Alumet v. Bear Lake Grazing Co.

dissenting opinion, surprise it comes as no

that the Court is not much concerned that very may well have discombobulated the process making in the

law certain that

Troy pays Gascon for his unsuccessful mis- eyes persons

deed. of some But,

may be seen as in a commendable. sense,

larger stability where the of the law concerned, regrettable, it is I and said as closing my

much in the sentence in earlier

opinion along which issued with the Court’s

opinion April of 1991.

ALUMET, as, Compa also known ny; Company; Southwire National (Now Corporation National Inter Steel Inc.) Sciences, Inc.,

group, and Earth Alumet, Plaintiffs-Ap partners

pellants-Cross Respondents,

v. COMPANY,

BEAR LAKE GRAZING

Defendants-Respondent-Cross

Appellant. COMPANY,

BEAR LAKE GRAZING

Counterclaimant-Respondent-Cross

Appellant, CORPORATION,

NATIONAL STEEL Sciences, Inc.,

Earth and Southwire

Company, partners doing business un Alumet,

der the firm also name Counterdefendants-Appellants-Cross Company, known as Alumet

Respond ent s. Archer, D. Archer

John and Elizabeth wife,

husband and

Counterdefendants-Appellants.

No. 18397. Idaho,

Supreme

Boise, February 1990 Term.

April 1991.

Rehearing July Denied

BOYLE, Justice. petition out of This for review arises appeal declaratory judgment second concerning in the action district court duty actively of a lessee to mine under an develop- implied covenant of reasonable mining ment on a written lease. appeal, In the first v. Bear Lake Alumet Co., Grazing I), (hereafter (Ct.App.1986) Alumet the agree- Appeals lease held that the Court ment contained an covenant ac- premises the case tively mine the remanded to the district court determine the im- required the level of under plied covenant. The district court was also to set Appeals the instructed if for cure Alumet had defaulted time comply failing to with the terms the covenant. Upon remand no additional evidence was and the trial court presented upon quantify- existing relied record production under the im- ing required annually plied covenant at one million tons period a time for cure and set parties appealed All case breach. again assigned to the Court of was once Appeals. appeal, In the second Alumet v. Grazing, Bear Lake II), (1989)(hereafter Alumet Appeals judg- affirmed the Court granted we ment of the district court and review.

I. Proceedings Facts Prior in the first two The facts are well stated repeated will appeals and not be except as neces- opinion in this great extent For presented. sary to address issues Thomas, Fields, Moffatt, Barrett, Rock & history complete recitation Boise, respon- plaintiff-appellant-cross for litigation I this see Alumet facts of argued. Fields dent Alumet. Richard C. II. Kidwell, Holden, Crapo, Idaho Hahn & predecessors in interest of Falls, counterdefendants-appellants Company Grazing Bear Lake Alumet and R. Thom- and Elizabeth Archer. Curt John agreement lease under which into a entered argued. sen de- lessee, Alumet, explore and County Pocatello, velop phosphate mine Caribou defen- Meyers, McDevitt & Alumet and its Springs, Soda Idaho. Bear Lake near dant-respondent-cross-appellant Archer, explored extensively argued. predecessor, Grazing Jerry Meyers Co. R. and we begin affirmed deposits, but did not The Court phosphate granted The extended review. removing ore until 1978. expire term of the lease was

primary continued to mine the May, 1979. Alumet II. 1983, removing from 1978 to property produce royalty payments of enough ore to Review Standard of period for that approximately $9000.00 It is well established lessor, Lake In 1984 the Bear Graz- time. court’s decision review of a lower Court’s the lease was ing, notified Alumet the evi ascertaining whether limited to Alumet’s “failure to terminated due to fact, and findings of supports dence good mining opera- properly conduct faith findings support fact whether thereby upon premises, the leased tions 52(a); John of law. I.R.C.P. conclusions forfeiture of causing an abandonment and Edwards, 660, P.2d 69 747 113 Idaho son v. filed an action for a said Lease.” Alumet (1987); Coeur Dalton v. South Fork of judgment action in district declaratory 833, Dish, 101 Idaho d 'Alene River Sewer seeking ruling that the lease was court Fandsen, (1980); P.2d 141 Morris v. 623 in and had not breached. still effect been (1980). 778, The 621 P.2d 394 101 Idaho trial, Following a bench the district court provide: Procedure Idaho Rules of Civil express an ruled that the lease contained upon “In all actions tried the facts without mine, develop to and that covenant set jury [findings of fact shall not be ... language required in lease which clearly I.R.C.P. aside unless erroneous.” in “pay royalties” for ore removed lessee to 52(a). weighing evidence and The task of secondary payment term meant province of the finding facts is within royalties.” The district court “substantial find not set aside trial court and we will royalties that the levels and found they court unless are ings made the trial during paid Grazing to Bear Lake the sec- Further, give we will clearly erroneous. substantial, and ondary term had not been trial regard opportunity of the due to in default. Based on held the lease was conflicting testimony and to judge weigh to calculations made Archer v. Mountain credibility of witnesses. Rueth judge the 852, P.2d 943 Supply, Fuel 102 Idaho 642 (1982); State, 74, 103 Idaho v. (1982), the district court determined that 104, Smith, 101 Idaho 609 v. Javernick $31,650.00 royalties the lessee owed (1980); Pas P.2d 171 Roemer v. Green paid lease which were to be within the 591, Farms, Inc., 97 Idaho 548 P.2d tures agreement’s thirty-day period cure or the (1976). accept the trial We must 857 lease be terminated. sup findings of fact if are court’s substantial, competent though ported by appealed. Archer The Court Alumet and evidence, meager. conflicting however Appeals the trial court’s deter- reversed 74, State, Idaho ex- 103 mination that the lease contained an Rueth v. 316, Watkins, (1982); 76 Idaho con- v.

