Nevada Half Moon Mining Co. v. Combined Metals R. Co.

• Decision Date: 12 September 1949
• Docket Number: No. 3845.,3845.
• Citation: 176 F.2d 73
• Parties: NEVADA HALF MOON MINING CO. v. COMBINED METALS REDUCTION CO.
• Court: U.S. Court of Appeals — Tenth Circuit

176 F.2d 73 (1949)

NEVADA HALF MOON MINING CO. v. COMBINED METALS REDUCTION CO.

No. 3845.

United States Court of Appeals Tenth Circuit.

July 23, 1949.

Rehearing Denied September 12, 1949.

Edward W. Clyde, Salt Lake City, Utah (Woodrow D. White and Allan E. Mecham, Salt Lake City, Utah, on the brief), for appellant.

Herbert Van Dam, Salt Lake City, Utah (Edgar C. Jensen, Salt Lake City, Utah, on the brief), for appellee.

Before BRATTON, HUXMAN and MURRAH, Circuit Judges.

BRATTON, Circuit Judge.

By separate deeds executed in 1929, Nevada Half Moon Mining Company, hereinafter referred to as Nevada, and M. C. Godbe, conveyed to Combined Metals Reduction Company, hereinafter referred to as Combined, certain mining claims in Nevada which they separately owned. And as an integral part of the transaction the three parties entered into a joint written contract, but inasmuch as Godbe is not presently involved no further reference will be made to him. The contract provided among other things that Combined should endeavor diligently to develop the property and produce and ship ores from it. It further provided that Combined should market the ores, or in the alternative should purchase and treat them at its plant, but before making such purchase or entering into any contract for the sale of the ores it should submit to Nevada its proposed offer or contract, and within twenty days after receipt of the offer Nevada should either provide a contract on better terms or be deemed to accept the offer or proposed contract of Combined. It further provided that Combined should pay to Nevada a royalty of two and one-half per cent of the net mill or smelter returns from the sale or disposal of the ores mined and produced from any of the property, such payments to be made for a period of ten years from and after the commencement of actual mining operations. And it further provided that the net mill or smelter returns as used therein should mean the net amount paid for the ores by the milling or smelter company to whom they were sold, after deducting all charges for treatment, transportation, sampling, and assaying. The parties subsequently agreed that the effective date of the ten-year period should commence on July 1, 1942. Combined produced ores from the property, processed them at its plant, sold the processed products, and paid to Nevada a royalty of two and one-half per cent of the mill returns under the schedule then in force and effect.

Pursuant to an Act of Congress, 50 U.S. C.A.Appendix, § 901, et seq., the Administrator, Office of Price Administration, placed a ceiling on certain minerals; and by administrative action, Metals Reserve Company, a wholly owned agency of the United States, paid to Combined certain sums representing premium or subsidy payments for ores produced from the property to which reference has been made. These payments began in 1942 and ended in 1947. Combined refused to pay Nevada any royalty on the sums received from Metals Reserve Company and Nevada instituted this action to recover for such royalty. The cause was tried to the court without a jury. Judgment was entered for Combined, and Nevada appealed.

The first question to which the parties address themselves is whether Combined was liable to Nevada for payment of so-called royalty on the sums received from Metals Reserve Company. The purpose of a written contract is to evidence the terms upon which the minds of the parties meet and unite at the time they enter into it. And where its terms are plain and unambiguous, there is no room for construction. But where the meaning of a contract is doubtful, the function of judicial interpretation is to ascertain the mutual intention of the parties, and when that is found it prevails over verbal inaccuracies, careless recitals, inapt expressions, or dry words of stipulation. The court should, as far as possible, place itself in the position of the parties at the time of the execution of the agreement, and then from a consideration of the writing itself, its purposes, and the circumstances surrounding its execution endeavor to ascertain and give effect to their intention. New York Casualty Co. v. Sinclair Refining Co., 10 Cir., 108 F.2d 65. The intention of the parties, when manifest, or when ascertained from the written agreement in accordance with basic canons of interpretation, must control and be enforced unless it is directly contrary to the plain sense of the binding words of the agreement. A. Leschen & Sons Rope Co. v. Mayflower Gold Mining & Reduction Co., 8 Cir., 173 F. 855, 35 L.R.A.,N.S., 1.

The cold language contained in a written agreement, standing alone, is not always controlling. General Finance Corp. v. Dillon, 10 Cir., 172 F.2d 924. That which is necessarily implied in a contract is as much a part of it as though expressly stated therein, but the implication must result from the language employed in the instrument and be indispensable to carry the intention of the parties into effect. If it is clear from all the pertinent parts or provisions of the contract taken...