Court Opinion

ID: 8656324
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:16:18.157708+00
Date Added: 2024-06-11T16:56:44.183596
License: Public Domain

FRICK, J.
On September 23, 1909, tbe plaintiffs commenced this action in equity to recover the sum of $9,000 from the defendants as an alleged balance due upon the purchase price of certain mining claims, and to have said sum declared a lien upon said mining claims, and for an order of sale thereof to pay said $9,000, etc. The defendants denied the maturity of the alleged indebtedness, and, as a further defense to the action, set up the contract entered into between the parties concerning the purchase of the mining claims in question, the terms of which, so far as material to this controversy, we shall refer to hereafter. It is not necessary to set forth the pleadings. Such parts as may be deemed material, however, will be referred to in the course of the opinion:
The conceded facts, briefly stated, are, that on the 2d day of July, 1901, the plaintiffs entered into what may be termed a dual option agreement with the defendants whereby the plaintiffs sold to the defendants seven mining claims, of which six were unpatented, together with the improvements thereon. By the terms of said agreement the defendants were given the ■ choice to pay the sum of $16,000 in full for said mining claims or to pay the sum of $21,000, $9,000 of which to be paid as hereinafter stated. If the defendants elected to pay the sum of $16,000 for the full purchase price of said claims, (they were required to pay the same as follows: $1,000 on the date of the contract July 2, 1901; $1,000 on or before September 2, 1901; $6,000 on or before October 20, 1901; and the remaining $8,000 on or before July 2, 1902. Upon the other hand, if the defendants elected to pay the $21,000 for said mining claims the payments were to be made at the dates and upon the conditions following: $1,000 on the date of the contract ; $1,000 on or before September 2, 1901; $6,000 on or before October 20, 1901; $4,000 on or before July 2, 1902; and the remaining $9,000, in the language of the contract were made payable in the manner and upon the conditions following:
“5. The balance of the above-named purchase price, being the sum of nine thousand dollars ($9,000.00), shall be paid *140only in tbe manner following and not otherwise — that is to say, on and after the 2d day of July, 1902, the said second parties, or their assigns, shall pay over to said first parties, or their assigns, a net one-half (<■,-) of said second parties’ proceeds from said mine, meaning thereby a net one-half (4) of the proceeds of all ores mined from said property after the said second parties have deducted all moneys paid out by them or expenses incurred in mining, milling, sampling, handling, transporting, smelting and marketing said ores. ’ ’
The contract also contained the following conditions:
“E. The extent and manner of managing and developing said property shall be left solely to the sound and reasonable discretion of said parties of the second part.
“F. It is also understood and provided that the parties of the first part may have, if they so desire, when the property is being worked, employment thereon under the orders and direction of said second party, or his assigns, so long as said first parties are competent and faithful and said work continues, at usual miners ’ wages.
“6. # * # And the parties of the first part agree, upon the payment of the twelve thousand dollars ($12,000.00) as above specified, to deliver to the parties of the second part, or their assigns, a warranty deed containing the usual cove-’ nants conveying title in fee to their full undivided interests in the above-described premises free and clear of all incum-brances, and subject only to the paramount title of the United States in the unpatented claims. Upon delivery of said deed the second parties hereto shall make and deliver to the parties of the first part hereto their certain contract agreement to pay the balance of the purchase price named herein of nine thousand dollars ($9,000.00) in the manner and only in the manner provided by paragraph 5. And the said parties of •the first part further agree that upon the payment of the one thousand dollars ($1,000.00) required, and to-day made, under paragraph No. 1, said deed shall be placed in escrow in Salt Lake City, Utah, to be delivered to the said second parties, or their assigns, upon the payment of the said twelve thousand dollars ($12,000.00).”
