1006-
73 FEDERAL-REPORTER.
the carrier from the duty of exercising any care in the receipt of packages for shipment or storage. It simply defines the degree of care required under the circumstances of the particular case. Otherwise the carrier may leave his warehouse open to the ingress of whoever may come, and to the storage of what chance may bring, as was done in this case. If a bailee leaves goods exposed so that they are liable to be stolen, and they are stolen, he cannot say in his defense,that he had a right to rely upon the presumption of honesty in others. No more can he leave his warehouse open, without supervision as to what is stored therein, and, when damage results from the storage of dangerous articles, say that he had a right to rely upon the presumption that those who brought articles for storage would not be negligent. Such is not the conduct of a reasonable man "guided by those considerations which ordinarilY' regulate the conduct of human affairs." The testimony of the statio ll agent is that it is not customary to put carboys of acid or tanks of acid in the warehouse, that it should have been left outside, and that they were not aware that it was being stowed in the warehouse. All of which goes to show that any care, however slight, on the part of the person having the warehouse in charge, would have prevented the accident by which the petitioner's property was destroyed. In the Nitroglycerine Case the defendants did !lot know the character of the package received by them, but this want of knowledge was not theresult of indifference as to what they received. They were deceived by the innocent appearance of the package. They relied upon this appearance, as they had a right to do under the circumstances. In this case the defendant did not see the destructive package, nor know that it was being stored. It abandoned the safety of the property in its charge to the chance that all the persons desiring to store packages in its warehouse would exercise reasonable care as to the dangerous character of what was stored by them. This was an omission to do what a reasonable and prudent man would, under the circumstances, do, and is negligence. The petitioner is entitled to recover his damages. These will be the actual cost to him of replacing the property destroyed at Baker City. CENTRAL APPALACHIAN CO., Limited, v. BUCHAKAK et al. (Circuit Court of Appeals, Sixth Circuit. No. 353. LEASE OF COAL lI'IINES-DEPENDENT AND INDEPENDENT COVENANTS.
April 14, 1896.)
A lease of coal lands required payments quarterly of royalties on the tonnage mined, the lessee being bound to pay on a certain minimum tonnage, whether actually mined or not. At the time of the lease two mines already had railroad connections, and the lessor covenanted within six months after demand to extend the road to a new mine which was to be opened, also to make certain other extensions within periods ranging from a year to 18 months; and for any default as to such extensions the lessee was authorized to terminate the lease. Held that, as the minimum roy_alties were to become due, in part, before performance by the lessor of its covenants to make the extensions, such covenants were to be regarded
CENTRAL APPALACHIAN CO. V. BUCHANAN.
1007
as independent of the covenants to pay royalties, and the lessor's failure therein was no defense to an action for minimum royalties which became due prior to a termill,ation of the lease by the lessee.
of
In Error to the Circuit Court of the United States for the District I
This was an action to recover an amount claimed as rent alleged to be due under a contract of lease made by the Southern Land Improvement Company, a Kentucky corporation, to the Central Appalachian Company, Limited, a corporation organized under the laws of the kingdom of Belgium. The former hereafter will be referred to as the "Improvement Company," and the latter as the "Appalachian Company." The defense was that the plaintiff, as lessor, had failed to comply with a covenant, contained in the lease, respecting the construction of a railroad, hereafter to be more fully described, compliance with which was claimed to be a condition precedent to the payment of anything by the lessee under the contract. The only question presented by the record and the a8signments of error is whether the covenant referred to was a dependent or independent covenant. '1'he leasing clause of the contract was as follows: "For the consideration of one dollar to the first party hereto in hand, and other valuable considerations secured to its satisfaction, and upon the terms and conditions and stipulations herein set forth, the Improvement Company has demised and leased, and does hereby demise and lease to the Appalachian C-ompany, for the period of ten years from and after the 13th day of October, 1892, with privilege of renewal of ten years longer in manner and form as hereinafter described, the mining rights and privileges as hereinafter set forth in all those certain lands belonging to the Improvement Company, situate in Bell county, Kentucky, and lying on or near the waters of the Right ]'ork and Left Fork of Straight creek and its tributaries, which lands are more particularly described as follows." Then follows a minute description of the lands. The lease then proceeds: "The buildings and improvements on these lands have been sold and conveyed to K H. Patterson by an instrument of even date herewith. which is referred to for particulars, and said buildings and improvements are excepted from this lease. 