Whitebird v. Eagle-Picher Company

• Decision Date: 14 May 1968
• Docket Number: No. 9303-9305.,9303-9305.
• Citation: 390 F.2d 831
• Parties: Robert A. WHITEBIRD, George A. Romick, Phillip A. Romick, Jr., Woodrow Greenback, Lula May Greenback, Amy Greenback, Shirley Greenback Sixkiller, Charm Vallaire King and Walter King, Appellants, v. The EAGLE-PICHER COMPANY, a corporation, Appellee. Pearl Crawfish PEERY, Thomas E. Crawfish, Alice Gilmore, Alice Marie C. Tuthill and Chester Woodard, Appellants, v. The EAGLE-PICHER COMPANY, a corporation, Appellee. Ida Louise McQuillin KILLOUGH, Appellant, v. The EAGLE-PICHER COMPANY, a corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

390 F.2d 831 (1968)

Robert A. WHITEBIRD, George A. Romick, Phillip A. Romick, Jr., Woodrow Greenback, Lula May Greenback, Amy Greenback, Shirley Greenback Sixkiller, Charm Vallaire King and Walter King, Appellants, v. The EAGLE-PICHER COMPANY, a corporation, Appellee.

Pearl Crawfish PEERY, Thomas E. Crawfish, Alice Gilmore, Alice Marie C. Tuthill and Chester Woodard, Appellants, v. The EAGLE-PICHER COMPANY, a corporation, Appellee.

Ida Louise McQuillin KILLOUGH, Appellant, v. The EAGLE-PICHER COMPANY, a corporation, Appellee.

Nos. 9303-9305.

United States Court of Appeals Tenth Circuit.

March 12, 1968.

Rehearing Denied May 14, 1968.

W. Rodney DeVilliers, Albuquerque, N. M. (W. L. Eagleton and James R. Eagleton, Tulsa, Okl., on brief), for appellants.

John R. Wallace, Miami, Okl. (Ben T. Owens, Melvin H. Landers, Robert S. Gee, R. Bruce Carter, Miami, Okl., on brief), for appellee.

Before WOODBURY,^* LEWIS and HICKEY, Circuit Judges.

HICKEY, Circuit Judge.

This is an appeal from a judgment of the trial court denying an accounting and recovery of additional royalty allegedly due appellants, Whitebird et al., under two consecutive sets of mining leases.

The questions presented are:

Is Eagle-Picher obligated to account for and pay a royalty based upon its gross sales receipts from all minerals and mineral elements mined and sold from the leases under the 1922 and 1945 provisions?

Did the "Cincinnati litigation" compromise constitute an agreed interpretation of the 1922 leases?

Did the conduct of the parties who negotiated and executed the leases under the provisions of the law for the benefit of appellants operate to suspend or supercede regulations promulgated and effect an agreed construction of the royalty provisions?

Did Eagle-Picher acquire title to the minerals upon payment of the royalties required by the 1945 leases?

Appellants, Quapaw Indian wards of the United States Government, are the title successors of Indian lands allotted to members of the tribe in 1896.¹ Appellee is the successor to title of leases negotiated by the Secretary of the Interior pursuant to law, with approval of the owner-wards, covering portions of allotted lands in Ottawa County, Oklahoma, a part of the Tri-State Mining District where lead and zinc deposits are recovered by lessees. Eagle-Picher, or its predecessors, began mining operations in 1922 and has continued operations, with intermittent interruptions, until the present time. The basic mining operations have been conducted in substantially the same manner throughout the years. Crude ore is extracted from the mine, moved to a mill where lead concentrates, zinc concentrates and tailings are recovered from the crude ore. By additional processing at other plants zinc metal, cadmium, germanium, gallium, sulphur and sulphuric acid are recovered from the zinc concentrate. Only lead metal is recovered from the lead concentrate.

Two sets of leases are involved: The first, referred to as the 1922 leases, were negotiated and executed in that year with an expiration date of March 2, 1946; the second, referred to as the 1945 leases, were negotiated and executed in that year and are still in effect.

