Butler v. Watrous

• Court: Alabama Supreme Court
• Writing for the Court: McCLELLAN, J.
• Citation: Butler v. Watrous, 185 Ala. 130, 64 So. 346 (Ala. 1913)
• Decision Date: 04 December 1913
• Parties: BUTLER et al. v. WATROUS.

64 So. 346

185 Ala. 130

BUTLER et al. v. WATROUS.

Supreme Court of Alabama

December 4, 1913

Rehearing Denied Feb. 5, 1914

Appeal from Chancery Court, Shelby County; W.W. Whiteside Chancellor.

Bill by J.L. Watrous against Albert N. Butler and others. From a decree for complainant, defendants appeal. Affirmed.

Barnes & Denson and N.D. Denson, all of Opelika, and Koenig &amp Slocumb, of Birmingham, for appellants.

Stallings & Drennen, of Birmingham, for appellee.

McCLELLAN J.

J.L Watrous filed this bill against A.N. Butler, J.I. Butler, W.E. Crittenden, and the Montevallo Red Ash Coal Company, a corporation. As amended it sought to impress upon and enforce against certain lands, known in this litigation as the Howison lands, a trust in favor of Watrous. From the voluminous legal evidence noted on the submission, these conclusions of fact, after taking due account of the inconsistencies appearing in the evidence, must result:

(1) On January 7, 1909, Watrous owned 315 acres of coal-bearing land, known in this litigation as the Cary lands, and also certain claims, both arising out of or traceable to his purchase of assets of the Montevallo Coal & Railroad Company, a corporation.

(2) Adjoining the Cary lands were the Howison lands, carrying coal. On the date stated Watrous secured from Howison, for a nominal consideration, a three months' option to buy the Howison lands at $15 cash.

(3) Because of the favorably appearing outcrop of coal on the Howison land, and the absence of any practically profitable way to enter, from the surface, the Cary land for coal-mining purposes, the Howison land bore a very important relation to the value of and the availability of the mineral underlying the Cary land. With the Howison land and the Cary land subject to a common interest and ownership, the basis for a promising prospective enterprise of that nature was to be found. The Howison land was, in a consequence of this prospect, the key to the best value and development of the Cary land in respect of its mineral. Without the Howison land, the mineral under the Cary land was practically unavailable and unattractive to persons interested in mining operations.

(4) While this option was pending, Watrous discussed with A.N. Butler the former's prospects in respect of these coal properties. The two came from their homes in Connecticut to the properties, and viewed them as entity; Butler being fully advised of the described important relation the Howison mineral lands bore to the Cary mineral lands.

(5) After Watrous had expended something over $100 in prospecting for coal on the Howison lands, Watrous and A.N. Butler made a verbal agreement to go in together, establishing a relation in the nature of partnership, to further test the Howison land for the coal outcrop indicated, to procure the extension of the option, and to share equally in the cost of the test, and, if the manifestation was confirmed by the test they were to make on the Howison land, Butler was to put up $15,000 to buy the Howison tract, and, with the Cary and Howison tracts as a basis, a corporation was to be organized in which they should have equal stock; but, if the more extended test failed to justify the expectation, then each should bear the loss of one-half of the $1,500 required to be paid to Major Howison for the extension of the original option.

(7) In pursuance of this agreement the option was extended, but left, by its terms, to read in favor of Watrous, though Butler was recognized by him as being an equal beneficiary thereunder; Butler paying the $1,500 required. A considerable sum was expended by them on their joint account in driving a slope on the Howison tract, and materials, belonging to Watrous, suitable for that purpose, and of value, were moved from the Cary tract to the scene of operations on the Howison tract, and there used.

(8) Subsequent to the verbal agreement Watrous and Butler executed a paper (without date) in the following language: "Exhibit A. This understanding and agreement entered into by J.L. Watrous and A.N. Butler in regard to buying Howison land, and forming a company to operate same. A.N. Butler agrees to take up option on said land at $15,000. Watrous is to put into the proposed company all property now remaining to him which was formerly of the Montevallo Coal & Railroad Company, and to receive therefor stock and bonds to the same amount as said Butler shall receive for the Howison land, which is to be put into the proposed company. Butler and Watrous agree with each other that each will give the other one month's option to buy any or all his stock in proposed new company at lowest terms he will sell to any one. A.N. Butler. J.L. Watrous. Filed in office Feb. 13, 1911. J.R. White, Register."

They also executed the following written agreement indorsed on the back of the above-quoted instrument: "J.L. Watrous hereby assigns to A.N. Butler one-half interest in all claims he may have against Mrs. Charles Cary and others, or against the Southern Mineral Land Co., or the Tennessee Coal & Iron Co., arising out of loss of land formerly held by the Montevallo Coal & R.R. Co., of Shelby county, Alabama, and said A.N. Butler hereby agrees to pay one-half of all costs arising out of any suits on said claims. A.N. Butler. J.L. Watrous."

(9) Consistently with the agreement, but before the extended option was availed of, the process of incorporation was effected by Watrous and Butler to the extent of fully preparing the papers therefor, except the omission of the name of the corporation therein, and of the filing of the papers in the appropriate office. The perfection of the incorporation was held up to settle upon a proper name, and, latterly, pending the possibility of a favorable, profitable sale of the common interest made by the combined Cary and Howison tracts, if the latter was bought under the option, or if such a sale was effected with the Howison tract represented by the right to buy it under the option.

(10) By subsequent agreement between Watrous (in whose name alone the extended option stood by its terms) and Butler, the conveyance under the option was to be made to Butler, who, as appears, was to furnish the $15,000 (less the $1,500 already paid to Howison) to effect the option. There is nothing about this agreement itself, or the agreement in connection with the established circumstances in relation to which it may be considered, to justify the conclusion, as of fact, that the in nature, partnership arrangement was then intentionally abrogated or abandoned. The motive for Watrous' consent to the conveyance being made by Howison to Butler, when the extended option should be availed of,...