Carter Coal Co. v. Litz

• Decision Date: 30 April 1943
• Citation: 54 F. Supp. 115
• Parties: CARTER COAL CO. v. LITZ et al.
• Court: U.S. District Court — Western District of Virginia

54 F. Supp. 115

CARTER COAL CO. v. LITZ et al.

District Court, W. D. Virginia, at Roanoke.

April 30, 1943.

COPYRIGHT MATERIAL OMITTED

W. P. Hazlegrove, of Roanoke, Va., and Herbert J. Jacobi, of New York City, for plaintiff.

E. L. Hogsett, of Huntington, W. Va., for defendants.

PAUL, District Judge.

In 1939 A. Z. Litz and others were the owners or purported owners of lands in McDowell County, West Virginia, of an area of approximately 2,400 acres. The owners of the land and their respective undivided interests therein were A. Z. Litz, 17/48; Etta V. Litz, 4/48; J. N. Harman, Jr., 1/48; Mamie M. Sanders, 2/48; J. J. Sperry, 12/48; the estate of H. E. Harman (Cary H. Biggs and James W. Harman, executors), 12/48.

During the latter part of 1939, negotiations were initiated between A. Z. Litz and the Carter Coal Company for a sale to the latter of what are described as the underwater seams of coal on the 2,400 acres of land at a price of $75 per acre. Mr. Litz was the owner of the single largest share in the land. He apparently had more experience and knowledge of coal lands and of this tract in particular than any of his co-owners and the negotiations, including the correspondence relating to the proposal, were conducted between the Carter Company and him. There is no evidence that Litz held any power of attorney or any instrument constituting him agent for the other owners, but it is clear that the latter acquiesced in and approved of his conduct of the negotiations. However, Litz did not purport nor attempt to bind the other owners and when the written offer of purchase was made by the Carter Company, all of the owners recorded their individual acceptances.

The original written offer of purchase was dated October 24, 1939, and was accepted conditionally. One of the conditions was the vendors would be able to secure a release from the Premier Pocahontas Collieries Company, to which the premises were then under lease; the other conditions related to the nature of the warranty of title to be given by the individual grantors and to certain terms of payment. These matters were satisfactorily settled and the parties came to a complete agreement as to the terms of sale, subject to examination and approval of the title to the land by the vendee; and it was agreed that the matter should be closed not later than June 30, 1940.

As a result of the examination of the title to the lands, the attorney employed by the vendee for that purpose reported that in his opinion the title was good as to a portion of the land, comprising 1,349 acres; but that as to the remainder of the land, 1,051 acres, there was a question as to the title arising as follows:

It appears that the 2,400 acres of land was made up of various separate tracts in which one W. L. Taylor had owned various undivided interests prior to the year 1924. In that year a creditors suit was instituted against Taylor under the style of Abraham P. Thompson et al. v. W. L. Taylor et al., as a result of which Taylor's interest in these lands, as well as other real estate owned by him, was decreed to be sold. At the sale, which was a public one under decree of court, A. Z. Litz had become the purchaser of Taylor's interests in all of the parcels going to make up the 2,400 acres. As a result of his examination of this link in the chain of title the attorney for Carter Coal Company was of opinion that, due to a misdescription of certain of the lands in the decree of sale in Thompson v. Taylor, A. Z. Litz had not acquired the entire interest of W. L. Taylor in 1,051 acres of the land but that as to this tract there was still outstanding a 750/1900 interest in the heirs of W. L. Taylor. Taylor had died in 1932.

In view of this question it was agreed that the vendors should undertake to procure from the Taylor heirs a quit claim deed to any interest they might have and apparently, in anticipation that this could be procured, the vendors under date of June 28, 1940, executed a deed to the 2,400 acres of land and the Carter Coal Company gave certain checks to the respective grantors for a cash payment on the property and executed certain notes for the balance, as well as a deed of trust securing the payment of the notes.

