Orleans Hornsilver Mining Co. v. Le Champ D'Or French Gold Mining Co.

The supreme court of this state has construed sec. 5081, Rev. Laws 1912, as authorizing the amendment of a complaint to conform to the proof. Miller v. Thompson, 40 Nev. 39; Ramezzano v. Avansino, 44 Nev. 67. The Supreme Court of California, in the case of Drew v. Hicks, 35 P. 563, held that it was an abuse of discretion for the lower court to deny defendant the right to amend the answer to conform to the proof. See, also, Pratt-Gilbert Company v. Renaud, 213 P. 400; Ray v. American Photo Player Co., 189 P. 130; Watson v. Watson, 203 P. 714; Straw v. Temple, 159 P. 44.

The authorities are uniform upon the question that where in a written contract reference is made to another document, such reference will be construed only for the purpose of identifying the subject matter, and the terms and conditions of the instrument will not be construed as being binding on the parties. Wallace v. Oregon Engineering and Construction Co., 174 P. 156; Johnson v. Grand Fraternity, 255 Fed. 933; Cruthers v. Donohoe (Ind.), 84 A. 322, at 323.

The agreement of July, 1921, is complete within itself, because new stipulations and grounds for forfeitures are recited therein. The instrument contains all the essentials necessary for a lease and option to purchase. The parties, the premises, the terms and conditions are fully set forth. Bradley v. Metropolitan Music Co. (Minn.), 95 N.W. 458.

It is important to consider, in view of the law, these provisions of the agreement of July 18, 1921. It will be noted that Dunfee was the party who had the right to reenter and take possession in the event of forfeiture; it will be noted that appellant agreed to surrender possession to Dunfee on default; and, lastly, that in the event of default and forfeiture that Dunfee was to have a new lease for the full term, or four years. This constituted a reversion of the estate in favor of Dunfee for a full period of four years after the default of D'Arcy or his assignee. We submit that the authorities hold, with great uniformity, that where these several specific provisions are contained in a lease, the courts construe, by reason thereof, that the same constitutes a sublease and not an assignment, because the sublessor has a reversion in the estate and right of reentry. The leading cases on this question are Davis v. Vidal,151 S.W. 290, and Dunlap v. Bullard, 131 Mass. 161. We also desire to call the court's attention to the following statement of law contained in Thompson on Real Property, vol. II, sec. 1372, p. 493: "Where the lessee sublets for the whole of the unexpired term, reserving a power of reentry, or if the subtenant covenants to surrender to him at the end of the term, a sublease and not an assignment results." An immaterial variance between the allegations and proof adduced will be disregarded, and furnishes no ground for reversal. 31 Cyc. 702.

There is no variance if the proof sustains a portion of the allegations of the pleadings. 31 Cyc. 701.

The allegations in the complaint are not denied, and, therefore, stand admitted. Admitted testimony cannot vary an admission of the pleadings. Manning v. Bowman, 26 Nev. 451,69 P. 995.

Respondents contend that defendant's exhibit D was made a part and portion of plaintiff's exhibit 6 by the provisions of the latter, and that the intention of the parties, as shown by the evidence, coupled with the admissions of the pleadings, is the final and governing factor in construing the status of the said instruments. Kendis v. Cohn (Cal.), 265 P. 844, 851; Shnitman v. Husted (Cal.App.), 279 P. 194.

OPINION This is an action in tort to recover judgment in the sum of $127,575, damages alleged to have been sustained as the result of a conspiracy, culminating, as alleged, in the forfeiture of a bond and lease upon certain mining property.

Judgment was rendered in favor of the defendants. A motion for a new trial was made and denied. The plaintiff has appealed.

We will refer to the corporate parties as "plaintiff" and "defendant company," and to individuals, where necessary, by their respective names.

On January 1, 1921, defendant company, through E. Carter Edwards, its attorney in fact, executed and delivered to defendant Dunfee a lease upon certain mining property for the term of four years, together with an option to purchase within said period. The lease provided, among other things, that Dunfee should perform 60 shifts of work per month upon said property during the life of the lease, and for failure to do so that the lease and option held by him might be forfeited by defendant company. In due time Dunfee took possession of the property and proceeded to work the same.

A few months thereafter an agreement was entered into between Dunfee and A.I. D'Arcy, whereby Dunfee agreed to sell all of his interest in the said lease and option to D'Arcy for $40,000, $15,000 cash and the balance in installments evidenced by promissory notes, D'Arcy assuming and agreeing to pay to the defendant company for the property the amount named in the option to Dunfee, to which agreement defendant company became a party by reason of its written approval. Pursuant to this agreement D'Arcy organized the plaintiff company, which took over his contract and thereafter entered into possession of the property and began to operate the same.

Three years or more thereafter, the plaintiff not being in active operation and development of the property, the defendant company served written notice upon it that unless it resumed work and performed 60 shifts of labor per month upon the property the lease and option would be declared forfeited and possession taken by it. Plaintiff having failed to resume work and do the 60 shifts required, within the time required, defendant company took possession of the property.

Numerous other details are presented in the record, but we do not deem it necessary to state them.

Many errors are assigned and argued in plaintiff's opening brief, but it is necessary to determine but one of them in view of the following statement in its reply brief: "We admit that if the stipulation contained in the Defendant's Exhibit D requiring Dunfee to perform sixty shifts were binding on appellant, that the lease might be lawfully cancelled."

We do not think the question seriously debatable.

1. In considering this question it is urged by plaintiff that the agreement between Dunfee and D'Arcy (exhibit D) is a sublease and not an assignment of Dunfee's interest, and hence plaintiff was not obligated to do the 60 shifts monthly; plaintiff conceding, as we understand, that if it be an assignment, plaintiff was obligated to do the work.