press and held that the lease Watkins covenant (1955). In Rueth we stated: actively mine. 281 P.2d 1057 implied covenant to tained an appellate review salu a determination “This standard The case was remanded for effect, reflects the view that mining tary in court of what level of the trial afforded to the trial deference must be implied under the cove- required would be special opportunity to assess and for cure court’s fix a reasonable time nant and to credibility who weigh the of the witnesses had defaulted. if it found that Alumet record, personally.” Rueth v. appear before already in the Considering evidence 77, 1336; at State, 644 P.2d implied 103 Idaho quantified the the district court Bledsoe, 84, Idaho v. 100 an- see also Jensen production million tons covenant at one (1979). $250,- It follows that the P.2d 988 payment of 593 nually royalty awith are of the trial court which to conclusions one-year period 000.00 and allowed findings of fact will not supported by the by the Following this determination cure. appeal. Pichon v. L.J. court, appealed. be disturbed parties again once trial all 950

Broekemeier, Inc., implied obligation part 108 Idaho 702 P.2d an on the (Ct.App.1985). diligently explore, develop, lessee to 884 premises work so that the lessor [mine] I, the Court of may expected obtain the income that in agreement the lease found that between Annot., grant duced him to the lease.” parties contained an covenant Rights Duty Develop, Mineral 76 A.L. — actively property. mine the leased Alu (1961); Adams, R.2d 725 see also Co., Grazing met v. Bear Lake 112 Idaho Implied-In-Law Develop Covenant (Ct.App.1986). The time 679 Leases, and Mine in Hard Mineral appeal long passed on this issue has (1983) (noting Idaho L.Rev. is, therefore, judicata and it res as expectation is the lessor’s interest “[i]t particular covenant to mine this being protected by implied-in- which is Boundary County, case. v. See However, develop”). law covenant to Woldson, (9th Cir.1944), F.2d cert. does not mean that a lessee must mine den., 324 U.S. 65 S.Ct. 89 L.Ed. lessor, solely benefit of the and to As we stated Insurance the detriment of the lessee. Covenants Hansen, Corp. Assocs. should assure that both re (1989): P.2d 1230 bargain and must ceive benefit Accordingly, having the facts been decid- carefully applied be to a lessee. Archer v. ed, final, they are have become the 852, Supply, Mountain Fuel 102 Idaho 642 case, Ap- law of the and the Court of (1982); Long, P.2d 943 see also Smith v. 40 peals’ pronouncement must be adhered 531, (1978). Colo.App. 232 578 P.2d Under to, in the trial court and on both subse- test, prudent operator a lessee must quent appeal. development continue of leased reasonable 950-51, at 116 Idaho 782 P.2d at 1232- Id. premises profits for the common to secure 33; Airstream, see also Inc. v. CIT Fin. advantage lessor and The of both lessee. 569, Servs., Inc., 115 Idaho 768 P.2d 1302 may expected required to do lessee be (1988); Moore, Inc., Barker v. Fischbach & prudent operator to that which a would do 871, (1986); 110 Idaho 719 P.2d 1131 develop protect par Suitts interests of both Idaho, However, 110 Security duty v. First Bank Idaho ties. the lessee is under no 15, (1985). development unprof 713 P.2d 1374 We therefore to undertake which is case, merely develop hold in this that the lease to him its as the law itable because profit agreement might contains an ment result some to between Co., King lessor. v. 220 Kan. implied actively covenant to mine the Rush Oil 616, (1976). 556 P.2d 431 obli premises. leased gation of a lessee to exercise reasonable light the standard of review set mining may diligence development above, forth it is our task to review the if the suspended totally be terminated record us to determine whether the before develop market conditions are such that applied trial court the correct burden of in a net loss to the ment would result presented proof and whether the evidence Mining, lessee. 4 American Law See supports the trial court’s determination. 131.09(5)(b) (2d 1989); v. ed. Hummel § McFadden, 543, 395 Pa. 150 A.2d 856 III. (1959) (an implied not mean covenant does Duty Implied’ an Lessee Under diligence in mining). due continuous What Develop Mine to Covenant depend upon means context will circumstances, quantity quality im A fundamental reason for an mineral, fluctuating de market that the lessor’s plied covenant is to assure mand, market, accessibility met. the labor expectations royalties are 441, many other factors. Reed Co., 112 the mineral and Grazing Lake Idaho v. Bear Feldspar Corp., 71 S.D. v. (Ct.App.1986). 679 Where Consolidated 732 P.2d (1946)(a lessee who has is his 23 N.W.2d 154 principal to the lessor consideration not re- agreed pay royalties lessor receiving royalties, there is expectation of of each specific facts and circumstances ore at a loss. Unless ore quired to extract profit, the ore removed is produced quantity at a reasonable case. The can be the mine is sus- con- implied obligation simply to work of the factors to be one Kingman Feldspar pended). Taylor deciding v. lessee’s sidered in whether the (1933) (while Co., 41 Ariz. reasonable. actions have been rule re- covenant the trial court’s Alumet contends every produce effort to quires reasonable contrary to presently before us is decision possible, much ore as when and sell as in Archer v. Mountain the law established temporary depression in the val- there is a (1982), Fuel, 102 Idaho ore, required to ue of the such lessee is not jurisdic- majority view from other merely extract ore at a loss so that Alumet cites to Archer wherein tions. thereon). may royalties lessor have Even stated: excusing without an clause a lessee who develop can obligation An to mine and be royalties agreed pay has lessor minimum burden, example when an onerous required is not to extract ore at a loss. develop- market conditions are such that Co., Ruby Allen v. surely ment result in a net loss to Co., (1964); Feldspar Taylor Kingman Nothing prevents parties the lessee. (1933); C.J.S., 41 Ariz. bargaining contract from for such an 189(b) p. 406 Mines and Minerals § obligation, but no reason sufficient a lessee has met this To determine whether compel judicially impose us to the obli- standard, economic, competitive and envi- agreement an gation in the absence of may ronmental factors are relevant and be has been shown. considered the trier of fact. Alumet v. Co., Grazing

