Court Opinion

ID: 9545976
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:22:59.206177+00
Date Added: 2024-06-11T15:15:50.797680
License: Public Domain

NOBLE, Justice (dissenting). The majority determined that appellant is entitled to one-half of the land in Section 18, less the ten acres reserved for headquarters, upon the basis that at the time of the levy of the writ of attachment Sredanovich and Gailey had performed the obligations required of them and were entitled' to a deed conveying to them one-half of the land described in Section 18. It is apparent that a determination of the rights of the parties depends in the first instance upon the construction of the lease agreement. Turning then to the written instrument,, the purpose and consideration for the lease is stated as: “ * * * to develop the above described area for irrigation purposes and that the consideration passing from second parties to first parties for this Lease is the development of water or the effort of second parties to develop water upon said 'premises for irrigation purposes.” and a provision for conveyance of one-half of the real estate if sufficient water was developed for irrigation, as follows: “It is agreed and understood between the parties hereto that in the event that water is developed in sufficient quantities and quality for irrigation purposes that first parties shall convey to second parties one-half of the above described premises; the division shall be made at the time it is determined that water of sufficient quantity and quality for irrigation purposes has been developed, and such division shall be made on an equitable basis.” There follows a provision for division by arbitrators if the parties cannot agree. The instrument also provides that the lessees shall have the right to terminate the contract if in their sole judgment water cannot be developed for irrigation purposes in sufficient quantity or at a cost to make the project economically feasible, and that they might cancel the lease by giving notice of such intent. It is not disputed, and the court found that the lessees did discover and produce water in sufficient quantity and quality to irrigate all or nearly all of the tillable land in Section 18. It is likewise not disputed that no effort was made to discover or develop water for the irrigation of any of the land in Section 1. The majority opinion proceeds upon a construction that when water, sufficient in quantity and quality, to irrigate Section 18 was produced, Sredanovich and Gailey became immediately entitled to a deed to one-half of the land to which water had been beneficially applied and that appellants succeeded to that right by virtue of the attachment sale and special master’s deeds. This brings me immediately to the question whether the lessees were required to develop water sufficient to irrigate all of the land described in the contract, or at least, make an effort to do so before lessees were entitled to ,a division of the lands. Stated otherwise, was the contract divisible or entire? Primarily, the question of whether a contract is severable or entire is one of intention of the parties and is to be determined by the language used by the parties and the subject matter of the agreement. Walters v. U. S. Fidelity & Guaranty Co. of Baltimore, Md., 35 N.M. 4, 288 P. 1044; Fancher v. Board of County Commissioners of Grant County, 28 N.M. 179, 210 P. 237; Nunlist v. Keleher, 31 N.M. 358, 246 P. 904, 48 A.L.R. 366. Each case must be determined upon its own facts. If the terms of the agreement clearly show the intention of the parties, the inquiry is at once ended and no construction is required. But, in many instances, the language used does not clearly settle the question. Resort is then had to the subject matter of the agreement. The provision for conveyance of an 'interest in the land, standing alone, leaves some uncertainty as to when the lessees are entitled to receive conveyance; but when the whole instrument is read together and the purpose and nature of the subject matter considered, I have no doubt as to the intention of the parties. A guide to interpretation of the contract is found in Fancher v. Board of County Commissioners, supra, where it was said that the terms of the contract did not settle the question. It was there said: “Resort may then be had to the nature of the subject-matter; whether the contract apportions the consideration to each of the items covered may be considered; whether the whole quantity, service, or thing, as a whole, is of the essence of the contract; and perhaps other tests may be resorted to.” The trial court found: “17. It was the obligation and.duty of the lessees, Gailey and Sredanovich, to attempt in good faith to develop water on each of said tracts of land; and if water on said tracts, or either of them, was developed sufficient for irrigation during the term of said lease, * * * develop at their own expense the area which could be irrigated from the available water so developed.” It is apparent to me from a reading of the entire instrument that it was the duty and obligation of lessees to attempt in good faith to develop water on each of said tracts. It is unnecessary