Holdred Collieries Of West Va. v. Boone County Coal Corp.

• Decision Date: 09 September 1924
• Docket Number: (No. 5059.)
• Citation: 124 S.E. 493
• Court: West Virginia Supreme Court
• Parties: HOLDRED COLLIERIES OF WEST VIRGINIA . v. BOONE COUNTY COAL CORPORATION.

124 S.E. 493

HOLDRED COLLIERIES OF WEST VIRGINIA .

v.BOONE COUNTY COAL CORPORATION.

(No. 5059.)

Supreme Court of Appeals of West Virginia.

Sept. 9, 1924.

(Syllabus by the Court.)

Error to Circuit Court, Kanawha County.

Action by the Holdred Collieries of West Virginia against the Boone County Coal Cor-poration. Judgment for plaintiff, and defendant brings error. Affirmed.

Price, Smith & Spilman, of Charleston, for plaintiff in error.'

Brown, Jackson & Knight, Geo. S. Couch, and Harold A. Ritz, all of Charleston, for defendant in error.

MEREDITH, P. Defendant complains of a judgment for $7,167.48 rendered in an action of assumpsit, which was tried by the court in lieu of a jury.

In 1911 the Boone County Coal Corporation owned about 29, 000 acres of coal lands located in Logan county. About that time it appears to have divided this large area into various smaller tracts for the purpose of leasing them to individuals and corporations for development. Divers leases were made from time to time, and among them was one to Spruce Valley Coal Company, dated, January 1, 1913, covering a tract of about 1, 200 acres. It runs for a period of 27 years, with the privilege of renewal for a term of 10 or 20 years. It contains many covenants, but the one upon which this action is based is found in article 15, and is as follows:

"Article 15. The lessor agrees to erect or cause to be erected an electric power plant, centrally located, from which they shall sell to the lessee electric power delivered to such point as shall be mutually agreed upon, if such point be other than at the mines of the lessee. The price to be agreed upon, which shall not be for more than 2% cents per K. W. hour of direct current as measured by an approved meter to be supplied by the lessor, provided, however, that the minimum charge after one year from the date hereof shall be $1.00 per month per K. W. of installation."

This action was brought to recover damages for defendant's failure to comply with the article quoted. Shortly after the execution of the lease the Spruce Valley Coal Company began and later completed a modern coal mining plant on the leasehold, and equipped it for operation by electric power. Some time prior thereto the defendant had caused to be organized an electric power company, known as the Spruce Pork Company, and this company had constructed a power plant, centrally located, at Sharpies; from this plant electric power was furnished to defendant's various lessees. On January 1, 1914, the Spruce Valley Coal Company entered into a contract with the Spruce Fork Company for electric power for the operation of its mine. This contract was to run for 2 years; while it does not appear to have been renewed, it seems to have been treated as continuing beyond the 2-year period. It was also executed by Boone County Coal Corporation as evidence of its assent and of guaranty to its lessee that the execution of the contract should not be construed as a waiver of the lessor's obligation under ar tide 15 of the lease. The rates prescribed in the contract conformed to the provisions of article 15. On July 5, 1917, Spruce Valley Coal Company, the lessee, assigned its leasehold to the plaintiff. The defendant, the lessor, joined in the assignment, and agreed therein that the covenants of the lease should remain unchanged, but should continue to be in full force and effect as between the defendant lessor, Boone County Coal Corporation, and the plaintiff assignee, Holdred Collieries. The Spruce Fork Company was a subsidiary of the defendant company. It continued to furnish electric power to Spruce Valley Coal Company under its contract until July 6, 1914, when it conveyed its property, including its electric power plant, to Spruce Fork Coal Company. The latter company, on November 25, 1914, conveyed the same property to the defendant. About the time this transfer was made the Spruce Fork Company had been declared by the State Public Service Commission to be a public service corporation by an order entered in a proceeding brought by Emma J. Chambers, so that defendant acquired title to the electric power plant subject to the burdens as well as the privileges of public service. Thereafter the plant appears to have been operated for some time by the Spruce Lighting Company, another of defendant's subsidiaries, but no formal transfer seems to have been made to it until March 1, 1916, when the plant was transferred to it by Boone County Coal Corporation. By agreement between the latter and the Logan Light & Power Company, dated February 25, 1916, the Logan Company agreed to operate the power plant, either through another subsidiary of the Boone County Coal Corporation, called the Boone Power Company, or, If it desired, to operate it through the Spruce Lighting Company. There were various other contracts and transfers made relative to the power plant until the power business was finally taken over by the Kentucky & West Virginia Power Company. The plant at Sharpies was dismantled, and the power for mining operations in the field has since been furnished by a larger plant at Logan. It is unnecessary to further detail these various transactions. Up until November, 1920, the Holdred Collieries was furnished power at the rates prescribed in article 15, either by the Boone County Coal Corporation or one of Its subsidiaries. In November, 1920, the public service power company then furnishing the power to plaintiff refused to furnish it at the rate prescribed by that article, because it had been granted a rate by the Public Service Commission which made its rates higher than 2 1/2 cents per kilowatt hour of direct current, the maximum rate prescribed by the lease. The article also calls for direct current, but beginning on or before November, 1920, the power company refused to maintain the mechanical ap-paratus necessary to transform the alternating current to direct current so it could be used in plaintiff's mines, and plaintiff was compelled to go to tliis expense. Up to that time the power company had maintained this machinery. Upon its refusal to do so and to furnish power at the rate prescribed by article 15 of plaintiff's lease plaintiff notified the Boone County Coal Corporation to furnish the power at the contract rate and likewise to furnish the mechanical apparatus to transform the alternating current it was then receiving to direct current. The lessor refused. Plaintiff was then compelled to pay tbe higher rate and to furnish the machinery necessary to transform the electric current so it could use it. This action is to recover the difference between the contract rate and the rate plaintiff was required to pay, and also the expense it incurred in maintaining the transforming apparatus. The account runs from November 1, 1020, to March 1, 1923.

Defendant urges various grounds for reversal which we will discuss in order.

Its first proposition is that the obligation imposed upon it under article 15 of the lease was subject to the right of the state under its police power to change it without the consent either of the lessor or lessee, and that, since the defendant's subsidiary power companies, to which defendant delegated the duty of supplying electric current under article 15, have been held to be subject to regulation as public utilities, and the defendant itself for a time discharged the same duty as a public utility, its obligation to furnish electric current at the contract rate has been abrogated through the orders of the Public Service Commission.

When the coal mining lease was made, the Boone County Coal Corporation was not a public service company, nor was it engaged in public service business. It was not itself supplying electric current to the public. It did own the capital stock of the Spruce Fork Company, an electric power company, which was then supplying electric power to Boone County Coal Corporation's lessees. Whether the power company at that time had begun furnishing electric current to others, as distinguished from the Boone Corporation's lessees so as to make it, the Spruce Fork Company, a public utility, and as such subject to public regulation, does not appear. But, even if the Spruce Fork Company was then a public service company, defendant could clearly have performed, and could yet perform, its obligation under article 15 without becoming a public service company. It may be true that defendant was then, through its subsidiary, causing electric power to be furnished to a number of its lessees, under similar contracts, but this would not make defendant a public utility. The service required under article 15 might be performed by a public utility, but not necessarily so. It could be performed by a private individual or corporation not subject to public service regulation. Nor can we say that the parties...