31 Colo. 15 | Colo. | 1903
delivered tlie opinion of the court.
Action to recover profits accruing under a lease. On the 29th day of December, 1896, Charles H. Thomas and John P. Johnson, plaintiffs below, appellees here, and Frank M. Taylor and W. S. Copeland, defendants below, appellants here, secured from its owner. a lease on the Fanny Rawlings mine at
. After this new agreeement was made, the mine was worked and ore extracted therefrom shipped and sold to a smelter, monthly statements furnished and received, until some time in October, 1899, when, by consent of all parties, the lease was surrendered to the lesssor.
After the agreement of January 21 was made, defendants entered into a separate contract with the Big Pour mining company, by which they acquired the right and privilege of carrying on work in the Panny Rawlings mine through the workings of the Big Four company, and as a consideration therefor defendants agreed to pay to the Big Pour company three-eighths of the profits of the lease on the Panny Rawlings mine. In accordance with the requirements of the lease, defendants furnished to the plaintiffs
The trial court found in favor of defendants on the second and third, and in favor of plaintffs on the first, account, and upon the latter finding rendered a joint judgment against defendants for $3,525.25, which by this appeal defendants seek to reverse.. The plaintiffs have purported to assign cross-errors to the findings against them on the two items mentioned.
There are no disputed questions of fact. The question is solely one of law, and its solution depends upon a construction of the terms of the contract of January 21, the material parts of which are here reproduced :
“First. In consideration of W. S. Copeland and F. M. Taylor assuming and agreeing to pay all expenses of the lease incurred after January 25, 1898, Charles FI. Thomas and John F. Johnson hereby agree to transfer and assign, and do hereby transfer and assign, to W. S. Copeland and F. M. Taylor each one-eighth interest in and to said lease, and W. S. Copeland and F. M. Taylor do hereby agree to pay all expenses incurred after January 25, 1898, it being the mutual intention that the respective interests after January 25th shall be as follows, viz.: Charles H. Thomas and John F. Johnson each one-eiglith ownership in the lease and one-eighth interest in the profits resulting from .the operation of the Lease, lüithout personal liability for any portion of the expenses; W. S. Copeland and F. M. Taylor, each three-eighths ownership in the lease and three-eighths in the profits, and each to be liable for one-half the ex*20 penses, if any, over and above the earnings of the said lease.”
“Third. It is. mutually understood that the profits of the Lease, in which Charles LI. Thomas and John F. Johnson have each one-eighth interest, are to be computed and divided in the following manner, viz.: When on the last day of any calendar month the total receipts from the lease, after January 25, 1898, shall exceed the total expenses of the Lease, after January 25,1898, to said last day of the month, the surplus receipts on hand shall be divided by check mailed on or before the tenth day of the succeeding month to the address of each party in interest, but at any time when such receipts do not exceed such expenses, no division shall be made.”
1. The chief dispute is over the method of ascertaining profits. The plaintiffs ’ position is that the contract means that the accounts shall be closed at the end of every month, and the loss, if any, at the end of the month shall be borne by the defendants absolutely without reference to the statement of accounts for the other months; that, if the expenses far any month, or series of consecutive months, are greater than the receipts for that month, or series of months, neither the total receipts, nor the profits, of any other month or months can be applied to the extinguishment of such excess expenses. In effect, plaintiffs say that the lease is divided into monthly rests or periodsthat for the purpose of ascertaining and distributing profits the lease is divided into such periods or rests, each of which must stand on its own basis, without reference to any other period of the full term. Defendants, on the contrary, say that the contract on its face shows that in computing the profits the entire period during which the lease runs after January 25, 1898, must be taken into consideration, and though the distribution is to be made on the last day of any calendar
The first clause of the contract, standing alone, in terms provides that plaintiffs are not to be personally liable for any part of the expenses incurred under the lease, but that defendants are to pay all of them. It is just as manifest that plaintiffs were to receive for their respective interests one-eighth only of the profits resulting from the operation of the lease, and the profits were to be what was left from the receipts after all expenses were 'deducted, and these profits were those resulting, not from the operation of the lease for some particular fraction of the term, but for the whole time it was to run. Such is the natural meaning of the language of this clause; but, if possible, this meaning becomes clearer from what is said in the third clause. Therein" provision is made for the computation and division of profits which are to be determined by subtracting, on the last day of any calendar month, from the total receipts from the lease received after January 25, 1898, up to such last day of any month, the total expenses of the lease after January 25 up to such last day. This does not mean that the profits are to be reckoned by dividing the lease into monthly periods or rests, and by taking the
