Fort Worth Sand & Gravel Co. v. Peters

• Decision Date: 05 February 1937
• Docket Number: No. 13497.,13497.
• Citation: 103 S.W.2d 407
• Parties: FORT WORTH SAND & GRAVEL CO., Inc., v. PETERS.
• Court: Texas Court of Appeals

103 S.W.2d 407

FORT WORTH SAND & GRAVEL CO., Inc., v. PETERS.

No. 13497.

Court of Civil Appeals of Texas. Fort Worth.

February 5, 1937.

Rehearing Denied March 26, 1937.

Appeal from District Court, Tarrant County; Frank P. Culver, Jr. Judge.

Suit by C. C. Peters against the Fort Worth Sand & Gravel Company, Inc. From a judgment in favor of the plaintiff, the defendant appeals.

Reversed, and cause remanded.

Cantey, Hanger & McMahon, W. D. Smith, and F. T. Denny, all of Fort Worth, for appellant.

Levy & Evans, of Fort Worth, for appellee.

SPEER, Justice.

On July 3, 1928, C. C. Peters, as lessor, and Fort Worth Sand & Gravel Company, as lessee, entered into a written lease contract whereby the former let to the latter, for a term of three years, about forty acres of land along with exclusive use of a certain railway switch track on the premises, and certain other valuable rights, such as ingress and egress upon the premises; the lessor retaining only for himself and tenants the right to use the switch track for shipping livestock, farm products, and supplies.

In consideration of the lease, the lessee obligated itself to pay to lessor a royalty of ten cents per cubic yard for all gravel and sand taken from the premises, and, further, that in the event it did not take enough sand and gravel during any month that the royalties to lessor, at the price named, did not amount to $200, it would pay that amount as a minimum lease for each month the lease should remain effective, provided that, if a monthly payment of $200 should exceed the amount due lessor by virtue of the yardage removed at the agreed price, lessee should have the right to thereafter, and before the expiration of the lease, remove sand and gravel to the extent of such excess payment.

There was a further stipulation in the contract in this language: "It is understood that this lease, and the rights and privileges granted hereby shall continue for a period of three years from the date hereof, with the understanding, however, that if the sand and gravel on the premises shall become exhausted, or if either the quality or quantity thereof become such as that it cannot be mined by lessee with a reasonable profit, in such event or events said lessee, upon giving thirty days written notice to lessor of such facts shall be entitled to terminate this lease, and thereafter all obligations of either party hereto as made by the lease shall be null and void."

The lessee began paying to lessor the minimum monthly royalty payments and continued to do so until in May, 1930, when it quit and notified the lessor in writing, as provided in the contract, that the quality and quantity of sand and gravel were not on the leased premises and declared its intention to terminate the lease.

Plaintiff C. C. Peters instituted this suit against the defendant Fort Worth Sand and Gravel Company for $2,700, alleged to be the minimum royalty promised to be paid for the unexpired term of the contract.

The defendant answered with general denial and special pleas that (a) the lease contract was entered into between the parties, each believing that there was sufficient sand and gravel on said premises of a commercial quality that it could be mined by defendant at a reasonable profit to it, but that in truth both parties were mistaken as to the quality and quantity thereof, and that it could not be mined and marketed at a reasonable profit; (b) the consideration for the lease failed because of the absence of sand and gravel on the premises in sufficient quality and quantity to enable defendant to mine it with a reasonable profit to itself; (c) before it learned the premises did not contain the sand and gravel in quality and quantity sufficient to justify its mining with a reasonable profit, it had expended in royalty payments and necessary expenses in testing same the sum of $6,374.57; that of said amount $4,700 had been paid to plaintiff in said minimum royalty payments; and (d) it pleaded the provision of the contract above quoted under which it had the right to declare the contract terminated by notifying plaintiff in writing that the quality and quantity of the sand and gravel was insufficient to enable it to mine the same with a reasonable profit to itself. Prayer was for the amount expended by defendant prior to ascertaining the premises could not be profitably operated.