Bear Lake at 102 Idaho 642 P.2d at 947. Id. 732 P.2d at 679. are Forfeitures abhorrent judging reasonably prudent In law, against all intendments are 1) standard the courts should examine: Cunningham, them. v. 94 Idaho Heisel if operation method of to determine effi (1971). 461, the forfei 491 P.2d 178 Where planning equipment cient and modern were provision provide in contract ture a would 2) employed; by efforts conducted sales recovery, it unjust an and unconscionable company competing to see if it was recovery will will not be enforced mines; 3) effectively nearby with market according to the amount of be assessed conditions; 4) productivity compara Andrews, damage. Blinzler v. 94 actual nearby ble mines. Mendota See Coal & 215, (1971), appeal 485 P.2d 957 af Lumber, Ry. v. Eastern 53 Coke Co. & 769, remand, 95 Idaho 519 P.2d 438 ter (9th Cir.1931). regard F.2d 77 With (1973). mine, implied actively covenants to ig- the trial court Alumet contends that Appeals, in Lake Alumet v. Bear foregoing when it de- nored the standards Co., 441, 446, Grazing 112 Idaho operator prudent that a 679, termined (Ct.App.1986),accurately 684 and cor capital the construction invested rectly set forth the have law as follows: refining operation spite of the de- of a agree All that authorities we have found uncertain pressed economic conditions and implied develop or to when covenants to argues pru- Alumet that it acted market. imposed, mine are the lessee’s actions great dently by investing a amount of judged good under a faith stan- will be during time the construc- capital that such as dard —often described terms refining plant because the market tion of diligence, diligence, ordi- reasonable due as ordered so uncertain and to do In nary diligence ordinary prudence. require operating at a court would the trial words, compare the other the court will Furthermore, Alumet asserts it had loss. reason- lessee’s actions with those of a drilling, surveying, million on $3.8 invested ably prudent, similarly situated business- studies and market- permits, under environmental sufficiency man. The of the work argues obligation an to active- looking ing that the lease is determined 952

ly during period development mine of unfavorable increased would result in a profit market and economic conditions would re- to the lessee. Archer v. Mountain loss, quire operate great 852, it to at a Supply, will Fuel 642 P.2d 943 (1982); result in forfeiture of the lease and Gruy, Atlantic Co. v. 720 Richfield subsequent (Tex.1986); to Bear Lake windfall Graz- 121 S.W.2d Anderson v. ing argues contrary Meuer, which to well Cal.App.2d 50 light holding (1942). established law. of our alleges “A lessor who breach of an part IV that the trial court misallocated the covenant to has the burden proof, agree we with Alumet burden showing by evidence that the substantial the facts of the case must be con- covenant has been breached.” Robbins weighed by sidered and the trial court con- U.S.A., Inc., 246 Kan. Chevron market, sidering competition the economic (1990); P.2d Sanders v. Bir- required by and other factors the cited mingham, 214 Kan.

authorities. (1974). claim, It has such a been held that nature, very supported by its must be

