Opinion
Civ. A. No. 2853.
March 23, 1955.
Williams Parler, Roddey L. Bell, Lancaster, S.C., for plaintiffs.
LeRoy M. Want, Darlington, S.C., T. Carlisle Smith, Jr., Asheville, N.C., Louis M. Shimel, Charleston, S.C., for defendants.
The report of Special Master Charles W. Muldrow follows:
The above entitled action was brought on July 14, 1951, in the Court of Common Pleas for the County of Chesterfield and was removed to this Court because of diversity of citizenship.
The complaint alleges that the defendant, Carolina Mining and Exploration Corporation, hereinafter called the defendant, entered into a contract with the plaintiffs, Helen Clyburn, John S. Clyburn, Louise C. Mangum, and their mother, E. Mae Clyburn, and their sister, Catherine Clyburn Crawford, hereinafter called the Clyburns, whereby the Clyburns granted to the defendant the exclusive right or option to purchase a 1,350-acre tract of land in Chesterfield County, South Carolina, known as "The Brewer Mine Property"; that, under provisions of the agreeement which was signed by the defendant and the Clyburns, the purchase price was to be $140,000, of which the sum of $3,000 was to be paid upon the execution and delivery of the agreement or, in lieu of the initial payment, the defendant was to have all outstanding record liens, leases, options or other clouds of title stricken from the records of the Clerk of Court for Chesterfield County, in which later event the defendant was relieved of the $3,000 cash payment; and that the ten-year option period was to commence from the date of the initial payment of $3,000, or the date of the clearing of the title by the defendant; that the defendant elected to bring proper proceedings to cancel the leases, options or other clouds of title which appeared of record affecting the property, in lieu of making the initial payment; and that they were successful in removing or cancelling of record all such leases, options or other clouds of title on or about or prior to the 14th day of November, 1940; that in accordance with said agreement the plaintiffs made and executed to the defendant a good and sufficient warranty deed conveying fee-simple title to the property to the defendant and that the deed was deposited with O. Roddey Bell, as escrow officer, to be delivered to the defendant upon the payment of the balance of the purchase price; that the said agreement further provided that in the event the defendant failed to comply with the terms and conditions thereof, or to pay the purchase price of $140,000 within the ten-year period, the same was to become null and void and the defendant was to furnish to the Clyburns a full and adequate release of any claim or interest in the premises; that subsequent to the execution of the agreement Catherine Clyburn Crawford died intestate leaving as her only heirs at law the plaintiff, Ben H. Crawford, Sr., and Ben H. Crawford, Jr. and John C. Crawford, and that E. Mae Clyburn died leaving her last will whereby she devised her interest in the premises to the plaintiffs Helen Clyburn, John S. Clyburn, Louise C. Mangum, Ben Crawford, Jr., and John C. Crawford, and that they, with the plaintiff, Ben H. Crawford, Sr., were at the time of the filing of the complaint owners in fee of the premises involved; that more than ten years had elapsed since the initial date of the agreement; that the defendant failed to comply with the terms thereof in that the full purchase price had not been paid or tendered to the plaintiffs and that by reason thereof the plaintiffs are entitled to have said option agreement cancelled and stricken from the record as a cloud on their title thereto; that although the agreement expired and the plaintiffs so notified the defendant, the said defendant, its agents, servants and employees have continued to trespass upon the property and to extract and remove therefrom topaz and other minerals or metals and have refused to discontinue the said acts, although notified to do so by the plaintiffs, and that the defendant has in general, interfered with the plaintiffs' rights of ownership of said property and have obstructed the rights of entry thereon; that each act of trespass by the defendant, constitutes a separate offense which would necessarily involve the plaintiffs in a multitude of suits, putting them to much cost and expense, and that they are informed and believe that the reason for such continuing trespass on the part of the defendant is to embarrass the plaintiffs' title thereto, and that they are informed and believe that the defendant is so insolvent that a judgment for damages at law against it could not be collected, and that they are without remedy at law and will suffer irreparable damages, if not protected by the injunctive powers of this Court.
The plaintiffs pray that the agreement set out in the complaint be adjudged void and of no effect and that the defendant be required to execute to the plaintiffs a proper release and cancellation thereof; that the defendant, O. Roddey Bell, who is in possession as escrow agent of the deed for the premises be required to surrender the same to the plaintiffs; that the defendant be adjudged to have no title, claim or interest in the premises by virtue of the agreement or option or any assignment or transfer thereof; that the defendant be forever barred and restrained from asserting or claiming any right, title or right of possession to the premises by reason of said agreement or option; and for such other and further relief as in the premises may be just.
The answer of the defendant denies that title to the property was finally cleared on or before November 4, 1940, and alleges that title was not finally cleared until December 23, 1942; it admits that more than ten years elapsed since the date of the purchase contract and that the full purchase price had not been paid but it denies that the defendant failed to comply with the terms of the purchase contract and specifically denies that the plaintiffs are entitled to have the same cancelled and stricken from the records. It admits that topaz had been abstracted and removed from the premises and alleges that the royalty payments had been paid to and accepted by the plaintiffs.
