Central Appalachian Co. v. Buchanan

TAFT, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The Appalachian Company, the plaintiff in error and the defendant below, files but three assignments of error. . The first two are practically the same. They question the correctness of the ruling of the trial court that the covenant by the Improvement Company that the Railroad Company would construct the railroad as therein specified was an independent covenant, and not a dependent covenant, and a condition precedent to the payment of the minimum royalty under the contract of lease. No argument has been addressed to the court in support of the third assignment of error, and it must therefore be regarded as waived. Chamois Co. v. Williamson (decided by this court at the present term) 18 C. C. A. 662, 72 Fed. 508. In their reply brief, counsel for the plaintiff in error seek to raise other questions; but, as no assignments of error embracing them have been filed, they will not be considered. The only question before us, then, is whether the covenant by the Improvement Company that the Railroad Company would construct-the railroad in the manner provided in the contract was a condition precedent to the payment of the minimum royalty under the lease. The learned district judge held that it was' not, and we entirely concur with him. The lease was dated in October, 1892, and possession was taken under it in November following. The railroad extension up to Mine C was not to be completed until six months after a demand by the Appalachian Company, the railroad extending to the mouth of Long Branch was not to be completed before the 1st of January, 189á, and the railroad from Long Branch to Sim’s Fork was not to be completed until six months thereafter; while the agreement to pay a minimum royalty began with the beginning of the lease, and the first royalty under the lease was due on the 81st of December, 1892. This was three months before it would have been necessary for the Improvement Company and the Railroad Company to have built the first extension of the railroad provided in the contract, even if demand had been made for it as soon as the Appalachian Company went into possession. The royalty for a year and a quarter would be due before the Long Branch extension had to be built, and the royalty for a year and three quarters would be due [1011] before the Hint’s Fork extension bad to be built under the contract.' It is impossible, under such circumstances, that the covenant to pay the royalty and the covenant that the railroad should he extended were interdependent. The Appalachian Company protected itself in the contract by the provision of the contract that if the road was not extended it might terminate the lease. It did not exercise this privilege for nearly a year after a default on the part of the Improvement Company and the liailroad Comnany to build the first extern siou. All this time it remained in possession of the property and did coal mining. It is immaterial whether it was possible to mine; the minimum amount of coal as provided in the contract: without the railroad or not. If the Appalachian Company had intended to make its payment of the minimum royalty dependent on the construction of the railroad, it should have insisted on the presence of such a clause in Che contract. If manifestly did not: have this intention, because several installments of the royalty were due before all the contemplated extensions of the railroad could be completed. The Appalachian Company had possession of the property of tin* Improvement Company, and did mining thereon for nearly a year and a half. It would bo an unjust construction of the contract that, would permit the lessee to have so much of the benefit moving to it under the contract: without paying anything therefor. Especially is this tine when the Appalachian Company had the right to terminate the lease and its liability under it in May or June of 1898, and yet failed to do so, and continued in possession for nearly a year thereafter. Rules for determining whether covenants are dependent, or independent are like rules for construing wills. They are merely aids in ascertaining the» intention of the minds of those who execute the instruments. Often the intention is so dear that rules are of no service. Huch is the case; at bar; hut, as extended reference has been made to the authorities upon the briefs of counsel, it is proper that we should shortly discuss them. The covenant to build the railroad in this least; of mining .rights cannot he distinguished from a covenant of a landlord to improve or repair leased premises at souk; time after the date when by the terms of t.he lease possession begins. In such a case, the authorities are uniform that: a breach of the covenant to repair or improve is no defense to an action for rent under the lease. Lunn v. Gage, 37 Ill. 19; McCullough v. Cox, 6 Barb. 386; McDowell v. Hendrix, 67 Ind. 513; Wright v. Lattin, 38 Ill. 293; Hunt v. Silk, 5 East, 149; Tayl. Landl. & Ten. §§ 265, 275. The same result must be reached in the case at bar by following either of two of the rules which Sergeant Williams lays down in his notes to the case of Pordage v. Cole, 1 Saund. 