Cochrane v. Justice Min. Co.

• Decision Date: 07 May 1891
• Citation: 26 P. 780,16 Colo. 415
• Parties: COCHRANE v. JUSTICE MINING CO. et al.
• Court: Colorado Supreme Court

26 P. 780

16 Colo. 415

COCHRANE v. JUSTICE MINING CO. et al.

Supreme Court of Colorado

May 7, 1891

Commissioners' decision. Error to district court, Lake county.

T. J. O'Donnell and L. S Dixon, for plaintiff in error.

Rucker & Titcomb, for defendants in error.

REED C.

This was a suit in equity, brought by plaintiff in error against the defendants, to compel the specific performance of an alleged contract to lease certain mining property in the county of Pitkin. Upon the hearing a decree was entered dismissing the suit. The pleadings were very lengthy, and a large mass of testimony was taken. The issues made by the pleadings, and the facts established by the testimony, deemed necessary for an understanding of the case, are, to save repetition, embraced in the opinion instead of in a statement of the case. There are numerous assignments of error, many upon minor and unimportant points. The only one necessary to be considered is the general one,--the twelfth: 'That the court erred in its finding, judgment, and decree in favor of the defendant and against the plaintiff.' There being no serious controversy in regard to the facts and premises, the determination of the case depends upon the solution of the following questions or propositions: First. Did what transpired between the parties constitute a binding and concluded agreement for the lease of the property; and, if so, was it sufficiently definite to be enforced in a proceeding to compel specific performance? Second. Was the failure to consummate the agreement by a written contract of lease attributable to the plaintiff or defendants? The advertisement for bids to lease the property of defendants was as follows: 'Bids will be received at the office of the Justice Mining Co., up to noon on March 18, 1889, for lease or leases on the properties of the Justice Mining Co., consisting of the Justice, Marlin Monte Cristo, and Western Union, situated in Tourtelotte park, and consisting of 26.8 acres. Bids to be addressed to Peter Lux, President J. M. Co.' In response to this, plaintiff, who had formerly with others a lease upon and worked the same property, as alleged, at great pecuniary loss, made three proposals or bids,--two for a portion of the property, which we need not consider, and the third for the entire property, as follows: 'I will take lease on the whole property at thirty-five per cent. royalty at eighteen months, and agree to expend, under the best management obtainable, at least five thousand ($5,000) dollars each and every month during life of lease in development work, I to have thirty (30) days to begin work, in order to make examination of property, and put machinery in place. Lease to date from time of commencing work. Settlement as usual.' At a corporate meeting of the officers of the defendant the third proposition or bid of plaintiff was accepted, and evidenced by the following entry made in the minutes of the corporate proceedings: 'After some deliberation it was moved and carried that F. T. Cochrane & Co.'s proposition for lease on the three sections of the Justice Mining Co.'s property, according to paragraph 3, be accepted. (Date of proposition, Denver, Colorado, March 16, 1889.) Moved and carried that all other bids be rejected.' And as appears in the minutes of the same meeting, the following corporate action was taken: 'Moved and carried that the president be empowered to draw up the lease in conjunction with Mr. Cochrane, or his agent, and present it to the board of directors for their consideration. Moved and carried we now adjourn subject to the call of the president.' On the same day the defendant, by Peter Lux, its president, sent the following telegram to plaintiff at Denver: 'F. T. Cochrane, Senate Chamber: Lease awarded to you on last proposition. PETER LUX.' The advertisement or offer to lease was definite in regard to the property to be leased, naming the respective claims constituting the property, and giving the aggregate area in acres and fractions of an acre. The bid of plaintiff was, as to extent of property, length of term, percentage or rental to be paid, and amount to be expended monthly in development, and manner of expenditure, equally definite. The corporate acceptance by defendants entered of record, was a general and unqualified acceptance of the plaintiff's bid as made, and the notification of the acceptance general and unqualified. Under the authorities, to create a valid contract of lease but few points of mutual agreement are necessary: First, there must be a definite agreement as to the extent and bounds of the property leased; second, a definite and agreed term; and, third, a definite and agreed price of rental, and the time and manner of payment. These appear to be the only essentials; the others, such as the covenant for the peaceful possession on the part of the lessor, diligent, proper, workman-like and continuous working with a view to best results, both present and prospective, on the part of the lessee; and where, as in this case, the rental is a share or percentage of the proceeds, the disposition of the ore to the best advantage, the keeping of accurate and honest accounts and making honest returns, are secondary and implied covenants, growing out of the principal agreement.