For a further defense the defendant alleges that there was a disagreement between the plaintiffs and the defendant as to the balance due upon the purchase price and that there was disagreement as to when the time of the ten-year contract terminated; that on or about April 12, 1950, after many conferences the defendant and the plaintiffs, Ben H. Crawford, Sr., acting for and on behalf of the infant plaintiffs, Ben H. Crawford, Jr. and John C. Crawford, agreed that the purchase contract should terminate on December 31, 1952, and that the balance due on the purchase price should be reduced to $100,000 because of the wrongful removal by the plaintiffs of timber, pipe and other materials from the property and on account of payments made by the defendant to the plaintiffs; and that the defendant should increase royalty payments on topaz from $.50 to $1 per ton to be applied on the $100,000 balance; that the defendant, in reliance upon said agreement, proceeded with negotiations for the development of the property and for the payment of the agreed balance due on the purchase price and that, in reliance upon such agreement, expenses were incurred by the defendant in conducting such negotiations and that from and after April 12, 1950, the increased royalty payments provided by the agreement were paid to and accepted by the plaintiff on all topaz removed from the premises; that the defendant at all times acted upon the assumption and in the belief that the purchase contract would not terminate until December 31, 1952, and that the balance due by it upon the purchase price was the sum of $100,000 and that plaintiffs permitted and allowed this defendant to proceed and act upon such assumption and belief until on or about the 26th day of February, 1951, when it was advised that plaintiffs did not recognize the agreement reached in April, 1950.
Defendant further alleges that it elected to clear the title to the property in question as the alternative to making a cash down payment of $3,000; that the final cloud was removed by order of Judge Waring on December 23, 1942, and that until this order was signed defendant was unable to negotiate a contract upon the property because it did not know whether a good and sufficient title could be conveyed by the plaintiffs.
Defendant alleges that the contract was to be extended for a period equal to that in which operations are suspended for any of certain designated reasons and for "any cause beyond the control of the Defendant"; that, from the start, the plaintiffs repeatedly, entirely without basis, declared the defendant in default and their contract terminated; that defendant was forced to obtain an injunction to halt plaintiffs' interference; that, from the start, defendant has been continually harassed by plaintiffs in its efforts to make a deal with responsible parties.
Defendant further alleges that it invested more than $20,000 in machinery and equipment; that gold mining was halted by Governmental order; that United Feldspar and Minerals Corporation agreed to erect a plant on the property and develop it, but that its work was unsatisfactory; that disagreements with Feldspar resulted in an arbitration favoring the defendant, and that mining operations were impossible during this period.
Defendant further alleges that plaintiffs wrongfully cut timber, removed a pipeline and other equipment, and granted a right-of-way to a power co-op. in an area that defendant had planned for a residential development.
The case comes before me, as Special Master appointed by the Hon. Ashton H. Williams to succeed the Hon. A.F. Woods, of Marion, resigned, in the form of a maze of testimony that has developed from turbulent contractual and personal relations built up over a period of 18 years. It is no oversimplification to state, however, that the opposing contentions are these:
By plaintiffs — The time specified for payment to be made has expired; therefore defendant has no rights and should be put off the property.
By defendant — Time has not expired because the contract itself provides for extensions in the event of certain contingencies which in fact have occurred; also, the plaintiffs have failed to give the defendant credit for certain items of damages by reducing the purchase price; therefore, the Court should allow the defendant more time and set the amount of its damages.
Considering the more than 550 pages of testimony and the literal scores of exhibits, there is remarkably little conflict in the testimony. To understand the testimony in its relation to the issues made by the opposing contentions as above stated, it is essential that what I shall refer to as the 1938 contract be kept in mind.
To review somewhat, the Brewer mine, property of the Clyburn family for many years, is a gold mine. Unlike the famous Haile mine in this state, it has not been a large producer of gold in recent years. Prior to 1936, it was operated by various persons under arrangements of varying kind with the Clyburns. The gold was not in sufficient quantity to make possible profitable operations, and the mine was of no great present value to anyone.
Among these persons who had operation agreements was one Mittenbuhler. During the years he assigned his rights to a Dr. Colby. Mittenbuhler was unable to get along with the Clyburns — it is not necessary for me to find who was the party at fault — and the Clyburns entered into an agreement to sell to Carolina Mining and Exploration Corporation, the defendant in this case.
This corporation, although existing in North Carolina corporate form, was, practically speaking, the personal company of M.R. Hilford and, after his death on July 14, 1949, of his widow, the current president and sole operator of the company. Mr. Hilford was a self-educated mining engineer who became interested in the mineral resources of the Carolinas. His view was that minerals are among the Carolinas' greatest assets, an asset that largely was being neglected.
In 1936, Mr. Hilford, for the Carolina Mining and Exploration Corporation, signed a contract with the Clyburns for the purchase of the mine. Its provisions are practically the same as those of the 1938 contract which superseded it, so there is no necessity for a lengthy review of this contract, except that it did not contain the alternative method of making the down payment of $3,000 included in the 1938 contract.
After the 1936 contract was executed, Mr. Hilford had interested a Canadian concern in purchasing the property and a $500 deposit actually was put up in escrow toward the deal that was contemplated. He had the title examined, and the defects in the title shown by the records in the office of the Clerk of Court for Chesterfield County were revealed. The Canadian deal — the first of several which Mr. Hilford — and after his death Mrs. Hilford — had ready for consummation could a good title be assured, fell through.
The 1938 agreement was executed with the knowledge of title defects and allowed the Carolina Mining and Exploration Corporation the alternative of clearing the title in lieu of the $3,000 cash down payment.
By this contract the Clyburns agreed to sell to Carolina Mining for $140,000, payable $3,000 when the option to purchase is exercised, and the balance to be paid out of royalties ranging from 5 to 15 percent of ore production. In lieu of the $3,000 payment, the corporation had the privilege of clearing the title to the property. The full purchase price was to be paid within ten years from the date of the down payment or the clearing of the title in lieu thereof. If the purchase price payment was completed in two years, the full price was to be $100,000 instead of $140,000.