to decide on this appeal whether there was an obligation to further develop the land for which water was available. Applying the rule of Fancher v. Board of County Commissioners, supra, I quote the purpose and subject matter of the agreement as expressed by the parties, thus: “It is agreed and understood that the purpose of this Lease is to develop the above described area for irrigation purposes and that the consideration passing from second parties to first parties for this Lease is the development of water or the effort of second parties to develop water upon said premises for irrigation purposes.” (Emphasis added) It is plain to me that the parties themselves expressed their purpose or intention “to develop the above described area for irrigation purposes,” and the consideration as “the development of water or the effort of second parties to develop water upon said premises for irrigation purposes.” A reading of the purpose clause and the nature of the subject matter indicates that it was the intention of the parties that the entire area described in the contract be developed, or that an effort be made to develop it. Again, applying the rule of Fancher, this contract does not apportion the consideration to the separate tracts of land nor to less than the whole, until there has been at least an effort to develop water on both tracts. The parties to the contract agreed that if water was developed suitable and sufficient for irrigation, the lessees were to receive a deed to one-half of the land described in the agreement and that division of the land and the deed should be made when it was determined “that water of sufficient quantity and quality for irrigation purposes has been developed.” The issue is simply whether at the time of the levy of the writ of attachment Sredanovich and Gailey had performed their obligations under the contract to the extent that they had acquired an interest in the real estate which appellees were then obligated to convey to them. As I view the contract, when read as a whole, and considering its subject matter and expressed purpose, this was an entire and indivisible contract requiring the development of, or an honest effort to develop, the entire tract. No provision was made for partial performance until, at least, there was an effort to develop water for both tracts. Since Sredanovich and Gailey made no effort to develop water on any part of Section 1, they were not entitled to conveyance of either a portion of the land developed nor of the whole tract. It follows that nothing passed to appellant by the sale or master’s deeds. Appellant asserts that the interest of Sredanovich and Gailey in the lease was transferred to appellant and that appellant succeeded to all rights of the lessees under the lease by virtue of the attachment sale and special master’s deeds, including the right of reimbursement of one-half of the expense of drilling and equipping the well on Section 18. The fallacy in this contention lies in the fact that neither the lease nor lessees’ interest in the lease were attached. The sheriff’s return clearly shows that only “all the right, title and interest of defendants, John W. Gailey, Sr., and Sam Sredanovich, in and to the following described real estate * * * ” was attached. The special master’s deeds likewise conveyed only their right, title and interest in the described real estate. The language of the deeds, following description of the real estate “as such interest is set forth in and established by that certain lease agreement * * * ” does not purport to transfer the lease itself nor any rights thereunder except the right of lessees in the described real estate, nor could it under the return of the attachment itself. The trial court found that the notice of sale, among other things, provided “such sale to include all of the defendants’ rights under the terms of said lease agreement,” and concluded that since the sale purported to include property not seized, it was a departure from the levy and •orders of the court and that the special master’s deeds are void. The deeds themselves did not purport to convey anything except the attached interest in the real estate. The majority have concluded that appellees were indebted to Gailey and Sredanovich in the sum of $5750, or one-half of the •cost of the drilling and equipment. That, however, is of no importance since neither the lease nor lessees’ interest in the lease were attached and appellant could not, therefore, have succeeded to any right which lessees may have had to reimbursement of any part of the cost of drilling or of equipment installed. As I view it, Libby v. De Baca, 51 N.M. 95, 179 P.2d 263, is not analogous. The basis of that decision was a rule of the oil •conservation commission constituting forty acres as a drilling unit for oil and gas, and the holding that since gas had been produced from a well on one forty-acre tract the lease would not be canceled as to that tract if certain conditions imposed were complied with. There is no such rule or regulation applicable to the instant case. The contract being entire and indivisible, it follows that the judgment appealed from should be affirmed. I dissent.