124 S.E. 470 (Va. 1924), Mathieson Alkali Works v. Virginia Banner Coal Corporation

Citation:124 S.E. 470, 140 Va. 89
Opinion Judge:Burks, J.
Party Name:The Mathieson Alkali Works v. Virginia Banner Coal Corporation and Others
Attorney:Buchanan & Buchanan, Hutton & Hutton, White, Penn & Stuart, Rushmore, Bisbee & Stern, for the appellant. E. M. Fulton, W. H. Rouse, Walter H. Robertson and Joseph L. Kelly, for the appellees.
Judge Panel:Burks, J., delivered the opinion of the court. Sims, P., dissenting. Campbell, J., concurs in the dissenting opinion. SIMS
Case Date:September 18, 1924
Court:Supreme Court of Virginia
 
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Page 470

124 S.E. 470 (Va. 1924)

140 Va. 89

The Mathieson Alkali Works

v.

Virginia Banner Coal Corporation and Others

Supreme Court of Virginia

September 18, 1924

          Appeal from a decree of the Circuit Court of Dickenson County. From an order of reference defendant appealed.

          Appeal dismissed.

          SYLLABUS

         The opinion states the case.

         Buchanan & Buchanan, Hutton & Hutton, White, Penn & Stuart, Rushmore, Bisbee & Stern, for the appellant.

         E. M. Fulton, W. H. Rouse, Walter H. Robertson and Joseph L. Kelly, for the appellees.

         Burks, J., delivered the opinion of the court. Sims, P., dissenting. Campbell, J., concurs in the dissenting opinion.

          OPINION

         Burks, J.

          [140 Va. 93] In the year 1917 the Virginia Banner Coal Corporation, hereinafter called the coal company, owned a lease for a long term on a large boundary of coal land, but had neither plant nor equipment, and hence was producing no coal. At the same time, the Mathieson Alkali Works, hereinafter called the alkali works, was an established manufacturing industry operating a considerable plant, and using a large quantity of coal. Thereupon a written contract was entered into between them, bearing date September 1, 1917, by which the alkali works

Page 471

loaned to the coal company $ 150,000.00 and the coal company raised $ 50,000.00, all of which was expended by the coal company in developing its lease and in providing a plant and equipment for the production and shipment of coal. The contract provided, amongst other things, for the security of this loan by a first mortgage on the plant and equipment of the coal company, the creation of a sinking fund, the payment semi-annually of interest at six per cent, and of $ 25,000.00 of the principal on July 1, 1921, and of $ 25,000.00 annually thereafter until all the principal was paid. The contract also contained the following clause, which is the chief bone of contention:

         1. "(a) The alkali works agrees to buy and pay for and the coal corporation agrees to sell and deliver, f. o. b. cars at the mines, for and during the term of ten (10) years from April 1, 1918, until April 1, 1928, at the price hereinafter specified, the annual requirements of coal of the alkali works, estimated approximately at 200,000 tons per annum, to be delivered, as specified by the alkali works, in approximately equal monthly installments of the following proportions and grades: "133,000 tons of nut and slack coal, such as will pass through bar screen, the bars of which are one and one-half inches apart.

          [140 Va. 94] "67,000 tons of egg and lump coal, such as will not pass through bar screen, the bars of which are one and one-half inches apart, and will pass through bar screen, the bars of which are four (4) inches apart.

         "The said two grades of coal shall be of such quality as is required, as of this date, by the United States Government for coal supplied to the soldiers' home at Johnson city, Tennessee, and shown upon the specifications hereto attached, marked 'Specifications.'

