Haynes v. Eagle-Picher Company, 6736.

Citation295 F.2d 761
Decision Date16 November 1961
Docket NumberNo. 6736.,6736.
PartiesMyra HAYNES, Pearl Garrett, Beatrice Thompson and Glenn Barr, Appellants, v. EAGLE-PICHER COMPANY, a corporation, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Douglas Hudson, Fort Scott, Kan., for appellants.

John R. Wallace, Miami, Okl., for appellee.

Before MURRAH, Chief Judge, and PHILLIPS and HUXMAN, Circuit Judges.

MURRAH, Chief Judge.

This is an appeal from a judgment of the trial court denying recovery of additional royalty allegedly due the plaintiff-appellants under a mining lease.

Plaintiffs are the present owners of an undivided one-half interest in a quarter section of land in Kansas. In 1912 the predecessor of the plaintiffs executed a lease to O. M. Youse for a primary term of ten (10) years which provided, inter alia, that "the privilege of operating shall continue as long as oil, minerals, or other substances of value can be produced in paying quantities." The material portion of the royalty clause of this lease provided:

"In consideration of which the said party of the second part hereby agree and bind himself, his executors, administrators, or assigns, or sublessees to pay or cause to be paid to the party of the first part their executors, administrators or assigns, at a sum of money equal to five (5) percentum of the market value at the place mined or produced of all oil, gas, asphaltum, lead, zinc and all other minerals or substances whatever, which may be mined or removed by the said party of the second part * * *."

By mesne conveyances (hereinafter more fully set out) defendant Eagle-Picher obtained the right to mine these premises, located in what is known as the Tri-State Mining District. The mining operations consist of bringing the ore bearing rock to the surface where it is run through a beneficiating or concentrating plant or mill, and zinc concentrates and lead concentrates are recovered from the crude ore. Contained in the concentrates are zinc, sulphur, lead, cadmium, germanium and other elements.

There is no market of any kind for the ore bearing rock or crude ores mined until they have been reduced to concentrates. There is an open market in the Tri-State Mining District for the commodities known as zinc and lead concentrates. Such market has been in continuous existence for a period of time beginning several years prior to the original lease.

A royalty, based upon the market value of the zinc and lead concentrates, as determined by the market price, was paid by Eagle-Picher and its predecessors to the plaintiffs and their predecessors as full royalty payment.

Subsequent to plaintiffs' acquisition of their interest, Eagle-Picher, utilizing advanced processing techniques, began saving commercially sulphur, cadmium and germanium out of the residue of the concentrates. No royalty was paid on these newly discovered mineral values. Plaintiffs, upon learning that minerals other than lead and zinc were being commercially saved from the ores taken from their property, demanded payment for the sulphur, cadmium and germanium under the royalty provisions of the original lease. Eagle-Picher refused to recognize any obligation under the contract to pay for these mineral substances. This suit involves the lessee's obligation under the royalty provision of the original lease to compensate the lessors for these newly found values.

The trial court held for Eagle-Picher and concluded: that plaintiffs have been paid all that was due them under the original lease; that plaintiffs are estopped from asserting that they have not been paid all royalties due them; that there is no privity of contract between plaintiffs and defendant, hence no basis for recovery; and, that there is no fiduciary relationship between plaintiffs and defendant.

Of course, if there is no privity between plaintiffs and Eagle-Picher, the case is at an end. A brief deraignment of the manner by which Eagle-Picher acquired its interest in the premises is essential to an understanding of the legal relationship of the parties.

An undivided one-half interest in the entire Youse lease was obtained by Eagle-Picher from the Commerce Mining and Royalty Company, who had held that interest as assignee of the original lessee.

The remaining undivided one-half interest in the leasehold estate is held by Eagle-Picher under two instruments, each of which cover an undivided one-half interest in a divisible portion of the quarter section. Each of these instruments had a primary term which expired prior to that of the original lease and each of which provided, as did the original lease, that if production was being had in paying quantities on the terminal date of their primary terms, then the right to operate thereunder would continue so long as such production was maintained.1

Eagle-Picher takes the position that as to the undivided one-half interest which it obtained under the instruments relating to the divisible tracts it is a sublessee — hence without privity, and under no duty to account to the lessor. Plaintiffs urge the provisions of the original lease wherein the lessee bound "himself, his executors, administrators, or assigns, or sub-lessees" to pay the royalty reserved therein and argue that Eagle-Picher, even if a sub-lessee, is responsible under the terms of the original lease.

A sub-lessee owes no obligation to the original lessor to comply with the covenants of the original lease because there is no privity — either of contract or estate — between them. See Tiffany, Law of Real Property, Vol. I, p. 201, Sec. 124; 32 Am.Jur., 342, Landlord and Tenant, Sec. 423; Thompson on Real Property, 1959 Replacement, p. 52, Sec. 1210; 52 C.J.S. Landlord and Tenant, § 529b (1), p. 341. It follows that the language of the original lease, purporting to bind any subsequent sub-lessees, did not and could not have that effect.

It is well settled that a conveyance by a lessee of...

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9 cases
  • Gilmore v. Weatherford
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • September 4, 2012
    ...for mineral development, primarily lead and zinc, in 1897. See Act of June 7, 1897, 30 Stat. 62, 72; see also Haynes v. Eagle–Picher Co., 295 F.2d 761, 762–63 (10th Cir.1961) (describing lead and zinc mining practices in the “Tri–State Mining District”). Mining activity created the piles of......
  • Cal-Am Corp. v. Spence, CAL-AM
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • September 18, 1981
    ...default in rent or royalty payments. So it would appear that the conveyance here in question is an assignment. See, Haynes v. Eagle-Picher Co., 295 F.2d 761 (10th Cir. 1961), cert. denied, 369 U.S. 828, 82 S.Ct. 846, 7 L.Ed.2d 794 (1962). However, Spears v. Canon De Carnue Land Grant sugges......
  • Combs v. Maben Energy Corp., Civ. A. No. 83-5098
    • United States
    • U.S. District Court — Southern District of West Virginia
    • June 19, 1986
    ...determined to mean, in the collective bargaining context, having acquired something of ascertainable value. Haynes v. Eagle-Picher Co., 295 F.2d 761, 765 and n. 2 (10th Cir.1961). Coal is produced for use or sale when it is first made marketable or usable as fuel. Thomas v. Blue Coal Corpor......
  • In re Pampoukidis
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut
    • August 31, 1989
    ...Co., 844 F.2d 369, 372 (6th Cir.1988); Thomas v. United States, 205 Ct.Cl. 623, 505 F.2d 1282, 1286-87 (1974); Haynes v. Eagle-Picher Co., 295 F.2d 761, 763 (10th Cir.1961), cert. denied, 369 U.S. 828, 82 S.Ct. 846, 7 L.Ed.2d 794 5 This decision does not consider whether any right that Pier......
  • Request a trial to view additional results
1 books & journal articles
  • CHAPTER 3 ACQUIRING OPERATING RIGHTS FROM A LESSEE
    • United States
    • FNREL - Special Institute Mining Agreements Institute (FNREL)
    • Invalid date
    ...& MEYERS, supra note 2, § 403.3 and cases cited therein. [7] 3A THOMPSON, supra note 2, § 1225; See, e.g., Haynes v. Eagle-Picher Co., 295 F.2d 761 (10th Cir. 1961). [8] 3A THOMPSON, supra note 2, § 1210 at 52; See, e.g., Jackson v. Sims, 201 F.2d 259 (10th Cir. 1953); Haynes v. Eagle-Piche......

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