IV. expert testimony. Robbins v. Chevron U.S.A., Inc., Burden 246 Kan. of Proof argues Alumet the district court by placing proof upon erred the burden of The fact that Alumet initiated to come with forward evidence legal in the form a declarato action showing it did not breach judgment pro ry action does not alter the development. covenant of To reasonable evidentiary cedural and burden. bur contention, illustrate its Alumet directs our proof declaratory den of in a relief action is Finding attention to the district court’s governed by the same rules and considera Fact # 14 where it stated: problem applicable tions as are to the same The record of this case contains no sub- legal proceedings when it arises of other evidence, competent considering stantial 1250; types. 23 A.L.R.2d at Annot. Hall economic, competitive environmental Adm., Ky. v. Eversole’s 64 S.W.2d factors, prudent op- that indicates that a (1933)(in Declaratory Judg under suit good erator in faith able to would not be ’ ment Act where asserted defendants 1mine million tons of ore from the Alu- lease, right partial of oral to cancellation mining in a sea- met-Bear Lake leases them). proof upon burden was of added.) (Emphasis son. Appeals The Court of in Alumet II cor- general is the rule les proof applicable rectly stated the burden of proof has the of to sor burden show mining lease. to a good the lessee did not act in faith and as a prudent, similarly reasonably situated busi In lessee’s fail- an action where Birmingham, nessmen. Sanders v. See property raised as develop ure to is 769, (1974); 214 Kan. Durkee defense, per- the lessee’s claim or and Hazan, (Okla.1969). A v. under the lease is tested ac- formance alleges lessor who breach cording to the standard of reasonable gen development covenant of further must allege diligence, the lessor must erally prove has not acted that the lessee to meet prove that the lessee has failed diligence facts with reasonable under the that standard. par circumstances as exist at the 985, p. at p. 119 Idaho at 812 P.2d ticular time. See Stewart v. Amerada Appeals correctly (Okla.1979); Although the Court of Corp., P.2d 854 Hess 604 769, regard, proper appli- 214 the law this Birmingham, v. Kan. stated Sanders prove to require cation would lessors P.2d 959 The burden is likewise 522 comply claiming that Alumet has failed to with generally on a lessor cancellation develop and mine the the fail covenant to or termination of a lease to show premises. mining practices and that leased prudent ure of contrary findings regard Alumet. This is requirement The trial court’s proof use of the ing jurisdiction, the burden of law in this to well-established subject II; Sup- “would not” have been the words Archer v. Mountain Fuel Alumet significant (1982), debate of between ply, 102 Idaho P.2d appeal. argues that the trial jurisdic- held majority view other to the misapplied clearly of court burden tions. lessee, upon it, proof placed as the Supply, a Fuel Archer Mountain prove that it did not burden breach unanimous Court observed: develop implied covenant reasonable develop mine can be obligation An hand, the other Bear Lake ar ment. On burden, example when an onerous the choice gues that of the words “would develop- market conditions are such that merely reading not” is semantics and surely result in a net loss to ment would clearly trial court’s entire re decision Nothing prevents parties the lessee. proper proof that the veals burden an bargaining a contract from for such applied. no obligation, but reason sufficient Appeals The Court of described the use judicially impose the obli- compel us to phrase Finding “would 14 as not” agreement gation the absence of an lapses negative “unfortunate into double has been shown. phraseology,” p. at 812 P.2d way By at at 947. reading p. at but that a concluded footnote, Supreme Court added: entirety the trial court’s decision in its left imposing obligation an We note such unpersuaded them trial court mis- that the might in this case result in a forfeiture Further, proof. the burden understood Mountain of the leases Beker and “[Sjtate- the Court of noted that consequent to the Fuel and windfall substantially quoted ments those similar to Archers, $183,000 have who received here, expressed in free positive but terms any having of the ore available without negatives, in the of double can be found depleted. under the leases At judge’s p. decision.” P.2d at 5,n. Id. at 102 Idaho p. 293. n. 5. reveal Our review record does not The onerous burden mine and similarly evidence of what a situated market and economic conditions are when reasonably prudent operator do un- resulting in a windfall or not favorable der the circumstances.1 There is no evi- as noted in Archer forfeiture Court support a dence to one million ton annual precise Supply, v. Mountain Fuel is requirement production other than infer- in this if the trial result reached case projections Alu- ences drawn of what Likewise, court’s decision affirmed. anticipated producing time met had at a II Appeals’ decision in Alumet predating problems experi- the economic requires a lessee mine at a loss which to phosphate industry. Although in enced the provisions lease a contract unless the or misapplication proof of the burden of does duty contrary is the di- relieve that to invariably prejudice, result in Alumet not by this in provided rection Archer v. II, of p. p. at the use Supply, appears place not” to the Mountain Fuel the words “would proof production of burden of an annual P.2d 943 Finding by support court’s # 13 states: cited the trial court as for

1. The district of Fact evidence finding companies in and the of fact does not demonstrate that "Other southeastern Idaho this companies large had invested amounts of western United States have invested substantial other during period. capital phosphate capital a com- The evi- as mined ore on relevant However, only the trial demonstrates dence cited court mercial basis 1974 to 1984.” pre-existing period. several and not that there were mines 1974 to 1984 is the relevant operating during period. processing plants period does not to 1974. this relevant Rather, date clear back period no sub- when In our review of record we found the relevant is from finding competent support evidence a acquired upon build a land which to stantial companies investing large processing plant, Lake were and when Bear these Furthermore, during capital period. sought of this to terminate the amounts lease. scrutiny At 119 Ida- negative phraseology.” Our review and double us concerned that the p. Regardless record leaves trial ho at 812 P.2d at required carry court Alumet to the burden categorize words it is of how we these two it, prudent prove as a reasonable interpreta- any obvious that one of several operator, mine would not be able to mine varying results. applied tions can be with one million tons of ore from the leased require eventually In a case that could premises during mining a season. Consid of dollars of invest- forfeiture millions ering that the law abhors a forfeiture and lessor, ment, potential and a windfall to the against that all intendments are a forfei necessary we conclude that it is ture, Cunningham, Heisel case to be remanded for a determination (1971), diligence and that due mining re- the trial court of the level of implied develop under an covenant to and quired satisfy implied covenant requires property mine leased a reasonable based on the evidence with the burden application so that economic and market proof allocated to the lessor. prevent are considered to sub conditions lessee, stantial financial loss to V. 131.09(5)(b) Mining, American Law § (2d ed.1989), considering particularly Time Cure prove required the lessor is Bear Lake asserts that the one breach, hereby reverse the decision of we year time for cure of default allowed implied and hold that an the trial court dis the trial court was excessive. We obligation of a lessee to exercise reason Considering demon agree. that the record diligence development mining in able nearly strates one million tons of ore terminated, if may suspended, totally or be percent one-sixth or sixteen of the total the market and economic conditions are production phosphate in the western in a development such that would result States, in cannot find error United we Obviously, lessee. the sus net loss to the allowing one-year period to trial court tem pension mining activities would be Ac produce such substantial amount. mine porary covenant to upon pres as it cordingly, based the record faith, require good would exists, ently find no error in the one- we compliance eco prompt once the reasonable year for cure and affirm the trial time changed and nomic and market conditions regard. in court mining operat were such that be hardship loss or economic ed at a financial light holding that the trial court of our the market conditions to the lessee. Once proof misallocating the burden erred beyond temporary or economic conditions proceedings, it remanding for further change, lessee then the the control of the necessary that we address the other is not duty responsibil lessee would have argued appeal. on issues raised and mining and de ity immediately resume Therefore, judgment of the district operations under the velopment and remanded for further court is reversed may mine. All of these factors covenant to findings proceedings and to enter based by the trial court deter be considered record, request upon or the evidence its Alumet is in breach of whether further to submit covenant to mine. evidence, testimony with burden I, Following it is un- remand Alumet upon lessor properly allocated proof accept parties did not fortunate that the Grazing prove that the lessee Bear Lake addi- the trial court’s invitation submit implied covenant to its Alumet breached had If evidence tional evidence. additional property. mine the leased and likely that the trial been submitted it is district court as to judgment required court would not have been being year is af- cure one the time for not” Finding # 14 in the “would phrase under all the being reasonable firmed as Appeals re- language that Court presented. into circumstances lapses ferred to as unfortunate "...

