Russell v. Golden Rule Mining Co.

• Decision Date: 04 June 1945
• Docket Number: Civil 4689
• Citation: 159 P.2d 776,63 Ariz. 11
• Parties: TOM. J. RUSSELL, H. GRADY HARRISON and T. L. DANIEL, Appellants, v. THE GOLDEN RULE MINING COMPANY, an Arizona corporation, Appellee
• Court: Arizona Supreme Court

159 P.2d 776

63 Ariz. 11

TOM. J. RUSSELL, H. GRADY HARRISON and T. L. DANIEL, Appellants, v. THE GOLDEN RULE MINING COMPANY, an Arizona corporation, Appellee

Civil No. 4689

Supreme Court of Arizona

June 4, 1945

APPEAL from a judgment of the Superior Court of the County of Maricopa. Dudley W. Windes, Judge.

Judgment affirmed.

Messrs Woolf & Shute, for Appellants.

Messrs Jennings & Salmon and Mr. Ozell M. Trask, for Appellee.

Morgan J. Stanford, C. J., and LaPrade, J., concurring.

OPINION

Morgan, J.

The appellee corporation was plaintiff below, and appellants were defendants. The parties will be designated as plaintiff and defendants. The construction of various contracts involving mining claims is required for a determination of the issues raised on this appeal. A pertinent statement of the facts and a reference to the agreements in the order of their execution are essential to a clear appreciation of the questions which have been presented to us.

The defendants owned three lode mining claims located in Maricopa County, known as the Little Daisy Group, consisting of Little Daisy Nos. 1, 2 and 3. Russell and Harrison owned jointly an undivided one-half interest, Daniel the remaining undivided one-half. On April 20, 1937, Daniel, as first party, entered into a contract with his co-defendants as second parties, covering his half interest. The contract provided:

"That the party of the first part for and in consideration of the covenants and agreements of the parties of the second part herein contained, hereby agrees to sell to said second parties, an undivided one-half interest in (describing property).

"The purchase price . . . to be the full sum of . . . $ 15,000.00, payable as follows: . . ."

We summarize: (1) $ 50 per month beginning May 6, 1937; (2) right of immediate possession in second parties to work and remove ores with 10% royalty; entire purchase price to be paid within two years; "royalties and $ 50 per month" to be applied upon the purchase price; (3) "Any machinery placed upon the property" by second parties "in the event this contract is not completed by full payment, shall be and belong to the parties of the second part." The usual provisions appear, requiring second parties to perform assessment work, to begin operations within "thirty days from May 6, 1937." All work to be done properly, etc. "(d) This being a contract of sale in which possession is given, second parties agree that they will keep posted until the purchase price is paid, or the rights herein granted are forfeited to first party" notices of nonliability. The contract concludes with the following paragraph:

"it is further mutually agreed by and between the parties hereto that in the event the parties of the second part do not promptly pay the Fifty Dollars ($ 50.00) per month, or keep and perform the covenants and agreements required of them to be kept and performed, then all rights granted by this instrument shall cease and determine, and thereupon the contract shall become null and void."

On November 15, 1937, Russell and Harrison, as first parties, entered into an agreement with one O. H. Anderson, as second party, under which they agreed "to sell to second party" the Little Daisy claims and an adjoining strip to be located immediately by them, for $ 50,000, to be paid "on the following terms and conditions" which, for brevity, we summarize:

(1) Work to begin within ten days to sink shaft an additional 100 feet, or to drift if ore does not continue in shaft; (2) At least 120 man days' work per month. If second party fails "to perform the work for a period of sixty (60) days without just cause . . . it will be considered abandonment of the property." (3) Second party is given possession of the claims, and the usual right to mine and remove ores, with provision that he shall pay a graduated royalty of 10 to 25 per cent which shall be applied on the purchase price until paid in full. In section 4 the following appears:

"It is mutually agreed and understood between the parties hereto, that parties of the first part have contracted to purchase a one-half interest in the claims herein set out from T. L. Daniel. Said contract of purchase being dated the 20th day of April, 1937. . . . The terms and conditions set out in said contract between the parties of the first part and T. L. Daniel, and the subsequent Agreement thereafter entered into for extension of time to make the payments mentioned in the said contract entered into on the 20th day of April, 1937, are all taken into consideration between the parties to this agreement. Party of the second part may take over and perform at his option, the terms and conditions of said contract . . ., and is to receive credit on the purchase price of the said above claims on all monies paid to T. L. Daniel."

