Price v. Tennessee Products & Chemical Corp.

• Decision Date: 18 May 1964
• Citation: 53 Tenn.App. 624,385 S.W.2d 301
• Parties: Thomas G. PRICE and Thomas G. Price, Jr., d/b/a Pikeville Coal Company, Plaintiff-Appellant, v. TENNESSEE PRODUCTS & CHEMICAL CORPORATION, Defendant-Appellee.
• Court: Tennessee Court of Appeals

Page 301

385 S.W.2d 301

53 Tenn.App. 624

Thomas G. PRICE and Thomas G. Price, Jr., d/b/a Pikeville Coal Company, Plaintiff-Appellant, v. TENNESSEE PRODUCTS & CHEMICAL CORPORATION, Defendant-Appellee.

Court of Appeals of Tennessee, Middle Section.

May 18, 1964.

Rehearing Denied July 31, 1964.

Certiorari Denied by Supreme Court Dec. 9, 1964.

Raymond A. Graham and W. N. Dietzen, Chattanooga, Dietzen, Graham & Dietzen, Chattanooga, of counsel, for appellant.

A. A. Kelly, South Pittsburg, Robert G. McCullough and D. L. Lansden, Nashville, Waller, Lansden & Dortch, Nashville, of counsel, for appellee.

CHATTIN, Judge.

Thomas G. Price and Thomas G. Price, Jr., a partnership, doing business as Pikeville Coal Company, brought this suit in the Circuit Court of Marion County, Tennessee, for the breach of a contract or a mining lease against the defendant, Tennessee Products & Chemical Corporation.

It was alleged in the declaration the parties had on February 2, 1959, entered into an agreement whereby defendant agreed to sublease to plaintiff a portion of the lands defendant had under lease from the United States Steel Corporation; that the purpose of the lease was plaintiff would strip and auger mine the coal in the land; that defendant would furnish to plaintiff maps at six months intervals which would designate the areas to be mined during the ensuing six months period and these maps were to be attached to and become a part of the lease; that prior to March 3, 1961, plaintiff had moved its equipment to the area leased and stripped and auger mined the area so designated and was preparing to move to an area known as Kelley's Creek which defendant had orally designated as the next area to be mined, when defendant advised plaintiff that plaintiff could not mine Kelley's Creek; that W. J. Travis and Carl McFarlin, Jr., authorized officials of the defendant Corporation, orally agreed plaintiff could mine the Kelley's Creek lands; that plaintiff, relying on the oral agreement, purchased special equipment for the purpose of mining these lands; and that by reason of the breach plaintiff lost the profit which plaintiff would have realized if the area had been mined.

Defendant filed pleas of nonassumpsit, nil debit, non est factum, the statute of frauds and perjuries in that the written lease and subsequent oral agreement were void for lack of a sufficient description of the lands involved; that plaintiff breached the contract sued upon by carrying on substandard mining; and that plaintiff was not entitled to maintain the suit because of plaintiff's failure to procure a license to operate a mine in violation of T.C.A. §§ 58-115, 58-116 and 58-117, or a privilege license to seell coal as provided by T.C.A. § 67-4202 and T.C.A. § 67-4203(25).

The trial court, at the conclusion of plaintiff's proof, sustained defendant's motion for a directed verdict and dismissed the suit. license to sell coal as provided by T.C.A. § nature of a writ of error and has assigned as error the following:

'(1) The Agreement to Mine Coal is not within the Statute of Frauds;

'(2) The area was described in written instruments signed by the Defendant;

'(3) The written agreement of the parties incorporated by reference a recorded lease that described the area by metes and bounds;

'(4) The defendant was estopped to question the validity of the contract because it had assured the Plaintiff that it could mine the Kelley Creek Area and induced the Plaintiff to thereafter spend thousands of dollars for special equipment to mine the coal in this area, which the Plaintiff was not otherwise obligated to do and which it would not have done except for the assurance and inducements of the Defendant.'

It is necessary we review the evidence in the most favorable light of plaintiff's theory of the case since we are bound by the following:

'In considering the propriety of the action of the Trial Judge in directing a verdict, we are to look to all the evidence, to take as true the evidence for the Plaintiff, to discard all countervailing evidence, to take the strongest legitimate view of the evidence for the Plaintiff, to allow all reasonable inferences from it in his favor, and if then we conclude that a verdict for Plaintiff would have been warranted by the evidence, the motion for peremptory instruction should have been denied and the action of the Trial Judge in granting the motion, was reversible error.' T. H. Hayes & Sons v. Stuyvesant Insurance Company, 194 Tenn. 35, 250 S.W.2d 7.

