Rocky Mountain Gold Mines, Inc. v. Gold, Silver & Tungsten, Inc.

• Decision Date: 26 June 1939
• Docket Number: 14372.
• Citation: 104 Colo. 478,93 P.2d 973
• Parties: ROCKY MOUNTAIN GOLD MINES, Inc., v. GOLD, SILVER & TUNGSTEN, Inc.
• Court: Colorado Supreme Court

93 P.2d 973

104 Colo. 478

ROCKY MOUNTAIN GOLD MINES, Inc., v. GOLD, SILVER & TUNGSTEN, Inc.

No. 14372.

Supreme Court of Colorado, En Banc.

June 26, 1939

Dissenting Opinion August 19, 1939.

Rehearing Denied Sept. 18, 1939.

Error to District Court, Boulder County; Claude C. Coffin, Judge.

Action in ejectment by Gold, Silver & Tungsten, Incorporated against the Rocky Mountain Gold Mines, Incorporated, wherein defendant answered and sought equitable relief. To review a judgment for plaintiff, defendant brings error.

Reversed.

FRANCIS E. BOUCK, J., dissenting.

Charles F. Brannan and Ewing, Arnold & Weinberger all of Denver, for plaintiff in error.

John T Adams, of Denver, for defendant in error.

HILLIARD Chief Justice.

A complaint in ejectment. Plaintiff in error, defendant at trial, claiming as assignee of an instrument denominated a 'mining lease and option' of the premises involved, which it pleaded in extenso, and in virtue whereof it was in possession, answered and sought relief as in equity. It set forth what it had paid and performed pursuant to the terms of the lease and option, and contended the substantiality thereof evidenced its good faith, and worked such equity in its favor that defendant in error should be relegated to foreclosure. Consistently, plaintiff in error prayed for dismissal of the action, or, that only as in foreclosure, with right of redemption saved to plaintiff in error, should defendant in error enjoy fruits in the present proceeding. The case was tried as in chancery, but equitable relief was denied and ejectment adjudged. We quote the document:

'Lease.

'This indenture, made and entered into this 22nd day of September A. D. 1934, by and between the Tungsten Production Company, Inc., a Colorado corporation, as party of the first part, and hereinafter termed the Lessor, and Scott Hendricks of the City of San Francisco, State of California, as party of the second part, and hereinafter termed the Lessee, Witnesseth:

'That for and in consideration of the sum of fifteen thousand dollars ($15,000.00) and royalties hereinafter reserved unto the Lessor, and of the covenants and agreements hereafter contained to be faithfully paid, kept and performed by the said Lessee, and subject to all of the terms, conditions and reservations herein set forth, the said Lessor had demised and let, and by these presents does lease, demise and let unto the said Lessee an undivided seven-eights (7/8) of the certain lode mining claims, mill sites, property and rights, situate and being in Grand Island Mining District, County of Boulder and State of Colorado, described as follows, to-wit: (Here follows description of mining claims and mill sites involved.)

'It is agreed that all improvements, machinery and equipment which shall be placed upon the demised premises during the term hereof shall be considered as belonging to the demised premises and upon the expiration or sooner termination of this lease shall become the property of said Lessor.

'To have and to hold the said demised premises and property, subject to all of the terms, covenants and conditions herein set forth, for the sole purpose of mining and developing the same, for the term of thirty-eight months (38) from the date hereof, unless sooner forfeited or determined through the violation of any of the covenants, agreements or conditions hereinafter against the said Lessee reserved.

'In consideration of this demise and the rights and privileges herein and hereby granted, the said Lessee hereby covenants and agrees to and with the said Lessor as follows, to-wit:

'First: To commence work on the demised premises and the actual mining of the same within thirty days (30) after the date of the execution hereof, and to do all work and conduct all operations upon and within the demised premises in mine fashion, and in a thorough, skillful and workmanlike manner, and in accordance with good mining practice and methods, so as to take out the greatest amount of ore possible with due regard to the development, safety and preservation of the demised premises as a workable mine, and to the covenants and agreements herein contained; to at all times observe and comply with all laws and regulations of this State and of the United States which are now in force or which may be hereafter enacted. To pay the general taxes due and payable on January 1, 1935, and each year thereafter during the continuance of this lease.