Actual operations were to begin not later than 180 days after the initial payment was made or the title was cleared. The term of the agreement was to be extended for a time "equal to such period as may reasonably be necessary to resumption of operations if such operations are made impossible by reason of * * * accident, or casualty, or the suspension of operations because of litigation involving mining operations, or to permit reconstruction of said plant in order to enlarge same or increase the efficiency thereof * * * or any cause beyond the control of" Carolina Mining.
The contract provided that no timber was to be taken off of the property; that timber used for the mine would be paid for at the current rate and credited on the purchase price.
Upon the payment of $3,000, the Clyburns were to put a general warranty, fee-simple deed in escrow with an agent acceptable to both parties, to be delivered to Carolina Mining on payment of the full purchase price.
The contract specifies that should any payment be delinquent by sixty days, the agreement is subject to cancellation upon the giving of thirty days notice, unless Carolina Mining has made good, in the meantime, the default.
Almost immediately after execution of the contract, three things occurred, according to the undisputed testimony:
1. It was found that the mine was of little or no value, under existing conditions, as a gold mine.
2. A rock, existing in plenty at this mine, almost exclusively in the United States, was found to be topaz, and Mr. Hilford began his long efforts to prove that it had great commercial value.
3. There began the repeated disagreements between the contracting parties, which the Hilfords regarded as inexcusable harassment.
Mr. Hilford at first appeared to feel, as his predecessors did, that there was gold in commercial quantities in the Brewer mine. That hope was practically exploded when a large company which he interested found to the contrary. The hope definitely was killed, for years at least, when the government closed down the mining of gold because of war conditions.
Meanwhile, Mr. Hilford had become interested in the topaz. A little known government report — not distributed to the general public — had been made on the Brewer mine topaz by a Dr. Pardee. While on a trip to New York in the interest of the mine, Mr. Hilford spent his spare time in the public library, reading this report and the scanty material that at this time was available on topaz.
The Clyburns had filed suit against Dr. Colby, assignee of the Mittenbuhler lease. Dr. Colby had counterclaimed for $100,000, claiming a scheme to keep large gold profits from him. With Mr. Hilford pushing the case, the suit was dismissed on April 29, 1939, and the Mittenbuhler-Colby lease was cancelled, as result of agreement worked out by Mr. Hilford, on January 17, 1940 (recorded February 3, 1940). Thus the parties thought at the time that the title was clear.
But it was almost another year, in December, 1940, before the Clyburns put the deed in escrow, with O. Roddey Bell, who is a nominal defendant in this case.
From 1936 on, Mr. Hilford carried on with his efforts to interest mining interests in the Brewer mine, first as to gold and then as to topaz. He and Mrs. Hilford went to New York in 1937 and 1938 for this purpose. He had no steady income. Mrs. Hilford worked in New York to support them while he went from company to company, and later she did similarly in North Carolina. With only minor income coming in at any time from the Brewer property, Mrs. Hilford rebuilt old cars for a small profit, worked in millinery, even did without electricity in their home — all to enable them to finance their efforts to sell both industry and government on the possibilities of topaz, which only shortly before had been regarded as only a worthless rock.
As to the harassment that began with the signing of the contract, there has been no satisfactory explanation whatever. Mrs. Clyburn, who spoke for the family until her death in 1947, was not here to testify. Mr. Hilford, too, is dead. Mr. Hines and Mr. Stewart and Mr. Knight, all of whom were attorneys for the Clyburns at various crucial times in the dealings, also are dead.
It appears from the evidence that, prior to the clearing of the title, in 1940, the Clyburns attempted to terminate the contract on four separate occasions, or threatened to do so: February 11, for failure to pay the Clyburns' representative; June 22, the same; July 25, because validity of the Colby release was being questioned by Mrs. Colby, and October 26, for failure to comply with terms of the contract (details not specified). In addition, the Clyburns attempted to restrict the rights of the Carolina Mining in favor of a man who had a farm lease, even though the corporation had prior rights to the handling of the property.
Nor did the Clyburns' efforts to terminate the contract cease with the apparent clearing of the title. On June 10, 1941, the Clyburns' attorneys wrote the Hilfords notifying them that the lease was cancelled because of the following violations of the contract (with the Hilford explanation given in parentheses):
1. You have failed to supply a monthly statement of the output of the mine, and an itemized statement for which said output was expended. (No such statements required by the contract, but details were supplied on monthly royalty checks to the Clyburns.)
2. Copies of all mint returns not furnished. (Mint returns were copied by John Clyburn, as representative of the Clyburns, and made available to the Hilfords.)
3. No representative of the Clyburns hired. (The Clyburns were to send their representative, but did not do so. On the occasion of this particular letter, the Clyburns were invited to send their representative.)
4. Mine not operated for gold within 30 days. (This was no fault of Carolina Mining, and the contract did not so require. Also, no proper notice of proposed cancellation was given at any time.)
It appears from the record that the Hilfords, acting for their corporation, Carolina Mining, satisfied the Clyburns on these and the other occasions. In fact, on September 9, 1940, two weeks after one notice that the contract was terminated, the Clyburns wrote that, as of September 5, 1940, time would not be counted against the Carolina Mining in the performance of its contract.
Two months later, on November 9, 1940, Roberta Colby, as guardian of Dr. Colby, alleged to be mentally incompetent, sought to set aside the dismissal of Dr. Colby's counterclaim. But at least six weeks earlier than the September 9th letter, on July 25, 1940, the Clyburns had notice that the Colby action against their title was coming. For, on that date, their attorney, Mr. Hines, wrote Carolina Mining that he was advising the Clyburns to retake possession of the property on the basis of the Colby claim. Thus, Carolina Mining had to step in and finish the job of clearing the title.