In section 5 it is provided that all machinery, equipment and improvements located on the claims shall remain during the first four months of operation by second party, and to be used by him. On or before March 25, 1938, second party is to pay first parties $ 2,000 for the machinery, equipment and improvements, including first parties' milling plant, "provided that party of the second part exercises his option to take over said claims on or before the 25th day of March, 1938."

Section 6 is quoted in full: "This being an option to purchase said claims on the terms above set out, second party agrees that he will post and keep posted on said premises Notices of Non Liability, showing that he is working and operating said premises under an option contract, to purchase said claims on the 25th day of March, 1938, or any time before said date, from first parties, as provided by the Laws of the State of Arizona, for the purpose of protecting the parties of the first part against labor, material, man's lien."

Sections 7 to 10, inclusive, set out the usual conditions to the effect that the work shall be done in a good and minerlike manner, conforming to state laws, timbering where necessary, etc. Provision is made requiring the second party in each year, on or before July first, to do annual assessment work. First parties have the right of inspection, and shall be furnished with duplicate smelter or mint returns for all ores shipped.

By section 11, second party assumes all liability for injuries or hazard to employees, etc., and concludes with these provisions: "provided, the option to purchase said premises is exercised on or before the 25th day of March, 1938; in other words, until the full purchase price of said claims has been received by parties of the first part, or their order, or representatives."

Section 12 specifically provides "in case the option is exercised by party of the second part to purchase said claims, . . . in addition to royalties paid, there is to be paid to" first parties $ 50 a month for fourteen months beginning March 25, 1938, and thereafter $ 100 per month for a period of two years, to apply on the purchase price. "Party of the second part shall have the right to remove any machinery placed by him or owned by him, from said claims within sixty (60) days from the termination of this instrument."

Section 13. "It is mutually understood and agreed between the parties hereto that the agreement above set out, is an option for four (4) months, ending the 25th day of March, 1938. If, at the end of the said four (4) months' period, party of the second part desires to proceed with the development work, take over the mine; he shall give parties of the first part written notice of his intention; otherwise, this option will be considered forfeited on March 25th, 1938. Upon written notice of second party's intention to proceed with the further development of the mine, the above contract becomes the sole and only contract between the parties hereto and cannot be changed except by written consent of all the parties."

Section 14 provides: "Time is of the essence of this agreement." If the second party shall pay the purchase price and perform as required he shall have the right to receive a conveyance of the property. If he fails to make payments as required or perform conditions, the right to purchase and to receive conveyance and to have possession of and work the mine "shall at once cease and determine." In such event he shall yield possession without notice. Any and all sums of money paid by him "shall be and become the property of the said parties of the first part, as liquidated damages and as rent for said premises."

Section 15: "All machinery and equipment placed on said premises, or owned by party of the second part, shall be removed by party of the second part at his option, on termination of this agreement.

"It is agreed and understood that upon the termination of this agreement in any manner except by the purchase of said premises and their conveyance, that all timbering, ladders, pipe lines, gravity water development and buildings, and other permanent improvements shall remain on said property and be and become the property of the parties of the first part as liquidated damages."

Contemporaneously with the foregoing agreement, the Daniel contract with his co-defendants was modified. This agreement is also dated November 15, 1937. It acknowledges that the $ 50 monthly payments have been paid in full up to March 25 1938. It provides for an extension for a period of two years from May 25, 1939, on condition that from that date $ 100 per month shall be paid for twenty-four months, with graduated royalties from 5 to 12 1/2 per cent. All payments and royalties "to be applied on the purchase price on the undivided one-half interest bought from the party of the first part, until the full purchase price shall have been paid." In all other respects the...