Court Opinion

ID: 8656325
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:16:18.160594+00
Date Added: 2024-06-11T16:56:44.188720
License: Public Domain

McCAETY, J.
I concur. It is a recognized rule of law that where a contract is susceptible of two constructions, each of which is probable, or its meaning otherwise rendered doubtful, the court, in order to construe the contract so as to give it the meaning and effect the parties who made it intended that it should have, will place itself, as nearly as can be done, in the position of the parties “by admitting evidence of the surrounding facts and circumstances, the nature of the subject-matter, the relation of the parties to the contract, and the objects sought to be accomplished by the contract. ’ ’ 2 Page on Contracts, section 1123. It is also a well-recognized rule of construction that a contract should be considered and construed as an entirety and should be interpreted so as to give effect, if possible, to each provision therein contained. By following and applying these familiar rules of construction *153in construing tbe contract under consideration, the uncertainty, if any, of its provisions is more apparent than real, and its meaning — the intention of the parties making it— is reasonably plain and free from doubt.
The.record shows that some time about the first of the year 1900, the exact date is not given nor is it material, plaintiffs entered into a contract with one W. R. Sloan whereby they were given an option for two years to purchase a portion of the mining claims involved in this litigation. The group then consisted of one patented and two unpatented claims. The court found, and the evidence shows, that Sloan “agreed to sell and convey said claims to plaintiffs for the sum of $5,000, and plaintiffs thereon paid the sum of $500 to him, and the said Sloan placed a deed in escrow with the Wells-Pargo Company, Bankers, Salt Lake City, Utah, to be delivered to the plaintiffs upon payment by them of the further sum of $4,500.
Plaintiffs, immediately after the execution of their contract with Sloan, took possession of the property, commenced, and, continuously for fifteen months thereafter, prosecuted development work thereon. It is admitted, and the record shows, that prior to the time plaintiffs took possession of the property a large amount of work had been done thereon. Respondents (plaintiffs below) in their printed brief say:
“These claims had been worked prior to 1901 for many years, and more than $30,000 worth of work had been done on the same.”
There was an incline 800, and one 300, feet in depth and several perpendicular shafts ranging in depth from 50 to 200 feet, besides numerous drifts and tunnels on the property. Plaintiffs, immediately after taking possession, located four claims contiguous to the property. A United States patent was later on procured for the six unpatented claims by and at the defendants7 expense; During the fifteen months plaintiffs were at work on the property they expended, in addition to their time and labor, $3,500 in cash in their efforts to make the enterprise a going and paying concern.
Silas F. Johnson, one of the plaintiffs, who is a practical mining man of long experience, testified in part as follows:
*154“Lockwood and I put in about fifteen months’ work; we-had some hired men; we spent about $3,500 there besides our own time. That was cash. * * * We didn’t spend much on the four claims we located. As a matter of fact, the four claims didn’t cost us anything except the expense of making the locations. * * * Mr. Lockwood and I worked •there for fifteen months practically every day. * * * We didn’t keep on because it was impossible to get the ore out of this long incline. We spent at least six months trying to straighten it up and clean the waste out of it in order get the ore, and we couldn’t make a success of it after we did it. * * * I gave an option on the property for $16,000 for the simple reason I hadn’t the money to develop it.”
The only conclusion deducible from these facts, as I read the record, is that this group of mining claims could not, without the expenditure of a large sum of money, be placed on a paying basis; and even with an outlay of large sums-of money there was nothing in the then condition and appearance of the property to justify more than a vague hope -or belief on the part of the plaintiffs that merchantable ore would be found in sufficient quantities to more than pay the running expenses of working the mine. That such was the opinion of the plaintiff Johnson, who testified as a witness in the ease, I think, is too plain to admit of serious argument. His testimony, considered in connection with the somewhat unusual favorable terms in the contract providing how the final payment of $9,000 may be made, I think, shows this.
