*1 VALLEY TENNESSEE KAOLIN CORPO
RATION, corporation organised
existing under the of the laws State of
Louisiana Whittington,
D. H. a resident citizen of
Natchitoches, Louisiana
v. al., P. PERRY et
Joe
Appellants-Appellees, C., Co., Spinks Clay
H.
Appellees- Appellants. Tennessee, Appeals
Court of
Western Section.
Dec. 1974.
Rehearing Denied Jan. 1975. by Supreme
Certiorari Denied
Aug. Lassiter, Huntingdon, R.
W. H. Thomas Prewitt, Memphis, appellants-appellees. Dresden, Thomas, George appel- C. lees-appellants.
NEARN, Judge. Kirby On June J. C. and Ollie tract of land located in Kirby, owners of a *2 County, Carroll 7th Civil District of lessors, the Whittington between and the Per- on year clay a 30 and mineral lease granted Rolands, rys and be declared void and that Spinks Clay Company, land to H. C. their Whittington permitted be to recover sums (hereinafter The Spinks). lease was Inc. on expended in reliance the lease. The Kegister’s in the Office of Carroll recorded defendants, and Perrys Rolands filed an County the terms of the lease and under praying answer and a cross-bill the lease pay per to 15 cents ton for Spinks Whittington with be declared void because clay shipped or all minerals sold and from Whittington of non-payment by and that guaranteed mini- said tract of land Kirby-Spinks the be a lease declared cloud annual of for the first mum $10 on Spinks, their title and be removed as second and year, year, for the $50 because of a failure to mine the minerals year each thereafter. pay payments, and annual had rental for- Kirby rights feited all under that April On J. C. and Ollie lease. said land P. Kirby conveyed tract of to J. Spinks original filed to demurrers the bill Perry $1,000, being of such sale for the sum cross-bill, and the of both which were over- subject to the aforesaid mentioned to lease by ruled the Chancellor. A discretionary 5, 1957, Spinks. April Perry On J. P. con- appeal granted was prayed and to the Su- veyed a undivided interest in one-half said preme overruling Court from the order the Roland, L. property to R. Roland and W. D. The Supreme upheld demurrer. Court the $1,000. Jr. in consideration of Chancellor and pro- remanded further 20, 1963, On P. L. Perry, March J. R. Spinks ceedings. filed answer alleging Roland, Roland, D. Jr. and W. entered into validity the of their lease and the non-valid- agreement lease Whittington, a with D. H. ity of Whittington the lease. Valley Tennessee President of Kaolin Cor- During trial, the pendency of the R. L. granting Whittington a poration, year Roland died and his next of kin were substi- in mineral lease this same tract of land. party tuted as defendants and cross-com- lease, of Whittington Under the terms this plainants. to pay per was the lessors 50 cents ton for all and minerals sold or removed with a Before a final decree was entered on the of guaranteed royalty minimum annual remand, Whittington-Kaolin hearing and $25,000 keep to the in lease effect. Perrys-Rolands settled their differ- addition, $5,000 a bonus of was to the Whittington-Kaolin ences. were dismissed lessors. with all Perrys-Rolands reserving rights
On
Whittington
March
D. H.
against Spinks
cross-complaint.
on their
Bpinks
received written notice from
in
Spinks.
The final decree was
favor of
to
subject
said tract of land was
the record-
Perrys-Rolands
The
appealed
have
from the
Bpinks Clay
mineral
in
ed
favor
Spinks
appealed
adverse decision and
has
Company.
attempts
ofOut
court
to solve
portion
findings.
from a
of the Chancellor’s
problem the
two
alleged
leases
The posture
appeal
of the matter on
now
the same tract of land were unsuccessful.
being
original
if the
suit
been
as
had
be-
individually,
H.
Whittington
D.
as Pres-
Perrys-Rolands
tween the
and Spinks with
Valley
Corpora-
ident of Tennessee
Kaolin
Perrys-Rolands seeking
a forfeiture of
tion,
Chancery
against
filed a suit in
Spinks
Spinks
seeking
lease and
decla-
Roland,
R.
