Court Opinion

ID: 8802517
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:37:29.029397+00
Date Added: 2024-06-11T17:03:57.652398
License: Public Domain

VAN VALKENBURGH,
District Judge (after stating the facts as( above). The issues presented for determination are thus defined by the various parties:
As stated by appellant:
“The single question presented by this appeal is: ‘Can the stipulated payments under a mining lease, made in advance of ore being removed, be applied on ore subsequently removed, in the absence of any provision for such application and contrary to the express requirements of the lease? ’ ”
Counsel for Republic Iron & Steel Company say:
“The issue to be determined on this appeal is whether the minimum payments made, under the mining lease in question, in advance of mining ore, are to be treated as ‘advance royalty’, or as ‘dead rent.’ ”
Appellee Snyder, for himself and appellee Smith, puts it thus:
“Can payments of ‘royalty’ made, under the terms of the Nelson indenture, in advance of ore being mined and removed, be applied on ore subsequently removed in excess of minimum requirements? If this question is answered in the affirmative, appellant’s appeal must fall. If in the negative, it must be sustained unless the appellant has, as to these appellees, either: (a) Lost his rights by a practical construction of the contract; or (b) suffered an estoppel; or (c) waived his rights.”
By common consent, then, we turn first to consideration of the controlling clauses of this indenture. It will be noted that they contain no language expressly authorizing or permitting payments of royalty, required to be made in advance of ore being mined and removed, to be applied on ore subsequently removed in excess of minimum requirements. If, then, the right exists, it must be by implication, and must flow from the necessary legal effect of the terms employed.
[1,2] Appellees base their contention primarily upon the nature of the estate created by an instrument of this sort. They insist that, by the grant, the lessees were made the owners of the ore; that the lease is in reality a sale of the ore, and the royalties reserved are, in fact, the purchase price of it. It is therefore argued that the right to apply such royalties, previously paid, to ore subsequently mined and removed, results naturally and necessarily from the character of the transaction. Authorities conceived to be in support of this theory are cited; among them, Diamond Iron Mining Co. v. Buckeye Iron Mining Co., 70 Minn. 500, 73 N. W. 507; Muhlenberg v. Henning, 116 Pa. 138, 9 Atl. 144; Plummer et al. v. Hillside Coal & Iron Co., 104 Fed. 208, 43 C. C. A. 490; Wilmore Coal Co. v. Brown (C. C.) 147 Fed. 931; In re McFadden’s Estate, 224 Pa. 443, 73 Atl. 927; Von Baumbach v. Sargent Land Co., 219 Fed. 31, 134 C. C. A. 649.
Appellant relies upon the doctrine announced in Minnesota, supported by decided cases in other jurisdictions, that under these mining leases the amounts stipulated to be paid by the lessees are rents and not the purchase price of mineral in place; that they are “the compensation which the occupier pays the landlord for that species of occupation which the contract between them allows” — citing State v. Evans, 99 Minn. 220, 108 N. W. 958, 9 Ann. Cas. 520; Boeing et al. v. Owsley, 122 Minn. 190, 142 N. W. 129; State v. Royal Mineral Ass’n, 132 Minn. 232, 156 N. W. 128; Saulsberry v. Saulsberry, 162 Ky. *291486, 172 S. W. 932, Ann. Cas. 1916E, 1223; Kissick et al. v. Bolton et al., 134 Iowa, 650, 112 N. W. 95; Lehigh Zinc & Iron Co. v. Bamford, 150 U. S. 665, 14 Sup. Ct. 219, 37 L. Ed. 1215; Wonsetler et al. v. Andrews et al., 58 Ohio, 551, 51 N. E. 168; Woodruff v. Gunton, 222 Pa. 384, 71 Atl. 851; Gilmore v. Ontario Iron Co., 86 N. Y. 455; Berwind-White Coal Min. Co. v. Martin, 124 Fed. 313, 60 C. C. A. 27.
