Molybdenum Corp. of America v. Kasey

• Decision Date: 17 December 1959
• Citation: 176 Cal.App.2d 357,1 Cal.Rptr. 400
• Parties: MOLYBDENUM CORPORATION OF AMERICA, a corporation, Plaintiff, Cross-Defendant, Respondent and Appellant, v. J. Bryant KASEY, Maryann Kasey and Julius A. Paskan, Defendants, Cross-Complainants, Appellants and Respondents. Civ. 5930.
• Court: California Court of Appeals Court of Appeals

Page 400

1 Cal.Rptr. 400

176 Cal.App.2d 357

MOLYBDENUM CORPORATION OF AMERICA, a corporation, Plaintiff, Cross-Defendant, Respondent and Appellant, v. J. Bryant KASEY, Maryann Kasey and Julius A. Paskan, Defendants, Cross-Complainants, Appellants and Respondents.

Civ. 5930.

District Court of Appeal, Fourth District, California.

Dec. 17, 1959

Rehearing Denied Jan. 13, 1960.

Hearing Denied Feb. 10, 1960.

Schultheis & Laybourne, Everett B. Laybourne, Los Angeles, Lonergan & Jordan, John B. Lonergan, San Bernardino, for respondent and cross-appellant.

Scudder & Forde, Guy Richards Crump, Los Angeles, for appellants and cross-respondents.

SHEPARD, Justice.

This is an action for declaratory relief wherein both parties seek clarification of a dispute over their rights in certain unpatented mining claims in the Clark Mountain Mining District of San Bernardino County. Both parties have appealed.

From the record before us it appears that during the years 1924 to 1950, thirteen unpatented lode mining claims were located by plaintiff's (hereinafter called Company) predecessors in interest in the area with which we are concerned. Twelve of these claims (hereinafter referred to as Sulphide Queen claims) bear the names Sulphide Queen Nos. 1 and 2; Lead Mountain Nos. 2, 3 and 4, and East Extension; Wash Queen; Wash Queen No. 2; Hard Rock Queen; and Sulphide King Nos. 1, 2 and 3. These twelve claims were all acquired by Company before entering into the contract with defendants (hereinafter called Kasey) on June 11, 1951, which contract hereinafter will be discussed at length. Also in the year 1950, Kasey located twenty-nine lode and placer mining claims in the same area. Such lode claims are called Sleeper Nos. 1 and 4; Dymius; Dymius No. 1; Somnabulist No. 3; Somnabulist Fraction Nos. 1 and 2; Sleeper Fraction No. 1; Morpheus Nos. 1, 2, 3, 4 and 5; Galenite; Barito; Neola; La Prase; Neodymius and Neodymius No. 1. The placer claims are called Lanthan Nos. 1, 2, 3, 4, 5 and 6; Alluvium, Alluvium No. 1 and Aqua.

On June 11, 1951, Company entered into the contract with Kasey for the purchase of Kasey's claims. July 22, 1951, Company through its agent Allen located a lode claim called Betty Ann and title was later transferred to Company. September 21, 1951, Company exercised its option to purchase under the contracts, and deeds were thereupon executed and delivered by Kasey to Company. On or about March 2, 1950, and prior to any of Kasey's locations one Krone located a lode claim called Onessa No. 4, title to which was acquired by Company by purchase on December 20, 1951. Kasey attempted to locate Sleeper No. 1 Annex on April 9, 1955. By its complaint Company only contests the validity of Kasey claims Lanthan No. 1, Sleeper No. 1, Sleeper No. 4, Dymius, Dymius No. 1, Somnabulist No. 3 and Somnabulist Fraction No. 1. ¹ The real burden of the controversy is that Company seeks an adjudication that will relieve it of the obligation to pay royalty on minerals mined by it from the claims in question, and Kesey seeks a contrary adjudication.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

