Sutro Tunnel Co. v. Segregated Belcher Min. Co.

• Decision Date: 10 June 1885
• Parties: SUTRO TUNNEL CO. v. SEGREGATED BELCHER MIN. CO.
• Court: Nevada Supreme Court

7 P. 271

19 Nev. 121

SUTRO TUNNEL CO. v. SEGREGATED BELCHER MIN. CO.

Supreme Court of Nevada

June 10, 1885

Appeal from a judgment of the First judicial district court, Storey county, entered in favor of the plaintiff.

B. C Whitman, for appellant.

M. N Stone, for respondent.

HAWLEY J.

On the twenty-sixth day of March, 1866, an agreement was entered into by and between the trustees for the Sutro Tunnel Company, an association then existing under the laws of this state, it being the predecessor in interest of the present corporation, respondent herein, and the Gould & Curry Silver Mining Company, then a mining corporation, with reference to the construction of the Sutro tunnel, under the act of the legislature of this state, approved February 4, 1865, (St 1864-65, p. 128,) and the royalty to be paid by the mining corporation for the extraction of ore after the drainage of its mine by the tunnel.

On the twenty-ninth of March, 1879, the parties to this suit, in the city of San Francisco, state of California, made and entered into an agreement, which recites that the agreement dated March 26, 1866, "between the said parties thereto, for the construction of a tunnel known as the 'Sutro Tunnel,' is hereby made and constituted the agreement by and between the parties hereto, and recognized as existing and binding between the parties hereto, subject to the changes and modifications hereinafter contained, which are hereby agreed to and adopted, whether specific reference be herein made to the portions of said agreement hereby changed and modified or not." This new agreement contains 14 separate articles relating to the construction of lateral tunnels, drainage of the mining ground, royalty to be paid for ore extracted from appellant's mine, etc. Under the provisions of article 4 respondent agreed to construct a lateral tunnel from and to certain named points, of specified dimensions, to be provided with a suitable drain for the flow of water coming into it from the mine owned by appellant; the said lateral tunnel to be the property of respondent. Under article 6 appellant "agrees to advance to said party of the first part in gold coin of the United States, on the fifth day of each and every month, seventy dollars for every linear foot of said lateral tunnel" constructed during the preceding month. It is agreed that the sum so advanced shall not constitute a direct liability against respondent, but may be discharged as provided in article 7. It is further agreed that if appellant fails to pay respondent in the manner stated, it will be liable for all direct and consequential damages resulting from such default. In article 7 respondent agrees that the advances made by appellant under the provisions of article 6 may be repaid by appellant, deducting one-half the charges that may be due respondent upon each ton of the ore extracted from appellant's mine, until the sum so withheld shall amount to the whole sum to be advanced for the construction of the tunnel. It does not appear that any ore was extracted from appellant's mine after the execution of the contract.

This action was brought to recover the amount due for the construction of 171 linear feet of said lateral tunnel, and for the consequential damages resulting from the non-payment of the same. Appellant and respondent are corporations organized and existing under, and by virtue of, the laws of the state of California.

1. The first question to be considered involves a construction of the statute of limitations. 1 Comp. Laws, §§ 1016-1048. Can a foreign corporation, in a case where the contract was made out of this state, plead the provisions of this statute? Does section 21 of the statute refer to the provisions of section 32 as well as to section 16? Appellant contends that the statute in question is different from that of other states; that in effect it should be classified and treated as two distinct statutes,--one preceding section 32, the other including it and subsequent sections; that the latter statute is unique in its character and is independent of all the provisions contained in the first statute. This position is a novel one, and has been presented in an ingenious and plausible manner; but the question arises whether it can be supported by the crucial test applied in the construction of all statutes, [7 P. 273] --the intention of the legislature. Did the legislature intend that such a construction should be placed upon its work? Was it within the thoughts of the members of that body when enacting the original provisions in 1861, or when adopting the amendments of 1867? In considering these questions we are irresistibly led to the conclusion that such was not the intention of the legislature. When the amendments of 1867 were enacted, they became a part of the law of 1861. The law thereafter, as before, was embodied in one statute upon the subject, and must be treated as an entirety. When the amendments of 1867 were made, sections 21 and 32 were both revised. The whole subject was before the legislature. It necessarily follows that if section 21 applied to section 32 in the original act, it is also applicable in the act as amended. The question, then, is whether section 21 was ever intended to apply to section 32. The language of section 21 is general in its terms. There are no restrictions to any specified class of cases or causes of action.

In Robinson v. Imperial Silver Min. Co. 5 Nev. 75, this court declared that the expression "cause of action" in section 21 includes actions concerning real estate as well as personal actions. Section 21 was inserted for the purpose of creating an exception to the general rule as to the time when the cause of action, whatever it might be, should be commenced; the exception being the absence of the defendant from the state. There is not, in our opinion, any substantial reason why the provisions of section 21 should not be made applicable to the class of cases mentioned in section 32, as well as those mentioned in section 16. In the absence of any words in section 21 limiting or restricting its provisions to a certain class of cases or to certain sections of the statute, we are of opinion that it was the intention of the legislature that it should apply to all causes of action; to foreign corporations, as well as individuals absent from the state; to contracts made out of the state, to be performed within it, as well as to contracts made within this state.

2. The next question presented for our determination arises under the provisions of article 15 of the first agreement, executed in March, 1866:

"If any question should arise between the parties to this agreement, either in respect to the time when the mine of the party of the second part shall have been drained in accordance with the foregoing articles, and the payment of two dollars per ton for ore extracted should commence, or in respect to the amount of money at any time due or payable from the party of the second part to the parties of the first part, it is agreed that such question shall be determined by each party choosing one competent and disinterested person as an arbitrator; and in the event of disagreement between such arbitrators, they shall choose a third competent and disinterested person. The arbitrators shall be sworn, and a majority of the three may decide the disagreement between the parties hereto, and their decision shall be final."

Under this clause of the agreement, was respondent bound to arbitrate, or make an effort to arbitrate, the disagreements between it and appellant, before commencing this action? It is questionable whether this article has any application to the facts of this case. It will be observed that the agreement of 1866 is adopted "subject to the changes and modifications" contained in the agreement of 1879. The article in question related to the main tunnel, to its construction and maintenance, and to the rights and privileges of the mine-owners therein. The main tunnel was not then completed to the Comstock lode, and many questions were liable to arise as to when the tunnel should in fact drain the mines, or when the payment of royalty for ore extracted should begin; and a disagreement upon either of these questions necessarily involved the other in respect to the amount of money that might, at any time, be due or payable between the parties. The differences which arose between the parties are assigned as a reason for the making of the new contract, containing modifications and changes of a substantial nature, as follows: "And, whereas, both of the parties hereto are desirous of adjusting all differences existing between themselves, and of preventing a recurrence thereof in the future," etc.

Under these circumstances, it would seem that the fifteenth article of the original agreement was not applicable to the new condition of affairs under the contract of 1879. But if we concede, for the sake of the argument, that it must be considered as of binding force, what was there in dispute between these parties that required an arbitration to be made? Bear in mind that no controversy is presented in the record as to the length of the lateral tunnel, or its completion in accordance with the specifications, and that the amount of money to be advanced, as well as the time of payment, is expressed in the agreement. Upon this state of facts, what could have been accomplished by arbitrators under the limited authority given them in the covenant under consideration? There was no dispute "in respect to the time when the mine" of appellant should be drained; no dispute as to when the payment "for ore extracted should commence;" and no dispute "in respect to the amount of money at any time due or payable" from appellant to respondent,--within...