Of course, in the elaborate briefs of counsel on both sides, many cases other than those above selected are deemed to bear more or less directly upon this point in issue; but the foregoing are thought to be sufficiently comprehensive fully to disclose the divergent theories. The Minnesota rule must be conceded to be as claimed by'appellant. The Supreme Court of that state holds that instruments called and operating as mining leases “are leases in fact as well as in name, and the amount stipulated to be paid by the lessees are rents.” This doctrine, first suggested in State v. Evans, supra, was approved in Boeing v. Owsley, and expressly confirmed in the very late case of State v. Royal Mineral Ass’n after full consideration of previous decisions in various jurisdictions, both state and federal. The court said:
“We adhere to the doctrine of the Evans and Boeing Cases, and hold these instruments leases. It follows logically that the amounts stipulated to be paid by the lessees are rents, and they were expressly held by this court to be rents in the Boeing Case, supra, a case which involved a construction of the very leases now before the court. They are ‘the compensation which the occupier pays the landlord for that species of occupation which the contract between them allows.’ ”
This is a Minnesota contract, and, as between private parties, it is our duty to follow the decisions of the Minnesota court of last resort establishing a rule of property in that jurisdiction. Kuhn v. Fairmont Coal Co., 215 U. S. 349-360, 30 Sup. Ct. 140, 54 L. Ed. 228; Wilmore v. Brown (C. C.) 147 Fed. 931; Polk et al. v. Mutual Reserve Fund Life Ass’n et al. (C. C.) 137 Fed. 273; Smith et al. v. Guffey et al., 202 Fed. 106, 120 C. C. A. 436. This being so, it is unnecessary to attempt a reconciliation of conflicting decisions in other jurisdictions. In Von Baumbach v. Sargent Rand Co., supra, this court was construing a federal statute in a case between the government and a private corporation. Here, we have under consideration a Minnesota contract between private parties affecting property rights in that state, and in such case we are bound by the construction placed upon it by the local courts. Von Baumbach v. Sargent Land Co., 242 U. S. 503, 37 Sup. Ct. 201, 61 L. Ed. —
[3] It is obvious then that the claim of appellees is not sustained by the nature of the estate created by the lease in question. Are its terms susceptible of the interpretation for which they contend? We do not think so. It provides clearly and without ambiguity for a minimum annual payment within one year from the completion of a railroad within four miles of said land, irrespective of the mining and removal of ore during that year and unconditioned thereby. The fact that this annual payment is computed as royalty upon a required minimum production of 10,000 tons of iron ore does not change the nature of the transaction. The provision is for an annual minimum compensation “for that species of occupation which the contract between *292them allows.” Such a provision is not unusual in such leases. It is inserted to insure diligence and promptitude in mining. Diamond Iron Mining Co. v. Buckeye Iron Mining Co., 70 Minn. 500-505, 73 N. W. 507; Lehigh Valley Coal Co. v. Everhart, 206 Pa. 118-124, 55 Atl. 864; Gilmore v. Ontario Iron Co., 86 N. Y. 455.
The decided cases do not support the contention of appellees that tire right of future application is implied from the nature of the transaction in the absence of provision in the lease itself authorizing or permitting such application. On the contrary, it appears from the record that in a majority of leases such authority is expressly given. As was said in Wonsetler et al. v. Andrews et al., 58 Ohio St. 551—557, 51 N. E. 168, 169, 170:
“The omission of such, stipulation in the instrument under consideration would indicate that a different result was intended by the parties in this case. A stipulation of so material a character should not be supplied by construction.”
It will also be noted that the lease in terms provided that the $2,-000, to be paid at its execution and to keep it in force after October I, 1893, should apply on the first royalty due under it; thereby, under ordinary rules of construction, excluding a .like application of other payments in advance of mining. Furthermore, in his notification of June 29,’ 1903, appellee Smith claims credit for such sum upon first royalties due, but makes no similar claim for minimum royalties to be paid after July 1, 1903, although he makes express reference to the date when payment of such royalties should begin. These circumstances are not without their logical significance. We have given careful consideration to all points raised in argument and brief bearing upon the construction of this instrument, and nothing has been adduced which tends to disturb the conclusion we have reached.
[4] But it is insisted that, even though under the terms of the lease these payments in advance of ore being mined and removed cannot be applied on ore subsequently removed in excess of minimum requirements, nevertheless appellant has lost his rights by a practical construction of the contract. This contention is based upon the terms of certain receipts given by appellant at the times the minimum royalty payments were made. As stated in argument and brief, the first receipts were carefully drawn by appellee Smith. That dated July II, 1904, stated that the payments made were for and on account of “advanced royalty or rent” due under the lease. The following clause also appears:
“With, this payment I have received on account of said lease the sum of twenty-five hundred and twenty-five dollars ($2,525), being the royalty or rent in full on said lease for the year ending July 1, 1904, and twenty-five dollars ($25) additional, which said sum of $25.00 I hold in trust for whoever may be rightly entitled thereto.”
