Aug 5 (Reuters) - A tiny Montana town near the banks of the Little Bighorn River where U.S. Army commander George Armstrong Custer made his last stand in 1876 against Sioux and Cheyenne warriors is to be sold at an auction this month.

Garryowen, a 7.7-acre (3.1-hectare) town of just two residents in the Little Bighorn Battlefield in southeastern Montana, was purchased by Chris Kortlander in 1993 after a wildfire destroyed his home in Malibu, California.

"The only thing I had were the clothes on my back," he said.

Concerns about his health are now prompting the 54-year-old dealer in historical artifacts to auction the gas station and convenience store that anchor the economy of Garryowen, as well as a manuscript collection representing the papers of Custer's wife, Elizabeth Bacon Custer.

The auction of Garryowen marks the most prominent recent sale of tiny historic Western towns that have included the auction in April of Buford, Wyoming, population one, which was bought for $900,000 to international fanfare.

Garryowen is the site of one of the few U.S. monuments outside Arlington National Cemetery that is dedicated to an unknown soldier. It sits on Interstate 90 midway between Yellowstone National Park and Mount Rushmore National Memorial.

Custer had been a successful Union Army commander in the Civil War before he was dispatched to post-war campaigns, triggered by Western expansion and driven by the U.S. government, aimed at forcing Plains Indians onto reservations.

On June 25, 1876, the 36-year-old Custer and more than 200 7th U.S. Cavalry soldiers were killed by Sioux warriors including Crazy Horse and Cheyenne forces in the territory of Montana in a battle that has gone down in history.

"It's one of the great sagas of the American West with a cast of characters second to none," said James Donovan, author of the 2008 history, "A Terrible Glory: Custer and the Little Bighorn - the Last Great Battle of the American West."

Mystery blankets a major U.S. military defeat that generated incomplete and conflicting accounts by eyewitnesses.

"There are three known facts about Custer and the Little Bighorn: Custer came, Custer saw, Custer got his derriere whipped," said Sandy Barnard, author of the 2005 "Where Custer Fell" and other books tied to the battle.

WIFE'S CAMPAIGN

Historians credit Elizabeth Bacon Custer, or Libbie, author of three books about her life with Custer, for fostering a fascination with him that flourishes 136 years after his death in a battle popularly referred to as "Custer's Last Stand."

"Libbie went on a mission to salvage his good name and to refurbish his reputation," said Lynn Houze, assistant museum curator at the Buffalo Bill Historical Center in Cody, Wyoming.

In 2004, Kortlander bought the thousands of manuscripts, documents and historic photographs that comprise the Elizabeth Bacon Custer collection, which is not cataloged.

He believes a love letter to Custer from another woman and a translation - yet to be undertaken - of the collection's shorthand copies of correspondence between Custer and his wife may provide new insights on a relationship Barnard described as "one of the great love affairs of history."

No scholar has fully examined the collection, which includes Libbie's notes about 19th century frontiersman William F. "Buffalo Bill" Cody, whose traveling show about the "wild" American West set its image for generations.

Historians and writers who have reviewed select documents from the collection said it contains items of historical and cultural interest.

"We do see it as a valuable collection," said Jeremy Johnston, archivist with the Buffalo Bill Cody Historical Center.

Added author Barnard, "It's a treasure trove that needs to be mined."

The Tulsa, Oklahoma, auction house is to offer buyer's choice with an opening bid of $250,000 for Garryowen, named after the song Custer adopted for the 7th Cavalry, and the manuscript collection to online and onsite bidders on Aug. 15.

"Garryowen is in a league of its own," said Amy Bates, chief marketing officer for Williams & Williams.

Kortlander, who along with a caretaker are the town's only residents, said he hopes both the town and the collection will go to a sole bidder dedicated to building on a legacy Kortlander has shaped for 19 years.

"One reason for an auction is to attract that special person who wants to carry the torch," he said. (Editing by Vicki Allen)

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