Byron v. York Inv. Co., 17588

• Decision Date: 30 April 1956
• Docket Number: No. 17588,17588
• Parties: W. Walter BYRON, Plaintiff in Error, v. YORK INVESTMENT COMPANY, a Colorado Corporation, Defendant in Error.
• Court: Colorado Supreme Court

Page 742

296 P.2d 742

133 Colo. 418

W. Walter BYRON, Plaintiff in Error, v. YORK INVESTMENT COMPANY, a Colorado Corporation, Defendant in Error.

No. 17588.

Supreme Court of Colorado, En Banc.

April 30, 1956.

Rehearing Denied May 21, 1956.

VanCise & VanCise, Edwin P. VanCise, Denver, for plaintiff in error.

Hayutin & Hayutin, Charles L. Ford, Denver, for defendant in error.

KNAUSS, Justice.

Plaintiff in error was defendant in the trial court and will be referred to as defendant, or as Lessor, or by name. Defendant in error was plaintiff in the lower court and will be referred to as plaintiff, or as Lessee, or York. Irving J. Hayutin, a Denver lawyer, president of York, was a principal witness at the trial and was one of the Trustees-Mortgagees in a chattel mortgage hereafter mentioned. He will be referred to as Hayutin.

Plaintiff York leased from Byron certain mining properties in Summit County, Colorado. The written lease was dated April 2, 1951. At the same time the Lessee purchased certain mining machinery and equipment from Byron. The lease was drawn by Hayutin and provided for a minimum monthly rent or royalty, a stated minimum number of work shifts per week and other provisions customary in a mining lease. The lease provided for a notice of sixty days in case of default with the right reserved to Lessor to terminate the lease and retake possession if such default was not corrected within that period. It also provided that in the event of forfeiture Lessee was to have sixty days time in which to remove its machinery and equipment, after which, unless otherwise agreed in writing, such machinery and equipment 'shall be and become the property of the Lessor as liquidated damages.'

The voluminous record before us (consisting of 1,576 folios in the original record and 790 folios in a supplemental record) discloses that on July 25, 1951 Lessee executed its demand note in the sum of $39,600 and secured it by a chattel mortgage on its personal property at the Kimberly mine, the note being payable to Hayutin and his brother, as trustees for certain named individuals. On February 1, 1952 a new chattel mortgage was executed by Lessee embracing all of Lessee's property 'now or hereafter acquired' on all of the mining properties. This mortgage was given to secure the indebtedness first above mentioned and was due on or before March 1, 1952 and was still unpaid on October 22, 1952, the date on which the matters in controversy arose.

On April 10, 1952 Lessor notified Lessee of certain defaults under the lease and stated his intention to take possession of the properties if the defaults were not corrected within sixty days. On June 23, 1952 the Lessor and Lessee agreed in writing that the lease 'was considered terminated June 10, 1952 subject to the following reinstatement provisions'. Then followed specific provisions providing for certain work to be done and payment made in full of all delinquent royalties on or before July 25, 1952. It was further specified that if these requirements were met by July 25, 1952 the lease would be reinstated without penalty; if not complied with the Lessee would remove its machinery and equipment within sixty days thereafter unless otherwise agreed by the parties. On July 25th the required work had apparently been performed but the delinquent royalties had not been paid. On that date the Lessee paid Lessor $1,500 by a check on which was written 'Delinquent royalties as per agreement. June royalty to be paid September 1, 1952.' It was agreed that if all royalties were paid by October 1, 1952 the lease would be reinstated. Neither the June nor July 1952 royalty payments were made. Between October 5 and October 15, 1952 Hayutin removed some of the Lessee's machinery and equipment.

