o encl.) bcc; Mr. Dennis Krantz (w/encl.) Michael Gluckman, Esq. (w/encl.) Mr. John Azlant (w/encl.) THIS ASSIGNMENT of certain mining leases is made and entered into effective as of the date set forth below, by and between STANDARD METALS CORPORATION, a corporation organized under the laws of the State of Delaware with its principal offices at 645 Fifth Avenue, New York, New York 10022, and being a debtor in possession pursuant to a reorganization pending before the United States Bankruptcy Court for the District of Colorado, Case No. 84 B 00945 G (hereinafter called "SMC") and SUNNYSIDE GOLD CORPORATION, a corporation organized under the laws of the State of Delaware, and having its principal place of business in the State of Colorado (hereinafter called "Sunnyside"). . For the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which SMC hereby acknowledges, SMC does hereby bargain, grant, assign, transfer, sell and convey to Sunnyside all of SMC's rights, titles and interests or claims in and to those certain mining leases more fully described in Exhibit A attached hereto and incorporated herein by this reference. Said leases cover and relate to certain claims (whether patented, unpatented or millsites) situate upon and within unsurveyed lands protracted as: Township 41 North, Range 6 West, Township 42 North, Range 6 West, Township 43 North, Range 6 West, Township 41 North, Range 7 West, Township 42 North, Range 7 West, Township 43 North, Range 7 West, and Township 42 North, Range 8 West, all of the New Mexico Principal Meridian, San Juan County, State of Colorado, together with any improvements thereon and all appurtenances thereto. For the considerations herein recited, SMC does hereby covenant and warrant unto Sunnyside that at the time of executing and delivering this Assignment, SMC is well seized of the leases herein assigned, has good, sure, perfect, absolute and indefeasible estate and title thereto and has the full, right, power and authority to grant, bargain, sell, and convey the same in manner and form aforesaid, and that the same are free and clear of all former or other grants, liens, taxes, assessments, and encumbrances of whatsoever kind or nature. This Assignment is made subject to and accepted by Sunnyside subject to the terms and provisions of that reserved net profits interest created under the terms and provisions of a General Transfer, Assignment and Bill of Sale dated November 19, 1985, between SMC and Sunnyside. To the extent there is any conflict between the terms and provisions of the November 19, 1985 Asset Sale and Purchase Agreement between Echo Bay Inc. and SMC and this Assignment, the terms and provisions of the said Asset Sale and Purchase Agreement shall control. Dated this _____ day of ______, 1986. STANDARD METALS CORPORATION ATTEST: ______B y : ______— ~ President STATE OF ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of _____* 1986, by Boris Gresov as President-of Standard Metals Corporation, a Delaware corporation, on behalf of the corporation. Witness my hand and official seal. Notary Public My commission expires: Head Office: SUNNYSIOE GOLD CORPORATION Silverton Office: Building D AN ECHO DAY COMPANY P.O. Box 177 484 Turner Drive Silverton, CO 81433 Durango* CO 81301 Phone (303) 387-5533 Phone (303) 259-1091 February 12, 1986 J. P. Packer Joy Manufacturing Co. 1200 Oliver Bldg. Pittsburg, Pennsylvania 15222 FEDERAL EXPRESS Dear Mr. Packer: Please find enclosed Sunnyside Gold's check #1346 in the amount of $8,000.00 covering the advance royalty payment due 11-9-85. This disbursement was an oversight on my part. Too much confusion resulting from the sale. Sincerely Manager, Finance and Administration JEF:mkr Enclosure cc: Keith Johnson Contract Administrator Joy Manufacturing Co. P. 0. Box 340 Colorado Springs, Colorado 80901 Phil Barber / Welborn, Dufford, Brown & Tooley v/ 1700 Broadway Denver, Colorado 80209-1199 SUNNYSIDE GOLD CORPORATION 484 TURNER DRIVE, BLDG. D DURANGO, CO 81301 66-40/53t February 12 19 86 PAY TO THE Joy Manufacturing ORDER OF. $i*8»Q00.00* "I DOLLARS Wachovia Wachovia Bank t Trust Company, N.A. Winston-Salem, NC 27102 FOR. V 02-66 Royalty ||"0000 Läli&H1 IÏ053 lOO^U: WELBORN, DUFFORD, BROWN 6 TOOLEY RANDALL J. FEUERSTEIN ROBERT F. WELBORN A TTO R N EYS AT LAW S.KIRK INGEBRETSEN PHILIP G. DUFFORD 1700 BROADWAY DIANE L.BURKHARDT THOMAS G. BROWN STEPHEN J.SULLIVAN DALETOOLEY (I933-I9Ö5) D E N V E R , COLORADO 80290-1199 JOHN M. SPILLANE DAVID W. FURGASON (303) 861-8013 EULEN TOLL WILLIAM C.ROBB DOUGLAS P. RUEGSEGGER JOHN F, WELBORN EDWARD D. WHtTE WILLIAM A. Me LAIN PEGGY J. ANDERSON BEVERLY J. QUAIL RICHARD L.FANYO KATHRYN L.POWERS PHILLIP D. BARBER February 28, 1986 GREGORY A. RUEGSEGGER JOHN F. MECK Ms. Mary L. Andersen San Juan County Clerk P.O. Box 455 Silverton, CO 81433 Dear Mary: Enclosed for recording is a Ratification of Lease, executed by Washington Mining Company to Echo Bay Inc. and Sunnyside Gold Corporation, consisting of 78 pages. For the cost of recording, I enclose our check in the amount of $234.00. Also enclosed is a stamped, self-addressed envelope for return mailing. Should any questions or problems concerning this request arise, please feel free to telephone me at the above Denver number. I'm glad that you and Jim Field were able to work out the matter of the motor vehicle transfers. Thank you for your continued assistance. Very truly yours, // Carla St. Romain Title Clerk/Legal Assistant CS:crh Enclosures ROBERT F. WELBORN ATTORNEYS AT LAW RANOALL J. FEUERSTEIN PHILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT DENVER,COLORADO Ô0290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M, SPILLANE WILLIAM C. ROBB (303) 86I-BOI3 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.McLAlN EDWARD D. WHITE BEVERLY J.OUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L.POWERS PHILLIP D. BARBER GREGORY A. RUEGSEGGER JOHN F, MECK February 14, 1986 HAND-DELIVERED Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Re : Sunnyside Gold Corporation Dear Chris In my February 13 letter to you, we omitted identification numbers on two of the three trailers because we did not have that information. Since that letter, I have learned that the trailer containing the Core Drill has a serial number of 40E052195, and vehicle identification number of