Kentucky Harlan Coal Co. v. Harlan Gas Coal Co.

• Decision Date: 11 October 1932
• Citation: 245 Ky. 234,53 S.W.2d 538
• Parties: KENTUCKY HARLAN COAL CO. et al. v. HARLAN GAS COAL CO.
• Court: Kentucky Court of Appeals

53 S.W.2d 538

245 Ky. 234

KENTUCKY HARLAN COAL CO. et al. v. HARLAN GAS COAL CO.

Court of Appeals of Kentucky

October 11, 1932

Appeal from Circuit Court, Harlan County.

Action by the Harlan Gas Coal Company against the Kentucky Harlan Coal Company and others, in which defendant named filed a counterclaim and cross-petition against A. B. Cornett and D B. Cornett. From the judgment, the Cornetts and the Kentucky Harlan Coal Company appeal.

Judgment on cross-appeal affirmed and reversed on original.

B. M Lee and Forester & Carter, all of Harlan, for appellants.

James H. Jeffries, of Pineville, for appellee.

RICHARDSON J.

The Kentucky Harlan Coal Company and the Harlan Gas Coal Company are corporations, engaged in mining coal on adjoining lands. The title to its coal lands was acquired by the Harlan Gas Coal Company by three leases, one dated April 1, 1919, and executed by A. B. Cornett to James K. Griffin and Frank B French; another dated April 20, 1912, executed by A. B. Cornett and the children of A. B. Cornett, including his son, D. B. Cornett, to Griffen and French, and the third one by A. B. Cornett, dated February 1, 1915, to the Harlan Town Coal Company. The Harlan Gas Coal Company is the successor in title to Griffin and French and the Harlan Town Coal Company, except a certain boundary known in this litigation as 35 acres, which was released to A. B. Cornett by the Harlan Town Coal Company prior to the time the Harlan Gas Coal Company acquired its title.

The action was originally instituted by the Harlan Gas Coal Company against the Kentucky Harlan Coal Company to recover damage for its alleged negligence in causing water from its mine to flow into and damage the mine of the Harlan Gas Coal Company. During the preparation of the case for trial, the Harlan Gas Coal Company claims that it discovered that the Kentucky Harlan Coal Company had entered and mined the coal under the 20.4 acres of land covered by its lease.

The appellants contend that the pleadings admit that the line between the property in controversy is a straight line, running north and south.

In its original petition, the Harlan Gas Coal Company averred "that defendant's said coal mining property lies adjoining and on the west side of plaintiff's said leasehold, *** being a fairly straight line extending approximately in a north and south direction, the plaintiff owning and holding the leasehold properties immediately east of said line and defendant owning, holding and operating the coal mining properties immediately to the west of said line."

In its original answer the Kentucky Harlan Coal Company alleged that "the defendant through its subsequently acquired lease is the holder and owner of all the leasehold property and coal laying to the west of said Lewis Farmer patent line."

The Harlan Gas Coal Company made this response: "The Kentucky Harlan Coal Company has been for some time past the holder and owner of all the leasehold property and coal lying to the west of said Lewis Farmer patent line to the north of the crest of Little Black Mountain *** that the defendant does not hold or own any property of the original leasehold properties mentioned, described and claimed by the plaintiff herein, except such portion of same as lies north of the crest of Little Black Mountain, and between the easterly line of the Aaron Fountain 1600 acre patent and the westerly line of the Lewis Farmer 600 acre patent No. 8093 *** that the lease set up and described in its original petition and its reply herein, lap upon and conflict with the subsequently acquired lease of the Kentucky Harlan Coal Company, the total extent of said lap being 25 acres, more or less." Thus it is shown that the appellants' contention in respect to the pleadings is incorrect.

By an amended petition, the Harlan Gas Coal Company made A. B. Cornett and D. B. Cornett defendants, alleging that the Kentucky Harlan Coal Company acquired title to the land claimed by it by leases from them and sought to recover of them by reason thereof.

The Kentucky Harlan Coal Company made its answer a counterclaim and cross-petition against the Cornetts, alleging that its right to mine the coal on the 20.4 acres was conferred by title derived by mesne conveyances from the Cornetts. It sought to recover of them whatever sum the Harlan Gas Coal Company should be decreed against it by reason of it having taken the coal from the 20.4 acres.

The court determined that the title to 16 acres of the 20.4, claimed by the Harlan Gas Coal Company, was prior and superior to that of the Kentucky Harlan Coal Company; that the Kentucky Harlan Coal Company had mined 64,000 tons on the 16 acres, and the profit to it was 18 cents per ton, amounting to $11,520. A recovery of this sum, with interest, was permitted against the Kentucky Harlan Coal Company and A. B. Cornett and D. B. Cornett, with directions that "thereafter" the amount be prorated between A. B. and D. B. Cornett, according to their respective interests in the 16 acres. The Kentucky Harlan Coal Company was given a judgment on its counterclaim against A. B. and D. B. Cornett for the $11,520 as a recoupment. This appeal is prosecuted by the Cornetts and the Kentucky Harlan Coal Company from this judgment.