'l'he mining rights and privileges hereby granted, the consideration therefor, and the terms, conditions, and stipulations upon which the same are granted, are as follows, to wit: (1) During the term of this iease, the Appalachian Company shall have the exclusive right and privilege of mining coal and making coke from any and all coal beds, coal seams, and coal deposits constituting the coal mines on or that are situate within or upon the lands of the Improvement Company hereinabove described and leased, and of selling or otherwise disposing of the product of said mines so obtained by it; such right and privilege to extend to the mining of all coal that said Appalachian Company may desire or be able to take from said mines. (2) '1'0 enable said Appalachian Company to exercise its mining rights and privileges it shall have the following further rights and privileges." Then follow 13 different paragraphs detalling the addition.al privileges conferred by the lease. They included the right to use all existing entries or mine openings, and to open such new entries as the lessee might desire, and to erect, maintain, and operate the same; to erect coke ovens on the lands; to erect miners' houses and outbuildings and other necessary structures for mining, shipping, and distributing the cool; to take from the land all stone necessary to be used in the building of coke ovens and other necessary improvements; to take fire clay and limestone as might be needed for this purpose; to take limestone for the production of lime to be used in the construction of such structures; to cut and use nonmerchantable hardwood timber for the same purpose; to use the water of Straight creek as might be necessary in the conduct and operation of .the business of mining and coking coal and disposing of the same; to layover said lands such railways as migbt be necessary; and to have free passage over the surface of the land as might be necessary or convenient for the work of mining and distributing coal. The tenth paragraph was as follows: "The Improvement Company shall furnish to the. Appalachian Company copies of its plats and maps showing the workings of the mines hitherto open-
'1008
73 FEDERAL REPORTER.
ed, and that said mines now opened near the coke plant on said lands are g.uarantied by the ImplUvement Company to be in good W()1'kable conditIOn without further repair being neceslllU"y from any existing cause or defect." In the thirteenth paragraph the Improvement Company leased some further lands for the sawe term to the Appalaehian Company, and gave it tbe right to erect fal"tories and to couduet any business or enterprise thereon which It might see fit to establish. 'rhe fourteenth paragraph was: "The rig-ht Is herehy granted to tbe Appalachian Company to use during this lease tbe openings and passageways, tracks and appliances in and through any mine or that may be opened under I.'ase on the leal:'wd premises, for tbe purpose of taking coal from other lands of the Appalachian Company or fl"OUl the lands of others l,ring adjoJlllJlg the leaseu lands on which said are situated, even though the ('''al in the said mines on tile leased premises herein may have been exhausted." The cOlllpensation to be paid by the Appalachian Company was provided as follows: "The Appalachian Company shall In each year cause to be taken from the mines on the above-described property a quantity of coal not less than the uumh('!" of tons h('rf'in !Ipecifif'd.-a ton helm," ('stim!lt('d at 2.000 pounds.to wit: During th(' first year of this l('a8e, 2i)O.OOO tons; dllring the se('ond y('ar of this INlse, 300,000 tons; during the third year of tbis lease, 350,000 tons; during the fourtb year of this lE"ase, 400,000 tons; during the fiftb year of this l"ase, 450,000 tons; and duriug ell ch year thereafter, not less than 450,000 tons. The AppalachiHn Company shall pay to the Improvement Company on all coal, whether bltuminons or cannel, taken from said mines, a royalty of not lpss than tpn cents pel' ton of two thousand puunds, up to the minimulll amount required to be [IlinPfl in each ye-ar. and upon any excess mined in any year over and above the minimum provided for that year, the royalty to be so paid as above, shall be six and one-fourth cents per ton. If in any year the amount so miIwd shall fall below tbe minimum provided for that year. the Appalachian Company shall nevertheless pay to the Improvement Company a sum as royalty equal to the amount which might be realized by said minimum at tbe rate of t('n ('pnts per ton." The Appalachian Company was requlrpd to puy the taxes and other legal assessments during the term. 1'he royalties as above prOVided were to be paid as follows: "Upon all coal taken from the mines betw('en the first day of December and the last day of both indusive. in each p'ar, thl' royalty shall be paid on thp IllS! day of .June following; and upon all coal taken out between the first day of Jun(' and the last day of :\ovemllPr. bot.h Inelusive, in each year, the royalty shall be paid on the last day of December following." The guaranty with re;;pect to the railroad was as fdlows: "The Improvement Company undertr.l{er, and guaranties that said railroad company [that is, the 'West Virginia, Pineville & Tennessee Railroad Company], together with the Improvement Company, will make, execute, and deliver to said Appalarhlan Company. and that said railt'oad cowpany will duly perform, a contract In substance as follows, to wit: "(I) That the railroad company, within six months after demand made by the Appalachian Company, will extend Its existing line of railroad from its present terminus near the Improvement Company's ovens np the Hight Fork of Straightcreel( to a point opposite such new CO/II-mine opening or openings as may be made by the Appalachian Company; the length of such extension, however, not to excePd one mil(', unl!'