IP TIMBERLANDS OPERATING CO. LTD. v. Denmiss
Decision Date | 02 April 1998 |
Docket Number | No. 96-CA-00140-SCT.,96-CA-00140-SCT. |
Citation | 726 So.2d 96 |
Parties | IP TIMBERLANDS OPERATING COMPANY, LTD. and International Paper Company v. DENMISS CORPORATION, John H. Hauberg 1982 Living Trust, et al. |
Court | Mississippi Supreme Court |
Charles Clark, John G. Corlew, Watkins & Eager, Jackson, Phillip A. Wittmann, Richard C. Stanley, Edwin H. Neill, III, Stone Pigman Walther Wittmann & Hutchinson, New Orleans, LA, Jackie M. Rozier, Jackson, Attorneys for Appellants.
Luther T. Munford, Ross F. Bass, Jr., Michael B. Wallace, William C. Brabec, Phelps Dunbar, Jackson, James A. Smith, Jr., James R. Hennessey, Smith & Leary, Seattle, WA, Attorneys for Appellees.
BEFORE PRATHER, C.J., JAMES L. ROBERTS, Jr. and MILLS, JJ.
STATEMENT OF THE CASE
¶ 1. IP Timberlands Operating Co., and International Paper Company appeal two orders of the Hinds County Circuit Court. In construing a 1945 lease agreement with a purchase option, Judge James E. Graves, Jr., determined as a matter of law that the purchase option unambiguously called for appraisers to fix the lands' value, although the option expressly provided for arbitrators to fix the value of the lands. Also, Judge Graves determined as a matter of law that the purchase option called for the lands' value to be appraised as unencumbered from the remainder of the prepaid ninety-nine year lease that runs through 2044. Appellants raise the following issues on appeal:
¶ 2. On October 25, 1945, the Denkmann Lumber Company authorized John H. Hauberg, President, or John D. Shuler, Vice-President, or W.H. Giles, Vice-President, to sell and convey to International Paper Company or Southern Kraft Timberland Corporation, all of the timber, trees, wood and other forest products, of every nature, kind and description, including the future growth thereof, on all or any part of the lands of the Denkmann Lumber Company, for such price and consideration and on such terms and conditions as may be deemed fit and proper by said officers, all without any restrictions or reservations whatsoever.
¶ 3. On October 25, 1945, Southern Kraft Timberland Corporation, a division of International Paper Corporation, executed an agreement with the Denkmann Lumber Company, in which Kraft leased approximately 140,000 acres of Mississippi land from Denkmann. Also, on the same day, Kraft leased approximately 95,000 acres of Louisiana land in another lease agreement.
¶ 4. The Mississippi agreement stated that in consideration of $1,000,000 cash paid by Kraft, and a further sum constituting the balance of the consideration, Denkmann thereby:
¶ 5. Kraft made total payments of $2,250,000 to Denkmann as consideration for the ninety-nine year lease. However, the agreement imposed upon Kraft the duty to pay the annual land taxes, exercise good forestry practices and leave the land reforested for Denkmann at the end of the lease in 2044. Kraft's rights under the lease would terminate if it failed to pay the annual land tax. Also, Denkmann reserved "the right to make and grant any and all oil, gas, gravel and other mineral leases and contracts necessary or desirable to the full mineral development of the said lands".
¶ 6. Further, the agreement allowed Kraft the right to exercise one of two purchase options for all of the leased Mississippi land. The first was to be exercised on or before March 1, 1946, at a price of $3.50 per acre. The second option stated:
¶ 7. The agreement provided that if either of the purchase options were exercised, the deed would contain full reservation to Denkmann, or its assigns of all minerals, and rights reasonably necessary to full mineral development.
¶ 8. The agreement allowed Kraft and Denkmann to assign their rights and obligations. Although not clear from a review of the record, Denkmann distributed its assets to the distributees before 1960. In 1971, the distributees of Denkmann exchanged their share of the distributed assets for $10 par value stock in the newly formed Denmiss Corporation. Beginning as late as 1960, the Denkmann distributees were represented by Agents and Attorneys-in-Fact, which included Denkmann former President John H. Hauberg, and Vice-President W.H. Giles, among others. Kraft assigned its rights to the International Paper Company, which later transferred its rights to International Paper Timberlands Operating Co., LTD. On February 15, 1996, IPTO transferred its rights and obligations to the purchase option back to IP, which left IPTO with the timber and leasehold...
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