Mr. Hilford did defend the action — and successfully. It was dismissed by order of Judge Waring on December 23, 1942. Thus, the title was clear, once and for all, and the ten-year period specified by the contract, began.
What followed is a story of ingenuity that could happen nowhere but in America. The testimony as to this is long and involved, but there is no dispute whatever concerning it.
As noted above, Mr. Hilford had become interested in topaz in 1937. By 1939, when gold possibilities had definitely petered out, he had turned his full attention to it. Only recently had this "blue rock" been identified; the job now was to find commercial uses for it and to convince both the scientific and business worlds of the profits to be had in such use.
Mr. Hilford set about to do this with an enthusiasm and energy that can be understood only when one sees the hundreds of letters and papers — introduced into evidence — that he personally typed and received to and from governmental agencies and the nation's largest companies. It started at the New York public library, and it hit full stride — which was maintained until his death in 1949 and after his death by Mrs. Hilford until the filing of this action by the Clyburns — when he enlisted the aid of the research department of the Wachovia Bank and Trust Company, of Asheville, N.C.
Through this bank, he began his long contacts with agencies that could probe topaz for its properties and with concerns that could use it. He found that it was valuable as a refractory material, that is, it was convertible into mullite, which can withstand great heat and which has many commercial uses in products in which heat resistance is important. The nation's supply of mullite normally comes from kyanite imported from India, an importation which was obviously difficult during the war years.
Persistence and insistence by Mr. Hilford — as detailed both by Mrs. Hilford and Ralph B. Adair — a mining engineer of worldwide experience and formerly head of the North Carolina research laboratory in Asheville — interested the state research laboratory, the TVA, the War Production Board, the U.S. Bureau of Mines, and the mining profession generally.
WPB planned a million dollar plant for the production and processing of topaz, but this was prevented, first by wartime shortages, and then, by the peace which ended the government's urgent need. The Bureau of Mines actually did complete a major diamond drilling project at the mine, all of this with Mr. Hilford as the moving spirit.
During the 1940s, Mr. Hilford sent samples of topaz — taken from the mine by hand — to companies over the nation. The samples were small at first, and they grew larger as various companies investigated and saw for themselves the potential uses for this rock. Mr. Hilford's efforts were directed toward selling the mine for enough to pay off the Clyburns and debts that were accumulating, with his profits to come from royalties that would accrue.
The multitudinous details of these efforts are shown in the testimony — it is unnecessary to detail them in this report. Similarly, it is unnecessary further to detail the alleged harassments, which continued just as they had during the 1940-1942 period. The important point is that, over the years, the Hilfords and the Clyburns could not agree on two points: (1) the termination date of the contract, and (2) the amount due on the purchase price. It appears that the main difference of opinion was between the Hilfords on the one hand and Ben H. Crawford, Sr., acting for himself and as guardian of his two minor children, on the other.
On April 17, 1948, the Clyburns agreed to accept $90,000 if paid in four months. There were other attempts at agreement, but a cash payment was impossible because, at first, the companies that could put up the money required longer periods for experimentation, and the Clyburns would not grant the necessary extensions to the Hilfords. More importantly, throughout the years, the Clyburns claimed that the Hilfords had violated their contract and had no rights to sell. With a cloud on the title, no company would buy or lease.
In April, 1950, the Clyburns agreed with Mrs. Hilford — Mr. Hilford then had died — that the termination date was ten years from December 23, 1942, the date of Judge Waring's order clearing the title (December 31, 1952, was actually specified), and that the price, allowing for credits due Carolina Mining and for damages for items taken by the Clyburns, was $100,000. Mr. Crawford participated in the conference and specified that the formal agreement, to be drafted by the attorneys, was to be iron clad and contain no loophole for Carolina Mining to retain any rights should it not meet these specifications. John Clyburn, as agent for the Clyburns, wrote out and signed the memorandum of agreement, and the Clyburns' attorney put it into formal form. But Mr. Crawford would not sign it, and his sisters-in-law and brother-in-law said that they would not if he would not. Agreement then became impossible, even though Mrs. Hilford had purchasers available who would have paid off the Clyburns in full over a period of time, and, in all probability, in cash if a firm agreement could have been reached. Also, acting under the April agreement, Carolina Mining had raised the royalty to $1 a ton, and royalty checks were accepted by plaintiffs.
Early in the operations it became apparent to Mr. Hilford that he must have a modern plant to mine the topaz. For this purpose, he contracted with United Feldspar in 1940. Feldspar put in no pulverizing equipment, however. Unable to find a plant in the south, he had to send topaz to East Liverpool, Ohio, for the pulverizing that industry required. To make matters worse, Feldspar never installed modern mining equipment as it had contracted to do, and Carolina Mining's customers became dissatisfied.
The Feldspar relationships were stormy, almost from the beginning. In 1941 the Clyburns put Feldspar's foreman off the property, and the Hilfords had to go into Federal Court for an injunction against their interference.
Finally, the disagreements with Feldspar reached crucial proportions, and they were put into arbitration under North Carolina law. This required nine months, and no mining work was done during this period. The final decision was largely in favor of Carolina Mining, and Feldspar did not resume its operations. The testimony shows beyond doubt that this was litigation within the meaning of the contract, and the resulting nine-months delay must be credited to the Carolina Mining in the form of an extension of its contract for a like period.
There were two other interruptions that fall within the contract provisions allowing extension of time for incidents beyond the control of the corporation. One was the untimely death of Mr. Hilford and the other was the period during which no new mining could be pursued for lack of a plant and in much of which a plant was being erected by Ralph T. Lynch, with whom the sales agency of Carolina Mining, American Minerals and Mullite Corporation, contracted to build a plant for the production of topaz.