!'lR the Railroad ('ompanv shall to extend further, and the location tbereof to be on eitber side of Straight creek as the Railroad Company may determine. "(2) That on or before January 1, 1894, from this date, the railroad company will build and complete, ready for use, a line of railroad "conneeting wltb its present track, at a point near the junetion of the Right and Left Forks of Strlilght creek, and extending thence up said Left Fork to a point at or near the moutb of Long Branch, "(3) That witbln six months after tbe completion of sald road to Long Brancb the Railroad Company will extend Its road up said Left Fork to a point at or near tbe mouth of Siln's Fork, said road througbout to be ot lltandard gauge, and wltb reasonable and practicable grades and curves.
1009
"(4) That the railroad company will maintain and keep In reasonably good repair its said railroad, constructed and to be constructed as above mentioned. "(5) That upon completion of said railroad to Long Branch the AppalachIan Company will at once open a mine or mines en the lands of the Improvement Company above described, neal' or accessible to such cxte-nsion. where it may be found practicable, and coal in workable quantity and marketable quality, and will mine therefrom continuously during this ll-ase an amount ..Jf coal not less than at the average rate of two hundred and fift.r tons per day from the time of such completion; and when said railroad shall have been extended to Sim's Fork the Appalachian Company shall in like manuel' mine from said lands lying on the line of the branch extending up said Left Fork, if to be found practicable, and in workable quantity and marketable quality, not less than fifty additional tons of coal pel' day from the time that said extension is completed to Sim's Fork, but these quantities not to incl'ease the yearly minimum hereinabove required unless at the option of the Appalachian Company," Then follow certain provisions as to the right of the Appalachian Company to use the tracks provided, and the rental thereof. Section 7 of the contract prOVided that, "if the Appalachian Company shall fail to pay the royalties within sixty days, the Improvement Company migllt ternJinatp all ril!.]lts of the Appalachian Company, and declare the agreement void, and take possession of the leased premises," amI that thereupon the Improvement Company might recover from the Appalachian Company the royalties due and accl'Uecl up to the date of the surrender of the leased premises, and that all the improvements put by the Appalachian Company upon the land should be subject to the landlord's lien for rental in behalf of the Improvement COllipany, and in addition thereto to a contract lien hereby created in behalf of the Improvement Company and the Railroad Company for the amounts due them, respectively, and for enforcing payment of the same, Further provisions of the c'Ontract were as follows: "It is understood and agreed that, out of the royalties and rentals to become due in any year by the Appalachian Company under this contract, eithe-r to the Improvement Compnny or the Hailroad COII,pany, such portions of each or both as may be necessary to payoff and discharge any interest then due and unpaid, or about to become due, on the mortgage honds of the Improvement Company secured by its 1110rt>.!:lge to th Louisvi1le Trust ' Company, trustee, dated February 1, 1892, recorded in the Bell county, Kentncky, clerk's office, in Deed Book ::\0, 27, pages - , may be paid by the AppalaelJian Company for account of the Improvement Company to said Trust Company, to be applied by it to the payment and discharge of said interest of the Improvement CO'mpany." The fourteenth clause of the lE'use was as follows: "If the Improvement Company and Raill"Oud Company shall fail to construct or cause to be constructed the railroad herein provided for, or at any shall fail. for sixty days after notiee and demand, to give to said Appalachian Company the use of said railroad as herein stipulated for, and as stipulated in the railroad contract of even date herewith, the Appalachian Company shall have the right to cancel this lease from that date." The court below found that the defendant, the Appalachian Company, took possession of the leased lands about November 1, 1892, and continued to hold the property under the lease until April 20, 1894, when the defendant assumed to terminate the lease under the fourteenth clause of the contract referred to; that Mines A and B, which had been opened by the Improvement Company before the lease was made to the Appalachian Company, were not in good workable condition as guarantied in the contract; that the defendant, the Appalachian Company, was not able to mine the minimum amount of coal of 250,000 tons per annum from said mines within the first year, but that the said company could have mined much more than it did mine within the first year of the lease; that the extension of the railroad up the Right Fork of Straight creek, opposite the opening of Mine C. would have 'Uabled defendant to have mined, with proper exertion and skill, the minimum amount of coal required by the contract; thillt the defendant, after January 1, 1893, had to expend on Mines A and B, to make them workable under the guaranty. $3,500; and that the defendant expended, at the openings and inclines of ;\iine C proper for mining, an extension of the railroad to that point, of $5,000. V.