319, 320, for determining whether covenants are dependent or independent. The first of these rub's is as follows: “If a day he appointed for payment, of money, or part o-f it, or for doing any other act. and the day is to happen or may happen before the thing which is the consideration of the money or other act is to he performed, an action may he brought for the money, or for not doing such other act before performance; for it appeal's that the party relied upon Ms remedy, and did not intend to make the performance a condition precedent. And so where [1012] no time is fixed for. performance of that which is the consideration of the money or other act.” As already explained, in the case before us, part of the minimum royalty was due under the contract before any of the new railroad track was built. Two semiyearly payments were due before the rest of the railroad extensions were to be completed. Hence it is plain that the Appalachian Company was relying upon its remedies on the covenant to secure its enforcement, and one of these was, in this case, a cancellation of the contract. Sergeant Williams’ third rule is as follows: “Where a covenant goes only to part of the consideration on both sides, and a breach of such covenant may be paid for in damages, it is an independent covenant; and an action may be maintained for a breach of the covenant on the part of the defendant without averring performance in the declaration.” And the learned annotator, after citing a number of cases to sustain the rule thus stated, gives the reason for it as follows: “Hence 'it appears that the reason of the decision in these and other similar cases, besides the inequality of damages, seems to be that where a person has received a part of the consideration for which he entered into the agreement, it would be unjust that, because he has not had the whole, he should therefore be permitted to enjoy that part without either paying or doing anything for it. Therefore the law obliges him to perform the agreement on his part, and leaves him to his remedy to recover any damage he may have sustained in not having received the whole consideration,” — citing Boone v. Eyre, 2 W. Bl. 1312; 1 H. Bl. 273; Campbell v. Jones, 6 Term R. 570; Duke of St. Albans v. Shore, 1 H. Bl. 279. Iu the case before us the minimum royalty was to be paid, not only for the coal taken from the mines to be reached by the railroad extensions, but also, and in much greater part, for the coal taken from Mines A and B, which already had railroad connection. We have already alluded to the injustice of a construction which would permit the Appalachian Company to have all the coal mined or which might have been mined from A and B, amounting to 750 tons a day, for nothing. The principle announced in Sergeant Williams’ third rule finds illustrations in Lord Ellenborough’s judgment in Hunt v. Silk, 5 East, 449, in Lyon.v. Bertram, 20 How. 154, in Payne v. Bettisworth, 2 A. K. Marsh. 429, and in Nelson v. Oren, 41 Ill. 18. The cases of Hoare v. Rennie, 5 Hurl. & N. 19, and Norrington v. Wright, 115 U. S. 188, 6 Sup. Ct. 12, relied on by plaintiff in error, have nothing in them conflicting with the construction placed by us on this lease. They were cases of mercantile contracts for the delivery of merchandise in monthly installments, and a failure by the vendor, to deliver an installment in the time and manner prescribed was held the breach of a condition precedent, entitling the other party to rescind. Their ratio decidendi is shown by the opening words of Mr. Justice Gray in delivering the opinion of the court in the latter case. He said: “In contracts of merchants time is of the essence. The time of shipment is the usual and convenient means of fixing the probable time of arrival, with a view of providing funds to pay for the goods, or of fulfilling contracts with third persons. A. statement descriptive of the subject-matter, or of some material incident, such as the time or place of shipment, is ordinarily to be regarded as a warranty, in the sense in which that term is used in insurance and mari [1013] time law: that is to say, a condition, precedent, upon the failure or nonperformance of which the party aggrieved may repudiate the whole contract.” It will be seen that eases of this class rest on the exigencies of mercantile business, and, like warranties in maritime insurance, are based ultimately on custom and usage. But, conceding to these decisions all the effect claimed for them, there is nothing in them from which it can be inferred that the vendee can avoid payment of the contract price for the installments already received and used by him; and yet that is, in reality, what the Appalachian Company seeks to do here. The judgment of the circuit court is affirmed.