The defendants elected to purchase the mining claims for *141tbe sum of $21,000, to be paid, however, in the manner stated in the part of the contract we have set forth above. The defendants made the first four payments amounting to the sum of $12,000, and obtained the deed mentioned in the contract. Upon the delivery of the deed the parties entered into the contract provided for in the original agreement, the material parts of which are:
“In consideration of the conveyance by the second parties to the first parties of the Atlas, Atlas No. 1, Atlas No. 2, Atlas No. 3, Atlas No. 4, Atlas No. 5, and Atlas No. 6, lode mining claims, in Star Mining District, Beaver County, Utah, the first parties hereby promise and agree, for themselves and their assigns, that they will pay to the second parties or their assigns, one-half of the net proceeds of all ores mined by the first parties, or their assigns, from said property, until the second parties shall have received the sum total of $9,000.00 out of such net proceeds. The words ‘net proceeds’ as here-inabove used shall be construed as the proceeds of the sales of ores taken from said property remaining after the first parties shall have deducted all moneys paid out by them or their assigns for expenses incurred in mining, milling, sampling, handling, transportation, smelting and marketing said ores. This contract shall be deemed and construed as a covenant running with the title to said land and shall bind the grantees, heirs and assigns of the first parties. It is distinctly understood and agreed that the first parties shall not be liable hereunder to pay to the second parties any sum whatever unless such net proceeds are realized by them out of said property, and then only to the extent of one-half of such net proceeds until the full sum of $9,000.00 shall be paid to the second parties. ’ ’
The plaintiffs, in their complaint, pleaded only the legal effect of the contract, and, among other things, also alleged:
“That said defendants, with full knowledge of the rights of the plaintiffs in the premises, and of their obligation to pay the said $9,000 remaining due upon the purchase price of said property, have wilfully failed, neglected and refused to pay said sum, or any part thereof, out of the proceeds of Said mining property, or otherwise, and said defendants with full *142knowledge as aforesaid of the rights of the plaintiffs and of their duty in the premises, have wilfully failed, neglected and refused to work, develop or operate said mine, or extract ores therefrom, all for the express purpose of delaying the payment of said $9,000, and of defeating, if possible, the rights of the plaintiffs in the premises. That said defendants have had a reasonble time to pay said $9,000 from the proceeds of said mining property, and have likewise had a reasonable time to develop said property, and to sell and dispose of the same; but to do either of said things said defendants have neglected and refused and still neglect and refuse. ’ ’
In supp'ort of the foregoing allegations the plaintiffs, over defendants’ objections, were permitted to propound the following question and to receive the answer thereto as stated below:
“Mr. Johnson, from your knowledge of the ground and your experience as a mining man, what do you say as to whether or not with but comparatively slight expenditure ore could have been mined and shipped at a profit sufficient to have paid your $9,000 from the claims which were sold to the defendants by you and Lockwood ? A. "Why, I think with an expenditure of $5,000 sinking this vertical shaft, that the mine could have been paying right along. ’ ’
Appellants, as appears from the evidence, did not work the mining claims after the, payment of the $12,000, did not receive any net proceeds .therefrom whatever, and did not pay plaintiffs any more money.
The court made findings of fact and conclusions of law in favor of the plaintiffs. The 'principal part of the findings merely relate to the contracts entered into by the parties. It, however, made some additional findings as follows:
‘ ‘ That said defendants, Geddes, Snyder and Beckett, at the time of the execution of said option agreement on the 2d day of July, 1901, and said agreement of October 4, 1901, represented and stated they would immediately work and develop said mining claims; that they had sufficient means with which to work said property; that the examination made and caused to be made by them of said property showed that said mining claims contained large deposits of ore from which, at an ex*143pense not to exceed five thousand ($5,000.00) dollars, they could have mined and shipped lead, silver and other ores, at a profit, and discharged said indebtedness of $9,000.
‘ ‘ The court further finds that said ipining property is valuable for mining purposes, and is of a valuation of at least $50,000; that it contains valuable deposits of ore which can be mined and shipped at a profit, and that if defendants had worked said property and mined the ore therein they could, within a short time after entering into said contract, have paid said $9,000 out of one-half of the net piuceeds of the orés mined from said, property, and by such proceeds (the court means, proceeds of the sales of ores taken from said property), remaining after the defendants deducted the moneys paid by them, or expenses incurred in mining, milling, sampling, handling, transporting, smelting or marketing such ores.
