McKibben v. Mohawk Oil Co., Ltd.

667 P.2d 1223, 1983 Alas. LEXIS 463
CourtAlaska Supreme Court
DecidedJuly 29, 1983
Docket6654, 6674 and 6675
StatusPublished
Cited by38 cases

This text of 667 P.2d 1223 (McKibben v. Mohawk Oil Co., Ltd.) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McKibben v. Mohawk Oil Co., Ltd., 667 P.2d 1223, 1983 Alas. LEXIS 463 (Ala. 1983).

Opinion

OPINION

BURKE, Chief Justice.

Plaintiffs Harley McKibben, Adolph Vet-ter, and Roudolph Vetter are the owners of the Christina mining claim located near Fairbanks. On December 2,1977, plaintiffs entered into a mining lease agreement with Joseph Taylor and Paul Rice, giving Taylor and Rice the right to mine the land in a workmanlike manner until March 15, 1978. The lease also provided that the plaintiffs would receive forty-five percent of the value of all ores and minerals mined and extracted from the claims after deducting smelting and refining costs. Taylor and Rice would bear the entire costs of mining and milling the ore.

Taylor and Rice assigned their interest in the lease to Tri-Con Mining, Inc. [Tri-Con] with plaintiffs’ consent. Plaintiffs and TriCon entered into an addendum of the lease, which provided that whenever the lessee’s ore shipments had a specified low assayed value, plaintiffs’ royalty interest would be reduced to ten percent.

Soon after Tri-Con began mining the Christina claim, Tri-Con entered into a joint venture with Mohawk Oil and Gas, Inc. [Mohawk Inc.], a wholly owned subsidiary of Mohawk Oil Company, Ltd. [Mohawk Ltd.]. With only two weeks remaining in the term of the lease, Tri-Con and Mohawk Inc. engaged in a bulk mining program during which some 12,000 to 15,000 tons of ore were mined from the property and shipped to the nearby Fox Mill. Tri-Con and Mohawk Inc. processed and milled approximately 6,000 tons of the stockpiled ore. The percentage recovery of precious metals from the ore was extremely low.

On October 9, 1979, Richard Saveli, an attorney for plaintiffs, sent a letter to Mohawk Ltd. and Tri-Con. Saveli disputed the meaning of the ten percent royalty provision in the addendum to the lease, and accused the assignees of diluting the ore and removing precious metals from the mill without reporting it to plaintiffs. Saveli then demanded an accounting, and stated that “[l]essors hereby declare that they are immediately entitled to 45% of the ore presently stockpiled .... ” Saveli ended the letter by stating that “[i]n order to reach an understanding short of civil litigation, please contact this office within twenty days of the date of this letter.”

On October 31, 1979, J.P. Tangen, attorney for Tri-Con and the Mohawk corporations, wrote to Saveli and denied his allegations, but accepted Saveli’s offer to resolve the dispute, and asked Saveli when his clients would remove their share of the ore. Saveli subsequently advised Tangen that Saveli’s letter of October 9, 1979, was not an offer to reach an accord and satisfaction. Saveli also denied that plaintiffs meant to give up their rights under the lease, such as the right to a forty-five percent royalty, in exchange for forty-five percent of the actual material stockpiled by Tri-Con and Mohawk Inc.

On March 21, 1980, plaintiffs filed a complaint against Tri-Con, Mohawk Ltd., and Mohawk Inc. First and second amended complaints were filed on September 18, 1980. As amended, the complaint alleges *1227 that defendants breached the lease; committed waste and conversion; engaged in unworkmanlike mining; and intentionally diluted the ore. Plaintiffs also requested punitive damages for the “purposeful and outrageous conduct” committed by defendants. Defendants denied the allegations, and asserted various affirmative defenses, including accord and satisfaction.

Plaintiffs served interrogatories on TriCon requesting factual and legal details of all affirmative defenses including accord and satisfaction. Tri-Con objected to the interrogatories and plaintiffs filed a motion to compel discovery. The motion was denied by the superior court on February 4, 1981.

Defendants subsequently moved for partial summary judgment to dismiss plaintiffs’ claims for intentional dilution, un-workmanlike mining, punitive damages, and waste. Plaintiffs moved for partial summary judgment to pierce the corporate veil of Mohawk Inc. Following a hearing on these motions, the superior court granted plaintiffs’ motion, denied defendants’ motion to dismiss plaintiffs’ claims for waste, intentional dilution, and unwork-manlike mining, but dismissed plaintiffs’ punitive damages claim.

