161 P. 910 | Utah | 1916
Lead Opinion
On September 23, 1909, tbe plaintiffs commenced this action in equity to recover the sum of $9,000 from the defendants as an alleged balance due upon the purchase price of certain mining claims, and to have said sum declared a lien upon said mining claims, and for an order of sale thereof to pay said $9,000, etc. The defendants denied the maturity of the alleged indebtedness, and, as a further defense to the action, set up the contract entered into between the parties concerning the purchase of the mining claims in question, the terms of which, so far as material to this controversy, we shall refer to hereafter. It is not necessary to set forth the pleadings. Such parts as may be deemed material, however, will be referred to in the course of the opinion:
The conceded facts, briefly stated, are, that on the 2d day of July, 1901, the plaintiffs entered into what may be termed a dual option agreement with the defendants whereby the plaintiffs sold to the defendants seven mining claims, of which six were unpatented, together with the improvements thereon. By the terms of said agreement the defendants were given the ■ choice to pay the sum of $16,000 in full for said mining claims or to pay the sum of $21,000, $9,000 of which to be paid as hereinafter stated. If the defendants elected to pay the sum of $16,000 for the full purchase price of said claims, (they were required to pay the same as follows: $1,000 on the date of the contract July 2, 1901; $1,000 on or before September 2, 1901; $6,000 on or before October 20, 1901; and the remaining $8,000 on or before July 2, 1902. Upon the other hand, if the defendants elected to pay the $21,000 for said mining claims the payments were to be made at the dates and upon the conditions following: $1,000 on the date of the contract ; $1,000 on or before September 2, 1901; $6,000 on or before October 20, 1901; $4,000 on or before July 2, 1902; and the remaining $9,000, in the language of the contract were made payable in the manner and upon the conditions following:
“5. The balance of the above-named purchase price, being the sum of nine thousand dollars ($9,000.00), shall be paid*140 only in tbe manner following and not otherwise — that is to say, on and after the 2d day of July, 1902, the said second parties, or their assigns, shall pay over to said first parties, or their assigns, a net one-half (<■,-) of said second parties’ proceeds from said mine, meaning thereby a net one-half (4) of the proceeds of all ores mined from said property after the said second parties have deducted all moneys paid out by them or expenses incurred in mining, milling, sampling, handling, transporting, smelting and marketing said ores. ’ ’
The contract also contained the following conditions:
“E. The extent and manner of managing and developing said property shall be left solely to the sound and reasonable discretion of said parties of the second part.
“F. It is also understood and provided that the parties of the first part may have, if they so desire, when the property is being worked, employment thereon under the orders and direction of said second party, or his assigns, so long as said first parties are competent and faithful and said work continues, at usual miners ’ wages.
“6. # * # And the parties of the first part agree, upon the payment of the twelve thousand dollars ($12,000.00) as above specified, to deliver to the parties of the second part, or their assigns, a warranty deed containing the usual cove-’ nants conveying title in fee to their full undivided interests in the above-described premises free and clear of all incum-brances, and subject only to the paramount title of the United States in the unpatented claims. Upon delivery of said deed the second parties hereto shall make and deliver to the parties of the first part hereto their certain contract agreement to pay the balance of the purchase price named herein of nine thousand dollars ($9,000.00) in the manner and only in the manner provided by paragraph 5. And the said parties of •the first part further agree that upon the payment of the one thousand dollars ($1,000.00) required, and to-day made, under paragraph No. 1, said deed shall be placed in escrow in Salt Lake City, Utah, to be delivered to the said second parties, or their assigns, upon the payment of the said twelve thousand dollars ($12,000.00).”
