Johnson v. Geddes

• Decision Date: 24 November 1916
• Docket Number: 2927
• Court: Utah Supreme Court
• Parties: JOHNSON et al. v. GEDDES et al

161 P. 910

49 Utah 137

JOHNSON et al. v. GEDDES et al

No. 2927

Supreme Court of Utah

November 24, 1916

Rehearing denied December 28, 1916.

Appeal from District Court, Third District; Hon. Geo. G. Armstrong Judge.

Action by Silas F. Johnson and another against Theron Geddes and others.

Judgment for plaintiffs. Defendants appeal.

REVERSED AND REMANDED with directions to enter judgment dismissing the complaint.

Howat Macmillan & Nebeker for appellants.

Wm. H. King and Samuel Russell for respondents.

FRICK, J. McCARTY, J., concur. STRAUP, C. J., dissenting.

OPINION

FRICK, J.

On September 23, 1909, the plaintiffs commenced this action in equity to recover the sum of $ 9,000 from the defendants as an alleged balance due upon the purchase price of certain mining claims, and to have said sum declared a lien upon said mining claims, and for an order of sale thereof to pay said $ 9,000, etc. The defendants denied the maturity of the alleged indebtedness, and, as a further defense to the action, set up the contract entered into between the parties concerning the purchase of the mining claims in question, the terms of which, so far as material to this controversy, we shall refer to hereafter. It is not necessary to set forth the pleadings. Such parts as may be deemed material, however, will be referred to in the course of the opinion.

The conceded facts, briefly stated, are, that on the 2d day of July, 1901, the plaintiffs entered into what may be termed a dual option agreement with the defendants whereby the plaintiffs sold to the defendants seven mining claims, of which six were unpatented, together with the improvements thereon. By the terms of said agreement the defendants were given the choice to pay the sum of $ 16,000 in full for said mining claims or to pay the sum of $ 21,000, $ 9,000 of which to be paid as hereinafter stated. If the defendants elected to pay the sum of $ 16,000 for the full purchase price of said claims, they were required to pay the same as follows: $ 1,000 on the date of the contract July 2, 1901; $ 1,000 on or before September 2, 1901; $ 6,000 on or before October 20, 1901; and the remaining $ 8,000 on or before July 2, 1902. Upon the other hand, if the defendants elected to pay the $ 21,000 for said mining claims the payments were to be made at the dates and upon the conditions following: $ 1,000 on the date of the contract; $ 1,000 on or before September 2, 1901; $ 6,000 on or before October 20, 1901; $ 4,000 on or before July 2, 1902; and the remaining $ 9,000, in the language of the contract were made payable in the manner and upon the conditions following:

"5. The balance of the above-named purchase price, being the sum of nine thousand dollars ($ 9,000.00), shall be paid only in the manner following and not otherwise--that is to say, on and after the 2d day of July, 1902, the said second parties, or their assigns, shall pay over to said first parties, or their assigns, a net one-half (1/2) of said second parties' proceeds from said mine, meaning thereby a net one-half (1/2) of the proceeds of all ores mined from said property after the said second parties have deducted all moneys paid out by them or expenses incurred in mining, milling, sampling, handling, transporting, smelting and marketing said ores."

The contract also contained the following conditions:

"E. The extent and manner of managing and developing said property shall be left solely to the sound and reasonable discretion of said parties of the second part.

"F. It is also understood and provided that the parties of the first part may have, if they so desire, when the property is being worked, employment thereon under the orders and direction of said second party, or his assigns, so long as said first parties are competent and faithful and said work continues, at usual miners' wages.

"G. * * * And the parties of the first part agree, upon the payment of the twelve thousand dollars ($ 12,000.00) as above specified, to deliver to the parties of the second part, or their assigns, a warranty deed containing the usual covenants conveying title in fee to their full undivided interests in the above-described premises free and clear of all incumbrances, and subject only to the paramount title of the United States in the unpatented claims. Upon delivery of said deed the second parties hereto shall make and deliver to the parties of the first part hereto their certain contract agreement to pay the balance of the purchase price named herein of nine thousand dollars ($ 9,000.00) in the manner and only in the manner provided by paragraph 5. And the said parties of the first part further agree that upon the payment of the one thousand dollars ($ 1,000.00) required, and to-day made, under paragraph No. 1, said deed shall be placed in escrow in Salt Lake City, Utah, to be delivered to the said second parties, or their assigns, upon the payment of the said twelve thousand dollars ($ 12,000.00)."