"The court further finds that the said defendants, after obtaining said option and entering into said agreements on October 4, 1901, refused to work said mining claims, or to extract and remove ore therefrom; that plaintiffs, upon a number of occasions between said dates and the commencement of this action, requested the defendants to work, operate and develop said property and to ship ores therefrom and to pay said $9,000, but the said defendants refused upon each occasion, and continued to refuse to work said property, or to mine the ores thereon or to pay,said $9,000, or any part thereof. That from the year 1901, when the defendants obtained a deed to said premises, until the time of the trial, the said defendants have not worked said property or expended any sum of money thereon or attempted to develop said property or to ship ore therefrom, but during all of said period refused, and still refuse, to work, develop or operate said property, or to pay said $9,000; and the said defendants give out and declare that they are under no obligation whatever to either work said property or to ship ore therefrom,' and further give out and declare that they never will be required to pay the said $9,000, or any part thereof, until they shall work said property, and from one-half of the net proceeds thereof derive a sufficient sum to pay and discharge said $9,000. ’ ’
*1441, 2 Upon the findings and conclusions of law the court entered a judgment or decree in favor of plaintiffs for the sum of $9,000, with 8 per cent, interest from September 1, 1909, amounting to $5,100, declared said principal and interest to be a lien upon the mining claims and ordered them sold to pay the amount found due as aforesaid. The defendants appeal to this court and here assail the findings of fact, conclusions of law, and judgment.
The findings, and especially those we have hereinbefore set forth, are assailed both upon the alleged ground that they are not sustained by the evidence, and that they are immaterial under the issues.
The district court seems to have proceeded upon the theory outlined by plaintiffs’ counsel, the substance of which may be stated thus: That inasmuch as the $9,000 were mentioned in the contracts as being a part of the $21,000 purchase price for the mining claims, and although defendants agreed to pay that sum out of the net proceeds which they should obtain from the mining claims, yet that sum was payable at all events within a reasonable time after the deed was executed and delivered; that notwithstanding the defendants have had a reasonable time within which to develop said mining claims and obtain therefrom sufficient net proceeds to pay said sum of money, they, nevertheless, have failed and neglected to do so and for that reason said sum of $9,000 became due when such a reasonable time had elapsed, which was on the 1st day of September, 1909, or 23 days before this action was commenced. Plaintiffs’ counsel, in this court, defend the judgment of the court upon the theory just outlined. In support of their contention counsel refer to the following Utah cases, namely, Charter Oak, etc., Co. v. Gisborne, 5 Utah 319, 15 Pac. 253; McIntyre v. Ajax M. Co., 20 Utah 323, 60 Pac. 552, and 28 Utah 162, 77 Pac. 613; Haslam v. Haslam, 19 Utah 1, 56 Pac. 243, and Schenck v. Wicks, 23 Utah 576, 65 Pac. 732. Cases are also cited from other jurisdictions. Inasmuch as we are firmly convinced that both the plaintiffs and the defendant must stand or fall by the terms of their contract we do hot deem it necessary to specially point out why the foregoing cases are not controlling, much less do we deem it necessary *145to review any of them. In this connection we also desire to state that while plaintiffs’ counsel have filed an elaborate brief and .argument, yet we shall not attempt to follow and answer their arguments except as that is done in the statements made in the course of this opinion.
At the threshold of this controversy we are again reminded that courts are created to enforce and not to make contracts. In other words, unless it is shown that the contract in question was obtained by fraud, oppression, or duress, or that it is against law or public policy, or is unconscionable, it is the duty of the courts to enforce it according to its terms and not by forced construction to modify or disregard it. The terms of the contract in question here, • as we view them, are so explicit, so plain, and are expressed in such apt and clear language that there really is nothing for a court to construe. It is true that the district court made certain findings, among others, that when the option agreement was entered into in 1901 some of the defendants made certain statements to the effect that they would “immediately work and develop said mining claims, ” etc. That finding is assailed. It must not be overlooked that the finding relates to the time when the original option agreement was entered into, namely, in 1901. Now, by reference to that agreement it will be seen that the finding is in the very teeth of its terms. In that agreement it is provided:.
