Court Opinion

ID: 9538957
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:44:35.73909+00
Date Added: 2024-06-11T14:58:20.088802
License: Public Domain

ELLETT, Justice
(dissenting) :
I dissent.
This case involves an accounting procedure in strip mining. The cost of removing overburden to expose ore is incurred in one year, and as a result ore can be removed for several years thereafter without additional expense of removing overburden. The trial court held that the cost of *217removing the overburden was to be charged to the year when it was incurred and not prorated over the life of the exr posed ore body. I think he erred in doing so. He did not follow the evidence of the expert accountant, who testified that in the strip mining industry it is generally accepted that such costs will be capitalized and allocated to the ore produced in each year based upon the probable ore reserves in place.
If the defendants had bought the mine with the overburden already removed, the ■situation would be the same as if they had bought the mine with overburden on top of the ore and then expended a large sum of ■money to remove the waste matter. In either case • there is no loss for the year when payment was made or overburden removed solely because of the expenditure. The gross sales in succeeding years would mot be the measure of profits.
The main opinion in affirming the trial ■court speaks of gross receipts and net receipts as if they refer to cash receipts. Since the amount of cash received in any given year is a fixed sum, there cannot be two figures for it, viz., gross and net. The meaning is obviously gross profit and net profit.
In this case the plaintiff was given the ■option to take 10% of the gross profit or 50% of the net profit each year. His contention is that he can take either 10% of the gross receipts 1 or 50% of the net receipts. The trial court allowed him to take 10% of the gross in the year of removing the overburden and 50% of the net thereafter.
A simple example will show the fallacy of such a method:
Suppose a shoe store sells 100 pairs of shoes per day at a price of $10 per pair. If the shoes cost $6 per pair, the profit would be $4 per pair (excluding overhead, etc.). Now, if the salesman can have 10% of the gross receipts or 50% of the net, he would really have a good deal. Suppose the merchant bought 600 pairs of shoes on Monday and paid therefor $3600. The salesman would take 10% of the gross sales for that day and get $100. On each of the other five days he would claim 50% of the net take, and since there is no cost of shoes on these days, he would claim $500 per day. His wages for the week would then be $2600, although it is perfectly obvious that the total profit on the sales is only $2400.
I think the lower court erred in its interpretation of the agreement, and I would reverse the judgment and award costs to the appellants.

. Minus certain prescribed costs but excluding anything for overburden except in the year when actually paid out.