Court Opinion

ID: 9644008
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:46:25.655273+00
Date Added: 2024-06-11T18:11:07.200773
License: Public Domain

DENMAN, Circuit Judge
(dissenting).
I dissent, inter alia, because' this court has rendered a decision on important questions of California law in conflict with the California decisions of Crowell v. City of Riverside, 26 Cal.App.2d 566, 581, 80 P.2d 120, and Leslie v. Federal Finance Co., 14 Cal.2d 73, 78, 80, 92 P.2d 906, and instead has based its decision upon these questions on the law as stated by the Supreme Court of Connecticut.
I do not agree that a mine owner has not the power to make an option for a renewal of a lease of his mine conditioned on the protection of the miners who risk their bodies and lives to extract the gold from which his lease royalties are paid.
In the instant case are forty-three (not twenty-one, as stated in the court’s opinion) admitted violations of the “mine * * * regulations of the State of California,” later considered in detail as to their importance in the California law. As shown, they all related not to the profit of the lessor but concerned the safety of *972the miners by whose work below ground the hoped for profit of both lessor and lessee was to be created.
The renewal of the ten year lease and option was made dependent on the performance of the following covenant not to commit such violations: “That all operations of said lessees herein shall be in accordance with the laws and mine and milling regulations of the State of California.” The court, in effect, holds that the option of the renewal of a mining lease cannot be conditioned on the performance of such a covenant because that would create something in the nature of a forfeiture.
There is no evidence that the violations of the regulations caused or could have caused any injury to the lessor corporation or its successor in interest the Title Insurance and Guaranty Co., for which they could be given the “full compensation” referred to in the last paragraph of the court’s opinion rejecting the applicability of Crowell v. City of Riverside, supra. Indeed, the lessor mine owner is protected by the rule stated in Smith v. Belshaw, 89 Cal. 427, 430, 26 P. 834, that the lessor is not liable for injury to miners by negligence of. the lessee while he is in complete possession and control of the mine under the lease. Further, here were covenants of the lease “to post and keep posted legal .non-liability notices for said owner” and that “the lessee will carry legal compensation insurance on all men by them employed.”
This was the factual situation in Crowell v. City of Riverside. There the renewal of the lease was conditioned upon the performance of a covenant not to sublease. This covenant was broken. There, as here, the lessee claimed the denial of the lease renewal would be in the nature of a forfeiture and that he was within the provisions of Section 3275 of the Civil Code of California that “Whenever, by the terms of an obligation, a party thereto incurs a forfeiture, or a loss in the nature of a forfeiture, by reason of his failure to comply with its provisions, he may be relieved therefrom, upon making full compensation to the other party, except in case of a grossly negligent, willful, or fraudulent breach of duty.” (Emphasis supplied.)
The Crowell case holds that because the breach of the covenant not to sublease was not compensable in money damages, section 3275 is not applicable. The area not covered by that section is held, at page 581, of 26 Cal.App.2d, at page 127 of 80 P.2d, to be
“ ‘Relief is generally confined to cases of covenant for the payment of money where the amount can be unquestionably fixed, and not to covenants to keep insured, and the like.’
“Also that:
“ ‘Forfeiture for breach of covenant not intended merely as security for the payment of money will not generally be relieved against, for the reason that' no exact compensation can be made.’
“Also that: ' '
“ ‘Among these covenants for a breach of which no relief can ordinarily be given is that to repair generally, or to make specific repairs, or to lay out á certain sum of money in repairs or erections within a specified time; the covenant to insure; the covenant not to’assign without license; and in other covenants of a special nature.’
“ * * * The breach in the instant case of the inhibition against subletting, which, as we have held, amounted to a condition by which appellant Warren was bound, was not one susceptible of being compensated in money.”