955 555, P. It is thus established attorney 608. appellant Alumet. No Costs firmly in entrenched law of the case fees allowed. since jurisprudence, and has been Idaho immediately following statehood. C.J., almost BAKES, concurs. Justice, BISTLINE, concurring in the II. by opinion in the authored reached result Court, BOYLE, Justice, concurs in specifically suggested and that this It has been III, IV, V. the attendant in and case and under Parts the instant by the is somehow bound

circumstances doctrine, to what the case as I. law of I, in Appeals wrote Alumet Court of long has of law of the case The doctrine However, pursuit of then Alumet II.2 in Idaho. v. First Se- been a rule Suitts renewed. seemingly has been notion Idaho, 15, 713 110 Idaho curity Bank of Moreover, Court, appel- responding this (1985), alia, citing Richard P.2d 1374 inter II, of Alumet petition for review lants’ 403, (1927), Jarvis, P. 370 44 Idaho review, briefs, granted supported by Mutual Fire v. Northwestern Creem passed by which were the same issues Association, 349, P.2d 702 58 Idaho Appeals squarely are now the Court (1938). opinion this In the Suitts 1985 well established us. It has been before unequivocally that this Court stated granted, review has been that when opinion prior in the 1979 case be- Court’s directly to the decision Court turns same de- plaintiff the same tween in proceedings trial court and examines represented the law of the case fendant error, relative to claimed that court as upon the binding the remand was and on remaining cognizant nevertheless trial court. rulings Appeals. Court views Jarvis, this stated: In Richards v. Court should review is concluded and When our upon the of this court “The conclusions contrary to that we reach a decision the case appeal first established the law of opin- Appeals, reached the Court guidance the trial court and for the is the announcing this Court’s decision ion followed.” 44 Idaho should have been of the case.3 ultimate and final termination 258 P. the Creem opinion of the Court of The decision and said, responsive to a conten case this Court point becomes offi- functus proceedings the trial court in fol tion that cio, may have other than that this Court lowing had not followed this remand upon excerpts con- repeated and relied decision, prior appellant that the so Court’s Hopefully the remarks tained therein. Creem, Idaho at asserting was in error. make it clear proffered I will which have joined 74 P.2d at 702. Justice Ailshie reached the Court of that conclusions in Black Justice Sullivan Hall v. Chief binding district although on the Appeals, (1904), man, 75 P. 608 ob 9 Idaho case, do not and can- courts as law of ruling that the served as to a doctrine preclude this not in manner as holding point on a of law is available reaching conclusions. its own authority in other cases to be followed or to be modified or over thus affirmed III. merits, according to its intrinsic but ruled presented with Alumet’s we were ruling or hold When very case in which a grant review of the Alu- request that we binding in all further ing is made it is Appeals, Blackman, opinion II of the Court of 9 Idaho met proceedings. Hall v. Co., nor the property, but not the same Grazing same 2. Alumet v. Bear Lake judge. (Alumet I); same trial (Ct.App.1986) Alu Co., Grazing met v. Bear Lake mind, course, (Alumet II). prior (Ct.App.1989) Keeping A that the time Co., rehearing expired petition has Supply 102 to for v. Mountain Fuel which Archer case. rehearing being sought. (1982), without involved Idaho vote, origi- nec- lessees under the order to cast an informed the Archers were lease, essary manifestly to undertake a considerable review evident that nal it is proceedings, certainly prior expressly of the language they were aware that to review this Court’s decision out of order obligating to mine could have lessees case, in the 102 Idaho 642 P.2d Archer Mountain included in the lease with been primary In issue Archer the which no inferences from the Fuel. We draw around the Archer was decided revolved in the Arch- language of such absence lessee, that his Mountain Fuel contention agreement. We sim- er/Mountain Fuel codefendant, Supply, Beker Indus- and its present. ply note that it is not Corporation, corporation, a tries Delaware 854-55, Archer, 642 P.2d at 102 Idaho at agree- were the terms of an executed (footnote original) (emphasis in 945-46 ment, royalty provi- particular and in omitted). agree- holding In that the 1962 [paragraph expressly sions thereof re- 4] express provision obli- ment contained no quired to mine and the leasehold mine, opinion to our gating the lessees expressly, impliedly. property, if not then noted: 853-54, Archer, Idaho at 642 P.2d at language paragraph There is no court, Judge 944-45. The district Rasmus- a possibly be construed as such could sen, codefendants, and had held for the paragraph does ad- covenant. While Supreme against Archer. A unanimous mined, royalties for ore and it dress affirmed, pointing out that: Court royalties un- would be useless to discuss example language expressly An obli- contemplated mining the less the leased gating party produce from purpose of the property indeed, the sole — 2(d) property is found in Section mine Mountain Fuel to lease was to allow Valley underlying Dry Lease between a tremendous dif- property —there Department the Archers and assigning right ference between Interior, provides which property, subject to a condi- mine certain of the fore- Sec. 2. consideration imposing royalties paid, be tion going, hereby agrees: the lessee property. obligation an to mine Archer, at 642 P.2d at 946 (d) pros- production. To Minimum original). to an Archer (emphasis in As diligently lands and pect the leased “imposed an that a court had contention year beginning the fourth with mine, separate obligation to implied-in-law lease, in- except operations are when agree- apart language of an elements, strikes, the terrupted by ment, substantial consideration was where to the les- casualties not attributable exchange lease” we paid in see, suspend- operations are or unless noting that obli- persuaded, were not “[a]n act, provided ed as in section 39 of develop can be an oner- gation to mine and year deposits mine each the leased burden, example when market con- ous royalty to a value of pay thereon development would are such that ditions fraction thereof. The an acre or $1 in a net loss to the lessee.” surely result prior to the may, lessee time Archer, P.2d at 947. 102 Idaho at lease, end of the thirtieth month of Mining Supervi- petition file a with the IV. production minimum sor to have the Supreme question that this changed to a lesser It is without specified herein resort, insofar as petition by the is the court of last figure, supporting such case is con- if the lessor of law of the required showing the doctrine so, I being such ac- am unable that the facts warrant cerned. That finds tion, requirement quotation pas- of a change accept Boyle’s he will Justice figure. Corp. v. sage a lesser from Insurance Associates Hansen, appears provision An identical having (1989): “Accordingly, the facts was ulti- Ranch lease which

