E. J. SHRECK, Appellant and Cross-Appellee,
C. C. COATES and J. M. LAFFERTY, Appellees and Cross-Appellants
APPEAL from a judgment of the Superior Court of the County of Yavapai. Richard Lamson, Judge. Judgment modified and affirmed.
Messrs. Patterson & McFate, for Appellant and Cross-Appellee.
Messrs. Ryrne & McDaniel, for Appellee and Cross-Appellant C. C. Coates.
Mr. Leo T. Stack, for Appellee and Cross-Appellant J. M. Lafferty.
[59 Ariz. 271] ROSS, J.
This action grows out of a lease by the parties hereto of certain placer mines and mining claims located in the Walker Mining District of Yavapai County, and a right to the waters of Lynx Creek, under State Permit No. A-905, used in connection therewith, and the working and operation of said leasehold and mining properties.
Prior to January 2, 1940, appellant E. J. Shreck was the lessee of such mines and mining property and had been for some nine or ten years, the lessors being A. B. Peach, Ziba O. Brown and others, owners.
On January 2, 1940, E. J. Shreck, J. M. Lafferty and J. E. Wenger entered into a contract of lease and sale from the owners to themselves, extending over a period of ten years, with an option to the lessees to extend the contract and lease for ten more years upon the same conditions. The rental stipulated to be paid the lessors was 10% of the gold taken from the mining claims by the placer mining operations. The lease imposed the usual terms and conditions as to how the mining operations were to be conducted, such as continuous work by a minimum force, etc. It provided for the installation of equipment, of a monthly capacity of 8,000 cubic yards, capable of saving 90% of the gold in the ground worked; the payment of a minimum rental and of all taxes except on that portion of Willow Flat No. 1, a patented mining claim, situate on the east bank of Lynx Creek,
planned to be conveyed by the lessors to Shreck for his home; to do all necessary annual assessment work on the unpatented claims. Many other conditions were imposed on lessees and the violation of them, or any of them, at the option of the lessors could terminate the lease. When and if the rental of 10% amounted to $60,000 the lessors agreed to convey the mining property to lessees, less the portion of the Willow Flat No. 1 reserved for Shreck's home.
[59 Ariz. 272] January 4, 1940, thelessees, Shreck, Lafferty and Wenger entered into a partnership agreement for the operation of the leased property, the partnership business to be restricted to such operations. The following bilateral stipulations are contained in the partnership agreement:
"Second parties hereto (Lafferty and Wenger) agree and bind themselves to furnish all machinery, supplies, tools and equipment necessary to carry on good and efficient placer mining operations upon said premises, and shall pay for same, it being understood, however, that second parties are to be reimbursed for the actual costs of any such machinery, supplies, tools and equipment and when second parties are so reimbursed all parties hereto shall be equal owners of said machinery, supplies, tools and equipment;
"Second parties further agree to furnish all necessary capital for the purpose of carrying on any of the mining operations herein contemplated, provided however, that they shall be reimbursed from the proceeds derived from the operation of said property before any proceeds are divided among the parties hereto;
"It is mutually agreed between the parties hereto that in the event operations of said mining property are discontinued that first party (Shreck) shall have the exclusive right to buy all of the partnership ...