Duncan v. Campbell

Hines, J. None of the headnotes require any elaboration except the third, fourth and fifth. The lease between the parties was for ninety years. It provided for the payment by the lessee to the lessor of 25 cents per ton for each and every ton mined and shipped from the leased premises during the life of the lease; and that, if the lessee failed to pay said royalty of 25 cents per ton as above specified, then the lease to be null and void and of no force and effect whatever. Payments for clay mined and shipped from the premises were to be made on each Saturday for the previous week. The lease provided that “if the mining, treating, and shipping of clay should stop at any time within the life of this lease for the period of one year, then this lease is to be void.” It is insisted on behalf of the lessee, that, under this provision for forfeiture, there could be no foreifeiture if the lessee mined or treated clay, although he may not have shipped any clay for a period of one year during the life of the lease. The lessor insists that the failure of the lessee to do all three of these things, and especially his failure to ship any clay from the leased premises for the period of one year, would work a forfeiture of this lease. What is the- proper construction of this stipulation ? [826] The lease contract, like all others, must be construed according to the intention of the parties and with reference to the subject-matter. Alexander v. Dorsey, 12 Ga. 12 (56 Am. D. 443); Snook & Austin Furniture Co. v. Steiner, 117 Ga. 363, 373 (43 S. E. 775). Can the lessee defeat forfeiture by either mining or treating clay? Can he defeat forfeiture by mining alone, or by mining and treating without shipping clay? It is said that the forfeiture can only result from his failure to do the three things mentioned in this stipulation, and that if the lessee does any one of them he does not fail in doing all three of them, and that in consequence no forfeiture could result. We do not think that this is the proper construction of this stipulation. It was inserted in the lease wholly for the benefit and protection of the lessor. Wills v. Manufacturers Natural Gas Co., 130 Pa. 222 (18 Atl. 721, 5 L. R. A. 603). In arriving at the true meaning of this provision in the lease, we must look to the object which the parties had in view. The rent depended upon the number of tons of clay which were mined, treated, and shipped. For the landlord to get any benefit from the mine, the tenant had to dig, treat, and ship clay or other minerals. If the lessee merely mined clay, or mined and treated clay, the landlord would get no rent or compensation. The purpose of the stipulation was to compel the lessee to mine, treat, and ship clay or other minerals, in order that the lessor might receive his royalty of 25 cents per ton for each ton mined, treated, and shipped. All three things had to be done under this lease before the lessor was entitled to payment of his royalty. Payments were to be made only when clay was shipped. We must give to this stipulation such construction as will carry out the manifest intention of the parties to the instrument, and effectuate the clear purpose and intent of this provision of the lease. The clear purpose of this stipulation was to compel the lessee to mine, treat, and ship clay, in order that the lessor might get his reserved rent. To place upon this provision the construction the lessee insists upon would lead to its unreasonable interpretation. It would make this provision, which was intended for the protection of the lessor and for the purpose of compelling the lessee to ship, clay in order that the mine might become remunerative to the lessor, an instrument by which these purposes would be partially or entirely defeated. It would permit the lessee, during the long life of this [827] lease, to mine clay and other minerals, or to mine and treat, without shipping any, for any length of time he desired, and thus deprive the lessor of all compensation from the mining operations during the period of postponed shipments. So we are of the opinion that the lessee, under this provision, forfeited, his lease if he did not ship clay for the period of one year. ' What is the effect of the breach of this stipulation by the lessee ? It is urged by able counsel for the lessee that this stipulation is a condition subsequent, for breach of which the lessor can only resort to his claim for damages. It is true “ the law inclines to construe conditions to be subsequent rather than precedent, and to be remediable by damages rather than by forfeiture.” Civil Code (1910), § 3717. But where the parties expressly stipulate for forfeiture for breach of covenant, and where precise compensation can not be