I.D. 402116 COLO, and license number of JYD-1854, The Hyrdomulcher Trailer has never been placed on the road, so apparently it does not have any identifying numbers. I hope this information is useful to you. Sincerely WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/slf cc: Mr. Dennis Krantz WELBORN, DUFFORD, BROWN g TOOLEY ROBERT F.WELBORN ATTO RN EYS AT LAW RANDALL J. FEUERSTEIN PHILIP G.DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT OALE TOOLEY (1933-I9B5) DENVER,COLORADO 60290-1199 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C.ROB8 (303) 86I-SOI3 ELLEN TOLL JOHN F, WELBORN OOUGLAS P, RUEGSEGGER WILLIAM A- MCLAIN EDWARD D. WHITE BEVERLY J. QUAIL PEGGY’ J. ANDERSON RICHARD L.FANYO KATHRVN L. POWERS JOHN F. MECK THEODORE B.ATLA5S COUNSEL PHILLIP D. BARBER GREGORY A.RUEGSEGGER February 3, 1986 Michael Gluckman, Esq. Milner and Steer 2900 Manulife Place 10280-101 Street Edmonton, Alberta, Canada T5J3V5 Re: Sunnyside Gold Corporation Dear Michaels As you may recall, Joy Manufacturing Co. is one of the lessors in regard to the Sunnyside Mine Property. The documents we received from Joy at the November 19, 1985 closing were signed by its attorney, rather than by an officer. Today, I received originals of the following documents signed by a Joy officer: 1. Ratification of Lease; 2. Consent to Assignment; and 3. Escrow Agreement. I am enclosing an original copy of each document for your files. Sincerely, WiUjBORN, DUFFORD, BROWN & TOOLEY phillip D. Barber PDB/slf Enclosure \ p w j M f h d h C c n / ^ A d e l m a n La v i n e K r a s n y G o l d a n d Le v i n ATTORNEYS AND COUNSELORS AT LAW NATHAN LAVINE SUITE 1900 MARVIN KRASNY TWO PENN CENTER PLAZA LEWIS H. COLD PHILADELPHIA, PA, 19102 ROBERT H. LEVIN (2151 568-7515 CARY M. SCHILDHORN MYRON A. BLOOM BARRY D. KLEBAN ALEXANDER B, ADELMAN CARY D. BRES5LER (1950-1984) SARA B. KALB* MARK J. PACKEL OF COUNSEL N.Y, BAR ALSO January 31, 1986 SIDNEY CHAIT FEDERAL EXPRESS Honorable John F. McGrath United States Bankruptcy Court 400 Columbine Building 1845 Sherman Street Denver, CO 80203 RE: Standard Metals Corporation Case No. 84 B 00945 G Dear Judge McGrath: This office is co-counsel for Dann S. Sheftelman and the Bondholder Class, as that Class is defined in a certain proof of claim filed by Dann S. Sheftelman on behalf of himself and the Class. As counsel for Sheftelman and the Bondholder Class, we are in receipt of Notice Pertaining To Hearings Set For February 6 1986 and Notice Setting Hearings Not Previously Set, a copy of which Ienclose herein. This Notice provides, in part, that the parties will assist the Court in deciding in what order issues should be presented. Since the Motion For The Appointment Of A Trustee and the Motions To Convert Chapter 11 Case to Chapter 7 request alternative remedies, only one of which can be granted, we believe that these Motions should be heard together. Should our clients' Motions to Convert be granted, a Chapter 7 Trustee would be appointed, who would then need to be heard on the Debtor's Motion to Hold Scheduling Conference Regarding Claims of NL Industries, Inc. and New Jersey Department of Environmental Protection and Request of Ventures Trident For Payment Of Administrative Expenses. Accordingly, we believe that the Motions To Convert and the Motion For The Appointment Of A Trustee should be heard first, prior to the Debtor's Motion and Request of Ventures Trident. Honorable John F. McGrath January 29, 1986 Page ...... 2 In addition, as a practical matter, I will be corning from out of town for the hearings on the Motion to Convert and the Motion For The Appointment Of A Trustee and based on the past history of the case, I believe that numerous other attorneys and parties in interest will be coming in from out of town for the hearings on these Motions. For this reason as well, we would request that these hearings be held first. Respectfully yours, GARY D. BRESSLER GDB:pn Enclosure CC: All Parties Listed On Attached Sheet {Regular Mail) Woodward Explosives c/o Mr. Lawrence Woodward Box 12356, Station F Albuquerque, NM 87195 Howard Tallman, Esq. U.S. Trustee's Office 202 Columbine Building 1845 Sherman Street Denver, CO 80203 Alan D. Sweetbaum, Esq. Schied Sc Horlbeck, P.C. Suite 3100 633 17th Street Denver, CO 80202 Morris B. Hoffman, Esq. Mosley, Wells & Johnson, P.C. Suite 1120 1600 Broadway Denver, CO 80202 J. Henry Schroder Trust Company One State Street New York, NY 10015 Michael A. Berman Office of the General Counsel- Securities and Exchange Commission 50 5th Street, NW Washington, DC 20549 Republic Supply Company c/o LTV Energy Products Company Attn: Mr. Jim Massie P. 0. Box 359 Dallas, XX 75221 Wagner Equipment Company c/o Mr. Ferron R. Oaks P. 0. Box 380388 Denver, CO 80238 Boyles Brothers Drilling c/o Mr. Robert Ebechard 15865 West 5th Avenue Golden, CO 80401 Hibernia Bank c/o Harry L. Simon, Esq. Harry L. Simon, P.C. 4155 East Jewell, Suite 300 Denver, CO 80222 Steve Seifert, Esq. Charles E. Matheson, Esq. Fairfield St Woods 950 17th Street, Suite 1600 Denver, CO 80202 Garry R. Appel, Esq. Rothgerber, Appel & Powers 1600 Broadway, Suite 2400 Denver, CO 80202 Patrick T. Canning Securities and Exchange Commission Room 1204 219 South Dearborn Chicago, IL 60604 Dolores B. Kopel, Esq. United States Trustee 1845 Sherman, Suite 202 Denver, CO 80203 Richard G. Murphy, Jr., Esq. Sutherland, Asbill Se Brennan Riveredge, Suite 950 2000 Riveredge Parkway NW Atlanta, GA 30328 Mr. Boris Gresov, Chairman Standard Metals Corporation 645 5th Avenue New York, NY 10022 Barry L. Wilkie, Esq. Shaw, Spangler Sc Roth 1700 Broadway, Suite 1400 Denver, CO 80290-1498 John R. Lee, Esq. Securities and Exchange Commission Room 1204 219 South Dearborn Chicago, IL 60610 K. K. Summers, Esq. P. 0. Box 398 Grand Junction, CO 81502 San Miguel Power Association c/o Mr. E. J. Ballard P. 0. Box 128 Nucla, C0 81424 Crist Machinery and Supply Co. c/o Mr. Glenn Bunce P. 0. Box 1866 Grand Junction, C0 81502 Industrial Repair Service, Inc. c/o Mr. John E. Wreyford 1113 Camina Entrada Farmington, NM 87401 Glen E. Keller, Jr., Esq. Charles W. Schlosser, Esq. Davis, Graham & Stubbs 370 17th Street, Suite 4700 Denver, CO 80202 H. Thomas Coghill, Esq. Coghill & Goodspead Suite 14'30 1600 Broadway, Suite 1430 Denver, CO 80202 C. B. Johnson, Inc. c/o Mr. Alan R. Peterson