Buckhannon Sales Co., Inc. v. Appalantic Corp.

• Decision Date: 17 December 1985
• Docket Number: No. 16596,16596
• Court: West Virginia Supreme Court
• Parties: BUCKHANNON SALES CO., INC. v. APPALANTIC CORPORATION, et al.

Page 222

338 S.E.2d 222

175 W.Va. 742

BUCKHANNON SALES CO., INC. v. APPALANTIC CORPORATION, et al.

No. 16596.

Supreme Court of Appeals of West Virginia.

Dec. 17, 1985.

Syllabus by the Court

1. "While the general rule is that the construction of a writing is for the court; yet where the meaning is uncertain and ambiguous, parol evidence is admissible to show the situation of the parties, the surrounding circumstances when the writing was made, and the practical construction given to the contract by the parties themselves either contemporaneously or subsequently. If the parol evidence be not in conflict, the court must construe the writing; but if it be conflicting on a material point necessary to interpretation of the writing, the question of its meaning should be left to the jury under proper hypothetical instructions." Syl. Point 4, Watson v. Buckhannon River Coal Co., 95 W.Va. 164, 120 S.E. 390 (1923).

2. "Where a contract is ambiguous then issues of fact arise and summary judgment is ordinarily not proper." Syl. Pt. 2, Lee Enterprises, Inc. v. Twentieth Century-Fox Film Corp., 172 W.Va. 63, 303 S.E.2d 702 (1983).

Charles G. Johnson, Johnson & Johnson, Clarksburg, for appellant.

James N. Riley and Roger J. Morgan, Young, Morgan, Cann & Romano, Herbert G. Underwood and Gary W. Nickerson, Steptoe & Johnson, Clarksburg, for appellees.

NEELY, Justice.

On 1 January 1979 Buckhannon Sales Company, Appalantic Corporation and Monongahela Power Company entered into a contract in which Monongahela Power Company agreed to purchase coal from Appalantic with Buckhannon acting as sales agent. By agreement dated 28 August 1980, Appalantic, now under new owners, and Buckhannon established a commission scheme under which Buckhannon would receive compensation for its efforts as sales agent. Buckhannon was to calculate a six percent sales commission from the net sale price of the coal reduced by both the cost of trucking the coal "from the tipple to Harrison Station ..." and the cost of cleaning that coal. ¹ In a 24 September 1980 "Letter of Instruction" Appalantic recapitulated the method of computation Buckhannon was to use for its commission from the sale of coal to the Monongahela Power Company. ² At the time of that letter, Appalantic had mines located only on "R.N. White leasehold," and the coal those mines produced was washed exclusively at the "Mikela" washing plant. However, under the agreements, Appalantic had the first right to furnish coal under the Monongahela agreement whether that coal came from Appalantic's mines or whether Appalantic acquired the coal from a third party.

Between August 1980 and November 1982 Buckhannon received the proceeds from the sale of coal to Monongahela Power Company and made distribution of those proceeds. All the coal shipments from the Appalantic mine on the "R.N. White leasehold" were washed at the "Mikela" plant and then trucked to Harrison Station. On these shipments, Buckhannon deducted trucking and washing costs before taking commission. On all other coal sold under the Monongahela Power Company contract, and provided by Appalantic, Buckhannon deducted its commission from the gross sales price with no allowance made for trucking or washing. In October, 1982 Buckhannon received a letter from Appalantic disputing Buckhannon's method of calculating and claiming that Buckhannon should make its deductions for trucking and washing from the gross sales price before computing its commission on all coal delivered to Monongahela Power Company and provided by Appalantic.

On 9 January 1984, Buckhannon sued Appalantic and Lang Brothers, Inc., ³ under the Uniform Declaratory Judgement Act, W.Va.Code 55-13-1 to 55-13-16 [1941], seeking interpretations of the various agreements between Buckhannon and Appalantic. Before any hearings on the matter, Lang filed a motion in limine to prevent the introduction of parol testimony concerning the various documents, contending that the court should not admit parol evidence and that the terms of the various contracts were unambiguous.

On 24 August, 1984, on the basis of several memoranda and hearings the court sustained Lang's motion. On 24 August 1984, Buckhannon moved that it be permitted to vouch the record with the testimony which it would have adduced. The court permitted the record to be vouched accordingly and Buckhannon presented Carl J. Martin, its president, who testified regarding various documents filed with the complaint and the construction given to the contract by the parties. At the conclusion of that hearing, the court requested and parties supplied proposed findings of fact and conclusions of law. On 5 October 1984, on the basis of the pleadings and record the court adopted the findings of fact and conclusions of law submitted by Lang, decided that the contracts were not ambiguous, and held that Buckhannon must deduct $4.00 per ton for trucking and $4.40 per ton for cleaning regardless of whether the coal came from Appalantic's mine on the "R.N. White leasehold" or from a different source.

The question before us is whether the parol evidence rule bars the introduction of testimony concerning the agreements that detail the allocation of costs between Appalantic and Buckhannon. We hold that the motion in limine was erroneously sustained and that the parties should have the opportunity to explain the agreements. Therefore, we reverse the summary judgment.

The underlying issue in this case is whether Buckhannon must make deductions for trucking and washing coal before computing its sales commission on all coal delivered under the Monongahela Power Company agreement, and provided by Appalantic, regardless of the actual shipping and trucking costs. Buckhannon maintains that to interpret and apply the various contracts and memoranda governing these matters, it is necessary to adduce testimony concerning the agreements and the performance under these agreements.

Under the parol evidence rule, a written contract is considered "to merge all of the negotiations and...