So in the instant case the breaches of the agreement to comply with the safety laws and regulations could not be compensated for by the payment of money damages to the lessor. As later stated in detail, the damages, if any, from the violation of the California mining safety regulations are to the innocent third parties whose eyes are blinded or backs are broken or whose husbands and fathers are killed from their violations. Obviously the damages to these persons whom the lessor has sought to protect cannot in any way be made good by a money payment to the lessor.
From this it is clear that if a mine lessor makes his lease renewable only, say, if no Cornish miners are employed, the denial of a renewal because such mining crews *973were employed is not in the nature of a forfeiture, even if it were shown that su'ch miners were more efficient and produced larger royalties to the lessor. A lessor may make what conditions he pleases for the renewal of a lease. Here the lessor chose the performance of the California mining safety regulations.
Also in the Crowell case, at page 581, of 26 Cal.App.2d, at page 127 of 80 P.2d, the word “willful” in Section 3275 is held “to be understood in its ordinary sense of ‘spontaneous’ or ‘voluntary’.” In that sense many of the violations of the California safety regulations hereinafter considered are directly attributable to the lessees mining superintendent’s willful disobedience.
The court’s opinion is also contrary to the law of California as stated by its supreme court in Leslie v. Federal Finance Co., 14 Cal.2d 73, 80, 92 P.2d 906, 910. There it was claimed that the agreement was a mere contract for an option, to which relief from forfeiture under Section 3275 did not apply. The supreme court held that there was no, option but a contract of redemption to which that section applies. It states the contention and the law as to the option agreement as follows:
“In the present case the finance company insists that the consent decree is nothing more than an option to purchase which was not exercised by the appellant within the time limited and that it terminated upon the expiration of that time.
“It is true that time is of the essence of the ordinary option contract and no forfeiture results from a strict enforcement of its terms, because an option is merely mi offer to sell and vests no estate in the property to be sold. Wightman v. Hall, 62 Cal.App. 632, 217 P. 580; Williston on Contracts, vol. 3, Rev.Ed. p. 2389, § 853. * * (Emphasis supplied.)
Here the option vests no estate in the mining property. An option is not the kind of contract for which the relief under Section 3275 applies to breaches of conditions not compensable in money, any more than when the time for its exercise has expired. This later California decision is in accord with the supreme court’s earlier statement in Swift v. Occidental Mining & Petroelum Co., 141 Cal. 161, 173, 74 P. 700, 704, that
“ * * * The neglect of the landlord to strictly enforce his right of forfeiture for breach of condition does not entitle the tenant to a renewal when such renewal is dependent upon faithful performance of conditions. There is no finding, and no evidence to warrant a finding, that plaintiffs consented to any cessation of the work of exploration and development, and their mere failure to enforce a forfeiture for the cessations which occurred in 1894-95 and, 1898-99 was not a waiver of performance of the conditions upon which they had bound themselves to renew the lease. * * *
“It was error to allow the stockholders and directors of the company to testify that they expected and counted upon a renewal of the lease. The only way they could entitle themselves to a renewal was by performing the conditions of their lease. Without this their expectations were of no avail, and with it unnecessary. * * * (Emphasis supplied.)
The importance of the mining safety regulations is shown by the history of hte legislation creating them. The gold mining states, like California, through years of social and political struggle since the days of the slaughter of miners in the Comstock Lode and other dead Nevada mines, have enacted a system of laws and regulations for the protection of the human beings working below ground. In California this protection is both by punitive statutes and by regulations built up through the years by the California Industrial Accident Commission.
Forty-three of these protections are admitted to have been violated by the lessee. Twenty-one are detailed in the footnote.1
*974All these violations are of regulations vital hoisted up in cages in elevators in shafts to the protection of men lowered down and taking them to and from the lower levels *975where they work, often in poisonous gases and in constant danger of crushing from cave-in of the tunnel walls or from negligent handling of their explosives and their fuses.