P. 0. Drawer S Cortez, CO 81321 Washington Mining Company c/o Mr. J. M* Newcomb 6917 Collins Avenue Miami Beach, FL 33141 Lawrence A. Kellog, Esq. Finley, ICumble, Wagner, Heine, Underberg, Manley Sc Casey 777 Bickell Avenue, Suite 1000 Miami, FL 33131 William H. Rutter, Esq. Craig A« Christensen, Esq. Sherman Sc Howard 633 17th Street, Suite 2900 Denver, CO 80202 Jack L. Smith, Esq. Bruce T. Buell, Esq. Holland Sc Hart 55.5 17th Street, Suite 2900 Denver, CO 80202 Richard L. Bond, Esq. Stewart D. Aaron, Esq. Dorsey Sc Whitney 350 Park Avenue New York, NY 10022 Dan L. Cartin, Esq. Davis U Ceriani, P.C. Suite 400, Market Center 1350 17th Street Denver, CO 80202 Thomas A. Thornton Vice President Finance Bateman Engineering 777 South Wadsworth Blvd. Lakewood, CO 80226 Hibernia National Bank in New Orleans c/o Harry L. Simon, Esq. 4155 East Jewell, Suite 300 Denver, CO 80222 Icke Construction Company, Inc. c/o George W. Icke 2642 Rimrock Road Madison, WI 53713 A. Sturm Sc Sons c/o Paul J. Sturm P. 0. Box 287 Manawa, WI 54949 . Sheldon M. Weiner 1921 Lee Street Evanston, IL 60202 Dean Witter Reynolds, Inc. c/o David S. Lerner, Vice President, Investments 9400 South Dadeland Blvd., 0120 Miami, FL 33156 Henry Abrams 16 Beacon Drive Loveladies, NJ 08008 Luke E. Grezaffi, Jr. P. 0. Box 2618 Houma, LA 70361 Marshal Artime 796 Wilshire Drive Belleville, IL 62223 Holme, Roberts St Owen 1700 Broadway, Suite 1800 Denver, CO 80290 Continental Casualty Company c/o Matt J. Farley 755 Magazin Street New Orleans, LA 70130 Edwin K. McMartin 520 West 9th Street Pueblo, CO 81003 Echo Bay, Inc. c/o Philip G. Dufford, Esq. Welbom, Dufford, Brown St Tooley Denver, CO 80290 Michael Romero, Esquire Isaacson Rosenbaum Woods Levy & Snow First Interstate Tower North Suite 2300, 633 17th Street Denver, CO 80202 Nicholas E. Chimicles, Esquire Greenfield & Chimicles One Haverford Centre 361 W Lancaster Avenue Haverford, p a 19041-0100 UNITED STATES DISTRICT COURT FOR fTHE DISTRXCT^ja^Ç&LORADO I N BANKRUPTCY ; '* if ■] p ^ Case No. 84 B 00945 G ■, .■r^.vraiprcyconr j : v t z m m Ï In re: I M I 6 1986 STANDARD METALS CORPORATION, orirtDrOoü L. ¿u tf'ü ty ¿¡¿(¡I D e b t o r . BY NOTICE PERTAINING TO HEARINGS SET'FOR , J.ÏO & * 2 NOTICE SETTING HEARINGS NOT PREVIOUSLY*SET NOTICE IS HEREBY GIVEN that the court has set hearings on various motions filed in this case for February 6, 1986. By this Notice, the court now decides that all hearings will be at 9:00 a.m. on that date. The parties will assist the court in deciding in what order issues J?0 taJle.n- . 1 1Shighly likely that all matters will not be disposed on this date and the court is well aware of this. NOTICE IS FURTHER GIVEN that by this notice the court sets the following motions not previously set: Motion of the Creditors* Committee for Appointment of a Trustee; the Amended Motion of Dann S. Sheftelman to Convert (The motion of the Canadian Imperial Bank to Dismiss or Convert has been withdrawn.); Debtor's Motion to Set Hearing and Hold Scheduling Conference Regarding Claims of NL i nuC ’ and *i®w JerseY Department of Environmental Protection. The court will consider all objections to any of the Motions set on this date. —£ To aid all parties, listed are the Motions the court finds to be \ J et rnal Y 6r 1986' t0 be9in a 9:00 a -m* in Courtroom A, United States Bankruptcy Court, 400 Columbine Building, 1845 Sherman Street, Denver, Colorado. The order of listing is not relevant. Motion of Creditors1 Committee to Appoijnt a Trustee Motion of Creditors' Committee to Convert Case to Chapter 7 Debtor's Motion to Hold Scheduling Conference Regarding Claims of NL Industries, Inc. and New Jersey Department of Environmental Protection P Motions to Convert filed by Dann S. Sheftelman Request of Ventures Trident for Payment of Administrative Expenses DATED: January f(p , 1986 BY ORDER OF THE COURT: BRADFORD L. ¿OLTON, Clerk N O T IC E O F ENTRY ON DO CKET 'r, HeretyGfv&n ...-tPursuanttoRuleS By: Marilyn R. Reynolds ths Ft)rfOo(na Order of Judgment i U.S. Bankruptcy Court 400 Columbine Building 1845 Sherman Street Denver, CO 80203 ROBERT F. WELBORN ATTO RN EYS AT LAW RANOALL J. FEUERSTEIN PHILIP G. DUFFORD 1700 BROADWAY S. KIRK INGE8RETSEN THOMAS G. BROWN DIANE L. BURKHARDT DENVER,COLORADO S0290-1I99 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M.SPILLANE WILLIAM C. ROBB (303) 861-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARD D. WHITE BEVERLY J. OUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L, POWERS JOHN F, MECK THEODORE B-ATLASS COUNSEL PHILLIP D, BARBER GREGORY A.RUEGSEGGER January 24, 1986 HAND-DELIVERED Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Re : Sunnyside Gold Corporation Dear Chris This letter supplements my January 21 letter to you. Attached is a copy of a letter dated January 20, 1986 from the Town-County Coordinator, Silverton-San Juan County to Greg Sparks regarding the outstanding bills on the Old Hospital Building Lease. I believe the invoice confirms the $1,850.03 bill that I mentioned to you. There is also mention of a "bill for $627.27 for coal on hand for the hospital building as of November 19, 1985." This bill may have been previously filed with the Bankruptcy Court. I have not been able to get in touch with anyone who knows anything about the bill. If you have any records on it, you might try to take care of that matter on Monday as well. Let me know if you need anything else. Thanks for your help. Sincerely WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/slf Enclosure cc: Mr. Dennis Krantz TowivCounty Coordinator Silverton-San Juan County P.O. Box 250 303*387*5644 fcUvarton, Cobrado 814&3 January 20, 1986 Oreg Spark» Sunnysids Bald Corporation 4B4 Turner Drive* Bldg- D OaranaQi Colorado 81301 D©ar Mr. Spark»i Thi* letter i* to confirm information ral&tiv#» to the phono eorwersiation between myself and Donni* Kranz of your offie® on January 20, 19S6« It ha® came to the attention of 8an Juan County that two outstanding bill» relative? to this maintenance of th» hospital buildingthat you now occupy in Silverton have not been paid* A bill delivered to the bankruptcy court for maintenance' on the hospital building from July through November 19, 1905 for '*1851», 03 and & bill far *627.27 for coal Kin hand for tho hoapital building as of November 1*?