Rhonda's Rhodium

As a lark, Rhonda bought 20,000 shares of Lucky Bucky Minerals, Inc. when its price on the "penny stock" exchange was $0.005 per share. Shortly thereafter, she learned that she was the largest individual shareholder with sufficient votes to elect herself to the three-person board of directors. At the next board meeting, she managed to purchase controlling interest in the company for a little over $1,500.

About 10 months after obtaining control of Lucky Bucky, the company received a letter from Tame Kitty Oil Drilling Co. The letter indicated that Tame Kitty was drilling for natural gas in northwest Colorado and had come across an "interesting" layer of compressed gravel about 300 feet below the surface. The letter was sent to Lucky Bucky because the land records showed that its corporate predecessor owned all the "metallic ore" mineral rights in where Tame Kitty was drilling. On investigation, Rhonda learned That Lucky Bucky owned the mineral rights covering an area three miles wide and five miles long, with the Tame Kitty drilling site about one-third the way from one end.

Rhonda took the trouble to investigate because the letter had included an assay report that showed a very rich concentration of rhodium compounds. The report indicated that the deposit was unusual in that it included only a very minor amount of the other minerals normally associated with rhodium. Rhonda had an expert review seismic surveys of the area. The expert produced a chart showing that the compressed gravel layer was almost three miles long and varied from a few feet (where Tame Kitty had drilled through it) to about 75 yards in width. The layer also varied from a few inches to about 20 feet in depth. The layer had, fairly obviously, been a stream bed some millions of years earlier.

A few letters from Lucky Bucky produced a number of enthusiastic offers to mine and process the find. All the offers required that access be assured before any money was invested. Rhonda found that most of the land surface was owned by the state government and had been dedicated as a state "natural area" in the early 1970s. The state had purchased the land from private owners shortly before the natural area designation, about 90 years after the ore rights had been deeded to Lucky Bucky's predecessor. The state had made no effort to purchase or condemn the rights owned by Lucky Bucky.

The most appropriate, and least expensive, place to locate the prospective mining operation is on the state-owned land. Only a small portion of the deposit is under privately owned land and that is in very rough terrain, making it both difficult to reach and very expensive to use as a base for mining operations. A mining engineer did an extensive examination of the area and all the available data. Her informed opinion is that about 20% of the deposit might be mined from a location not on state land, but at a cost that would exceed the value of the materials mined. If operations started from a location near the Tame Kitty drilling site, 95% of the deposit could be profitably mined.

The state peremptorily denied Lucky Bucky's request for access, citing a state statute that expressly prohibits mining and road construction in natural areas. Since Lucky Bucky's request had included a diagram, the state's refusal gratuitously noted that any roads and operations on adjacent private land would require prior state approval due to the "likelihood" of contaminated runoff into the natural area. Since the average annual rainfall in the area is about two inches per year, a hydrologist is of the opinion that any potential runoff could be easily contained, unless two or three "100-year storms" occurred in one week.

After further correspondence, the state's and Lucky Bucky's positions have hardened. The state has stated that it is seriously considering condemnation (eminent domain) proceedings. Rhonda argues:

1. Lucky Bucky has a legal right to an easement over the land surface to a location from which the found minerals can be reasonably mined. That includes both access (road, mine shafts) and a sufficient area to place the necessary structures and equipment.

2. The state's declaration of the area as a "natural area" constitutes an unconstitutional "taking" requiring compensation.

3. If the state's declaration is not, itself, a taking, that declaration together with the state's refusal to recognize Lucky Bucky's easement rights is an unconstitutional taking.

With respect to both Lucky Bucky's "taking" argument and the state's threatened condemnation, Lucky Bucky contends that "just compensation" must be equal to the fair market value of the entire ore deposit, less mining costs (assuming the operations are at the most advantageous location). The state takes the position that the relevant amount of ore and mining costs must be based on operations from the privately owned land.

What result?

Figby's Imagination

Ferdinand Figby works for a federal government agency. Figby's position requires his presence in a number of locations in the U.S. and around the world. Naturally, he flies to these locations, usually on commercial flights. In the past three years, Figby has flown more than 250,000 miles on commercial flights. He insists on flying only on flights of an associated group of companies.

