Golden Cycle Min. Co. v. Rapson Coal Min. Co.

• Decision Date: 01 May 1911
• Docket Number: 3,342.
• Citation: 188 F. 179
• Parties: GOLDEN CYCLE MINING CO. v. RAPSON COAL MINING CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

188 F. 179

GOLDEN CYCLE MINING CO. v. RAPSON COAL MINING CO. et al.

No. 3,342.

United States Court of Appeals, Eighth Circuit.

May 1, 1911

Tyson S. Dines, for plaintiff in error.

Henry McAllister, Jr. (Joel F. Vaile and William N. Vaile, on the brief), for defendants in error.

Before VAN DEVANTER and HOOK, Circuit Judges, and CARLAND, District judge.

PER CURIAM.

On the 11th day of July, 1906, the Golden Cycle Mining Company plaintiff in error, made and entered into a contract with the Rapson Coal Mining Company and the Curtis Coal Mining Company, defendants in error, which, so far as is material to the questions raised upon this record, was in the following language:

'This agreement, made and entered into this 11th day of July 1906, by and between the Golden Cycle Mining Company, a West Virginia corporation doing business in the state of Colorado, and hereinafter called the Mining Company, party of the first part, and the Rapson Coal Mining Company and the Curtis Coal Mining Company, both Colorado corporations hereinafter called the Coal Companies, parties of the second part, witnesseth:

'Whereas the mining company is now operating one or more metalliferous mines in the Cripple Creek mining district in Teller county, Colorado, and intends in the near future to begin the operation of its ore reduction works near Colorado City, El Paso county, Colorado, and desires to secure a continuous supply of coal for use in the operation of its said mines and reduction works, and any other mines or reduction plants it may hereafter acquire in the same vicinity, and

'Whereas, the Coal Companies are engaged in the business of mining lignite coal in and upon the coal mines which they control for such purposes near Colorado Springs, Colorado, and mines of bituminous coal near Rugby in Las Animas county, Colorado, and are desirous of enlarging their market for the output of coal from said mines:

'Now Therefore, the parties hereto have agreed as follows:

'(1) During the period beginning with the date hereof and ending December 31, 1910, the Mining Company agrees to purchase from the Coal Companies all the lignite coal it may use in the operation of its said mines and reduction works, and also all the bituminous coal it may use so long as the Coal Companies are able to furnish a good quality of the same at as favorable prices and under as favorable conditions for delivery as other coal mine operators may be willing to furnish the same.

'(2) During said period of time the Coal Companies agree to supply to the Mining Company all of said coal that it may desire to purchase and use for the purposes aforesaid, and make such prompt delivery of the same as the necessities of the Mining Company may require. * * *

'(11) It is agreed that in the event the Mining Company shall acquire a substantial interest in a coal mine as owner, lessee or stockholder whereby it secures the control of the operation of such mine, then the Mining Company may, at its option, declare this contract terminated upon giving the Coal Company ninety (90) days' written notice of its intention to do so.'

Immediately upon the execution and delivery of the contract from which the above excerpts are taken, the Coal Companies commenced the performance of said contract and at all times thereafter until the 13th day of May, A.D. 1908, did fully perform all the obligations and agreements of said contract by them or either of them to be performed, and did sell and deliver to the Mining Company and said Mining Company did receive and purchase all the lignite coal required and used by it in the operation of its mines in the Cripple Creek Mining district, Teller county, Colo., and its reduction works near Colorado City, El Paso county, Colo., and said Mining Company did pay to the Coal Companies the contract price therefor.

On the 13th day of May, A.D. 1908, above mentioned, the Mining Company refused to purchase or receive from the Coal Companies any more lignite coal under the contract herein mentioned. July 1, 1908, the Coal Companies commenced this action against the Mining Company to recover damages for the alleged breach of the terms of the contract herein mentioned by the Mining Company in refusing to purchase or receive any more lignite coal under said contract after May 13, 1908. The Mining Company appeared in the action and after a trial in the court below a verdict was rendered in favor of the Coal Companies and against the Mining Company upon which final judgment was rendered in favor of the Coal Companies for the sum of $21,250, besides costs and disbursements. The Mining Company has removed the case to this court by writ of error.