* 1905$ have not been paid. Since these billet reflect unpaid coats for the» maintemanee of th» hospital building in violation of Section 7 of th» L©a»e Agreement with Option to Purchase, San Juan County will defer in O b t a i n i n g an apprai*al relative to the» purchaee option of ©aid l®a»e until the«® outstanding b i l l » have been paid. If you need additional.information, or wish to dieeu»» thi* situation further, ploaa® do not heetitate to call. eincorfflly, P, Raymond f/3. Pronwall William Simon Chairman, Board of County Cammiaaioncr* m t m m JAN 2 2 198S o w w w a c o o - .TOi gftct J u a n Countv Board of Comm» PH* OFFICE OF Sac Juan County Treaeurer SAN JUAN COUNTY, COLORADO M. Standard Metals Corporation ______E-Q.Boz 2A7______:.. ______Silvertori» Colo. 81433 .. tu . . . , KÀIHTEKÀ.HCE OF OFFICE BIFILDIKG 7-18 Coal purchased in ttha amount of . 1421.. 53 As of &ov. 19» Coal left io coal bin 10.5 ton at $59*00 par ton - 609 OC 3 1 2 - $ 8 FORNACE TEffDER-WAGES PAIO July, Aug. Sapfc. &.Oct» 19 hours lu Novambpr at', $7*64 * 1037 .45 (* Ictcludaa goc* Sac«) Total . , .$1650; 03 ROBERT F. WELBORN ATTORNEYS AT LAW RANDALL J. FEUERSTEIN PHILIP G. DUFFORD 1700 BROADWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L. BURK HARDT DALE TOOLEY (1933-1985) DENVER,COLORADO Ô0290-U99 STEPHEN J. SULLIVAN DAVID W. FURGASON JOHN M. SPILLANE WILLIAM C. ROBB (303) 661-8013 ELLEN TOLL JOHN F. WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A-MCLAIN EDWARD 0, WHITE BEVERLY J.QUAIL PEGGY J. ANDERSON RICHARD L.FANYO KATHRYN L. POWERS JOHN F, MECK THEODORE B.ATLASS COUNSEL PHILLIP D. BARBER GREGORY A. RUEGSEGGER January 21, 1986 HAND DELIVERED Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 - Seventeenth Street, Suite 4700 Denver, Colorado 80202 Re : Sunnyside Gold Corporation Dear Chris This will confirm our conversation of this morning. As I informed you, the San Juan County Commissioners have demanded payment from sunnyside in the amount of $1,850.03. That demand includes $812.58 for coal purchased by the County to heat the Old Hospital Building, and $1,037.45 for wages paid for basic maintenance services provided by Gerald Glanville on behalf of the County. Both of these bills are for services rendered or goods provided between July and November 1985. Under the Old Hospital Building Lease, Standard was required to pay utilities and provide for basic maintenance items. In July 1985, standard apparently stopped providing maintenance on the building and was not heating the building. The County stepped in and took over these items to protect the condition of the building, I am told. I do not have the receipts for these items, but expect to have them in the next day or so, and will forward them to you. Sunnyside believes that these expenses are Standard's responsibility, insofar as Sunnyside was to acquire all of the property (including leases) free and clear of liens pursuant to the Court's October 28, 1985 Order. The County did not bring these items up to us until several days ago. Therefore, we were not in the position to debit Standard at closing on these matters. Christopher L. Richardson, Esq. January 21, 1986 Page 2 Inasmuch as there is a hearing next Monday regarding Standard's payment on other items, we would appreciate it if you would approach the Court to obtain authorization to pay the County for the $1,850.03 needed to bring the Old Hospital Building Lease current. Please advise if you have any objection to doing this. I imagine that the San Juan County Treasurer, Katie Martinez, can best answer any question that you have. Sincerely, WELBORN, DUFFORD, BROWN & TOOLEY Phillip D. Barber PDB/jjb bcc: Mr. John Azlant Michael Gluckman, Esq Mr. Dennis Krantz ROBERT F. WEIBORN A TTO R N EYS AT LAW RANDALL J. FEUERSTEIN PHILIP G.DUFFORD 1700 BROAOWAY S. KIRK INGEBRETSEN THOMAS G. BROWN DIANE L.BURKHARDT DALE TOOLEY (I933-I9SS) DENVER,COLORADO 60290-1199 STEPHEN J.SULLIVAN DAVID W. FURGASON JOHN M.SPILLANS WILLIAM C. ROBB (303) 361-8013 ELLEN TOLL JOHN F.WELBORN DOUGLAS P. RUEGSEGGER WILLIAM A.MCLAIN EDWARD D, WHITE BEVERLY J.QUAIL PEGGY J, ANDERSON RICHARD L.FANYO KATHRYN L. POWERS JOHN F, MECK THEODORE B.ATLASS COUNSEL PHILLIP D. BARBER GREGORY A.RUEGSEGGER January 21, 1986 Mr. John Azlant Echo Bay Inc. Sunnyside Gold Corporation 3300 ManuLife Place 10180 - 101 Street Edmonton, Alberta, Canada T5J 3S4 Re : Sunnyside Gold Corporation Dear John Enclosed is a copy of a Stipulation for Dismissal of Appeal in the Standard Metal's bankruptcy matter. As you will recall, Dann Sheftelman and the Bondholder Class appealed Judge Gueck's Order confirming the sale to Echo Bay, Inc. That appeal has now been withdrawn. Sincerely WELBORN, DUFFORD, BROWN & TOOLEY PDB/jjb Enel. cc: Robert L. L e d e r e , Esq. (w/encl.) JAN 2 o >' Civil Action Nos. 85-Z-2592, -2593 In re: STANDARD METALS CORPORATION, Debtor Bankruptcy Case No. 84-B-0945 M DANN S. SHEFTELMAN and the "BONDHOLDER CLASS", Appellants, VS . STANDARD METALS CORPORATION, Appellee. STIPULATION FOR DISMISSAL OF APPEAL COME NOW the Appellants, Dann S. Sheftelman and the "Bondholder Class", the Debtor, Standard Metals Corporation, and the Official Unsecured Creditors' Committee, by and through their attorneys, and hereby stipulate as follows: 1. On or about October 28, 1985, the United States Bankruptcy Court for the District of Colorado entered an Order pursuant to 11 U.S.C. § 363 authorizing the sale of certain pro perty of the estate to Echo Bay, Inc. 2. On or about November 6, 1985, Sheftelman and the Bondholder Class filed Notices of Appeal in the Bankruptcy Court from the above-referenced Order. 