What this court holds is that an owner of a mine cannot make a ground of the forfeiture of a lease of his mine or a condition precedent to its renewal, the violation of these laws and regulations for the protection of the miners because (a) the owners, the lessors, “were not injured by any of the violations of these safety orders,” and (b) “before the Industrial Accident Commission was required to take steps which might have slowed production or otherwise injured lessor, all violations were corrected.” (Emphasis supplied.) The question is not whether there is a “slowed production or [an] otherwise injured lessor.”
I dissent from such an inhuman limitation on the power of the owner of a mine to protect the producers of his royalties, the employees of his lessee, from dangers necessarily inherent in their production. Of course, it is not the mine owner whose legs are crushed or eyes blown out from the violations of the regulations regarding the rate of burning of fuses and of the storage of powder, as shown in items 10 and 17 of footnote 1. Nor is it the owner’s wife who is widowed because of any one of the four violations (items 2, 13, 19 and 21) of another regulation there is no telephone from the lower levels to advise that the opening of a gas pocket has asphyxiated her husband and that he must have immediate medical attention. Nor are the owner’s children fatherless if through the violation of the regulation respecting the wire hoisting rope (items 11 and 14) a cage is dropped and twenty miners are killed, or are otherwise killed because of the eight failures to provide guard rails at *976dangerous places as shown in items 1, 3, 5, 6, 7, 8, 16 and 20.
I dissent from the court’s holding that such violations are “relatively minor infractions” when the Chief of the Bureau of Industrial Accident Commission finds
“ * * * These unsafe conditions of your place of employment constitute a menace to the lives and safety of any person or persons employed thereabout and such places of employment, machines, devices, or apparatus, are being operated or used in violation of the laws of the State of California, and the Safety Rules and Orders of the Industrial Accident Commission of the State of California,”
and the Commission itself orders
“It is further ordered that the use and operation of said equipment be, and it is hereby prohibited," Until said conditions shall be rectified, as aforesaid;
“And the Legal Department and/or any employee of the Commission are hereby authorized to attach notice of said prohibition to said equipment and to institute any civil or criminal proceedings in the courts which may be necessary to adequately enforce this order.”
If these regulations to protect life and limb are- held “minor,” one well may wonder what of the Industrial Accident Commission’s regulation are “major” protections.
I further dissent from the court’s holding that it is a “faithful performance” of the covenant, to comply with the safety laws and regulations to violate them and later, under the pressure of threatened prosecution of the Accident Commission, such as above quoted, to cease violating them. Particularly since the cessation of violation makes possible the admitted extraction of nearly $1,500,000 in goíd during the ten year period of the lease.
The lessee was a corporation and necessarily the violations were through its agents. It was proved and not denied that a copy of the violated regulations were served by the Commission on the lessee before any of the violations occurred. It certainly is not a faithful compliance of the superintendent of the mine not to have read them.
This is not a case of casual violations of minor subordinates. It is the superintendent’s continued obligation to have a telephone system installed in the several levels below a vertical distance of 500 feet from the . surface. Yet this regulation was violated four times and only ceased on four pressures from the Commission. It is strange doctrine for this circuit to call it a faithful compliance with the laws and regulations, first to violate them and thereafter comply with the enforcing orders by ceasing the' violations. It is not a strained analogy to say it is like putting the cart before the horse.
Nor was there prompt cessation of the violations. On February 5, 1942, upwards of twenty other violations of the regulations in addition to the twenty-one in footnote 1 were called to the attention of the lessee by the Commission’s representatives. On March 2, 1942, the representative inspected to find what had been done, discovered then, over three weeks later, that seventeen had not been complied with and was told “the only reason for not complying was they hadn’t got around to it yet.” These latter violations ceased only when threatened with the institution of “civil or criminal proceedings in the courts.”
At no time was there acquiescence by the lessor in such violations. On the contrary, as the court’s opinion shows, the earlier violations of 1935 were twice protested. As to the later years there is no evidence of their waiver as a condition precedent to the extension of the lease.