“The extent and manner of managing and developing said property shall be left solely to the sound and reasonable discretion of said parties of the second part [defendants]. ’ ’
3, 4 Further it was provided that “when the property is being worked” the plaintiffs shall be given employment, etc. Plaintiffs’ counsel, however (and it seems the district court took their view), insist that notwithstanding the fact that plaintiffs then agreed that the working and development of the mining claims, as well as “the extent and manner” thereof, should be left to the judgment or discretion of the defendants, yet such should be the case only if the work and development should comport with the wishes or judgment of the plaintiffs, or the judgment of some .court to which the matter might be submitted. True, the court *146finds that certain statements were made, bnt sucb statements, if made at all, were also found to have been contemporaneous with the making of the contract, and, under elementary rules of evidence, can, therefore, not be given the effect of enlarging the liability under the contract. But the statements can be given no force or effect for the simple reason that they are directly contrary to and hence contradictory of the terms of the contract, and for the further reason that it is neither claimed nor found that they were intended for or constituted a modification of the contract. Neither can the other findings of the court, except those relating to the contract, be given any effect for the obvious reason that the rights of the parties must be determined from the terms of the contract alone. It is quite true that where the terms of a contract are. uncertain or obscure the court not only may, but it ought to, avail itself of all legitimate legal evidence which will shed light upon the intention of the parties and. upon the rights granted upon the one side and the obligations assumed upon the other. A court may, however, not receive evidence for the sole purpose of enlarging the rights upon the one side and increasing the obligations upon the other. Nor may a court do that simply because the provisions of the contract in its judgment should have been made more equitable.
5, 6 Let us pause for a moment to see what the contract says concerning the rights of the plaintiffs and the duties or obligations assumed by the defendants. In the first option agreement it is made as plain as the English language can make it that the $9,000 “shall be paid only” out of the “net one-half of the proceeds of all ores mined from said property.” Then follows the provision that the defendants shall determine the “extent and manner” of the development work. In another part of the option agreement it was again provided that the $9,000 shall be paid “in the manner, and only in the manner, provided for by paragraph 5,” which paragraph we have quoted in full. Then again in the final contract, which was made and delivered pursuant to the option contract and after or contemporaneous with the deed to the mining claims, after again providing that the $9,000 shall be payable only out of one-half of the net proceeds, it is said:
*147“It is distinctly understood and agreed that the first parties [the defendants] shall not be liable hereunder to pay to the second parties any sum whatever unless said net proceeds are realized by them out of said property, and then only to the extent .of one-half of such net proceeds until the full sum of $9,000 shall be paid to the second parties [the plaintiffs].”
In order to secure the $9,000, regardless of the time when the ore shall be mined and the net proceeds, if any, obtained, the parties in that contract also provided:
“This contract shall be deemed and construed as a covenant running with the title to said land and shall bind the grantors, heirs and assigns of the first parties. ’ ’
Considering, therefore, all of the provisions of the contract together it is quite clear that it was assumed by all the parties that it might not only be a long time before one-half of the net proceeds would be obtained in sufficient quantities to pay the $9,000, but that it was possible that one-half of the proceeds might not reach that sum at any time. This is made clearer still when reference is had to the purchase price that was fixed in the two options. In one the defendants could obtain the mining claims by paying $16,000 in full therefor. They declined to pay that amount, but elected to purchase under the other option by the terms of which they were required to pay only $12,000 of their own money, but were required to pay an additional $9,000 (which was $5,000 more than the first option), but they were required and agreed to pay .said $9,000 only out of one-half of the net proceeds to be derived from the mining claims. Notwithstanding the fact, however, that the plaintiffs were willing to sell the mining claims for $16,000 in full, one of the plaintiffs testified that the claims were worth $50,000 at the time they were sold, and were worth that at the time of the trial. Plaintiffs, however, gave the defendants the option to purchase the mining claims for $12,000 in money regardless of whether that amount, or any amount, was realized out of the property, and for an additional $9,000 making the purchase price $21,000, but agreed that the $9,000 should be paid only out of one-half of the net proceeds, if any, obtained from the mining claims. The de*148fendants agreed to the latter proposition, paid the plaintiffs $12,000 as agreed, but paid no more and have never worked nor developed the mining claims nor have realized any net proceeds therefrom. The defendants did not, certainly not in express terms, agree to work and develop the mining claims. No donbt it was their intention to do that, and no donbt it was assumed by the plaintiffs that they would do so. There is, however, nothing in the contract, that obligates the defendants to do so at any time nor within what any one else might consider to be a reasonable time. If the plaintiffs had desired such a contract they should have demanded it when the option was given to the defendants, and the latter could then either have accepted or declined the proposed conditions. It is too late to impose conditions after a new contract has been entered into which supersedes the old one.
