Whitelock v. Leatherman

• Decision Date: 09 May 1972
• Docket Number: No. 71-1474.,71-1474.
• Citation: 460 F.2d 507
• Parties: C. L. WHITELOCK, Plaintiff-Appellee, v. Delbert LEATHERMAN et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

460 F.2d 507 (1972)

C. L. WHITELOCK, Plaintiff-Appellee, v. Delbert LEATHERMAN et al., Defendants-Appellants.

No. 71-1474.

United States Court of Appeals, Tenth Circuit.

May 9, 1972.

Kenneth E. Barnhill, Jr., Denver, Colo., for plaintiff-appellee.

John D. Ward, Denver, Colo. (Thomas R. Young, Denver, Colo., with him on the brief), for defendants-appellants.

Before SETH and McWILLIAMS, Circuit Judges, and CHRISTENSEN, Senior District Judge.^*

CHRISTENSEN, Senior District Judge.

Upon findings of fact which we have determined to be generally supported by the evidence, the court below granted specific performance of an agreement of the defendants-appellants Leatherman and Cope to assign state mining leases to the plaintiff-appellee Whitelock. Finding little substance in the grounds for appeal expressly explored in the briefs and oral arguments here, but having considered also certain entwined problems which are not without difficulty and which refute appellee's contention that the appeal is frivolous,¹ we conditionally affirm.

The points specifically urged by appellants in support of their appeal are: (1) that certain findings and conclusions of the trial court are not supported by the record; (2) that the trial court erred in restricting evidence concerning the circumstances of the execution of a certain "Mining Lease and Option to Purchase"; (3) that this lease-option was voidable because it was not executed by the plaintiff lessee; and (4) that it was voidable because it was a mere option.

The evidence discloses that appellants-defendants Leatherman and Cope on or about July 9, 1969, acquired from the Colorado Board of Land Commissioners Colorado Fluorspar Mining Lease #2134/16-F. According to plaintiff's testimony, Leatherman approached the plaintiff to see if he wanted "to lease their property". The acreage of the existing lease wasn't deemed large enough by plaintiff and he asked Leatherman to go to Denver to "pick up . . . five or six hundred acres more to tie this all in." Plaintiff told him to take the additional lease in Leatherman's and Cope's names "as long as I am dealing with you on this 158 acres." Plaintiff gave Leatherman $400 at that time, $310 being the cost of the lease and the balance to be used as expenses. Upon the accomplishment of this mission Leatherman and Cope signed a form headed "Mining Lease and Option", completed by plaintiff, which plaintiff testified he had "always used" but which apparently was not tailored to the particular transaction. Leatherman stated when the form was handed to him, "That's fine, and I know the State Land Board, I'll take care of everything." Plaintiff paid Leatherman $1000 and agreed to pay him also "a two and a half per cent royalty."² Plaintiff through "oversight" didn't sign the lease-option delivered by Leatherman but coupled explanation of this oversight to the statement, "but Mr. Leatherman was going to get the other from the state anyway." The lease-option nonetheless was recorded by plaintiff with the county recorder.

The completed lease-option form as so signed and recorded recited that it was "entered into the 30th day of July", the year being omitted, between Delbert Leatherman and Wiley A. Cope, thereinafter referred to as Lessor, and C. L. Whitelock, thereinafter referred to as Lessee. It provided that the Lessor, in consideration of the payment of rents and royalties and the performances set forth, granted and leased to the Lessee the mining properties covered by Fluorspar Mining Lease #2134/16-F, procured independently by Leatherman and Cope, and Fluorspar Mining Lease #2136/16-F, obtained by them pursuant to Leatherman's oral agreement with plaintiff; that "the term of this lease shall be for a period of fifteen years with the lessee having the option to buy or to renew for an additional fifteen years", the option price being stated as $35,000; that all royalties were to apply to the purchase price of the property and that "as consideration for this lease", lessee agreed to pay the lessor $1,000 cash and 2½ overriding royalty. There were other provisions in the instrument typical of mining leases, including a covenant that the lessee would operate the mine in full compliance with all state mining laws, but nothing further tending to clarify the problems before us.

