Case ID: ny-st-rep_7/html/0511-01.html
Source: Caselaw Access Project
Author: {"author": "Danforth, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John D. McIntyre et al., App’lts, v. The McIntyre Coal Company, Resp’t.
    
    
      (Court of Appeals,
    
    
      Filed April 19, 1887.)
    
    1. Lease op mining lands—Construction op—Royalties as rent.
    A lease contained a grant and demise of coal lands to the lessee, in which he covenanted to mine and carry away not less than 75,000 tons of coal for five years, and not less than 100,000 tons of coal for the next fifteen years, and to pay a royalty of thirty cents per ton, and, further, that “ In case the quantity of coal mined and taken away in any year of the said term shall fall short of the proper minimum quantity above named, will pay as rent for such year a sum of money equal to the amount he would have been required to pay under this covenant, if he had mined the full proper minimum quantity; provided, that if in any year the party of the second part shall mine and carry away more than the proper minimum quantity for such year, such excess, or so much thereof as may be necessary, may be set off against the deficiency of any other year or years, within the same division of the term hereby demised. So much of said excess as is applied to make up such deficiency, having been paid for, shall not be paid for again.” Held, that this permitted mining in excess of the amount required in any year, and an application of that excess to the royalties otherwise unearned, but still due in subsequent years when there happened to be a deficiency in production.
    2. Same.
    An agreement to carry on the mining operations “in a safe, skillful and workmanlike manner,” should not be construed to mean that the lessee will work the mine continuously.
    3. Same.
    The lessee further stipulated in case the quantity mined in any year fell short of the minimum quantity named to pay a sum of money equal to royalty on such minimum quantity; Held, that this showed an intention to provide for a certain amount of rent, and when that was paid, no matter when, the obligation of the lessee ceased. Ruger, C. J., and Rapallo, J., dissentij \
    
      Appeal from judgment of supreme court, general term, third department, affirming judgment of special term, dismissing complaint.
    
      John E. Parsons and Geo. L. Steelman, for app’lts; Edwin Countryman, for resp’t.
    
      
       Affirming 40 Hun, 638, mem.
      
    
   Danforth, J.

This case has been twice argued; the second time at the request of the court, in order that a conjecture, not presented by counsel, but prompted by an examination of the lease, and creating some doubt as to the rights of the parties, might be called to their attention. The appellants have, however, given the suggestion very little support. They have, indeed, failed to show that, if adopted, it would express the intention of the parties, and we find nothing in the points of the plaintiffs which indicates error in the conclusion reached by the trial judge as to the true construction of the covenant for alleged breach of which the action was brought. That was the only question before him, and is the one to which the appeal is directed.

It appears that on the first day of 'October, 1869, the plaintiffs demised to Jervis Langdon certain coal lands for the term of twenty years from July 1, 1870; that the defendant acquired his rights, and took his place. The complaint states that on the first of January, 1885, $7,500 rent for the quarter ending on that day became due, and this action was brought for its recovery. The answer admits the demise, but alleges payment according to the covenant of the lessee. So far as now material, the lease contains a grant and demise of the premises to the lessee, in consideration of which, as therein expressed, he convenants and agrees that he will mine and carry away from the coal lands not less than 75,000 tons of coal per annum for the first five years of the term, beginning on the first day of July, 1870, and will mine and carry away not less than 100,000 tons of coal per annum for the next fifteen years, and will pay rent or royalty of thirty cents per ton for every ton of coal mined and carried away during the full term; the payment of the rent or royalty to be made quarter-yearly on the first days of October, January, April, and July, in each year, from the commencement of the term.” Then follow these words : “In case the quantity of coal mined and taken away in any year of the said term shall fall short of the proper minimum quantity above named, the lessee will pay as rent for such year a sum of money equal to the amount he would have been required to pay under this covenant if he had mined the full proper minimum quantity; provided, that if, in any year, the party of the second part shall mine and carry away more than the proper minimum quantity for such year, :such excess, or so much thereof as may be necessary, may be set off against the deficiency of any other year or years within the same division of the term hereby demised. So much of said excess as is applied to make up such deficiency, having been paid for, shall not be paid for again.”

