Van Berkom v. Cordonnier
2011 ND 239
| N.D. | 2011Background
- Beaudoin plaintiffs own mineral rights in Stark County; JB Mineral Services sought to lease them and provided a July 20, 2009 lease and a supplemental agreement tied to a 120-day termination provision.
- The supplemental agreement required JB to pay $45 per net mineral acre as a “Supplemental Bonus Payment” on or before the termination date, or the lease would terminate automatically.
- JB delivered a $165,600 sight draft with the lease but JB did not fund or obtain authorization for payment by the termination date (January 12, 2010).
- A revised lease was issued January 6, 2010 but Beaudoins did not accept it or fund the new draft;JB never paid the July 2009 draft and sought to rely on the July 2009 dates and forms.
- Beaudoins sued to declare the lease invalid and for statutory damages; the district court granted summary judgment that the lease automatically terminated on January 12, 2010 under the unless clause, awarding damages and fees.
- JB appeals, arguing the form and timing of payment/tendering allowed extension; the Supreme Court affirms the automatic termination under the unless clause and rejects Irish Oil-based arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the lease terminated automatically under the unless clause | Beaudoin argues automatic termination occurred on January 12, 2010 | JB argues tender of a future-dated, funded draft complied with the clause | Yes; automatic termination on January 12, 2010 |
| Whether tender of a draft suffices to satisfy payment timing | Beaudoins claim only actual timely payment or tender | JB contends tender of a draft payable later satisfies timing | No; tender must be immediately payable and funded by the termination date |
| Application of Irish Oil & Gas v. Riemer compared to unless clause | Irish Oil supports consideration via royalty but not relevant here | Irish Oil controlling where complication arises | Inapplicable; unless clause governs here and Irish Oil does not control |
| Whether summary judgment was appropriate | District court correctly found no genuine fact issue | Disputes on form of payment create material issues | Summary judgment affirmed |
Key Cases Cited
- Irish Oil & Gas, Inc. v. Riemer, 2011 ND 22 (N.D. 2011) (consideration where royalty clauses present; question of fact)
- Nygaard v. Continental Res., Inc., 1999 ND 172 (N.D. 1999) (timeliness of payment; form of payment distinguished)
- Norman Jessen & Assocs., Inc. v. Amoco Prod. Co., 305 N.W.2d 648 (N.D. 1981) (strict construction of unless clauses; automatic termination rule)
- Borth v. Gulf Oil Exploration & Prod. Co., 313 N.W.2d 706 (N.D. 1981) (automatic termination when payments deficient)
- Serhienko v. Kiker, 392 N.W.2d 808 (N.D. 1986) (unless clause construed as a special limitation)