Morton v. Godfrey L. Cabot, Inc., No. 10119

CourtSupreme Court of West Virginia
Writing for the CourtLOVINS; HAYMOND
Citation63 S.E.2d 861,134 W.Va. 55
PartiesMORTON, v. GODFREY L. CABOT, Inc.
Decision Date09 March 1951
Docket NumberNo. 10119

Page 861

63 S.E.2d 861
134 W.Va. 55
MORTON,
v.
GODFREY L. CABOT, Inc.
No. 10119.
Supreme Court of Appeals of West Virginia.
Submitted April 20, 1949.
Decided June 14, 1949.
Dissenting Opinion March 9, 1951.

Page 862

Syllabus by the Court.

1. A past due debt, certain in amount, bears interest from the due date until paid.

[134 W.Va. 56] 2. The rule announced in Norton v. Shelby County, 118 U.S. 425 [6 S.Ct. 1121, 30 L.Ed. 178]: 'An unconstitutional Act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed', applied to the facts of thi case.

3. In the absence of a showing of special circumstances, withholding payment of a debt by a debtor in good faith, without fault or misconduct on his part, in reliance upon a legislative enactment subsequently held unconstitutional, does not exonerate such debtor from payment of interest accruing after the time the debt is due.

Page 863

Dayton, Campbell & Love, Charleston, for plaintiff in error.

Lively & Lively, A. D. Duduit and M. O. Litz, Charleston, for defendant in error.

LOVINS, Judge.

D. Holmes Morton, individually and as trustee, commenced this action against Godfrey L. Cabot, Inc., a corporation, in the Circuit Court of Kanawha County, seeking to recover the aggregate amount of $6,869.97, consisting of $5,600.65 principal and $1,269.32 interest.

During the pendency of the action, defendant paid plaintiff the principal amount of $5,600.65, and paid into court the sum of $243.97, as interest accruing thereon after June 26, 1945.

The facts were stipulated, a jury waived, and the cause was submitted to the court in lieu of a jury. The trial [134 W.Va. 57] court found for defendant, adjudged that plaintiff was not entitled to recover interest, and ordered that the sum of $243.97, representing interest theretofore paid into court, be repaid to defendant. Plaintiff prosecutes this writ of error to that judgment.

By lease dated April 1, 1936, plaintiff and his wife leased certain tracts of land in Kanawha County, aggregating 2411.28 acres, more or less, to defendant for the purposes of producing oil and gas. Some of the lands were owned by plaintiff in his own right and other tracts were held by him as trustee. The pertinent provisions of the lease are substantially as follows: Defendant agreed to pay an annual rental at the rate of $1 an acre, subject to credit for sums paid as royalties; that it would deliver to plaintiff one-eighth part of all oil produced and saved from the leased premises; that it would pay '* * * a royalty of one-eighth of the then current wholesale market value at the well for all gas produced and saved from the leased premises * * *'; and that it would pay plaintiff '* * * one-eighth part of the net proceeds of the sale of any gasoline extracted or manufactured by the lessee'. The rentals and royalties were paid 'between the 20th and 30th days of each month, covering gas produced during the preceding calendar month.' The lease did not provide for the payment of interest on past due monthly installments.

Several wells were drilled on the lands covered by the lease, from which gas has been produced in paying quantities and the lease is not in full force and effect. Rentals and royalties accruing under the lease were paid by defendant until June 9, 1939, in accordance with its provisions.

Chapter 127, Acts of the the Legislature of West Virginia, 1939, was enacted March 11, and became effective on June 9 of that year. From the effective date of said Act, until June 26, 1945, defendant deducted from the monthly installments due under said lease various amounts equalling one-eighth of the privilege taxes paid by defendant [134 W.Va. 58] on the gross value of the gas produced from the leased premises.

Prior to the effective date of said Chapter 127, an annual tax was levied on the privilege of engaging in the business of producing oil and gas and the business of collecting rents for the use of real and personal property. By Section 2 of Chapter 86, Acts of the Legislature, 1935, an annual privilege tax was levied against persons engaged in the business of producing oil and gas, the amount of the tax on such privilege being '* * * determined by the application of rates against values or gross income as set forth in section two-(a) * * *', of Chapter 86, id. Section 2-a of Chapter 86 provided that the tax on the privilege should be at the rate of six per cent on the gross proceeds derived from the sale of natural gas in excess of $5,000, whether such gas was sold and delivered within or without the State of West Virginia. Section 2-i of said Chapter 86, levied a tax of one per cent on the gross income of any person engaged in the business of collecting income from the use of real or personal property, or any interest therein, whether by lease, conveyance or otherwise, '* * * whether the return be in the form of rentals, royalties, fees, interest or otherwise * * *.' Section 3-a of Chapter 120, Acts of the Legislature, 1939, provides for a surtax to be levied in addition to the taxes levied by Section 2-a of said Chapter 86.