made for such breach, the forfeiture will be enforced. Where the forfeiture works equity and protects the landlord against the laches of the lessee, the forfeiture will be enforced where the lease is of no value to the landlord until developed. Munroe v. Armstrong, 96 Pa. 307. While equity generally abhors a forfeiture, it does not do so when it is equitable and just, and when the enforcement of the forfeiture is the only means of protecting the landowner against the laches of his lessee, and where the lease is of no valué to the landowner until developed. Steelsmith v. Gartlan, 45 W. Va. 27 (29 S. E. 978, 44 L. R. A. 107); Chauvenet v. Person, 217 Pa. 464 (66 Atl. 855, 11 L. R. A. (N. S.) 417); Genet v. Del. & H. Canal Co., 136 N. Y. 593 (32 N. E. 1078, 19 L. R. A. 127). In Doe v. Bancks, 4 Barn. & Ald. 401 (see 5 L. R. A. 604), Best, J., said: “In construing this clause of the lease we must look to the object the parties had in view. The rent was to depend upon the number of tons of coal raised. In order to derive any benefit from the mine, it was the object of the landlord by introducing ’this clause to compel the tenant to work it. The clause therefore was introduced solely for the benefit of the landlord, to enable him in case of a cesser to work, to take possession of the mines and either to work them himself or let them to some other tenant. That, therefore, being the object of the parties in introducing the clause, I think it will be fully answered by holding the lease to be void at the option of the landlord.” [828] Provisions for forfeiture in ordinary leases have always been strictly construed by both courts of law and equity. Jenkins v. Jenkins, 63 Ind. 415 (30 Am. R. 229); Jackson v. Brownwell, I Johns. (N. Y.) 267; Jackson v. Topping, 1 Wend (N. Y.) 388 (19 Am. D. 515); Westmoreland &c. Co. v. DeWitt, 130 Pa. 235 (18 Atl. 724, 5 L. R. A. 731). When, however, the parties have made an express stipulation which will admit of but one construction, not to give effect to it would be to make a new contract for the parties, instead of construing and enforcing that which they had made for themselves. In leases of lands for mining purposes, where the rent reserved is a royalty, the courts do not hesitate, but look with favor upon provisions for forfeiture for non-exploitation. Huggins v. Daley, 99 Fed. 606 (40 C. C. A. 12, 48 L. R. A. 320). Such a covenant is a condition the breach of which works a forfeiture. Civil Code (1910), § 3721. This case does not come within the class of cases where a court of equity, on the lessor’s application, declines to cancel, during the term, a mining lease for mere delay in paying rent, and for failure to commence operations at the time stipulated, where the lessee is ready and willing to pay the rent, and to perform his covenant to open and operate the mine (Pheasant v. Hanna, 63 W. Va. 613, 60 S. E. 618); nor within the class of cases where a court of equity will never enforce a technical forfeiture, where no substantial pecuniary injury has resulted to the lessor (Craig v. Hukill, 37 W. Va. 520, 16 S. E. 363, Spies v. Arvondale &c. R. Co., 60 W. Va. 389, 55 S. E. 464); nor within that class of cases where equity will relieve the tenant against an inequitable forfeiture (12 Am. & Eng. Enc. Law, 739); nor within that class of cases where equity will, where the breach is not wilful, relieve against a forfeiture of penalty, where the stipulation is intended as mere security for the payment of money, and precise financial compensation can be made. Davis v. West, 12 Ves. 475; Garner v. Hannah, 6 Duer, 273. .But it is insisted, that, under the contract of April 20, 1918, by which the lessee agreed to pay the lessor $200 on May 3, 1918, and to pay the sum of $50 per month as royalty on "the clay for each month until he began operations, and where on February 13, 1919, the lessee paid the lessor the sum of $350 in full payment of royalty for this clay, the lessor waived the forfeiture of this lease [829] for breach of this covenant. This clearly would constitute a waiver of this forfeiture up to the date of this payment; but this payment was made and received expressly subject to the lease, and the contract for the payment of $50 per month until operations under the lease were begun was expressly satisfied in full and canceled. Thereafter the parties were remitted to their rights and obligations under the lease. Under such circumstances, the receipt of said payment did not amount to a waiver of future forfeiture for breach of this covenant. Chauvenet v. Person, supra. In view of the above rulings, the court below erred in the charge set out in the third headnote; and the verdict is contrary to the law and evidence. Judgment reversed. All the Justices concur.