The agreement upon which this suit is based was executed by the parties on February 2, 1959. At the time of its execution the defendant, Tennessee Products, was the holder of a lease from the United States Steel Corporation of some 24,075 acres of land lying in Marion, Grundy and Sequatchie Counties as shown on a map attached thereto. This lease provided Tennessee Products could mine all the coal in the lands in accordance with the best practice in that industry. Tennessee Products was required to submit to the lessor for its approval projections of all mining operations showing the location of all proposed openings, entries, haulageways and other work sixty days prior to proceeding with the proposed operations. The lease further provided in the event Tennessee Products failed to mine the coal to the satisfaction of the lessor after thirty days notice of such failure, the lessor would have the right to terminate the lease.

We quote the first paragraph of the agreement entered into by the parties on February 2, 1959, since we think it is pertinent to the issues for our determination.

'AGREEMENT made and entered into on this the 2nd day of February, 1959, between TENNESSEE PRODUCTS & CHEMICAL CORPORATION, a Tennessee corporation, with principal office at Nashville, First Party, and PIKEVILLE COAL COMPANY, a partnership composed of Thomas G. Price and Thomas G. Price, Jr., with principal place of business in Pikeville, Kentucky, Second Party,

'WHEREAS, First Party is the holder of a lease dated the 7th day of January, 1955, under the terms of which it has leased from United States Steel Corporation certain lands for the purpose, among other things, of mining coal therefrom and said lease is now in full force and effect and authorizes First Party to sublease any of said lands; and

'WHEREAS, Second Party is engaged in the business of augering and strip mining coal and has adequate machinery and equipment for such purpose;

'NOW, THEREFORE, it is mutually agreed as follows:

'1. First Party hereby leases to Second Party, subject to the terms, provisions and conditions hereinafter set forth and further subject to the terms and conditions of the aforesaid underlying lease from United States Steel Corporation to First Party, the portion of the land marked in red on the map attached hereto, for the purpose of strip or open pit mining and auger mining.

'Second Party shall mine the area shown on said map in the order designated by the chief engineer of First Party and shall mine only such portions of said area as are listed upon an attached sheet and agreed upon and incorporated in this lease by reference.

'First Party at six months' intervals during the time of this lease shall designate sufficient area to be mined by Second Party during the next six months and such designation shall be attached hereto and become a part of this lease, and Second Party shall not strip or auger outside of said designated area. First Party will furnish at its expense section maps in duplicate, scaled 1"' = 100' covering crop line to be mined for each six months' period, showing areas to be skipped for any purpose, and will furnish maps required by State or Federal authorities.'

The remaining parts of the agreement may be summarized as follows: Plaintiff agreed to mine the coal by the strip or auger method, depending upon which was the most economical at the time; and to perform such mining in the most effectual and workmanlike manner in order to recover the greatest amount of merchantable coal. Plaintiff also agreed to comply with the laws of this State and of the Federal Government regulating the managrement and operation of coal mines 'in accord with the terms and conditions of the lease between First Party and United States Steel Corporation, which lease is by reference made a part hereof.'

Plaintiff agreed to pay defendant the market value of any timber removed by its mining operations.

Plaintiff agreed to construct necessary roads from the public highways to the site of its operations.

Plaintiff agreed to pay lessor a royalty of eighty cents per ton for the coal mined.

Plaintiff represented that it owned sufficient machinery and equipment to produce a minimum of twenty thousand tons of coal per month; and, in the event the machinery, as listed in the agreement, was insufficient to produce that quantity of coal a month, plaintiff would acquire the necessary additional machinery and equipment.

Defendant agreed to haul the coal produced by plaintiff from the area of production to its tipple in Whitwell or cause the same to be done at a cost of not more than eighty-five cents per ton of two thousand pounds.

It was agreed the agreement would take effect upon the notification of an award by the Tennessee Valley Authority under Requisition No. 23 to plaintiff; and that the agreement would continue in effect for three years or until the agreement or future agreements had been performed.

Mr. W. J. Travis, at the time of the execution of the contract between plaintiff and defendant, was the manager of the mines and properties of the defendant.

Mr. J. C. Kelley was, at the time of the execution of the contract, the chief engineer for the defendant.

Mr. Travis stated in his deposition that he and Mr. Kelley discussed the contract with the Prices and went over the properties with them prior to the execution of the contract. Subsequently, the contract was executed by the parties at the...