Dugan v. Logan

• Decision Date: 08 March 1929
• Citation: 229 Ky. 5,16 S.W.2d 763
• Parties: DUGAN v. LOGAN et al. SAME v. NATURAL ROCK ASPHALT CORPORATION OF DELAWARE et al.
• Court: Kentucky Court of Appeals

16 S.W.2d 763

229 Ky. 5

DUGAN v. LOGAN et al.

SAME v. NATURAL ROCK ASPHALT CORPORATION OF DELAWARE et al.

Court of Appeals of Kentucky

March 8, 1929

Rehearing Denied May 24, 1929.

Appeal from Circuit Court, Edmonson County.

Action by M. M. Logan and others against Thomas S. Dugan, in which defendant filed a cross-petition against the Natural Rock Asphalt Corporation of Delaware and others. From a judgment for plaintiffs, and from a judgment dismissing the cross-petition, defendant appeals. Affirmed.

Hite H Huffaker and Walter P. Lincoln, both of Louisville, and Rodes & Harlin, of Bowling Green, for appellant.

M. M Logan, of Frankfort, and B. M. Vincent, of Brownsville, for appellees.

Sandidge & Sandidge, of Owensboro, and Milton Clark, of Brownsville for appellee Natural Rock Asphalt Corporation of Delaware.

REES J.

This action was brought on February 28, 1924, by the appellees, M M. Logan, J. A. Siedle, and Sallie E. Martin, against the appellant, Thomas S. Dugan, to quiet their title to certain mineral rights in 175 acres of land in Edmonson county. It was averred in the petition that the plaintiffs were the owners of the mineral rights in the land, and that on April 5, 1922, the master commissioner of the Grayson circuit court conveyed the land to the defendant without reserving the mineral rights; that the commissioner's deed was executed without authority and was void, and was a cloud upon plaintiffs' title.

The defendant filed an answer and counterclaim, which was in two paragraphs. The first paragraph was a traverse. In the second paragraph it was averred that the defendant was the owner of five tracts of land, one tract containing 500 acres, two tracts 100 acres each, and two tracts containing together 200 acres, these tracts being in addition to the 175-acre tract described in the petition, and that the plaintiffs were asserting claims to these five tracts of land and by way of counterclaim he sought to have his title thereto quieted. Thereafter he withdrew paragraph 2 of his answer and counterclaim, and filed an amended answer, counterclaim, and cross-petition. He sought to make this pleading a cross-petition against a number of new parties, namely, Natural Rock Asphalt Corporation of Delaware, Rock Asphalt Company of America, Premier Asphalt Company of West Virginia, H. L. Overall, W. R. Owen, and W. E. Massey. In paragraph 3 of this pleading it was averred that the defendant was the owner of the same five tracts of land which had been described in the two paragraphs of the original answer, and that the plaintiffs and cross-defendants were claiming the mineral rights in these five tracts of land under a deed of conveyance from the Chicago Title & Trust Company, trustee in bankruptcy of the Federal Asphalt Company, made to Samuel R. Jenkins, and also under certain tax deeds.

The cross-defendant Natural Rock Asphalt Corporation filed a motion to strike out paragraph 3 of the amended answer, counterclaim, and cross-petition, because the cause of action attempted to be set out did not affect and was not affected by, the original cause of action set up in the petition. All of the cross-defendants filed a joint demurrer to the third paragraph of this pleading, and the motion to strike and the demurrer were sustained by the court, and a judgment was entered dismissing the cross-petition. Thereafter the case proceeded on issues made between the original plaintiffs and the defendant Dugan, and upon a submission of the case judgment was entered quieting plaintiffs' title to the mineral rights in the 175 acres of land, and the defendant has appealed from that judgment, and also from the judgment dismissing the cross-petition.

It appears that the five tracts of land described in the cross-petition are entirely separate and distinct from the 175 acres mentioned in the original petition, and are located in a different section of the county. Some of the parties made cross-defendants were claiming an interest in one tract, some in another, and it further appears that the deed made by the Chicago Title & Trust Company, trustee in bankruptcy, conveyed 66 separate tracts of land, located in Edmonson, Grayson, and Hardin counties, and that the defendant Dugan is claiming 42 of these tracts. The cross-petition did not affect the subject-matter of the litigation then pending. Furthermore, various claimants to these tracts may have had wholly different defenses, and, if so, it would be impracticable to make all of them parties to one action. Whether or not a cross-petition shall be prosecuted in an action is a matter of discretion in the circuit judge, and we are of the opinion that he properly exercised that discretion in this case in dismissing the cross-petition, and that judgment is affirmed. Howard v. Jones, 147 Ky. 303, 143 S.W. 1058; Wahl v. Lockwood & Gasser. 227 Ky. 183, 12 S.W.2d 321.