iLOIO
73 FEDERAL
·oourt below held that the. cavenantby the Improvement Company that tbe Railroad Company would. extend its lines as provided in the contract was a covenant independent of the to pay the minimum royalty, and was not .a condition precedent, and that, for a breach thereof, the defendant was entitled to damages which might be set off against the minimum ro;yalty or ;rent accruing to the plaintiff under the contract; that, after estimating and deducting the damages caused by the failure to construct the railroad as agreed. and by the breach of the agreement to deliver the existing mines ina workable condition, the amount due from the plaintiff to the defoodant as minimum royalties from the time of taking possession in November, 1892, until April 28, 1894, when defendant canceled the lease and delivered up possession, was $27,137.56.
Helm & Bruce, for plaintiff in error. Richards, Weissinger & Baskin, for defendant in error. Before TAFT and LURTON, Circuit Judges, and HAMMOND, J. TAFT, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The Appalachian Company, the plaintiff in error and the defendant below, files but three assignments of error. The first two are practically the same. They question the correctness of the ruling of the trial court that the covenant by the Improvement Company that the Railroad Company would construct the railroad as therein specified was an independent covenant, and not a dependent covenant, and a condition pre-cedent to the payment of the minimum royalty under the contract of lease. No argument has been addressed to the court in support of the third assignment of error, and it must therefore be regarded as waived. Chamois Co. v. Williamson (decided by this court at the present term) 18 C. C. A. 662, 72 Fed. 508. In their reply brief, counsel for the plaintiff in error seek to raise other questions; but, as no assignments of error embracing them have been filed, they will not be considered. The only question before us, then, is whether the covenant by the Improvement Company that the Railroad Company would construct the railroad in the manner provided in the contract was a condition precedent to the payment of the minimum royalty under the lease. The learned district judge held that it was not, and we entirely concur with him. The lease was dated in October, 1892, and posses-sion was taken under it in November following. The railroad extension up to Mine C was not to be completed until six months after a demand by the Appalachian Company, the railroad extending to the mouth of Long Branch was not to be completed before the 1st of January, 1894, and the railroad from Long Branch to Sim's Fork was not to be completed until six mouths thereafter; while the agreement to pay a minimum royalty began with the beginning of the lease, and the first royalty under the lease was due on the 31st of December, 1892. This was three months before it would have been necessary for the Improvement Company and the Railroad Company to have built the first extension of the railroad provided in the contract, even if demand had been made for it as soon as the Appalachian Company went into possession. The royalty for a year and a .quarter would be due before the Long Branch extension had to be built, and the royalty for a year and three quarters would be due
1011
before the Sim's Fork extension had to be built under the contract. It is impossible, under such circumstances, that the covenant to pay the royalty and the covenant that the railroad should be extended were interdependent. The Appalachian Company protected itself in the contract by the provision of the contract that if the road was not extended it might terminate the lease. It did not exercise this privilege for nearly a year after a default on the part of the Improvement Company and the Railroad Comnany to build the first extension. All this time it remained in possession of the property and did coal mining. It is immaterial whether it was possible to mine the minimum amount of coal as provided in the contract without the railroad or not. If the Appalachian Company had intended to make its payment of the minimum royalty dependent on the construction of the railroad, it should have