Hartford Coal Co. v. Helsing
| Citation | 263 N.W. 269,220 Iowa 1010 |
| Decision Date | 12 November 1935 |
| Docket Number | No. 42791.,42791. |
| Parties | HARTFORD COAL CO. et al. v. HELSING et al. |
| Court | Iowa Supreme Court |
HARTFORD COAL CO. et al.
v.
HELSING et al.
No. 42791.
Supreme Court of Iowa.
Nov. 12, 1935.
Appeal from District Court, Polk County; Loy Ladd, Judge.
Action in equity to confirm and establish plaintiffs' rights in a coal lease, to enjoin interference therewith on the part of defendants, for an accounting for coal which it is alleged was wrongfully taken out by the defendant landowner and others, for damages by way of reimbursements for permanent improvements made by plaintiffs, and for general equitable relief. The answer, in addition to general denial, alleged lease had terminated because of bankruptcy of lessor, plea of equitable estoppel, and acquiescence, and prayed for general equitable relief. Judgment for plaintiffs for value of coal taken by defendants, from which defendants appeal. Decree further finds that plaintiff had abandoned lease, and court refused to award plaintiffs damages for permanent improvements, from which plaintiffs appeal.
Affirmed in part and reversed in part on defendants' appeal. Reversed and remanded with instructions on plaintiffs' appeal.
[263 N.W. 270]
Clark, Byers, Hutchinson & Garber, of Des Moines, for appellants.
Stewart & Reno, of Des Moines, for appellees.
HAMILTON, Justice.
This action involves a controversy over a coal lease. The record is quite voluminous, the abstract containing over 400 pages. We can only refer to the facts briefly. One McIntyre originally owned the lands involved. He leased to one Routson and others the exclusive right to mine and remove coal underlying the lands for a period of twenty years, beginning May 18, 1923. The royalty at first was 15 cents per ton, and was later reduced to 10 cents. The term of this lease was assigned to the Indian Valley Gloss Coal Company, hereinafter referred to as the valley company. Defendant J. L. Helsing was one of the incorporators of this company. He later purchased the lands of McIntyre and thus became entitled to the royalty. During the year 1931, the valley company leased the mine to one A. J. Tinlin, who operated the same until November of that year, when he abandoned operations because of a fall in one of the mine entries. Some of the members of the plaintiff copartnership were employed in the mine at the time. Defendant J. L. Helsing, acting in his official capacity as secretary of the valley company, employed one John Karney and others, some of whom are plaintiffs herein, to clean up the fall. A group of six or eight of these men, including Karney, being out of steady employment, proposed to the officers of the valley company that they take over and operate this mine. They formed a kind of miners' copartnership and, to meet legal requirements, elected Karney as manager or foreman. The verbal agreement or understanding was that when any member of the partnership dropped out, he had no further interest in the partnership business. Plaintiffs were to have the use of the mine equipment and pay a royalty of 25 cents per ton for all coal removed. They commenced work November 9, 1931, and later a written lease was entered into between the plaintiff partnership and the valley company. The first draft of contract contained a reservation giving the lessor the privilege of operating a strip mine. This was rejected by the plaintiffs and another contract was prepared, omitting any reference to strip mining privileges.
It is a fair inference from the testimony that at the beginning the operation of this mine was more or less an uncertain
[263 N.W. 271]
venture. One man had tried and abandoned the effort on account of a fall or cavein of the roof of one of the entries. These miners were out of work and undertook to create a job for themselves. They were used to hard work and with the fortitude and courage typical of the average coal miner, they were willing to try again. The venture was to be for the mutual benefit of both parties. The first efforts toward the north were futile and had to be abandoned. Helsing, it seemed, had been told there was still some coal toward the north. When it was discovered there was none, he excused himself by saying he had been misinformed and encouraged the men to try south, saying that he thought they could still make good there. He showed his sportsmanship and spirit of co-operation by waiving all royalties due prior to January 1, 1932, which perhaps did not amount to a very large sum because not much coal was hoisted, but it no doubt helped out these plaintiffs as they were without capital.
They worked on without any written contract until May 12, 1932, when a contract was entered into between the Indian Valley Gloss Coal Company by V. T. McCall, vice president, by J. L. Helsing, secretary, lessor, whereby it leased to the Hartford Coal Company, a copartnership, consisting of John Karney, M. Templeton, S. Evans, George Cooper, C. Blake, H. Simpson, Tom Lewis, D. Contri, lessees, all property of said lessor, including tipple, all mining machinery, equipment of every kind and nature used and necessary for mining operation at its mine near Hartford, Iowa, including the following described leaseholds belonging to the lessor, to wit (here follows a description of real estate). Lessees agreed to pay the lessor the sum of 25 cents per ton mine run for all coal hoisted. Any additional machinery or equipment purchased by lessees for working the mine was to remain the property of the lessees with the right of removal at the expiration of the lease. Any replacement of existing machinery during the term was at the expiration of the lease to remain on the premises as the property of the lessor. The lease contained a covenant against incumbrances, except a judgment of $2,050 which lessor agreed to satisfy. There was also a provision in the lease that should lessor for any reason beyond its control lose possession or control of the property, that the lease might be canceled without recourse, or in event it became necessary or advisable for lessor to sell the property during the term of the lease, the lease might be canceled, lessees in that event to be recompensed for the actual net cost of the improvements of a permanent nature, any changes from present operations, or any new locations of shafts to have the approval of lessor. The lease was for a period of five years from April 1, 1932, and was binding on successors and assigns of all parties.
It seems Helsing, as the owner of the real estate, had not fully given up in his own mind the idea of strip mining in some of this territory covered by this lease, and despite the fact that plaintiffs had rejected a lease containing strip mining reservations, we find that as early as June, 1932, Helsing began negotiations for sale of the coal suitable for strip mining and continued these negotiations up to September, 1932. There is evidence that an agreement was actually entered into with one Mr. Cunningham, an engineer and coal operator of twenty-five years' experience in various states, for a sale of the strip coal rights for the sum of $100,000, but this finally failed of ultimate consummation because of a disagreement over the method of payment, but it went so far that the prospective purchaser employed a man to drill. He commenced drilling July 21, 1932, and drilled six holes. Records of the drillings were furnished to Mr. Helsing, owner of the land, and the University Avenue Coal Company of Des Moines, working with the prospective purchaser, Cunningham, Mr. V. T. McCall, who was a stockholder in the valley company, went with the driller, showing him where to drill. Later he drilled 55 holes in all, and was paid for his work by Mr. Helsing. He found what he called a nice piece of stippable coal. The thickness of the vein was about four feet. It was the same vein of coal as that being taken out by the shaft mine by the plaintiffs under their lease. The negotiations with these parties ended about September, 1932.
During the negotiations, the fact that plaintiffs had a lease covering these premises was mentioned, and Cunningham asked Helsing if he made a deal what would be done with the operation of the shaft mine. Helsing said that he would not have to worry about that because he would take care of any claims out of the proceeds of the deal, but that it would help materially if the new company, provided they made a deal, would give the six of them (members
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of plaintiff partnership) jobs. In this conversation Helsing said that if any serious objections or difficulty arose which could not be worked out, the valley company could be thrown into bankruptcy and the lease wiped out. Helsing did not remember making this statement, but admitted that something might have been said about bankruptcy, as the company was actually in bankruptcy during part of the time the negotiations were being carried on.
An involuntary petition in bankruptcy was actually filed September 2, 1932, by three small creditors whose claims were less than $1,000. From an...
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