The defendants elected to purchase the mining claims for the sum of $ 21,000, to be paid, however, in the manner stated in the part of the contract we have set forth above. The defendants made the first four payments amounting to the sum of $ 12,000, and obtained the deed mentioned in the contract. Upon the delivery of the deed the parties entered into the contract provided for in the original agreement, the material parts of which are:

"In consideration of the conveyance by the second parties to the first parties of the Atlas, Atlas No. 1, Atlas No. 2, Atlas No. 3, Atlas No. 4, Atlas No. 5, and Atlas No. 6, lode mining claims, in Star Mining District, Beaver County, Utah, the first parties hereby promise and agree, for themselves and their assigns, that they will pay to the second parties or their assigns, one-half of the net proceeds of all ores mined by the first parties, or their assigns, from said property, until the second parties shall have received the sum total of $ 9,000.00 out of such net proceeds. The words 'net proceeds' as hereinabove used shall be construed as the proceeds of the sales of ores taken from said property remaining after the first parties shall have deducted all moneys paid out by them or their assigns for expenses incurred in mining, milling, sampling, handling, transportation, smelting and marketing said ores. This contract shall be deemed and construed as a covenant running with the title to said land and shall bind the grantees, heirs and assigns of the first parties. It is distinctly understood and agreed that the first parties shall not be liable hereunder to pay to the second parties any sum whatever unless such net proceeds are realized by them out of said property, and then only to the extent of one-half of such net proceeds until the full sum of $ 9,000.00 shall be paid to the second parties."

The plaintiffs, in their complaint, pleaded only the legal effect of the contract, and, among other things, also alleged:

"That said defendants, with full knowledge of the rights of the plaintiffs in the premises, and of their obligation to pay the said $ 9,000 remaining due upon the purchase price of said property, have wilfully failed, neglected and refused to pay said sum, or any part thereof, out of the proceeds of said mining property, or otherwise, and said defendants with full knowledge as aforesaid of the rights of the plaintiffs and of their duty in the premises, have wilfully failed, neglected and refused to work, develop or operate said mine, or extract ores therefrom, all for the express purpose of delaying the payment of said $ 9,000, and of defeating, if possible, the rights of the plaintiffs in the premises. That said defendants have had a reasonable time to pay said $ 9,000 from the proceeds of said mining property, and have likewise had a reasonable time to develop said property, and to sell and dispose of the same; but to do either of said things said defendants have neglected and refused and still neglect and refuse."

In support of the foregoing allegations the plaintiffs, over defendants' objections, were permitted to propound the following question and to receive the answer thereto as stated below:

"Mr. Johnson, from your knowledge of the ground and your experience as a mining man, what do you say as to whether or not with but comparatively slight expenditure ore could have been mined and shipped at a profit sufficient to have paid your $ 9,000 from the claims which were sold to the defendants by you and Lockwood? A. Why, I think with an expenditure of $ 5,000 sinking this vertical shaft, that the mine could have been paying right along."

Appellants, as appears from the evidence, did not work the mining claims after the payment of the $ 12,000, did not receive any net proceeds therefrom whatever, and did not pay plaintiffs any more money.

The court made findings of fact and conclusions of law in favor of the plaintiffs. The principal part of the findings merely relate to the contracts entered into by the parties. It, however, made some additional findings as follows:

"That said defendants, Geddes, Snyder and Beckett, at the time of the execution of said option agreement on the 2d day of July 1901, and said agreement of October 4, 1901, represented and stated they would immediately work and develop said mining claims; that they had sufficient means with which to work said property; that the examination made and caused to be made by them of said property showed that said mining claims contained large deposits of ore from which, at an expense not to exceed five thousand ($ 5,000.00) dollars, they could have mined and shipped lead, silver and other ores, at a profit, and discharged said indebtedness of $ 9,000.

"The court further finds that said mining property is valuable for...