Eagle-Picher Co. v. Mid-Continent Lead & Zinc Co., 4733.

• Decision Date: 02 February 1954
• Docket Number: No. 4733.,4733.
• Citation: 209 F.2d 917
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: EAGLE-PICHER CO. v. MID-CONTINENT LEAD & ZINC CO.

209 F.2d 917 (1954)

EAGLE-PICHER CO. v. MID-CONTINENT LEAD & ZINC CO.

No. 4733.

United States Court of Appeals Tenth Circuit.

February 2, 1954.

John R. Wallace, Miami, Okl. (Willard L. Phillips, Thos. M. Van Cleave, Kansas City, Kan., A. C. Wallace and Ben T. Owens, Miami, Okl., on the brief), for appellant.

Emerson Foulke, Joplin, Mo., and J. E. Schroeder, Kansas City, Kan., for appellee.

Before PHILLIPS, Chief Judge, and BRATTON and PICKETT, Circuit Judges.

PICKETT, Circuit Judge.

The parties hereto were the owners of separate mining leases covering land in Cherokee County, Kansas, from which lead and zinc were mined.¹ They entered into a contract to pool their interests and consolidate the operations of the leases for their mutual benefit. The defendant was to conduct the mining operations on the land and the plaintiff was to receive the mineralized ore in hoppers located on the leased premises and transport it to its Central Mill, located at Cardin, Oklahoma, about 25 miles away, there to prepare it for market and sale. The leases on all the land expired on February 17, 1937, and the contract contemplated that Mid-Continent would obtain a ten-year lease in its name on all the property. The ten-year lease was obtained and at its expiration was extended to June 6, 1953. Prior to June 6, 1953, Eagle-Picher obtained leases in its own name covering 11/12 of the land and Mid-Continent obtained a lease on 1/12 of it. Mid-Continent contended that the operating contract was still in effect, and the plaintiff brought this action under the Federal Declaratory Judgments Act, 28 U.S.C.A. §§ 2201, 2202, for a decree declaring that the contract had terminated and that Mid-Continent had no further right in the property which it had leased. The trial court held that the contract was not terminated, and that the rights of the parties were to be governed and determined by it. The precise issue to be determined on this appeal is whether the parties were engaged in a joint adventure and whether that relationship had been terminated.

To determine this question, we must look to the language of the contract, the relationship existing between the parties, and the background against which it was executed.

During the year 1935, each of the parties were separately operating mines under leases of lands from the same ownership. Mid-Continent had a concentration mill on its property. Eagle-Picher had constructed a new Central Mill in northern Oklahoma. All of the leases were to expire in 1937. The parties believed that new leases could be obtained from the owners and they were desirous of consolidating the operation of their properties. Prior to the execution of the contract the parties had mined the leases for many years. The contract provided specifically for the mining operations and the processing of the ore and that the profits should be divided equally between the parties. It was agreed that Mid-Continent should obtain the new leases in its name but subject to the terms of the contract. The contract contained no termination date. When it was executed, and as a part of the same transaction, Mid-Continent conveyed to Eagle-Picher by Bill of Sale the concentration mill, tools, machinery and equipment which were located upon its leased lands. The Bill of Sale contained a provision that the property was not to be removed from the premises until the milling operations of Eagle-Picher proved satisfactory and effective. As contemplated by the parties, Mid-Continent obtained a ten-year lease on all the property.

The concentration process at the Eagle-Picher plant was new and unproven. The contract provided that if this process developed to be unsatisfactory to Mid-Continent or the land owners, the ore would be processed by Mid-Continent in its plant located on the leased land, in which event the profits were to be shared equally between the parties. This provision never became operative as the Central Mill proved to be satisfactory and the ore was shipped to it during the term of the ten-year lease and during the extension which expired on June 6, 1953. The leases and the machinery and equipment on the land constituted all of the property of Mid-Continent. Some time prior to the expiration of the extension of the lease, the president of Mid-Continent notified Eagle-Picher that his company would not be able to renew the leases; that other individuals were trying to get them; and that Eagle-Picher should take such action as it saw fit to protect itself. The undisputed evidence was that the president was not authorized to make the statement, but this is not important to a decision of the case as no issue of estoppel was raised.

To constitute a joint adventure there must be a combination of two or more persons devoted to a specific enterprise. They must agree to combine their property, efforts, skill and knowledge in a common undertaking. There must be an agreement for joint property interests in the undertaking and a sharing of the profits or losses. Blackner v. McDermott, 10 Cir., 176 F.2d 498, 500; Grannell v. Wakefield, 172 Kan. 685, 242 P.2d 1075; Yeager v. Graham, 150 Kan. 411, 94 P.2d 317; Shoemake v. Davis, 146 Kan. 909, 73 P.2d 1043, 1045; Livingston v. Lewis, 109 Kan. 298, 198 P. 952; A. C. Houston Lumber Co. v. Marshall, 109 Kan. 172, 197 P. 861; Crawford v. Forrester, 108 Kan. 222, 194 P. 635; 30 Am.Jur. Joint Adventures, Sec. 7.

The duration of a joint adventure may be fixed by the terms of a contract between the parties or by mutual consent. If no date is fixed by the contract for its termination, the agreement remains in force until its purpose is accomplished or until such accomplishment has become impracticable. Goss v. Lanin, 170 Iowa 57, 152 N.W. 43; Fuller v. Laws, 219 Mo.App. 342, 271 S.W. 836; Bane v. Dow, 80 Wash. 631, 142 P. 23; Blackner v. McDermott, supra: 30 Am.Jur. Joint Adventures, Sec. 44. This enterprise was brought about by the joint efforts of the parties and each had a definite part to perform for its success. Each contributed its leases and its efforts to the enterprise for the purpose of profit. We agree with the trial court that the contract created a joint adventure between the parties and that the relationship was fiduciary in character.

A joint adventure generally is considered a partnership not general in operation or duration, but limited to a particular enterprise or venture. Grannell v. Wakefield, supra; Shoemake v. Davis, supra; Livingston v. Lewis, supra. The relationship imposes upon the parties an obligation of loyalty to the joint...