Allen v. Ruby Co.
| Decision Date | 18 February 1964 |
| Docket Number | No. 9191,9191 |
| Citation | 87 Idaho 1,389 P.2d 581 |
| Parties | D. K. ALLEN and Mary R. Allen, husband and wife, Plaintiffs-Respondents, v. RUBY COMPANY, a corporation, Defendant-Appellant. |
| Court | Idaho Supreme Court |
Calvin Dworshak, Jay L. Webb and L. E. Haight, Boise, for appellant.
Robert H. Remaklus, Cascade, Randall Wallis, Boise, for respondents.
Under date of May 9, 1951, plaintiffs-respondents, D. K. Allen and Mary R. Allen, husband and wife, as lessors, entered into a mining lease with Warren Dredging Corporation, as lessee, whereby the lessee was granted the exclusive right during a period of twenty years to mine and extract from the leased premises, consisting of 160 acres, all minerals, ores, sands and mining products.
Under the terms of the lease the lessee agreed to pay to the lessors, as mining royalty, a sum of money equivalent to 10% of the net sales returns received from all mining products recovered by the lessee through mining operations upon the leased premises which were sold and disposed of by the lessee. The lease further provided that advance payments upon the mining royalty were to be made to the lessee on the first day of July of each year in an amount equivalent to $10 per acre on such portion of the leased acreage as remained undredged and unmined.
Under and by virtue of a merger agreement entered into by and between Warren Dredging Corporation and defendant-appellant, Ruby Company (effective May 1, 1959), appellant assumed and became liable for payment of all existing indebtedness and obligations of the lessee, Warren Dredging Corporation, including the obligation to perform the lease here involved.
Respondents commenced this action seeking to recover judgment against appellant in the amount of $3200 and interest, alleging that neither the Warren Dredging Corporation nor appellant has paid the advance royalty payments falling due under the terms of the lease on July 1, 1957, in the sum of $1600 and on July 1, 1958, in the sum of $1600. Appellant filed an answer admitting the execution of the mining lease but denied that any sum was due and owing respondents under the terms and conditions of said lease. Appellant incorporated in its answer three affirmative defenses, the first of which in essence states that under the terms of the lease appellant is and has been excused from the payment of advance royalties and relieved from the performance of said lease because, since 1954 it could not mine the leased premises at a profit by reason of the decline in market price of the principal product from the premises, governmental acts and orders, and the increased cost of mining.
The second affirmative defense states that in pursuance of its good faith to dredge the subject property, and at great expense to itself, appellant placed a dredge upon the property, and during February 1953, through no fault or negligence on the part of appellant, the dredge toppled over, capsized and sank.
Under the third affirmative defense it is alleged that at all times material to this action appellant has been unable to conduct, at a profit or otherwise, any dredging or mining operations on the premises involved because of commercial frustration brought on by the so-called Korean War.
Appellant also interposed two counterclaims, under the first of which it is alleged that on April 14, 1959, respondents served upon appellant a notice of forfeiture and appellant requests that the court decree the lease to be in full force and effect.
By the second counterclaim appellant alleges that the payment of $1600 (claimed by respondents to be due and owing on July 1, 1956) was made by appellant to respondents on the 25th day of October, 1956, in reliance upon promises of respondents to negotiate in good faith for a modification of said lease; that respondents failed to negotiate and appellant prays judgment against respondents for $1600 and interest.
The trial court granted respondents' motion to strike each of the affirmative defenses and also respondents' motion to dismiss each of the counterclaims and entered its order accordingly. Thereafter the trial court entered its order granting respondents' motion for summary judgment, from which order this appeal is taken.
Besides claiming error in granting summary judgment the assignments of error challenge the action of the court in striking each of the alleged affirmative defenses and dismissing the two counterclaims.
Appellant contends that it has alleged facts in its affirmative defenses, which, if proved, would excuse the appellant from performance of the obligations to be performed by it under the lease and would relieve it from any obligation to pay the advance royalty payments claimed. Appellant relies upon section 20 of the lease, which provides:
This appeal is from the order granting motion for summary judgment and this review of its validity requires that the allegations of fact contained in appellant's defenses be considered as true. Idaho Rules of Civil Procedure, Rule 56(c). Therefore, for the purpose of this inquiry it must be conceded that during the years in question it was impossible for appellant to conduct mining operations on the premises described in the lease at a profit by reason of market conditions, breakage or loss of equipment and machinery, and governmental acts and orders, all beyond appellant's control.
The issue here presented arises as a result of the different interpretation placed upon certain terms of the lease by the parties to this action. There is no dispute of fact as to the wording of the lease, and the salient question which must be resolved requires an interpretation and construction of the terms in dispute.
Various rules and principles governing interpretation and construction of like instruments have been cited by the parties. We agree with the trial court's view that such rules have been fairly summarized by the writer of the annotation in 28 A.L.R.2d 1013 (at page 1016) as follows:
The subject instrument consists of approximately twenty-four legal-sized typewritten pages and it would unduly extend this opinion to incorporate it in its entirety herein. However, we deem it necessary to quote some of its provisions. Under its provisions the lessee (appellant) gained and lessors (respondents) relinquished substantial possessory rights to the leased premises together with the exclusive right to mine, extract and market all minerals and ores therefrom during a period of twenty years unless voluntarily terminated by the lessee. It is provided in section 3 of the lease that the lessors were to receive a mining royalty in an amount equivalent to 10% of the net sales returns received from the sale of all mining products recovered and sold from the property. The term 'net sales returns' is specifically defined in the lease.
The lease also provides (section 4) for advance payments to be made by the lessee in the following quoted language:
'Section 4. As advance payments upon mining royalty (referred to herein as 'advance royalty'), the Lessee agrees to pay to the Lessors on the first day of July of each year commencing July 1, 1951, and continuing during the term of this Lease, a sum of money equivalent to $10.00 per acre computed on the following acreage within the following legal subdivision of the leased premises, and such acreage shall constitute the basis for determination of advance royalty payments to the Lessors and is referred to herein as 'advance royalty acreage': [legal description of leased premises] Each such yearly payment shall constitute an advance payment on mining royalty to be paid by the Lessee to the Lessors under the provisions of Section 3 of this Lease; and it is recognized and agreed that the Lessee shall reimburse itself and deduct from accrued mining royalty all such amounts of advance royalty which shall have theretofore been paid hereunder.
'As mining or dredging operations are conducted upon the advance royalty acreage, the aggregate advance royalty payable to the Lessors shall be reduced by an amount equivalent to $10.00 per acre for the acreage so dredged and mined, with the result that advance royalty will only be paid with respect to that portion of the advance royalty...
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...give the protection intended thereby to both the debtor and the creditor. 24 Idaho at 150, 132 P. at 797; accord Allen v. Ruby Company, 87 Idaho 1, 11, 389 P.2d 581, 587 (1964). Application of the rule in Clark and Allen to the facts of this case lends additional support for the interpretat......
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...both parties, as against a construction which would only be in the interest of one of the parties to the contract. Allen v. Ruby Co., 87 Idaho 1, 11, 389 P.2d 581, 587 (1964). Madrid v. Roth, 134 Idaho 802, 806, 10 P.3d 751, 755 (Ct. App. 2000). "If the factfinder is unable to determine the......
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...both parties, as against a construction which would only be in the interest of one of the parties to the contract. Allen v. Ruby Co., 87 Idaho 1, 11, 389 P.2d 581, 587 (1964). However, exculpatory clauses generally are not favored and are strictly construed against the drafter. 17A C.J.S. C......