During all this flying Figby, of course, studies the various materials provided by the agency concerning his duty assignments. Since those materials tend to be rather sensitive, the agency has provided Figby with "laptop" computers, "personal data assistants," and related equipment. Figby has never been told that the supplied equipment cannot be used for personal or recreational purposes, and there are no relevant regulations restricting use. Because of the imbedded security measures, Figby is the only person who can access the programs and data in the provided equipment.

Figby's work while flying averages less than an hour. Most of the flights take more than three hours and some take as long as 25 hours, not including layovers and connection times. Obviously, Figby must do something to occupy his time.

Figby has a remarkable imagination and advanced computer programming skills, both of which he has exercised during his many flights. He wrote a novel, an electronic game, and a computer program, among unimportant other things.

The novel is "science fiction," set in a future populated with a number of starfaring civilizations, including humans. A pre-publication reviewer suggested that it is a thinly disguised fictionalization of Figby's work experience, which he has strenuously denied. There is little internal or objective evidence to support the reviewer's suggestion. Figby has a contract with Tor, a major science fiction publisher. Under the contract he will receive $32,500 plus $2.50 for each book sold, starting with sale number 13,001. The publisher has not yet released the book because of the controversy described below.

The electronic game was designed initially for "personal data assistant" type hardware. It is significantly more sophisticated than other games available for such hardware, approaching the quality of games normally produced for PCs or PlayStation™ hardware. The requirements necessary for a copyright on that program have been satisfied. Figby has applied for a software patent for a program that enables transferring game programs and game data between PDAs, computers and PlayStation™ hardware. A patent will probably be granted.

Personnel changes following the most-recent election finally reached Figby's level in the agency. One result was increased scrutiny of expense accounts and external-activity reports. The agency formally announced its position that all results from all personnel activities during normal working hours and while traveling are the property of the agency, not the employee. After a review of Figby's records, the employing agency presented him with some formal demands, specifically:

1. That Figby sign a document agreeing (a) to the agency's use, at its sole discretion, of his "frequent flyer" miles when making job-related travel arrangements, and (b) that he will not attempt to use those miles for personal travel.

2. That Figby formally assign all copyrights, patents, patent applications, and related royalties to the agency. The agency takes the position that documentation is not legally necessary, since he has no property rights in those things, but the documentation will be useful in the event royalty payors have any questions about to whom payment should be made.

3. That Figby formally assign all contract rights with the novel's publisher to the agency, with the same rationale as stated in the preceding paragraph.

What result?

All Good Deeds

Grandpa Joe O'Creedy homesteaded 160 acres of farmland. He received a patent (government deed) to the land, so he was the first individual title holder. After he received the patent, Joe married Mable and they had four children (Alice, Bob, Carol, and Ted). In Joe's will, he gave the 160 acres to his children "as equal joint tenants" but subject to a life estate to Mable. Mable's will was different. Her will stated that she gave all her interest in the land to Alice. Joe died before Mable.

Under state law, a spouse has the option of "taking against the will" if the will gives to persons other than the surviving spouse more than half the value of the property owned by the married couple at the spouse's death. The property to be considered is all the properties, real and personal, owned jointly by the spouses, or individually by one of them. After Joe died, Mable decided to "take against" Joe's will. Bob and Ted challenged Mable's right to do that, claiming that Joe's will did not do give more than half the property to others. Before the matter was decided by the court, Myrtle died.

Alice continued to press Mable's claim (as executrix of Mable's estate). She also brought another matter to the court's attention. In an old safe, to which no one but Joe ever had the combination, Alice found a deed that was signed by Joe and properly notarized. In that deed Joe transferred the property to "Joe and Mable, as tenants in the entireties." The deed was dated about 10 years before Joe's will and about 12 years before he died. There is nothing in the local county records to indicate that deed had ever been filed.

Ted left the farm the day he turned 18 and has not been back since. Before Joe died, Carol talked Ted into signing a deed. The deed states that Ted transfers to Carol the 160 acres. It is in the form of a warranty deed. It purports to transfer a fee simple interest in all the land.

Bob and his children have been farming the land for the past 25 years, after Joe and Mable moved to town. Bob has a letter from Joe saying that if he (Bob) stays on the land and farms it for 15 years, the farm will be his. Bob also has affidavits from three neighbors and two distant relatives. Each affidavit says that at one Thanksgiving dinner (the year Joe and Mable moved to town), Joe announced at the dinner table that he (Joe) was giving the farm to Bob but Bob had to "stick it out" for 15 years. Bob has many documents and financial records to prove that he continued farming the land for 25 years and that he made substantial improvements to the farm (new buildings, irrigation systems, etc.) using money he earned as a real estate agent.