It is contended by counsel for defendants that the above-recited acts of the parties did not constitute a concluded agreement that they in certain respects lacked the necessary definiteness, and could only be regarded as inconclusive negotiations in regard to a specific contract to be afterwards agreed upon and executed by the parties. It is contended, first, that there was no definite time designated for the beginning of the term. With this, we cannot agree. The language of the bid is: 'I to have thirty days to begin work. * * * Lease to date from time of commencing work.' If the offer was accepted, and plaintiff notified of its acceptance, the agreement for lease would be concluded as of that date, and the 30 days would commence to run, and the term would commence at the expiration of the 30 days. It is also contended that there was a want of definiteness in regard to the basis upon which the rental of 35 per cent. was to be computed, as to what expenses of production the gross proceeds from ore were to be subject before calculating the percentage, and the offer of plaintiff, containing in regard to payment only the words, 'settlement as usual.' It is contended that there would be no concluded contract until the terms of payment were definitely settled, specified, and defined. The plaintiff had for a long time been a lessee of the same property. The clause 'settlement as usual' evidently relates to one of two well understood premises, either-- First, to the former method of computation and time and manner of payments existing between the parties; or, second, a well-known and established custom of the district; either one of which was sufficiently definite to constitute a part of the contract. It is immaterial to which it referred. It is evident from the action of the board of officers that it was properly understood at the time of the acceptance. No objection was made to it on account of uncertainty or indefiniteness. Nothing more definite was required or asked. The acceptance was complete and unqualified. Had the indefiniteness now relied upon in argument suggested itself to the officers at that time, it would necessarily have resulted in the rejection of the bid, or in requiring a better defined offer. In Van Ness v. Pacard, 2 Pet. 148, it is said: 'Every demise between landlord and tenant in respect to matters in which the parties are silent may be fairly open to explanation by the general usage and custom of the country or of the district where the land lies. Every person, under such circumstances, is supposed to be connusant of the custom, and to contract with a tacit reference to it.' This is the universal doctrine, and further authority is considered unnecessary. From this it will be apparent that all the essentials necessary to constitute a concluded agreement of lease were contained in the advertisement, bid, and acceptance, and that the element of indefiniteness was such that it was capable of being made definite by reference to former course of dealing, or the customs of the district. In Bish. Cont. § 322, it is said: 'If one makes to another an offer, verbal or written direct, by letter or by telegram, of a sort implying nothing to be done except to assent or decline, and the latter accepts it, adding no qualification, there is thus constituted a mutual consent of the same thing at the same time,--in other words, a contract.' In support of this elementary proposition, see Smith v. Colby, 136 Mass. 562; Cheney v. Transportation Line, 59 Md. 557; Highland Co. v. Rhoades, 26 Ohio St. 411; Wells v. Railroad Co., 30 Wis. 605; Abbott v. Shepard, 48 N.H. 14. It is contended on the part of defendants that there was no concluded agreement, for the reason that, at the same corporate meeting at which the bid of plaintiff was accepted, there was a subsequent motion passed and entered of record, in which the president was 'empowered to draw up the lease, in conjunction with Mr. Cochrane or his agent, and present it to the board of directors for their consideration.' This contention cannot prevail: First, the language used--'the lease'--presupposes a contract already in existence; second, it in no way attempts to modify, qualify, or restrict the contract as made and accepted; third, the proceeding was ex parte, was not communicated to the plaintiff or brought to his motice, appears to have been simply a designation of a party who should represent the defendants in reducing the contract to writing and attending to its execution as the...