Mr. Hilford's death in 1949, to which his exertions in connection with the mine apparently contributed, was preceded by a heart attack which kept him abed for unspecified duration. His widow attempted to go forward with his work immediately, but obviously she could not immediately attend to any mining. It appears to the court that a three-month extension would be a reasonable credit for time lost as result of his illness and death.
When the Feldspar operations concluded, Mr. Hilford attempted to carry on without an operating company. It was apparent, however, that adequate mechanical equipment was a prerequisite to successful operation. Late in December 1947, Carolina Mining's best customer, Bethlehem Steel, rejected shipments, and operation could not continue on the hand-mining basis that had been followed. Operations came to a stop, except for the shipment of a few samples of topaz that had been stockpiled, and could not be resumed, as hereinafter related.
After the cancellation by Bethlehem Steel and while on a trip North in behalf of the mine, Mr. Hilford suffered his fatal heart attack.
Meanwhile, on December 29, 1948, the contract was executed by which Mr. Ralph T. Lynch, Scranton, Pa., attorney and mining engineer, was to put in the plant that would do the required job of producing and pulverizing topaz for delivery to the Hilford corporation for sale to industry. Mr. Lynch was subjected to some delays through the difficulty of obtaining equipment and because of — on the advice of engineers — relocation of the plant. By July, 1949, at the time of Mr. Hilford's death, however, the Lynch plant was well under way and it was to be completed in 1950.
Mrs. Hilford attempted to carry on her husband's work. Immediately after his death, she went to East Liverpool to supervise the pulverizing of topaz samples that were on hand. When she returned to North Carolina — it should be noted that her husband had been dead only since July 14, 1949 — she found a letter from Mr. Knight, as the Clyburns' attorney, under date of August 23, 1949, informing her that the contract was at an end unless the entire price was paid in cash within the next few days. It was stated that the ten-year period expired during this few-day period.
Where this termination date was derived is not explained in the record.
Such a sum obviously could not be raised in a matter of days. Mrs. Hilford communicated with Mr. Lynch at once. Efforts were made by both Mrs. Hilford and Mr. Lynch to reach an agreement with the Clyburns, but this proved impossible. The Clyburns demanded larger payments than Carolina Mining felt were justified under the contract and damages suffered since execution of the contract.
Mr. Lynch did not push his work on the plant to completion as result of the uncertainties. He joined Mrs. Hilford in trying to learn just what the Clyburns would accept, and representatives of large companies participated in negotiations toward the same end. Mrs. Hilford accused the Clyburns of negotiating behind her back with at least one of these companies, just as allegedly was done with Feldspar in earlier phases of the negotiations.
It was during this period that an apparent compromise agreement was reached by Mrs. Hilford with the Clyburns. This agreement set the termination date as December 31, 1952, the price at $100,000, the remaining $40,000 being accounted for by the royalties paid the Clyburns and by the timber and other personal property removed by the Clyburns. Once the terms were agreed upon, it was agreed that they should be written out in note form and presented to Mr. Knight for drafting in such terms as, in the words of Mr. Crawford, it would be iron clad with no loophole for Carolina Mining to escape surrendering all of its rights if the terms were not met.
Mrs. Hilford was invited to write out the agreed terms but she insisted that John Clyburn so do. He did, signing the notes as agent for the other plaintiffs. Mr. Knight then put the notes into legal form. Mr. Crawford refused to sign, saying that the agreement was not to the best interest of the minors. John Clyburns never denied that the notes as he wrote them covered the points as agreed upon by the parties.
Defendant had expert and other witnesses present at the references before me to testify as to the damages. In the beginning of this brief review of them, it must be noted that, in several instances, the defendant could present no one who saw the item concerned at the time concerned. But this admittedly was because the plaintiffs had caused the property to be removed before it could be so witnessed that expert eyewitness testimony would have been possible.
As to Timber, the contract provided that no timber was to be removed from the property. Even without such a provision, the plaintiffs would have had no right to cut timber on property covered by the agreement with Carolina Mining. There was some testimony for plaintiffs that the Clyburns had permission, but a letter shows that any such permission as referred to therein was limited to a very negligible area — negligible from the standpoint of timber thereon.
Defendant introduced evidence showing that two of the men concerned with the cutting remembered the price paid the Clyburns as being $5 and $10 per 1,000 feet. But the Clyburns themselves introduced evidence (Plaintiffs' Exhibit I) showing that by plaintiffs' own record book the timber brought a total of $4,268.45 and that the average price was about $4 per 1,000 feet (the price started at less than $4 and increased, at the very end, to $4.50 per 1,000).
Dividing $4 a thousand into the $4,268 received, we find that 1,067 thousands of feet, or 1,067,000 feet, were cut. Mr. Dargan, defendant's expert forester, testified that each 100,000 feet cut in the 1940-41 period normally would have become 165,000 feet in ten years, an increase of about two-thirds by volume in 1951, the year in which this suit was filed and also the year in which timber reached a peak. Thus in 1951, we have a probable quantity of about 1,778,332 feet. Mr. Dargan testified that, conservatively speaking, it would have brought $30 a thousand.
Figuring the quantity at 1,500,000 feet, out of caution and fairness to the plaintiffs, it appears that defendant has been damaged here in the sum of $45,000.
As to the Pipeline removed by the plaintiffs and sold for junk not the slightest justification has been advanced. Plaintiffs have stated simply that it was only junk and that it was not worth to defendant what defendant's president said it was. This is a matter within the knowledge of the defendant, not the plaintiffs. Defendant's expert said it would cost $10,800 to replace it with secondhand pipe. He was not discredited; his figure was not disproved. Further, the pipeline is shown on a map of the U.S. Geological Survey. I have little alternative but to accept the testimony of defendant's witness as to the measure of damages.
