Summary
In Smith v. Aggregate Supply Co., 214 Ga. 20 (102 S.E.2d 539), a case in which the relief sought was the same as that sought here and in which the lease-contract was substantially identical with that here attacked, this court held the contract was a lease and not an option, and therefore did not violate the rule against perpetuities; that the contract was not so vague and indefinite as to be incapable of enforcement and construction; and that the contract was not lacking in mutuality.
Summary of this case from Sewell v. Aggregate Supply Co.Opinion
19993.
ARGUED FEBRUARY 10, 1958.
DECIDED MARCH 7, 1958.
Equitable petition. Haralson Superior Court. Before Judge Foster. November 26, 1957.
D. B. Howe, Harold L. Murphy, for plaintiff in error.
Robert A. Edwards, Murphy Murphy, Thomas B. Murphy, James R. Murphy, contra.
1. The contract in the instant case is a lease of real estate for the specified purposes set out therein, and is not an option to purchase land or an interest therein. Being a valid lease of the premises, the provision of the lease that it shall continue in force for an undetermined period of years does not violate the rule against perpetuities. It is not lacking in mutuality, nor are its terms too vague and indefinite to be capable of construction and enforcement.
2. The allegations of the petition are sufficient to allege a cause of action to enjoin the defendant from interfering with the petitioner's rights under the lease, and the trial court did not err in overruling the defendant's general demurrers.
ARGUED FEBRUARY 10, 1958 — DECIDED MARCH 7, 1958.
Aggregate Supply Company, a Georgia corporation, brought an equitable petition against Mrs. Evie Smith, B. N. Pruitt, and the State Highway Department of Alabama, seeking injunction, damages, and other and further relief. The exception to this court is to a judgment overruling the general demurrers of Mrs. Evie Smith to the petition as amended. The other defendants were not served and made no appearance in the trial court.
In substance, the amended petition alleges: that Mrs. Smith, by a written instrument dated August 6, 1956 (which was duly recorded), conveyed to W. P. Rose the right to mine and remove sand, gravel, stone, and other minerals from certain described realty; that on August 17, 1956, Rose assigned to petitioner his rights under the instrument, the right to make such an assignment being included therein; that the defendants are removing sand, gravel, and related materials from the land in violation of petitioner's rights; that Mrs. Smith, on June 28, 1957, executed a contract with the State Highway Department of Alabama conveying certain gravel on said land; that defendants have removed at least 2,400 cubic yards of sand, gravel, stone, and related materials from the land, and have damaged petitioner's mineral rights in the amount of $1,008; and that such acts of trespass will continue unless defendants are enjoined. By amendment it is alleged: that, after the execution of the agreement with W. P. Rose (petitioner's assignor) and before the agreement of June 6, 1957, was made with the Highway Department of Alabama, Mrs. Smith attempted to sell gravel and related materials to Haralson County, Georgia, and said county removed approximately 3,000 cubic yards of said materials from the land in question, over petitioner's protest and in violation of its rights under its contract; and that said conduct of Mrs. Smith shows she is wilfully and maliciously interfering with petitioner's rights and that she will continue to do so unless restrained and enjoined. By further amendment it is alleged: that on or about January 1, 1957, petitioner notified Mrs. Smith of its intention to mine materials from certain of the lands in question which were under cultivation, and pursuantly to its contract paid to her $300, which she accepted; that on or before August 6, 1957, petitioner tendered to Mrs. Smith $300, same being the minimum rental for the rent year ending on said date, which she refused to accept. By the amendments it was prayed that Mrs. Smith be enjoined from interfering with petitioner's rights under the lease contract and from making any claim to the estate held by petitioner in the minerals on the land in question. The defendant demurred generally to the petition on the ground that it set forth no cause of action, and on the further grounds that the contract violates the rule against perpetuities; that it is too vague and indefinite to be enforced; and that it is lacking in mutuality and is unilateral.
