Pepper v. Dixie Splint Coal Co.

• Decision Date: 19 September 1935
• Parties: JEAN MCNEIL PEPPER, EXECUTRIX, ETC. v. DIXIE SPLINT COAL COMPANY, ET AL.
• Court: Virginia Supreme Court

Page 179

165 Va. 179

JEAN MCNEIL PEPPER, EXECUTRIX, ETC. v. DIXIE SPLINT COAL COMPANY, ET AL.

Supreme Court of Virginia, Staunton.

September 19, 1935.

Present, Campbell, C.J., and Holt, Gregory, Browning, Chinn and Eggleston, JJ.

1. APPEAL AND ERROR — Failure of Appellant to State in Petition for Appeal that He Desired to Adopt It as His Opening Brief — Motion to Hear Appeal Ex Parte Overruled Where No Injury to Appellee Shown — Case at Bar. — In the instant case a motion was made to hear the appeal ex parte upon appellee's brief because appellant failed to state in the petition for the appeal that she desired to adopt the petition as her opening brief. Some sixty days before the appeal was heard by the Supreme Court of Appeals counsel for appellant notified counsel for appellee in writing that the petition would be adopted as the opening brief. No injury, prejudice or surprise to appellee having resulted from the failure to state in the petition that it would be adopted as the opening brief, the Supreme Court of Appeals overruled the motion.

2. MINES AND MINERALS — Lease of Coal Lands by Corporation — Suit for Accounting of Rents — Three Successive Companies Having Same Name and Controlled by Same Persons — Supreme Court of Appeals Will Look to Substance of Things to Prevent Responsible Parties Escaping Liability — Case at Bar. — In the instant case, a suit for an accounting of the sums due complainant for royalties and rents due under a lease of coal lands, the company which originally leased the land was succeeded by a co-partnership composed of the stockholders of the company, and the co-partnership was succeeded by another company owned by the same persons. All three organizations had the same name, and the ultimate control and ownership of each was lodged in the same persons.

Held: That the complete dominance and control by the same persons made the two corporations and the co-partnership, as to the lessor, merely a veil or shadow through which the Supreme Court of Appeals would look to the real substance of things, when it would be unconscionable, through corporate fiction or otherwise, to permit the real and responsible parties to escape liability by turning over their property from one entity to another.

3. MINES AND MINERALS — Lease of Coal Land by Corporation — Suit for Accounting of Rents — Three Successive Companies with Same Name and Composed of Same Persons — Real Parties in Interest Remained Same as to Lessor — Case at Bar. — In the instant case, a suit for an accounting of the rents and royalties due complainant from defendants under a lease of coal lands, the lessee, a corporation composed of two men and their families, was dissolved and a co-partnership, composed of the same parties, was formed. Later this, too, was dissolved and another corporation formed, with the same parties as stockholders. The three companies operated under the same name, and the same man was actively in charge of operations during the entire time. Complainant was unaware of the changes.

Held: That so far as complainant, the lessor, was concerned, the parties in interest always remained the same.

4. MINES AND MINERALS — Lease of Coal Land by Corporation — Transfer of Assets to Co-Partnership Having Same Name and Composed of Same Persons — Recognition of Lease by Partnership and Estoppel to Deny Tenancy — Case at Bar. — In the instant case, a suit for an accounting of rents and royalties due complainant under a lease of coal lands, the lessor, a corporation, transferred all its assets, including the lease, to a co-partnership, composed of the stockholders of the corporation, and was dissolved. The co-partnership was later dissolved and a corporation was formed, composed of the same persons. The co-partnership did not expressly assume the liabilities of the first corporation, nor did the last corporation expressly assume the liabilities of the co-partnership, but all three operated the mine under the same lease and in the same name, and in a cross-bill they asked that the lease be reformed.

Held: That the members of the co-partnership recognized the lease and were estopped to deny that they were tenants thereunder.