Wallentine final, decided, they are have be- Fuel. been Mountain Since mately issued to me, case, and in Bark- by were authored the law of the Court Suitts come er, concurring dissenting I authored a adhered Appeals' pronouncement must be opinion, portions of which are hereinafter to, on in the trial court and subse- both presently the case is displayed while law of 979, quent appeal.” At 119 Idaho stage: center (1991). That statement made Jus- law abso- Bakes, generally principle I know of no which tice would be correct if any appellate lutely prohibits this considering principle we were res Court— rectifying its own error —es- court—from assuredly we most are not judicata, which just respect for a court’s pecially when a that, language doing. But more than jus- duty attempt the achievement of preceding para- sentences in the of the tice activated. has been graph necessarily have to be considered. I that the doctrine of law concede

It was not that the “facts had been decid- in Idaho as recognized the ease has been erroneously treated as law ed” which was jurisdictions. in other Neilsen and case, judica- and which would be res County and Twin Falls Co. Cassia case, ta and not at all be law of the but District, 103 Idaho A School Joint Class of the case was that what did involve law 317, (1982), the 647 P.2d 773 Appeals expressly ‘conclud- “the Court recognized that could not re- it findings that the of fact made ed finding Supreme Court on view supported by are the evi- district court prior appeal gen- in the same case. A dence, erroneous, and, clearly are not ” proposition of law is that an inferior eral should not set aside.’ As- be Insurance ordinarily higher is court bound 950, sociates, 116 Idaho at 782 P.2d at 1232 determination, with some few ex- court’s added). (emphasis ceptions. Appeal 5 Am.Jur.2d and Er- readily Boyle’s is noted in As Justice ror § opinion, at 119 Idaho at 812 P.2d at stringently the law of the However speaks judicata he both res courts, may bind inferior case doctrine interchangeably law of the case in discuss- question is a different matter where the ing implied covenant to mine: appellate up comes the same court. appeal The time for on this issue has doctrine, however, binding not That therefore, is, long passed judi and it res ap- on a appellate courts which second to the to mine cata as covenant prior appellate peal perceive that their particular Boundary in this case. See decision was in error. The Arizona Su- Woldson, County, Idaho v. 144 F.2d 17 Court, recognizing that preme after (1944), den, cert. 324 U.S. 843 S.Ct. [65 doctrine was well-established 89 L.Ed. 1405] state, say: went on to some courts insist that While hold We therefore as the law [of times, applied should at all doctrine be case, agree- in this that the lease case] excep- others create an 3 Am.Jur. ment contains an between appears tion where it the former deci- actively covenant to mine the palpably erroneous. An sion was premises. leased authority many jur- abundance of principle. seemingly feels isdictions sustains this latter Additionally, Boyle Justice example Supreme For Court of Cal- the need to bolster the Insurance Associ rejected years ago sixteen ifornia quotation by stating: also Air ates “[S]ee the law of the case Servs., Inc., doctrine that abso- stream, Fin. Inc. v. CIT of a lutely precluded reexamination (1988); Barker v. 768 P.2d 1302 unjust manifestly decision. Moore, Inc., 110 Idaho Fischbach & ‘ * * * (1986) ]; Barker The doctrine of the law of [Matter of Idaho, (2 recognized as a one Security v. First Bank case is harsh Suitts (1985).” 947) Those and the modern view is Cal.Jur. adhered to when authority on law that it should be cases were indeed Idaho application of it results in a mani- of the case doctrine. Both Airstream unjust festly Dredg- Bank, decision. United National N.M. 245 P. 543 Comm., (1925). v. Ace. ing Co. Industrial Cal. 284 P.2d ...’ [P.] Barker, 871, 873-74, Matter of (1986) (footnote 719 P.2d 1133-34 omitted, emphasis in original). opinion ruling We are of the that a case, however, similar, Law of the while appeal manifestly palpably on one if or scope is judicata. broader in than res erroneous not to is be treated as con- More importantly, may properly that which subsequent appeal on clusive the of be judicata, seen as barred res not so same case. are of this We view be- principle barred when the involved is law of cause courts exist but the ultimate case, this, the especially highest the where purpose establishing justice. of If we appellate court is ultimately involved and arbitrary rigidly principle adhere to an coming bears the burden of down with the of convenience and declare as deci- our conclusion, final hopefully and the correct clearly wrong sion that which is and one. A law case announcement wrong, we which know to be then we binding from this Court will in any be purpose are defeating the for which proceedings further in all of the lower Moreover, courts we in exist. are ef- courts; however, a of the case law an- saying consequence fect that it is of no Appeals, nouncement from the of Court us that not justice to had in the end binding while it be on the will district prevailed. Sibley Jeffreys, v. Ariz. courts, does not at all fetter this Court’s (1956). 429-30 authority to intervene rule otherwise Appeal As summarized in 5 Am.Jur. it see fit to should do so. Error, 750: § Boyle Justice has that: written “We the

