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agreement. The Supreme Court of Tennessee, in the case cited above, said of such a requirement in a mining lease:
"The 'testing' should be so thoroughly done as to determine, not only the presence of such minerals, but their commercial value, considering their abundance and accessibility. The information resulting should be such as a prudent and experienced investor would desire to know before expending his capital in the digging of shafts or the erection of machinery proper for the profitable working of such a mine."
Slaven was never notified of even the superficial search made, nor that the lessee proposed to hold on and comply with the terms of the lease. No rent was paid or demanded. No taxes were paid. Not $1 was ever expended in endeavoring to make the lease productive to the lessor. In this situation of things Slaven clearly expressed his intention to avoid the agreement by making a new lease in 1890 to the appellees. Logan Gas Co. v. Grt. Southern Gas Co. (C. C. A.) 126 Fed. 623, 626; Guffy v. Hukill, 34 W. Va. 49, 11 S. E. 754, 8 L. R. A. 759, 26 Am. St. 901; Huggins v. Daley, 99 Fed. 606, 40 C. C. A. 12, 48 L. R. A. 320.
But, independently of any other ground, the general provision of this lease, authorizing the lessee to abandon whenever he should see fit, makes it a lease at the will of the lessee. An estate terminable at the will of one of the parties is determinable at the will of either, though it purports to be terminable at the will of one only. 1 Washburn, Real Property, 371 (side paging); Taylor's Landlord & Tenant, § 14; 18 Am. & Eng. Ency. of Law (2d Ed.) 182.
The decree of the court below is accordingly affirmed.
Following will be found the opinion of the court below:
CLARK, District Judge. For the purpose of determining the questions raised in this case, it is not regarded as important to characterize the instrument, the construction of which is involved, as either a lease or conveyance. It might be called either, and it would not substantially change the rights of these parties. It hardly is to be doubted that the paper operates as a severance of the mineral and surface rights in the tract of land embraced in the lease upon certain conditions, expressed and implied, and it certainly had the effect to vest in the party of the second part, to use the very language of the paper:
"The exclusive right to enter upon said lands at any time hereafter, and search for coal, iron ore, and all other minerals, oils, and salines, and, when found, to remove the same from said lands, together with all rights and privileges incident to the mining and securing said coal, iron ore, clay, and other minerals, oils, and salines, including the right of ingress and egress."
And it at the same time imposed upon that party the obligation: "To enter upon and make search for coal and other minerals in said lands above described, and, should he find coal, iron ore, or other minerals, or oil, or salines, in said lands and adjoining lands, of sufficient thickness, quantity, and quality to justify him, the party of the second part, to open and work said mines, or oils, or salines, then he, or his representatives or assigns, shall pay to the party of the first part, his heirs or assigns, within five (5) years after the completion of a railroad built in connection with any leading railroad by which said minerals or oils can be taken to any large markets, the sum of ten (10) dollars a year, until mining is commenced upon said premises, or during the continuance of this agreement; and the failure to make these
advanced payments yearly upon request shall be deemed an abandonment of this agreement, but not to the injury of the party of the second part or his assigns."
An instrument like this, as is true of all instruments, must receive a reasonable interpretation, which would give effect to the plain intention of the parties, and not one which would defeat the intention of the parties. The instrument should be so construed as to confer substantial rights on the bargainee, and to furnish a substantial and valuable consideration to the bargainor. It should not be given such an interpretation as would render the paper wanting in mutual obligation, or such as would reduce it to a mere nudum pactum, as declared by Judge Lurton in the case of Petroleum Company v. Coal, Coke & Mfg. Co., 89 Tenn. 381, 18 S. W. 65. The construction must be given in the light of the surrounding circumstances which constituted the situation in which the parties were standing at the time the agreement was made, and such an interpretation must be given as will make the instrument consistent with the view that it is one which a reasonably sensible and intelligent man would have entered into, under the circumstances, and in the light of the situation in which the agreement was made and executed. According to the contention of the defendant, now, at the expiration of 30 years, the instrument is still in full force and effect, conferring upon the bargainee the right, indefinite as to time, which was vested by the agreement when first executed. As the bargainee's contention is, the bargainee now, at the end of 30 years, is vested with the same rights which it possessed when this contract was executed in February, 1873. If at any time in the indefinite future a railroad shall be built sufficiently close by the property to meet the views of the bargaince as to the conditions under which the property can be economically and profitably tested and operated, then for the first time an obligation will rest on it, under the contract, to proceed to test and to operate, or to give notice and abandon. All the right which the bargainors, or their assignees, possess, is to wait and to see whether, during the lifetime of this or any succeeding generation, conditions may arise which will cause the contract to commence yielding to the bargainors, or to the plaintiffs as assignees, a substantial consideration, or a royalty on mining operations, as contemplated when the contract was first entered into.