While we think a sublessee might obligate himself to do the work required in a lease or forfeit his interest, we will dispose of the question presented.

The agreement between Dunfee and D'Arcy recites that whereas D'Arcy "is desirous of purchasing all of the right, title and interest of said J.W. Dunfee in said lease and option, and thereby acquire title to the mining claims and mining property * * * in A.I. D'Arcy, in like manner as J.W. Dunfee is entitled under said lease and option to acquire title therein * * * the party of the first part (Dunfee) hereby agrees to assign, sell, transfer, and convey to the party of the second part (D'Arcy) all the right, title, interest, property, claim or demand whatever, of the party of the first part, of, in or to, that certain lease and option * * * said lease and option is hereby referred to and made a part hereof. * * * When the full payment of $40,000.00 shall be paid to J.W. Dunfee, according to the terms, and upon the payments in this agreement provided, the assignment, sale, transfer, and conveyance of all the right, title and interest of J.W. Dunfee, of, in, and to, shall become and be fully vested in said A.I. D'Arcy. * * *"

In the lease and option from the defendant company to Dunfee it is provided that time shall be of the essence of the contract and that for failure to comply with its terms said lease and option may be forfeited.

We think it clearly appears from the agreement between Dunfee and D'Arcy that it was an assignment of the lease and option held by Dunfee. We say this because the agreement has all of the earmarks of an agreement of sale and none of a sublease. Giving the language of the agreement its usual and popularly accepted meaning, there is not a word in it to signify a sublease, but every word indicates a sale. In fact, if we were extremely desirous of holding the agreement a sublease, we can find nothing in it upon which to base such a conclusion. A sublease on mining property provides for the payment of royalties on the ore shipped. In the instant case the agreement does not provide for the payment of royalties to Dunfee, but does provide that from the ores shipped, after payment of royalties to defendant company, "the balance of said net returns to J.W. Dunfee, party of the first herein to be applied on the next payment or payments coming due hereunder."

2. But we think, whether the agreement between Dunfee and D'Arcy be an agreement of sale or a sublease, it was obligatory upon plaintiff company to perform the 60 shifts.

Pursuant to the terms of the agreement, plaintiff was put into the exclusive possession of the property and of all of the machinery, tools, and appliances used in the operation of the property; furthermore, by the very terms of the agreement with Dunfee it is recited that D'Arcy is desirous of acquiring title to the property "in like manner as J.W. Dunfee is entitled under said lease and option to acquire title therein." Is not this conclusive upon the point that it thereby obligated itself to perform all of the conditions imposed upon Dunfee as a condition precedent to acquiring title? We can imagine no other interpretation to be put upon this language.

Counsel for respondent asserts that Dunfee and D'Arcy, in providing in their agreement that "said lease and option is hereby referred to and made a part hereof" (referring to the lease and option held by Dunfee), expressly imposed upon D'Arcy the obligation of performing the 60 shifts. As to this contention counsel for plaintiff contend that this reference was for the purpose of description, and hence it did not become obligatory on plaintiff to perform the 60 shifts, and in this connection our attention is called to the case of Wallace v. Oregon Engineering and Construction Co., 90 Or. 31, 174 P. 156, 157, 175 P. 445, and other cases of similar import.

3. In the case mentioned it is said: "A reference in a subcontract to the general contract for a particular purpose makes it a part of the subcontract only for the purpose specified."

There can be no doubt of the correctness of this statement.

The general rule is stated in 13 C.J. 530, as follows: "Writings which are made a part of the contract by annexation or reference will be so construed; but where the reference to another writing is made for a particular and specified purpose, such other writing becomes a part for such specified purpose only."

4. In the instant case it does not appear that the lease and option was made a part of the agreement between Dunfee and D'Arcy for a particular and specific purpose, and hence we must assume that such was not the intention.

But if the question were a doubtful one, it would be our duty to resolve it in favor of the defendants, for the reason that the plaintiff itself construed the agreement between Dunfee and D'Arcy as an assignment until nine months had elapsed after the testimony had been taken in this case, as had the defendants.

5. In the complaint in this action plaintiff alleged a sale from Dunfee to D'Arcy of his interest in the lease and option. At the conclusion of the taking of testimony in the case it was continued for argument, and upon the argument nine months later plaintiff sought to amend its complaint to allege that the agreement between Dunfee and D'Arcy was a sublease, instead of a sale. The court rightly denied the application.

6. Some time after the plaintiff had entered into possession of the property under the agreement in question, and while it was developing the same, a suit in equity was instituted in the federal court against the defendant company, Dunfee, and plaintiff, in which it was alleged that the defendant Dunfee held his lease and option as a trustee for the plaintiff in that suit, and praying that such be decreed to be the fact. Shortly after the institution of that suit, defendant company gave written notice to plaintiff to the effect that during the pendency of the suit in the federal court, mentioned, it need not prosecute work upon the property in question. Thereafter the plaintiff sought and received from defendant company an agreement relieving it temporarily of the necessity of prosecuting the work upon the property. Every contract should be construed so as to give effect to the intention of the parties. In the instant case both construed the contract as imposing upon plaintiff the duty of doing the work, and this, too, before any thought of litigation. Who is more capable of determining their intentions?

While what we have said must result in an affirmance of the judgment and order appealed from, we may add that we have carefully considered the evidence and are of the opinion that the findings and judgment are amply sustained.

For the reasons given, it is ordered that the said order and judgment be affirmed.

ON PETITION FOR REHEARING