Court Opinion

ID: 9640066
Source: CourtListenerOpinion
Date Created: 2023-08-22 16:56:38.437433+00
Date Added: 2024-06-11T08:15:11.066325
License: Public Domain

PHILLIPS, Circuit Judge
(concurring).
The majority opinion has my concurrence, but it seems desirable to me to state additional reasons for the conclusion that the claim for liquidated damages should be denied.
It will be observed from section 8 set forth in the majority opinion that the liquidated damages are to indemnify the lessor for damage sustained “by reason of the default of the lessee” and not for damages resulting from a termination of the lease. In that respect it differs from the lease before the court in Burns Trading Co. v. Welborn, 10 Cir., 81 F.2d 691, 695, 106 A.L.R. 285.
The sub-lease contains many covenants to be kept and performed by the lessee, natnely: to carry on the mining operations with a force and equipment sufficient for the production of the minimum requirements under the sub-lease, to work the mine and carry on the mining operations in a workmanlike and mininglike manner, to turn rooms in the mine in such a way as to save all the coal reasonably possible, to provide passages for air and keep the same open at all times, to keep the mine shafts and other openings in proper condition, to repair without delay any injury to the mine and keep it in good working order and condition, to keep the mine open for inspection by the lessor, to comply with state and national laws respecting coal mining, to indemnify the lessor against loss on account of any violation of law by the lessee, to pay certain stipulated royalties and certain stipulated minimum royalties, to keep full, true and accurate records of the amount of coal mined, to furnish to the lessor on or before the fifth day of each month a true and complete account of all coal mined during the preceding month, and to indemnify the lessor for the costs and expenses, including attorneys’ fees, incurred in defending any suit or suits *771brought against lessor for the violation of law by the lessee or on account of any other failure, neglect or default of the lessee in keeping and performing the covenants of the lease. These covenants are of varying degrees of importance. It is well settled that where a contract contains a number of such covenants a provision that a fixed sum shall be paid for breach of any one is a penalty. Burns Trading Co. v. Welborn, supra, 81 F.2d at page 694; Seidlitz v. Auerbach, 230 N.Y. 167, 129 N.E. 461; Wilbur v. Taylor, 154 Wash. 282, 282 P. 65; Gross v. Exeter Mach. Works, 277 Pa. 363, 121 A. 195, 197; Graves v. Fitzpatrick, 127 Okl. 124, 260 P. 10, 11; O’Brien v. Illinois Surety Co., 6 Cir., 203 F. 436; Chicago, B. & Q. R. Co. v. Dockery, 8 Cir., 195 F. 221.
For the reasons indicated it is my opinion that section 8 provides for a penalty rather than liquidated damages.
Section 11 of the sub-lease reads as follows :
“It is further agreed that in case of default by Lessee in any of the provisions of this agreement, except as otherwise provided in paragraph 13 hereof, Lessor may, at any time when any such default exists, at its election, serve written notice upon Lessee by mailing same to Lessee in properly sealed, stamped and registered envelope addressed to Lessee c/o Otto Friedrichs, First National Bank Building, Denver, Colorado, notifying Lessee of the claimed default, and that unless within fifteen (15) days after the receipt of such notice the Lessee shall correct such default, and fully comply with all and singular the terms of this lease in that regard (said notice to specify wherein Lessor claims that Lessee is in default), it will declare this lease terminated and the term hereof ended; and that in the event such default shall not be cured, or action taken to that end to the Lessor’s satisfaction within said time said Lessor may, without further notice, thereupon declare said term ended, and this lease terminated, and may thereupon enter into and take possession of the said premises as aforesaid, and all the improvements, betterments, equipment, personal property, etc., then and there being located, and hold and enjoy the same as its, the Lessor’s, sole property, and in such event license and authority is hereby given to Lessor to make such entry by its officers, agents, attorneys, or employes and assistants, and to use all such force as may be deemed needful for taking possession as aforesaid, and to oust Lessee, as well as any and all persons claiming by, through, or under Lessee, and for nothing which the said Lessor, or the officers, agents, or representatives thereof may do in connection with the taking possession as aforesaid, shall there be any liability whatsoever in any civil suit, action, or proceedings.”
Section 13, excluded from the operation thereof, provides that the lessee shall carry workmen’s compensation insurance.
Section 8 is only operative in the event of termination of the sub-lease “on account of any default • on the part of lessee” in the manner provided in section 11. The record here is barren of any proof of the termination of the sub-lease in accordance with the provisions of section 11. True, on June 8, 1937, the referee ordered the trustee to surrender and disclaim the lease as of May 1, 1937. This, however, did not terminate the sub-lease as between the lessor and lessee. Burns Trading Co. v. Welborn, supra, 81 F.2d at page 694; In re Ells, D.C.Mass., 98 F. 967; In re Frazin, 2 Cir., 183 F. 28, 33 L.R.A.,N.S., 745; Petition of Colburn, 1 Cir., 16 F.2d 780. Therefore, it is my conclusion the lessor has not established its right to invoke the provisions of section 8.