The defendants elected to purchase the mining claims for
“In consideration of the conveyance by the second parties to the first parties of the Atlas, Atlas No. 1, Atlas No. 2, Atlas No. 3, Atlas No. 4, Atlas No. 5, and Atlas No. 6, lode mining claims, in Star Mining District, Beaver County, Utah, the first parties hereby promise and agree, for themselves and their assigns, that they will pay to the second parties or their assigns, one-half of the net proceeds of all ores mined by the first parties, or their assigns, from said property, until the second parties shall have received the sum total of $9,000.00 out of such net proceeds. The words ‘net proceeds’ as here-inabove used shall be construed as the proceeds of the sales of ores taken from said property remaining after the first parties shall have deducted all moneys paid out by them or their assigns for expenses incurred in mining, milling, sampling, handling, transportation, smelting and marketing said ores. This contract shall be deemed and construed as a covenant running with the title to said land and shall bind the grantees, heirs and assigns of the first parties. It is distinctly understood and agreed that the first parties shall not be liable hereunder to pay to the second parties any sum whatever unless such net proceeds are realized by them out of said property, and then only to the extent of one-half of such net proceeds until the full sum of $9,000.00 shall be paid to the second parties. ’ ’
The plaintiffs, in their complaint, pleaded only the legal effect of the contract, and, among other things, also alleged:
“That said defendants, with full knowledge of the rights of the plaintiffs in the premises, and of their obligation to pay the said $9,000 remaining due upon the purchase price of said property, have wilfully failed, neglected and refused to pay said sum, or any part thereof, out of the proceeds of Said mining property, or otherwise, and said defendants with full*142 knowledge as aforesaid of the rights of the plaintiffs and of their duty in the premises, have wilfully failed, neglected and refused to work, develop or operate said mine, or extract ores therefrom, all for the express purpose of delaying the payment of said $9,000, and of defeating, if possible, the rights of the plaintiffs in the premises. That said defendants have had a reasonble time to pay said $9,000 from the proceeds of said mining property, and have likewise had a reasonable time to develop said property, and to sell and dispose of the same; but to do either of said things said defendants have neglected and refused and still neglect and refuse. ’ ’
In supp'ort of the foregoing allegations the plaintiffs, over defendants’ objections, were permitted to propound the following question and to receive the answer thereto as stated below:
“Mr. Johnson, from your knowledge of the ground and your experience as a mining man, what do you say as to whether or not with but comparatively slight expenditure ore could have been mined and shipped at a profit sufficient to have paid your $9,000 from the claims which were sold to the defendants by you and Lockwood ? A. "Why, I think with an expenditure of $5,000 sinking this vertical shaft, that the mine could have been paying right along. ’ ’
Appellants, as appears from the evidence, did not work the mining claims after the, payment of the $12,000, did not receive any net proceeds .therefrom whatever, and did not pay plaintiffs any more money.
The court made findings of fact and conclusions of law in favor of the plaintiffs. The 'principal part of the findings merely relate to the contracts entered into by the parties. It, however, made some additional findings as follows:
‘ ‘ That said defendants, Geddes, Snyder and Beckett, at the time of the execution of said option agreement on the 2d day of July, 1901, and said agreement of October 4, 1901, represented and stated they would immediately work and develop said mining claims; that they had sufficient means with which to work said property; that the examination made and caused to be made by them of said property showed that said mining claims contained large deposits of ore from which, at an ex*143 pense not to exceed five thousand ($5,000.00) dollars, they could have mined and shipped lead, silver and other ores, at a profit, and discharged said indebtedness of $9,000.
‘ ‘ The court further finds that said ipining property is valuable for mining purposes, and is of a valuation of at least $50,000; that it contains valuable deposits of ore which can be mined and shipped at a profit, and that if defendants had worked said property and mined the ore therein they could, within a short time after entering into said contract, have paid said $9,000 out of one-half of the net piuceeds of the orés mined from said, property, and by such proceeds (the court means, proceeds of the sales of ores taken from said property), remaining after the defendants deducted the moneys paid by them, or expenses incurred in mining, milling, sampling, handling, transporting, smelting or marketing such ores.
"The court further finds that the said defendants, after obtaining said option and entering into said agreements on October 4, 1901, refused to work said mining claims, or to extract and remove ore therefrom; that plaintiffs, upon a number of occasions between said dates and the commencement of this action, requested the defendants to work, operate and develop said property and to ship ores therefrom and to pay said $9,000, but the said defendants refused upon each occasion, and continued to refuse to work said property, or to mine the ores thereon or to pay,said $9,000, or any part thereof. That from the year 1901, when the defendants obtained a deed to said premises, until the time of the trial, the said defendants have not worked said property or expended any sum of money thereon or attempted to develop said property or to ship ore therefrom, but during all of said period refused, and still refuse, to work, develop or operate said property, or to pay said $9,000; and the said defendants give out and declare that they are under no obligation whatever to either work said property or to ship ore therefrom,' and further give out and declare that they never will be required to pay the said $9,000, or any part thereof, until they shall work said property, and from one-half of the net proceeds thereof derive a sufficient sum to pay and discharge said $9,000. ’ ’
The findings, and especially those we have hereinbefore set forth, are assailed both upon the alleged ground that they are not sustained by the evidence, and that they are immaterial under the issues.