Since there was a breach of the conditions precedent to the lease renewal, it is nowise a waiver of the breach that a majority of the stockholders in the mine owner’s corporation were ready to make a different and more favorable lease. The argument of the court in that regard defeats itself. These stockholders were ready to make a new lease, not to make effective the option for a continued lease of the original agreement.
Nor is there merit in the court’s contention that because the insurer advised that the company had had a good death and accident record in comparison with other companies, the violation of the condition precedent was waived. The option pro.vi*977sion required obedience to the safety regulations. It did not provide that one may make forty-one violations, many of essential safety importance, “provided your violations produce less death and injury than other mining operators.” So to hold is to rewrite the contract.
Nor am I able to agree with this court’s contention that the fact that in ten years the lessee was able to take $1,500,000 from a mine that theretofore had been unsuccessfully worked has anything to do with the right to the renewal of the lease at the end of the ten-year period. For all that appears, the ten years’ effort of the lessee was amply rewarded. It is nonetheless a breach of conditions precedent that the lessee, if they had not been breached, would conlinue for five years longer to make further profits. The lease did not provide that the lessor would rely upon these non-performances only in the event the mine was not worth a further leasing. If the lack of success of the prior operations were a factor in determining the legal effect of the option to the successful operator, then it well could be argued that only because of the lifting of the value of gold by its demonitization by Congress in 1933 was the second operation thereafter successful.
The judgment of the district court should be reversed.

 1) On April 28-29, 3936, the mine was being operated without guard rails or chains to protect the opening at the collar of the main working shaft as provided by Mine Safety Order No. 1732 then in force which reads as follows:
“Order 1732. Shaft Protection
“(a) At the top of all shafts and at all shaft stations, a gate, guard rail, or other protection subject to the approval of the Industrial Accident Commission shall be installed and kept in place ex-
*974cept when the cage, skip bucket or other conveyance is being loaded or unloaded thereat.”
2) On April 28-29, 1936, the mine was being operated without an underground telephone system in violation of Mine Safety Order No. 1755 and
“An act providing for the establishment and maintenance of a telephone system in mines and prescribing a penalty for the violation thereof.
[Approved June 13, 1913. In effect August 10, 1913.]
“The people of the State of California do enact as follows:
“Section 1. In all mines operated and worked in this state where a depth of more than five hundred feet underground has been reached, a telephone system must be established, equipped and maintained by the owners or lessees thereof with stations at each working level below tie depth aforesaid, communicating with a station thereof on the surface of any such mine.
“Sec. 2. The failure or refusal of any owner or lessee to install or maintain such telephone system shall be deemed guilty of misdemeanor and punished accordingly [St.1913, p. 782.]”
3) On April 28-29, 1936, the mine was being operated without a two rail railing on the dump track runway from the mine to the mill which for approximately 200 feet was over four (4.) feet from the floor (ground) level and in places from eight (8) to ten (10) feet from the floor (ground) level in violation of General Safety Order of the California Accident Commission No. 13 which reads as follows :
“(a) All elevated walks, runways or platforms, except on unloading sides of platforms, if four (4) feet or more from the floor level, must be provided with a two-rail railing not less than three and one-half (3%) feet high. * * * ”
4) On April 29, 1936, the mine was being operated with an inflammable change house within one hundred feet of the main mine shaft in violation of Mine Safety Order No. 1741 (g) which reads as follows:
“(g) Timber framing or storage sheds or any inflammable structure * * * shall not be placed or permitted to remain within one hundred feet of any mine opening, shaft house or hoisting engine house. * * * ”
5) On January 26, 1937, the mine was being operated without a safety guard over the gears of the lathe in its shop in violation of Mechanical Power Transmission Safety Order No. 2627 of the California Industrial Accident Commission then in force.
6) On January 26, 1937, the mine was being operated without a safety guard to prevent personal contact with the spokes of the hoist gear in violation of Mechanical Power Transmission Safety Order No. 2627.
7) On January 26, 1937, the mine was being operated without a second rail on the guard rail at the edge of the cam floor in violation of said General Safety Order No. 13.
