Prato v. Moore

BARNARD, P. J. This is an action to cancel a lease or contract for the development of certain mining property.

The plaintiffs were the owners of two sets of mining claims, one supposed to contain talc and the other lead and silver. On April 17, 1940, they entered into a contract with the defendants for the purpose of developing these properties and producing ore. So far as material here this agreement provided that the defendants would furnish, at their own expense, all labor, equipment and supplies necessary for developing these mining properties and extracting ore therefrom; that they would employ in this connection an average of at least three men for at least six months during each year, commencing with the year 1940; and that the proceeds from all ore produced and sold should be divided equally between them and the plaintiffs. It was also provided that if the mining properties were sold during the life of the agreement the proceeds should be equally divided, but that no such sale could be made without the mutual written consent of all parties. It was further provided that the defendants should have the right to withdraw and terminate the agreement at any time, and that in the event they should fail to employ an average of three men a day for at least six months a year, in accordance with the contract, the plaintiffs “shall have the right to terminate this agreement if said second [158]parties shall fail to comply with said requirement within thirty (30) days after receipt of written notice from first parties to that effect.”

On December 29, 1942, a written notice was served on the defendants that the plaintiffs “hereby elect to terminate and cancel that certain agreement, ’ ’ which is then particularly described, upon the ground that the defendants had failed to comply with its terms in that they had failed to employ, in connection with the development of the properties, an average of three or more men for at least six months during each year. On receipt of this notice the defendants put two or three men to work on the • property for a short time, but failed to make up the deficiency. This action was brought on February 5, 1943, and the complaint was later amended. The complaint alleged the execution of the contract and the failure of the defendants to comply with its terms, in the respects described in the notice. It also alleged forfeiture and abandonment. In their answer the defendants admitted service of the notice upon them, but denied its sufficiency under the terms of the contract. As special defenses, it was alleged that the defendants had been frustrated and prevented from performing the contract by federal and state laws, rules and regulations adopted in connection with carrying on World War II, and that the plaintiffs had interfered with the defendants “in the operation or endeavored sale of said property” in that they had interfered with the sales of these mining claims “which these defendants were able and willing to make,” and had interfered with the installation of machinery and with operation of the properties.