Georgia Kaolin Company v. United States of America, 249 F.2d 148 (5th Cir. 1958)

Proceeding under an enabling statute,¹  appellant, the lessee of mineral rights under a lease from the DeFores, which by its terms expired on February 16, 1950, brought this suit to recover the damages it claimed to have suffered as a result of the failure of the United States, which had held possession of the property under a lease expiring June 30, 1946, to re-deliver the property to it on that date.

The claim was that, because of the failure of the United States to re-deliver the property and its continuing failure thereafter so to do until in March, 1947, plaintiff "was compelled in order to secure any benefits from said lease to said valuable clay lands, to negotiate with its lessors for an additional lease and * * was compelled to pay additional and larger sums for royalties" to plaintiff's damage in the amount sued for.

The United States replying with a motion to dismiss the complaint for failure to state a cause of action and joining issue in an answer denying plaintiff's allegations and claims, the cause went to trial before the court without a jury. At the conclusion of the oral evidence, which, except for the brief testimony of one witness for the government, consisted mainly of the long drawn out and to an extent argumentative testimony of appellant's president and that of its general manager, the district judge, on full findings of fact and law, concluded that, while the proof showed that the United States had breached its obligation to redeliver the property and had wrongfully held over, plaintiff had not sustained its burden of establishing that it had sustained the damages for which it sued or any actual damages, and was, therefore, entitled to recover only nominal damages in the sum of $1.00. Pursuant to these findings and conclusions, a judgment was entered for plaintiff for said sum.

Appealing from the judgment, appellant is here insisting that the district judge entirely misapprehended the nature and effect of the evidence which plaintiff offered in its behalf; that his findings of fact were therefore clearly erroneous; and that his judgment may not stand.

Appellee, on its part, taking a directly contrary view, urges upon us that the district judge was right throughout, that indeed no other judgment could have been entered.

On the facts²  established without dispute and for the reasons hereafter briefly stated, while we agree with appellant that the district judge was wrong in his conclusion:

"This Court cannot agree with plaintiff, however, in its contention that such damages as it here claims (or such as it would claim the right to claim, but for the new lease) were within the contemplation of the parties, or either of them, when this lease was signed."

we agree with appellee that he was right in holding:

"* * * The burden rests upon the plaintiff to establish by a preponderance of the evidence both that it has sustained damages and the amount thereof."

and in finding and holding upon a careful examination and summary of the evidence that plaintiff had failed to produce any showing that it had been damaged by the acts complained of and that it was therefore entitled to recover only nominal damages.

Striking hard at these findings, appellant points to the testimony of its president, that, while there were several factors which entered into the decision to seek an extension of the DeFore mineral lease, the major factor was the economic one, viz., that it was deprived by the action of the United States of that much time taken out of its lease "and my duty was to minimize the damage by trying to reduce it some other way",³  and to the opinion he gave that the 8 1/3 months delay caused by the government had made it difficult, indeed almost impossible, without higher costs, to get all of the clay out within the time remaining. So pointing, it insists: that, upon this evidence and the authorities holding that one who is injured by the wrongful or negligent acts of another is bound to exercise reasonable care and diligence to avoid loss or to minimize or lessen the resulting damages and that the injured party may recover for expenses incurred in reasonable efforts to prevent or minimize his damages,⁴  plaintiff was entitled to the recovery sought; and that the findings and conclusions of the district judge to the contrary were clearly erroneous.

The appellee pointing to the discursive, inconclusive, argumentative, and, to an extent, not wholly consistent nature of the testimony of plaintiff's president and chief witness, extending over more than 200 pages of the transcript, particularly to his testimony as to the situation he found himself in when, after Mr. Chestney's death, his hopes sunk on getting an extension of the lease which he had all along been hoping to get, he found himself confronted, at first with the problem of getting the clay off before his mineral lease expired even if the government should release it in June, 1946,⁵  and later with the even more difficult problem when the government retained possession of the property after the lease expired and did not surrender it until some eight months thereafter, urges upon us that the controlling issues determined by the judge were fact issues and the record fully supports his findings that plaintiff's proof failed to make out a case for the recovery of the damages it sued for.

We agree with appellant that, though it did not sue for or prove the amount of damages it actually sustained as the natural and probable result of being deprived of a part of its lease time by being compelled either to purchase an extension of the lease for the 8 1/3 months lost or to mine it at a higher cost with the probability of leaving some of the clay unmined, it could nevertheless recover if it had made satisfactory proof: (1) that if it had not obtained the new lease it would have been damaged in at least the amount of its claim; (2) that it took the new lease not because of the advantages and benefits it conferred but in an effort to minimize the losses it would have otherwise sustained; and (3) that in doing so it acted with reasonable care and prudence.

We agree with appellee, however, that the district judge was right in holding that the plaintiff did not make such proof. Indeed, when the evidence and the court's findings with respect to it are reviewed in the light, of plaintiff's attitude toward and use of this lease over the long period of years it has had it as a part of its mineral "reserve", its manifested desire at all times to obtain a renewal or an extension of it rather than to mine it, and of the evidence as a whole showing the great advantages it obtained by securing the new 13 year lease, we think it plain that the record furnishes the fullest support to the findings and conclusions of the district judge, that plaintiff neither made the requisite proof of the damage, if any, sustained by it as a result of the 8 1/3 months holding over, nor established as it was required to do, that appellant's act in obtaining the lease was not a voluntary one taken for its own benefit and advantage but an involuntary one which, in the exercise of reasonable and prudent efforts to minimize the damages resulting to it from the holding over, it was compelled to, and did, take.

The judgment is, therefore, affirmed.