3. Since the sale to Echo Bay has now been completed, the parties agree these appeals are now moot and respectfully request the dismissal of the same. ISAACSON, ROSENBAUM, WOODS, LEVY & SNOW, P.C. Michael E. Romero, Esq. 633 17th Street, Suite Denver, Colorado 802 Telephone (303) 292-5656 Attorneys for Appellants ADELMAN LAVINE KRASNY GOLD & LEVIN By Robert H. Levin, Esq. 1900 Two Penn Center Plaza Philadelphia, Pennsylvania 19102 Telephone (215) 568-7515 Attorneys for Appellants GREENFIELD & CHIMICLES By Nicholas E. Chimicles, Esq. 361 West Lancaster Avenue Haverford, Pennsylvania 19041 Telephone (215) 642-8500 Attorneys for Appellants DAVIS, GRAHAM & STUBBS B y (IsLfativaJu*. Lx — ______Glen E. Keller, Esq. r Christopher L. Richardson 370 17th Street, Suite 4700 Denver, Colorado 80202 Telephone (303) 892-9400 Attorneys for Standard Metals Corporation FAIRFIELD AND WOODS i, Esq. 950 17th Street, Suite 1600 Denver, Colorado 80202 Telephone (303) 534-6135 Attorneys for Official Unsecured Creditors' Committee I HEREBY CERTIFY that on this 17th day of January, 1986, a copy of the foregoing Stipulation for Dismissal of Appeal was mailed, postage prepaid, to Glen E. Keller, Esq. Christopher L. Richardson, Esq. Davis, Graham & Stubbs 370 17th Street, Suite- 4700 Denver, Colorado 80202 Charles E. Matheson, Esq. Fairfield & Woods 950 17th Street, Suite 1600 Denver, Colorado 80202 Patrick T. Canning, Esq. Securities & Exchange Commission 219 South Dearborn, Room 1204 Chicago, Illinois 60604 Philip G. Dufford, Esq. Welborn, Dufford, Brown & Tooley 1700 Broadway, Suite 1100 Denver,' Colorado 8 0290 Paul G. Hyman, Jr., Esq. Holme Roberts & Owen 1700 Broadway, Suite 1800 Denver, Colorado 80290 H. Thomas Coghill, Esq. Coghill & Goodspeed, P.C. 1600 Broadway, Suite 1430 Denver, Colorado 3 0202 LAW OFFICES Is a a c s o n , Ro s e n b a u m , Wo o d s L evy & S n o w , RC. SUITE 2300 633-I7TH STREET DENVER, COLORADO 80203 Philip G. Dufford, Esq. Welborn, Dufford, Brown & Tooley 1700 Broadway, Suite 1100 Denver, Colorado 80290 Echo Bay Mines Reports ido Mines Regains 100% Net Earnings For 1985 NEW YORK, NY - Echo US$203 per ounce. 1984 pro Ownership Of Grant Gold Mine Bay Mines Ltd. reported net duction was 181,500 ounces VANCOUVER, B.C. - A to pay Aurex 50% of the net Silverado of |U.S.) earnings of C$16.1 million at a cash breakeven cost of successful conclusion of proceeds from the disposition $1,464,485. After the two (C$0.46 per common share) US$198. negotiations between Silver or sale of any of the project year suspension period, for die year ended December' "The increased gold pro ado Mines (U.S.), Inc. and assets including the property Silverado will repay the loan 31, 1985, compared with net duction," said John Zigarlick, Aurex, Inc. has resulted in the itself, if such were to be the over three years. earnings of C$23.9 million It., president, "is mainly due signing of an agreement be case, to apply to the repay In essence, the parties have (C$0.64 per common share) to the Round Mountain ac tween parties whereby Aurex, ment of their investment. a difference of opinion. in I9S4. Revenues were quisition at the beginning of Inc. will withdraw from the Under the agreement, Sil Silverado believes results to C$111.9 million in 1985 bas 1985. Echo Bay's share of pro Grant Mine Prelect after in verado and Aurex have agreed date are positive and will ed on an average realized gold duction was nearly 70,000 vesting (U.S.) $7,351,723. to make provision for the ultimately lead to a suc price of US$324 per troy ounces. The Lupin mine con Silverado will retain a 100% satisfaction of current cessful mine, Aurex believes ounce, and C$89.3 million at tributed the balance of the in interest in the project and has liabilities to existing creditors otherwise. Aurex is therefore an average of US$380 in 1964. crease through higher tonnage agreed to return to Aurex, Inc. of the Grant Mine and its withdrawing and Silverado The 1985 fourth quarter net processed during the year. its investment (non-interest operator, Tri-Con Mining Inc. shall continue. Silverado is earnings were C$5.5 million Consolidated proven and accruing) by way of produc Silverado will assume sole now discussing venture fun (C$0.13 per sharel compared probable ore reserves at tion royalty, if, as and when’ responsibility for the future ding with other mining con with C$6.8 million (C$0,19 D ecem ber31,1985 were 91.2 production is achieved. liabilities of the project. cerns in order to complete per .sharel in the fourth million tons containing 4.5 Theproductionroyalty will In addition, Marubeni development work and bring quarter of 1984, Revenues million troy ounces of gold. be paid six months after pro America Corporation, the the mine back to production were C$30.1 million and duction commences from This compared with 24.5 controlling shareholder of status as soon as possible. C $24.6 million in the 1985 million tons containing 2.1 15% of Net Smelter Returns Aurex, Inc., has agreed to a The company's address is and 1984 quarters respectively. million ounces at the end of of product sales less $320 two year suspension of the #2580 - 1066 West Hastings Robert F. Caiman, chair 1984, The substantial in (U.S.) per ounce of gold pro- ' loan principal and interest St., Vancouver, B.C. V6E man of Echo Bay, said, ' 'The crease is due to the upgrading duced. Example: If gold were payments on its loan to 3X2. most significant event of the of part of Round Mountain's $400/oz. the royalty would be year was our acquisition of a gold mineralized tonnage |$400-$32Dr *XV*’' - $12.' 50% interest in the Round (known as Type III to ore Such a royalty formula leaves Mountain mine in Nevada. reserves at year-end 1985. the mine an»optimum chance Echo Bay Exploration Acquires 60% Despite the addition of this This followed successful tests for achieving profitability and Interest In Washington Properties profitable operation, eaming9 which demonstrated that therefore leaves the property were down because the gold can be economically ex as an attractive project for DENVER, CO - Crown chance at any financing ac average gold price was US$50 tracted from Type II ore using financial participation. Resources Corp. of Denver tivities for the Seattle Mine lower in 1985 than 1984. At the heap leaching recovery Also, Silverado has agreed and Cold Texas Resources under a joint venture between the average 1984 gold price process. Ltd. of Houston have agreed Crown and Sutton Resources our 1985 earnings per share As aresul t of the increase in to give Echo Bay Exploration Ltd. of Vancouver and a fun would have been about 85% reserves, a feasibility study to Inc, a 60 percent interest in ding unit to be formed by higher than the C $0.46.1' examine the expansion of some Washington state min Cold Capital Corp. Gold production from the Round Mountain production ing properties in exchange for Crown Resources had pre- company's Lupin mine and will be undertaken in 1986. $10 million in expenditures visusly announced the com its 50% interest