French v. Nabob Silver-Lead Co.

• Decision Date: 08 March 1960
• Docket Number: SILVER-LEAD,No. 8752,8752
• Citation: 82 Idaho 120,350 P.2d 206
• Parties: T. D. FRENCH, Plaintiff-Appellant, v. NABOBCOMPANY, a corporation, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 206

350 P.2d 206

82 Idaho 120

T. D. FRENCH, Plaintiff-Appellant, v. NABOB SILVER-LEAD COMPANY, a corporation, Defendant-Respondent.

No. 8752.

Supreme Court of Idaho.

March 8, 1960.

Eugene McCann, Chas. E. Horning Wallace, for appellant.

H. J. Hull & Sons, Wallace, for respondent.

McQUADE, Justice.

Respondent owns a number of mining claims on Pine Creek in Shoshone County, Idaho. Appellant leased a part of respondent's claims under a written lease for a period of two years from September 1, 1953, to August 31, 1955. Under terms of this lease, 50 per cent of the net smelter returns from ore shipped was to be paid to appellant and 50 per cent to respondent. Respondent was to furnish appellant compressed air and power, and was to mill all ores produced. In addition, appellant was given the right to use certain mining machinery owned by respondent. Negotiation for this lease were carried out by appellant with C. C. Dunkle, vice president and manager of respondent's mining operations, who was also one of its directors.

In early February, 1955, appellant desired to do some prospecting by way of diamond drilling on the leased property. Before beginning this work, however, it was necessary that he be granted an extension of his present lease which was to expire August 31, 1955. Accordingly, appellant wrote Dunkle on February 16, 1955, sending a copy of the letter to H. J. Hull, president of respondent and a member of its board of directors, stating such reasons for desiring an extension of the lease. Appellant noted in this letter he had sufficient ore then developed to last until termination of the lease under which he was presently operating.

Hull answered appellant's letter on February 18, 1955, informing appellant that when Dunkle returned to Wallace, appellant's request would receive the attention of the directors.

On March 19, 1955, appellant and Dunkle met and discussed the matter of the lease extension. As a result of this discussion, appellant wrote Dunkle on March 21, 1955, sending a copy of the letter to Hull, setting out what apparently was the extent of agreement reached between the two men on March 19. Among other things, appellant was to have his present lease extended until September 1, 1957, with option for renewal, and the lease was to be modified so as to give appellant the right to supervise milling operations and technique. The royalty to be paid respondent was to be 15 per cent of net smelter returns, and certain designated paragraphs relating to the furnishing to appellant of compressed air and power, and maintenance of facilities, were to be deleted. It should be noted the deletion of the paragraph relative to the furnishing to appellant of compressed air and power by respondent was necessary since Dunkle had informed appellant during the course of their discussions that respondent intended to commence sinking operations on a portion of its property not under lease, and that it would not be able to perform this work and still supply compressed air to appellant. Because of this, appellant stated in the letter he hoped to have an airline completed from Sidney Mining Company in 30 days, and thought this would be a good time for the changes in the lease to become effective. Through subsequent correspondence between the parties, respondent was kept informed as to the state of completion of the airline.

A meeting of the directors of respondent corporation was held April 28, 1955, at which time appellant's letter of March 21 was considered. The minutes of this meeting revealed Hull was instructed to advise appellant of the changes in the lease to which respondent would agree. Among those changes material here was that the term of the lease would be for one year, but the right of renewal from year to year would be granted as long as relations between the parties remained satisfactory. Further, respondent was to mill all of appellant's ore for a designated charge, and appellant would pay a royalty of 15 per cent of net smelter returns on all ore mined from the property covered by the lease. By order of the board, Dunkle was to discuss any unsettled items with appellant.

Results of this meeting were conveyed to appellant by Hull May 3, 1955, in accordance with the order of the board. Mention was made in this letter that appellant was to mill all ores at respondent's mill, and respondent was to have full supervision and control of milling operations. This letter concluded by stating when appellant and Dunkle were in agreement on all points, he, Hull, would suggest a new lease to be drawn to supplant the old agreement. Appellant answered this letter May 7, 1955, stating: 'We both understand that the lessee [appellant] is to have the right to mill elsewhere at his option.' The words 'we both' apparently applied to appellant and Dunkle, as mention was made in the letter that they had talked the matter over that same morning. Some protest was made concerning the terms of the lease being for one year; however, appellant mentioned Dunkle had assured him he could have the lease as long as he desired and the rest of the directors felt the same. In closing, appellant stated the airline would be completed from Sidney on May 15, and he would begin taking air through such line June 1. Appellant noted if respondent was desirous of commencing sinking operations immediately, he could begin taking air from Sidney May 15.

Hull responded to this letter May 9, 1955, when he wrote stating he, Hull, had neglected to mention appellant was to have the option under the new agreement to mill elsewhere; however, he hoped mill results and costs would prove satisfactory so respondent could continue to do appellant's milling. Hull concluded by stating June 1 would be sufficient time to begin taking air from Sidney, as arrangements for respondent's sinking operations had not been completed.

Thereafter, Hull wrote appellant on June 13, 1955, that he and Dunkle had reviewed the correspondence and conversations between the parties and felt they were in agreement on the major items, except he now felt respondent must do all of appellant's milling, contrary to what he had written appellant May 9.

On August 2, 1955, appellant wrote Hull that he had expected a certain amount of give and take on the final terms of the lease, but those terms as stated by Hull were so far divergent from his verbal agreement with Dunkle that he could not accept them. Further, he wrote, if respondent would reimburse appellant for the expense of installation of the airline, he would in effect forget the entire matter. This was followed by another letter from appellant to Hull written September 19, 1955, wherein appellant stated he was giving up all further work on respondent's property, and since the new lease had never been consummated, he believed it to be Hull's option to refigure the settlement for concentrates shipped on the original lease on the 50-50 basis, and respondent would have to pay for tramming of ore and trucking to the mill in addition to paying for the Sidney air rental from June 1, and for the cost of installation of the airline.

Upon his return from a three-weeks trip to New York, Hull answered on October 7, 1955, explaining the settlement for concentrates was to be figured under terms of the new lease in accordance with his letter of May 3, and further that respondent would not stand the cost of the Sidney airline. It should be noted the parties figured ore settlements during the summer of 1955 on the basis of the new agreement, that is to say, 15 per cent of the net smelter returns was paid to respondent.

The complaint in this action seeks recovery in the amount of $1,492.36 allegedly expended by appellant in the construction of the Sidney airline in reliance upon representations made to appellant by agents and officers (Dunkle and Hull) of respondent, relative to the granting of the lease extension. The answer filed by respondent denies the material allegations of the complaint and sets up as an additional defense the fact a strike of mill workers occurred August 16, 1955, and this strike was the dominant reason appellant had terminated whatever agreement the parties had. The answer is joined with a cross-complaint wherein respondent seeks the sum of $1,500 damages because a large amount of ore allegedly left by appellant at the termination of his operations was blocking and obstructing the use of a passageway on respondent's property. By leave of the court, an amendment to the cross-complaint was allowed wherein it was...