Byron was in Denver on October 21st and October 22, 1952. Early in the morning of October 22, 1952, at the direction of Lessee, five trucks arrived at the leased premises. The drivers of these trucks removed certain of the machinery and equipment from the structures in which they were housed, preparatory to loading it on the trucks and a portion thereof was loaded on one truck, preliminary to its removal from the mining properties. This operation was halted by the Sheriff of Summit County who held a distraint warrant for unpaid personal property taxes against the chattels. Hayutin, who was on the properties, went to the county seat and paid the taxes. After lunch that day a tractor was found in position across the road blocking the trucks which were still on the premises. The tractor belonged to Byron and was placed there by one Earl Smith at Byron's direction pursuant to a telephone conversation between Byron and his wife. The latter had informed Lessor by 'phone of the actions of Lessee. This tractor was on a private road inside the leased premises. Hayutin called Byron by telephone and the parties discussed their respective claims. Byron informed Hayutin that the machinery and equipment were his as liquidated damages pursuant to the terms of the written lease. Byron said he would be in Kokomo at 6 P.M. that day and Hayutin agreed to wait for him to further discuss the matter. Byron at the same time talked to the sheriff. As a result, the tractor was removed and the partially loaded truck, as well as the other empty trucks, were allowed to pass down the road. Prior to the telephone conversation between Hayutin and Byron on October 22, 1952, and following the telephone notification by Byron's wife that Lessee was attempting to remove the machinery and equipment, Byron, who apparently did not know that Hayutin was at the mine, sent a telegram to Hayutin at his Denver law office in which he told Hayutin that he understood an attempt was being made to remove the equipment. He advised Hayutin that he had no rights on the premises. He said: 'As Attorneys for yourself and York Investment Co. you are well aware that you have two choices, legally (sic) payment of rents due and for damages done or to bring suit for replevin.' This telegram was sent by Byron from the Cosmopolitan Hotel in Denver.

On October 24, 1952 York sent a registered letter to Byron in which it was said: 'Yesterday you advised us that you would send us a written proposal re your demands. Your action is preventing us from delivering mortgaged property to the mortgagee, pursuant to an agreement between the mortgagor and mortgagee to accept the property in full payment of indebtedness covered by a promissory note secured by a recorded chattel mortgage. If we are to avoid a deficiency under our note and mortgage, we must make delivery at once. Will you therefore send us your proposal as quickly as possible.'

On October 27, 1952 Byron replied to this letter stating: 'In response to your letter of October 24th, you are advised that it is necessary for us to have the Kimberly and Sellers mines examined by a competent engineer to determine the extent of damage which has accrued to the property during the term of your lease, and also an inspection of the mining equipment located on said premises. As soon as the inspection is complete, which we hope will be some time this week, we will be in a position to confer with you regarding the matter.'

Only one conclusion can be reached when we read the written communications which passed between the parties, and that is that under the lease Byron thought he had a lien on the machinery and equipment for past due rent or royalty, taxes and damages, and that because the Lessee had not removed the property within the sixty day period he, Byron, under the lease written by Hayutin, became the owner of the machinery and equipment as liquidated damages. York's letter of June 23, 1952 definitely stated that if Lessee did not comply with the terms of the lease by July 25, 1952 it would 'remove its property within sixty days thereafter unless otherwise agreed upon.'

The chattel mortgage mentioned in the York letter of October 24, 1952 was introduced in evidence, but the holders of the note secured thereby were not parties to this action.

The present action was commenced on November 10, 1952. In its complaint York alleged its ownership and possession of the machinery and equipment; it alleged that defendant converted this property. $35,000 damages were prayed for. Defendant, by answer, denied the conversion; set up the lease, non-compliance with its terms on the part of Lessee and its failure to remove the property within the sixty day period, together with other matters which constituted a counterclaim against Lessor. Trial was to a jury which returned a verdict for Lessee in the sum of $21,000 against Lessor and another on the counterclaim in favor of Lessor and against Lessee in the sum of $1,000. From the judgment entered on the verdict against him, Lessor brings the cause here on writ of error.

It should here be noted that present counsel for Lessor did not participate in the trial of this case. The trial consumed several days during which the trial judge displayed remarkable patience, notwithstanding counsel on both sides injected, or attempted to inject into the case, matters which were entirely immaterial to the issues involved.

At the close of Lessee's case counsel for Lessor moved for dismissal of plaintiff's complaint. This motion was denied, as was a similar motion interposed at the conclusion of the trial.

We are of the opinion that the motion made at the conclusion of Lessee's case,...