Carol has a bad habit - gambling (legally, of course). After both Joe and Mable died, she took Joe's will and Ted's deed, and her birth certificate, to a finance company. To secure a $40,000 loan, she executed a mortgage in favor of the finance company. It was not long before Carol stopped making payments on the loan. The finance company went to court, naming only Carol as a defendant, and obtained a judgment foreclosing the mortgage and, in essence, transferring Carol's interest in the property to the finance company.

Who owns what?

It[']s Full of Stars

A very famous line in a very famous book by a very famous writer is "It's full of stars."

A marginally known fan and computer-game illustrator created a computer program that can be used to create a three-dimensional "star map." The program has been used to create maps of the stars actually observed. It also has been used to create fictional star maps for electronic games, computer games, "hard copy" novels, etc. The program's creator named the program "Its Full of Stars" and dedicated it to the famous author, fully acknowledging the author and the line. The program's creator has made the program available, as "freeware," on the internet, with the condition that any person who publishes star maps made with the program acknowledge the program's use, the program creator's role, and the famous author.

Does the program creator have a cause of action against persons who download and use the program for commercial purposes but do not include the acknowledgments?

The Un-Cracked Safe

Neela Chulalonghorn is a mathematician. She spent many hours (years, really) trying to write a mathematical formula that could be used to predict the rise and fall of wholesale green tea prices. She finally constructed a formula that made predictions with 87% accuracy. During all her formula-writing efforts, Neela was very careful to double-shred and bag all of the paper on which she wrote notes and always saved any computer calculations and data on floppies or zip disks which she kept in her possession at all times.

Duke Tan Tea Co. learned about Neela's efforts. On many occasions, Duke Tan's agents tried to obtain Neela's notes, calculations, etc. One of them even tried to put some of her discarded, double-shredded papers back together using a glue pad designed to catch mice. They were never successful, so Duke Tan decided to buy the formula. His offer to pay "at least seven figures in Euros" persuaded Neela that a meeting would be a good idea. Neela chose to have the meeting at the Raffles Hotel in Singapore.

When Neela checked into the hotel before the meeting, she asked the hotel's general manager to store some "very, very valuable" items in the hotel's safe. The manager responded by saying the hotel no longer provided that service because it had installed a "very secure" safe in every room. He also told her that the safes in the "sumptuous suites" were more secure than most safes used in the most exclusive jewelry stores. Because of this, Neela chose a sumptuous suite for her stay.

The day after her arrival, Neela met Duke Tan for lunch. After some rather spirited bargaining, Duke Tan purchased the exclusive right to use Neela's formula for one year, with an option to renew. He agreed to pay 7.2 million Euros for the license, with the price for any option term to be negotiated. Duke went to his bank to get the necessary cash. Neela went to her hotel room to get a disk with the formula, which she had put in the safe in her room the night before. Duke found the cash, but Neela found an empty safe. Before Duke Tan got to the hotel with his cash, Neela's formula was available on the Internet - free to anyone who wanted to download it. Naturally, Duke Tan decided to take the cash back to the bank.

After much investigation, it was determined that the safe in Neela's room, and all the others in similar rooms, were accessable from service closets between rooms. The lower part of the walls in those closets were covered with a sheet of metal, which was screwed into the wall. In the affected closets, the there was a large hole in the wall behind the metal sheet. By removing the metal and reaching through the hole, a person had access to the rear wall of the safe in the adjacent room. The safes were constructed so that the back of the safe could be removed by loosening four bolts. From the inside, the corners of the rear wall looked just like the other corners, which were obviously solidly welded together.

Neela has sued Raffles for 50 million Euros. She contends that Raffles was the bailee of the disks she put in the safe and that it negligently failed to fulfill its obligations. Raffles, of course, denies there was a bailment.

Neither Raffles, nor anyone else, can prove when or how the walls came to have holes. A construction expert says it looks like the holes were left during the original construction, but he admits that they might have been made later by a very skilled person. The company that built the safes has design and production records showing that all of the safes delivered to Raffles were double-welded along all corners, inside and out, before they were delivered. The delivery records show all the safes were transported by Turner Transport from the factory to the hotel, a distance of less than 10 miles. Turner Transport's records show that the same number of safes were received and then delivered to Raffles Hotel's manager and there was no notations about broken or damaged packages.

What result?