89 W. Va. 402 | W. Va. | 1921
The decree constituting the basis of the former appeal in this canse disposed of by the decision reported in 85 W. Va., 545, was interlocutory and appealable only because it settled the principles of the cause. From a subsequent decree executing the former one,-by requirements of payment of large sums of money, by the United Pocahontas Coal Company and Worth Kilpatrick, to L. E. Tierney and the Flat Top National Bank, the losing parties have appealed and the others have cross-assigned errors.
For some reason not disclosed, J. A. Armstrong, G-. C. Armstrong, A. Stone and A. D. Rice, associates of Kilpatrick in the sales of the properties of the Zenith and Indian Ridge coal companies to the United Pocahontas Coal Company, complained of by Tierney and the Flat Top National Bank, were excluded from the decree. Right to' any decree at all against the United Pocahontas Coal Company is denied in argument, on the ground that it was a piirchaser for value from the other two companies and had acquired full legal and equitable title to their properties, before this suit was instituted. But, if this position is untenable, then it is urged that the decree should have gone against the two Armstrongs, Stone and Rice as well as the company -and Kilpatrick. The former decree adjudicated liability of the United Pocahontas Coal Company and, as to that adjudication, it was affirmed. Assault upon it is now barred by lapse of time. It was entered May 12, 1919, and this appeal was taken from another decree, May 6, 1921. The limitation is one year. If it had not been appealed from and affirmed, time would preclude this complaint. Barbour, Stedman & Herod v. Tompkins, 58 W. Va. 572. The former decree may be interpreted as having imposed liability, upon the ground of legal or constructive fraud, not actual fraud. It characterizes the transaction as an ‘ ‘ illegal and unlawful merger ’ ’ and ‘ ‘ a fraud on the rights and holdings” of'the plaintiffs,. All of this is consistent with the theory of constructive fraud. In such cases,
Both the commissioner’s report and the decree fix the values of the properties of the Zenith Coal and Coke Company and the Indian Ridge Coal and Coke Company, by adding to the value of the unmined coal in their leases at 10 cents per ton, what are termed miscellaneous and current assets and the physical values of their plants, and then deducting their liabilities. Tierney and the bank complain of the omission of the coal in three undeveloped seams of coal within the leases, estimated by a witness, a's aggregating over 11,000,000 tons. They insist also upon addition of nearly $2,000,000.00 for the estimated present worth of profits derivable from operation of the properties, during the potential lives of the leases. For disallowance of these alleged elements of value, they excepted to the report and here complain of the overruling of their exceptions. They claim the decree should have awarded Tierney $224,242.20 instead of $72,813,40, and the Flat Top National Bank $81,723.43 instead of $27,259.54, including interest. On the other hand, the appellants complain of an allowance of too much tonnage and inclusion of miscellaneous and current assets and physical plant values. They also deny liability for interest and charge a duplication of values in "one instance.
As in almost, if not quite, all eases of ascertainment of prop
Omission of the coal in the three unworked seams was manifestly proper. None of the coal was owned in fee by the two old companies merged into, and consolidated with the new one. They were mere lessees. The value of the coal to them depended upon the mining and marketing thereof. It did not belong to them. They were to pay for it as they should take it out. At the rates at which they had been severing and removing it, there would have been no occasion to touch any of the three omitted seams, within the potential lives of the leases. The No. 3 seam would have furnished more coal than was likely to be mined, and, presumptively, the expense of new openings in other seams would not be incurred under such circumstances. As use of the omitted coal was improbable, it had no appreciable value, for its value was to be found only in utilization thereof.
The probability of profits to arise from the operation of the properties is only a circumstance indicating their value. Not having been earned and being dependent upon future conditions and contingencies, they cannot be accepted as constituting present values in and of themselves. Out of the income, it is necessary to pay the royalties and operating and marketing expenses and return the principal with interest on it, in the case of the purchase of such property. The subject matter of the purchase, the right of mining, is constantly depleted by the operations, and ceases to exist with the exhaustion of the coal or termination of the lease. Besides, it is impossible to say, with any degree of certainty, what per cent, of profits could be realized from mining operations extending over periods of time ranging from fifteen to thirty-eight years. The trial court limited the evidence of probable profits to its proper function, namely, reflection of value in the property and rights of the companies.
In addition to dividends on their stock, amounting to about 6%, Tierney and the bank obtain, as of March 31, 1915, several times the par value of their stock. Tierney’s allowance-on account of his Zenith company stock amounts to more than 600% and those made to him and the bank on account of the other company, amount to more than 1200% of their stock holdings. On the basis here adopted, the plaintiffs obtain results about as favorable as those indicated in Col. Tier-ney’s evidence respecting the earnings of other mining companies in the Pocahontas field, ranging from 650% to 1600%,. over periods of 26 to 29 years of operation.
There is no duplication in the addition of 96%% of the value of the Zenith company to the total value of the Indian Ridge company, for the latter owned that much of the former, and Tierney and the bank were entitled to their percentages out of the entire value of the Indian Ridge company, and Tierney, to his percentage out of the entire value of the Zenith. He and the Indian Ridge company practically owned the Zenith. They owned all of its stock except two shares. Hence, it was proper substantially to divide its property between them.
If one taking the property of another, converting it to his own use and realizing a profit from it, is not chargeable with damages corresponding to the value of the use, he not only escapes liability for full compensation to the injured party, but also profits by his own wrong. Here the defendants may be regarded, upon one view of their status, as having wrongfully taken and used the property of the plaintiffs and derived profit from such use. Upon another, they are constructive, if not actual, trustees using and deriving profits from the property. There is as much reason for requiring them to account for the profits, as for requiring them to restore the property. It may not be accurate to call such compensation interest, but it is not unfair nor unreasonable, as regards them, to measure it by the interest rate or rule. It would be impossible to deny compensation equivalent to interest, under the circumstances here disclosed, consistently with our decisions. Cresap v.
The decree complained of will be so modified as to require payment of the said sums of $38,254.33 to L. E. Tierney and $16,592.30, to the Flat Top National Bank, respectively, together with their costs, by the United Pocahontas Coal Company, Worth Kilpatrick, J. A. Armstrong, G. C. Armstrong, A. Stone and A. D. Rice, with interest on said debts from
Modified and affirmed.