An understanding of the contract is vitally essential to a determination of the issues of the case. The contract first recites representation of ownership of claims by the parties and the desire of Company to acquire all of the Kasey claims and appurtenant rights lying within a ten-mile radius of a point which is fairly central to all of the claims named in the contract. Section First grants a 90-day option to Company to purchase the Kasey claims for a total purchase price of $2,000,000, $15,000 of which was paid down for the option, $135,000 of which was paid on the exercise of the option and the execution and delivery of the deeds from Kasey to Company, and the total balance from royalties from the expected recovery of minerals from the claims. Section Second warrants Kasey's good title in the claims agreed to be sold (called in the contract Primary Claims). Section Third grants Company the right to 'enter into possession' of the Kasey claims and to mine for testing purposes during the 90-day option period. Section Fourth provides that whenever Company commences commercial production from any of the other Sulphide Queen claims it will also commence and continue, within economically feasible limits, the production from Wash Queen claim. Section Fifth provides that Company will pay royalties on production from any valid Kasey claims except that no royalty will be paid from production on the Sulphide Queen claims. Then follows an exception to the exception which says 'Excepting only * * * minerals mined from any deposit or vein within both the Wash Queen claim and a good, valid and subsisting Primary Claim and not within any of the other Sulphide Queen claims'. Then follows a royalty limitation (as to Wash Queen) of 135,000 tons and a recital that references are to claims as presently located on the ground, methods of computing net returns for royalty purposes, and the total maximum royalty limitation. Section Sixth covers procedure in payment of royalties and in giving notices by one party to the other. Section Seventh provides that on the exercise of the option Kasey 'will thereby (a) admit that each of the lode mining claims included in the Sulphide Queen claims as now monumented and marked on the ground is and has been a good, valid and subsisting mining claim.'; that Kasey consents to a judgment quieting Company's title to the Sulphide Queen claims as against Kasey in a then pending action, 'provided that the foregoing shall not prejudice any rights which the Owners would otherwise have to receive royalties under Section Fifth hereof'. Section Eighth requires Kasey to perform and file proofs of annual assessment work. Section Ninth must be quoted in full.

'Ninth: It is understood that Molybdenum has not made or completed an examination respecting the validity of the Primary claims or respecting the existence or value of any rare earth minerals therein and it is agreed that neither the execution of this Agreement nor the exercise of the option herein provided by Molybdenum shall prejudice or impair the right of Molybdenum to assert in good faith the invalidity of any of the Primary or Secondary claims or the exercise by Molybdenum of the full and complete rights of ownership of the Primary and Secondary claims, including, without limitation, the right to determine whether it shall mine (excepting only as otherwise specifically provided in Section Fourth hereof), maintain or abandon any of said claims or any part thereof, provided, however, that if Molybdenum shall abandon any Primary claim or part thereof and relocate the same, such abandonment and relocation shall not relieve Molybdenum from any obligation it might otherwise have to pay royalty under the provisions of Section Fifth of this Agreement.'

Section Tenth provides methods of settle net proceeds disputes. Section Eleventh prevents the agreement from being used as evidence if the option be not exercised. Section Twelfth requires each party to execute and deliver all documents and do all things necessary or desirable to carry out the purposes of the agreement. Section Thirteenth gives certain restricted rights to Kasey to mine named minerals from certain named claims. Section Fourteenth provides for assignability and inheritability of the rights of each party.

After a 33-day trial and numerous extended motions and countermotions the court in general substance found that the claims called Sleeper No. 1, Somnabulist No. 3 and Dymius (excepting the westerly 100 feet of Dymius) were valid claims and that Kasey is entitled to the contract royalties therefrom as to those portions thereof which do not overlap Onessa No. 4, Sulphide Queen No. 2, Sulphide King No. 1, Lead Mountain Nos. 2 and 3 and Wash Queen No. 2. The court further found that the claims called Somnabulist Fraction No. 1, Sleeper No. 4, Dymius No. 1 and Lanthan No. 1 are not valid claims.

Not specifically mentioned in the pleadings but necessarily involved in the question of payment of royalties was the question of whether or not extralateral rights of Company through alleged apexing of veins on Sulphide Queen claims outside of Wash Queen would affect the right of Kasey to royalties from minerals mined on Wash Queen. In this respect the court found in substance that the contract between the parties had abridged for royalty purposes, as between these parties, any extralateral vein rights that Company might try to use for the purpose of evading payment of royalties to Kasey.

All decisions in this case necessarily depended to some degree on the priority and validity of the various claims since all of the Sulphide Queen claims, as well as Onessa No. 4 and Betty Ann, are to some extent overlapped in crazyquilt fashion by one or more of the Primary claims.

Kasey first contends that Section Fifth is ambiguous and that extrinsic evidence should have been received to explain its meaning. Kasey further contends in this respect that the meaning given Section Fifth by the trial court is not correct. As a further adjunct to this point Kasey contends that they offered certain evidence to show consideration, and that it was improperly rejected. A reading of the whole contract convinces us that the trial court was right in holding Section Fifth to be clear and unambiguous. It is true that whenever the meaning of a contract is uncertain or doubtful, evidence of extrinsic circumstances may be received to clarify the intent of the parties in the contractual language which they used. Walsh v. Walsh, 18 Cal.2d 439, 443, 116 P.2d 62. It is also well established, however, that if upon a reading of the whole contract the portion of the contract under attack is clear and explicit no extrinsic evidence will be received to vary its plain terms. As was said in Universal Sales Corp. v. Cal. Etc. Mfg. Co., 20 Cal.2d 751,...