But there is still another reason why the district court’s construction of the contract in question cannot prevail. Under the contract no payments were due nor could become due until the defendants had obtained at least some net proceeds. If they had worked the mining claims during all of the years from 1901 to the present time, and had obtained no net proceeds, nothing would be due under thá terms of the contract, and if, during that time, they had obtained net proceeds in any amount less than $18,000, the plaintiffs would have been entitled to only one-half of the amount realized, whether that amount was $1,000 or $10,000, or any other sum less than $18,000. If, therefore, the defendants had obtained net proceeds from the mining claims and had failed or neglected or refused to pay plaintiffs one-half thereof, the plaintiffs could have sued for and recovered said one-half and no more, and the burden of proof in such an action would have been upon them to establish that the defendants had realized net proceeds, and the amount thereof. The district court, however, held that in view that the plaintiffs did not, within a reasonable time, work and develop the mining claims, and therefore did not to an absolute certainty demonstrate the fact that they could not obtain .net proceeds from the claims, for that reason they should be required to pay the whole $9,000 with legal interest from September 1, 1901, the date when, *149according to tbe judgment of tbe district court, a reasonable time bad elapsed. This is not a case where one party to a contract may sue and recover before his claim has matured under the terms of the contract upon the ground that the other party to the contract has, by his own act, deprived himself of the ability to perform according to the terms of the contract when it has matured. Here the parties made ample provision in the contract that such a condition could not arise. .The defendants can never prevent the plaintiffs from having recourse to the mining claims in case there are net proceeds derived therefrom. Neither can they, under the terms of the contract, have recourse against the defendants personally, nor 'against the mining claims, unless and until either the defendants, or some one who claims under them, obtain some net proceeds from the mining claims. This is their contract, and they must abide by it.
It is, however, suggested that if this conclusion is sound, then the defendants may never pay the $9,000, and can never be compelled to do so, although they hold and enjoy the mining claims. There are several answers to that contention. The first one is that under the terms of the agreement the defendants did not obligate themselves to pay unless ,and until they realized net proceeds from the mining claims. Secondly, that they did not agree to pay the $9,000 out of the net proceeds within a reasonable time, or at any time, unless they should first realize the net proceeds. Nor did they obligate themselves to work the mining claims within a reasonable time, nor within a specified time, or at all. That was a matter taken for granted by the plaintiffs, but not agreed to by the defendants, and hence is not a part of the obligations assumed by them. The third answer is, that if the defendants have in any way breached the terms or conditions of their contract the plaintiffs may sue and recover such damages as they may have sustained „thereby, precisely the same as they would have to do in case of a breach of any other contract. Courts of law are always open for such actions, and courts of equity may act only when the remedy at law is inadequate. Again, courts of equity may not, under the guise of construction, so change or modify contracts as *150to impose conditions or obligations not expressed or clearly implied, although such conditions or modifications, in the judgment of the court, may make the terms and conditions of the contract more equitable and more in accord with the court’s sense of justice. Where the terms and conditions of a contract are not unconscionable, and no fraud, duress, or misrepresentation is claimed, the courts must enforce all contracts as the parties have made them and not as the court thinks they should have been made. Neither can a court of equity give relief merely because under a long-time contract the parties did not foresee and provide for all possible emergencies, that might arise. Under the contract in question the defendants no doubt paid the $12,000 for the mining claims in the hope and expectation that they could make a profit out of them, and the plaintiffs were willing to sell the claims for $16,000 in money in full payment or for $12,000 in money with the promise that they should receive $9,000 additional out of one-half of the net proceeds that should be obtained from the claims. The defendants were not willing to risk $16,000 but were willing to take the chance of getting back their $12,000, while the plaintiffs were willing to take the $12,000, and also take the risk of getting $9,000 in addition out of the net proceeds that should be derived from the mining claims in case any net proceeds should be obtained therefrom. The plaintiffs took it for granted, however, that the necessary net proceeds would be realized. We can see nothing unfair nor unjust in such a contract, although it afterwards develops that for eight years or more the defendants made no effort to work or develop the property for which they had paid $12,000 in cash.
