Atwater v. Fall River Pocahontas Collieries Co.., ( No. 8590

• Decision Date: 14 December 1937
• Docket Number: ( No. 8590,( No. 8591)
• Court: West Virginia Supreme Court
• Parties: William C. Atwater & Company, Inc. v. Fall RiverPocahontas Collieries Company et al.

119 W.Va. 549

William C. Atwater & Company, Inc.

v.Fall River Pocahontas Collieries Company et al.

(Nos. 8590, 8591)

Supreme Court of Appeals of West Virginia.

Submitted October 12, 1937.

Decided December 14, 1937.

1. Appeal and Error

The decree of this Court, upon a question decided by the trial court is final, and the questions involved and adjudicated on a former appeal generally cannot be reviewed on the second appeal. An exception to this rule is stated in Syl. 7, Pennington v. Gillaspie, 66 W. Va. 643, 65 S. E. 109.

2. Appeal and Error

When a case, involving the construction of a mining lease, is remanded for further development on the question whether or not all "minable coal" has been exhausted, the words "min-able coal" should be construed under the terms of the lease.

3. Appeal and Error

"The findings of the trial chancellor will not be disturbed on appeal unless clearly wrong." Highland, Exr. v. Davis, 119 W. Va. 501, 195 S. E. 604.

4. Corporations

Generally, the application of the so-called instrumentality rule will not be made in haphazard disregard of the entity of a corporation. The corporate veil, nevertheless, will be torn away whenever the occasion arises to prevent a fraud or a wrong.

5. Estoppel

In the absence of knowledge, or means of knowledge, on the part of the party sought to be estopped, there can be no equitable estoppel.

6. Equity

In a suit in equity, relief can only be obtained under a general prayer, where there are supporting' allegations and the relief sought is not inconsistent with prayers for special relief.

Kenna, President, absent.

Appeal from Circuit Court, McDowell County.

Suit in equity by William C. Atwater & Co., Incorporated, against the Fall River Pocahontas Collieries Company, the Bankers Pocahontas Coal Company, and another, wherein the Bankers Pocahontas Coal Company filed a cross-bill. From an adverse decree, the William C. Atwater & Co., Incorporated, and the Fall River Pocahontas Collieries Company appeal.

Affirmed in part; reversed in part; remanded.

Crockett & Tutwiler and Henry S. Miller, for appellants.

Cocke, Hazlegrove & Shackelford, S. D. Stokes, and Strother, Herndon & Berry, for appellees.

Riley, Judge:

This suit in equity, brought by William C. Atwater & Company, Incorporated, against Fall River Pocahontas Collieries Company, Vaughan Coal & Coke Company and Bankers Pocahontas Coal Company, was appealed to this Court by Vaughan Coal & Coke Company (115 W. Va. 745, 178 S. E. 73), and remanded for further development. From a final decree, entered on the remand, Atwater Company and Fall River Company appeal.

A partial statement of facts, contained in the opinion of this Court rendered on the former hearing, reads:

"On May 1, 1901, Tug River Coal Land Company, predecessor in title to the defendant, Bankers Pocahontas Coal Company, leased to Cambridge Coal & Coke Company a tract of 808 acres of land in McDowell County for coal mining purposes. December 27, 1902, the Land Company entered into a new contract of lease with L. H. Vaughan who had acquired the rights of the Cambridge Company, providing for a royalty of eight cents per ton for coal mined and a minimum annual rental of $5,000.00 for a term of thirty years. On February 1, 1903, L. H. Vaughan assigned his rights under his lease to Vaughan Coal Company. The Vaughan Company operated the property until November 25, 1916, when it assigned its rights therein to Fall River Pocahontas Collieries Company in consideration of the Fall River Company agreeing to pay the royalties under the lease to the lessor, the taxes on the land and seven cents per ton for all coal mined and a minimum annual royalty of $4,375.00 to the Vaughan Company. The Fall River Company, a subsidiary corporation of plaintiff, William C. Atwater & Company, Inc., was organized a short while before taking over the lease from the Vaughan Company, with a paid in capital of $90,000.00. The Fall River Company, during its operation under the lease, ir. April, 1926, distributed among its stockholders a 20% dividend, and in June, following, reduced its capital stock from $90,000.00 to $30,000.00 and distributed the difference in cash to the stockholders. This left it without any working capital and necessitated the immediate and continued borrowing of money from the Atwater Company to keep it going. On November 26, 1927, the Fall River Company executed its note to the Atwater Company in the sum of $64,798.77 to cover previous loans. On January 3, 1928, the Fall River Company executed a chattel mortgage on all of its personal property to secure the payment of said note. On June 3, 1929, the Vaughan Company caused a distress warrant to be issued and levied upon the personal property of the Fall River Company for delinquent royalties due the former by the latter in the sum of $3,869.95. On June 10th, following, the Fall River Company notified the Bankers Company and Vaughan Company that it had permanently ceased the mining of coal from the premises because the minable coal therein had been exhausted."

