May v. Shields
| Decision Date | 24 June 1964 |
| Docket Number | No. 3205,3205 |
| Citation | 393 P.2d 319 |
| Parties | Woodrow MAY and Glyda May, husband and wife, George Locke and Dorothy Locke, husband and wife, and Violet Blodgett and Vern Blodgett, wife and husband, Appellants (Plaintiffs below), v. Paul SHIELDS, Don Shields, Marlin Vaughn and Mamie Vaughn, husband and wife, and Wyoming White Marble and Minerals Corporation, a Wyoming corporation, Appellees (Defendants below). |
| Court | Wyoming Supreme Court |
William Jones, of Jones & Jones, Wheatland, for appellant.
M. R. Foe and D. N. Sherard, Wheatland, for appellee.
Before PARKER, C. J., and HARNSBERGER and McINTYRE, JJ.
The appellants as landowners seek to reverse a judgment of the district court under which their claim for ejectment in connection with certain mining property was denied.
The landowners admit the giving of a mineral lease to defendant-appellees for the production of marble. The primary term of the lease was five years. After about half of this term had run, the lessors served notice upon the lessees of default and termination of the lease. The notice gave the lessees 60 days within which to correct the asserted defaults. Following such 60 days the action in ejectment was commenced.
The lessors contend the lessees are guilty of four separate defaults which have caused the lease to terminate. The defaults claimed are these:
1. Failure to keep accurate and complete records.
2. Failure to keep the premises safe as to persons and livestock.
3. Failure to obtain coverage under Workmen's Compensation law and hazard insurance.
4. Failure to operate the premises in a good and workmanlike manner according to the standards and customs of the mining industry.
According to the lease agreement entered into by the parties, (1) lessees agreed to keep accurate and complete records of all minerals sold and the prices paid therefor; (2) they agreed, during the operation of the lease, to keep the premises safe both as to persons and livestock and to respond in damages for their negligence thereby; (3) they also agreed, during the operation of the lease, to furnish Workmen's Compensation and suitable hazard insurance and to save the lessors harmless from any damages through the operation of the lease; and (4) they further agreed to carry on the mining operations in a good and workmanlike manner according to the standards and customs of the mining industry.
The lease contains a provision for minimum royalty, which obligates the lessees to pay lessors a minimum royalty of $1,000 per year. In connection with this obligation there is a specific provision which recites that in the event such minimum royalty is not paid when due, then the lease shall terminate as of that date.
It is to be noted, however, that minimum-royalty payments were not in default, and there is no provision for an automatic termination in connection with any one of the four defaults claimed by lessors. There is a general provision on default, in paragraph 10 of the lease, which specifies that in the event of default by either party in the performance of any of the covenants, if such default shall continue for a period of 60 days after written notice of such default is given by one to the other (such notice setting out the particulars of such default and making demand upon the other to make good the alleged default), then it shall be lawful for the party giving the notice to terminate and end the agreement.
If we understand the position of appellants correctly, the recognize that except for the general default provisions contained in paragraph 10 their proper remedy for any of the alleged violations would be an action in damages rather than a termination of the lease. See Vaughan v. Napier, 92 W.Va. 217, 114 S.E. 526, 528; Sewell v. Aggregate Supply Company, 214 Ga. 543, 106 S.E.2d 16, 18; Keller v. Model Coal Company, 142 W.Va. 597, 97 S.E.2d 337, 340; and Mauney v. Millar, 134 Ark. 15, 203 S.W. 10, 12.
We turn therefore to a consideration of the circumstances under which lessors can declare a termination of the lease for defaults alleged pursuant to the provisions of paragraph 10. In that regard we notice appellant-lessors are taking the position that the alleged defaults pertaining to the keeping of records and operating of the premises are incapable of correction within the 60-day notice period, since they affect conduct already transpired and incapable of re-enactment.
We think termination of the lease under paragraph 10 cannot be construed as a substitute for the remedy of an action to recover damages, where a violation of covenant is claimed that cannot be corrected. It is clear from the language employed in paragraph 10 that the party notifying the other of a default must set out the particulars of such default and make demand upon the other party to make good the alleged default.
The only reasonable interpretation of such a provision is that it operates only when the particulars of the alleged default are set out as required and when there is an opportunity for the party notified to make good any existing default called to his attention. See Kirker v. Shell Oil Co., 104 Cal.App.2d 497, 231 P.2d 905, 910; Hoover v. General Crude Oil Co., 147 Tex. 89, 212 S.W.2d 140, 142-143; Neff v. Jones, Okl., 288 P.2d 712, 716; Danker v. Lee, 137 Cal.App.2d 797, 291 P.2d 73, 76; and Hermon Hanson Oil Syndicate v. Bentz, 77 N.Dak. 20, 40 N.W.2d 304, 308-309.
In order to deal with all the defaults claimed by the lessors, we deem it necessary to discuss each of them separately.
The obvious purpose of the provision for keeping accurate and complete records of all minerals sold and the prices paid therefor is to assure to lessors the full payment of all royalties. It appears, however, that the minimum royalty paid in this case exceeded and took the place of royalties payable from minerals sold. Appellants do not claim otherwise.
There is no provision for the furnishing of records by lessees to lessors, but the lessees are to keep such records. Lessors, according to the lease, are to have free access to all records as may be 'sufficient to ascertain the correctness of the computations of the royalties.'
Actually, there is no dispute as to the computations of royalty. In fact there is substantial evidence that George Locke, one of the lessor-appellants, worked for operators of the mine and acknowledged that he knew there was not enough ore being shipped for the royalty thereon to come anywhere near the minimum royalty, and as far as he was concerned there was no need for monthly statements.
Moreover, it is undisputed that, after the lessees received the notice of default from lessors, an answer thereto was served within 60 days upon lessors stating that accurate and complete records of all minerals sold and the prices paid therefor are available at the office of D. N. Sherard, attorney at law, in Wheatland. Attached to the answer was a list showing dates of sale of marble, weights shipped and sold and the price paid therefor.
Although appellants criticize the records presented by the lessees and point to the fact that certain inaccuracies were admitted, they fail to show any prejudice therefrom and frankly admit that all royalties payable had been paid through the payment of minimum royalties.
From this evidence, the district court could reasonably conclude that records had been kept 'sufficient to ascertain the correctness of the computations of the royalties,' as required by the lease; or if any default in that regard existed originally, that it was adequately remedied within 60 days after notice of default.
The agreement of the lessees regarding safe premises was that they would 'keep the premises safe both as to persons and livestock and shall respond in damages for their negligence thereby.' There was no showing that damages had resulted nor that lessees had failed to respond in damages for negligence in keeping the premises safe.
However, without attempting to say whether lessors should be restricted to an action for damages before attempting to terminate the lease for an alleged violation of this provision, we think...
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