Court Opinion

ID: 3305251
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:20:25.709811+00
Date Added: 2024-06-11T14:24:10.416596
License: Public Domain

I dissent. The opinion of the majority is based on the proposition that the plaintiff's right to pay the amount due for "clean-up" royalties and thereby to continue in possession of the mine had terminated before the offer of April 20th to pay said royalties was made. I think that the evidence shows a waiver of the forfeiture growing out of the failure to pay said royalties and that in holding that it does not, the majority opinion fails to consider the true rules of law applicable to such cases. The summary of Professor Pomeroy in his work on contracts has been accepted for many years as a correct statement of the law on this subject. It is as follows: "The one who is entitled to insist upon a punctual performance by the other or else that the agreement be ended, may waive his right and the benefit of any objection he might raise to performance after the prescribed time, either expressly or by conduct; and his conduct will operate as a waiver when it is consistent only with a purpose on his part to regard the contract as still subsisting, and not ended *Page 217 
by the other's default." (Pomeroy on Contracts, sec. 394.) In section 395, he states the well established rule that when the right to a forfeiture is once waived, time is no longer essential as to the payments included in the waiver, that it cannot again be made essential as to them, except by a notice again fixing the time of the payment, and that the time so fixed must be reasonable under all the circumstances. In section 397, he proceeds to say that the time thus newly fixed by notice may again be waived by conduct, and that "if the time is once allowed to pass and the parties still go on negotiating for the completion of the purchase, this conduct amounts to a waiver, and time is then no longer essential."
With these rules in view the evidence sufficiently establishes the waiver. As the trial was before a jury and the court directed a verdict for the defendant, the rule prevails that every fact in issue favorable to the plaintiff, of which there was substantial evidence, must be considered as proven and evidence inconsistent therewith must be disregarded. Forfeitures are not favored either in law or equity. In considering the effect of the evidence due weight must be given to both of these propositions.
While it must be conceded that the language used in the agreement clearly includes the clean-up payments among those as to which time is essential, it is at least doubtful from the whole case and from the nature of these payments whether the parties at the time really understood that it had that effect. The main object of the provision that time was essential and that a forfeiture would result from a failure to pay promptly, obviously was to secure prompt payment of the installments of the price agreed upon. The clean-up payments were in fact advance payments on those installments and the contract so declares. It must be admitted that where payments as to which time is made essential are for very small amounts, becoming due at irregular intervals, and both the amounts and dates of payment are determined by subsequent events brought to pass in part by the acts of third persons and are not fixed in advance by the contract itself, it would be much more probable that prompt payment, or forfeiture for nonpayment, would be waived than it would be with regard to regular installments of the price to be paid at times fixed by the agreement. *Page 218 
Consequently, slighter evidence would suffice to establish such waiver.
The contract fixed no definite time for making clean-up payments. The amounts thereof depended on the amount of precious metal obtained. Both amount and date became known for the first time when the clean-up was made. At the time of the sale and until the supposed forfeiture, the operations at the mine were largely carried on by "tributers," persons taking out ore independently for a percentage of its value. Clean-ups were made for their benefit as the ore was mined. By the language of the contract payment of the royalty upon each of these clean-ups was to be made within ten days thereafter and a failure by the plaintiff as to any one of them, would, ipso facto, forfeit all of the plaintiff's rights. According to the testimony of Fitzgerald the plaintiff had paid twelve thousand five hundred dollars on the price, and it had a very substantial interest at stake. Four or five "tributers" clean-ups were made between February I and March 4, 1910, but the respective dates and amounts were not proven. The following are the dates of other tributers clean-ups shown and the amounts are the royalties due thereon: March 4, $43.02; March 7, $91.22; March 11, $26.42; March 14 (3 clean-ups), $51.17; March 17, $5.47; March 23, $86.23; March 20, $2.08; March 30, $11.97; April 1, $3.94; April 7, $28.72; April 8 (2 clean-ups), $66.67. I mention these to show the irregular dates and the varying amounts of royalty payments. The plaintiff's manager testified that the nature of the business was such that it was a very difficult matter to ascertain at any time the royalties that were then due. None of the above amounts were paid, and, under the contract, at the expiration of ten days from each clean-up a forfeiture of all of plaintiff's interest would have occurred if there had not been a waiver by the defendant. Obviously there was such waiver as to all clean-up royalties that became due on or before March 17th, the date of the letter of the defendant to plaintiff mentioned in the majority opinion. This letter was received by Fitzgerald, the manager of the plaintiff, on March 18th. The statement therein demanded of him was not made until April 2d. He then rendered the statement accompanied by a draft to cover the royalties shown to be due thereby, although, in fact, the *Page 219 