'Second: To work and mine said premises as aforesaid steadily and continuously during the term hereof, performing not less than one hundred and fifty

(150) underground shifts of work within the demised premises within each and every calendar month beginning thirty (30) days after the date of this agreement, and until the commencement of the operation of the mill as herein provided, and after the commencement of the operation of said mill, and during the remainder of the life of this agreement not less than three hundred (300) underground shifts within each and every calendar month, and any excess above the required number of shifts that may be performed by the said Lessee within any one calendar month shall not apply on the succeeding or any following month or months of said term. The word 'shift' as herein used, shall mean the labor of one man for one day of at least eight hours.

'Third: To well and sufficiently timber all workings within the demised premises wherever necessary or proper in accordance with good mining practice, and to repair or replace all old timbering wherever and whenever it may become necessary or proper in accordance with good mining practice.

'Not to commit or permit the commission of any waste or damage within or upon the demised premises, and to at all times preserve and maintain said premises as a safe and workable mine.

'Fourth: To at all times keep the main tunnel and all other workings where operations are being conducted within the demised premises drained and clear of loose rock and rubbish and in a safe and secure condition, except only as prevented from so doing by act of God or unavoidable accident. To do no underhand stoping of any kind for any purpose and to store no waste underground, except for filling stopes where the ore has been extracted. In driving the main tunnel, the said Lessee agrees at all times to maintain the same on a uniform grade of four tenths of one per cent and to make and keep said tunnel not less than five feet wide by seven feet high in the clear above the tracks.

'Fifth: To reconstruct or revamp the mill situate on said property so that said mill shall have a capacity to adequately treat at least fifteen hundred (1500) tons of ore per month, and to start said mill operating on or Before one hundred twenty (120) days after date of this agreement; except, however, that if said mill shall not be operating within said one hundred twenty (120) day period, this lease shall not be terminated if said Lessee shall pay to the Lessor the sum of twenty-five hundred dollars ($2500.00) in cash on or Before the termination of said one hundred twenty (120) days, whereupon the said Lessee shall have an additional thirty (30) days in which to commence the operation of said mill. Additional extensions, for periods of thirty (30) days each, shall, in like manner, be granted to the Lessee upon payment of twenty-five hundred ($2500.00) on or Before the expiration of any such thirty (30) day period.

'Sixth: To ship all ores with due diligence after the same are mined or after the same are mined and milled. To occupy and hold any and all veins, cross or parallel lodes, spurs, feeders or mineral deposits of every kind which may be discovered in any manner by working within or upon the demised premises as part and parcel of the said demised premises, and as the property of the said Lessor with privilege to mine same under this lease.

'Seventh To pay to the Lessor a royalty of 12 1/2% of the net mill, smelter or sampler returns of all ores mined or extracted by the said Lessee from the demised premises, and a like royalty on the net mill, smelter or sampler returns of any and all mine dumps or mill tailings that have been or may be extracted from the demised premises and located and deposited thereon. For the purpose of fixing the compensation to be paid by said Lessee to the said Lessor for the use by said Lessee of the Boulder County Tunnel and/or mill and the other property hereby leased in the mining of outside ores from other properties not covered by this lease, a vertical plane shall be considered as extended downward through the West end line, as well as through the continuation in its own directions Northerly and Southerly of the West end line of the said Boulder County Lode No. 43, and it is agreed that said Lessee shall pay the said Lessor, as compensation for the use of the property hereby leased, 12 1/2% of the net mill, smelter or sampler returns of all outside ores mined by Lessee East of said vertical plane and 6 1/4% of the net mill, smelter or sampler returns of all outside ores mined by said Lessee West of said vertical plane. If the said Lessee shall sell any mill tailings or ores from any mine dumps which have been extracted from the demised properties but which have been or shall be deposited on outside ground, said Lessee shall pay to the said Lessor 6 1/4% of the net mill, smelter or sampler returns thereof. If the said Lessee shall mill any ores on the demised premises which have not been extracted therefrom or which have not been extracted from other properties through and by means of workings on the demised premises, said Lessee shall pay to the said Lessor as a usage charge 6 1/4% of the net mill, smelter or sampler returns of all such ores. Net...