Culbertson v. JNO. McCall Coal Company
| Decision Date | 28 September 1967 |
| Docket Number | Civ. A. No. 923. |
| Citation | 275 F. Supp. 662 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | William M. CULBERTSON, Jr., J. H. Franks, a mental incompetent, and Cora Franks and J. C. Franks, Committee for J. H. Franks, a mental incompetent, Plaintiffs, v. JNO. McCALL COAL COMPANY, Inc., a Maryland corporation, Clyborne, Inc., a West Virginia corporation, and C. A. Clyborne, Defendants. |
Joseph M. Sanders, Sanders, Sanders & Bivens, Bluefield, W. Va., for plaintiff William M. Culbertson, Jr. James W. Harman, Jr., Tazewell, Va., and L. R. Coulling, Jr., Hudgins, Coulling & Brewster, Bluefield, W. Va., for involuntary plaintiffs J. H. Franks and Cora Franks and J. C. Franks, Committee for J. H. Franks.
John S. McDaniel, Jr., Baltimore, Md., LeRoy Katz, Katz, Katz & Kantor, Bluefield, W. Va., and Carl C. Gillespie, Tazewell, Va., for Jno. McCall Coal Company, Inc., Cylborne, Inc., and C. A. Clyborne.
This is a civil action originally instituted by William M. Culbertson, Jr., a member of a partnership known as Whitewood Smokeless Coal Company, formerly engaged in mining and shipping coal in Buchanan County, Virginia, for the purpose of requiring defendants to account for the proceeds of sale of Whitewood's coal, shipped during the period July 1, 1948 to December 31, 1955, less the agreed selling commissions, and to recover the amount due, with interest, and punitive damages.
During the period July 1, 1948 to June 15, 1954, Whitewood Smokeless Coal Company, a partnership consisting of J. H. Franks and William M. Culbertson, Jr., was engaged in mining coal in Buchanan County, Virginia, which coal it delivered in railroad cars at its tipple to defendant Jno. McCall Coal Company, Inc., Whitewood's alleged sales agent, hereinafter referred to as McCall. J. H. Franks became ill about June 15, 1954, and retired from the partnership, and thereafter William M. Culbertson, Jr., continued to mine coal under the name of Whitewood Smokeless Coal Company, which coal was likewise delivered in railroad cars at Whitewood's tipple to McCall. Culbertson contends that when Franks ceased working and withdrew from the partnership in 1954 he and Franks entered into an agreement by the terms of which he, Culbertson, took over all of the assets of the partnership, consisting largely of obsolete mining equipment, and assumed and paid Whitewood's debts and liabilities. During the period July 1, 1948 to December 31, 1955, Whitewood delivered to McCall a total of 245,011.35 tons of coal which was sold, or otherwise disposed of, by McCall.
Contending that all of the above-mentioned tonnage of coal was sold by McCall as Whitewood's exclusive sales agent and that McCall had not accounted for the sales prices, less agreed selling commissions, Culbertson instituted this action against defendants for the purpose of determining whether McCall did properly account to Whitewood for the proceeds of sales of its coal, less the agreed selling commissions, and to recover from the defendants the amount due and owing by McCall, with interest. Culbertson also asks that McCall be required to return the commissions received by McCall on certain sales with respect to which McCall did not properly account, and to pay punitive damages.
J. H. Franks was adjudicated a mental incompetent by the Circuit Court of Russell County, Virginia, on November 4, 1966, and Cora Franks and J. C. Franks were appointed the committee for J. H. Franks. Thereafter, on motion of Culbertson, and by an order entered herein on July 25, 1967, J. H. Franks and Cora Franks and J. C. Franks, his committee, were made involuntary plaintiffs herein. This order was entered over the objection of defendants, and Cora Franks and J. C. Franks, committee for J. H. Franks.