insisted on the presence of such a clause in the contract. It manifestly did not have this intention, because several installments of the royalty were due before all the contemplated extensions of the railroad could be completed. The Appalachian Company had possession of the property of the Improvement C'Ompany, and did mining thereon for nearly a year and a half. It would be an unjust construction of the contract that would permit the lessee to have so much of the benefit moving to it under the contract without paying anything therefor. Especially is this true when the Appalachian Company had the right to terminate the lease and its liability under it in }Iay or June of 1893, and yet failed to do so, and continued in possession for nearly a year thereafter. Rules for determining whether covenants are dependent Or independent are like rules for construing wills. They are merely aids in ascertaining the intention of the minds of those who execute the instruments. Often the intention is so clear that rules are of no service. Such is the case at bar; but, as extended reference has been made to the authorities upon the briefs of counsel, it is proper that we should shortly discuss them. The covenant to build the railroad in this lease of mining rights cannot be distinguished from a covenant of a landlord to improve or repair leased premises at some time after the date when by the terms of the lease possession begins. In such a case, the authorities are uniform that a breach of the covenant to repair or improve is no defense to an action for rent under the lease. Lunn v. Gage, 37 Ill. 19; McCullough v. Cox, 6 Barb. 386; McDowell v. HendriX, 67 Ind. 513; Wright v. Lattin, 38 Ill. 293; Hunt v. Silk, 5 East, 449; Tayl. LandI. & Ten. §§ 265, 275. The same result must be reached in the case at bar by following either of two of the rules which Sergeant Williams lays down in his notes to the case of Pordage v. Cole, 1 Saund. 319, 320, for determining whether covenants are dependent or independent. The first of these rules is as follows: ·'u a day be appointed for payment of money, or part of it, or for doing any other act, and the day is to happen or may happen before the thing which is the consideration of the money or other act is to be performed, an. action may be brought for the money, or for not doing such other act before performance; for it appears that the party relied u[l(>n his remedy, and did not intend to make the performance a condition precedent. And SO where:
1012
no time is fixed for performance of that which is the consideration of the money or other act."
As already explained, in the case before us, part of the minimum royalty was due under the contract before any of the new railroad track was built. Two semiyearly payments were due before the rest of the railroad extensions were to be completed. Hence it is plain that the Appalachian Company was relying upon its remedies on the covenant to secure its enforcement, and one of these was, in this case, a cancellation of the contract. Sergeant ·Williams' third rule is as follows: "\Vhere a covenant goes only to part of the consideration on both sides, and a breach of such covenant may be paid for in damages, it is an independent covenant; and an action may be maintained for a breach of the covenant on the part of the defendant without averring performance in the declaration."
And the learned annotator, after citing a number of cases to sustain the rule thus stated, gives the reason for it as follows: "Hence it appears that the reason of the d 'cision in these and other similar cases, b!>sides the inequality of damages, seems to be that wheTe a person has received a part of the consideration for which he entered into the agreement, it would be unjust that, because he has not had the whole, he should therefore be permitted to enjoy that part without either paying or doing anything for it. 'rherefore the law obliges him to perform the agreement on his part, and leaves him to his remt."dy to recover any damage he may have sustained in not having received th whole consideration,"-citing Boone v. Eyre, 2 \V. ' El. 1312; 1 H. lIi. 27::;; Cawpbell v. ,Jones, 6 'rCl'm R. 570; Duke of 8t. Albans v. Shore, 1 II. Bi. 279.