The damages claimed by the Coal Companies and for which they recovered judgment was for the fair and reasonable profits which would have accrued to them by the performance of the contract mentioned by the Mining Company from May 13, 1908, to December 31, 1910. On February 13, 1908, the Mining Company served the following notice on Charles H. Curtis, president and general manager of the Coal Companies:

'Colorado Springs, Colorado, February 13th, 1908.

'The Rapson Coal Mining Company and The Curtis Coal Mining Company, Both Colorado Corporations, Colorado Springs, Colorado-- Gentlemen: You are hereby notified that this company has acquired a substantial interest in a coal mine as stockholder, whereby it has secured control of the operation of such mine, and that this company hereby avails itself of the option contained in paragraph 11 of the contract now pending between your companies and this company for the sale and purchase of lignite coal, and hereby in accordance with a provision of said contract, contained in said paragraph 11 thereof, notifies you that said contract shall terminate at the expiration of 90 days from date of the receipt of this communication by you.

'Yours truly,

The Golden Cycle Mining Company, 'By Jno. T. Milliken, President.'

On May 13, 1908, the Coal Companies served the following notice on the Mining Company:

'Colorado Springs, Colo., May 13, 1908.

'The Golden Cycle Mining Company, City-- Gentlemen: You are hereby notified that we decline to release you from your obligations under the contract between us, dated July 11, 1906, and that we deny that said contract has been terminated by reason of any notice heretofore served on us by you. We insist that said contract is still binding and obligatory upon you, as well as upon us, and we are now ready, willing and able, and hereby offer to comply with each and every provision thereof, requiring the performance of any act or thing by us. We hereby offer to continue to deliver to you the coal mentioned in said contract at the time and place therein mentioned, which coal under said contract you are required to purchase from us, and we request you to notify us forthwith whether you will accept the delivery of said coal, according to the terms of said contract. You are further notified that we claim that you had not on February 13, 1908, at the time when you attempted to give us notice of the termination of said contract, placed yourself in such a position as to become vested with any right, under Paragraph 11 of said contract, to elect to terminate the same, or to give us notice of such election. In the event you persist in your determination to violate said contract, we will hold you liable for all damages which we may sustain by reason of such conduct on your part.

'Yours very truly,

The Rapson Coal Mining Company, 'By C. H. Curtis, President. 'The Curtis Coal Mining Company. 'By C. H. Curtis, President.'

The rule that a contract may be broken by the renunciation of liability under it in the course of performance, and that suit may be immediately instituted for the recovery of damages based as far as possible on the ascertainment of what the injured party would have suffered by the continued breach of the other party down to the time of the complete performance, less any abatement by reason of circumstances of which the injured party ought reasonably to have availed himself, is firmly established by the case of Roehm v. Horst, 178 U.S. 1, 20 Sup.Ct. 780, 44 L.Ed. 953.

After a careful review of all the cases, American and English, the Supreme Court in the case last cited declares that after the renunciation of a continuing agreement by one party the other party is at liberty to consider himself absolved from any future performance of it, retaining his right to sue for any damages he has suffered from the breach of it, but that an option should be allowed to the injured party either to sue immediately, or to wait until the time when the act was to be done still holding it as prospectively binding for the exercise of this option.

In order to reverse the judgment below, counsel for plaintiff in error urges the proposition that the contract sued on is not enforceable, because the respective promises made by the parties constituting the only consideration supporting the same are not mutually binding, and that the contract is nudum pactum. We think the word 'use' in the language of the contract is equivalent to the words 'needed, required,' or 'consumed,' and brings the agreement of the parties within the rule enunciated by this court in the case of Cold Blast Transportation Co. v. Kansas City Bolt & Nut Co., 114 F. 81, 52 C.C.A. 25, 57 L.R.A. 696. It is said in the case last cited that:

'An accepted offer

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