The defendant alleges that during the first period or division of the term, viz., five years from July 1, 1870, to July 1, 1875, it took away from the demised premises an excess of 322,058 tons above the 375,000 tons required by the lease, and paid the full royalty; that thus far during the second period it has mined 220,679 tons over the full amount required for the whole of the second period or division of fifteen years mentioned in the lease, and paid the full royalties thereon, and has thus paid all the rents and royalties for the whole remaining period of the lease.

Upon trial before the court the facts alleged by the defendant were in substance found to be true, and the learned trial judge held that, under the terms of the lease, the defendant has the right to set apart from the excess of coal mined during any one year of said second period of said lease sufficient to make good any deficiency in any subsequent year of said second period, and, having elected so to do, has the right to set apart from the excess of the first year of said second period, to wit, the year ending July 1, 1876, the amount of 25,000 tons, to make good a like deficiency in the amount mined during the period from October 1, 1884, to January 1, 1885, the period to recover rent for which this action is brought,” and dismissed the complaint. It was his opinion that the provision for an annual mining of “not less than 100,000 tons of coal per annum” for fifteen years, taken separately, was not satisfied unless that amount was annually produced; but he held that the other provision permitted mining in excess of that amount in any year, and an application of that excess to the royalties otherwise unearned, but still due in subsequent years when there happened to be a deficiency in production. It is evident that under this construction the lessee might go on and mine during the first year of each division the whole amount required for that period. On the other hand, the claim is made in behalf of the lessors—and this is their principal contention—that the mining must be continuous during each year of each division of the term; and, if there should be an excess, it could be applied upon the deficiency occurring in some other preceding year; in other words, that the lessee, whether it mines or not, must pay in each year thirty cents per ton on at least 100,000 tons, or $30,000 annually; “but if (as was suggested in the opinion which led to the reargument) it has to pay for a,ny deficiency as rent, the amounts so paid are to be regarded as royalties paid, and are to be set off against royalties on any subsequent excess over the 100,000 tons, so that the lessee shall not be compelled to pay again a royalty which has once been paid.” Again, it is said in support of this view: “ When it has paid for a deficiency, "it becomes entitled to take out an equal amount of excess without paying;” in other words, as the case is put in argument, the deficiency must have occurred before the excess is produced. It is argued that the provision means a past deficiency and a future excess. I cannot reach that conclusion, and am constrained to agree with the defendant’s view.

First. It accords with the literal reading of the provision. If in any year of the terms you carry away more than the 100.000 tons, such excess, or so much “of such excess” as may be necessary, may be set off against the deficiency of any other year or years within the same division. These permissive words, “if, in any year of the term,” of course must apply as well to the first year of each division as to the other years, or as to the last year. It is conceivable that there might be produced 150,000 tons, an excess of 50.000 tons, in the first year of the second term, and in the second year of that period there might be produced only 50.000 tons, leaving a deficiency in the second year of 50.000 tons. By the terms of the lease the excess of the first year must be paid for at the time the royalties for the minimum of 100,000 tons are paid: that is, the whole quantity mined, 150,000 tons, must be paid for within the year. During the second year, notwithstanding the deficiency, the royalties for 100,000 tons must be paid, as, according to the appellant’s' contention, the excess of the first year cannot be set off against the deficiency of the second year. Yet the excess has been paid for, and, as the condition runs, shall not be paid for again.

Second. The parties having restricted the general language of “any year,” by applying to it any other year or years “within the same division,” appear to have had the question of limitation in mind, and no further restriction should be implied. Yet the appellant’s contention would reduce the years of grace in one division to four years, and in the other to nine years, and make it read as if it said: “ If, in any year except the first year of each division, the lessee shall mine and carry away an excess,” then, etc.

Third. The object of the provision was to provide for anticipated or possible “excess.” That is the dominant word. It must be paid for, because the covenant of payment requires each ton mined and carried away, no matter how great the production, to be paid for quarterly from the commencement of the term. But it was also in the minds of the parties that a deficiency might occur. This might arise from various causes, voluntary and involuntary, and' so that was provided for. The lessee may apply the excess, say the parties, not only upon the deficiency of any other— that is, any other “ one year,”—but of any other “ years,” no matter how many, so they all come within one division..