The district court seems to have proceeded upon the theory outlined by plaintiffs’ counsel, the substance of which may be stated thus: That inasmuch as the $9,000 were mentioned in the contracts as being a part of the $21,000 purchase price for the mining claims, and although defendants agreed to pay that sum out of the net proceeds which they should obtain from the mining claims, yet that sum was payable at all events within a reasonable time after the deed was executed and delivered; that notwithstanding the defendants have had a reasonable time within which to develop said mining claims and obtain therefrom sufficient net proceeds to pay said sum of money, they, nevertheless, have failed and neglected to do so and for that reason said sum of $9,000 became due when such a reasonable time had elapsed, which was on the 1st day of September, 1909, or 23 days before this action was commenced. Plaintiffs’ counsel, in this court, defend the judgment of the court upon the theory just outlined. In support of their contention counsel refer to the following Utah cases, namely, Charter Oak, etc., Co. v. Gisborne, 5 Utah 319, 15 Pac. 253; McIntyre v. Ajax M. Co., 20 Utah 323, 60 Pac. 552, and 28 Utah 162, 77 Pac. 613; Haslam v. Haslam, 19 Utah 1, 56 Pac. 243, and Schenck v. Wicks, 23 Utah 576, 65 Pac. 732. Cases are also cited from other jurisdictions. Inasmuch as we are firmly convinced that both the plaintiffs and the defendant must stand or fall by the terms of their contract we do hot deem it necessary to specially point out why the foregoing cases are not controlling, much less do we deem it necessary
At the threshold of this controversy we are again reminded that courts are created to enforce and not to make contracts. In other words, unless it is shown that the contract in question was obtained by fraud, oppression, or duress, or that it is against law or public policy, or is unconscionable, it is the duty of the courts to enforce it according to its terms and not by forced construction to modify or disregard it. The terms of the contract in question here, • as we view them, are so explicit, so plain, and are expressed in such apt and clear language that there really is nothing for a court to construe. It is true that the district court made certain findings, among others, that when the option agreement was entered into in 1901 some of the defendants made certain statements to the effect that they would “immediately work and develop said mining claims, ” etc. That finding is assailed. It must not be overlooked that the finding relates to the time when the original option agreement was entered into, namely, in 1901. Now, by reference to that agreement it will be seen that the finding is in the very teeth of its terms. In that agreement it is provided:.
“The extent and manner of managing and developing said property shall be left solely to the sound and reasonable discretion of said parties of the second part [defendants]. ’ ’
*147 “It is distinctly understood and agreed that the first parties [the defendants] shall not be liable hereunder to pay to the second parties any sum whatever unless said net proceeds are realized by them out of said property, and then only to the extent .of one-half of such net proceeds until the full sum of $9,000 shall be paid to the second parties [the plaintiffs].”
In order to secure the $9,000, regardless of the time when the ore shall be mined and the net proceeds, if any, obtained, the parties in that contract also provided:
“This contract shall be deemed and construed as a covenant running with the title to said land and shall bind the grantors, heirs and assigns of the first parties. ’ ’
Considering, therefore, all of the provisions of the contract together it is quite clear that it was assumed by all the parties that it might not only be a long time before one-half of the net proceeds would be obtained in sufficient quantities to pay the $9,000, but that it was possible that one-half of the proceeds might not reach that sum at any time. This is made clearer still when reference is had to the purchase price that was fixed in the two options. In one the defendants could obtain the mining claims by paying $16,000 in full therefor. They declined to pay that amount, but elected to purchase under the other option by the terms of which they were required to pay only $12,000 of their own money, but were required to pay an additional $9,000 (which was $5,000 more than the first option), but they were required and agreed to pay .said $9,000 only out of one-half of the net proceeds to be derived from the mining claims. Notwithstanding the fact, however, that the plaintiffs were willing to sell the mining claims for $16,000 in full, one of the plaintiffs testified that the claims were worth $50,000 at the time they were sold, and were worth that at the time of the trial. Plaintiffs, however, gave the defendants the option to purchase the mining claims for $12,000 in money regardless of whether that amount, or any amount, was realized out of the property, and for an additional $9,000 making the purchase price $21,000, but agreed that the $9,000 should be paid only out of one-half of the net proceeds, if any, obtained from the mining claims. The de