Reference is made to a copy of a written report introduced in evidence by plaintiffs that was made by a civil engineer and mining expert of the result of an examination he made of the property and samples of ore taken therefrom and assayed, just prior to or about the time the contract in question was executed. The report, among other somewhat extravagant, and, in view of the evidence of Silas F. Johnson, one of the plaintiffs, who was familiar with every incline, shaft, drift, and tunnel in the mine, and the amount and character of the ore exposed, I might add, reckless and misleading statements therein set forth contains the following respecting the tonnage and value of “high-grade” ores exposed in the mine, namely:
*155“In the two inclines mentioned, limiting the measurement severely on an estimate, the tonnage practically in sight can safely be considered as 300 tons of an average value of $30 per ton. In extracting this it will be necessary to take out an equal amount of waste. The expense of mining this in a small way will be high, about $2 per ton:
Mining.$ 2.00
Hauling to Milford.1.25
Freight.3.50
Sampling and smelting. 6.00
$12.75
—leaving a net profit of $17.25 per ton, or $8,625. There is every probability that when this ore is extracted an equal tonnage will be exposed, and that this will continue indefinitely. * * *
“The showing at the bottom of the 800-foot incline shaft is extremely favorable for a very large tonnage. The recent development does not show the width of the ore body except to the extent that it is greater than 20 feet. The surface of the vein matter directly above this point is 100 feet or more across, and a comparatively small amount of work below would probably open tonnage to furnish a 200-ton mill indefinitely. The profit that could be realized on the operation of the 200-ton concentrator on ore of the grade now exposed would be: # * * Net profit per month, $28,320.00.”'
This report, in so far as it deals with the amount and value of the ores exposed in the mine, is manifestly unreliable and misleading. It is a matter of common knowledge to all parties, and their numbers are legion, who have had experience in and are familiar in a general way with the mining industry in this and adjoining states, that a mine containing the amount and character of ore described in the report as being exposed and partially blocked out could readily have been sold for many times the price named in the contract. While the defendants may have been, and probably were, misled by the report respecting the amount and the character of the ore exposed and the value of the mine, it is manifest that plaintiffs were not, in any respect, misled by it. Their willingness *156to dispose of the property for $16,000, payable in installments, at intervals covering a period of one year, as provided in a contract executed by the parties contemporaneously with the contract under consideration, or for $21,000 as provided in the contract here involved, namely, $12,000 in cash and $9,000' payable from the “net proceeds” of ores mined and “not otherwise,” is very persuasive, if it does not conclusively show that in ttyeir opinion values placed on the mine in excess of $16,000 were largely, if not entirely, speculative and conjectural. Moreover, it is inconceivable that Sloan would have parted with-miping property containing the extensive bodies of commercial ore mentioned in the report and there described as being exposed and partially blocked out for $5,000, giving the parties purchasing it two years in which to pay $4,500 of the purchase price and that plaintiffs would have expended thereon $3,500, besides fifteen months of their time and labor, without being able to take out sufficient of this high-grade shipping ore to pay the running expenses of operating the mine. As considerable importance seems to be attached to the report and as it is practically the only matter in the record that in any sense tends to support the finding of the trial court, that the property “contains valuable deposite of ore' which can be mined and shipped at a profit, and that if defendants had worked said property and mined the ore therein they could, within a short time after entering into said contract, have paid said $9,000 out of one-half of the net proceeds of the ores mined from said property,” I shall, for the purpose of further showing the unreliable and misleading-character of the instrument, refer, in a general way, to the evidence of the witness Johnson, one of the plaintiffs, wherein he described in detail the condition of the mine and the amount of development work done thereon since the execution of the contract. He stated that three different parties were given options by defendants to purchase the property, each of whom operated — worked on — the property for a few months and then abandoned it; that the development work done on the property since the execution of the contract aggregated from $6,000 to $7,000, and that but little, if any, ore had been mined and shipped-therefrom. He also testified that in his *157opinion it would require a further expenditure of $5,000 in development work to put the mine on a paying basis. Therefore the finding of fact referred to, made by the court, is not only unsupported by but is contrary to the overwhelming weight of the evidence.