Again, I think the contention of the appellant requires us to change the words used by the parties in another respect. The lessee is to pay “the rent or royalty of thirty cents per ton for every ton of coal mined and carried away; but, in case the quantity mined and carrried away “ in any year of the term shall fall short of the proper minimum quantity, the lessee shall”—do what? Why, “pay to the lessor a sum of money equal to the amount he would have been required to pay if he had mined the full proper minimum quantity.” Then comes the proviso as to the excess, and then the words: “ So much of said excess having been paid for, shall not be paid for again.” The appellant reads it as if it said, “the previous deficiency” which has been paid for “ in pursuance of the covenant to pay for deficiencies.” I do not see how this can be allowable when the express language of the covenant is: “So much of said excess having been paid for, shall not be paid for again.”

It should be observed that nowhere in the lease do the parties provide for rent payable as such in money and at a fixed sum, except upon default of the lessee in mining and taking away the quantity of coal provided for, and then the sum to be paid is measured by the tax or royalty which would, except for that default, have been paid to the lessor upon the produce of the mine. This is opposed to the con: trolling idea of the appellant, which seems to be that the lease imposed an obligation upon the lessee to produce continually in working the mine, and this is presented in various forms. Thus it is said by their counsel: (1) “ that the lease nowhere provides that the lessee may in any year altogether cease to mine;” (2) that the lease provided “ that the lessee shall and will prosecute and carry on the said mining operations in a skillful and workmanlike manner;” (3) “that the lessee binds himself absolutely to mine at least 100,000 tons during each of the fifteen years.”

The learned counsel nowhere finds in the lease an express covenant to work the mine continuously, but seeks from these provisions to imply one. I can find no authority for such implication, nor power on the part of the court to interpolate such a covenant into the contract which the parties deliberately made, and in regard to which no omission or mistake is pretended. Certain things the lessee must do. Certain other_things the lessee must not do. The lease contains injunctions and prohibitions; agreements to do and agreements not to do. But the lessee is neither required to work the mine continuously, nor does he agree to do so. Such an obligation cannot, in support of an action like this, be interred from the agreement to carry on the mining operations “in a safe, skillful and workmanlike manner;” for the lease provides the penalty for omitting to do so, viz., accountability to the lessors for any loss or damage which they may sustain in these respects, and declares that it shall be ascertained by arbitration or action for damages or termination of the lease.

As to the other provisions referred to, the deduction sought to be drawn from them is repelled by an express provision for what is called in the English cases (Jegon v. Vivian, L. R., 6 Ch., 742; Wheatley v. Coal Co., L. R., 9 Eq., 538) a dead or sleeping rent; that is, a rent which must be paid whether the mine is worked or not. This is found in the clause already quoted, but which may be repeated, in this connection, to show that the parties contemplated, not a continuous working of the mine, but a possible discontinuous working of it, viz.: “In case the quantity of coal mined and taken away by the party of the second part, in any year of the said term, shall fall short of the proper minimum quantity above named, the party of the second part shall and will pay to the parties of the first part, their heirs, executors, administrators, or assigns, as rent for such year, a sum of money equal to the amount he would have been required to pay under this covenant if he had mined the full minimum quantity.” Let us suppose that, at the very moment after the execution of the lease, the lessee had seen fit to let the land lie idle, preferring to pay the lessor in money a sum equal to the aggregate amount he would have been required to pay if he had for each one of the twenty years mined the full minimum quantity of coal, can it be thought that at any time thereafter he could be called upon for royalty or rent ? Certainly not. The lease secures payment by royalty as rent, and then, in default of royalty measured by production, stipulates for rent in money. The whole intention of the parties was to provide for a certain amount of rent; and when that is paid, no matter when it is paid, the obligation of the lessee ceases. The remaining sentence of the same provision gives equal latitude and relief to the lessee when he has paid so much royalty upon coal mined as will cover the rent called for, whether the royalty is paid in one year, or in different years, having regard only to that division into periods which the parties themselves arranged for. This construction works no injustice to the lessors. They have received the rent, which was made payable whether the coal was mined or not. It has been paid in one of the two ways bargained for. If more was expected, other provisions should have been inserted in the lease. So far as that instrument discloses the intention of the parties, it has been fully carried out, and the plaintiffs properly held to have no cause of action. A different result would lead to a double payment.

The complaint, therefore, was necessarily dismissed, and the judgment appealed from should be affirmed.

Andrews, Earl and Finch, JJ., concur; Ruger, Ch. J., and Rapallo, J., dissent; Reckham, J., takes no part.