Baggaley v. Pittsburg & Lake Superior Iron Co. , 90 F. 636 ( 1898 )

LURTON, Circuit Judge,

after making the foregoing statement of facts, delivered Hut opinion of the court.

The sale of standing timber is a sale of an interest in land, and under the Michigan statute of frauds must be in writing. Johnson v. Moore, 28 Mich. 3; Russell v. Myers, 32 Mich. 522; Williams v. Flood, 63 Mich. 487, 30 N. W. 93. The contention, therefore, is that, if it was in excess of the authority of the officers and directors of this company to sell the lands of the company unless authorized thereto by a vote of three-fifths of the stock of the company, it was equally unauthorized fo sell the timber standing thereon. But does the statute prohibit the sale of all lands or interests therein unless consented to by the requisite number of shareholders? or only such as are useful for mining purpose's? To ascertain the purpose of this act we may look to the whole statute, including exceptions stated by way of a proviso or saving clause. The general purpose of the statute was to protect the interests of shareholders in. mining companies. In Beecher v. Mill Co., 45 Mich. 103, 7 N. W. 695, Mr. Justice Cooley interprets the act by saying: “It intends that the mining property shall not be conveyed away or mortgaged except by their deliberate action.” That the limitation is upon the alienation or incumbrance of “mining property,” as distinguished from property not required in the conduct of the business for which the company was organized, is evident from the description of property to which the prohibition applies. The prohibition is against the alienation or incumbrance of “the mine works, real estate, or franchises.” By “real estate” we must understand, from ifs association with “mine works” and “franchises,” that species of “real estate” useful or valuable in connection with its “mine works” or “franchises.” This interpretation is made more evident by the terms of the proviso, which expressly authorizes, by the vote of a majority of the directors, the sale of “city or village lots” and lands, “from which the timber has been removed,” “not required for mining purposes.”

We are not unmindful that the ordinary office of a proviso is to except out of an act that which would otherwise be included. But this rule must not be carried too far. Such clauses are often introduced from excessive caution and for the purpose of preventing a possible misinterpretation of the act by including therein that which was not intended. The rule is, therefore, not one of universal obligation, and must yield to the cardinal rule which requires a court to give effect to the general intent if that can be discovered within the four corners of the act. If such general intention would be defeated by construing the act as embracing everything of the same general description as those particularly excepted therefrom, an arbitrary application of the rule is not admissible. Tinkham v. Tapscott, 17 N. Y. 141. The purpose of this statute was to prevent such alienations or incumbrances of property as would disable the company from the conduct of its business as a mining company. To avoid all possible misinterpretations of this intent, the legislature, from an excess of caution, has seen fit to except out of the act a class of property which, by description, is not necessary or important to the integrity of the company’s business. The lands of this company situated within Delta and Menominee counties are not mineral lands. They were probably bought in the belief that they contained minerals. No such minerals have been discovered. They are, therefore, lands not “required” for mining purposes. They are in counties quite distant from the county in which the company’s remaining mineral land is located. The timber thereon is, therefore, of no possible value for mining uses or purposes. The sale of either timber or land not required or useful for mining purposes is not prohibited under any reasonable interpretation of this statute. The sale of either or both would in no degree cripple or disable the company from the conduct of its business. If a sale of land from which the timber has been cut, the land being nonmineral, and therefore “not required for mining purposes,” is permissible, the sale of standing timber upon nonmineral lands, so remote from the “mine works” as to be useless for mining purposes, is equally admissible, when authorized by the directors. The error assigned must be overruled, and the decree affirmed, in so far as it is involved by this special appeal.