Gatewood v. New River Consol. Coal & Coke Co.

• Decision Date: 12 December 1916
• Docket Number: 1434.
• Citation: Gatewood v. New River Consol. Coal & Coke Co., 239 F. 65 (4th Cir. 1916)
• Parties: GATEWOOD v. NEW RIVER CONSOL. COAL & COKE CO.
• Court: U.S. Court of Appeals — Fourth Circuit

239 F. 65

GATEWOOD v. NEW RIVER CONSOL. COAL & COKE CO.

No. 1434.

United States Court of Appeals, Fourth Circuit.

December 12, 1916

Hunsdon Cary, of Richmond, Va., for appellant and cross-appellee.

Robert S. Spilman, of Charleston, W. Va., and Robert E. Scott, of Richmond, Va., for appellee and cross-appellant.

Before KNAPP and WOODS, Circuit Judges, and JOHNSON, District Judge.

KNAPP Circuit Judge.

The New River Consolidated Coal & Coke Company, defendant below, is the sales agent of a group of coal mines, some 12 or 14 in number, in the New River district of West Virginia. It does not itself engage in the business of mining or producing coal. In June, 1910, this company made a written contract with one Saunders whereby he became, on a commission basis 'its sole agent in the matter of the sale of its product at and east of Clifton forge inland and southern coastwise (all government coal not to be included in this agreement) ' He had been employed on a salary the year before as 'manager of sales.' On December 1, 1910, Saunders formed a partnership with Gatewood, the plaintiff, to whom he assigned a half interest in this contract, and the firm of Saunders & Gatewood continued the business with the assent of the company. Effective April 1, 1911, there was a supplemental agreement which extended the contract, on an agreed commission, to include 'the United States government business, that prior to April 1, 1911, has been handled on our individual account. ' In July, 1912 Gatewood bought out Saunders, and thereafter conducted the agency for his own benefit until the company terminated the arrangement, as it had the right to do, on March 31, 1913. In November following this suit was brought to recover commissions alleged to be due under the terms of the contract on certain sales of coal as follows:

(a) Coal sold to the Chesapeake & Ohio Railway Company between April 1, 1911, and April 1, 1912, to the aggregate of about 100,000 tons.

(b) Coal sold in 1911, through officers of the government, to the Panama Railroad Company.

(c) Coal sold by Blake & Co. to various customers in the territory covered by the contract and while the same remained in force.

(d) Coal delivered to the United States collier Sterling after the termination of the contract.

The trial court decided against plaintiff on the first two of these claims, but upheld his right to recover on the other two claims. Both parties appealed.

We first consider briefly a preliminary question. It is apparent that plaintiff's grievance is an alleged breach of contract, for which his ordinary remedy would be an action at law. But, instead of instituting such a suit, he filed a bill in equity, alleging that he did not know the amount of coal which had been sold in the territory covered by the contract, and on which commissions had not been paid, nor the prices obtained therefor, and that the defendant 'has in its possession full information concerning the sale and selling price of all coal shipped by it, or by any and all of the individual mines hereinbefore set out, none of which knowledge is in the possession of your orator. ' He therefore prayed for a discovery of the facts in this regard, including inspection of defendant's books and records, and for an accounting. We are of opinion, without arguing the point, that the allegations of this bill present a case for equitable cognizance, and are therefore sufficient to give jurisdiction to a court of equity.

After the defendant's answer was filed, plaintiff made a motion for the production of the contracts between defendant and the companies for which it acted as sales agent, to allow an examination of defendant's books of account, and to require answers to certain interrogatories which were attached to the notice of motion. The trial court denied this motion, for the stated reason that defendant's answer was sufficient, 'save as to the sales alleged to have been made through the Blake agency, as to which the court is of the opinion that the claimant is entitled to a fuller answer. ' In the same order the court also denied defendant's motion to dismiss the bill of complaint on the ground that the facts therein stated did not entitle the plaintiff to the relief demanded. The defendant, however, refrained from asking that the cause be transferred to the law side of the court, but consented that it be retained and proceeded in as a suit in equity.

Following this decision, the defendant filed an amended answer, with an 'exhibit statement' appended, which showed in detail all the sales made by Blake & Co. in the described territory. The plaintiff then made a further motion to transfer the cause to the law side of the court, under equity rule 22 (198 F. xxiv, 115 C.C.A. xxiv), and the denial of this motion is assigned as error. It seems enough to say that if, as we hold, and as plaintiff surely cannot deny, the allegations of the bill are sufficient to give jurisdiction to a court of equity, that jurisdiction was not lost by the circumstance that plaintiff's motion was disallowed, except as above recited. The bill makes a case for equitable relief, and therefore it does not appear that the suit 'should have been brought as an action on the law side of the court. ' In other words, the rule in question is without application to this case, and it follows that the court did not err in denying the motion to transfer.

Upon the merits of the controversy one or two general observations may be made before taking up the several claims in suit. In the first place, the proofs indicate that neither the plaintiff himself, nor the firm of Saunders & Gatewood, had anything to do with the sales of coal on which commissions are now demanded. It appears to be the fact that those sales were made without regard to the Richmond agency, and without the aid of those who conducted that agency. In short, the plaintiff predicates his right to recover, not upon any substantial service performed, or attempted to be performed, for the defendant, but solely upon the language of the written contract, as he insists that language must be construed. And this leads, in the second place, to plaintiff's basic contention, which is that the term 'product,' as used in the contract, means the product of the mines of which defendant was sales agent; that defendant, by making Saunders 'its sole agent in the matter of the sale of its product,' asserted or represented that it had the right and authority to sell the entire output of those mines; and therefore that Saunders and his successors were entitled to commissions on all coal produced by the mines which was sold in the territory covered by the contract.

We are unable to sustain this contention. Having reference especially to the coal furnished to the Chesapeake & Ohio Railroad, it seems clear to us that such a construction of the contract would not be warranted. Saunders had been with the defendant company for four years altogether, the last year as 'manager of sales.' He was perfectly aware that defendant owned none of the mines or the coal they produced, that it was merely an agent for the sale of such coal as might be intrusted to it for that purpose, and it is certainly...