Kohlsaat v. Main Island Creek Coal Co.
| Decision Date | 07 March 1922 |
| Docket Number | 4229. |
| Citation | 112 S.E. 213,90 W.Va. 656 |
| Parties | KOHLSAAT ET AL. v. MAIN ISLAND CREEK COAL CO. |
| Court | West Virginia Supreme Court |
Submitted February 28, 1922.
Rehearing Denied June 2, 1922.
Syllabus by the Court.
A provision in a lease of land for coal mining purposes providing that any controversy between the lessors and lessee arising thereunder shall be submitted to arbitrators and to an umpire in case of disagreement, and designating how the arbitrators and umpire shall be selected, will not prevent either party from maintaining suit to assert his rights under it.
Provision, in an arbitration clause in a lease of land for mining coal on a royalty to the lessor, that upon failure of either party to appoint an arbitrator the other may make an appointment of two arbitrators, and the two so appointed may select an umpire, does not prevent a revocation of the agreement for arbitration, nor prevent a resort to the courts in the first instance for a vindication of rights under the lease.
Where a lease of land for mining coal stipulates that a fixed sum for each ton of coal mined shall be paid the lessor as royalty but, if the coal is sold to the consumer for a price above 90 cents per ton, then the lessee shall pay, in addition to the fixed sum, 10 per cent. of the price in excess of 90 cents and the lessee increases its price to consumers by the addition of 45 cents per ton under a permissive order of the Federal Fuel Administrator, which order allows such increase on condition that a corresponding increase per ton be added to wages of lessee's miners, and the lessee sells its coal to the consumer at $2.50 per ton, and increases the wages of its miners in accordance with the condition of the permissive order, the lessee, in computing royalties to be paid to its lessor, is not permitted to first deduct the 45 cents from the price of the coal sold to the consumer and calculate the excess royalty on the remainder left above 90 cents per ton. The lessor is entitled to receive royalties based on the full price paid by the consumer.
Where there is a provision in a coal mining lease that royalties shall be paid the lessor on a basis of the price at which the coal is sold to the consumer, the lessee is not justified, in computing the royalty, to subtract commissions paid to a selling agent from the sale price of its coal, and calculate the royalty on the sum remaining. The expense of selling the coal is an ordinary and necessary expense of the operation and should not be deducted from the sale price before computing royalties.
"Payment by a debtor and receipt by a creditor of a less sum than is due upon an undisputed liquidated demand is not satisfaction of the debt, although the creditor agrees to accept it as such, if there be no release under seal or no new consideration given as to the part left unpaid." Nixon v. Kiddy, 66 W.Va. 355, 66 S.E. 500.
Any item omitted by reason of mistake or inadvertence from a stated and settled account, growing out of ordinary business transactions, may be recovered in an appropriate legal action.
Error to Circuit Court, Logan County.
Action by John E. C. Kohlsaat and others, trustees, etc., against the Main Island Creek Coal Company, and from a judgment therein the plaintiffs bring error, and the defendant assigns cross-error. Modified and affirmed.
Fitzpatrick, Campbell, Brown & Davis, of Huntington, Brown, Jackson & Knight, of Charleston, and R. D. Campbell, of Huntington, for plaintiffs in error.
E. L. Hogsett and Holt, Duncan & Holt, all of Huntington, for defendant in error.
This litigation arises out of a coal mining lease executed by Clinton Crane and James O. Cole to the Main Island Creek Coal Company on about 27,000 acres of coal lands in Logan county, dated October 6, 1913.
The issues involved arise under the provision of the lease relating to royalties, and that relating to arbitration of controversies which might arise.
The royalty provision is: "And the said lessee, in consideration of the premises, does covenant and agree to commence at once upon delivery of this lease, the work of developing said lands as a coal producing property, and to prosecute the same continuously and with diligence; and further covenants and agrees, during the term aforesaid, unless this lease shall be sooner terminated under some provision hereof, and in such case until such termination, to pay to the lessors the rents and royalties for the use of said demised premises and said coal; that is to say, ten (10) cents per ton for every ton of two thousand (2,000) pounds, and, in addition thereto, ten (10) per cent. of the selling price of said coal above ninety (90) cents per ton f. o. b. cars at the tipples. The lessors are to be paid never less than ten (10) cents per ton of two thousand (2,000) pounds, and whenever the coal from said premises shall sell to consumers for a price above ninety (90) cents per ton of two thousand (2,000) pounds at the tipple on an average of all grades, then, and in every such case, the lessee shall pay to the lessors ten (10) per cent. of the price in excess of ninety (90) cents.
Each calendar year of the lease shall be divided into two equal periods, and all coal mined and sold during each period, and the aggregate sum for which it was sold to consumers shall be ascertained, and, if it appear that the coal mined during such period sold for a sum in excess of ninety (90) cents per ton of two thousand (2,000) pounds, then, and in such event ten (10) per centum of such excess above ninety (90) cents per ton shall be paid to the lessors in addition to the ten (10) cents per ton aforesaid. Coal used on the premises shall be accounted for at the average price per ton for which the coal mined during such period sold."
The arbitration clause reads:
In 1916 Cole and Crane conveyed the land leased to plaintiffs as trustees of the Cole & Crane Real Estate Trust, to become effective upon the death of either of the grantors, and, Crane having died in 1917, the trust became effective. In the summer and fall of 1917 certain executive orders were promulgated by the President of the United States and the Fuel Administrator, under authority of a war measure enacted by Congress fixing a scale of prices for bituminous coal at the mines. The order of October 27, 1917, permitted an increase in price of 45 cents per ton over that formerly fixed, subject to two conditions:
Between November 1, 1917, and July 1, 1918, defendant coal company mined and sold from the leased land 644,936 2/3 tons of coal at an increased price of 45 cents for each ton, and, before paying royalty thereon, deducted from the gross amount for which this tonnage was sold 45 cents per ton, equal to $290,221.50, and refused to pay royalty thereon, claiming that this 45 cents per ton increase composed no part of the price for which the coal was sold, within the meaning of the terms of the lease, but constituted a fund for the payment of its miners, in which defendant has no beneficial interest. Plaintiffs claimed one-tenth of this amount, $29,022.15, under the terms of the royalty provision of the lease, and thus arises the first issue.
The second claim of plaintiffs arises in this manner: From July 1916, to July 1, 1918, defendant coal company sold its coal through an agent, the Wyatt Coal Company. In computing royalties upon coal mined and sold it would deduct from the sales price the commissions paid by it to its selling agent, and account to plaintiffs for royalties upon the gross sum...
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