Page 864

By Chapter 127, Acts of the Legislature, 1939, a producer of oil and gas was required to pay a privilege tax on the value of the entire production, without any deduction for any payment in money or kind required by any contract or agreement. Such producer was authorized and empowered '* * * to deduct from any payment, in money or in kind, to the owners of any royalty interest, excess royalty, or working interest in such properties, that proportion of the tax paid which the said royalty, excess royalty or working interest bears to the entire production * * *.' It was further provided by said Chapter 127 that '* * * there is hereby levied upon such royalty interest, excess royalty or working interest, such proportionate[134 W.Va. 59] part of the tax imposed by said section two-a'. Said Chapter 127 also provided that a person paying the tax levied by that chapter should be released from liability for taxes under Section 2-i of Chapter 86, Acts of the Legislature, 1935.

Acting under the provisions of Chapter 127 aforesaid, defendant at various times deducted an aggregate sum of $2,600.65 from payment of rents and royalties due plaintiff under said lease, such deductions being calculated in accordance with the provisions of Chapter 127 aforesaid. Such deductions were made without objection by plaintiff from the effective date of the statute to June 26, 1945, when said Chapter 127 was adjudged to be an unconstitutional statute in the case of Cole v. Pond Fork Oil & Gas Co., 127 W.Va. 762, 35 S.E.2d 25, 160 A.L.R. 970. This Court denied a rehearing in the Cole case on September 10, 1945, and on November 5, 1945, certiorari was denied by the Supreme Court of the United States, 326 U.S. 765, 66 S.Ct. 147, 90 L.Ed. 461.

There is no dispute as to the amount of the principal so deducted by defendant, nor is there any dispute as to the amount of interest which would accrue from the respective due dates until the principal amount was paid.

Plaintiff contends that the principal was not paid when due, and that after the due dates interest accrued and became payable by operation of law so long as the principal remained unpaid. Defendant denies liability for interest on the principal amount on the equitable ground that it acted in good faith in withholding payments to plaintiff in accordance with the provisions of an apparently valid statute. Defendant further contends that Chapter 127, a aforesaid, was an effective and valid legislative enactment until it was declared unconstitutional by a court of competent jurisdiction. In connection with this latter contention, defendant paid into court the said sum of $243.97, representing interest from the date this Court declared Chapter 127, idem, to be invalid.

The questions presented by this record are: (1) Is defendant[134 W.Va. 60] relieved from the payment of interest by acting in good faith; and (2) is the enactment of an apparently valid statute, afterwards declared to be unconstitutional, sufficient reason to preclude the right of recovery of interest on a past due debt?

In this jurisdiction 'one who withholds money from the rightful owner on the date when it should be paid is liable for interest.' Mairs v. Central Trust Co., 127 W.Va. 795, 803, 34 S.E.2d 742, 747. See Code, 56-6-27. No liability for interest arises by implication prior to the date a debt is due. See Lockard v. City of Salem, 130 W.Va. 287, 43 S.E.2d 239; Lutz v. Williams et al., 84 W.Va. 216, 99 S.E. 440; Bennett v. Federal Coal & Coke Co., 70 W.Va. 456, 74 S.E. 418, 40 L.R.A.,N.S., 588; Shank v. Groff et al., 45 W.Va. 543, 32 S.E. 248. Interest accrues on a debt from the time it is due, although liability therefor was in dispute. Great Northern Ry. Co. v. Erie R. Co., D.C., 58 F.2d 414.

Although not argued or raised in briefs, the question has been posed by a judge of this Court whether plaintiff, having accepted payment of the principal, may maintain this action for recovery of interest alone. Under the rule laid down in the fourth point of the syllabus of Bennett v Coal & Coke Co., supra, where the right to interest arises by implication, such interest is considered to be damages, and may be recovered only along with the principal sum '* * * as an incident thereto, and

Page 865

if the principal sum be accepted in settlement the right to the damages is lost and no separate subsequent action can be maintained therefor.' (Italics supplied.) The instant case is not within the rule laid down in the Bennett case for the reason that this action was brought to recover principal and interest, both being then unpaid. No separate action has been brought. True, the principal was paid after this suit was commenced, but the facts at the time the action was brought control.