But there is still another reason why the district court’s construction of the contract in question cannot prevail. Under the contract no payments were due nor could become due until the defendants had obtained at least some net proceeds. If they had worked the mining claims during all of the years from 1901 to the present time, and had obtained no net proceeds, nothing would be due under thá terms of the contract, and if, during that time, they had obtained net proceeds in any amount less than $18,000, the plaintiffs would have been entitled to only one-half of the amount realized, whether that amount was $1,000 or $10,000, or any other sum less than $18,000. If, therefore, the defendants had obtained net proceeds from the mining claims and had failed or neglected or refused to pay plaintiffs one-half thereof, the plaintiffs could have sued for and recovered said one-half and no more, and the burden of proof in such an action would have been upon them to establish that the defendants had realized net proceeds, and the amount thereof. The district court, however, held that in view that the plaintiffs did not, within a reasonable time, work and develop the mining claims, and therefore did not to an absolute certainty demonstrate the fact that they could not obtain .net proceeds from the claims, for that reason they should be required to pay the whole $9,000 with legal interest from September 1, 1901, the date when,
It is, however, suggested that if this conclusion is sound, then the defendants may never pay the $9,000, and can never be compelled to do so, although they hold and enjoy the mining claims. There are several answers to that contention. The first one is that under the terms of the agreement the defendants did not obligate themselves to pay unless ,and until they realized net proceeds from the mining claims. Secondly, that they did not agree to pay the $9,000 out of the net proceeds within a reasonable time, or at any time, unless they should first realize the net proceeds. Nor did they obligate themselves to work the mining claims within a reasonable time, nor within a specified time, or at all. That was a matter taken for granted by the plaintiffs, but not agreed to by the defendants, and hence is not a part of the obligations assumed by them. The third answer is, that if the defendants have in any way breached the terms or conditions of their contract the plaintiffs may sue and recover such damages as they may have sustained „thereby, precisely the same as they would have to do in case of a breach of any other contract. Courts of law are always open for such actions, and courts of equity may act only when the remedy at law is inadequate. Again, courts of equity may not, under the guise of construction, so change or modify contracts as
*151 “Why, I think tilth an expenditure of $5,000 sinking this vertical shaft that the mine could have been paying right along. ’ ’
While, according to the view we have taken, that evidence is wholly beside the question which controls here, yet where is there anything on or between the lines of the contract sued on which required the defendants to expend $5,000, or any other sum, to sink a shaft? That matter was expressly left to their own judgment. Moreover, as already pointed out, a complete answer to the contention that the $9,000 are due and payable is the conditioh of the contract that if the defendants had worked the mining claims for any number of years and up to the present time, or would continue to work them for any length of time in the future, and they had obtained no net proceeds, or should obtain none, plaintiffs would have no right of action; and in case they had obtained net proceeds in the past, or should obtain some in the future, plaintiffs’ right of recovery would be limited to one-half thereof until they had obtained $9,000. Now, plaintiffs concede that no net proceeds have been obtained, and further testify that in order to make the mine pay, that is, to obtain any net proceeds therefrom, defendants would have to expend an additional $5,000, and in the very teeth of those facts contend, and the court found, that the $9,000 were due with $5,100 accrued interest. We confess our entire inability to see how this can be due under the contract without disregarding its terms upon the one hand and without imposing duties,upon the defendants not assumed by them upon the other. Much evidence was admitted and considered by the court regarding the condition of the mining claims and, their probable value. In our judgment that evidence is without any force whatever. The parties have expressly agreed upon the price to be paid which, for the purposes of this case, must be assumed was deemed the reasonable value. Moreover, the parties have fixed the time and manner of paying the purchase price, and we cannot understand how the condition of the mining claims or their speculative value can be given any effect in construing the language employed in the contract
The real question in this case may thus be viewed from any angle, and still we arrive at the same conclusion, namely, that under the contract the defendants did not obligate themselves to do the things the district court has required of them, and hence the judgment of that court cannot be sustained.
In conclusion we desire to add that counsel for the defendants have referred to the case of Consolidated Arizona Smelting Co. v. Hinchman, 212 Fed. 813, 129 C. C. A. 267. A perusal of that case has convinced us that it is very much in point in favor of the contentions of the defendants, and is in harmony with the conclusions that we have reached. It is not necessary, however, to do more than refer to the case.