in the Round For further information, over the next five years. pletion of a $500,000 sale of Mountain mine was 264,500 contact A. (Paddyl Brough The subsidiary of Echo Bay securities to the Prospector troy ounces. This was produc ton, vice president, Echo Bay Mines Ltd. of Alberta will Fund and New Prospector ed at a cash breakeven cost of Mines, Ltd., (403) 429-5811 gain the interest in the Gran Fund of San Antonio, Texas. ny and Key properties in the The.sale consists of 2.5 Republic District of million shares plus a like Rochester Mine Project Makes Washington. amount of warrants priced at Drilling on the Key and $.20 per unit. The warrants Application To Nevada DCNR Cranny properties indicates are exercisable at $.20 per "encouraging gold values," share for a period of five years. CARSON CITY, N V -P u r- beyond the property boun Crown said, and three "sub The funds will be used for suant to Nevada Revised dary, is calculated to be 38 stantial zones'' of mineraliza general corporate purposes by Statutes Chapter 445 and the ug/m1 approximately 0.8 tion have been found. The Crown. Nevada Administrative Code, kilometer |0.5 mile) SEof the Key West deposit reportedly Crown Resource Corp. is a Coeur Rochester made ap facility. The Nevada Ambient contains 425,000 tons of ore public company (NASDAQ plication to the Department Air Quality Standards for TSP. graded at .18 ounces of gold symbol CRRS) which Is ac of Conservation ana Natural for a 24-hour period and an per tom the Key Easr 1.3 tively involved in the mineral Resources (DCNR) for four air nual geometric mean are 150 million tons graded in excess and energy business, with quality registration cer and 75 ug/m 3, respectively. o f . 10 ounce of gold per ton, properties in eight states. tificates for the construction A copy of the review and and the Cranny deposit, 3.3 Corporate offices are located of the Rochester Mine Pro proposed restrictions is million tons of ore graded at at 820 Sixteenth Street, Suite tect, located near Lovelock, available for public inspec .053 ounce of gold per ton. 415, Denver, Colorado Nevada. The DCNR announ tion at the Pershing County Echo Bay will have first 80202. (3031 534-2110. ced its intent to issue four air Lihraryj the U.S. Environ quality registration certifi mental Protection Agency, D ated Material-RUSH! cates to Coeur Rochester, baa* Air Management Division, ed on the preliminary review 215 Fremont Street, San Fran of the. prospect, 4s proposed. cisco, California; and the The predicted maximum Division of Environmental 24-hour Impact for total Protection, Room 103, 201 suspended particular« |TSP), South Fall Street, Carson Ci beyond the property boun-» ty, Nevada. A copy of the dary, is calculated to be 132 review can be obtained from micrograms per cubic meter the Division of Environmen Jug/m1) approximately 0.8 tal Protection, Room 103,201 kilometer (0. Smile) SB of the South Fall Street, Carson Ci facility. The predicted max ty, Nevada 89710 (phone imum annual impact forTSP, 702-885-50651. Labor and Employment Review Column Ed. John M. Husband Denver:—295-8228 Drug and Alcohol Abuse In the Workplace by John M. Husband financial assistance are subject to the Act. their chemical dependency, but not so Drug and alcohol abuse have been part The Act requires that federal contractors handicapped as to be unqualified to per ; of American life for a long time. How have a program of affirmative action to form their jobs. ever, only recently have they gained rec The U.S. Department of Health and ognition as problems of such staggering employ handicapped individuals and provides a mechanism for complaints to Human Services has advised employers proportions. In the workplace, such the U.S. Department of Labor by those receiving federal aid as to their obliga abuse can cause lost jobs, moral prob- who refuse to comply with the require tions: i lems, illnesses, injuries and deaths. In With respect to the employment of a m ents. economic terms, losses include property drug addict or alcoholic, if it can be damage, absenteeism, lost productivity, The Act prohibits government con tractors from discriminating against shown that the addiction or alcoholism increased health insurance costs, in prevents successful performance of the creased worker’s compensation, the cost •‘qualified handicapped individuals.” A ‘•handicapped individual” is defined in § job. the person need not be provided of replacing and training new employees, the employment opportunity in ques employee theft and problems with quali 706(7)(b) of the Act as follows: Any person who (i) has a physical or tion. For example, in making employ ty control. mental impairment which substantial ment decisions, a recipient may judge In response to these problems, em ly limits one or more of such person’s addicts and alcoholics on the same ba ployers in increasing numbers put sis it judges all other applicants and workers through tests to determine the major life activities, (ii) has a record of such impairment, or (iii) is regarded as employees. Thus, a recipient may con presence of drugs in the blood or urine. sider—for all applicants including having such an impairment.... Such Many companies require testing as a pre drug addicts and alcoholics— past per requisite for employment. As employers term does not include any individual who is an alcoholic or drug abuser sonnel records, absenteeism, disrup establish policies to deal with these prob tive, abusive or dangerous behavior, lems, employees caught using controlled whose current use of alcohol or drugs prevents such individual from per violations of rules, and unsatisfactory substances are likely to find themselves work performance. Moreover, em forming the duties of the job in ques out of a job. tion or whose employment, by reason ployers may enforce rules prohibiting ; This article gives a brief overview of the possession or use of alcohol or of such current alcohol or drug abuse, ■ some areas of legal concern that may drugs in the workplace, provided that would constitute a direct threat to I arise in testing for or establishing policies such rules are enforced against all em dealing with drug or alcohol abuse property or the safety of others. ployees.2 among workers. It also discusses existing The statutory language does not auto matically