The Complaint filed herein alleges that during the period July 1, 1948 to December 31, 1955, there was a written agreement between Franks and Culbertson, doing business as Whitewood Smokeless Coal Company, and defendant C. A. Clyborne, by the terms of which it was agreed that C. A. Clyborne, or his assignee, as exclusive sales agent for Franks and Culbertson, would use all reasonable and diligent efforts in selling and disposing of Whitewood's coal at the best available market prices, and would account to Whitewood for the proceeds of sale of said coal, less the agreed selling commissions; that shortly thereafter C. A. Clyborne assigned said sales agency agreement to McCall; that during the period July 1, 1948 to December 31, 1955, pursuant to said sales agency agreement, Whitewood delivered to McCall 245,011.35 tons of coal; that McCall sold said coal, but wilfully and intentionally misrepresented to Whitewood the sales prices of said coal and wilfully and intentionally underpaid Whitewood for its coal.
The Answer filed on behalf of defendants alleges that during the period June 1947 through January 1949, McCall paid to Whitewood the prices received by McCall for Whitewood's coal, less the agreed selling commissions. The Answer further alleges
The Answer also pleads the 5 and 10 year Statutes of Limitations and alleges that the Complaint fails to state a claim against any of the defendants upon which relief can be granted.
Thus, the two questions now before the Court are, first, whether "the agency portion" of the agreement, dated June 20, 1947, was terminated by mutual agreement of the parties as of February 1, 1949, as contended by defendants, and if not, second, whether plaintiffs' claim is barred by the 5 or 10 year Statute of Limitations.
If, as contended by defendants, the so-called "agency portion" of the agreement was terminated by the mutual agreement of the parties as of February 1, 1949, then following such termination Whitewood was not concerned with the prices received by McCall for the Whitewood coal, and there was no duty on McCall to account to Whitewood or to permit Whitewood to examine its books and records. If, however, as contended by Culbertson, the agency portion of the agreement was never terminated, then the question remains whether the 5 or 10 years Statute of Limitations bars plaintiffs' claim against defendants. The answer to this last question depends upon whether Franks and Culbertson, during the statutory period, whichever is applicable, knew, or in the exercise of reasonable care should have known, that McCall was misrepresenting to Whitewood the prices received for Whitewood's coal and was wilfully and intentionally underpaying Whitewood for its coal.
Neither side demanding a jury, the case was tried to the Court without a jury.
Defendant Jno. McCall Coal Company, Inc. is a Maryland corporation, with its principal office in Baltimore, Maryland, and is qualified to do business in the State of West Virginia. Its principal business is the buying and selling of coal and the selling of coal for various coal companies on a commission basis.
Defendant Clyborne, Inc. is a West Virginia corporation, with its principal office in Bluefield, West Virginia. It is engaged in the business of buying and selling coal and acts as agent for McCall, and possibly other companies, in the sale of coal. Defendant C. A. Clyborne is a resident and citizen of Bluefield, West Virginia, and is president and manager of Clyborne, Inc. He and his wife own practically all of its stock.
Plaintiff Culbertson is a resident and citizen of the town of Raven, Virginia, and involuntary plaintiff J. H. Franks is a resident and citizen of Swords Creek, Virginia.
Diversity of citizenship of the parties thus appears, and since the amount in controversy well exceeds $10,000.00, exclusive of interest and costs, requisite federal jurisdiction exists. 28 U.S.C.A. § 1331. The substantive law of West Virginia applies. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188.
By virtue of a written lease, dated June 20, 1947, from J. H. Franks and defendant C. A. Clyborne, to Culbertson and Franks (plaintiffs' Exhibit No. 1), the latter were given the right and privilege of mining, by deep mining methods, the Cary seam of coal located in the M. D. Hinton Tract of approximately 1100 acres of land, and the Gillespie Tract of 2.314 acres of land, all of which land was located in Buchanan County, Virginia. In consideration of such mining rights, Franks and Culbertson agreed to pay to Clyborne and Franks, as lessors, certain royalties on all coal mined.
The said lease agreement further provided as follows:
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