International Nickel Co. v. Commonwealth Gas Corp.

• Decision Date: 08 November 1968
• Docket Number: No. 12669,12669
• Citation: 163 S.E.2d 677,152 W.Va. 296
• Court: West Virginia Supreme Court
• Parties: The INTERNATIONAL NICKEL COMPANY, Inc. v. COMMONWEALTH GAS CORPORATION.

Page 677

163 S.E.2d 677

152 W.Va. 296

The INTERNATIONAL NICKEL COMPANY, Inc. v. COMMONWEALTH GAS CORPORATION.

No. 12669.

Supreme Court of Appeals of West Virginia.

Submitted April 30, 1968.

Decided July 16, 1968.

Rehearing Denied Nov. 8, 1968.

Syllabus by the Court

1. 'The mere fact that parties do not agree to the construction of a contract does not render it ambiguous. The question as to whether a contract is ambiguous is a question of law to be determined by the court.' Syl. Pt. 1, Berkeley Co. Pub. Ser. Dist. v. Vitro Corp., W. Va. (162 S.E.2d 189).

2. 'Extrinsic evidence may be used to aid in the construction of a contract if the matter in controversy is not clearly expressed in the contract, and in such case the intention of the parties is always important and the court may consider parol evidence in connection therewith with regard to conditions and objects relative to the matter involved. * * *' Syl. Pt. 2, Berkeley Co. Pub. Ser. Dist. v. Vitro Corp., W.Va. (162 S.E.2d 189).

Steptoe & Johnson, William F. Wunschel, Charleston, Scheer, Meek & Vinson, J. B. Meek, Huntington, Sullivan & Cromwell, William E. Willis, Edward W. Keane, New York City, for appellant.

Huddleston & Bolen, Jackson N. Huddleston, William C. Beatty, Huntington, for appellee.

BROWNING, Judge:

Plaintiff, the International Nickel Company, Inc., a corporation, hereinafter referred to as Nickel, is engaged in manufacturing at a plant in or near the City of Huntington, West Virginia, in the process of which it consumes large quantities of natural gas. The defendant, Commonwealth Gas Corporation, hereinafter called Commonwealth, is a private corporation engaged in the production and sale of natural gas. For a number of years Commonwealth, and its corporate predecessors, have supplied Nickel with the major portion of its gas requirements at a fixed price per MCF. Commonwealth is not a public utility and its sales are not subject to regulation by any public authority.

In 1954, Nickel and Commonwealth renegotiated or amended their previous contract which called upon Commonwealth to supply and for Nickel to take a minimum of 90,000 MCF of gas each month at a price of 30 cents per MCF. This amendment, dated May 1, 1954, insofar as here pertinent, also required a minimum of 90,000,000 cubic feet of gas per month to be supplied and taken for a period of twenty years, and for the first time contained a price adjustment provision as follows:

'VI. The price of all gas purchased by Inco (Nickel) commencing June 1, 1954 shall be 41 cents per thousand cubic feet subject to adjustment in accordance with the following provisions, provided, however, that no such adjustment shall become effective except upon written notice to all of the parties hereto:

'The average price per thousand cublic feet, determined by applying the rates of United Fuel Gas Company in effect on June 1, 1954, payable by an industrial consumer of natural gas in the Huntington, West Virginia area regularly purchasing 90,000,000 cubic feet of gas each month, would be 40.05951 cents. In the event of future changes in the average price per thousand cubic feet which would be payable by such a consumer, the above contract price to Inco of 41 cents per thousand cubic feet shall be adjusted up or down in an amount equal to the amount of the change in the average price per thousand cubic feet which would be payable by such a consumer of $90,000,000 cubic feet per month. In determining for the purposes of the preceeding sentence the average price per thousand cubic feet which would be payable by such a consumer of $90,000,000 cubic feet per month, the rate to be applied shall be the rate at the time available to industrial consumers of United Fuel Gas Company (or its successor) in the Huntington, West Virginia area or, if United Fuel Gas Company (or its successor) should cease to be a public utility supplier of gas to industrial consumers in the Huntington, West Virginia area, the rate at the time available to industrial consumers of such other company as may then be the largest public utility supplier of gas to industrial consumers in the Huntington, West Virginia area.'