exclude all current users of legislative prohibitions. drugs or alcohol from the workplace. Lit The Rehabilitation Act erally read, the language appears to re The Rehabilitation Act of 1973 quire a demonstration that the “current use” of alcohol or drugs prevents perfor (“Act”) is a broad, comprehensive statute This review is prepared by the Labor Law Section of the Colorado Bar Association to designed to protect the handicapped.1 mance of the duties of the job or that it renders employment of the individual a present current issues and topics o f interest The Act does not apply directly to private direct threat to the property or safety of to members of the bar as both legal practition employers. However, federal contractors others. Thus, employees are placed in the ers and employers. This month's column was with contracts above certain minimum untenable position of simultaneously written by Column Editor John M. Husband, amounts and those who participate in Denver, a partner In the firm o f Holland & Hart. proving that they are handicapped by programs or activities receiving federal Although there is not much case law thejob. The leading case in this area is in this area to date, Whitlock v. DonovanJ Beazerv. New York City Transit Author indicates that the exclusionary language ity.* under the Act will be read broadly. In In Beazer, the New York City Transit Whitlock, the court dealt with a federal Authority established an absolute bar employee who was an alcohol abuser. against possessors or users of drugs. The The court excluded this current user rule had been applied to exclude both from the protection of the Act and com present and past users of drugs, including mented on the exclusionary language of former users who were on approved the Act as follows: methadone maintenance programs. The The legislative history indicates that certified class in Beazer was limited to record if you c a n 't read it? this 1978 amendment was meant to those in methadone maintenance pro JD »M D has prepared a list “exclude alcoholics and drug abusers grams. The class did not include appli of over 500 commonly-used in need of rehabilitation from the defi cants or employees who were currently medical abbreviations, nition o f‘handicapped individuals’” using drugs. for purposes of employment discrimi The New York trial court found that in a handsome folder for nation. H.R. Rep. No. 1149, 95th the absolute rule of exclusion adopted by your reference library. Cong., 2d Sess. 22-23, reprinted in the Transit Authority toward those in For a free copy, write:* 1978 U.S. Code Cong. & A.D. News methadone maintenance programs vio Advertising Manager 7312, 7333*34. There is no question lated the Fourteenth Amendment to the JD*MD, Inc. here that the plaintiff was currently U.S. Constitution and Title VII. How ever, the trial judge did state: 153 Main Street using alcohol and was in need of reha bilitation at the tim e of the incident I wish to stress certain things not com Madison, N.J. 07940 giving rise to this suit. Therefore he is pelled by my holding. The [employerl * No telephone orders not protected by Section 504 [29 is not required to hire any present or U .S.C . § 7 94].“ past methadone maintained person This is an area that is still subject to where there is a legitimate reason to interpretation. Despite the willingness of question the person’s ability or compe the court in Whitlock to exclude alcohol tence— including a legitimate reason ics and drug abusers in need of rehabilita to believe that the person is abusing tion from the definition of a handi illicit drugs or alcohol.... The [em capped individual, there is not enough ployer] is not prevented from making authority definitively to conclude that reasonable rules and regulations about mere demonstration of current use is methadone maintained persons— such sufficient cause to exclude an individual as requiring satisfactory performance WANTED: protected by the Act. in a program for a period of time such as a year, or forbidding methadone The Discrimination Laws maintained persons employment in REDEMPTION RIGHTS In addition to restrictions existing un sensitive categories such as that of sub (Before or after the der the Act with respect to handicapped way motormen, subway conductor, individuals, employment criteria involv subway towerman, bus driver, and jobs sale).. ing exclusion for drug or alcohol use or dealing with high voltage equipment.6 abuse may be subject to challenge under The court even went so far as to allow the I.L.C.’s, Trust Deeds, Title VII or similar state laws prohibiting employer's right to inquire as to whether Mechanic Liens, and discrimination against certain protected individuals were in methadone main groups; e.g., racial and other minorities. tenance programs. Judgements, Etc.. Most employers who test individuals In finding a Title VII violation, the Denver Area Apts, and for drug or alcohol abuse or use would Beazer court relied primarily on two sta argue that the rule is applied equally to tistics: that 81 percent of the employees Offices Preferred.. protected and nonprotected groups. If checked for suspected violation of its the employer’s policies with respect to its narcotics rule were either black or His Cash Purchase of tests can be shown to be applied equally panic; and that 63 percent of the persons Position!.... to protected and nonprotected groups, in New York City on methadone main and if it can be shown that no intention tenance programs were black or Hispan Fast and Experienced to discriminate can be demonstrated by ic. having such rules, an individual employ The U.S. Supreme Court was critical ( of the trial court’s decision. The Court Contact: ee claiming intentional discrimination faces a stiff legal challenge. found that the statistics did not support F.Jeffrey Krupka V However, even a neutral policy can be the conclusions of the decision. It stated 2273 E. Becker Ln. found to discriminate if a sufficient “im- that the first statistic regarding testing pact" on protected groups can be shown. should have been applied to all violators Phoenix, AZ 85028 Under the discriminatory impact analy- of the rule— not only methadone users. (602)971-2718 sis. there must also be an adequatejnow ^ Furthermore, the Court found that the ing of relationship to therequifem ents