8) On January 26, 1937, the mine was being operated without a screen on the guard rail which guarded the bull wheel in violation of said Mechanical Power Transmission Safety Order No. 2607 (2627).
9) On October 6, 1939, the mine’s hoisting engineer did not have a physician’s certificate as was required by Mine Safety Order 1743 which reads as follows:
“Order 1743. Hoisting Engineers.
“(a) At every mine where men are hoisted or lowered there shall be one or more men to be known as hoisting engineers. These men shall be able to speak and read English readily, and must have had practical experience in operating mine hoists. Each hoisting engineer shall be given a thorough physical examination at least once a year, by a medi-ieal physician authorized to practice in California. The physician shall complete the examination form and send it to the employer after signing, detaching and delivering the lower part to the applicant for posting in the hoist house. * * *
“No man shall act as a hoisting engineer until he has successfully passed the prescribed physical examination for a hoisting engineer.”
10) On October 6, 1939, a notice stating rate of burning of fuse was not posted at collar of shaft as provided in Mine Safety Order 1763-b, which reads as follows :
“Order 1763. Fuse. Blasting.
“(a) * * *
“(b) Notice shall be posted at the entrance of every mine stating the rate of burning of the fuse used.”
11) On October 6, 1939, the hoisting cable in the mine which had a diameter of less than % inch was fastened to the G-3 raise skip by only three clips instead of four as required by Mine Safe* ty Order 1739, which reads as follows:
“Order 1739. Hoisting Ropes (Steel or Iron).
“(i) Every rope used for hoisting or lowering men shall be seeuredly fastened at both ends * * *
*975“(R) (d) Por all wire ropes less than % inch in diameter, at least four clips shall be used.”
12) On October 6,1939, the surface powder magazine used in the operation of the mine did not have posted on each side of it any sign as provided by Mine Safety Order 1747, which reads as follows:
“Order 1747. Surface Storage Magazines.
“(a) * * *
“(b) (1) * * * Upon each side of such magazine there shall be at all times kept conspicuously posted a sign with the words ‘Magazine,’ ‘Explosives,’ ‘Dangerous,’ legibly printed thereon in letters not less than six inches high.”
13) On October 6, 1939, the mine was being operated without any telephone installed on the 700 foot level m violation of said Mine Safety Order No. 1769.
14) On October 16, 1938, the mine was being operated with the set screws in collar of cam shafts unguarded in violation of Mechanical Power Transmission Safety Order 2630 which requires that exposed set screws be guarded.
15) On October 6, 1939, the mine was being operated in violation of Mechanical Power Transmission Safety Order 2614 in that the dead end of the stamp drive countershaft in its stamp mill was not covered with a rotating easeing as was required by said Order 2614.
16) On October 6, 1939, the mine was being operated in violation of Mechanical Power Transmission Safety Order No. 2612 in that no guard rail was installed along the length of the countershaft of the mill 15 to 20 inches from the shaft, as required by said Order.
17) On March 22, 1940, the mine was being operated without any j>rovision made at the 100-10 hearing for temporary storage of powder, as required by Mine Safety Order 1748.
18) On March 22, 1940, the mine was being operated in violation of said Mine Safety Order 1743 in that a doctor's certificate of the hoisting engineer was not posted on the wall of the hoist house, as required by said Order 1743.
19) On March 22, 1940, the mine was being operated in violation of Mine Safety Order 1771, in that there was not installed therein an emergency telephone line from the lowest working level of the hoisting shaft to the surface through the second or emergency exit of the mine, as required by said mine Safety Order 1771.
20) On March 22, 1940, the mine was being operated in violation of Mechanical Power Transmission Safety Order 2608 in that the flywheel on the ore crusher was not enclosed, as required by said Order.
21) On March 20, 1941, the mine was being operated in violation of Mine Safety Order 1771 in that the emergency telephone line from the 700 foot working level which had been run to the surface through the second exit had not yet been connected to the surface telephone as required by said order.