The evidence further established that plaintiff paid accruing rentals due to the State Board of Land Commissioners under the primary leases following the delivery of the lease-option to him, and that the Board's regulations regarding the assignment of leases did not recognize a sublease as such but required an assignment to be executed on an approved form by the original lessee in favor of any sublessee, a new lease then to be issued to the latter. Other arrangements between the sublessor and sublessee were to be left to their separate agreement. The primary leases covered by the sublease-option executed by Leatherman and Cope contained consistent express provisions.³

Plaintiff went into possession of the property, had it inspected by geologists and engineers, and did substantial work on it with heavy equipment before his possession was interrupted by Tripp, also defendant-appellant herein. Immediately preceding this occurrence Leatherman had told plaintiff that he had been contacted about the property by Tripp and that he had been offered $500 cash and one quarter percent royalty for each (presumably for plaintiff, Leatherman and Cope). Plaintiff told Leatherman he was not interested. It was learned later that Tripp's entry upon the property was the result of an understanding between him and the other defendants-appellants.

Reciting without supporting pleadings or findings that it had "jurisdiction over . . . the subject matter of this action", the trial court found the facts consistently with the evidence recited above, and particularly found that in reliance upon the lease and option plaintiff commenced work on the described lands with the full knowledge of the defendants, and that "by express provision and by every reasonable implication arising from the provisions of said Mining Lease and Option to Purchase, the defendants Leatherman and Cope agreed to perform any and all acts reasonably necessary to perfect plaintiff's title to the leasehold estates reflected in Colorado Fluorspar Mining Leases # 2134/16-F and #2136/16-F"; that the appellants Leatherman and Cope refused to execute forms required by the State Board of Land Commissioners as necessary to accomplish the assignment of the state mining leases in accordance with its regulations and that on or about March 23, 1971, the defendant W. D. Tripp without authorization from the plaintiff entered and did work upon the lands described in said leases at a time when he had actual and constructive notice of plaintiff's leasehold interest in said lands.⁴

From these findings the trial court concluded that plaintiff's failure to sign the "Mining Lease and Option to Purchase" did not affect its validity and binding effect, that the absence of approval of any assignment of the leases by the Board of Land Commissioners had no effect upon the relationship between the parties, that plaintiff was entitled to specific performance of "defendants'⁵ agreement to convey and assign said leases to him", and that the defendant Tripp had no right to enter upon the premises described in the leases. Accordingly, appellants Leatherman and Cope were ordered within ten days to execute and deliver to counsel for plaintiff forms required by the Colorado State Board of Land Commissioners to effect an assignment to plaintiff of the primary leases in question, in the absence of which it was provided that the court would appoint some person to execute these forms for and on behalf of the defendants. It was from this order, treated as the final judgment in the cause, that this appeal was taken.

As to appellants' first point, an examination of the record reveals that all of the essential findings of fact of which complaint is made⁶ are supported by substantial evidence.

Appellants point out that the trial court consented to the amendment of the pre-trial order to permit argument directed to the question "whether or not a lease and option to purchase which does not provide for a specific time in which to commence work was voidable" and argues that the trial court failed to make a finding of fact or conclusion of law on this issue. We think this issue was one of law determinable from the face of the written document. In effect the trial court did conclude that the written "Lease and Option to Purchase" was not voidable, supported as it was by independent consideration as well as the agreement to pay an overriding royalty.⁷

Appellants' second contention is that they were unduly restricted in the development of the circumstances of the execution of the written lease-option. This is not substantiated by the record. It is true that the court itself raised the question of the parol evidence rule in connection with the cross-examination of the plaintiff by appellants' counsel and that thereafter the circumstances leading up to the form and execution of the lease-option were not fully explored. However, this was not the result of any preclusive ruling by the trial court but at appellants' own election, tactical or otherwise.⁸

Defendants concede in connection with their third point that the doctrine of Equator Mining and Smelting Company v. Guanella, 18 Colo. 548, 33 P. 613 (1893), renders signature of a written lease by a lessee unnecessary if the lessee in reliance upon the lease goes into possession and does substantial work on the leased premises. They question both that substantial work was done and that possession was taken by appellee. The transcript of the evidence, however, contains ample evidence of both.

Appellants' final contention is that the "Mining Lease and Option to Purchase" was voidable as a mere executory option. Leatherman...