Consumers' Coal & Fuel Co. v. Yarbrough

• Decision Date: 21 October 1915
• Docket Number: 62
• Citation: 194 Ala. 482,69 So. 897
• Court: Alabama Supreme Court
• Parties: CONSUMERS' COAL & FUEL CO. v. YARBROUGH.

69 So. 897

194 Ala. 482

CONSUMERS' COAL & FUEL CO. v. YARBROUGH.

No. 62

Supreme Court of Alabama

October 21, 1915

Appeal from Law and Equity Court, Walker County; T.L. Sowell, Judge.

Bill by the Consumers' Coal & Fuel Company against H.F. Yarbrough to restrain the foreclosure of mortgage and for the cancellation or reformation of a contract to purchase a mining lease. From a decree dissolving the temporary injunction, plaintiff appeals. Reversed.

Bankhead & Bankhead, of Jasper, for appellant.

London & Fitts, of Birmingham, and Davis & Fite, of Jasper, for appellee.

THOMAS J.

The decree of the court from which the appeal is taken dissolved the temporary injunction "for want of equity in the bill and upon the sworn denials contained in the answer." Pending the appeal the appellant prayed for and secured a reinstatement of the injunction. The demurrer incorporated in the answer challenged the equity of the bill. The assignments of error present for review the finding of the court that "there was no equity in the bill" and the decree dissolved the temporary injunction.

The bill shows that the Cahaba Coal Company owned the coal in the lands, the subject of this suit, and executed a lease thereon to H.F. Yarbrough, appellee; that he transferred the lease to Yarbrough Coal Company, a corporation, and later this company retransferred it to appellee. Before the retransfer of said lease by the Yarbrough Coal Company to appellee, the appellant Consumers' Coal & Fuel Company, with the said Yarbrough contracted for the sale of said lease. This contract, made a part of the bill, provided that H.F. Yarbrough would furnish to the appellant "the written consent of the owners of the property described in the lease to the assignment and transfer of said lease to party of second part [the Consumers' Coal & Fuel Company]," and that he would "cause the Yarbrough Coal Company to relinquish to him all the right, title, and interest in and to said lease, and *** satisfy or cause to be satisfied all outstanding liens claims, or mortgages of whatever description that may exist against the said leasehold interest." Appellant paid therefor the sum of $500 in cash and executed 13 notes, of $500 each, bearing 8 per cent. interest from date of sale, and payable from 1 to 13 months after date, respectively, and secured by a mortgage on the leasehold interest assigned to appellant.

Prior to the execution of the lease by the Cahaba Coal Company to Yarbrough, it had authorized a bond issue, and, pursuant to such authorization, executed a deed of trust to the lands contained in said lease, to secure said bond issue, and had borrowed from the First National Bank of Birmingham about $15,000, depositing its bonds so secured as collateral therefor. Thereafter Davis & Shackelford bought this property from the Cahaba Coal Company, assuming payment of the indebtedness of that company to the First National Bank; but the lien secured by the deed of trust on these lands was not released by the bank. Davis & Shackelford agreed with the bank to pay said indebtedness in equal installments, maturing in 1, 2, 3, and 4 years. The bill alleges that the amount of this indebtedness was about $15,000; that at the time the bill was filed the first note had been paid, but the notes falling due in 2, 3, and 4 years had not been paid. During the negotiations between appellant and appellee, the security of the Davis & Shackelford indebtedness was agreed upon, and appellee "represented to appellant, as a fact, that the notes fell due 6, 12, and 18 months from" that time; that appellant was "unwilling to make its notes due so that practically the entire purchase money would be paid before the indebtedness of Davis & Shackelford fell due, because it was unwilling to risk the payment of the indebtedness on said property secured by said lien." Appellant "did not know the maturity of said indebtedness of said Davis & Shackelford, and relied entirely upon the statement of Yarbrough," who further represented to appellant, "as an inducement to secure the maturity of appellant's purchase-money notes as they were executed, that if the notes of Davis & Shackelford to the bank were not as he represented, namely, to be due in 6, 12, and 18 months from that time, he would extend the payments of the notes executed by appellant and secured by the mortgage, to meet the payment of the Davis & Shackelford notes." When appellant learned of the true maturity of the Davis & Shackelford notes, it protested to Yarbrough, and endeavored to get him to extend the payment of said notes according to his agreement; but this he declined to do.