5. MINES AND MINERALS — Lease of Coal Land by Corporation — Transfer of Assets to Co-Partnership Having Same Name and Composed of Same Persons — Co-Partnership as Much Liable for Performance as Original Lessee — Case at Bar. — In the instant case, a suit for an accounting of the rents and royalties due complainant under a lease of coal lands, the lessee, a corporation, transferred all its assets, including the lease, to a co-partnership, composed of the stockholders of the corporation, and was dissolved. The co-partnership was later dissolved and another corporation, composed of the co-partners, was formed. The co-partnership did not expressly assume the liabilities of the first corporation, nor did the last corporation expressly assume the liabilities of the co-partnership, but all three operated the mine under the same lease and in the same name, and in a cross-bill asked that the lease be reformed.

Held: That the partnership and the individual members thereof were as much responsible for the performance of the covenants in the lease as if they were the original lessees. The co-partnership was a mere continuation of the first corporation, and to permit them to escape liability would be a fraud.

6. MINES AND MINERALS — Lease of Coal Land by Corporation — Dissolution of Corporation after Transfer of Assets to Co-Partnership — Corporation Not Relieved of Liability by Dissolution — Section 3810 of the Code of 1930 — Case at Bar. — In the instant case, a suit for an accounting of the rents and royalties due complainant under a lease of coal lands, the lessor, a corporation, was dissolved and its assets transferred to a co-partnership composed of the stockholders of the corporation. This, too, was dissolved and another corporation was formed. Complainant was unaware of these changes, and all three companies operated the mine under the same lease and in the same name. The lessee had covenanted to mine and remove all of the merchantable coal on the premises and had agreed that such coal was eighty-five per cent of the entire body of coal on the premises. It had agreed to pay a certain sum per ton for the coal mined and had agreed not to assign or sub-let the premises without the written consent of the lessor.

Held: That the fact that the first company was dissolved after transferring its assets to the co-partnership did not relieve it of its obligations and debts, for section 3810 of the Code of 1930 provides that dissolution of a corporation shall not affect the rights of existing creditors at the time of such dissolution, and complainant at the time of the dissolution of the first company was an existing creditor thereof.

7. MINES AND MINERALS — Lease of Coal Land by Corporation — Suit for Accounting of Rents — Dissolution of Corporation after Transfer of Assets to Co-Partnership — Liability of Directors and Stockholders for Dividends Received from Capital Stock — Section 3840 of the Code of 1930 — Case at Bar. — In the instant case, a suit for an accounting of the rents and royalties due complainant under a lease of coal lands, the lessee, a corporation, composed of two men and members of their families, transferred all its assets, including the lease, to a co-partnership, composed of the same persons, which did not expressly assume the liabilities of the corporation. The co-partnership later transferred its assets to a corporation, composed of the same parties, and was dissolved. The three companies operated the mine under the same lease and in the same name. The lessee had covenanted to mine and remove all the merchantable coal on the premises and had agreed not to sub-let the premises without the written consent of the lessor. The individuals composing the two corporations and the co-parthership admitted that they received certain dividends from the first company and also from the co-partnership and the second corporation.

Held: That the directors and stockholders of the first company were liable for whatever dividends were declared out of the capital stock and received by them from the corporation upon its dissolution, under section 3840 of the Code of 1930, providing that where dividends are declared out of the capital stock of a corporation, the directors, individually, shall be jointly and severally liable to the corporation's creditors to the amount of the capital so divided, and that each stockholder shall be liable to the extent of the amount received by them.

8. MINES AND MINERALS — Lease of Coal Land by Corporation — Dissolution of Corporation without Knowledge of Lessor after Transfer of Assets to Co-Partnership — Suit for Accounting of Rents — Laches — Case at Bar. — In the instant case, a suit for an accounting of the rents and reyalties due complainant under a lease of coal lands, the lessee, a corporation, transferred its assets, including the lease, to a co-partnership, composed of the stockholders of the corporation, and was dissolved. The co-partnership thereafter transferred all its assets to another corporation, composed of the same individuals and was dissolved. The lessee had no knowledge of these changes until after institution of the suit, and the three companies operated the mine under the same lease and in the same name. Suit was brought against the first company in 1931, eleven years after its dissolution and three years after the third company ceased to operate the mine, and defendants contended that complainant was guilty of laches.

Held: That the defense of laches was inapplicable. No conduct on complainant's part was shown which caused any injury to defendants.

9. MINES AND MINERALS — Lease of Coal Land by Corporation — Dissolution of Corporation after Transfer of Assets to Co-Partnership — Suit for Accounting of Rents — Statute of Limitations — When Statu...