A reply pleading by plaintiff was to the effect, (a) a general denial of defendant's affirmative pleas; (b) that prior to entering into the lease contract there were test holes dug on the leased premises at points and to the depth and of a character designated by the defendant for the purpose of proving the presence or absence of sand and gravel on the premises, and that by an inspection of the tests thus made defendant convinced itself of the fact suitable materials were on the premises to meet the conditions of the contract, and it did not rely upon representations made by plaintiff; (c) that defendant made payments of royalty installments each month from the date of the contract until May, 1930, and incurred the expense of stripping the soil from a portion of the premises as pleaded by it, in pursuance of the terms of the lease contract, and thereafter made no bona fide attempt to mine the sand and gravel prior to the time it breached the contract by failing to pay rentals and attempted to terminate same by the notice given plaintiff as pleaded by defendant; and (d) that the sand and gravel on the leased premises did not become exhausted but were of sufficient quality and quantity at all times that defendant, by the exercise of due diligence, could have mined the same at a reasonable profit.

The issues thus made were tried to a jury under special issues submitted by the court which, with their answers, were as follows:

"1. Do you find from a preponderance of the evidence that the sand and gravel on the premises of the plaintiff described in the lease of June 6, 1930, was of such quality that it could not have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit to itself? Your answer will be in the following form, either: `It could not have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit', or `It could have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit.' Answer: It could have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit.

"2. Do you find from a preponderance of the evidence that the sand and gravel on the premises of the plaintiff on June 6, 1930, was of such quantity that it could not have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit to itself? Your answer will be in the following form, either: `It could not have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit' or `It could have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit.' Answer: It could have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit.

"In the event you answer either of the foregoing questions that `It could not have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit,' you need not answer any further questions, but if you have answered both of said issues `It could have been mined by the Fort Worth Sand & Gravel Company with a reasonable profit', then answer:

"3. Do you find from a preponderance of the evidence that the Fort Worth Sand & Gravel Company, prior to June 6, 1930, used ordinary care to examine the premises to determine whether or not the sand and gravel thereon was of such quality and quantity as that they could mine same with reasonable profit? Answer: Yes.

"4. Do you find from a preponderance of the evidence that the defendant, Fort Worth Sand & Gravel Company, prior to June 6, 1930, in good faith determined, if it did so determine, that the sand and gravel on the premises of the plaintiff was of such quality or quantity that the same could not be mined by it with a reasonable profit? Answer yes or no. Answer: No."

Upon the jury verdict, the court rendered judgment, denying defendant recovery on its cross-action, and in favor of plaintiff for $3,221.25. This was the amount of unpaid royalties at $200 per month with interest from the time the installments became due. From this judgment the defendant has perfected its appeal.

At the conclusion of the testimony, and before the charge of the court was given, defendant moved for an instructed verdict, in its favor, which was overruled by the court. By propositions 3, 4, 7, 13, and 14, the defendant, for reasons therein assigned, complains of the action of the court in refusing the request. We do not believe the court was in error in overruling the motion.

Among the grounds of error assigned by defendant, in these several propositions were: (a) That plaintiff had failed to prove he had been damaged; (b) the amount of damages, if any; and (c) the court could not properly render judgment other than for defendant without proof that the value of royalties which would have accrued to plaintiff by reason of the operation of the lease would have been at least the sum of $200 per month.

The record discloses that defendant handled sand and gravel in large quantities, the greater part of which was mined with expensive machinery and loaded at the pits into railway cars for transportation into Fort Worth and in some instances to other places; that it purchased or leased lands purporting to contain sand and gravel and kept these deposits for use in the future as its need required; that it did not need the lease in controversy for immediate use at the time of the contract, and only attempted to work it in March or April of 1930 after the contract was made in 1928; that, when machinery was moved onto the lease preparatory for excavations, it was found by defendant that at the point where it undertook to mine there was no sand nor...