         "(b) Payment for the said coal shall be made by the alkali works to the coal corporation monthly, on or before the 20th day of each month, for the coal so delivered during the preceding month, price per ton to be paid by the alkali works for said coal shall be in the average per ton cost f. o. b. cars during the month in which the coal is mined, plus a profit of twenty-five cents ($ 0.25) per ton; provided, however, that in determining such price the item representing the cost per ton f. o. b. cars shall in no event exceed the 'standard cost' as hereinafter defined, and, in the event that during any month the coal corporation's cost per ton exceeds such standard cost, the alkali works shall pay for the coal mined during such month standard cost plus a profit of twenty-five cents per ton. The term 'standard cost' as used in this agreement shall mean the average cost per ton f. o. b. cars for any such month or months of the coal mined by the Stonega Coal and Coke Company, Clinchfield Coal Corporation and Virginia Iron, Coal and Coke Company at their Southwest Virginia operations. In event detailed cost figures of said companies for any month are not available to the parties hereto, then the cost per ton to be charged the alkali works shall be the average cost per ton f. o. b. cars during said month of three efficiently [140 Va. 95] managed and well located collieries at the time operating in the Southwest Virginia coal fields, which cost of production shall be determined from the best evidence by a majority of three competent, disinterested arbitrators, to be named as hereinafter, in section fourth, paragraph (a), provided: cost of any such arbitration to be borne equally by the alkali and the coal corporation.

         "The alkali works, or its duly authorized agent, for the purpose of ascertaining the coal corporation's cost per ton, shall be entitled to demand and receive from the coal corporation all information relating to and necessary for the matter of such determination, and to verify the same by an examination and audit of the books, records and accounts of the coal corporation.

         "(c) The coal corporation agrees that all coal sales made by it to third persons shall be made subordinate to and dependent upon the said delivery to the alkali works of its average monthly coal requirements."

         This suit was instituted in October, 1921, and since then there have been bills, amended bills, cross-bills, pleas in abatement, an application for a writ of prohibition, demurrers, answers, exceptions to answers, appeals, an action at law, and injunctions. Each party has endeavored to plead the other out of court, and the dominant idea pervading the record seems to be an apprehension on each side that one of them may say something that the other has not denied. Meanwhile, the trial court has decided nothing, and the parties are practically where they were at the beginning of the litigation.

         The original bill was filed by the coal company, alleging various breaches of the contract of September 1, 1917, which was exhibited with the bill, claiming large damages therefor, and also alleging an effort on the part of the alkali works to work the financial ruin [140 Va. 96] of the coal company. The bill insisted that the contract required the alkali works to take 200,000 tons of coal per annum, and averred its willingness and ability to perform the contract as to quantity, quality and grades of coal to be furnished by it. The bill also prayed for a mandatory injunction to require the alkali works, in the future, to receive and pay for 200,000 tons of coal per annum, and also a large sum of money for having failed theretofore to take coal from it at that rate.

         The injunction was granted by the judge of the Circuit Court of Dickenson county. Thereupon the alkali works applied to this court for a writ of prohibition which was refused, and subsequently perfected an appeal to this court, on the ground that the Circuit Court of Dickenson county was without jurisdiction to hear and determine the case. Before the appeal was heard the parties made a compromise agreement in which the injunction was dissolved and the contract of September 1, 1917, was abrogated for the future and all parties were left free to pursue any remedies they had for breaches of the contract prior to the compromise

Page 472

agreement. Thereupon the alkali works dismissed its appeal before a hearing was had.

         Subsequently, the alkali works filed its answer and cross-bill, claiming large damages for alleged breaches of the contract of September 1, 1917, on the part of the coal company. The coal company undertook to dismiss the present suit, and filed a declaration in assumpsit for the purpose of proceeding at law. On the petition of the alkali works, filed herein, the court enjoined the prosecution of the action at law.

         The coal company then filed its answer to the cross-bill in which it undertook to deny every affirmative allegation of new matter set up in the cross-bill. The [140 Va. 97] cross-bill had set up the construction of the alkali works of the contract of September 1, 1917, on the subjects of (1) the quantity of coal the contract required the alkali works to purchase of the coal company annually, (2) the price per ton to be paid by the alkali works, and (3) the quality of coal to be furnished by the coal company. The answer of the coal company denied that the alkali works had put the proper construction upon the contract and set out in detail its construction thereof. This was nothing more than an amplification and a statement more in detail of the claim made by the coal company in its original bill. The alkali works moved to strike from the answer the allegations on these three points. It also moved to strike out the allegation of the answer as to...

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