The 1922 leases provided for the payment of a 10% royalty "upon all ores mined and sold" from the leased land.

In 1937, appellants or their predecessors in title initiated litigation against Eagle-Picher in the United States District Court for the Southern District of Ohio (the "Cincinnati litigation"). The plaintiffs therein sought recovery for royalties allegedly due on the basis of 10% of the values recovered or recoverable as a result of Eagle-Picher processing lead and zinc concentrates at other plants and thereby producing some or all of the elements upon which claim is now made.

The Secretary of the Interior intervened on behalf of the plaintiffs and all persons similarly situated. The litigation was terminated by a stipulation executed by all parties on December 30, 1941. The stipulation dismissed the claim with prejudice, waived, relinquished and surrendered the plaintiff's claim to additional royalties based upon final sale prices of the elements recovered under the 1922 leases. Open market prices of zinc and lead concentrates, as and when they were produced at the mill, were accepted as the basis for the royalty computation. The stipulation was approved by the court and the Attorney General of the United States accepted the settlement and dismissed the action pursuant to the stipulation. The plaintiffs, appellants herein or their predecessors, accepted the proceeds of the settlement and compromise which were distributed pursuant to law.

The record contains considerable correspondence indicating the course the negotiations for settlement took. On October 14, 1941, the Assistant Commissioner of Indian Affairs of the Department of the Interior wrote the Superintendent of the Quapaw Agency advising him that a settlement of the "Cincinnati litigation" was being negotiated. The Assistant Commissioner's letter stated, in part:

"The tentative arrangement for settlement contemplates the Eagle-Picher Company making a payment of a lump sum which will not be allocated to the various claims made. It will be in full satisfaction of all existing claims against the company arising out of the leases in question. The Eagle-Picher Company objects to a settlement which would require it to pay a royalty on by-products such as sulphur and cadmium during the remainder of the term of the leases, on the ground it would serve as a precedent and other lessors in the Tri-State District would demand similar treatment. This Department is not willing to waive this claim. It therefore has been proposed that the company make an additional cash payment to compensate the Indians for the estimated royalties which might accrue to them during the remainder of the term of the existing leases. It is admitted that this is largely speculative but the company appears quite insistent that it would not accept a compromise involving any kind of a direct payment of royalties on by-products, or an admission that such payments are due under the leases. It is not believed this item alone should be permitted to defeat a settlement of the case if an otherwise satisfactory offer is received."

The letter further states, "There is a possibility of asserting the by-products claim against lessees other than the Eagle-Picher Company." Thus, it is clear the issue of whether royalties were due on by-products developed by Eagle-Picher was present in the negotiations from the very beginning and that the Department of the Interior would not assert any claim to royalties allegedly due on by-products if the company made an additional cash payment to compensate the Indians. Later correspondence indicates re-affirmance of Eagle-Picher's position on by-products and the acceptance of that position by the Department. Trial exhibit 1 was a letter dated November 5, 1941, to the Attorney General setting forth Eagle-Picher's stipulation for settlement. The letter states, in part:

"It is the intent that the dismissal of such claims with prejudice will terminate completely all controversy whether relating to past, present or to the remaining term of existing leases respecting accountability of the defendants for such by-products or alleged consumption or utilization of ores and concentrates."

Trial exhibits 2, 3 and 4 reflect the acceptance of this proposal by the Attorney General and private counsel. Trial exhibit 6 was an acknowledgment of receipt of the bank draft in the amount of the settlement price. The acceptance of the proposal bars any claims now presented under the 1922 leases. The findings of the trial court on this issue are sustained. The termination of the claims in the "Cincinnati litigation" by the Government was binding upon its wards. Mars v. McDougal, 40 F.2d 247, 249 (10th Cir. 1930).

The vital and primary issue concerning the 1945 hybrid mining leases² turns upon the interpretation of the language of the leases. It has been observed that today's leases are generally both a conveyance and a contract and, therefore, that it is "more likely that a written lease is intended to be a complete and operative integration of agreement. Footnote omitted." 3 Corbin, Contracts § 587, at 508 (1960). "Even when a contract...