Estate of Hatch by Ruzow v. Nyco Minerals Inc.

Decision Date11 December 1997
Citation666 N.Y.S.2d 296,245 A.D.2d 746
Parties, 1997 N.Y. Slip Op. 10,826 ESTATE OF Frances HATCH, by Theodore M. RUZOW et al., Respondents-Appellants, v. NYCO MINERALS INC., Appellant-Respondent.
CourtNew York Supreme Court — Appellate Division

Bond, Schoeneck & King (Richard A. Reed, of counsel), Albany, for appellant-respondent.

McNamee, Lochner, Titus & Williams P.C. (G. Kimball Williams, of counsel), Albany, for respondents-appellants.

Before CARDONA, P.J., and WHITE, CASEY, SPAIN and CARPINELLO, JJ.

CARPINELLO, Justice.

Cross appeals from an order of the Supreme Court (Viscardi, J.), entered November 5, 1996 in Essex County, which denied defendant's motion for summary judgment dismissing the complaint and denied plaintiffs' cross motion for summary judgment.

The present dispute requires the interpretation of several agreements executed during the 1950s between the parties' predecessors in interest concerning mining properties and mining projects in Essex County. At issue is whether defendant is obligated to continue to pay plaintiffs an annual overriding royalty. Both sides appeal from the denial of their respective motions for summary judgment, each contending that the written documents unambiguously warrant judgment in their favor.

Pursuant to an April 10, 1952 agreement between plaintiffs' predecessor (Willsboro Mining Company) and defendant's predecessor (Cabot Carbon Company), Willsboro transferred to Cabot all of its assets, including a 1951 mineral lease and a processing plant and equipment, in exchange for a cash payment and an "overriding royalty" of minerals "produced and sold" by Cabot. By this 1951 lease, Willsboro had been granted the exclusive right to mine wollastonite, diopside and garnet from specific lands in Essex County.

As contemplated by the April 10, 1952 agreement, the 1951 mineral lease was canceled and replaced with a new mineral lease on April 19, 1952. Pursuant to the 1952 lease, Cabot, as lessee, was granted the exclusive right to mine wollastonite from the lands described in the 1951 lease as well as additional lands in which the lessors had title or mining rights. These lands collectively became known as the Willsboro Mine.

The April 10, 1952 agreement was amended on September 24, 1957 to change the formula by which the overriding royalty would be calculated. The amendment provided for "a total overriding royalty of [$0.60] per ton of wollastonite and diopside produced and shipped * * * and [$0.10] per ton of garnet produced and shipped", subject to a $36,000 annual cap. In referring to the April 10, 1952 agreement, the amendment recites that "Cabot agreed to pay to Willsboro an overriding royalty * * * on minerals removed from lands in Essex County * * * covered by Mineral Leases to Cabot " (emphasis supplied), specifically identifying the 1951 and 1952 mineral leases.

In 1982, defendant closed the Willsboro Mine and opened the Lewis Mine, approximately 10 miles away. Despite closure of the Willsboro Mine, plaintiffs and their predecessors continued to receive overriding royalty payments until 1994. In 1994, however, defendant ceased making overriding royalty payments to plaintiffs on the basis that its obligation to do so ended 12 years earlier when it closed the Willsboro Mine. Plaintiffs commenced this action to compel performance of the April 10, 1952 agreement and defendant counterclaimed for return of the overriding royalty payments made between 1982 and 1994. 1

For their part, plaintiffs contend that the royalty created by the April 10, 1952 agreement, as amended, was not tied to any specific property; rather, the agreement simply provided that Cabot, as long as it was engaged in the mining, production and processing of wollastonite, diopside and garnet, would pay Willsboro an overriding royalty on all such minerals produced and shipped from whatever source. Defendant claims that a reading of the April 10, 1952 agreement, as amended, plainly establishes that it is only obligated to make overriding royalty payments for minerals extracted from those lands identified in the 1951 and 1952 mineral leases (i.e., from the Willsboro Mine) and because no minerals are now being produced from the Willsboro Mine, plaintiffs are not entitled to any royalty.

The construction and interpretation of an unambiguous written contract is an issue of law within the province of the court, as is the inquiry of whether the writing is ambiguous in the first instance (see, W.W.W. Assocs. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 566 N.E.2d 639). In the interpretation process, the objective is to determine the parties' intention as derived from the language employed in the contract (see, Chimart Assocs. v. Paul, 66 N.Y.2d 570, 572, 498 N.Y.S.2d 344, 489 N.E.2d 231; Teitelbaum Holdings v. Gold, 48 N.Y.2d 51, 56, 421 N.Y.S.2d 556, 396 N.E.2d 1029). In this regard, a court is duty-bound to adjudicate the parties' rights according to unambiguous provisions and give words and phrases employed their plain meaning (see, Sanabria v. American Home Assur. Co., 68 N.Y.2d 866, 868, 508 N.Y.S.2d 416, 501 N.E.2d 24; Laba v. Carey, 29 N.Y.2d 302, 308, 327 N.Y.S.2d 613, 277 N.E.2d 641). Moreover, "[t]echnical words are to be interpreted as usually understood by the persons in the profession or business to which they relate, and must be taken in the technical sense unless the context of the instrument or an applicable usage or the surrounding circumstances clearly indicate a different meaning" (22 N.Y.Jur.2d, Contracts, § 242, at 299).

In this case, "the agreement" between the parties consists not only of the April 10, 1952 agreement and its September 1957 amendment, but also the 1951 and 1952 mineral leases (see, Mayo v. Royal Ins. Co. of Am., 242 A.D.2d 944, 662 N.Y.S.2d 654; Sbarra v. Totolis, 191 A.D.2d 867, 870, 594 N.Y.S.2d 868). We find these documents unambiguous and obligate defendant to pay an overriding royalty on minerals removed from the leased lands only.

Inclusion of the phrase "overriding royalty" throughout the documents is dispositive of the parties' intent as this phrase has an unambiguous meaning. An overriding royalty, by definition, is a...

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