Lively v. Elkhorn Coal Co., 11592.
| Decision Date | 29 July 1953 |
| Docket Number | No. 11592.,11592. |
| Citation | 206 F.2d 396 |
| Parties | LIVELY v. ELKHORN COAL CO. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Robert T. Winston, Jr., Norton, Va. (J. O. Lively, by counsel, Napier & Napier, Hazard, Ky., Robert T. Winston, Jr., Norton, Va., on the brief), for appellant.
J. W. Howard, Prestonsburg, Ky. (J. Woodford Howard, Prestonsburg, Ky., H. L. Moore, Whitesburg, Ky., Herman L. Taylor, Chicago, Ill., on the brief), for appellee.
Before ALLEN, MARTIN and MILLER, Circuit Judges.
Appellant, J. O. Lively, sought by this action to recover damages in the amount of $44,000 by reason of the alleged breach by the appellee, Elkhorn Coal Company, of a contract between the parties pertaining to the strip mining of coal on certain properties owned by the appellee. The jury found for the appellant in the sum of $15,000. Thereafter the District Judge sustained the appellee's motion for judgment notwithstanding the verdict and ordered the action dismissed, D.C., 101 F.Supp. 1014, from which order this appeal was taken.
The complaint as amended alleged that on or about December 15, 1946, the appellant entered into a contract with the appellee whereby the appellant agreed to remove the overburden from certain coal near Kona, Kentucky, with appellant's equipment and at appellant's expense, and that the appellee agreed that if the coal proved suitable for market appellant would be given the contract to strip on the property and to sell the coal through appellee's market outlets; that appellee would deduct 70 cents from the price received for each ton of coal for royalties, sales commission and certain expenses; that the appellant commenced working under the contract, did the necessary prospecting and uncovering of coal, expended at least $6,000 in building bins and $8,000 in building roads, and loaded a great deal of coal from 1947 through 1949; that about February 1, 1949, appellant entered into a subcontract with the Blair & Oldham Construction Company under which Blair & Oldham were given 60% of the gross amount paid to appellant by the appellee for their work in uncovering the coal, and under which contract the appellant and Blair & Oldham operated until January 24, 1950; that on January 24, 1950, appellant had 20,000 tons of coal uncovered and ready to load; on that date the appellee breached the contract by turning the entire stripping contract over to Blair & Oldham and by refusing to allow the appellant to load coal or to perform his portion of the contract; that following this breach, Blair & Oldham loaded the 20,000 tons of coal which was uncovered and also an additional 60,000 tons that Blair & Oldham later uncovered in their operations; that by reason thereby appellant lost profits of at least $25,000, for which amount he asked damages. The complaint as amended also sought an additional $19,000 in damages for money expended in preparing the property for the stripping operations, such as putting in drainage tile and changing the course of a stream, and for the expenses of building the bins and constructing the roads. Appellee denied that it entered into any grant or lease of the mining rights for the mining of any particular area or quantity of its coal, or for any given period of time, and alleged that it permitted the appellant to go upon its properties and strip and market coal therefrom under arrangements terminable at the will of either of the parties; that under the arrangement the appellant was to bear all of the expenses incident to the construction and repair of roads, coal bins, and other expenses involved in the stripping operations, and that the appellee was not to be charged with or bear any part of such expenses; that appellant on January 24, 1950, voluntarily entered into a contract with Blair & Oldham under which all the stripping operations were turned over to Blair & Oldham in consideration of their agreement to pay the appellant an overriding royalty of 15 cents per ton on the coal produced by them; and that, in any event, the alleged agreement between the appellant and appellee was an oral agreement involving the sale or lease of real estate, which rendered it unenforceable under Sec. 371.010, subsection 6, Kentucky Revised Statutes, which required such a contract to be in writing. Upon the completion of the evidence upon the factual issues involved the case was submitted to the jury, the Court reserving for a later ruling the legal issue under the Kentucky Statute of Frauds. The action of the Trial Judge in sustaining appellee's motion for judgment notwithstanding the verdict was the result of the Judge's conclusion that the contract sued upon was an oral agreement admittedly not reduced to writing, and was therefore unenforceable under the statutory provision above referred to.
Sec. 371.010, subsection 6, Kentucky Revised Statutes, provides — "No action shall be brought to charge any person: * * * (6) Upon any contract for the sale of real estate, or any lease thereof for longer than one year; * * *" unless the agreement or some memorandum thereof be in writing and signed by the party to be charged therewith. We are of the opinion that the District Judge was correct in holding that the transaction in question fell squarely within the terms of the statutory provision. Under the applicable Kentucky authorities it appears well settled that a lease of mineral rights which gives the lessee the right to explore and remove the minerals therefrom is a transaction for the transfer and sale of an interest in lands and is unenforceable unless the statutory provisions are complied with. Beckett-Iseman Oil Co. v. Backer, 165 Ky. 818, 178 S.W. 1084; Commonwealth v. Elkhorn Piney Coal Mining Co., 241 Ky. 245, 43 S.W.2d 684; Kash v. United Star Oil Co., 192 Ky. 422, 424, 233 S.W. 898; Lowther v. Scheirich, 195 Ky. 177, 178, 241 S.W. 834; Nisbet v. Dozier, 204 Ky. 204, 263 S.W. 736; Kentucky Counties Oil Co. v. Cupler, 204 Ky. 799, 802, 265 S. W. 334.
Appellant contends that certain inter-office correspondence between certain officers and employees of the appellee...
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