It is perfectly plain that, if this view can be sustained, it will be equally sound after the lapse of another period of 30 years, or 60 or 90 years. Under such a view clearly the bargainors, or assignees, could receive no benefit during their natural life, and it would be very probable, certainly very possible, that no benefit would accrue within a period of 100 years. It seems to me too plainly evident to admit of serious denial that an interpretation which makes such results possible cannot be sound. It is a construction which in all practical effect, for all practical purposes, implies no legal obligations upon the bargainee, or lessee, to explore, or discover, and to work the mines. It furnishes no substantial consideration to the bargainors, as contemplated by the contract, in the way of royalty on mining operations, and such a construction would convert the instrument into a mere voluntary option on the part of the bargainee to take advantage of this contract, if at
any indefinite time in the future the conditions of that locality make it to its interest to do so. There would, under such a view, be manifestly a gross want of mutuality in the agreement. On the contrary, if the agreement is to be construed as requiring the bargainee within a reasonable time to explore the land, and in the event minerals are found to diligently work the same, and in that way bring to the bargainors a share in the profits of mining operations, the agreement may be regarded as imposing mutual obligations, and as furnishing mutual considerations to support it, but otherwise not. This is the clear doctrine of the case just referred to, which in this respect is in full harmony with the cases of Huggins v. Daley, 99 Fed. 606, 40 C. C. A. 12, 48 L. R. A. 320; Crawford v. Ritchey, 43 W. Va. 252, 27 S. E. 220, and Barnsdall v. Boley (C. C.) 119 Fed. 191.
Now it is in evidence that, at the time the original contract or agreement was made in 1873, the construction of what is now known as the Cincinnati Southern Railway, between Cincinnati, in the state of Ohio, and Chattanooga, in the state of Tennessee, was proposed, and it has in fact since been constructed. There is no doubt that this is one of the circumstances or conditions under which this contract was made, and that under a fair construction of the contract it must be held that this is the railroad referred to in the contract, after the completion of which, and within five years, the full obligations of the contract on the part of the bargainee were in force, and required action on the part of the bargainee, as contemplated by the contract taken as a whole, and such action as would in good faith carry out the clearly implied obligation to proceed; for as was said in Huggins v. Daley:
"There is always an implied, if not an expressed, covenant, for diligent search and operation."
If this be not the true construction, when will there ever be a railroad completed that will put into active operation the obligations resting on the bargainee under such an agreement? It is not to be doubted that leases similar to this have been taken upon bodies of land on either side of the great railway then proposed, and that the number of such leases and tracts of land may run into the hundreds. In the very nature of things, it is certain that there is no probability, or possibility, that third parties constructing railways will ever build them across, or so close to, these tracts of land as to relieve the bargainees of any expenditure or effort on their part to secure lateral or switch tracts reaching mineral property. If the output in mining operations would probably be so great as to induce a railway to build a branch line to any particular tract or tracts of land, this would only result after adequate exploration and development on the part of the bargainee under such a contract, and a showing to some through line of railway that the additional transportation business to be obtained in that way would justify the construction of a branch or spur track to the property thus explored, and which could be profitably operated; but according to the contention of the bargainee the bargainee has at no time been under any obligation to do anything of this kind, but is allowed to stand by and wait until the improbable condition shall arise when a railroad shall be built either on or so close to the tract of land as to require no effort and no expenditure on the part of the bargainee, and in this way the bargainee
is left to take all the speculative chances of the future, with the certainty that the bargainor has completely deprived himself of the power to render his property valuable for productive purposes. It is only necessary to state such a case, with adequate reflection on the grossly inequitable result, to force fair acknowledgment that such an interpretation is utterly unsound. Under this contract both parties took the chance that a railway connecting with the markets of the country would be constructed in the neighborhood of this property, and that when this was done the property would be diligently explored, and if found to justify mining operations, in view of the railroad thus built, whether five or ten miles from the property, or nearer, such mining operations were required to be commenced, and if diligent search for mineral deposits, with the proper test, disclosed that mining operations could not then be conducted profitably, it was an obligation on the part of the bargainee to abandon the enterprise under the contract, surrendering his rights under this agreement, and to notify the bargainor accordingly, and a clearly implied obligation or covenant required it to do this within a reasonable time, in all respects, where the time is not fixed by the written agreement.