Furthermore, the report was the rankest kind of hearsay evidence, and if proper and timely objections had been made when it was offered in evidence the trial court would undoubtedly have excluded it. While the admission of it in evidence without objection entitles plaintiffs to have it considered by this court, its unreliable character as hearsay may, nevertheless, be considered in determining the weight that should be given it. The evidence of the witness Johnson as to the condition of the mine respecting the amount and character of the ore therein exposed, the amount of development work done and expenditures made by plaintiffs and their inability to mine sufficient ore to pay the running expenses, the $6,000 or $7,000 worth of development work done since the contract was executed, and the limited amount of ore, if any, the parties doing the work were able to mine, considered in connection with his evidence wherein he says that in his opinion it will require an expenditure of $5,000 to put the property in a conditioii so that “ore can be mined and shipped at a profit,” completely destroys, as I view the record, the value of the report as evidence.1
I here remark, parenthetically, it is safe to predict that if the numerous — countless—undeveloped mining claims in this and the adjoining states that have heretofore been examined, and reports,* both verbal and written, made thereon, by mining experts and men claiming to be such, had, in the majority of cases, possessed the merit claimed for them in the reports, including the property in question, and the properties had been continuously worked to their full capacity, the output of silver bullion would be equal to if not greater than that of copper, and the output of gold so great as to demonetize it and to make the metal a drug on the market.
The plaintiffs, as stated, were given an option for two years by Sloan in which to purchase the property. They paid $500 on the purchase price and expended. $3,500 in cash, be*158sides fifteen months of their time and labor, in trying to make the mine a dividend paying concern. In other words, plaintiffs, at the time the contract was executed, had invested $4,000 in cash and fifteen months of their time and labor, making a total investment by them of about $7,000. This, they realized, would be irretrievably lost to them unless they could induce men with means to take the property off their hands before their option, which had about six months to run, expired. They were given an opportunity by defendants, which they took advantage of, to dispose of the property on terms that would return to them the $4,000 cash they had put into the enterprise, pay Sloan the balance owing him on the purchase price ($4,500), give them $3,500 for the fifteen months’ labor that each of them put in the mine, which would be equal to $116.66 per month for each of them over and above their expenses, besides guaranteeing to them one-half of the net proceeds of all ores thereafter mined and shipped until they shall have received $9,000 out of such net proceeds. It was under these circumstances, as shown by the record, that the contract under consideration was made and executed. '
The defendants paid $12,000 of the purchase price as provided in the contract. The provision of the contract providing how and under what circumstances the balance ($9,000) may be paid is as follows:
“The balance of the above-named purchase price ($21,000) being the sum of $9,000, shall be paid only in the manner following and not otherwise, that is to say, on and after the 2d day of July, 1902, the said second parties or their assigns shall pay over to said first parties or their -assigns a net one-half of said second parties’ net proceeds from said mine, meaning thereby a net one-half of the proceeds of all ores mined from said property after the said second parties have deducted all moneys paid by them or expense incurred, ’ ’ etc.
The contract further provides that:
“The extent and manner of managing and developing said property shall he left solely to the sound and reasonable discretion of said second parties.” (Italics mine.)
These provisions, whether read by themselves or in connection with the other provisions of the contract, are plain and *159free from ambiguity. They provide, first, that the $9,000 shall be paid from the net proceeds of the mine “and not otherwise,” and, second, that the extent and manner of managing and developing the mine shall be left solely to the sound and reasonable discretion of the defendants.