It is conceded that the Harlan Gas Coal Company and the Kentucky Harlan Coal Company derived their respective title from a common source, and that A. B. Cornett and D. B. Cornett were parties to the conveyances from which their respective title was derived, except that portion of the land which was embraced by the lease executed by A. B. and D. B. Cornett and Hall under which the Kentucky Harlan Coal Company asserts title, which embraces a portion of the disputed 16 acres.

The Harlan Town Coal Company acquired title to coal land conveyed to Griffin and French. The Harlan Gas Coal Company was thereafter organized and acquired title of the Harlan Town Coal Company to the same land. D. B. Cornett, W. W. Lewis, C. B. Cawood, Williams Brothers, and A. B. Cornett incorporated the Harlan Gas Coal Company, the successor in title of the coal lands of the Harlan Town Coal Company. It was decided that the line between the coal lands owned by the Harlan Gas Coal Company and those adjoining it was "jagged," and that it was to the interest of all parties concerned to have it surveyed and the "jagged" line straightened. Henry Groos was agreed on by the interested parties to make the survey. He made it and furnished them with a map of the property. The owners of the adjoining lands and leases "operated the property according to that map." His map showed the boundary line between the properties, which was accepted by the lessees on three sides, the Harlan Gas Coal Company, the R. C. Tway Coal Company, and the Kentucky Harlan Coal Company; and they continuously operated their leases according to the line made by Henry Groos, until a survey and map was made by Fox during the pendency of this action. The Groos survey and map were completed in 1916. All of the stock in the Harlan Gas Coal Company was owned by W. W. Lewis, A. B. Cornett, D. B. Cornett, and C. B. Cawood, at that time. In August, 1917, they sold the entire stock in the corporation to Alexander Y. Malcomson; R. C. Hurd, as agent of Malcomson, conducted the negotiations and purchased the stock for him. During the negotiations, D. B. Cornett furnished to Hurd, the agent of Malcomson, a copy of the Groos survey and map or blueprint, showing the coal lands as then claimed to be owned by the Harlan Gas Coal Company by virtue of its leases. After Malcomson became the owner of all the stock in the corporation, he, in the name of the corporation, assumed ownership, actual possession, and operation of the coal lands owned by the Harlan Gas Coal Company at the time he so acquired the entire stock of the corporation.

R. C. Hurd, as manager of the operation for Malcomson, retained the possession of the map or blueprint which was delivered to him by Cornett at the time of the completion of the sale of all the stock in the Harlan Gas Coal Company to Malcomson. Hurd stated that, during the negotiations of the sale of the stock to Malcomson, the manager of the corporation and the owners of the stock at that time represented to him as the agent of Malcomson, as a part of the transaction in which he purchased the stock for Malcomson, that the line represented by the Groos map or blueprint was the line of the coal land which the Harlan Gas Coal Company at that time owned, and which Malcomson, by his purchase of the stock, would acquire, and that, during the time he operated the mines for Malcomson, he recognized the line as shown by the Groos survey and map as the correct line dividing the coal lands of the Harlan Gas Coal Company and the Kentucky Harlan Coal Company. He is corroborated by other witnesses and not contradicted even by Malcomson.

The purchase by Malcomson of all the stock in the Harlan Gas Coal Company did not ipso facto dissolve the corporation. Louisville Banking Co. v. Eisenman, 94 Ky. 83, 21 S.W. 531, 1049, 14 Ky. Law Rep. 705, 19 L. R. A. 684, 42 Am. St. Rep. 335. His acquisition and ownership of the entire stock merely suspended the franchise of the corporation until the stock was thereafter transferred by him to others. Louisville Gas Co. v. Kaufman, 105 Ky. 131, 48 S.W. 434, 20 Ky. Law Rep. 1069; George T. Stagg Co. v. E. H. Taylor, Jr. & Sons, 113 Ky. 709, 68 S.W. 862, 24 Ky. Law Rep. 495; Wier v. Bush, 4 Litt. 429.

Notice of the agreed line, the survey and map of Groos, to Hurd, at the time of his negotiations of the purchase of the stock for Malcomson, was notice to Malcomson. Miller v. Jones (Ky.) 111 S.W. 295, 33 Ky. Law Rep. 848. Vizard Investment Co. v. York, 167 Ky. 634, 181 S.W. 370....