Perry,
Perry,
Alzemme
L.
Joe
validity.
ration of
Roland,
Spinks Clay
Jr.
C.
D.
and H.
W.
controlling
The
facts found
the Chan-
Company.
prayed
bill
that the lease
had
Spinks
pay
be
cellor were that
failed
Kirby
Spinks
agreement between
annual
because
declared void
forfeited
1957,1958,1959,
years
specified
and 1960as
Spinks’
pay the minimum
failure
lease;
rental;
alternative, that the lease
in the
but that the lessor had also
or in the
give
the notice of non-payment
failed
largely dependent upon the credibility of
required by the lease to effect a forfeiture.
Spinks
the witnesses.
maintained it mailed
The Chancellor then held there had been no
the checks and the lessor denied receipt of
Spinks
forfeiture of the
lease and same was
them. There is some confusion in the
subsisting agreement.
a valid
Spinks
record
created
as to whether the
question might
checks
have been mailed
*3
pertinent portion
The
of the
is
wrong
Chancellor,
to the
A
address.
on an
follows:
issue
hinges
which
on witness credibility,
agreed
by
“It is
and understood
and be-
unless,
will not be reversed
other than the
parties
Spinks
tween the
that if
shall fail
testimony
witnesses,
oral
of the
there is
pay
shipped,
to
or minerals
or fail
clear,
found in the record
concrete and con
pay
guaranteed
to
the
minimum annual
vincing
contrary.
evidence to the
State v.
payments,
sixty days
within
after same
(1968)
Town of Madisonville
222
Tenn.
and,
due,
provided
shall have become
803;
(1953
435 S.W.2d
Hall v. Britton
W.S.)
written demand therefor shall have been
41 Tenn.App.
the lease as of by notice default proof sor’s land. The further indicates that (First Party) any the lessor before forfei- Spinks expended has monies in an effort to non-payment ture for could be declared. produce clay, a market for the but as of the time of Spinks clay. suit had mined no The Perrys-Rolands assign
Defendants as er- record further reflects that a recently mar- finding by ror the the Chancellor that the ket has developed type clay. for this of Spinks lease had not been forfeited. De- argue Spinks implied fendants that had an argument appellants It is the of these express duty or to mine the property; that express that the lease created an and/or interpretation the Chancellor’s of the con- implied clay. covenant to mine correct; provision tract was not and that Further, of requirement the lease notice requiring the in the contract no- of a forfei- non-payment only applied when tice is unconscionable. upon ture or predicated cancellation was a Spinks assigns as error the Chancellor’s alone; non-payment but when the forfei- finding that the annual checks had predicated upon ture was a failure to mine properly not been mailed to and by received coupled non-payment, no notice was Perrys-Rolands. defendants required. We will first consider the appeal of We are opinion of the that the lease in Spinks. question implied contains neither an nor an Spinks argument ap express
It is the reaching covenant to mine. peal preponderates we, Chancellor, that the evidence conclusion as did the rely against finding upon (1930 the Chancellor’s that the the case of Pickens v. Kizer E.S.) checks for the minimum annual Tenn.App. 551. In the Pickens case were not received the lessor for the by mineral to be mined was marble instead 1957, 1958, 1959, years clay. pro- and 1960. An issue The rental minimum annual nature, presented by such as the one its vided in the lease was instead of $50.