Negotiations with the Taylor heirs were then conducted both by personal interview and correspondence in an attempt to get a conveyance of the Taylor interests, but after several months it was found that this could not be done. The vendors and the vendee then had further discussions and as a result it was agreed that the deed of June 28, 1940, conveying the 2,400 acres and the attendant papers be cancelled and that the property be handled as two parcels and conveyed in separate deeds; but that as to the 1,051 acre tract the deed, the purchase money notes, and the deed of trust securing the notes should be placed in escrow for a period of not exceeding three years, during which the grantors should take steps to clear the title. The parties drafted a written agreement covering this and the other terms of the transaction. While neither this agreement nor the deeds executed in pursuance of it were in fact entered into or executed until sometime during the fall of 1940, the parties for purposes of their own agreed that the agreement and the deeds and other papers should all be dated as of June 28, 1940. Accordingly a deed, dated June 28, 1940, was executed by the grantors conveying the 1,349 acres, title to which was not in question, reciting the payment of $36,000 in cash with the balance of the consideration evidenced by notes payable to the several grantors in the amounts of their respective interests. These notes aggregated $65,175, bore interest at 5 per cent payable semiannually, and were payable in ten equal annual installments; their payment was secured by a deed of trust. At the same time there was executed a deed to the 1,051 acre tract reciting a consideration of $78,825, all of which was evidenced by notes payable to the several grantors in the amount of their respective interests. A deed of trust was executed by the grantee to secure payment of the notes and, pursuant to the agreement of the parties, these deeds, deed of trust and notes were delivered to a selected trustee to be held in escrow for a period not exceeding three years, the period agreed on for clearance of the title. The agreement provided that, in case the title was not cleared within three years, the grantee might either extend the period or terminate the escrow, in which latter event the deed, deed of trust and notes were to be returned to their respective makers. The agreement made no specific provision as to how the failure to clear title to the 1,051 acre tract should affect the transaction as related to the 1,349 acres; but did provide that "except as specifically provided herein, this agreement shall not be construed as a release or waiver of * * * any of the interests, rights or claims of any of such parties as against any other or others of the parties, pursuant either to the contract of sale or to any other agreements, deeds * * * or other instruments, or otherwise, * * *".

Pursuant to the agreement to clear the title to the 1,051 acre tract a suit for this purpose was instituted on June 21, 1941, in the Circuit Court of McDowell County, West Virginia, under the style of J. J. Sperry et al. v. Walter L. Taylor, Jr., et al. A. Z. Litz had died in November, 1940, and his heirs, together with the other vendors, were the plaintiffs in this suit and the vendee (Carter Coal Company) also joined as a plaintiff. The defendants were W. L. Taylor, Jr., Ryland Craft, Ann Craft, Bettie Craft and Ryland Craft, Jr. The first of these was a son of W. L. Taylor and the others were respectively the surviving husband and the three infant children of a deceased daughter of W. L. Taylor.

In their bill the plaintiffs set forth the nature of their title to the 1,051 acres, alleged themselves to be the sole owners thereof and prayed that certain old deeds through which the Taylors claimed an interest be declared void as a cloud upon the title. On September 2, 1941, the defendants filed an answer in which they not only claimed an interest in the 1,051 acres but in support thereof asserted matter which constituted a claim to an interest in the entire 2,400 acres. This claim was based on the following facts and assertions. As before stated, the sale in the creditors suit of Abraham P. Thompson et al. v. W. L. Taylor et al. had resulted in a sale of Taylor's undivided interests in various tracts which now make up the 2,400 acres involved in the instant case. At this sale A. Z. Litz became the purchaser of the Taylor interests in these lands for the sum of $57,500. This sale was made at public auction, was confirmed by the court and a deed was made to Litz by J. N. Harman, Jr., and G. W. Howard, Special Commissioners, by deed dated May 1, 1925. In their answer in the suit of Sperry et al. v. W. L. Taylor, Jr., et al., the Taylors asserted that Litz's purchase at the sale in the old creditors suit had been in pursuance of a previous agreement between him and W. L. Taylor whereby Litz was to bid in the lands and obtain a deed therefor and reconvey the lands to Taylor's wife and children within the period of five years after the sale upon the payment to Litz of the sum of $86,250, against which latter sum Litz was to credit any amount received by him as rents or royalties from the land during the five years. The Taylors contended that as a result of this understanding the deed conveying the lands to Litz did not invest him with the fee simple absolute but that it was in legal effect "a mortgage or trust" with the right in the wife and children of W. L. Taylor to redeem the lands. It was further asserted that at the expiration of the five years a further agreement was entered into granting a further period of three years within which the Taylors might redeem the lands, but so modified as to apply...