The judgment, for the reasons stated, is reversed and the cause is remanded to the district court of Salt Lake county, vdth directions to set aside its findings of fact and conclusions of law in so far as they are in conflict with this opinion, and to substitute others which are in accordance ■with the views herein expressed, and to enter judgment dismissing the complaint. Appellant to recover costs.
Concurrence Opinion
I concur. It is a recognized rule of law that where a contract is susceptible of two constructions, each of which is probable, or its meaning otherwise rendered doubtful, the court, in order to construe the contract so as to give it the meaning and effect the parties who made it intended that it should have, will place itself, as nearly as can be done, in the position of the parties “by admitting evidence of the surrounding facts and circumstances, the nature of the subject-matter, the relation of the parties to the contract, and the objects sought to be accomplished by the contract. ’ ’ 2 Page on Contracts, section 1123. It is also a well-recognized rule of construction that a contract should be considered and construed as an entirety and should be interpreted so as to give effect, if possible, to each provision therein contained. By following and applying these familiar rules of construction
The.record shows that some time about the first of the year 1900, the exact date is not given nor is it material, plaintiffs entered into a contract with one W. R. Sloan whereby they were given an option for two years to purchase a portion of the mining claims involved in this litigation. The group then consisted of one patented and two unpatented claims. The court found, and the evidence shows, that Sloan “agreed to sell and convey said claims to plaintiffs for the sum of $5,000, and plaintiffs thereon paid the sum of $500 to him, and the said Sloan placed a deed in escrow with the Wells-Pargo Company, Bankers, Salt Lake City, Utah, to be delivered to the plaintiffs upon payment by them of the further sum of $4,500.
Plaintiffs, immediately after the execution of their contract with Sloan, took possession of the property, commenced, and, continuously for fifteen months thereafter, prosecuted development work thereon. It is admitted, and the record shows, that prior to the time plaintiffs took possession of the property a large amount of work had been done thereon. Respondents (plaintiffs below) in their printed brief say:
“These claims had been worked prior to 1901 for many years, and more than $30,000 worth of work had been done on the same.”
There was an incline 800, and one 300, feet in depth and several perpendicular shafts ranging in depth from 50 to 200 feet, besides numerous drifts and tunnels on the property. Plaintiffs, immediately after taking possession, located four claims contiguous to the property. A United States patent was later on procured for the six unpatented claims by and at the defendants7 expense; During the fifteen months plaintiffs were at work on the property they expended, in addition to their time and labor, $3,500 in cash in their efforts to make the enterprise a going and paying concern.
Silas F. Johnson, one of the plaintiffs, who is a practical mining man of long experience, testified in part as follows:
*154 “Lockwood and I put in about fifteen months’ work; we-had some hired men; we spent about $3,500 there besides our own time. That was cash. * * * We didn’t spend much on the four claims we located. As a matter of fact, the four claims didn’t cost us anything except the expense of making the locations. * * * Mr. Lockwood and I worked •there for fifteen months practically every day. * * * We didn’t keep on because it was impossible to get the ore out of this long incline. We spent at least six months trying to straighten it up and clean the waste out of it in order get the ore, and we couldn’t make a success of it after we did it. * * * I gave an option on the property for $16,000 for the simple reason I hadn’t the money to develop it.”
The only conclusion deducible from these facts, as I read the record, is that this group of mining claims could not, without the expenditure of a large sum of money, be placed on a paying basis; and even with an outlay of large sums-of money there was nothing in the then condition and appearance of the property to justify more than a vague hope -or belief on the part of the plaintiffs that merchantable ore would be found in sufficient quantities to more than pay the running expenses of working the mine. That such was the opinion of the plaintiff Johnson, who testified as a witness in the ease, I think, is too plain to admit of serious argument. His testimony, considered in connection with the somewhat unusual favorable terms in the contract providing how the final payment of $9,000 may be made, I think, shows this.
