Title: Tri-Bullion Corp. v. American Smelting & Refining Co.

State: new-mexico

Issuer: New Mexico Supreme Court

Document:

277 P.2d 293 (1954) 58 N.M. 787 TRI-BULLION CORPORATION, a corporation, Plaintiff-Appellant, v. AMERICAN SMELTING & REFINING COMPANY, a corporation, Defendant-Appellee. No. 5795. Supreme Court of New Mexico. November 29, 1954. Hannett & Hannett and W.S. Lindamood, Albuquerque, for appellant. Shantz & Woodbury, Silver City, Ben C. Hill, Tucson, Ariz., for appellee. LUJAN, Justice. This is an appeal from a judgment entered in favor of the American Smelting and Refining Company, a corporation, defendant (appellee), dismissing the complaint of the Tri-Bullion Corporation, a corporation, plaintiff (appellant), with prejudice, and the plaintiff appeals. The facts out of which the controversy arose are somewhat complicated, and will be stated in extenso. On December 4, 1890, a patent was issued by the United States Government to the North Graphic Mining Company covering Lot 523-A, the property involved herein, and Lot No. 523-B, not a subject of this suit, and recorded January 3, 1891. On December 12, 1903, the patentee, North Graphic Mining Company, leased the following described property under a 99 year *294 lease to one Cony T. Brown, which lease was recorded October 7, 1904. It reads, in part as follows: The lease further provides: On March 29, 1904, Cony T. Brown assigned this lease to Fitch & Brown, a copartnership. On March 30, 1904, said copartnership assigned their lease to W.H. Cottingham, as Trustee. On November 8, 1904, the said Cottingham, as trustee, assigned said lease to Graphic Lead and Zinc Mining Company, a corporation, which was recorded on November 12, 1904. On December 9, 1905, said last corporation conveyed its interest in said lease to the Ozark Smelting and Mining Company, a corporation, said assignment was recorded January 25, 1906. On June 19, 1913, the Tri-Bullion Smelting and Development Company, a corporation, the predecessor in title to plaintiff herein, and Ozark Smelting and Mining Company, a corporation, a predecessor in title to the defendant herein, entered into an agreement for the purchase of stock of the North Graphic Mining Company, a corporation, and its assets, same was recorded December 10, 1913. At the time of this agreement the North Graphic Mining Corporation, the original patentee, was still the owner of the mining claim subject to the Cony T. Brown lease. At the time of said agreement, no mention whatever was made therein concerning the south 400 feet of Extension No. 1, North Graphic Lode Mining Claim, designated as Lot 523-A, which property was leased to Cony T. Brown on December 12, 1903, and which lease was at the time of the agreement owned by Ozark Smelting and Mining Company, one of the parties to said agreement. On November 3, 1914, the North Graphic Mining Company, a corporation, conveyed said mining claim by warranty deed to Julian Dickinson, Receiver of North Graphic Mining Company, same was recorded November 6, 1914. No mention was made of a lease of the south 400 feet of said claim. On December 2, 1914, Julian Dickinson, Receiver of North Graphic Mining Company, conveyed said property to Howard Paschal, Trustee, reciting in said instrument that the same was made by virtue of a decree of the Circuit Court of Wayne County, Michigan, and in pursuance of the grant conferred by the deed to Dickinson, Receiver. This deed was recorded December 28, 1914. Howard Paschal was President of the Tri-Bullion Smelting and Development Company, and he it was who made arrangement with the holders of a majority of the capital stock of North Graphic Mining Company for a purchase of their stock prior to making of the above mentioned agreement, and who executed that agreement in behalf of his company. *295 On December 7, 1914, Howard Paschal, Trustee, by a deed conveyed the said mining claim, without mention of any lease of any nature, to the Tri-Bullion Smelting and Development Company and the Ozark Smelting and Mining Company, same was recorded December 28, 1914. On December 30, 1927, the Tri-Bullion Smelting and Development Company conveyed all its interest in said mining claim to Tri-Bullion Corporation, a corporation, plaintiff herein. On January 1, 1916 the Ozark Smelting and Mining Company, a corporation, conveyed its interest to the Sherwin-Williams Company, said deed was recorded December 13, 1916. On December 30, 1927, the Tri-Bullion Smelting and Development Company conveyed by deed all its interest in the North Graphic Group of Mines to the Tri-Bullion Corporation. On April 9, 1943, the Sherwin-Williams Company, by a mining deed, conveyed all its interest in the property to the American Smelting and Refining Company, defendant herein, which deed was recorded April 14, 1943. On April 25, 1944, Sherwin-Williams Company, executed a correction deed to American Smelting and Refining Company, conveying any interest in the surface ground in the property in question. This action was filed on January 29, 1951, by the plaintiff where it alleged: The defendant answered as follows: At the conclusion of the trial the court made many findings of fact and conclusions of law, among which are the following: The court concluded as a matter of Law: Many errors are assigned which are argued under