It is undisputed that the figure of 41 cents per MCF was arrived at by adding approximately .01 cent to the rate provided by General Service Schedule No. 1 of the United Fuel Gas Company as filed and approved by the West Virginia Public Service Commission, the only 'rates' which United Fuel had in effect on that date and, as testified to by the President of Commonwealth, this basis was suggested by Mr. Cabell, the Executive Vice President of Nickel. General Service Schedule No. 1 is 'available for general residential, commercial and industrial service from the Company's (United Fuel) facilities in West Virginia.' This rate schedule remains in effect, with several increases and two reductions in rates as approved and ordered by the Public Service Commission, and as of 1963, the year in which the present action was instituted, United Fuel continued to serve some 195 industrial customers, an average of 40 of which were located in the City of Huntington. However, in late 1954 or early 1955 United Fuel began the practice of entering into special contracts with certain industrial consumers at prices per MCF appreciably lower than those set forth in General Service Schedule No. 1. These special contracts, in the main, provide for an interruptible flow of gas at the option of United Fuel, and a minimum monthly charge without regard for, and no right to recover, the amount of gas not taken, contain automatic purchased gas and tax adjustment provisions and, while filed with the Public Service Commission were usually not filed until approximately one year after their effective date. While several of these special contracts call for a supply of gas in excess of that required by Nickel under its contract with Commonwealth, it will be noted that these excess demands apply to plants at Charleston, Belle and Ravenswood and none might be said to be within the 'Huntington area' unless by reason of the limited number of consumers using 90,000,000 cubic feet of gas or more per month, the entire area served by United Fuel might be said to be in the 'Huntington area'.

Commonwealth, since the inception of the contract with Nickel on May 1, 1954, has given Nickel the required notice of each rate increase in General Service Schedule No. 1 when approved by the Public Service Commission and thereupon charged Nickel for gas in accordance with that rate plus the approximate one cent additional provided by the contract. One two occasions after United Fuel had put into effect increases in rate the Public Service Commission refused to allow the full amount of the increase, establishing lower rates, and Commonwealth refunded the amount disallowed to Nickel. On one of these occasions, Commonwealth having calculated the amount of refund due, tendered that amount to Nickel which Nickel refused to accept until its own accounting department had verified it as the correct amount, the only figures which could have been used to so verify the account being United Fuel's General Service Schedule No. 1 as modified.

In 1963, Nickel, having become aware of the price obtainable under United Fuel's special contracts, made demand upon Commonwealth for a refund commensurate therewith and, upon Commonwealth's refusal to comply, instituted the present action demanding in excess of $1,000,000.00 as alleged overpayment under the provision of the contract heretofore quoted plus accumulated interest. Commonwealth answered, denying that any amount is due Nickel as a refund under provision VI, hereinbefore quoted, contending that the proper amounts were charged and paid and asserting further: (1) all payments by Nickel were voluntarily made; (2) Nickel failed to question the amount within 10 days of receipt of billing as required by contract; (3) Nickel is guilty of laches; (4) any right of action is barred by the statute of limitations; (5) Nickel is estopped to maintain this action. Upon a stipulation of facts and certain testimony taken before the Judge of the Circuit Court of Cabell County, sitting without a jury, the case was submitted for decision and the trial judge entered judgment for Commonwealth, to which judgment this Court granted an appeal on May 22, 1967.

The primary issue in this case is whether Commonwealth owes Nickel a sum of money in excess of $1,000,000.00 under the terms of the contract of 1954. There is no allegation in the complaint of fraud and a determination of this issue rests squarely upon the provisions of the contract. The contract of 1954 actually was a renewal of previous agreements between the parties beginning in 1925 but the 1954 agreement is unique in that it contained an escalation clause as to prices whereas the previous agreements between the parties provided for a specific sum of money for each MCF of natural gas taken from Commonwealth. Of course if the vital provision of that contract, Article VI, is clear and unambiguous much of the record made up in the trial court cannot be considered for when a written instrument, whether a constitution, a statute, a contract, or other such instrument is clear and unambiguous, resort cannot be had to the rules of construction or interpretation to ascertain the intent of the parties. These are the first two syllabus points in the very recent case of Berkeley County Pub. Ser. Dist., etc. v. Vitro Corp. of America, W.Va. 162 S.E.2d 189:

'1. The mere fact that parties do not agree to the construction of a contract does not render it ambiguous. The question as to whether a contract is ambiguous is a question of law to be determined by the court.

'2. Extrinsic evidence may be used to aid in the construction of a contract if the matter in controversy is not clearly expressed in the contract, and in such case the intention of the parties is always important and the court may consider...