Dunyon v. Scranton Mg. & S. Co.

GIDEON, J. The findings of the district court and the issues presented here are within the pleadings, hence no further reference will be made thereto. The defendant corporation was organized about the year 1900, under the laws of this state. The plaintiff was a director of the corporation from its organization to the date of filing this action. During all of that time he was its manager and had control of its mining operations within this state. The president, treasurer, and other directors were residents of the state of Pennsylvania, and the books of the company, except the record kept by the secretary, were in that state. Up until the year 1906 plaintiff received a salary of $100 per month. In that year, in the development of the mine, large bodies of valuable ore had been blocked out and his salary was increased to $350 per month. That continued until July 1, 1913. During the latter part of 1912, and in the early part of 1913, the mine did not produce sufficient ore to pay the operating expenses, and numerous letters were written between the plaintiff, as manager, and Mr. T. G. "Wolf, as president, in regard to the operation and development of the company’s mine. On or about July 10, 1913, the president of the company wrote the plaintiff and expressed anxiety over the exploration work being done and its results, and also some doubt as to his financial ability to hold out until ore in paying quantities was found, and also advised the plaintiff that there was interest then due on overdue notes, and that the company could not meet such indebtedness. He also expressed disap611 p ointment over tbe amount of money necessary to be advanced for the June pay roll. He then proceeded as follows: “I must now look to you for help in deferred payment on a portion of your salary of say $150. This back payment should not be exacted by either you or Nebeker, until all interest is paid, and enough accumulated to meet current expenses. You know from my past action that it would not be expected unless absolutely necessary, and I hope you will accept it in pfoper spirit. The life of the company, in which we are all interested, is in danger, and we must all join in bridging over. ’ ’ In response to that communication plaintiff replied under date of July 29, and among other things stated: “Nebeker and myself are perfectly willing to accept the proposition you make as to salaries, as we both have every confidence in the outcome of the property.” Prior to that, on June 9, 1913, plaintiff had written Mr. Wolf, in answer to a letter from Wolf dated May 27, saying: “As to myself will do anything that is satisfactory to you. Have made arrangements with Nebeker to take $100 per month and get the balance when we get the ore. ’ ’ That correspondence constitutes the contract under which plaintiff continued in the employ of the defendant as its manager until November 1, 1914. During that time plaintiff continued to have general control and direction of the development work carried on at defendants’ mine. At the end of each month the pay roll and statement of the expenses of that month were forwarded to a Mr. Knapp, treasurer of the company, at Scranton, Pa., and a cheek or draft was returned by the treasurer to the secretary at Salt Lake City to pay such pay roll and expenses. All moneys received from the sale of ore were remitted to the treasurer during that time. The money necessary to meet the monthly pay rolls and expenses was either loaned or advanced to the company upon the in-dorsement of Mr. Wolf and other officers of the company, and the record discloses that from July 1, 1913, to December 1, 1914, the expenses connected with the development work exceeded the income something like $20,000. In the month of — 612 — October, 1914, Mr. Wolf advised tbe plaintiff by letter that owing to the difficulty of obtaining money it would be necessary to curtail expenses, and on the 16th of that month wrote the plaintiff that he had talked the matter over with Mr. Knapp, the treasurer, and that a resolution had been passed by the directors fixing the plaintiff’s salary at $100 per month from October 1, 1914. In answer to that letter the plaintiff wired Mr. Wolf that he could not accept the terms mentioned in the letter of October 16th and stated, “In case you dispose of my services * * # I will insist on immediate payment of back salary.” Other correspondence was had between the parties concerning expenses and salaries and on November 23, 1914, Mr. Wolf, president of the company, wired plaintiff as follows: “Suspend all operations at once for the winter. .Sell all horses, at best prices, also engine if possible; arrange matters so that one watchman can take care of the property. Act at once pending receipt of letter. Pleased to receive suggestions. Financial conditions compel this.” As directed by that telegram the plaintiff stopped work on the mine, took an inventory of the property, disposed of a few items of personal property, procured a watchman to take charge of the mine and the, property located thereon, and ceased his employment as such manager about the middle of December of that year. On the day following, to wit, Decem-16, 1914, this suit was instituted to recover what is termed “back salary,” or $150 per month from July 1, 1913, to November 1, 1914. Trial was had before the court. Findings