four points. Under point one plaintiff in his brief says: "Simply stated, it is the position of the appellant that the Cony T. Brown lease was extinguished and merged in the agreement of December 19, 1913, and the deed of December 7, 1914, and the leasehold estate was absorbed in the conveyance to the grantees under said deed, one of whom also held the lease." Plaintiff's counsel erroneously refers to the agreement of December 19, 1913, throughout his brief. No doubt he intended to refer to the agreement of June 19, 1913. We are cited a large number of decisions and statements from text writers on the question of merger, and we agree that as a general rule when the same party becomes the owner of both a large and a small estate in the same property, they merge and the smaller estate becomes extinct. The agreement in question declared, in part, as follows: "3. It is further stipulated and agreed that the purchase of the interest controlled by said North Graphic Mining Company by the parties hereto, each taking an undivided one-half interest, shall in no way affect the title or rights covered by the said mining claim known as the Silver Bell and Ozark, held and owned by said party of the first part; and should any conflict arise with reference to the boundary lines of the so-called J.S. Richards claim confilicting with the boundary lines of the said Ozark claim, the same shall be waived, recognizing the prior title of said party of the first part to the Ozark Mining claim as located and acquired by said party to the first part. At the time of the making of the agreement said corporations were not tenants in common in any property whatsoever. The Ozark Smelting and Mining Company was the sole owner of the lease from North Graphic Company to Cony T. Brown, the original lessee, it was a part of its separate holdings, and was an interest then held in severalty. The proposed purchase was to acquire the interest controlled by North Graphic Company, which excluded the leasehold, since it was not owned and controlled by it. In this connection the rule is that one cannot sell and convey to another a greater interest in real estate than he himself possesses. Gregory v. Pribbeno, 143 Neb. 379, 9 N.W.2d 485. During the life of a lease the lessee holds an outstanding leasehold estate in the premises, which for all practical purposes is equivalent to absolute ownership. Baker v. Clifford-Mathew Inv. Co., 99 Fla. 1229, 128 So. 827. The estate of the lessor during such time is limited to his reversionary interest which ripens into perfect title at the expiration of the lease. Rogers v. Martin, 87 Fla. 204, 99 So. 551. In the instant case we are of the opinion and so hold that there was no merger because the same party never became the owner of the larger (fee) and of the smaller (leasehold) estates in this property. We deem this situation similar to the following: A, the owner of a building, leases office space to B, the tenant; B, the tenant, and C, a third party, purchase A's interest as owner of the building. The doctrine of merger does not apply to kill B's lease. 51 C.J.S., Landlord and Tenant, § 257, p. 894; Patterson v. United Natural Gas Co., 263 Pa. 21, 105 A. 828; Vucinich v. Gordon, 51 Cal. App. 2d 434, 124 P.2d 868. *298 Moreover, it has been held that mergers are not favored in law or equity. In Mobley v. Harkins, 14 Wash. 2d 276, 128 P.2d 289, 291, 143 A.L.R. 88, the court said: Under the facts and the law, we hold that the lease was not extinguished but remained in force. Counsel for plaintiff further contends that the ore dump located on that portion of Lot 523-A leased to Cony T. Brown was appurtenant to the land on which it was located and that it thus constituted real property and never passed under the lease to the said Cony T. Brown. The general rule, in this connection, is stated in 58 C.J.S., Mines and Minerals, § 133, p. 213, as follows: The plaintiff did not prove, or attempt to prove, that the ore dump was placed on the mining claim at the time the lease was entered into with Cony T. Brown. An examination of the lease convinces us that no reasonable inference can be drawn therefrom that the dump might have been placed on the surface of Lot 523-A at the time the lease was executed and delivered to the lessee. The very purpose of the lease was to obtain "dumping ground," and by its terms granted the lessee the right to use the surface area of said lot as a dumping ground. The court found: We are of the opinion that it never was intended by North Graphic Mining Company and Cony T. Brown, lessee, that the dump placed on the said lot should become appurtenant to the land. Here the provisions in the lease gave the lessee the right to use the surface area of the mining claim as a dumping ground. This right and other provisions in the lease, all considered together indicated an intent and understanding that the dump should not be considered a part of the mining claim. The evidence was documentary and all presumptions are in favor of the judgment, the evidence is sufficient to support the findings and conclusions made by the court. *299 Having concluded as we have it becomes unnecessary to consider the other questions raised in the briefs. The judgment is affirmed. It is so ordered. McGHEE, C.J., and SADLER, COMPTON, and SEYMOUR, JJ., concur.