therefore hold as law the in [of case] However, case, agreement the that the lease since doctrine between of parties merely prac- law case is contains an covenant to one of actively premises.” tice or and not inflexi- mine the policy, court leased Deal- law, ing declaration, appellate solely so are that ble that courts with address nomenclature, thereby, proper it absolutely may not matter of is the bound but degree exercise a of a court certain discretion conclusion which becomes the Moreover, it, many applying holdings in there are law of the case. that the Court has announced which the courts have retreated heretofore true, requiring binding from rule law of the case is with inflexible but applied regardless only insofar as inferior it doctrine be effect courts decision, they are It is are error the former it has concerned. because infe- rior said courts that must follow law of been doctrine should accomplish the case as it has been declared either of not be utilized to an obvi- courts, injustice, appellate meaning this Court or applied ous or where the Appeals. appellate the Court of decision was clear- former palpably, ly, manifestly or erroneous with, Accordingly, agree I do or con- (Footnotes omitted) (em- unjust. Boyle’s opinion cur in as to that one Justice added). phasis particular point. Appeals, The involved, have put becoming probably Montana did Supreme Court has agree- impress lease thusly: authority to the onto the evils adherence ‘[T]he ment an covenant to greater rule are sometimes than those of Hale, premises. departure actively it.’ v. mine the leased do- State so, however, may usurping ing have been Mont. The Su- court. It did re- preme the function of trial Court of New wrote Mexico making strict court the deter- appellate apply ‘should the law the district an court mining obligations as of Alumet’s of the land rather than the law of the mination soon. Clayton to how much how case. Farmer’s Bank State lease missing from the However, stage of on to add that bargaining went it is at detailed or even any provisions which all covenants should were agreement that a lease (covenants, guar- any promises speci- mentioned upon spelled out with agreed be antees) proceed Pech, “development will summary Dana ficity. Leslie specified article, stages within through certain Agreement of her law review times, that, alternatively specified that (Or or Didn’t We Had We Wish Clauses during period expended each sums will be Have), Mountain L.Inst. cau- Rocky exploration.” 112 Idaho tioned as much: P.2d at 683. years provided have past The few industry the many events which although it held Appeals, The Court of the thought impossible and would have finding an ex- the district court erred new, unexpected bring will future covenant, declare its press proceeded to experienced re- we have events. What re- analysis “that the district court’s belief the cently forgotten not be when should develop- conclusion that flected the obvious again upswing. the All ‘present’ is contemplated by the ment of a mine was mining agreements, like other con- ongoing mining parties, and that an ... document, drafted or should be tract contemplated by par- operation was and with a knowl- carefully, precisely, 732 P.2d at 683. ties.” 112 Idaho at sought edge of the mineral commodities glitters gold, is not all that Just as all that property position. All specific not to the sta- “contemplated” does rise agreements anticipate provide Seemingly, should it contractual covenants. tus of negative events. go saying the occurrence of that where two would without occur, it is often too into a written parties When difficult times more have entered renegotiate agreement property or re- of a which one impossible late or lease Department agreement. penalties parties possessed The under structure an be, lease, highly un- it would be company the lessee can and often of Interior agreement not en- are, if the lease was usual serious. pursuit supposedly tered into in the parties failed to draft and Where the all concerned. profitable venture for agreement fully dealt execute an which I turned Appeals Alumet probabilities all of the as to what The Court with for the readily to the Pech law review article4 might pass, come to it is not under- fashioning included when factors to be why stood how or it is that the courts actively mine. implied covenant to agreement should which lessee’s rewrite 445, 732 P.2d at 683. Follow- is and 112 Idaho at parties had entered into. Such ing after further discussion direct- attorneys, which forever has been the function recog- court on remand and a function undertaken and concluded ed district to mine under parties find nize an covenant themselves involved before general principle of neglecting just as a costly litigation because of the lease—not law, meaning particular lease had not been but ascertain that all of bases parties executed. which the had agreement covered. foregoing that primarily on the basis history continuing litigation It is The of this questioned authority I in au- at first blush by Judge out Walters was well set Appeals to direct how decision the Court of thoring Appeals the Court of first judicially mod- agreement should be “concluded lease I. That decision ified, simultaneously mandate that the determining court erred in that the district to how follow its directions as express cove- district court the lease contained an should be conduct- proceedings on remand develop.” 112 Idaho at nant to by the terms are all bound ruling there no ed. at 683. In was agreement negotiated lease to which develop, it of the covenant to expressly stated Pech, Agreement Wish L.Inst. 241. Clauses We 4. Leslie Dana (or Have), Rocky Mountain had Didn't We signature, they affixed their persuaded and it should evidence and Alu- be so held. Courts should be indeed loathe met had not acted with reasonable dil- judicial to add embellishment. The error igence under the facts circumstances part on the of the Court of should as existed at the times involved. readily too overlooked. be Its di- findings The trial in support court’s court, Judge Woodland, rections to the trial requirement one million tons stated: appear proximate have been cause of the controversy is still ongoing. which OF FACT FINDINGS In closing, suggest I that one major Drilling trenching operations factor which has eluded discussion is the performed were proper- lessee on the specially opinion concurring which Judge ty between 1965 and 1974 to determine Burnett in issued Alumet II on denial of location, the grade of ore and thickness rehearing delved where he into the lack of deposit. of a habendum in the mining clause lease ore, agreement. is a good There wealth of material 2. for Substantial commer- contained in opinion, apparently that but cial development, was located on the gone by litigants. has the unnoticed property. leased shortly 3. Alumet after it obtained Justice, JOHNSON, concurring and property by assignment the from John dissenting. Archer, plan devised a and schedule for majority opinion, I concur in except the mining processing and ore. plan That portion the which holds that the trial court beneficiating called for construction of a proof misallocated the and burden the calcining plant and and produc- annual portion proceed- for further remands approximately tion of 2.5 million tons of re-, ings mining to determine the level of (Plaintiff’s ore. Exhibit 12 and Defen- quired satisfy the covenant. “E”) dant’s Exhibit my view, ample there evidence in the Calcining beneficiating phos- 4. trial the trial court’s decision court phate necessary ore are to a market and correctly understood and allocated the bur- phosphate mining operation a viable proof. den of court’s findings The trial upper the intermountain area. Such a support imposition fact the of the one mil- plant contemplated by was lion requirement. tons and known at the time of the extension The trial court’s conclusions law stat- of the and of primary assign- term ed, in part: by ment of Archer to the lease Alumet. (Tr. IV, 659-60, 8-1) Vol. P. 1.