of fact and conclusions of law were made and entered and judgment rendered in favor of plaintiff. Defendant appeals. The question for determination is, Has plaintiff a right, under the facts and circumstances above outlined, to recover? If plaintiff is entitled to recover it must be upon one of two theories: First, that the contract for his salary was for a fixed and definite amount and that the date of payment was left indefinite, and, as a result, defendant would be presumed to have contracted to pay the same within a reasonable time; — 613 — or, second, that the contract being definite as to the amount plaintiff was to receive and the date of payment being cpndi-tioned upon the happening of a future event, and the defendant having by its own act or conduct made the happening of that event an impossibility, then the amount became immediately due and payable. It may be conceded, under the authorities, that if the facts in this case — and there is not a disputed fact in the record — bring the plaintiff within either of the above propositions he is entitled to recover. Clearly he does not come within the first, and we do not understand that he seriously contends that he does. The chief contention of the respondent is that by reason of the president of the company suspending operations for the winter of 1914 he, by that act, rendered the happening of the contingency upon which the plaintiff would be entitled to recover impossible. Therefore, the amount of his salary being definitely fixed, the balance became due and payable, and he has the right to maintain this action. 1, 2 Under such contracts, as in all other contracts, the controlling question is to determine, if possible, what was the real intent of the parties at the time of making the contract. In determining that question, the intention of the parties must be gathered from the language used, the situation of the parties, and the subject-matter of the contract as presented by the evidence. As stated, the written contract between these parties consists of the correspondence hereinbefore given. It is clear, it seems to us, considering the former relationship of the parties, the matter concerning which they were contracting, and the language used, that it was the intention of the parties to that agreement that the back salary should not “be exacted” until sufficient ore had been found to pay the interest on the indebtedness and to meet the current expenses. That seems to have been the proposition submitted by the president in his letter of July 10, 1913, and the one accepted by the plaintiff in his letter of July 29th. In that letter he •stated: “Nebeker and myself are perfectly willing to accept the proposition you make, as to salaries as we both have every — 614 — confidence in the outcome of the property.” (Italics ours.) It is clearly deducible from that language that the plaintiff, iu continuing his services for the company after July 1, 1913, did not expect to receive payment from any source unless ore was found of such quality and quantity as to pay the interest on the indebtedness and the current expenses. In fact, in his communication he bases his willingness to accept the proposition not upon the ability of the defendant company to pay unless it found ore; but, as he states, “we both have every confidence in the outcome of the property. ’ ’ In addition, plaintiff was in .charge, credited with knowing, and was supposed to know, much more than any of the other officers of the workings of the company’s mine, how long it would take to find ore that would pay expenses, and in his letter of June 9, 1913, prior to the date of the letter which makes up the contract between the two parties, he says: “I am satisfied we have a big property and if it is in my power I am going to find it and I am sure we are on the right road. The making of a dividend payer of it means more to me if not financially than it does even to you, and I will sthke my reputation on the outcome of it if we can only hold out for a few months, and I do hope we will be able to find something before our money is exhausted.” All parties seem to have proceeded upon the theory of having confidence in the outcome of the property until the fall of 1914. Each month the plaintiff was paid $200 on his salary and $150 was carried and credited to him on what was designated the reserve account. Bespondent has cited numerous authorities sustaining in a general way the proposition contended for by him, and especially seems to rely upon the case of Hood v. Hampton Plains Exp. Co. (C. C.) 106 Fed. 408, which is probably the strongest case cited in support of his contention. Briefly, the facts in that case were that in October, 1895, the plaintiff there entered into a contract to become watchman for the property of the defendant at a salary of $4 per day, one half payable at the end of each consecutive fourth week, and the remaining half payable at such “time as the company [defendant] may — 615 — resume operations or dispose of the property.” Plaintiff continued in that employ under that arrangement until the fall of 1899, at which time the property had not been sold nor operations resumed. He was discharged and a suit was instituted to recover the balance of his salary. There are two elements in that case, as found by the court, that are not present in this case, and which seem to control the court’s decision: (1) "That at the time of his [plaintiff’s] employment it was the general understanding that the defendant would resume operations within a reasonable time, or use reasonable efforts to dispose of its property; that in the absence of any express declarations of the parties to that effect, there being no time specified within which operations should be resumed or property be sold, the law presumes that it was the intention of the parties that the contingencies mentioned should occur within a reasonable time;” (2) that the defendant in that case voluntarily discharged the plaintiff "without any just cause” and thereby "made it impossible for him to remain continuously (as the agreement contemplated) in the defendants’ service until ‘it resumed operations or disposed of property.’ ” Apparently no effort was made on the part of the defendant in that action during all of the time to either operate the property or dispose of it, and the plaintiff performed his part of the agreement until, as the court found, he was discharged without any just cause. No such condition exists in this case. Mr. Wolf, president of the company, repeatedly wrote the plaintiff that he had the utmost confidence in plaintiff’s judgment and regretted the necessity of suspending operations, even temporarily, but the financial conditions made such suspension absolutely imperative. In addition, it is in the record, and it is not disputed, that during all the time from June, 1913, to the termination of this contract, the defendant company did everything in its power to develop ore in paying quantities in its mine and only ceased to do so when it became impossible to longer advance the necessary money for that purpose. In other words, the defendant company — 616 — cannot be charged with not making an honest and reasonable effort to carry out its part of the agreement. Under such condition of affairs is it believable that at the time the parties made this contract in 1933 either one of them understood that if the company was unable to find ore the plaintiff would be entitled to recover the additional amount of his salary? If the respondent’s theory is right, then the company was under the necessity of continuing the development work on its mine indefinitely, or', failing to do that, it would be mulcted for the unpaid part of plaintiff’s salary. We do not believe any such agreement or understanding was in the contemplation of the parties. The law does not therefore impose a duty upon tho defendant to pay plaintiff’s claim. In De Wolfe v. French, 51 Me. 420, which we think is a correct statement of the law, it is said: “If, in fixing upon the happening of a futuro contingent ovont as tho timo when money is to he paid, the parties intend to make tho debt a contingent one, and the event never happens, tho creditor’s right to recover it will never accrue.” Furthermore, as stated in the beginning of this opinion, tho plaintiff was a stockholder and director of the defendant company, and was, as such, jointly interested with the other officers of the company in its success, and he must have understood and known that the ability of the defendant to pay the money that the president and the other officers of the company were advancing or lending to the company in carrying on the development work was contingent wholly upon the success of the venture. It seems likewise clear that the plaintiff was ■willing to devote his time for a less consideration than he had been receiving, with the hope that he, too, would not only receive additional salary but that ho would share in the profits of the mine if the company wore fortunate in finding valuable ore, and if not, that they would all stand their share of the losses together. That is, in making this arrangement he took a sportsman’s chance and, all parties to the agreement having sustained losses., the plaintiff should not be entitled to recover an unfair advantage. — 617 — The principles involved in this case, it seems to ns, are almost identical with the questions decided by this court at the October term, 1916, in Johnson v. Geddes, 49 Utah, 137, 161 Pac. 910. It is true in that ease, the contract stated definitely that the unpaid part of the purchase price was payable in the manner following, and not otherwise; that is, from one-half of the net proceeds of all ores mined upon the property after deducting the expenses of mining, etc., and further stated that “the extent and manner of managing and developing said property shall be left solely to the sound and reasonable discretion of said parties of the second part [defendants] . ” In effect, in this ease, the contract of the parties was that, unless ore was found of sufficient value to pay the interest on the indebtedness and the running expenses, plaintiff should not demand or exact his back salary. Should the defendant company in the future operation or development of this mine succeed in obtaining ore which will pay the running expenses and the interest on its indebtedness, nothing in this opinion should bo construed so as to prevent the plaintiff from then recovering the amount of back salary payable to him under his contract. In view of the foregoing conclusions the judgment of the district court, awarding plaintiff judgment, must be reversed. Such is the order. Plaintiff to pay costs. McCARTY, CORFMAN, and THURMAN, JJ., concur.