Lucky Five Min. Co. v. H. & H. Mines, Inc., 8064

• Decision Date: 08 July 1954
• Docket Number: No. 8064,8064
• Citation: 273 P.2d 676,75 Idaho 423
• Court: Idaho Supreme Court
• Parties: LUCKY FIVE MINING CO. v. H. & H. MINES, Inc.

Page 676

273 P.2d 676

75 Idaho 423

LUCKY FIVE MINING CO. v. H. & H. MINES, Inc.

No. 8064.

Supreme Court of Idaho.

July 8, 1954.

Rehearing Denied Sept. 2, 1954.

James G. Towles, Kellogg, Therrett Towles, Spokane, Wash., for appellant.

Sennett S. Taylor, Chas. E. Horning and Eugene F. McCann, Wallace, for respondent.

GIVENS, Justice.

October 6, 1939 appellant leased in writing to W. A. Noon, for a term ending November 1, 1942, with provisions for extensions on terms not involved herein, the California (referred to as California Placer One), Idaho, Oregon and Relief Creek No. 2, placer mining claims, in the Orogrande and Elk City mining districts in Idaho County, for a cash rental of $500 on the execution of the lease; $2,000 to be paid, on certain contingencies, on the 15th day of May, 1940. Further rentals and royalties of $15% upon determination by lessee to proceed and notice of such intention, following completion of his testing on or before May 15, 1940. Lessee agreed to begin work within sixty days thereafter and if he did not so commence--except for certain conditions not important herein--to pay as advance royalty $7,000. Upon failure to commence operations within twelve months thereafter, a further $7,000 and upon failure to commence operations within twelve months after that, the lease to be forfeited. Lessor warranted its title, but if title was questioned or defects appeared from an examination of the abstract of title, 'or otherwise,' the lessor would quiet title and if it did not do so, after twenty days' notice, the lessee could; the expenses thereof to be deducted from the purchase price. Lessee was given immediate right of entry and unlimited scope to test, at his expense, the land; to complete same on or before May 15, 1940 and same day, to give notice whether he intended to proceed. Upon notice of intention to proceed----

'* * * the payment of $2000 * * * shall become due and payable.'

'* * * If lessee shall fail to make said payment of $2000 on or before May 1_, 1940, this lease shall thereby be terminated and lessee shall thereupon vacate and surrender said premises.' Paragraph 4 of the lease stated:

'* * * the maturity of any such payment or obligation may be extended until such defect (title) shall have been corrected or such litigation shall have been terminated.'

Paragraph 17 was as follows:

'Lessee hereby reserves the right at any time to surrender possession of said premises and to terminate and cancel this lease by serving thirty days' written notice of such surrender and cancellation upon lessor.'

Title was questioned and the defects were considered so serious by both lessor and lessee, that lessor brought quiet title suit December 6, 1943.

The lease was assigned December 8, 1949 to respondent. Trial was had in the quiet title suit March 28, 1950 and decree entered March 31, 1950, from which the lessor appealed because title was not quieted in all the property claimed. Final decision of this Court was rendered July 26, 1951; Lucky Five Min. Co. v. Central Idaho Placer Gold Mining Co., 71 Idaho 490, 235 P.2d 319, q. v. affirming in part and reversing in part, with directions to the trial court.

Appellant's complaint herein alleges that in compliance with such mandate, the trial court entered the decree quieting title in lessor as directed August 20, 1951. Respondent's amended answer admitted that such decree was so entered on said date.

Suit herein was filed to enforce payment of the $2,000 and $14,000 royalties, on the theory the title was quieted as of May 15, 1950 and mining operations were not commenced within succeeding sixty-day and twelve-month periods thereafter, and alleging various claimed fraudulent claim manipulating transactions by defendant and particularly John C. Higgins, the asserted alter ego of William A. Noon, original lessee, and the real power behind the defendant Company. Higgins characterized Noon as his mining scout, and Higgins negotiated and revised the leases and was, by his own say-so, dominant in the transaction.

Among other defenses, respondent claimed the service in the quiet title suit was defective as to defendant Central Idaho Placer Gold Mining Company, a co-partnership; hence, title never has been quieted, testing had not been completed and maturity of payments and obligations were extended until the termination of the title litigation and before that it had, as permitted, cancelled the lease; and that appellant's action was barred by Section 9-505, I.C.

Judgment was rendered for respondent because the above service was defective and title never quieted in the former suit and respondent had a reasonable time after the litigation terminated to further test and notify acceptance and begin operations, because testing and mining costs had increased.

Shortly after the lease was negotiated, Higgins repeatedly attempted to get Clinkenbeard, appellant's secretary and evidently moving spirit, to modify and change the terms of the lease as too onerous. Clinkenbeard consistently resisted such importunities and the lease never was changed. Paragraph 8 of appellant's complaint thus alleges appellant's construction of the latter part of Paragraph 4 of the lease:

'Said lease also provided in effect that if there was any substantial defect in the title to said leased premises, or any part thereof, plaintiff as lessor therein would take the necessary legal steps to remove or correct the same, and that if any such defect would jeopardize lessee's right to possession or operation of said premises or to remove minerals therefrom, and if any payment should fall due or any other obligation of lessee should mature thereunder while such defect should remain uncorrected or while any litigation based on any alleged defect in lessor's title should be pending, the maturity of any such payment or obligation should be extended until such defect should have been corrected or such litigation terminated.'

While there was a conflict in the evidence, there is sufficient evidence to sustain Paragraph 14 of the Findings:

'That prior to the 15th day of May, 1940, the lessees, W. A. Noon and John C. Higgins, the defendant's predecessors in interest, were informed that the title of the lessor, the plaintiff in this suit, was defective and subject to serious question by reason of the fact that its title to said Relief Creek claims substantially depended upon an alleged conveyance of said claims to said lessor from the Central Idaho Placer Gold Mining Company, Ltd., and that it did not appear of record in Idaho County that said Central Idaho Placer Gold Mining Company, Ltd., had ever made a legal conveyance or any conveyance to said lessor. That said information which had been acquired by said lessees was conveyed to the lessor, the plaintiff herein, and that it was insisted by said lessees that the lessor proceed immediately with the commencement and prosecution of a suit to quiet the lessor's title to said claims and that acting within the protective provisions of said lease, the lessees notified said lessor that they would conduct no further testing or other operations on said property and that they would make no further payments to the lessor until such time as such suit should have been filed and prosecuted to a decree which would effectively clear the title of the lessor to said property.'

Paragraph 1 of the lease provides:

'* * * That the lessee agrees to commence such testing operations promptly and to complete the same on or before May 15, 1940, or before, and on said date to give notice whether he intends to proceed under this lease, whereupon, if he gives notice of intention to proceed with placer mining operations, the payment of $2000 above provided to be paid shall become due and payable. * * *.'

There were other provisions in the lease, but they are not pertinent to the controversy herein.

Only one ground, namely, defective title and its correction authorized deferment of the maturity of payments and obligations.

The payment of the $2,000 depended on two conditions: completion of the testing by May 15, 1940, which, because the title was defective and prior thereto had been questioned, was deferred until the litigation was terminated August 20, 1951; the second condition was that upon completion of...