As to the Stamp Mill, much the same situation applies. Mr. Adair stated that it would cost $7,000 to $10,000 to replace the mill. It was testified that it definitely could have been used in pulverizing operations. Thus, $7,500 appears to be a conservative estimate of the damages here.
As to the Power Line Right-of-Way that was granted the Lynches River Power Cooperative, it should be noted that Mr. John Clyburn told the Coop. that the lease to the property had expired. It seems that there he went far beyond the facts. Be that as it may, a line was run in the very strip that the Hilfords were planning for a residential development. Mr. Woodrum, a Camden real estate expert, testified that the damage to the sale value of those lots was $8,400, not counting aesthetic loss. There also was a loss of about $150 from timber cut, along the right-of-way, Mr. Threatt's testimony, together with Mr. Dargan's, shows.
As to Machinery and Equipment Lost, the evidence does not convince that the Clyburns can be held liable for all of this or for any certain part of it. I therefore fix no damages for this item.
Findings of Fact
On the basis of the evidence as herein reported, I make the following findings of fact:
(1) This is an action brought by the plaintiffs to cancel a certain agreement entered into by them and (or) their predecessors in title and the defendant corporation on the 6th day of August, 1938. The defendant correctly contends that, by its terms, the agreement has not yet expired.
(2) The plaintiffs are residents and citizens of Lancaster County, State of South Carolina and of the State of Georgia; the plaintiffs, Ben H. Crawford, Jr., and John C. Crawford were at the time of the institution of this suit minors under the age of 14 years and are properly represented as such before this court; the defendant Carolina Mining and Exploration Corporation is a North Carolina corporation doing business in South Carolina, and the situs of the land concerned in this action is Chesterfield County, South Carolina.
(3) The plaintiffs own legal title to 1,350 acres, more or less, described as the Brewer Mine tract, in Chesterfield County, subject to the aforementioned agreement with the defendant corporation.
(4) The plaintiffs and (or) their predecessors in title entered into an option or contract — evidenced by the aforementioned agreement — with the defendant on August 6, 1938, whereby they granted the defendant an exclusive right to purchase the said 1,350-acre tract, for the sum of $140,000, to be paid within ten years from a date hereinafter mentioned, with certain extensions also hereinafter mentioned.
(5) The contract provided that defendant was to pay $3,000 down or, in lieu thereof, exercise the option of removing from the records of Chesterfield County any "outstanding record liens, leases, options or other cloud of title," and defendant accepted this alternative.
(6) The last cloud was removed on December 23, 1942, when Judge Waring dismissed what is known as the final Colby suit or action, which sought to void a release Dr. Colby had executed relative to removing a recorded cloud on the ground that Dr. Colby was incompetent when he executed it. Thus December 23, 1942, is the beginning of the ten-year period under the contract provision that it shall begin on either the date of payment of the $3,000 or the date of the clearing of the title.
(7) Balance of the purchase price was to be paid out of royalties. Gold, which was believed to be the primary value of the mine at the time the contract was signed, yielded $43.08, and topaz, the commercial value of which was developed by the Carolina Mining and Exploration Corporation, $3,647.03. These amounts, together with the $3,000 above mentioned, are deductible from the sum due the plaintiffs.
(8) The 1938 contract was and remains a binding agreement of purchase and sale, the time under its provisions not having expired. The contract provided that the ten-year period shall be extended for a time equal to such period as may reasonably be necessary to resumption of operations after suspensions due to operations being rendered impossible "by reason of damage to or destruction of buildings, machinery, or equipment, by fire, accident, or casualty, or the suspension of operations because of litigation involving mining operations, or to permit reconstruction of said plan in order to enlarge same or increase the efficiency thereof, * * * or by reason of * * * act of God, shortage of water supply, or any cause beyond the control of the party of the second part * * *." I find that the defendant is entitled to extensions totaling 5 years and 10 months, as follows:
(a) There were certain disagreements with the Feldspar people, who contracted to carry on the mining operations for the defendant corporation. These were thrown into arbitration under North Carolina statute. Mining operations were not carried on by Feldspar while the dispute continued, and nine months were lost thereby. This was litigation within the meaning of the contract.
(b) Mr. Hilford, a one-man operator of his corporation, became ill for an unspecified period. He died. Time was lost as result of these events, which were acts of God and (or) a casualty beyond the control of the defendant. Three months is a reasonable extension for these, of which two months are included in the item below.
(c) When Bethlehem cancelled its contract, the defendant corporation's president realized that it could not continue mining operations without proper equipment. Primitive hand methods had been proven inadequate. The suspension by Bethlehem was in the final week of 1947. Mr. Hilford did everything possible to get a plant and finally satisfactory arrangements were made with Mr. Lynch. But Mr. Lynch suffered delays — which in no event can be laid at the door of the defendant and for which it cannot be penalized. Mining operations, as such, were never resumed. Thus the defendant is entitled to an extension from January 1, 1948, to December 23, 1952, which, for convenience sake and in consideration of the moderate round figure allowance for the items listed in (b) above, may be figured at 5 years.
(d) In addition, it is obvious that when this action was brought in 1951 and thereafter, the defendant was in no position to carry on mining operations, and I so find. The defendant is entitled to an extension covering all the time of this litigation, and therefore the extension should begin on the date of entry of the final judgment in the within action.