In determining whether the property could be profitably developed and mining operations carried on, it was a part of the obligation and the concern of the bargainee to determine in that connection, and as a part of that question, whether such operations could be carried on by procuring or by building a lateral or branch railroad, or, failing in that, by wagon or animal transportation, from this property to the railroad thus completed. But it is clearly not a permissible construction of the contract to say that the bargainee may stand idle, and take no step whatever, and insist that it is not required to take any such step, until and when, if ever that shall happen, a railroad shall by chance be built upon, through, or on a line adjoining the property. What is thus said seems to indicate sufficiently the course of reasoning which I regard as applicable to this case, and by which it is apparent that I reach the conclusion that there has been here a forfeiture and abandonment of the rights conferred upon the bargainee by the agreement in question, by nonuser and by a total failure to comply with the clearly implied covenant requiring diligent exploration and operation on the part of the bargainee; and upon the authority of the cases before referred to I conclude that the bargainor is entitled to the relief sought, and it is so decreed.
This view seems to render it unnecessary that I should consider or decide other points raised in the pleadings and discussed in the arguments at bar.
SOUTHERN RY. CO. v. SIMPSON.
(Circuit Court of Appeals, Sixth Circuit. June 22, 1904.)
1. FEDERAL COURTS-STATE STATUTES-CONSTRUCTION-STATE DECISIONS-CON
The opinion of a state court of last resort, construing a state statute, is conclusive on the federal courts sitting in such state to the extent only of the precise question decided.
2. RAILROADS-INJURIES AT CROSSINGS-STATUTES-CONSTRUCTION.
Shannon's Code, §§ 1574-1576, requires every railroad company to keep some person on its locomotive always on the lookout ahead, and, when any person, animal, or other obstruction appears on the road, to sound the alarm whistle, put down brakes, and exercise every possible means to stop the train and prevent an accident, and renders a railroad company absolutely liable for an accident caused by a failure to comply therewith. Held, that such sections did not render the railroad company absolutely liable for a collision occurring in the daytime, while the engine was being operated backwards with the tender in front, and that the refusal of the court to charge that if the engineer was actually on the lookout ahead of his engine, and saw plaintiff's vehicle as soon as it could have been seen, as it approached and entered on the crossing, and the engineer immediately blew the alarm whistle, put down the brakes, and used every possible means to stop the train and prevent the accident, plaintiff could not recover, though the engine was being operated backwards, was error.
OBLIGATION-PLEADING-AMENDMENT-DEPARTURE. Where a declaration in an action for injuries at a railroad crossing alleged that defendant wrongfully and negligently ran its engine and cars against plaintiff, when crossing its track in a lawful and prudent manner, it stated a cause of action at common law and under Shannon's Code, §§ 1574-1576, requiring every railroad company to maintain a lookout ahead on the locomotive, etc., and rendering the company absolutely liable for damages occasioned by failure to comply with the act, though such act was not referred to in the declaration; and hence the amendment thereof, by adding a count specially declaring liability under the statute, did not constitute a departure.
4. SAME CONTRIBUTORY NEGLIGENCE.
In an action against a railroad company for injuries at a crossing, under Shannon's Code, §§ 1574-1576, requiring every railroad company to keep some person on its locomotive on the lookout ahead, and certain other precautions, and rendering such company absolutely liable for injuries occasioned by a failure to comply with such sections, contributory negligence is no defense.
5. SAME EVIDENCE.
Where a railroad company was not required by Shannon's Code, § 1574, to blow the whistle or ring the bell at a crossing at which plaintiff was injured, evidence tending to show a custom of the company, subsequent to the collision, to blow the whistle at such crossing, was inadmissible. In Error to the Circuit Court of the United States for the Eastern District of Tennessee.
1. State laws as rules of decision in federal courts, see notes to Griffin v. Overman Wheel Co., 9 C. C. A. 548; Wilson v. Perrin, 11 C. C. A. 71; Hill v. Hite, 29 C. C. A. 553.
See Courts, vol. 13, Cent. Dig. § 957.