The contract meáns just what it says: That, though the time at which the computation and distribution of profits, if any, are made, is to he on the last day of any month, the amount to be distributed monthly is only what is left of tlie total receipts from the beginning of the term of the lease up to that date, after there is subtracted from such receipts the total expenses of the lease incurred during the same period of time; and since the total expenses of the lease from February to September exceeded by over fourteen thousand dollars the total receipts for the same period of time, it was proper for the defendants to apply to the liquidation of such excess expenses the subsequent receipts until that excess was wiped out before distributing any profits. This construction does not violate that provision which imposes upon defendants the obligation to pay all expenses, and which relieves the plaintiffs from the payment of any portion, though the argument to the contrary, at first blush, may seem plausible that the withholding by defendants of profits until after all expenses are met is a practical requirement that plaintiffs shall pay a part of the expenses, all of which the defendants themselves agreed to pay. The fallacy of this' argument is seen when it is recalled that, though plaintiffs were not to be personally liable for expenses, the receipts from sales of ore could be applied to expense account, and only profits are to be divided, and profits do not exist until after expenses are paid.
A construction should not be given to a contract that will result in oppression, if another construction can be reasonably made that will work justice. Let
The primary rule of construction of contracts is to make them speak the intention of the parties as gathered from the entire transaction. Wyatt v. Irrigation Co., 18 Colo. 298; McPhee v. Young, 13 Colo. 80; and St. L. D. L. & M. Co., etc., v. Tierney, 5 Colo. 584. If this can be arrived at from the language employed, the court is restricted to that. If, however, there is any uncertainty about it, the interpretation which the parties themselves put upon the contract may be looked to-. We have no doubt that the contract means just what defendants say, and when the uncertainties that necessarily attend mining operations are considered, it is not reasonable to believe that the par
It may be that the separate defenses of the answer in which these facts are alleged do not technically constitute good pleas of account stated or accord and satisfaction; but, if so, the admission of the evidence establishing these facts was not objected to on that ground. But whether the anwer shows an account stated to which no reasonable objection was seasonably made by the plaintiffs, or whether an accord and satisfaction is well pleaded, is not important under the facts of this case. It is entirely clear that plaintiffs knew the construction which defendants put upon the contract when these statements, covering a period of nearly two years, were received by them and they never objected thereto until after a lapse of an unreasonable time.
As a matter of law, it would seem that plaintiffs
2. As to the cross-errors assigned by plaintiffs, it is to be said that it is uncertain whether they have been assigned on the record as our statute requires. They are, however, easily disposed of on their merits. The payments to the Big Four company were properly chargeable to expense account. There is no contention that the work under the lease was unsldllfully or extravagantly conducted, or that the contract made with that company for the privilege of working the Fanny Rawlings claim was not a suitable and reasonable one. Indeed, we are warranted in saying that operating the Fanny Rawlings mine through the Big Four workings was economical and proper and in accordance with good mining. As'the amount paid for this privilege is not objected to as excessive, but only on the ground that it is not of such a character as to be included as a part of the expense, we are of opinion that the district court was right in declaring it a
3. The royalty to be paid to the lessor was provided for in the original lease. Plaintiffs claim that this item should be included in, and that it constitutes a part of, the expenses of operation to be paid by the defendants, and in no event to be a charge against them. It is clear, however, that the receipts contemplated by the lease out of which profits were to be paid mean only such part of the receipts as, by the very terms of the original lease, belonged to the lessees, and these were the receipts left after the royalty was paid. The royalty reserved for the lessor never belonged to the lessees. It was a primary charge on the receipts, and was the sole property of the lessor as its consideration for the lease. It cannot be said that royalty constitutes any part of the expenses of operating the lease.
It follows that the findings and judgment of the court as to the items relating to the Big Pour company and the royalty are right, and as to the first item concerning profits wrong. Plaintiffs’ assignment of cross-errors is not well taken,' and the judgment of the trial court with reference to them is affirmed. On defendants ’ appeal the judgment is reversed and the cause remanded, with instructions to dismiss the action.
Reversed.