Summit Coal Co. v. Southern Cotton Oil Co.

• Decision Date: 06 February 1928
• Docket Number: No. 5024.,5024.
• Parties: SUMMIT COAL CO. v. SOUTHERN COTTON OIL CO.
• Court: U.S. Court of Appeals — Fifth Circuit

24 F.2d 48 (1928)

SUMMIT COAL CO. v. SOUTHERN COTTON OIL CO.

No. 5024.

Circuit Court of Appeals, Fifth Circuit.

February 6, 1928.

Frank Dominick and A. G. Smith, both of Birmingham, Ala. (Stokely, Scrivner, Dominick & Smith, of Birmingham, Ala., and Ball & Ball, of Montgomery, Ala., on the brief), for appellant.

Leon Weil and R. E. Steiner, Jr., both of Montgomery, Ala. (Steiner, Crum & Weil, of Montgomery, Ala., on the brief), for appellee.

Before WALKER, BRYAN, and FOSTER, Circuit Judges.

WALKER, Circuit Judge.

While all the capital stock of the appellant, Summit Coal Company, a corporation which owned certain coal-mining properties, was owned by the appellee, and when the appellant was indebted to appellee in the principal sum of $136,000, the appellee sold all that stock to D. T. Buell, and thereupon, on February 5, 1921, the appellant executed to appellee a mortgage of said properties to secure said debt, which was divided into installments, payable, respectively, on the 1st day of each month from July, 1921, to November, 1935, each installment to include interest from November 1, 1920. That mortgage contained the following:

"That if said Summit Coal Company should pay said indebtedness as the same matures, and keep and perform all the agreements and undertakings herein contained, then this conveyance to be null and void; but should the Summit Coal Company fail to faithfully and promptly do and perform each and all of said agreements and undertakings herein contained, or should default be made in the payment of any sum herein described, or secured, with interest at maturity, and should said default continue for a period of 30 days after notice is mailed to said Summit Coal Company, then in any one of said events, the whole of said indebtedness shall at once become due and payable, and this mortgage be subject to foreclosure as now provided by law in case of past-due mortgages."

The mortgage contained a provision as to appellant shipping to appellee, until said indebtedness has been paid in full, all steam coal produced from the mines operated by appellant, up to a stated number of tons per year, and as to the appellant accepting and paying for such coal. By a written agreement, made and dated June 20, 1922, each of the parties released the other from the last-mentioned provision of the mortgage. By a written instrument bearing the same date, June 20, 1922, which recited the cancellation of the last above mentioned provision of the mortgage, the parties agreed as follows:

"First. That during the month of May of each year, during the life of the mortgage on the Summit Coal Company property dated February 5, 1921, the Oil Company will offer to buy from the Coal Company its requirements and those of the Refuge Cotton Oil Company (not to exceed, however, 50,000 tons in any one year) of steam coal for the succeeding 12 months for the plants of the said two companies located in the states of Alabama, Mississippi, Georgia, Florida, Louisiana, Tennessee, and Arkansas, at such per ton as the Oil Company may fix for the same.

"Second. If the Coal Company does not see fit to accept the price offered by the Oil Company, the Oil Company shall have the right to purchase coal from other parties and not purchase and/or use Summit coal during such year.

"Third. The Coal Company hereby agrees to reserve for the Oil Company 50,000 tons of steam coal in each year, and until the offer referred to in clause or article `First' hereof has been made by the Oil Company, and the Oil Company hereby agrees to refrain from purchasing its annual requirements up to 50,000 tons of said steam coal in each year until it has made its said offer and same has been refused by the Coal Company.

"Fourth. All offers shall be made by the Oil Company in writing and mailed or delivered to the Coal Company, addressed to Summit, Alabama; all acceptances of such offers shall likewise be in writing and mailed or delivered to the Oil Company, addressed to Southern Cotton Oil Company, Savannah, Ga.; unless within 10 days after the mailing or delivery of such offers the Oil Company shall receive the acceptance thereof by the Coal Company, such offer shall be considered as not having been accepted by the Coal Company and the Oil Company shall have the right of purchasing coal from other concerns, as provided in clause or article `Second' hereof.

"Fifth. Inasmuch as there may be periods during...