ofL statistic regarding the percentage of those en g a ged in methadone maintenance Other Issues use and abuse. While there are some lim programs in New York City was ques Aside from the Act and Title VII, any iting factors and considerations that tionable since it involved only public testing or program with respect to control must be made, every employer can take programs and did not include those of drug or alcohol use must be conducted certain precautions to limit drug and al involved in private programs. with consideration of other laws and con cohol use and abuse within the work More significantly, the Supreme tracts. place. Court went on to state: For example, for those employers with The record demonstrates, in fact, union contracts, a union might claim that the figure is virtually irrelevant that such a drug/alcohol control program NOTES because a substantial portion of the was adopted unilaterally without bar persons included in it are ... un gaining. In addition, provisions of a col 1.29 U.S.C. 701-794 (1976). qualified for other reasons— such as lective bargaining agreement with the 2.45 C.F.R. Part 84, App. A, Subpart A-4. the illicit use of drugs and alcohol.7 union, including the just cause provision, 3. 36 F.E.P. Cases 425 (D.D.C. 1984). The Court further added that even if may be interpreted by an arbitrator to 4. Id. at 427. It is interesting to note that the statistical showing had been ade require specific impairment or handicap the court in Whitlock also found that the plaintiff was protected by § 501 of the Reha quate to establish a prima facie case, it before an employment action can be tak bilitation Act. The court held that § 501 had been rebutted by the employer’s en. Finally, a union might challenge the placed a higher requirement upon federal demonstration that its narcotics rule was application of a drug/alcohol testing pro agencies as to their employees. “job related.” In this regard, the Court gram on the basis of discriminatory ap 5. 399 F.Supp. 1032 (S.D.N.Y. 1975); sub stated: plication to union members.10 sequent opinion, 414 F.Supp. 277 (S.D.N.Y. [Plaintiffs] recognize, and the findings In addition, increasing numbers of 1976), qjfd 558 F.2d 97 (2dCir. 1977), rev'd. of the District Court established, [em cases throughout the country are being 440 U.S. 568 (1979). ployer’s] legitimate employment goals based upon the common law. These in 6.id. at 1058. of safety and efficiency require the ex clude claims for wrongful discharge, in 7. Id. at 586. 8. Id. at 587, n. 31. clusion for all users of illegal narcotics, tentional infliction of emotional distress, 9. See also, Drayton v. City o f St. Peters barbiturates, and amphetamines, and libel, slander and invasion of privacy. burg, A ll F.Supp. 846 (M.D. Fla. 1979), of the majority of all methadone wherein the court stated: users.... {T]hose goals are sufficiently apart from the desire of any employer to served by—even if they do not re Conclusion recruit law-abiding employees, there quire— [employer’s] rule as it applies Federal law does not directly prohibit would seem to be no logical nexus what to all methadone users including those employment testing for drugs and alco ever between recent marijuana usage and who are seeking employment in non hol by a private employer. However, a employment as a firefighter (as distin safety sensitive positions.... The re private employer may become subject to guished from employment as a police of cord thus demonstrates that [employ the Rehabilitation Act of 1973 if the em ficer); and if there was evidence of dis er’s] rule bears a “manifest relationship ployer is a federal contractor. Alcoholics parate impact according to race... relief might be warranted on this issue. There to the employment in question.”8 and drug addicts are handicapped within is, however, no such evidence. T he decisions indicate the will Beazer the meaning of the Act, and taking an Id. at 855. ingness of the various courts considering employment action against such a handi 10. Lithographers Local I v, NRLB. 729 the employer’s rule in this litigation to capped individual can result in violation F.2d 172 (2d Cir. 1984); Jacob E. Decker & except the validity of the employer’s rule of the Act. In addition, claims may be Sons, 244 N.R.L.B. 875 (1979), enfd, 636 prohibiting the employment of users of made under Title VII and various state F.2d 129 (5th Cir. 1981). illicit drugs.9 One certainty that can be laws. gleaned from the decisions is that any At present, the case law supports the rule concerning drug or alcohol use must employer’s right to test and take employ be applied in an even-handed fashion. ment actions based on alcohol and drug Real Estate 2) show that the owner actually or being performed. Prompt notice to the continued from page 30 dered a change or took action owner is required if these differing con which resulted in a change; and ditions are found. 3) support the claim by reference to Proof of anticipated conditions may be detailed records in which the actual established by the following: quately covered in the plans and specifi costs of changed or extra work 1) bid specifications and plans; cations. This may cause a conflict of in should be separately recorded on a 2) bid estimate worksheets; terest for the A/Es who, by approving daily basis. 3) owner’s boring logs or soil reports; such change orders in a timely manner, 4) pre-bid site investigation report; may be inappropriately adm itting their Changes in the Site Conditions: and own negligence or faulty omission. Many construction contracts contain a 5) pre-bid or pre-construction confer To prove entitlement to additional differing site conditions clause that al ence minutes. compensation for a change in the scope lows an equitable contract price adjust of work, a contractor must: ment if physical site or subsurface condi Project Schedule Changes: I) show the original scope of work tions are either (1) different from those Delays, interferences or disruptions in contained in the bid documents represented in the contract or (2) materi work and suspension or acceleration of and confirmed in the contractor’s ally different from conditions that are work are changes in the project schedule. bid estimate; normally inherent in the type of work These changes may affect either planned