Reference is made to a copy of a written report introduced in evidence by plaintiffs that was made by a civil engineer and mining expert of the result of an examination he made of the property and samples of ore taken therefrom and assayed, just prior to or about the time the contract in question was executed. The report, among other somewhat extravagant, and, in view of the evidence of Silas F. Johnson, one of the plaintiffs, who was familiar with every incline, shaft, drift, and tunnel in the mine, and the amount and character of the ore exposed, I might add, reckless and misleading statements therein set forth contains the following respecting the tonnage and value of “high-grade” ores exposed in the mine, namely:
*155 “In the two inclines mentioned, limiting the measurement severely on an estimate, the tonnage practically in sight can safely be considered as 300 tons of an average value of $30 per ton. In extracting this it will be necessary to take out an equal amount of waste. The expense of mining this in a small way will be high, about $2 per ton:
Mining.$ 2.00
Hauling to Milford.1.25
Freight.3.50
Sampling and smelting. 6.00
$12.75
—leaving a net profit of $17.25 per ton, or $8,625. There is every probability that when this ore is extracted an equal tonnage will be exposed, and that this will continue indefinitely. * * *
“The showing at the bottom of the 800-foot incline shaft is extremely favorable for a very large tonnage. The recent development does not show the width of the ore body except to the extent that it is greater than 20 feet. The surface of the vein matter directly above this point is 100 feet or more across, and a comparatively small amount of work below would probably open tonnage to furnish a 200-ton mill indefinitely. The profit that could be realized on the operation of the 200-ton concentrator on ore of the grade now exposed would be: # * * Net profit per month, $28,320.00.”'
This report, in so far as it deals with the amount and value of the ores exposed in the mine, is manifestly unreliable and misleading. It is a matter of common knowledge to all parties, and their numbers are legion, who have had experience in and are familiar in a general way with the mining industry in this and adjoining states, that a mine containing the amount and character of ore described in the report as being exposed and partially blocked out could readily have been sold for many times the price named in the contract. While the defendants may have been, and probably were, misled by the report respecting the amount and the character of the ore exposed and the value of the mine, it is manifest that plaintiffs were not, in any respect, misled by it. Their willingness
Furthermore, the report was the rankest kind of hearsay evidence, and if proper and timely objections had been made when it was offered in evidence the trial court would undoubtedly have excluded it. While the admission of it in evidence without objection entitles plaintiffs to have it considered by this court, its unreliable character as hearsay may, nevertheless, be considered in determining the weight that should be given it. The evidence of the witness Johnson as to the condition of the mine respecting the amount and character of the ore therein exposed, the amount of development work done and expenditures made by plaintiffs and their inability to mine sufficient ore to pay the running expenses, the $6,000 or $7,000 worth of development work done since the contract was executed, and the limited amount of ore, if any, the parties doing the work were able to mine, considered in connection with his evidence wherein he says that in his opinion it will require an expenditure of $5,000 to put the property in a conditioii so that “ore can be mined and shipped at a profit,” completely destroys, as I view the record, the value of the report as evidence.1
I here remark, parenthetically, it is safe to predict that if the numerous — countless—undeveloped mining claims in this and the adjoining states that have heretofore been examined, and reports,* both verbal and written, made thereon, by mining experts and men claiming to be such, had, in the majority of cases, possessed the merit claimed for them in the reports, including the property in question, and the properties had been continuously worked to their full capacity, the output of silver bullion would be equal to if not greater than that of copper, and the output of gold so great as to demonetize it and to make the metal a drug on the market.
The plaintiffs, as stated, were given an option for two years by Sloan in which to purchase the property. They paid $500 on the purchase price and expended. $3,500 in cash, be
The defendants paid $12,000 of the purchase price as provided in the contract. The provision of the contract providing how and under what circumstances the balance ($9,000) may be paid is as follows:
“The balance of the above-named purchase price ($21,000) being the sum of $9,000, shall be paid only in the manner following and not otherwise, that is to say, on and after the 2d day of July, 1902, the said second parties or their assigns shall pay over to said first parties or their -assigns a net one-half of said second parties’ net proceeds from said mine, meaning thereby a net one-half of the proceeds of all ores mined from said property after the said second parties have deducted all moneys paid by them or expense incurred, ’ ’ etc.
The contract further provides that:
“The extent and manner of managing and developing said property shall he left solely to the sound and reasonable discretion of said second parties.” (Italics mine.)