ten days' grace had not expired as to all of them. The evidence shows that this draft was drawn in good faith and with the belief that it would be paid. It was not paid on presentation and thereupon, under date of April 13th, defendant wrote to Fitzgerald, informing him that the draft had not been accepted and that the "board of directors desire you to state by return mail what you propose to do in these matters and what may be expected in the future." Fitzgerald received this letter on April 14th. He immediately replied saying that he would begin payments on the royalties on April 20th, by applying thereon all the proceeds of tributers' rock, and that he expected to pay it all up in four weeks, as the ore was becoming more valuable. On April 18th, Fitzgerald sent to defendant his personal check for five hundred dollars to apply on the amount due from plaintiff on royalties. On April 19th, before the last check was received, the defendant's board of directors made and adopted a resolution declaring the agreement ended and authorizing its secretary to immediately take possession of the mine. No officer or agent of the plaintiff was present and it had no knowledge of this action at the time. It is obvious that the resolution could not of itself affect the plaintiff's rights. A copy of it was served on the plaintiff on April 20th, and immediate possession of the mine was then demanded. Plaintiff's manager thereupon offered to pay all royalties then due, which defendant refused to accept unless plaintiff also paid fifteen hundred dollars in taxes which it was not bound to pay. Plaintiff was allowed to continue in the possession and operation of the mine until April 26th. No previous notice had been given that this demand for possession would be made on April 20th, or at any other time.
The defendant's letter of March 17th clearly shows a waiver of the forfeiture for all the defaults which had then occurred. It even went further and proposed a distinct alteration in the terms of the contract, — namely, that thereafter, instead of paying the royalty on each clean-up as it became due, the plaintiff should render an account at the close of each month and pay the royalties monthly according to such account. This alteration was accepted and acted upon by the plaintiff and this conduct must be accepted as a waiver of the strict terms of the contract with respect to royalties on clean-ups. In the letter *Page 220 
of April 13th, after the default in the payment of the draft, the defendant did not insist upon the right of forfeiture which, technically, had accrued to it by reason of the dishonor of the draft and the failure to pay the amount due for the March royalties. On the contrary, it desired plaintiff to say what it proposed to do in the matter and to state what it could expect in the future. Defendant evidently then regarded the contract as still subsisting, and not as having terminated with the default, and the language of the letter plainly shows a desire to negotiate for its future performance. This, under the doctrine above stated, was a clear waiver of the previous defaults. If this case had been submitted to a jury and a verdict for the plaintiff rendered, this waiver would have been supported by the evidence, and it should be regarded here as an established fact. Under the change in the terms made by the letter of March 17th no additional payment would become due until May 1st. In the mean time none would become due so as to cause a forfeiture, unless by some notice or demand the defendant informed the plaintiff that after a reasonable time it would no longer stand by the proposition of March 17th.
The result is that the time, having been once allowed to pass for the March payment, became no longer essential as to that payment, and it could not again be made essential, except by notice fixing a new date upon which such payment would be demanded or a forfeiture declared. Payment was not wholly waived, but payment at the exact time was waived, when the defendant, in effect, asked plaintiff to negotiate for a future date. Plaintiff having replied by a promise of payment at an indefinite time, it was necessary for the defendant, if it still intended to insist upon a forfeiture on account of such payment, to fix a new date and give the plaintiff notice thereof a reasonable time in advance. It could not work a forfeiture by demanding immediate possession on account of a prior default which it had waived in this manner.
The offer of the plaintiff to pay the amount due, being made at the time of the unannounced demand for possession, was in time. It should have been accepted by the defendant. The demand of the defendant for more than was due was, in effect, a rejection of the offer. The defendant had no right to take possession and in doing so it committed a wrongful act. There is nothing in the evidence to show that its possession became *Page 221 
rightful before this suit was begun. It follows that the court erred in directing the jury to return a verdict for the defendant. For these reasons I think the judgment should be reversed.