Felder and others (plaintiffs) sued in district court in the then-territory of Alaska to recover $5,402.65 for goods, wares, and merchandise sold to Reeth (defendant) and for Reeth’s checks cashed by the plaintiffs. Reeth admitted to the money obligation but counterclaimed for the conversion and sale of his mining equipment and machinery. In his counterclaim, Reeth waived the tort involved in the conversion. Instead, Reeth relied upon an implied contract created by law, whereby the plaintiffs owed him the reasonable value of the machinery and equipment. Reeth argued that the reasonable value of the equipment was $10,000. The plaintiffs admitted to taking the mining equipment and alleged that the equipment had been taken to save it from total destruction by the flooding of the river banks on which the equipment had been placed. The plaintiffs further stated that they had sold the equipment for $550, which was its reasonable value in the region. The district court held that Reeth owed the plaintiffs $8,690.21 and that the plaintiffs owed Reeth $12,480 including interest, and rendered judgment in Reeth’s favor for the difference. The district court found that the reasonable value of the mining equipment at the time and place of the taking was $8,000 based on the use that Reeth could put the equipment to, despite the fact that the equipment had no market value. The plaintiffs appealed.