4$1 case, The lease in the Pickens as in this However, tracts such implied § case, provided day period for a SO for notice duty to mine can be and is waived non-payment which, case, as in this was lessor “where the lessee has or admittedly given. argument The made pay specific a sum of money in lieu of to the Pickens Court was that the lease was recurring royalties and the money has been independent forfeited require- accepted lessor”. Frierson v. Inter ments because there had been failure to Agricultural national Corporation (1940 mine the stone. M.S.) 616, 633, 148 Tenn.App. S.W.2d 37; and Weatherly. We understand the held, duty that if there was a law to be implied obligation to mine, then the lessee was in default mine arises obligation where that is the sole not making monthly tonnage payments or substantial grant consideration for the provided in the lease. It would then follow ing of the obligation lease. Whether the non-payment that notice of would be re- *4 mine implied is and then waived or quired under the lease whether and such notice was the minimum annual given. Further, payments are it was held that where con sidered liquidated long damages a lease denies a forfeiture so as the for ongoing an contract is periodic payment paid, merely play minimum there words. mine, key question implied can be no covenant to as such as heretofore an swered written covenant is an is whether or express negation of not the minimum an any implied long payment such covenant so nual as there is sufficient consideration to given was sufficient open consideration for the hold the lease.1 agreement. An additional reason not heretofore men- tioned us influenced the Court in Frier- argued It is to this Court that son, supra, which was also a case dealing payment is not sufficient consid $>50 Frierson, mineral lease. page at eration for the lease obtained and it 634, 38, 148 page S.W.2d at the Court stat- called to our attention that in the Pickens ed, “that equity courts of should construe case, supra, the annual was $360. contracts uphold so as to them prevent and disregard We will disparity the evident be forfeiture, ais trite observation but it is tween the value of and marble and will one that cannot too repeated. be often It question consider the on the basis of land has been borne in mind throughout our value at the time the lease was executed. consideration of this case.” present In the case the amount $1,000. fee was light In the of that cost stated, For the reasons we overrule the factor, we deem an annual pay Perrys-Rolands Assignments of Error and ment of to be a sufficient consideration. affirm the decree below at cost of appel- surety. lants and
A reading of the Tennessee cases leaves no doubt that recognizes this state CARNEY, J., MATHERNE, J., and implied obligation premises to mine for concur. Weatherly Ag minerals. v. See American (1938 M.S.) ricultural Chemical Co. 16 Tenn. OPINION ON PETITION TO REHEAR 613, 592, 598; App. 65 Mining S.W.2d NEARN, Judge. Manufacturing (1911) Co. v. Chemical Co. 1143; A petition
126 Tenn. 150 Anno S.W. rehear has been filed com- 721; tation 76 plaining A.L.R.2d and Corbin on Con- of the Court’s failure to consider implied 1. In so far as an covenant to mine or may oil result in the loss of the oil drain- concerned, drill is Tennessee views oil age adjoining lands, from while here the gas light leases in a different than those for marble can never be disturbed.” There cer- solid minerals. See T.C.A. 64-704. The § tainly drainage is no of solid ore or miner- being the Pickens reason in as set forth als. case, e., supra, explore i. “the failure to regarding the al- argument counsel provi- notice unconscionability of the leged Frank SAWNER d/b/a Frank Sawner agreement. of the lease sions and Son Construction Company, Appellant, directly did not comment We However, Opinion. in our former we point v. thought adequately it consider and we did M. P. SMITH CONSTRUCTION COMPA- the case it when we referred to treated NY, INC., Fidelity and United States (1930 E.S.) Tenn.App. v. Kizer Pickens Guaranty Company, Appellees. prime authority overruling as the Assignments of Error. Appeals Tennessee, Court of Western Section. in provisions contained The notice case, supra, are strik- lease in the Pickens Jan. in the contained
ingly similar those Certiorari by Supreme Denied consideration. The Pickens Court did under May 12, 1975. such notice unconsciona- not find find the and this Court did not ble case unconsciona- instant
provisions
ble. *5 simply are unable follow the
We appeal and in
argument propounded is burden provision that the notice
petition because it “re and unconscionable
some failure anticipate the lessors to
quires . be- by the lessee .
payments [and] never terminate the the lessor could
cause non-payment of the an-
lease for within the first payments unless
nual became due the
days after anticipated that the would
lessors day period made before the 60 end-
not be
ed.” required the lessors under
All that they give writ- days notice of default within 30 thereof.
ten
Then, rectify if the lessee does default, from that days
default within right lessor has the to terminate. of date Decem- Opinion
We stand our to rehear is petition
ber cost. petitioner’s
denied at MATHERNE,
CARNEY, J., J.,
concur.