Brief for the United States — Kirby v. United States Ex Rel. Crow Tribe

Inthe Supreme Court of the United States,

OcToBEeR TERM, 1922.

Grorce B. Kirpy, Cuartes McDaniEzs,

and United States Fidelity and Guar-

anty Company, plaintiffs in error,

v. No. 126.

THe Unitep States oF AMERICA FOR 7

and on behalf of the Crow Tribe of

Indians.

% IN ERROR TO THE UNITED STATES CIRCUIT COURT OF

: APPEALS FOR THE NINTH CIRCUIT.

BRIEF FOR THE UNITED STATES.

STATEMENT.

This case involves the construction of a clause of a

“grazing lease” of certain Indian lands in Montana.

The lease (R. 6-14), with the approval of the

Secretary of the Interior (R. 2), was made between

the superintendent of the Crow Indian School, for

and on behalf of the Crow Tribe of Indians, and the

plaintiffs in error Kirby and McDaniels. To secure

faithful performance of their part of the contract

the lessees executed a bond in favor of the United

19156—22

IRINA MERRIE NTO ee

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States with the United States Fidelity and Guaranty

Company, also plaintiff in error, as surety, in the

sum of $31,950. (R. 14-16.)

The lease was for a term of two years (R. 6, 7),

commencing on February 1, 1916, at an annual rental

of $31,950, to be paid in equal semiannual payments

in advance (R. 8), for grazing an average of 9,000

head of cattle (R. 9), and contained a provision as

to payment for excess grazing. (R. 9.)

On January 12, 1920, alleging that during the term

of the lease the lessees had engaged in grazing for

which they had not paid the rental prescribed in the

Icase, the United States, on behalf of the Crow

Indians, filed an amended complaint (R. 2-5) against

the lessees and the surety company in the District

Court of the United States for the District of Montana.

By stipulation the case was tried by the court

without a jury (R. 23). The court found that during

the first year of the lease there had been no grazing

beyond the amount paid for by the annual rental,

but that during the second year excess cattle to the

extent of 6,968 head had been grazed, and accord-

ingly entered judgment for the Government for

$31,356, besides interest from February 1, 1918, and

costs. (R. 24-26, 55-57. See also 51-55.)

On writ of error, the Circuit Court of Appeals for

the Ninth Circuit affirmed the judgment below,

except as to an item of costs which is not here ma-

terial. (R. 76-81.)

The writ of error from this court was then sued out.

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QUESTIONS INVOLVED.

The fundamental questions in this case are the

interpretation of the provision of the lease as to

excess grazing and whether, in the event of excess

grazing, the lessees and their surety are liable to the

lessors.

ARGUMENT.

The lessees contracted to pay $4.50 per head for the

average number of cattle grazed in excess of 9,000

head.

The lease provided (R. 9):

It is further agreed that the number of cattle

to be grazed on the territory described above

shall be limited to an average of nine thousand

(9,000) head, the maximum number at any one

time not to exceed eleven thousand five hun-

dred (11,500) head, and that any excess over

and above such maximum number shall be

paid for at the rate of $4.50 per head for each

and every head of such excess number, in addi-

tion to the rental herein named.

The plaintiffs in error contend that the lease does

not oblige them to pay for the grazing of cattle over

the average of 9,000 head but not in excess of 11,500

head.

The two lower courts, however, have decided that

in so far as the average number of cattle grazed in

either year taken separately exceeded 9,000, the

number to which the annual rental of $31,950 applied,

the lessees were bound to pay $4.50 per head per year.

It may be conceded that the clause of the lease

is awkwardly worded, for it refers to two maximum

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numbers, the less important of which is so called

and the more important of which is not so charac-

terized. But the two lower courts, instead of quib-

bling over the words, considered the intention of

the parties as manifested by the clause as a whole.

They decided that in the expression “any excess over

and above such maximum number” the maximum

referred to was the permitted maximum for the year

as a whole, for which the payment of $31,950 was

to be made, since that maximum was the principal

thing to be considered, and not the number of 11,500,

since that was simply the maximum permitted at

any one time, and for such time as would serve to

raise the yearly average to the 9,000 figure, the tem-

porary maximum being merely an incidental sub-

ject for consideration.

It is submitted that such an interpretation of the

clause is correct.

There is nothing in the circumstances of the case

to show that the parties intended that there should

be any free grazing. As they carefully provided that

nearly thirty-two thousand dollars per year should

be paid for the privilege of grazing up to an average

of 9,000 cattle and that $4.50 per head should be paid

for excess grazing, it is inconceivable that either of

the parties to the lease thought at the time of its exe-

cution that all cattle between the 9,000 and 11,500

limits should be grazed free of any charge.

Moreover, the written offer which Kirby and

McDaniels submitted preliminary to receiving the

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MER PORT BE ITN PB AIL Ng eg teas

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lease further shows the intention of the contracting

parties. They wrote (R. 28):

Minimum amount to be paid per annum in

semiannual payments in advance—$31,-

950.00. The number of cattle to be grazed

on this district to be 9,000 head, at the rate

of $3.55 per head per annum, and that any

cattle grazed in this district in excess of

9,000 head shall be paid for at the same

rates per head per annum.

Such an offer certainly shows that the lessees

then intended to pay for all cattle grazed beyond

the 9,000 limit; and this offer should be taken into

consideration in construing the terms of the con-

tract. United States v. Bethlehem Steel Co., 205

U. S. 105, 118; Simpson v. United States, 199 U. S.

397, 399; Brawley v. United States, 96 U. S. 168,

173, 174; Maryland Dredging & Contracting Co.

v. United States, 241 U. 8S. 184, 188. See also Wig-

more on Evidence, secs. 2465, 2462.