1. (a) In their brief counsel for the defendant state that the demurrers to the petition are based upon matters which are contended to be defects in the contract between the parties and not upon the allegations of the petition, and they further concede that whether the contract violates the rule against perpetuities depends on whether said contract is an option or a lease. They contend that the contract creates only an option to purchase minerals; that, under its terms, it may extend over an undetermined number of years; and that it therefore violates the rule against perpetuities and is invalid and void. An option to purchase realty or an interest therein which is unlimited as to the time within which the option may be exercised constitutes a perpetuity and is prohibited under the statute. Code (Ann.) § 85-707; Brown v. Mathis, 201 Ga. 740 ( 41 S.E.2d 137); Turner v. Peacock, 153 Ga. 870 ( 113 S.E. 585). But a perpetual lease, or a perpetual right to renew a lease, is not violative of the rule against perpetuities. Williams v. J. M. High Co., 200 Ga. 230, 236 ( 36 S.E.2d 667, 162 A.L.R. 1139); Atkinson v. Orr, 83 Ga. 34 ( 9 S.E. 787); Penick v. Atkinson, 139 Ga. 649 ( 77 S.E. 1055, 46 L.R.A. (NS) 284, Ann. Cas. 1914B 842). Therefore, it becomes necessary to determine whether the contract in this case is an option or a lease. "The cardinal rule of construction is to ascertain the intention of the parties. If that intention be clear, and it contravenes no rule of law, and sufficient words be used to arrive at the intention, it shall be enforced, irrespective of all technical or arbitrary rules of construction." Code § 20-702. The pertinent portions of the contract in this case are as follows: "Whereas, the above party owns in fee simple the . . . property as hereinafter described, does wish to lease to one W. P. Rose the above property for removal of all minerals on said property, therefore it is mutually agreed as follows: . . . The party of the second part [Mrs. Smith] does, for the above mentioned cash consideration and of the covenants and agreements hereinafter contained on the part of the parties hereto, have granted, demised, lease, and do by these presents, grant, demise, lease and let unto the party of the first part, for the sole and only purpose of mining and operating for and marketing of such quantities of sand, gravel and any and all minerals as may be found in and on the tract of land situated in Haralson County, and in the State of Georgia, and more particularly described as follows: [Description.] This agreement shall remain in force as long as the party of the first part shall pay to the party of the second part the sum of $300.00 per year minimum. The above stated amount shall be paid in the event that the royalties hereinafter set forth do not amount to the above sum. The party of the first part shall pay to party of the second part the sum of .10 per cubic yard of all stone, sand and gravel removed from the property above described. . . This lease contract shall continue in full force and effect for an undetermined period of years and may be terminated by the party of the first part as his desire should it become unprofitable to operate said mining operation. The party of the second part may terminate this lease contract after the party of the first part has not paid the royalties or the guaranteed minimum and is in default at least ninety days, after the party of the first part has commenced operation of mining of said minerals."
In our opinion a mere reading of the above portions of the contract makes it clear that the parties intended to create a lease of the property described therein for the purpose of enabling the lessee to mine and remove the minerals thereon, for which privilege the lessee obligated himself to pay an annual rental. The contract states that Mrs. Smith owns the property in fee simple and wishes to lease it to Rose, and that she does "grant, demise, lease and let unto" W. P. Rose the described tract of land for certain purposes. The reference in the contract to a certain price per cubic yard to be paid as royalties for materials removed from the land is merely a method agreed upon by the parties to ascertain the annual rental in the event a computation by this method would produce an amount larger than the $300 minimum rental; and in any event the lessee is bound to pay the minimum rental so long as the contract remains in force. As further illustrating that the intention of the parties was to convey an interest in the land, Mrs. Smith, the owner, specifically agreed that she would reimburse "the party of the first part [Rose] for any taxes, mortgages, or other liens that the party of the first part shall have to pay as a result of this contract." It is the general rule that, where a valid lease is entered into, conveying an interest in land, as between the parties the duty of paying taxes upon the land falls upon the lessee; and in order to relieve the lessee of this obligation it is necessary to do so by specific provision in the contract, as was done here. Warehouses, Inc. v. Wetherbee, 203 Ga. 483, 489 ( 46 S.E.2d 894).
The instant case is distinguishable from Brown v. Mathis, 201 Ga. 740, supra, relied upon by the plaintiff in error. In that case a grantor in a deed reserved the right to take sand off the property, and provided further that, in the event the grantor did take sand, it was to pay to the grantee, his heirs and assigns, ten cents per car for the sand. It was held that by the latter proviso the parties intended the reserved right to be a privilege and not title to the sand; and since the privilege was not limited as to when it could be exercised it violated the rule against perpetuities. By the terms of the instant contract, the lessee's rights thereunder were complete upon its execution, and thereafter it was not necessary for him, or his assignee, to do anything further in order to be entitled to mine and remove minerals from the land, subject only to the requirement that the annual rent be paid. The rights to exercise the privileges of the lease were vested immediately upon its execution by the parties.
(b) Counsel for the defendant, in this court, has not argued or insisted upon his ground of general demurrer that the contract is too vague and indefinite to be capable of construction and enforcement. But, since he has assigned error on the order of the trial court which overruled all the demurrers, suffice it to say that this ground of demurrer is without merit.
(c) The next contention is that the contract is unilateral and lacking in mutuality, and it is argued that, since the contract provides that it "may be terminated by party of the first part at his desire should it become unprofitable to operate said mining operation," the petitioner has no obligation under the contract. This argument completely overlooks the plain terms of the contract requiring that, so long as it remains in force, the petitioner, whether or not he exercises his rights thereunder, is absolutely bound to pay to the defendant a minimum rental of $300 per year, and upon a default of the required payment for at least ninety days the defendant may terminate the lease. The contract is mutually obligatory, binding upon both parties, and enforceable by either, and the contention that it is unilateral and lacking in mutuality is without merit.
2. The allegations of the petition are sufficient to allege a cause of action to enjoin the defendant from interfering with the petitioner's rights under the lease, and the trial court did not err in overruling the defendant's general demurrers.
Judgment affirmed. All the Justices concur.