Other receipts and letters used the terms “advanced royalties,” and still others, “advance royalties or rent.” In others, we find the terms “royalty,” “royalties,” “royalty on mining lease,” “advance rent or royalty due on lease,” and “amount due on Nelson lease.” Those receipts, upon which special emphasis is placed, were drawn by the ap-*293pellee Snyder; a- few of the others were drawn by appellant. In the latter, the term “advanced royalties,” does not appear; where it does appear, it is more often used in the disjunctive with the word “rent.” Appellant himself uses the words “royalty” or “royalties” and “rent” apparently without distinction. In mining leases, these words “rent” and “royalty” are used interchangeably to convey the same meaning. Saulsberry v. Saulsberry, 162 Ky. 486, 172 S. W. 932, Ann. Cas. 1916E, 1223; 27 Cyc. 710. Talcing the receipts as a whole, it is obvious that no uniformity in phraseology was attempted. Appellant states that when he signed these receipts he had not in mind any distinction between the different phrases used, and did not suppose that any of them had any effect upon the terms of the lease; that at the time they were given there was and had been no discussion as to whether royalties paid could1 be applied on ore subsequently taken out. We do not think these receipts, under their terms, or'under the circumstances of their issuance and acceptance, malcfe out a case of practical construction unfavorable to appellant. He gave them, as payments were made, without thought that they could operate, or were intended to operate, to change the terms of the lease. Many, perhaps most of them, could have no such effect. It is urged that appellee Snyder carefully prepared those first given for the purpose of determining whether they would meet with objection from Mr. Nelson, and therefore of eliciting from him a casual interpretation of the terms of ’the lease.- He did not, however, in his communications, nor in the terms of the receipts themselves, frankly call attention to the question in his mind, nor use expressions which could be presumed to challenge the attention of the lessor. It devolved upon him and his associates to satisfy themselves of the legal effect of this indenture at the time they acquired their interest in it. The plain intendment of the terms of a written instrument is not lightly to be set aside through indirection and inadvertence.
[5] There is another reason why this contention of appellees must fail.
“It is only where there is-doubt as to the meaning of the terms used, or the writing is silent or incomplete as to a given point, that the courts in interpreting the contract will resort to a practical construction which the parties may have put upon it.” St. Paul & Duluth R. Co. v. Blackmar, 44 Minn. 514-518, 47 N. W. 172; Coal Creek, etc., Co. v. Tennessee Coal, etc., Co., 106 Tenn. 651-687, 62 S. W. 162; Twin Tree Lumber Co. v. Ensign et al., 193 Ala. 113, 69 South. 525; Tustin v. Philadelphia & R. C. & I. Co., 250 Pa. 425, 95 Atl. 595; Railroad Co. v. Trimble, 10 Wall. 367-377,19 L. Ed. 948; Barber Asphalt Paving Co. v. City of St. Paul, 224 Fed. 842, 138 C. C. A. 558.
The contract under consideration is clear, complete, and unambiguous. In such case, the mere opinion of either party as to its meaning cannot control, nor was appellant required, before receipting for payments made under it, to guard against an inadvertent misconception of its plain and unequivocal terms.
[6] As has been heretofore stated, in the sublease to the Paxton Mining' Company, appellees Blue Ore Mining Company, Smith, and Snyder covenanted that they had paid to appellant the sums therein mentioned as advance royalty under the terms of said lease, and to *294that extent were entitled to mine and remove ore without further payment therefor. This right was transferred .to the Paxton Company, and by it to appellee Republic Iron & Steel Company, which ultimately paid to the Blue Ore Mining Company, the Paxton Mining Company, and'Smith and Snyder the amounts so' paid by them as alleged advance royalties. After the instruments evidencing these transactions had been formulated and executed, but before the final transfers had been made, appellee Snyder, with his attorney L-ind, who also represented appellee Smith, visited appellant for the purpose of getting a statement of all the moneys theretofore paid by the various parties in interest as minimum royalties in advance of the mining and removing of ore. This visit resulted in the execution by appellant of an instrument known as “Exhibit V,” which, omitting the attached statement of amounts, reads as follows:
“This will certify, that I have received prior to. this date, as advance royalties to apply on iron ore mined from the southeast quarter (S. E. ¼) of the southwest quarter (S. W. ¼) of section twenty-three (23), township fifty-seven (57), range twenty-two (22), under the lease now outstanding thereon, the several sums of money specifically set forth in the statément hereto attached, aggregating $12,500.00, of which the Paxton Iron Mining Company has paid $3,125.00, the Blue Ore Mining Company has paid $5,000, and Charles A. Smith and Fred B. Snyder jointly have paid $4,375.00. (C. A. S. $3,500.— F. B. S $875)
“Dated August 9th, 1907. B. F. Nelson.
“Checked & correct. , F. B. S.”
Appellees claim that this was a specific representation by appellant that the prior payments now in suit were advance royalties which they are entitled to apply on ore subsequently mined; that the sublease to the Paxton Company and the assignment thereof to the Republic Company were finally made and consummated upon the faith of this representation; and therefore that appellant is now estopped to place any different construction upon the terms of the lease.