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13 practice notes
  • Earl T. Browder, Inc. v. County Court of Webster County, No. 12016
    • United States
    • Supreme Court of West Virginia
    • November 15, 1960
    ...in its verdict and no objection was urged to that feature of the instruction. See Code, 56-6-27; Morton v. Godfrey L. Cabot, Inc., 134 W.Va. 55, 63 S.E.2d 861; Bischoff v. Francesca, 133 W.Va. 474, 56 S.E.2d 865. In response to two special interrogatories, the jury found that rock was actua......
  • City of Fairmont v. Pitrolo Pontiac-Cadillac Co., PONTIAC-CADILLAC
    • United States
    • Supreme Court of West Virginia
    • July 18, 1983
    ...Sadler v. Connolly, 175 Mont. 484, 575 P.2d 51 (1978); 16 Am.Jur.2d Constitutional Law § 256 (1979). In Morton v. Godfrey L. Cabot, Inc., 134 W.Va. 55, 63 S.E.2d 861 (1949), we recognized this rule in Syllabus Point 2, which was based on Norton v. Shelby County, 118 U.S. 425, 6 S.Ct. 1121, ......
  • Willey v. Travelers Indem. Co., No. 13036
    • United States
    • Supreme Court of West Virginia
    • December 21, 1972
    ...so that the court could render a judgment thereon with interest from the date of the judgment.' See also Morton v. Godfrey L. Cabot, Inc., 134 W.Va. 55, 63 S.E.2d 861; Mairs v. Central Trust Co., 127 W.Va. 795, 34 S.E.2d 742; Hallauer v. Fire Association of Philadelphia, 83 W.Va. 401, 98 S.......
  • Guaranty Trust Co. of N. Y. v. West Virginia Turnpike Commission, No. CC844
    • United States
    • Supreme Court of West Virginia
    • March 24, 1959
    ...S.E. 401, 21 A.L.R. 433. 'A past due debt, certain in amount, bears interest from the due date until paid.' Morton v. Godfrey L. Cabot, 134 W.Va. 55, syl. 1, 63 S.E.2d 861, 862. By Section 9 of the Act all such bonds are 'declared to have all the qualities and incidents of negotiable instru......
  • Request a trial to view additional results
13 cases
  • Earl T. Browder, Inc. v. County Court of Webster County, No. 12016
    • United States
    • Supreme Court of West Virginia
    • November 15, 1960
    ...in its verdict and no objection was urged to that feature of the instruction. See Code, 56-6-27; Morton v. Godfrey L. Cabot, Inc., 134 W.Va. 55, 63 S.E.2d 861; Bischoff v. Francesca, 133 W.Va. 474, 56 S.E.2d 865. In response to two special interrogatories, the jury found that rock was actua......
  • City of Fairmont v. Pitrolo Pontiac-Cadillac Co., PONTIAC-CADILLAC
    • United States
    • Supreme Court of West Virginia
    • July 18, 1983
    ...Sadler v. Connolly, 175 Mont. 484, 575 P.2d 51 (1978); 16 Am.Jur.2d Constitutional Law § 256 (1979). In Morton v. Godfrey L. Cabot, Inc., 134 W.Va. 55, 63 S.E.2d 861 (1949), we recognized this rule in Syllabus Point 2, which was based on Norton v. Shelby County, 118 U.S. 425, 6 S.Ct. 1121, ......
  • Willey v. Travelers Indem. Co., No. 13036
    • United States
    • Supreme Court of West Virginia
    • December 21, 1972
    ...so that the court could render a judgment thereon with interest from the date of the judgment.' See also Morton v. Godfrey L. Cabot, Inc., 134 W.Va. 55, 63 S.E.2d 861; Mairs v. Central Trust Co., 127 W.Va. 795, 34 S.E.2d 742; Hallauer v. Fire Association of Philadelphia, 83 W.Va. 401, 98 S.......
  • Guaranty Trust Co. of N. Y. v. West Virginia Turnpike Commission, No. CC844
    • United States
    • Supreme Court of West Virginia
    • March 24, 1959
    ...S.E. 401, 21 A.L.R. 433. 'A past due debt, certain in amount, bears interest from the due date until paid.' Morton v. Godfrey L. Cabot, 134 W.Va. 55, syl. 1, 63 S.E.2d 861, 862. By Section 9 of the Act all such bonds are 'declared to have all the qualities and incidents of negotiable instru......
  • Request a trial to view additional results

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