That the parties anticipated at the time the contract was executed, and at the time the deed conveying the title of the property to defendants was delivered, that the plaintiffs might have to wait indefinitely for the payment of the $9,000, or any portion thereof, and that defendants would not be called on to pay any part of the amount until there are “net proceeds” from ores mined with which to make payment, I think, is further evidenced by certain provisions of a contract, herein referred to, executed by the parties contemporaneously with the delivery of the deed. That contract or agreement is incorporated in the opinion written by Mr. Justice FrioK. It provides that the defendants will pay to plaintiffs one-half of the “net proceeds of all ores mined * * * from said property” until plaintiffs shall have received “the sum total of $9,000 out of such proceeds. ” It is also provided that the “contract shall be deemed and construed as a covenant running with the title to said land and shall bind the grantees, and heirs and assigns, ’ ’ etc. It also contains the following provision:
“It is distinctly understood and agreed that the first parties shall not be liable hereunder to pay to the second parties any sum whatever unless such net proceeds are realized by them out of said property, and then only to the extent of one-half of such net proceeds until the full sum of $9,000 shall be paid to the second parties. ’ ’
No claim is made by plaintiffs that any net proceeds of ores taken from the mine have been received. In fact the record shows that at no time since plaintiffs first became interested in the property have the proceeds of the ore been sufficient to pay the running expenses of the mine, or any considerable portion thereof. The provisions of the contract herein set forth, considered in connection with the circumstances and conditions with which plaintiffs were confronted in a financial way, their knowledge of the mine and of the *160extent and value of the ore exposed therein at the time the contract was executed, I think, clearly show that the parties, especially the plaintiffs, were doubtful as to whether the mine ever would or could be worked at a profit, and that it was uncertain as to whether there ever would be any net proceeds from ore mined, and that they executed the contract with that uncertainty in view and with the understanding that the payment of the $9,000 would be made from the “net proceeds of ores mined and not otherwise.” In other words, I think it is plain that the payment of the $9,000 was contingent upon the mine being operated and worked at a profit.
In order to uphold the judgment of the trial court it seems to me that this court must refuse to give effect to the por-visions of the contract herein referred to, namely, the provision providing that the $9,000 shall be paid out of the net proceeds of ores mined and not otherwise, the provision providing that “the extent and manner of developing the property shall be left solely” with the defendants, and that defendants “shall not be liable to pay (plaintiffs) any sum whatever unless such net proceeds are realized by them out of said property.” This, I submit,.a court has no right to do.
Furthermore, it is almost unbelievable that defendants would have bound themselves to pay $9,000 in addition to the $12,000 received by plaintiffs on the purchase price, regardless of whether the mine should be operated at a profit or loss, when they had an option to take over the property for $16,000, payable in installments covering a period of one year. We therefore must, in order to affirm the judgment, not only refuse, as stated, to give effect to the provisions in the contract to which I have just referred, but we must in effect hold that the defendants, whom we have a right to believe from the record were men of average intelligence, possessing ordinary business acumen and shrewdness, were willing to and did bind themselves to pay $21,000 for property on which they had an option to purchase for $16,000.
Counsel for plaintiffs, in their printed brief, say that the contract “clearly contemplates that defendants should work and develop the property” and devote considerable space in discussing the alleged dereliction of defendants in that regard.
*161The action is not brought to recover damages for an alleged breach of the contract by defendants in failing to work the property. The action is to enforce an alleged vendor’s lien and to subject the property to the payment of the lien. If the plaintiffs are entitled to have the $9,000 declared a lien on the property and the lien foreclosed and the property sold and the amount of the lien paid out of the proceeds of the sale, then I submit that the right would have existed even though the parties who have been in possession of the property since the execution of the contract had expended $7,000, or, for that matter, $70,000, each year on the property without realizing any .profit or “net proceeds.” If the $9,000 mentioned in the contract is- a lien on the property, as declared by the trial court, the continuity .with which work may have been prosecuted and the amount of money expended in carrying on the work without paying the expenses of operating the mine could not in any sense affect the plaintiffs’ right to foreclose the lien and subject the property to the payment of the obligation. In other word^ if defendants, at great expense, had kept a large force of men continuously at work, since the contract was executed, and had been unable to extract and market sufficient ore to pay expenses, they would be in no better position to resist the foreclosure of the lien than they are under the existing state of the record.