(9) The defendant, as above stated, has earned a credit of $3,000 on the purchase price and has paid $3,647.03 in topaz royalties and $43.08 in gold royalties, a total credit on the purchase price of $6,690.11. The plaintiffs wrongfully caused the removal of timber from property under lease to the defendant, as well as the wrongful removal of the stamp mill, and the pipeline. As to the timber, the defendant is entitled to damages based on its value in 1951, the year in which this suit was brought. As to the other items, the measure of damages is the worth of these items to the defendant, and not their value as junk. Similarly the plaintiffs, at a time when the lease had not expired, gave a right-of-way to a rural electric cooperative. The measure of damages here is the loss involved to the defendant, which had planned a residential development where the power line now runs. I find the above mentioned damages as follows:
(a) $45,000 — timber cut at instance of plaintiffs (b) 10,800 — pipeline removed by plaintiffs (c) 7,500 — stamp mill removed by plaintiffs (d) 8,550 — power line right-of-way granted by plaintiffs, $8,400 for the loss in value of the property as building lots, and $150 for the timber cut along the right-of-way. _______ $71,850 — total damages
(10) With the credits due defendant and the damages inflicted on it and credited against the purchase price of $140,000, I find that the balance due the plaintiffs on the 1938 agreement is $61,459.89.
Discussions
The 1938 contract is binding upon the parties; its termination date was December 23, 1952.
In equity time is normally not of the essence, as stated in 19 Am.Jur. at page 105:
"In ordinary cases time of performance is, in equity, regarded as formal and as meaning only that the contract shall be completed within a reasonable time and substantially according to the agreement, regard being had to all the circumstances. Consequently, a court of equity will generally relieve a party who has not performed his contract strictly as to time, unless it appears affirmatively that the parties regarded it as an essential element in their agreement, or unless such a result follows from the nature and purposes of the contract. Slight circumstances are sufficient in a court of equity to prevent a party from taking the benefit of a time stipulation."
However, in this case the issue of time being not of the essence is disposed of by the fact that the contract itself provided for the extensions being allowed by this Court.
The fact that damages cannot be measured with definite exactness is no bar to recovery. In the case of Powers v. Calvert Fire Insurance Co., 216 S.C. 309, 57 S.E.2d 638, 644, 16 A.L.R.2d 1261, the Court said:
"However, perplexity attending the determination of the question and amount of damages rarely, if ever, defeats a cause of action. In such cases courts ordinarily depend upon the wisdom and fairness of the good men and true who compose the jury and here they appear to have reached a just and reasonable verdict. 15 Am.Jur. 414 et seq., Damages, sec. 23. Hampton v. Supreme Lodge, 161 S.C. 540, 159 S.E. 923, 925. From the opinion in the latter the following is quoted: `There are cases * * * in which the question of an intentional wrong is involved. In such cases the degree of proof necessary is much relaxed in favor of the injured party. Where the wrongdoer creates the situation that makes proof of the exact amount of damages difficult, he must realize that in such cases "juries are allowed to act upon probable and inferential as well as direct and positive proof."' Wood v. Pender-Doxey Grocery Co., 151 Va. 706, 144 S.E. 635, 638. See, also, Chesapeake Potomac Tel. Co. v. Carless, 127 Va. 5, 102 S.E. 569, 23 A.L.R. 943."
In the case at bar, the damages were proven by the "best evidence". This is adequate under the South Carolina rule, which was followed in Mountain States Tel. and Tel. Co. v. Hinchcliffe, 204 F.2d 381, 383, a 1953 10th Circuit decision:
"In Hoffer Oil Corp. v. Carpenter, 10 Cir., 34 F.2d 589, 592, we said: `The general rule is that, where the cause and existence of damages has been established with requisite certainty, recovery will not be denied because such damages are difficult of ascertainment. * * *
"`In Straus v. Victor Talking Mach. Co., supra, page 802 of 297 F., the court said: "The constant tendency of the courts is to find some way in which damages can be awarded where a wrong has been done. Difficulty of ascertainment is no longer confused with right of recovery.'
* * * * * *
"`A reasonable basis for computation, and the best evidence which is obtainable under the circumstances of the case and which will enable the jury to arrive at an approximate estimate of the loss, is sufficient.'
"While the damages may not be determined by mere speculation or guess, it is enough if the evidence shows the extent of the damages as a matter of just and reasonable inference, although the result be only approximate.
"However, the plaintiff must establish his damage by the most accurate basis possible under the circumstances. He must produce the best evidence reasonably obtainable."
The Supreme Court of the United States in the case of Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 405, 71 L.Ed. 684, said:
"`* * * Damages are not rendered uncertain because they cannot be calculated with absolute exactness. It is sufficient if a reasonable basis of computation is afforded, although the result be only approximate.' This, we think, was a correct statement of the applicable rules of law. Furthermore, a defendant whose wrongful conduct has rendered difficult the ascertainment of the precise damages, suffered by the plaintiff, is not entitled to complain that they cannot be measured with the same exactness and precision as would otherwise be possible. Hetzel v. Baltimore O.R. Co., 169 U.S. 26, 39, 18 S.Ct. 255, 42 L.Ed. 648 [652]. And see Lincoln v. Orthwein, 120 F. 880, 886, 57 C.C.A. 540.
"We conclude that plaintiff's evidence as to the amount of damages, while mainly circumstantial, was competent, and that it sufficiently showed the extent of the damages, as a matter of just and reasonable inference, to warrant the submission of this question to the jury. The jury was instructed, in effect, that the amount of the damages could not be determined by mere speculation or guess, but must be based on evidence furnishing data from which the amount of the probable loss could be ascertained as a matter of reasonable inference."