The bill of complaint prays for an accounting, a temporary injunction against the distress proceeding, payment by Fall River Company of amount due under the chattel mortgage, sale of property covered by chattel mortgage, and general relief. To the bill of complaint, Bankers Company filed its answer and cross-bill, alleging damages to the premises by improper mining and abandonment of mining operations, and praying (1) that Atwater Company be enjoined from enforcing the chattel mortgage; (2) that Vaughan Company be en- joined from enforcing the distress warrant; (3) that reference be made to a commissioner to ascertain liens, priorities, indebtedness of parties to each other, indebtedness of L. H. Vaughan, Vaughan Company and Fall River Company to Bankers Company for coal mined, coal not mined, minimum royalties, damages for abandonment and forfeiture of mining contracts; (4) that such sums found to be due Bankers Company be declared first liens on property of other defendants; (5) that a decretal judgment for any deficiency be granted to Bankers Company; (6) that performance of mining contracts be compelled; (7) for the appointment of a receiver; (8) that the rights of the parties be adjudicated; (9) that the mining contracts be set aside as clouds on Bankers Company's title; and (10) for affirmative relief.

To Bankers Company's answer and cross-bill, Fall River Company and Atwater Company filed separate answers, praying judgment in their favor on Bankers Company's cross-bill, except actual and minimum royalties due Bankers Company from January 1, 1929, to June 1, 1929, and taxes unpaid by Fall River Company. On March 26, 1930, Vaughan Company answered the bill of complaint and Bankers Company's answer, praying cancellation of all contracts prior to November 25, 1916, the date of assignment of lease by Vaughan Company to Fall River Company; that the lease of that date supersede all prior contracts; that Vaughan Company and Bankers Company be declared joint lessors of Fall River Company, and entitled to all rents jointly and without priority; that Vaughan be held not liable to Bankers Company for taxes; that Vaughan Company and Bankers Company be given prior liens on property of Fall River Company and the leasehold estate against Atwater Company; and general relief. An amended answer and cross-bill was filed by Vaughan Company alleging reduction of capital stock of Fall River Company in June, 1926, from $90,000.00 to $30,000.00, and praying that W. C. Atwater and C. B. Smith be made parties; that certain records of Fall River Company and Atwater Company be produced; that stockholders of Fall River Company be required to return the $60,000.00 derived from the stock reduction and that same be applied to debts of Fall River Company; that the chattel mortgage be declared void; and general relief.

Fall River Company then answered the bill of complaint and amended answer and cross-bill of Vaughan Company, praying for judgment thereon in its favor and general relief. A like answer was filed by Atwater Company simply praying that the commissioner, to whom the cause theretofore had been referred, be required to report, and for general relief. C. B. Smith likewise answered praying to be dismissed and for general relief. Vaughan Company replied specially to these answers.

Such being the proceeding at the fist hearing, the commissioner made his report, excepted to by Fall River Company. By decree, entered December 16, 1933, the court awarded judgment in favor of Bankers Company against Vaughan Company and Fall River Company for 1927-1932 taxes, amounting to $15,181, 32; against Fall River Company in favor of Bankers Company, for actual and minimum royalties from December 1, 1928, to June 1, 1929, in the amount of $6,922.80, and in favor of Vaughan Company for like royalties in the amount of $6,057.45; against Fall River Company for minimum royalties to June 1, 1932, and in favor of Bankers Company, in the amount of $17,861.11, and in favor of Vaughan Company, in the amount of $15,640.32; and in favor of Atwater Company against Fall River Company, for the amount of the chattel mortgage as a lien subordinate to liens of Bankers Company and Vaughan Company. From this decree, the Vaughan Company alone took the first appeal.

On the first appeal, the case was remanded for further development on three issues: (1) Has all the minable coal been mined? (2) Did Fall River Company have a right to reduce its capital stock? (3) Is Atwater Company liable to Vaughan Company under the instrumentality rule?

On the remand, Atwater Company and Fall River Company filed answers to the answer and cross-bill of Vaughan Company, denying the right to apply the instrumentality rule, and by a second amended answer and cross-bill, Vaughan Company sought to enforce the claim against stockholders of Fall River Company for the amount of the stock reduction. Atwater Company, Fall River...