To properly understand the issues between the original plaintiffs and the defendant Dugan, it will be necessary to give a brief history of the various conveyances under which each party is claiming title to the land.

About the year 1886, William L. Breyfogle, an eminent physician, who resided in New Albany, Ind., but practiced his profession in the city of Louisville, Ky. and who was also a prominent financier, became interested in rock asphalt, about which little was known at that time. Foreseeing the uses to which this mineral would be put, and realizing its potential merits as a commercial product, he employed a geologist to explore for the mineral in Edmonson and adjoining counties, and during the years 1887, 1888, and 1889, Dr. Breyfogle acquired by purchase the mineral rights underlying over 6,000 acres of land in Edmonson, Grayson, and Hardin counties. These mineral rights were conveyed to him by numerous deeds, which were recorded in the respective counties. In 1891 he organized a corporation known as the American Bituminous Rock Company, to which he conveyed a portion of these lands. About the time it acquired the property, the American Bituminous Rock Company executed a mortgage to the Kentucky Trust Company, as trustee, on all of its property, to secure the payment of an issue of bonds of the par value of $100,000. It seems that both the stock of the corporation and the bonds were held by Dr. Breyfogle. On July 15, 1901, the American Bituminous Rock Company sold all of its property to the Federal Asphalt Company, and as part of the consideration the latter company assumed the mortgage debt to the Kentucky Trust Company. In 1904 the Federal Asphalt Company was adjudged a bankrupt by the District Court of the United States for the Northern District of Illinois. Ancillary proceedings were had in the United States Court for the Western District of Kentucky, but the exact nature of these proceedings does not appear.

On April 12, 1904, the Chicago Title & Trust Company was elected trustee in bankruptcy, and on March 24, 1905, it filed a petition in the bankruptcy court, setting forth that it was in possession of all of the property owned by the bankrupt at the time of the adjudication; that the bankrupt at that time had an asphalt mine in operation on its Kentucky property, which the trustee had operated under orders of the bankruptcy court, and that it had issued $8,000 of trustee's certificates under direction of the court, for the purpose of financing such operation; that the property consisted of a stock of merchandise, and certain lands and mineral rights in Edmonson, Hardin, and Grayson counties, consisting of 66 tracts in all; that the bankrupt had purchased the property from the American Bituminous Rock Company, and had assumed a mortgage indebtedness of $100,000, and it asked for an order of the court directing all of the property to be sold by the trustee, and asked the direction of the court as to whether the property should be sold subject to such mortgage lien or free of such lien. The lien of the holders of the $100,000 of bonds covered the entire property of the bankrupt, both real and personal.

A creditors' meeting was called by the referee in bankruptcy, and notices of this meeting were mailed to all scheduled creditors. H. H. Huffaker had succeeded the Kentucky Trust Company as trustee for the bondholders, and was scheduled as one of the creditors. One of the notices was mailed to him. After the hearing an order was made by the referee in bankruptcy, directing the trustee to sell the property. The property was offered both free of liens and subject to liens. The sale was advertised and sealed bids received, and the Assets Realization Corporation was reported by the trustee as the best bidder, and its bid was accepted by the court and the sale confirmed. The sale was made free of liens. The Assets Realization Corporation assigned its bid to Samuel R. Jenkins, and the trustee in bankruptcy of the Federal Asphalt Company executed a deed to Jenkins. By mesne conveyances Jenkins' title has passed to the plaintiffs.

The defendant Dugan claims title under a deed made to him by the master commissioner of the Grayson circuit court. On July 8 1905, after the property of the Federal Asphalt Company had been sold free of liens by the trustee in bankruptcy, H. H. Huffaker, trustee for the bondholders, brought suit in the Grayson circuit court against the American Bituminous Rock Company, the Federal Asphalt Company, Chicago Title & Trust Company, trustee in bankruptcy of the Federal Asphalt Company, the American Trust & Savings Bank, and the Assets Realization Corporation to enforce the mortgage lien securing the bonds, for the owners of which he was acting as trustee. The defendants were proceeded against by warning...