It has alreeady been stated that because of controversies between the Blue Ore Mining Company and Smith and Snyder at one time, and between the Blue Ore Mining Company, Smith, and Snyder, and the Paxton Mining Company at another time, as to their respective interests in the lease in question, certain admitted overpayments, or rather duplicate payments, had been made to appellant. There was at all times between these parties, until the statement of amounts contained in Exhibit V, a dispute as to the precise amount which each- of the above-named parties had paid. Eor this reason, it was desirable that an exact statement of these amounts should be procured from appellant. Appellant and his bookkeeper say that this was the only subject-matter in mind when this statement was applied for by Snyder and Eind. The latter say that their object was to get from appellant an expression of his construction of the terms of the lease on the right of application of these payments to ore subsequently mined; that they told him that the Republic Company was about to become a purchaser and to repay these sums on the theory that these rights existéd. The testimony of Lind and Snyder does not satisfactorily reveal that such a purpose was disclosed, to1 appellant. The terms of the lease were *295not referred to in these discussions, nor was it brought home .to appellant that a construction of those terms on his part was sought. He says he read the statement contained in Exhibit V and was aware of the import of its language, but that he owned at least one other lease, in the making of which'appellee Snyder had acted as his attorney, and in whith the right of future application of previous payments had been expressly reserved. No examination of any lease was made at the time this statement was indorsed as checked by appellee Snyder, in whom he had confidence, and he took it for granted that it followed the provisions of the lease then under consideration. Under these circumstances, this transaction is altogether analogous to those heretofore considered, involving a claimed practical construction by implication from the language of receipts. Not satisfied with the legal effect of the receipts theretofore given, appellees again sought, through Exhibit V, to obtain from appellant another expression of opinion as to the meaning of the written instrument. In our judgment, the effort must fail for practically the same reasons heretofore assigned.
“Where the statement or conduct is not resolvable into a statement of fact, as distinguished from a statement of opinion or of law, and does not amount to a contract, the party making it is not bound, unless he was guilty of clear moral fraud, or unless he stood in a relation of confidence towards him to whom it was made." Michie’s Encyclopedia of U. S. Sup. Ct. Rep. vol. 5, p. SMS; Sturm v. Boker, 150 U. S. 312, 14 Sup. Ct. 99, 37 L. Ed. 1093; Mutual Life Ins. Co. v. Phinney, 178 U. S. 327-342, 20 Sup. Ct. 906, 44 L. Ed. 1088.
Especially is this true where the parties have the written contracts before them, and are presumed, as a matter of law, to know their legal effect and operation. In these negotiations all the appellees were represented by lawyers of exceptional ability, especially conversant with mining leases; all were admittedly familiar with the lease in question and keenly alive to the provisions concerning royalty payments. They were presumed to know the legal effect of those provisions ; that &ey did know it is evidenced by the activity displayed in seeking to elicit from appellant an expression of opinion or construction favorable to them. Their opportunity for full and complete understanding of the law and facts involved was certainly equal to, if not greater than, that of appellant. They were not deceived nor induced to rely upon admissions or representations concerning unfamiliar matters. Appellant was a layman of complex business affairs. His conduct discloses no suggestion of moral fraud. He may very well have labored under a misapprehension of the terms of this particular lease, to which his attention was in no wise especially directed. At the most, his statement amounted to a mere expression of opinion as to the legal effect of clauses which appellees and théir counsel knew as well as or better than he did. ■ The essential elements of estoppel are not present. The appellant clearly had no intention of relinquishing any of his substantive rights, nor did his acts, under the circumstances disclosed by the record, have that legal effect. The foregoing considerations dispose of the claim of waiver as well as that of estop-pel.
[7] All the appellees, except the Republic Iron & Steel Company, find themselves in no worse position than that originally occupied by *296them. . The latter company is conceded to have its remedy against its grantors for payments made to them. As to subsequent payments to appellant made by the latter company, it could not, in any event, rely upon a mere statement of opinion as to the law of a contract, not a declaration or admission of fact, to such extent as to estop appellant from subsequently taking a different position as to the true interpretation of the written instrument. Sturm v. Boker, and Mutual Life Ins. Co. v. Phinney, supra.
Inasmuch as all the parties in interest are in court, and their several rights and obligations have been made clearly to appear, the finding should be for the defendants Benjamin F. Nelson and Mary Nelson, and the plaintiff should have and recover from the other defendants such sums as may be found due upon the record under the issues framed. Costs will be taxed under the principles, rules, and practice in equity.
The decree of the court below will be reversed, and the cause remanded for further proceedings in accordance with the views expressed in this opinion. It is sov ordered.