The case of Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 involved an action for damages brought by an employee under the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., at page 688 of 328 U.S., at page 1193 of 66 S.Ct., at page 1523 of 90 L.Ed., it is stated:
"Nor is such a result to be condemned by the rule that precludes the recovery of uncertain and speculative damages. That rule applies only to situations where the fact of damage is itself uncertain. * * * The uncertainty [in the Anderson case, as in the case at bar] lies only in the amount of damages * * *. In such a case `it would be a perversion of fundamental principles of justice to deny all relief to the injured person, and thereby relieve the wrongdoer from making any amend for his acts.' Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563, 51 S. Ct. 248, 250, 75 L.Ed. 544, 548. It is enough under these circumstances if there is a basis for a reasonable inference as to the extent of the damages. * * *"
In the case of Hampton v. Supreme Lodge, 161 S.C. 540, 159 S.E. 923, 925, the Court said:
"It is difficult in cases of this kind to measure accurately the exact amount of damages sustained, but that fact alone should not deprive plaintiff of her right to damages. There was for consideration by the jury in determining the amount of actual damages a number of elements, such as the value of the policy lost, the sick benefits lost, the loss of future help by her sisters in the court, the loss of their companionship, love, care, and protection.
"`There are cases * * * in which the question of an intentional wrong is involved. In such cases the degree of proof necessary is much relaxed in favor of the injured party. Where the wrongdoer creates the situation that makes proof of the exact amount of damages difficult, he must realize that in such cases "juries are allowed to act upon probable and inferential as well as direct and positive proof."' Wood v. Pender-Doxey Grocery Co., 151 Va. 706, 144 S.E. 635, 638. See, also, Chesapeake Potomac Tel. Co. v. Carless, 127 Va. 5, 102 S.E. 569, 23 A.L.R. 943."
The answer seeks relief in the alternative, either for recognition of the 1950 agreement or for an accounting for damages. While it would appear that the memorandum signed by John Clyburn for the parties constituted a binding contract, nevertheless, in view of the repudiation thereof by the plaintiffs, and the damages suffered by the defendant, I am of the opinion that the defendant is entitled to receive the amount of damages suffered by it as a result of the wrongful recovery by the plaintiffs of the personal property from the premises and the unauthorized granting of the right-of-way by them and that the amount of such damages is to be credited on the purchase price in addition to the royalties received by the plaintiffs and the credit of $3,000 to which the defendant is entitled because of the clearing of the title by it.
Conclusions of Law
I find the following conclusions of law:
(1) That the Court has jurisdiction of the parties and the subject matter of this action.
(2) That the defendant is entitled to extensions totaling 5 years and 10 months from the date of the entry of the final judgment herein.
(3) That the defendant is entitled to credits and damages aggregating the sum of $78,540.11 and that the balance due to the plaintiffs under the contract dated August 6, 1938 is $61,459.89.
(4) That upon the payment by the defendant to the plaintiffs of the balance of $61,459.89 on or before the period expiring 5 years and 10 months from the entry of the final judgment herein, the defendant shall be entitled to receive the deed heretofore deposited in escrow and dated the 4th day of November, 1940.
(5) That the complaint be dismissed with costs to be taxed against the plaintiffs.
(6) That the plaintiffs, their agents and servants shall be restrained from in any way interfering with the defendant, its agents, servants and assigns, from conducting the operations on the premises described in the said contract of August 6, 1938 and in accordance with the provisions thereof.
The transcript of the testimony, together with all of the exhibits referred to therein, is submitted to the Court along with this report.
On June 3, 1954, this cause was referred to Charles W. Muldrow, Esq., as Special Master, pursuant to Rule 53 of the Rules of Civil Procedure, 28 U.S.C.A. The Special Master filed his report on the 14th day of December, 1954. In that report the Special Master discusses fully the facts and law in this case and I am satisfied with his findings and conclusions, excepting that I am of the opinion that the amount of damages found by him to be sustained by the defendant corporation as a result of the unlawful acts of the plaintiffs be reduced as follows:
As to the unlawful cutting and removal of timber.
The evidence shows that in 1951 the timber would have brought $30 per thousand.
In the case of Davis v. Reynolds, 91 S.C. 439, 74 S.E. 827, 828, involving the cutting and removal of timber, the South Carolina Supreme Court said:
"Wherever there is a wrongful taking and conversion of property, the jury may give the highest market value up to the time of the trial."
While the Master was justified in finding that the defendant was entitled to be credited with $30 per each thousand feet of timber, nevertheless, I feel that it is proper to reduce the credit to $25 per thousand for the following reasons:
The contract between the parties provided that "the timber on the property may be used for building on the premises as needed in the operation of the mine and shall be paid for at the then current rate of like timber, such payments to be credited on the purchase price of the property."
It appears from the evidence that in 1950 the defendant was charged and paid to the plaintiffs $25 per thousand. I have, therefore, concluded that instead of charging the plaintiffs at the rate of $30 per thousand, the current price in 1951, to charge them only $25 per thousand, the price charged to and paid by the defendants to the plaintiffs in 1950. The timber damage therefore is reduced from $45,000 as found by the Master, to $37,500.
As to the other items, the Master found that the defendant is entitled to be credited with the sums of $10,800 for the unlawful removal of the pipeline, $7,500 for the unlawful removal of the stamp mill and $8,500 for the unlawful granting of a power line right-of-way and the value of the timber cut thereon.
These findings are based upon the evidence of experts who approximated the damages. After giving due consideration to these items of damage, I have concluded that it is proper to reduce them as follows: Pipeline — $9,800; Stamp Mill — $3,000; Right-of-way and related timber — $2,650; thereby increasing the amount to be paid by the defendant to the sum of $80,359.89.
Save as herein modified, the said report of Charles W. Muldrow, Esq., Special Master, is hereby in all respects confirmed and made the judgment of this Court.