Court Opinion

ID: 5202103
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:54:25.615963+00
Date Added: 2024-06-11T08:27:13.119636
License: Public Domain

Scott, J. (concurring):
I concur in the reversal of the judgment appealed from, but I do not agree that the obligors on the bond released themselves from its obligations by transferring the property, or that, the only liability they can be charged with under the bond, if any, is one which arose when they made the transfer.
Hpon a careful reading of the.contract and the bond it will be seen that nowhere is there an absolute agreement on the part of the obligors to pay the sum of $175,000. The contract provides that that sum shall be paid “as follows,” and- then follows careful ■ provisions for paying the amount out of earnings. The bond .provides that the $175,000 shall be paid “ in the manner provided in said, contract,” so that neither in the contract nor the bond is there any agreement to pay the $175,000 otherwise than "out of the earnings or dividends produced by working the mines. I think that it clearly appears that the basic idea of the agreement was that the $175,000 should, if paid at all, be paid out of earnings, and that the. mines, if properly worked, would" produce enough to pay that-sum.
The bond upon which this action is founded is not, therefore, conditioned to pay $175,000 absolutely, whether it shall be earned or not. It is conditioned for the fulfillment' by the obligors, or their assigns, of. the covenants, promises and agreements therein recited.' " ■
These are to pay over all net earnings and dividends as received, up to $175,000; to make statements and settlements of-accounts, and to commence to develop and work the mines within a certain time, and to keep not less than ten men at work. The provisions as to a reconveyance and for substituting a mortgage for the bond are not in the nature of obligations, assumed by the obligors, but merely options given to them whereby they might, if they saw fit, relieve themselves from all obligation.
*243The obligations of the bond, therefore, really are reduced to two, viz.: First. To pay the $175,000 as and if received out of net earnings or dividends. It is conceded that there have been no net earnings or dividends, and consequently there has been no default in this regard.
Second. That the defendants, or their assigns, will do certain things with respect to the working of the mines, -designed to insure the realization of earnings and dividends, and their proper application to the payment of the $175,000.
It is conceded that neither the obligors on the bond nor their assigns have continuously worked the mines, as it was agreed they would do, and it is for this breach that the present action must depend if it is to be maintained at all.
In this aspect the sum of $175,000 mentioned in the bond must be considered as a penalty, leaving plaintiffs to recover only so much damages as can be shown to have resulted from this breach. (Code Civ. Proc. § 1915.) In other words, the obligors) breach was that they did not so work the mines as to produce the $175,000, which, if earned, would have been payable to plaintiffs, but unless it is" made to appear that, if the obligors had continuously worked the mines they would have been able to earn the $175,000 or some part thereof, the plaintiffs have suffered no damage from the failure so to work.' The fact that the obligors assigned the mining claims to a corporation is of no importance. Both the contract and the bond are full of clauses and phrases showing that such an assignment was contemplated by the parties. And the assignment had practically no effect upon the relation of the parties to this action, for the covenant of the obligors was that they or their assigns would do the things covenanted for. Thus the obligors became in effect sureties that their assigns would do the things agreed upon, and upon the failure of the assigns to do them, the promise of the obligors was broken. Since there was no evidence justifying a recovery under this view of the case I am for reversal of the judgment and a new trial.
Pattebson, P. J., and Clabke, J., concurred.
Judgment reversed, new trial ordered, costs to appellant to abide event. Order filed.