These provisions, whether read by themselves or in connection with the other provisions of the contract, are plain and
That the parties anticipated at the time the contract was executed, and at the time the deed conveying the title of the property to defendants was delivered, that the plaintiffs might have to wait indefinitely for the payment of the $9,000, or any portion thereof, and that defendants would not be called on to pay any part of the amount until there are “net proceeds” from ores mined with which to make payment, I think, is further evidenced by certain provisions of a contract, herein referred to, executed by the parties contemporaneously with the delivery of the deed. That contract or agreement is incorporated in the opinion written by Mr. Justice FrioK. It provides that the defendants will pay to plaintiffs one-half of the “net proceeds of all ores mined * * * from said property” until plaintiffs shall have received “the sum total of $9,000 out of such proceeds. ” It is also provided that the “contract shall be deemed and construed as a covenant running with the title to said land and shall bind the grantees, and heirs and assigns, ’ ’ etc. It also contains the following provision:
“It is distinctly understood and agreed that the first parties shall not be liable hereunder to pay to the second parties any sum whatever unless such net proceeds are realized by them out of said property, and then only to the extent of one-half of such net proceeds until the full sum of $9,000 shall be paid to the second parties. ’ ’
No claim is made by plaintiffs that any net proceeds of ores taken from the mine have been received. In fact the record shows that at no time since plaintiffs first became interested in the property have the proceeds of the ore been sufficient to pay the running expenses of the mine, or any considerable portion thereof. The provisions of the contract herein set forth, considered in connection with the circumstances and conditions with which plaintiffs were confronted in a financial way, their knowledge of the mine and of the
In order to uphold the judgment of the trial court it seems to me that this court must refuse to give effect to the por-visions of the contract herein referred to, namely, the provision providing that the $9,000 shall be paid out of the net proceeds of ores mined and not otherwise, the provision providing that “the extent and manner of developing the property shall be left solely” with the defendants, and that defendants “shall not be liable to pay (plaintiffs) any sum whatever unless such net proceeds are realized by them out of said property.” This, I submit,.a court has no right to do.
Furthermore, it is almost unbelievable that defendants would have bound themselves to pay $9,000 in addition to the $12,000 received by plaintiffs on the purchase price, regardless of whether the mine should be operated at a profit or loss, when they had an option to take over the property for $16,000, payable in installments covering a period of one year. We therefore must, in order to affirm the judgment, not only refuse, as stated, to give effect to the provisions in the contract to which I have just referred, but we must in effect hold that the defendants, whom we have a right to believe from the record were men of average intelligence, possessing ordinary business acumen and shrewdness, were willing to and did bind themselves to pay $21,000 for property on which they had an option to purchase for $16,000.
Counsel for plaintiffs, in their printed brief, say that the contract “clearly contemplates that defendants should work and develop the property” and devote considerable space in discussing the alleged dereliction of defendants in that regard.
Dissenting Opinion
I dissent. True, the court cannot make a new contract for parties. It, however, is required to construe and give effect to those made by them. The intention of the parties as expressed in language employed by them of course must govern. The several contracts being parts of one transaction should be read together and construed with reference to each other and to the subject to which they relate and with which they deal.
The defendants purchased from the plaintiffs seven mining claims lying in the vicinity of other claims from which pay ore was being shipped, some of great value. When purchased, the claims were not wholly undeveloped. About 3,000 feet of work, running tunnels and inclines and sinking shafts, had been done upon them, and pay ore taken out of them;
His “resume” is:
‘ ‘ Although this property has not had the advantage of any intelligent development and the worldngs in many cases resemble gopher holes, there is, nevertheless, sufficient evidence to convince me that there is here an exceptional- opportunity for developing a mine of great value. ’ ’
■ Against this the defendants gave no testimony and adduced nothing to show that the mine did not contain pay ore, or that it could not have been worked profitably, or that any
In July, 1901, the defendants unconditionally purchased the claims from the plaintiffs, but with the option to pay $16,000 in cash, payable in installments, or $21,000, $12,000 of which in cash, payable in installments, and $9,000 out of net proceeds of ore mined by the defendants, or their assigns, from the properties. The defendants chose the latter. There thus was an absolute sale and an unconditional promise to pay the sum of $21,000, $12,000 of which to be paid in cash in installments, and $9,000 out of net proceeds of ore mined by them from the properties. By their contract of July, 1901, it was provided that “the balance of the above-named purchase price [$21,000] being the sum of $9,000, shall be paid” in manner that “on and after the 2d day of July, 1902 (when the last installment of the $12,000 was due), said second parties (defendants), or their assigns, shall pay over to the said first parties, or their assigns, the net one-half of said second parties' proceeds from said mine, meaning thereby a net one-half of the proceeds of all ores mined from said property after the said second parties have deducted all moneys paid out by them for expenses incurred in mining, milling, sampling, handling, transporting, smelting, and marketing said ores.” In October, 1901, the defendants paid the full amount of the $12,000 at which time plaintiffs made their deed conveying unqualified title to the properties to the defendants. Contemporaneous therewith, and in consideration thereof, by further agreement, and in accordance with the prior or main agreement, it was provided:
“That the first parties (defendants) hereby promise and*164 ■agree for themselves, and their assigns, that they will pay to the second parties, or their assigns, one-half of the net ■proceeds of all ores mined by the first parties, or their assigns, from said property until the second parties shall have received the sum total of $9,000 out of said net proceeds.”
