Consolidated Uranium Mines, Inc. v. Tax Commission , 4 Utah 2d 236 ( 1955 )

HENRIOD, Justice

(dissenting),

I dissent from that portion of the main opinion which holds that the 16 operations by 16 different operators under contract was an operation of a group of claims under one ownership, and from the position of the'main opinion that the contractors in the agreement were employees of Consolidated.

To justify its position, the main opinion makes certain statements which this writer believes should be answered.

It is stated that “Nowhere in the agreement is the contractor referred to as a lessee or the instrument as a lease, or the plaintiff as lessor”. This circumstance proves nothing.

The opinion goes on and says: “Aside from nomenclature, there are no provisions in the agreements for the demising or renting of the properties to the contractors. At most the plaintiff agreed ‘(a) To give to the Contractor and its employees engaged in the work access to the premises,’ but except for such purpose conferred no right of possession upon the contractor.” Most of the quoted language has no basis in fact and is itself contradictory. It is impossible for this writer to determine how giving access to the premises is not giving a right of possession, — which is the contradictory part of the quoted language. As to the actual facts with respect to who had the right of possession, let us look at the agreement itself. The contractor agreed to mine 300 tons of ore per month and to transport it from the workings, to timber the workings, keep the mine safe, to comply with applicable labor statutes with respect to labor employed on the work, indemnify Consolidated against injuries to the contractor’s employees, to permit the Consolidated access to the mine to inspect it, to pay all costs for labor, blasting, powder, etc., to save Consolidated harmless from liens on the premises. The Consolidated agreed to give access to the described premises, to transport the ore mined by the contractor, and to furnish the contractor with pipe, timber, rails, mine cars and other equipment. They both agreed that all ore mined by the contractor should be sampled, that contractor should perform in the mine not less than 100 shifts per month, and that Consolidated would defend its title in the courts in order to protect the contractor. How the main opinion possibly can say that the contractor was not given possession in the light of all the provisions mentioned which could not be performed without possession, is fanciful to this writer.

As against the contention of the majority opinion that the agreement entered into was not a sublease, but one of an employer-employee relationship, the following facts not only completely contradict such contention, but clearly establish a leasehold agreement under the very definitions of a lease pronounced in the main opinion:

The agreement specifically demises the property for a definite term when it says it shall continue for one year, and shall be extended automatically for another period “if the mine is in operation and the terms of this agreement have been complied with at the expiration of such period,” and for all ores mined and shipped the parties were each to have 50% of the net mill returns. Under the terms of the agreement, the Consolidated could not terminate the .same except for default in complying with its provisions, and in fact termination is absolutely controlled by the contractor, who, under its terms, can terminate by giving 10 days notice. Consolidated could be refused permission to come on the premises, even, except to inspect. Two miners, having contracts with Consolidated identical to that in evidence, clearly, by their testimony, eliminated any element of control on the part of Consolidated, just as did the contract. Consolidated’s engineer substantiated this testimony, and this evidence was uncontradicted. How an employer-employee relationship can be arrived at under these circumstances, where there is no evidence of control whatever, is impossible to determine. As if to emphasize the leasehold character of the instrument, the last provision states that “The contractor shall at all times during the term of, this agreement have and exercise full and complete direction and control of the work.”

It is highly interesting and significant to compare the agreement in this case with the form lease found at page 360 of Morrison’s Mining Rights, 16 ed., and note that substantially every provision in the one is incorporated in the other with unsubstantial variations in royalties, phraseology, etc.

Simply because a company has a number of properties and even though they be contiguous necessarily does not mean that if it leases out without any element of control reserved except to inspect, it is operating a group of claims under one ownership, since the fact .that it leases its -property and strips itself of control of operations, except to make a claim for breach of contract, militates against a conclusion that it is operating a claim, a group of claims or anything else except in a role of lessor, who incidentally may agree to furnish some equipment, but who can demand no kind of operation save what is said in the instrument, — in this case a matter which is completely within control of the contractor.