7 But even though it were conceded that the district court’s theory were correct, yet the fact that the defendants could have realized net proceeds in any amount between July, 1901, and September, 1909, in our judgment, is not established. When one of the plaintiffs was. testifying he was questioned with regard to whether, in his; judgment, the mining claims could have been worked so that they would have yielded “profits sufficient to have paid your-$9,000. ’ ’ He answered thus:
*151“Why, I think tilth an expenditure of $5,000 sinking this vertical shaft that the mine could have been paying right along. ’ ’
While, according to the view we have taken, that evidence is wholly beside the question which controls here, yet where is there anything on or between the lines of the contract sued on which required the defendants to expend $5,000, or any other sum, to sink a shaft? That matter was expressly left to their own judgment. Moreover, as already pointed out, a complete answer to the contention that the $9,000 are due and payable is the conditioh of the contract that if the defendants had worked the mining claims for any number of years and up to the present time, or would continue to work them for any length of time in the future, and they had obtained no net proceeds, or should obtain none, plaintiffs would have no right of action; and in case they had obtained net proceeds in the past, or should obtain some in the future, plaintiffs’ right of recovery would be limited to one-half thereof until they had obtained $9,000. Now, plaintiffs concede that no net proceeds have been obtained, and further testify that in order to make the mine pay, that is, to obtain any net proceeds therefrom, defendants would have to expend an additional $5,000, and in the very teeth of those facts contend, and the court found, that the $9,000 were due with $5,100 accrued interest. We confess our entire inability to see how this can be due under the contract without disregarding its terms upon the one hand and without imposing duties,upon the defendants not assumed by them upon the other. Much evidence was admitted and considered by the court regarding the condition of the mining claims and, their probable value. In our judgment that evidence is without any force whatever. The parties have expressly agreed upon the price to be paid which, for the purposes of this case, must be assumed was deemed the reasonable value. Moreover, the parties have fixed the time and manner of paying the purchase price, and we cannot understand how the condition of the mining claims or their speculative value can be given any effect in construing the language employed in the contract *152sued on. We have thus refrained from referring to the evidence just mentioned.
The real question in this case may thus be viewed from any angle, and still we arrive at the same conclusion, namely, that under the contract the defendants did not obligate themselves to do the things the district court has required of them, and hence the judgment of that court cannot be sustained.
In conclusion we desire to add that counsel for the defendants have referred to the case of Consolidated Arizona Smelting Co. v. Hinchman, 212 Fed. 813, 129 C. C. A. 267. A perusal of that case has convinced us that it is very much in point in favor of the contentions of the defendants, and is in harmony with the conclusions that we have reached. It is not necessary, however, to do more than refer to the case.
The judgment, for the reasons stated, is reversed and the cause is remanded to the district court of Salt Lake county, vdth directions to set aside its findings of fact and conclusions of law in so far as they are in conflict with this opinion, and to substitute others which are in accordance ■with the views herein expressed, and to enter judgment dismissing the complaint. Appellant to recover costs.