After the parties filed trial briefs the superior court held a pretrial conference during which both the plaintiffs and defendants moved for summary judgment on the issue of accord and satisfaction. The court also addressed plaintiffs’ claim for conversion, and reconsidered its previous ruling on plaintiffs’ claim for waste. After reconsideration, the court dismissed plaintiffs’ claim for waste, but refused to dismiss plaintiffs’ claim for conversion. Finally, the court found that the Saveli and Tangen letters constituted an accord and satisfaction of all the issues raised in plaintiffs’ complaint. The court dismissed plaintiffs’ complaint with prejudice and awarded defendants costs and limited attorney’s fees. This appeal and cross-appeal followed.

I. ACCORD AND SATISFACTION

“An accord is a contract under which an obligee promises to accept a stated performance in satisfaction of the obli-gor’s existing duty.” Restatement (Second) of Contracts § 281 (1979); see also Stephenson v. Ketchikan Spruce Mills, Inc., 412 P.2d 496, 498 (Alaska 1966). The enforceability of an accord is governed by the rules applicable to the enforceability of contracts. Restatement (Second) of Contracts § 281 comment d (1979). Plaintiffs contend that Saveli’s letter of October 9, 1979, was not an offer to reach an accord, and that even if the letter was an offer, defendantfe knew or should have known that it was not meant to relinquish plaintiffs’ royalty rights in exchange for an actual division of the stockpiled ore. Finally, plaintiffs contend that even if defendants’ interpretation was correct, the offer was too indefinite and was untimely accepted.

We believe that even if Saveli’s letter of October 9, 1979, was an effective offer to relinquish plaintiffs’ royalty rights in exchange for an actual division of the stockpiled ore, defendants did not accept the offer in a timely fashion. At the time an offeror makes his offer, he has full control of its terms, and may specify the time within which the acceptance is limited accordingly. 1 Corbin, Corbin on Contracts § 35, at 142 (1963); see also Beirne v. Alaska State Housing Authority, 454 P.2d 262, 264-65 (Alaska 1969). In Savell’s letter of October 9, 1979, Savell stated:

In order to reach an understanding short of civil litigation, please contact this office within twenty days of the date of this letter.

Tangen wrote his letter of acceptance on October 31,1979, twenty-two days after the date of Saveli’s letter.

Defendants contend that the aforementioned passage of Saveli’s letter, considered by itself, meant that the offer must be accepted within a reasonable period of time, and that the twenty-day period was evidence of what a reasonable time would be. In interpreting an offer we seek to give effect to the reasonable expectations of the offeree. 1 Corbin, Corbin on Contracts § 35, at 143, 145 (1963); see Beirne v. Alas

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Snead v. Wright
D. Alaska, 2024
Leslie Paul Zerbe v. John Collette
Alaska Supreme Court, 2023
Douglas Galipeau v. Briana Bixby and Mei-Lani Bixby
476 P.3d 1129 (Alaska Supreme Court, 2020)
Madonna v. Tamarack Air, Ltd.
298 P.3d 875 (Alaska Supreme Court, 2013)
Reust v. Alaska Petroleum Contractors, Inc.
127 P.3d 807 (Alaska Supreme Court, 2005)
Nerox Power Systems, Inc. v. M-B Contracting Co.
54 P.3d 791 (Alaska Supreme Court, 2002)
Sprucewood Investment Corp. v. Alaska Housing Finance Corp.
33 P.3d 1156 (Alaska Supreme Court, 2001)
Mitchell v. Heinrichs
27 P.3d 309 (Alaska Supreme Court, 2001)
Walden v. Department of Transportation
27 P.3d 297 (Alaska Supreme Court, 2001)
Ostrow v. State
963 P.2d 1021 (Alaska Supreme Court, 1998)
McDowell v. State
957 P.2d 965 (Alaska Supreme Court, 1998)
Alaska Continental, Inc. v. Trickey
933 P.2d 528 (Alaska Supreme Court, 1997)
Jensen v. Goresen
881 P.2d 1119 (Alaska Supreme Court, 1994)
In Re Tutu Wells Contamination Litigation
846 F. Supp. 1243 (Virgin Islands, 1993)
Harthman v. Texaco, Inc.
846 F. Supp. 1243 (Virgin Islands, 1993)
National Bank of Alaska v. Warfle
835 P.2d 1167 (Alaska Supreme Court, 1992)

Cite This Page — Counsel Stack

Bluebook (online)
667 P.2d 1223, 1983 Alas. LEXIS 463, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mckibben-v-mohawk-oil-co-ltd-alaska-1983.