Opinion
May 23, 1972.
Editorial Note:
This case has been marked 'not for publication' by the court.
Matney & Stark, Jack W. Stark, Fort Collins, for plaintiffs-appellants.
Hill & Hill, Alden T. Hill, Fort Collins, for defendant-appellee.
SILVERSTEIN, Chief Judge.
This action was brought by Mr. and Mrs. Ackerman, (Ackerman) against Sterling Paving Co. (Sterling) to recover payments alleged to be due under a Sand and Gravel Lease. Although several issues were tried and determined by the trial court, the sole issue before this court involves the payment of rent or royalties pursuant to the terms of the lease. The trial court found that, as of the date of trial, defendant, sterling, was not in default on the payments, and entered judgment accordingly. It is from this judgment that plaintiff appeal. We affirm.
Resolution of the issue rests upon construction of the lease, under which Ackerman, the landowner, leased the premises to Sterling for a period of five years, commencing October 21, 1965, 'for the sole purpose of mining, processing and marketing sand and gravel.' The lessee was given the right to stockpile the material mined. The lease provided for 'a minimum rental, for the full term aforesaid, payable in monthly installments of . . . $200.00 per month, in advance.'
The lease further stated:
'For and in consideration for said monthly minimum rentals the lessee shall be permitted to remove, without further charge, . . . (2,666.66) tons of sand or gravel. In any month that the sand or gravel is (sic) mined by the lessee and removed from the premises shall exceed . . . (2,666.66) tons, the lessee shall pay to the lessors the sum of seven and one-half cents (7 1/2¢) per ton for each ton of sand or gravel removed in excess of the said . . . (2,666.66) tons per month.'
Conflicting interpretations of the two above quoted sentences by the parties to the lease created the issue to be determined. The evidence discloses that Sterling took possession of the premises in October 1965, and began paying the minimal rental each month when due, although it did not remove any gravel until March 1966. In June 1966, Sterling sent Ackerman a schedule of payments which listed the payments made, the amount of gravel removed, the value of the gravel, at seven and one-half cents a ton, through May 1966, and showing a balance due Sterling which was computed by offsetting the cost of the gravel removed during the months of March, April, and May against the minimum monthly rentals paid for the months from October 1965 through May 1966.
Sterling continued making the $200 payment, and sending monthly schedules to Ackerman, through October 1969, at which time the schedule showed a balance due Ackerman of $1715.83. On October 17, 1969, Ackerman filed this action, claiming that Sterling owed $6,384.96, plus interest. The basis of Ackerman's claim is that, under the lease, Sterling was entitled to credit the minimum monthly rental against gravel removed only in the months in which sufficient gravel was actually removed from the premises, whereas the monthly statements sent by Sterling to Ackerman revealed that Sterling was crediting the minimum rental against gravel removed at any time during the term of the lease, at the rate of $200 for every 2,666.66 tons removed. On other words, Sterling interpreted the lease to read that the payment of $200 a month for the full term of the lease (60 months) entitled him to remove 160,000 tons (60 2,666.66) without further payment.
The evidence clearly supports the trial court's finding:
'That the parties by their conduct before the dispute arose, have interpreted the Lease in accordance with (Sterling's) construction of its meaning and that the plaintiffs for over three years, at least since the receiving of the summary schedule, . . . have adopted defendant's construction of the lease and acquiesced in such construction . . .; that plaintiffs . . . took no sufficient or positive action to establish their now asserted construction of the Lease.'
The trial court concluded that the lease was ambiguous as a matter of law. We agree.
The first sentence in question gives the lessee the right to remove $200 worth of gravel for each month's minimum rental paid 'without further charge.' The next sentence provides that the excess mined in any month shall be paid for at 7 1/2 cents per ton. The lease required that all payments should be made on or before the fifteenth day of the following month. It is not certain whether the second sentence was intended to be a limitation on the right given in the first sentence or whether it was intended as a device to keep payments current for the total amount of gravel removed.
In any event the law is clear that where there is an ambiguity in a contract, the interpretation placed thereon prior to any dispute is binding on the parties and the court. Gardner v. City of Englewood, 131 Colo. 210, 282 P.2d 1084.
In Hinkle v. Blinn, 92 Colo. 302, 19 P.2d 1038, our Supreme Court said,
'We conclude that the conduct of the parties before the controversy arose, acting under the contract, is a reliable test of their interpretation of the instrument, and whatever the stress of subsequent disagreement neither in his own interest may be heard to urge a different construction.'
Ackerman contends that even though the lease be ambiguous the interpretation placed thereon by the trial court is erroneous. Strong reliance is placed on Anderson v. United Coal & Coke Co., 67 Wyo. 536, 227 P.2d 700. However, the lease in that case was devoid of any provision which gave credit against the minimum monthly payments for product mined. The court in Anderson, supra, noted that, 'No provision (for credit on minimum rental) is found in the lease involved in the case at bar, and cannot be read into it.' The lease in the present case, which was drawn by Ackerman's attorney, contains such a provision. The parties acted throughout the term of the lease, until the present dispute arose, in accordance with Sterling's interpretation, and are bound thereby.
Judgment affirmed.
DWYER and ENOCH, JJ., concur.