Davidson Mineral Properties, Inc. v. Baird
| Decision Date | 05 April 1990 |
| Docket Number | Nos. S90A0071,S90A0168,S90X0154,S90X0169,s. S90A0071 |
| Citation | 260 Ga. 75,390 S.E.2d 33 |
| Parties | DAVIDSON MINERAL PROPERTIES, INC. v. BAIRD et al., and BAIRD v. DAVIDSON MINERAL PROPERTIES, INC. VULCAN MATERIALS COMPANY v. BAIRD et al. BAIRD v. VULCAN MATERIALS CO. |
| Court | Georgia Supreme Court |
H. Wayne Phears, Victor L. Moldovan, Phears & Dailey, Norcross, for Davidson Mineral Properties.
Max Kaley, Marietta, Duard McDonald, Marietta, for other appellees.
Rex M. Lamb, III, Andrew B. Williams, II, O'Callaghan, Saunders & Stumm, Atlanta, for Burgess Baird Jr. et al.
Alston & Bird, G. Conley Ingram, Peter M. Degnan, Geoffrey H. Cederholm, Atlanta, for Vulcan Materials Co.
This appeal involves property appellees/cross-appellants have leased to appellants/cross-appellees in Cobb County. Appellants brought this action in the Fulton County Superior Court seeking specific performance and injunctive relief. Appellees counterclaimed seeking cancellation or rescission of certain lease agreements. The parties filed cross-motions for summary judgment. The trial court granted summary judgment to appellees on their claims that there was an implied duty to mine, that the erection of certain asphalt plants breached the lease agreements, and that appellees had not acted in bad faith. The court granted summary judgment to appellants on the issues of mutuality of consideration, fraud, vagueness, and the executors' authority to enter into the lease agreement. We affirm in part and reverse in part.
The parties to this dispute have had a contractual relationship with each other since at least 1968. In that year, the appellees, collectively referred to as the Chastain Family, leased a tract of land to Davidson Mineral Properties, Inc. In 1974, the parties decided to enter into a new agreement because four subsequent amendments to the 1968 lease were in need of clarification. In 1976, the various parties in this appeal executed three agreements. The first agreement was between the Chastain Family and Vulcan Material Company. The second, titled "Restatement of Leases," was between the Chastain Family and Davidson (the "Family Agreement"). The third agreement, also titled "Restatement of Leases," involved a smaller adjoining tract of land and was between Robert Harold Chastain and Davidson (the "Robert Harold Agreement"). The dispute centers around the second and third agreements.
The two agreements are materially similar in many respects. Under the terms of the agreements, the lessees would pay a royalty of $0.05 per ton of material quarried and sold, a minimum annual royalty, and all property taxes. The leases are each for nine consecutive five-year terms which were automatically renewed unless lessee elected not to renew. The two agreements provide that the lessee shall have the exclusive right to mine the property, to change or construct certain roads on the property, to install certain wiring, and to construct and operate on the property any "plants, buildings, fixtures and/or attachments necessary or convenient to the operations carried on by Lessee or its associated parties." Both agreements set forth that the lessors were aware of, and agreed to assist in, the lessee's intent to relocate Greers Chapel Road. The agreements gave the lessee the exclusive right to terminate the lease after six months notice if it should determine that commercial operations were no longer desirable or practical. Finally, Davidson could assign the leases without the consent of the Chastains.
to mine. They point out that when the two agreements were being negotiated, the Chastains sought to include a specific date for the commencement of mining operations, but still executed these agreements despite Davidson's successful efforts to keep such a date out. Pretermitting any parol evidence issues, we find this argument not dispositive because the mere refusal to include a specific date for the beginning of mining operations does not mean that there was no implied duty to begin mining at some reasonable time. We hold, however, that under the criteria set forth in Higginbottom v. Thiele Kaolin Co., 251 Ga. 148, 304 S.E.2d 365 (1983), the lease agreements contain no implied duty to mine.
Higginbottom makes clear that in determining whether a mining lease contains an implied duty to mine, each case is necessarily different, but that there are two central issues. The first issue concerns the nature of the rental or royalty payment, and the second involves the lessee's interference with the lessor's use and control of the leased property. Id. at 151, 304 S.E.2d 365. Taking the latter issue first, the trial court below found that Davidson's and Vulcan's lease of the properties had not interfered with the Chastains' use of the land within the meaning of Hodges v. Georgia Kaolin Co., 108 Ga.App. 115, 118, 132 S.E.2d 86 (1963). We find no error as the agreements make clear that the Chastains could continue to graze their cattle, to live in a house on the property, and to use various sheds and warehouses until such time as mining operations rendered them unsafe and that, to date, neither Davidson or Vulcan have caused any changes to the property in preparation for mining operations.
The dispute as to whether there is an implied duty to mine in this case centers around the nature of the payments to the Chastains under the Family Agreement and the Robert Harold Agreement. The Family Agreement provides for so-called Earned Royalties of $0.05 per ton of rock mined and sold, which will first be reduced by any remaining so-called Minimum Royalty Credits previously paid to the Chastains in years there was no mining or the Earned Royalties fell below the minimum royalty. The Chastains argue that because the Earned Royalties are offset by any remaining Minimum Royalty Credits earned during the life of the lease, rather than just those earned during the year, the rental payments were contingent upon mining. Thus, goes the argument, there is an implied duty to mine within a reasonable time.
Although the amount of cash the Chastains would receive could vary from year to year, they do receive a minimum rent under the agreement. That is, they are guaranteed to receive a minimum rent over the life of the agreement in the form of either Earned Royalties or Minimum Royalty Credits. This minimum rent is not contingent on whether there is any mining. This holding is strengthened by the absence of a contractual provision requiring the forfeiture of any Minimum Royalty Credits paid or due to the Chastains, thereby evidencing that the parties intended for the Chastains to retain any remaining Minimum Royalty Credits. 1 Therefore, because the lessees have not interfered with the Chastains' use of the property, because the rent is not contingent on mining, and because there is no language within the lease to indicate otherwise, we hold that there is no implied duty to mine.
This result is not different for the Robert Harold Agreement. This agreement is different only in that it expressly states that the Minimum Royalty Credits are to be paid for only ten years, as opposed to being paid throughout the life of the lease. This fact is immaterial as Robert Harold Chastain is guaranteed a minimum rent of $50,000 over the life of the lease, which is not contingent on there being any mining.
and operating on the property an asphalt plant that processes stone from an adjoining property rather than stone from the leased property. This was error.
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