■ The defendants thus just as unconditionally agreed to pay $9,000 out of net'proceeds of ore mined by them from the properties as to pay the $12,000 in cash. The language of their contract admits of no other interpretation. But the defendants say that they had not agreed to work the properties or to mine or take out any ore. But they in no uncertain terms agreed to pay-$9,000 out of proceeds of ore mined by ■them from the properties. They, of course, could not comply •with such stipulation unless the properties were mined by them and ore extracted therefrom, for ore does not thrust itself out of the ground, nor without human agency reduce itself to a marketable product. As well say that a vendee, who, as part of the purchase price of a farm, had agreed to pay a sum definite out of net proceeds of crops raised by him on the farm, was not required to farm it or to raise any crops, for it was not nominated in the bond that he was to ■till, sow, or reap. To say one had agreed to pay $9,000 out of proceeds of ore mined by him from the property, and then say he ivas at no time required to work or mine it or do anything to obtain ore, seems to me but contradictory propositions. I thus think the defendants had a duty to perform and were required to make reasonable efforts to meet the payment out of net proceeds of ore, and that they were entitled •to a reasonable time to do that.
The period of eight years they had to do so certainly was more than reasonable time. The stipulations in the first or main contract that “the extent or manner of managing and developing said property shall be left solely to the sound and reasonable discretion of said parties of the second part, ’ ’ and that the plaintiffs should be given employment under orders and directions of the defendants “when the property is being worked,” do not imply that the defendants, in compliance with their contract to pay $9,000 out of net proceeds of ore mined by them, were not required to work the property, but
Contracts, with such stipulations respecting payment as here', are and should be liberally construed in favor of the payee. Smithers v. Junker, (C. C.) 41 Fed. 101, 7 L. R. A. 264. So construing those in hand I think it clear that the defendants had a duty to perform' respecting the discharge of their obligation as to payment of the unpaid $9,000 purchase price. I do not think it was contemplated by the parties that the $9,000 could become due only at the pleasure or will of the defendants regardless of lapse of time or the rights of the plaintiffs. To uphold the defendants in their contention but means that they have the sole right to say when such unpaid balance shall be paid, or that it shall never be paid. Surely that was not contemplated by the parties. I think the provision in the contract to pay the unpaid balance of the purchase price out of proceeds of ore mined by the defendants from the property constitutes but the means and not the end. And though the means had been inadequate to accomplish the end they, nevertheless, are not to control the
I do not see wherein the case of Consolidated Arizona Smelting Company v. Hinchman, 212 Fed. 813, 129 C. C. A. 237, cited and relied on by the defendants, supports them in their contention. The only thing there decided was that the provision of the contract there considered respecting payments of net proceeds from the operation of mining properties was not a part of the purchase price and not a covenant running with the land, but was merely personal, and did not create an equitable charge on the land. That is apparent from the syllabi, and is expressly so stated by the court in its opinion. Here the $9,000 to be paid out of the net proceeds admittedly is a part of the purchase price. The contracts in unmistakable terms so recite; in the one “the balance of the above-named purchase price ($21,000) being the sum of $9,000 shall be' paid” out of net proceeds; in the other, “in consideration of the conveyance by”, the plaintiffs of the claims, the defendants “promise and agree for themselves and their assigns that they will pay” the plaintiff net proceeds until the sum of $9,000 is paid; and by express provisions of the contract confessedly are covenants running with the land
Thus, from these considerations, do I think the judgment right declaring the unpaid purchase price of $9,000 due and unpaid, adjudging it a lien on the property and ordering it sold in satisfaction thereof. Something is said concerning interest. The court allowed no interest for the period of about eight years before the action was commenced and which time the defendants had to comply with their contract. It allowed interest only from the filing of the complaint to judgment, a period of a little more than seven years. If the plaintiffs were entitled to interest, as I think they were, they certainly were entitled to it for the period allowed.