In the case before us the minimum royalty was to be paid, not only for the coal taken from the mines to be reached by the railroad extensions, but also, and in much greater part, for the coal taken from :Mines A and B, which already had railroad connection. We have already alluded to the injustice of a construction which would permit the Appalachian Company to have all the coal mined or which might have been mined from A and B, amounting to 750 tons a day, for nothing. The principle announced in Sergeant Wil· liams' third rule finds illustrations in Lord Ellenborough's judgment in Hunt v. Silk, 5 East, 449, in Lyon v. Bertram, 20 How. 154, in Payne v. Bettisworth, 2 A. K. Marsh. 429, and in :Nelson v. Oren, 41 Ill. 18. The cases of Hoare v. Rennie, 5 Hurl. & N. 19, and Norrington v. Wright, 115 U. 8. 188, 6 Sup. Ct. 12, relied on by plaintiff in error, have nothing in them conflicting with the construction placed by us on this lease. They were cases of mercantile contracts for the delivery of merchandise in monthly installments, and a failure by the vendor to deliver an installment in the time and manner prescribed was held the breach of a condition precedent, entitling the other party to rescind. Their ratio decidendi is shown by the open· ing words of :Mr. Justice Gray in delivering the opinion of the court in the latter case. He said: "In contracts of merchants time is of the essence. The time of shipment is the usual and convenient means of fixing the probable tlnie of arrival, with a view of providing funds to pay for the goods, or of fulfilling contracts with third persons, A statement descriptive of the subject-matter, or of some material incident, such as the time or place of shipment, is ordinarily to be regarded as a warranty, 'in the sense in which that term is used in insurance and mari-
CI'ry m' OMAHA V. UNION PAC. RY. CO.
1013
time law; that is to a condition precedent, UIlon the failure or nonperformance of which the party aggrieved may repudiate the whole contract."
It will be seen that cases of this class rest on the exigencies of mereantile business, and, like warranties in maritime insurance, are based "ultimately on custom and usage. But, conceding to these decisions all the effect claimed for them, there is nothing' in them from which it can be inferred that the vendee can avoid payment of the contract price for the installments already received and used by him; and yet that is, in reality, what the Appalachian COlllpany seeks to do here. The judgment of the circuit court is affirmed. CITY OF O?lfAHA et al. v. U:\'IO:\' PAC. (Circuit Court of Appeals, I<:ighth Circuit. :\'0.443. CONSTITUTIONAl, LAW STATING PUHPOSE OF STATUTE IN TI'l'LE NEBHASKA
ny.
CO.
March 30, 180().)
CONSTITUTION. By an aet, passed in 1879, the legislature of :\'ebraska enacted a general system of assessment and taxation of property, which provided, among other things, that the roadbed, right of wa.v. tracks, depot gl"Ounds, and buildings and rolling stock of any railroad company should be retul'llcd its officers to the auditor of public accounts, assessed by the state l){Jard of equalization, and cel'titied to the clerks of the several counties throngll which the road ran in p['{)portion to the number of miles in such countief', respectiv('1y. By section 70 of an act passed in 1887, incorporating metropolitan cith,s, and defining their powers, the legislature gave power to sudl cities to assess certain buildings within the right of way or along the track of any rallr'oad company, used for purposes of rent by such company, or for purposes other tllan the ordinary operations of sueh eompany, and nat appearing- on the eounty rollR beoause not returned to the Rtate with the railroad property as such. In 18D1 an act waR passed, entitled "An act to amend sections 11 * * * 7n * * *" of the act of 1887, "and to repeal said seetions so amended." This act introduced into that of ISS'j a provision that the rig-ht of WLy of any railroad ill a dty should include only :-,0 fppt 0: lu nd on each sidp of the Illaill and that all lands and buildings outside of such 50 feet should be assessed by the city authorities. In lSD:l auother act was pmilled "An Het 10 amend sections 1 * * * 7H * * * of" the act of 1887, "as subsequently amended, and to repeal said sections as herptofore existing," By this amendment the city authorities were authorized tf) list and a,,· sess the roadbed, right of way, tracks, depot buildings, and ground" and all the property of any railroad company within the city, and not appearing on the county rolls by reason of having been returned or listed to the state auditor. Held, that the acts of 18\)1 and 1803 violtned the provision of section 11, art. 3, of the constitution of 1\ebraska that "no bill shall contain more than one subject and the same shall be clearly expresspd ill its title," since the acts contained provisions relative to a subject-mattPl' not dealt with by the act amended. eonferred new power" Oil tlw city authorities, and that of 1891 undertook to define the limits of a railroad riglJl of way, none of such purposes being suflieiently indicatpd by the titles of the acts; and, accordingly, that the acts were void.
Appeal from the Circuit Court of the United States fol' the District of Nebraska. On :M:arch 1, 187\), the legislative assembly of the state of Nebraska passed an act containing 184 sections, entitled "An act to provide a system of revenue." Laws Neb. 1879, pp. 273-349. The act in question outlined and es-