The bill further alleges that, as an inducement for the sale of said property, Yarbrough represented to appellant that the coal in said land on which said mine was opened was very low in ash, and guaranteed that it was 25 per cent. better than the Carbon Hill and Jagger coal, and furnished it an analysis showing that the coal contained 13.51 per cent. of ash, but that the fact is that the coal contains between 25 and 33 per cent. of ash, and is greatly inferior to the Carbon Hill coal; that appellant, in making the purchase of said lease, relied upon the representations made by Yarbrough, and that said representations were untrue, and greatly injurious to appellant; that, immediately after taking possession of the property, appellant sold the coal in the market, representing its quality to be as stated by Yarbrough; and that when the coal was delivered appellant had a great number of countermands and refusals to pay for the coal, from those to whom it had just been shipped, on account of its inferior quality and failure to come up to the representations made in accordance with the representations of Yarbrough to appellant.

The bill alleges that appellant will continue to "suffer irreparable damage and loss by reason of its inability to sell said coal on account of its inferior grade and high per cent. of ash, and that by reason of its high per cent. of ash it is almost impossible to market the product of the mine, and that the value of the property is greatly less on account of the quality of the coal, that it is not worth half as much as it would be if the coal were as represented by Yarbrough, and that it is doubtful if it has any value as a mining proposition because of the inability to sell the coal at a profit." Appellant alleges that it "would not have purchased said property at the price agreed on, but for the false and fraudulent representations by the said Yarbrough."

The bill further alleges that the said Yarbrough Coal Company had no property, except the lease, that it was largely indebted, and that creditors had been threatening to take action to secure possession of the property on the ground that the transfer of the lease to Yarbrough constituted a general assignment; that the Du Pont Powder Company secured a judgment in the circuit court of Walker county against the Yarbrough Coal Company, prior to the transfer of said lease, and recorded the same in the probate office of Walker county; and that said judgment is still unsatisfied. It is alleged that appellant paid the first note executed by it to Yarbrough, but thereafter, finding the facts as stated in the bill to be true, declined to pay the subsequent notes until Yarbrough would make proper adjustment of the amount to be paid and the maturity of the same.

The bill prays: (1) For a temporary injunction restraining Yarbrough from foreclosing the mortgage, which, by advertisement, he was proceeding to do, pending the hearing of the cause, and that a reference be ordered held, to ascertain the difference between the value of the property as agreed on at the time of the purchase and its real value based on the condition and quality of the coal, and that there be decreed an abatement of the purchase money in accordance with the report; (2) that if, upon hearing, it is found that the property is of little or no value on account of the condition of the coal, and that the same was misrepresented, as alleged in the bill, the trade or purchase contract be rescinded in toto, the mortgage be canceled, and the purchase-money notes surrendered upon delivery of possession of said property by appellant to Yarbrough; and also (3) that there be decreed a correction and reformation of the maturity of the mortgage, together with that of the notes given in connection therewith, so as to extend the time of payment to meet the payment of the Davis & Shackelford notes, such extension of maturity to run until all the liens against the property have been removed by Yarbrough, as he had contracted with appellant to do.

The sale was of a lease to mine the lands described, together with certain designated mining machinery and fixtures and other personal properties used in connection with the operation of a coal mine on the lands so leased. In ordinary sales of chattels the law will imply a warranty of title, though none be expressed in the contract, whether it be in writing or by parol. Cozzins v. Whitaker, 3 Stew. & P. 322; Williamson v. Sammons, 34 Ala. 691; Hafer v. Cole, 176 Ala. 246, 57 So. 757. In Steele v. Kinkle, 3 Ala. 352, 357, this court declared that:

"Where a vendor professed to be able to make a clear title in fee, either by a direct assertion to that effect, or, while he offers to make such a title, by concealing the fact of his inability to do so, his conduct cannot be otherwise than fraudulent. It cannot be reconciled with fair dealing,

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