Kanawha-Gauley Coal & Coke Co. v. Sharp

• Decision Date: 13 January 1914
• Citation: 80 S.E. 781,73 W.Va. 427
• Parties: KANAWHA-GAULEY COAL & COKE CO. v. SHARP.
• Court: West Virginia Supreme Court

80 S.E. 781

73 W.Va. 427

KANAWHA-GAULEY COAL & COKE CO. v. SHARP.

Supreme Court of Appeals of West Virginia.

January 13, 1914

Submitted December 16, 1913.

Syllabus by the Court.

If a lessor, with knowledge of a breach by the lessee of the restriction against assignment of the lease, permits the assignee to remain in possession of the premises and accepts subsequently accruing rents from him, the breach is waived.

Although a lessee assigns the lease with the lessor's assent, he nevertheless remains liable on his express covenant to pay rent, notwithstanding rent is accepted from the assignee, unless the lessor expressly agrees to release him and substitute the new tenant in his stead.

Error to Circuit Court, Kanawha County.

Action by the Kanawha-Gauley Coal & Coke Company against C. C Sharp. Judgment for defendant, and plaintiff brings error. Reversed and remanded.

Brown Jackson & Knight, Linn & Byrne, and Angus McDonald, all of Charleston, for plaintiff in error.

L. D Vickers, of Charleston, for defendant in error.

LYNCH J.

The Kanawha-Gauley Coal & Coke Company, in January, 1901, leased to C. C. Sharp for coal mining purposes 1,000 acres of land in Fayette county, on a stated royalty payable quarterly. The minimum royalty for the first year was fixed at $2,000, and for the second year $5,000; all of which was paid except $625. To recover this balance, plaintiff brought assumpsit. From a judgment for defendant on the verdict of a jury, plaintiff obtained a writ of error.

But one question is presented for consideration, namely: Shall Sharp, the lessee, be required to respond in damages to the plaintiff's claim for balance due on unpaid royalties? The defendant, while admitting the validity of the debt and that it is due and correct in amount, denies liability on the ground that the lease, though taken in his name, was in fact obtained for a mining corporation not organized but then in contemplation by him, and of which plaintiff was fully advised pending negotiations for the lease, and to which arrangement and purpose it gave assent by a stipulation of the lease; that such corporation was thereafter promptly chartered and organized, and at once began to open, equip, and operate the leased premises, and mined and shipped coal therefrom until January 1, 1903, when, with plaintiff's consent, the defendant Sharp and the new corporation assigned and conveyed to the Columbus Iron & Steel Company the lease and mining equipment.

That defendant did cause the organization of the Raven Coal & Coke Company, and that this corporation did proceed to operate the lands under the lease, is not only not denied but admitted by plaintiff, at least inferentially if not specifically; for the royalty account kept by plaintiff was charged against the Raven Company, and not at any time against Sharp. Plaintiff cannot, therefore, with any degree of propriety, deny either the fact of the corporate organization of the Raven Company, or of its active conduct and management of the mining operations.

Nevertheless, it insists that Sharp is liable, and must respond to its claim, notwithstanding the defense urged by him to the contrary. Its contention is based, in part, on the clause of the lease whereby it was "mutually agreed that the lessee shall not sublet the rights acquired under this lease to third parties without the written authority of the lessor, but the lessee is not hereby prevented from forming a company to work the property under this lease." Plaintiff did not authorize an assignment of the lease by defendant to the Raven Coal & Coke Company. Whether the clause quoted does or does not, apart from the testimony, warrant the construction for which plaintiff contends, it is not necessary to determine, because its principal witness Johnson says the Raven Company "was formed under this lease, which specified that he should form or could form it if he chose." The clause, construed in the light of this statement by Johnson, an active director of plaintiff, and of plaintiff's recognition of the Raven Company as the active operator under the lease by its charge against that company and receiving from it payments of royalties, clearly indicates acquiescence by plaintiff in Sharp's effort to assign the lease to the Raven Company.

So the conclusion is unavoidable that plaintiff knew, or had the means or source of information from which if pursued it would have ascertained, that the Raven Coal & Coke Company had or claimed some right or claim of right from Sharp by assignment or otherwise, under which it had begun and thereafter continued mining operations under the lease, thus in any event indicating a breach by Sharp of the agreement not to assign, if indeed there was a breach under a proper construction of the clause quoted. The authorities hold that "if the lessor, with notice...