In determining the average number of cattle grazed,

each year should be considered separately.

The plaintiffs in error contend that the lease con-

templated the grazing of the equivalent of 9,000

head for two years; but both of the lower courts

decided, we submit correctly, that the average for

each year should be determined separately.

The contract was clearly divisible into two yearly

periods. The rent was apportioned to each year

(R. 6, 7), and was payable for each year, so that it is

reasonable to conclude that the provision in regard

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to extra payment for excess cattle applied to each

year. As the District Court said (R. 53):

Dealing with an annual crop, the parties

dealt with each year complete and separate

from the other.

This is an action to recover money at a specified

rate which the lessees agreed to pay for permitted

grazing in excess of a named average, and is not an

action for a penalty.

The plaintiffs in error contend that if the lease is

construed as they construe it, and “the rate of $4.50

was intended to apply to ‘each and every head’ in

excess of 11,500 grazed upon the leased premises ‘at

any one time,’”’ such a rate is clearly a penalty,

because it would apply to such excess even though

the excess cattle were grazed upon the land for only

one day and would be, therefore, entirely dispropor-

tionate to the value of the grazing privilege, as fixed

by the contract; and they assert that under the law

of Montana a penalty or liquidated damages could

not be recovered in this case.

Assuming that the excess rate might have been

applied to grazing in excess of 11,500 head “at any

one time,” there was no finding by the trial court of

an excess of that nature. The finding related only

to excess grazing by an average number of cattle

(R. 55). Consequently the argument of the plaintiffs

in error presents only hypothetical questions.

The contention that the price of $4.50 per head for

the pasturing of cattle in excess of a given number

is a provision for a penalty because the rent is dis-

RSE RT aE Sc at —_—

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proportionate to the value of the grazing privilege as

fixed by the contract is without force in view of the

fact that plaintiffs in error themselves made a charge

of $5.25 per head to the Taylor’s Fork Cattle Com-

pany for the same privilege upon the same land.

(R. 32-33.)

The price of $4.50 per head for the excess of esti

pastured was neither liquidated damages nor a

penalty for the breach of the contract. It was part

of the substance of the agreement to pay a certain

additional rental for cattle pastured in excess of a

certain number. No breach of the contract was con-

templated. The contract permitted the grazing of

the cattle in excess of the number named. Provision

is made in the lease itself for estimating the number

of such excess and a price per head fixed, not as a

penalty or as liquidated damages but in payment for

the use of the lands for grazing of such excess. The

argument based upon the assumption that this par-

ticular covenant provides for a penalty or liquidated

damages for breach of the contract is built upon a

fallacy, and has for its premise something which has

no existence in fact.

As was pointed out by the Circuit Court of Appeals

(R. 77, 78), the United States—

does not sue for breach of a contract. There is

no allegation in the complaint upon which

either a penalty or liquidated damages can be

predicated. There was in fact no breach of

contract. The agreement left the defendants

at liberty to pasture as many cattle on the

ae SON PEW Sore ashe aN Rag

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lands as they might see fit to place thereon, up

to the limit of 11,500, but it provided that

for cattle in excess of 9,000 and for the exercise

of such privilege they should pay an increased

rate of pasturage per head. The rate was

increased doubtless on the theory that the

presence of such excess cattle would result

in some injury to the pasture, but that does not

mean that the rate so fixed is compensation for

damage. It was but payment for that which

the plaintiff parted with and the defendants

received.

The excess grazing was not unauthorized.

The plaintiffs in error contend that all excess

grazing was unauthorized and therefore, under the

statutes, illegal grazing, for which there can be no

recovery in this action. But such a contention is

not based upon a sound construction of the contract.

“Excess” grazing simply means grazing beyond

the amount paid for by the fixed annual rental of

$31,950. For the payment of that sum Kirby and

McDaniels might pasture an average of 9,000 head,

but not more than 11,500 head at any one time,

and for cattle beyond those limits the charge of

$4.50 per head was made. To say that such “ excess”’

grazing, fully provided for by the contract, was

unauthorized is absurd.

Where one of the joint tenants allowed grazing by

third parties the other tenant is equally liable for

the stipulated rent for that grazing.

Cattle belonging to third parties were put on the

range, as permitted in the lease, after negotiations

9

with McDaniels, to whom Kirby had referred the

representatives of one of the other parties (R. 44-45).

They were put there under contracts signed by

McDaniels in the names of Kirby and himself (R.

31-43) ; and a substantial part of the excess grazing

for the second year was due to the presence of those

cattle. (R. 49.)

There was some conflict in the evidence as to

whether Kirby knew of, consented to or acquiesced

in the grazing of the third parties (R. 48, 49); but the

trial court held that the issue thus offered was

immaterial (R. 49, 56); and this decision was properly

upheld by the Circuit Court of Appeals (R. 79).

Occupation by or under one of the two joint tenants

under the lease renders both tenants liable for the

rent. Kendall v. Carland, 5 Cush. 74, 80; Goshorn v.

Steward, 15 W. Va. 657, 664; Glenn v. Dungey, 4

Exch. 61, 64.

The surety is liable to the extent of the bond.

As is frankly admitted in the brief for Kirby and

the surety,

If the construction of the contract adopted

by the court is correct, both the principals

and surety in the bond or undertaking are

liable for the excess.

JAMES M. Beck,

Solicitor General.

Rosert P. Reever,

Special Assistant to the Attorney General.

NOVEMBER, 1922.

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