D. Under the circumstances of this case, length pri- considering September meeting, 5. At a Alu- lease, mary expectation term of the pro- met declared its intention build a economic, parties, environmen- cessing plant process to 1.5 factors, competitive prudent tal and (Tr. annually. I, million tons of ore Vol. operator good faith would not have 23-4, 124, 125, P. Defendant’s 1. Exhibit secondary began mined as the term “C”) only purpose keep- continued represented January 6. Alumet ing the lease alive. 1) process- 1980 that construction faith, prudent good E. A operator 2) ing plant begin immediately; would under the conditions factors referred capital plant the needed to finance con- above, at would mine least million obtained; 3) struction had been increased annually. tons of ore pile so a begin stock would completion plant be available on con- plain make it These conclusions to me Ill, (Tr. 3-12; struction. P. 1. Vol. against did not rule the trial court 431-435) P. did not fulfill a because Alumet Davy Company 7. Power Gas proof. clearly burden of These conclusions purpose contracted Alumet indicate that the court considered all trial independent objectionable. majority verification of the existence The concludes that ore of commercial bodies on the leased this one deviation from what it considers to property so million could approved English, $130 be bor- be demonstrates that the contemplated plant rowed to build judge place trial did not the burden of (Tr. I, 113-114, and roads. Vol. P. 1. proof proper party. on the There is SUB- 24-11) STANTIAL EVIDENCE in the record be- support at fore court to the conclusions of

8. There are least 21.1 million tons proven may ore the trial court however it be described minable Diamond & or characterized. The “substantial evi- Lanes Creek sites covered the lease. (Tr. I, 141, 142, 14-2; replaced by majori- P. dence” test is now Vol. Plain- review, 36) Syntax moving target ties tiffs Exhibits 30 & best. capitalize op- 9. Alumet never did its sufficiently process- eration to build the majority ar- seems motivated facilities, ing plant transportation gument that the trial court’s result would commercially property. mine the leased provide the lessor with a substantial “wind- (Tr. I, 116-125; Vol. P. Defendant’s Ex- fall.” There is evidence that the lessee did “C”) hibit spend “drilling, substantial sums on sur- began mining 10. Alumet in 1979 at veying, permits, environmental studies primary

the end term and until acts, marketing.” How these all under- purpose this action was instituted for the taken lessee for the benefit of the lessee preventing termination of the lease property which remain the lessee (Tr. II, only. 11-17) Vol. P. 1. which would have to be done anew lessee, mining only keep any subsequent 11. In the lease constitute a “wind- alive, making profit. Alumet is not fall” escapes to the lessor me.

(Tr. II, 287-288, 22-10) P. Vol. 1.

12. essentially Alumet is an unfunded

partnership operation whose since 1979 is by budget equal pre-sold

limited raw (Tr. I, 116-125; II,

ore. P. Vol. Vol. P.

182-183) companies

13. Other in southeastern

Idaho and the western United States BONDY, capital have invested substantial Marcia Kahn as Plaintiff-respondent, phosphate mined ore on a commercial (Exhibit 66, basis from 1974 to 1984. Tr. II, 215-221) Vol. P. LEVY, Defendant-appellant. Paul E. I would affirm the decision of the trial No. 18214. court. Supreme Idaho, Court of McDEVITT, J., concurs. Boise, January 1991 Term. McDEVITT, Justice, dissenting: 7,May 1991. I majority am unable to subscribe to the Rehearing July Denied

opinion reversing the trial court.

Upon remand to the trial court appeal,

initial that court entered a Memo-

randum Decision Comprehensive Find-

ings of Fact and of Law. Conclusions

In the pages analysis, ten of detailed evaluation,

thoughtful legal reasoning judge, majority the trial has found a

single grammatical usage which it finds

Case Details

Case Name: Alumet v. Bear Lake Grazing Co.

Court Name: Idaho Supreme Court

Date Published: Apr 26, 1991

Citation: 812 P.2d 253

Docket Number: 18397

Court Abbreviation: Idaho