Elk Refining Co. v. Falling Rock Cannel Coal Co.

115 S.E. 431, 92 W. Va. 479, 1922 W. Va. LEXIS 63
CourtWest Virginia Supreme Court
DecidedDecember 5, 1922
StatusPublished
Cited by8 cases

This text of 115 S.E. 431 (Elk Refining Co. v. Falling Rock Cannel Coal Co.) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elk Refining Co. v. Falling Rock Cannel Coal Co., 115 S.E. 431, 92 W. Va. 479, 1922 W. Va. LEXIS 63 (W. Va. 1922).

Opinion

MeRedith, Judge:

Plaintiff, Elk Refining Company, appeals from two decrees of the Circuit Court of Kanawha County, sustaining demurrers to its original and. supplemental bills o-f complaint and dissolving and refusing to reinstate and make permanent a temporary injunction theretofore granted.

As shown by the pleadings, plaintiff is and has been since 1913 the owner and operator of a plant for the refining of petroleum and petroleum products. This refinery is located on lands formerly leased from the defendant Coal Company but now owned by plaintiff. Defendant Company is the owner of 3,000 acres of oil and gas lands in Big Sandy .District, and is producing large quantities of oil and gas therefrom. On May 21, 1913, defendant, in order to facilitate the profitable marketing of its oil and gas, entered into a contract with H. A. Logan and Pred G-. Bannerot, by the terms [482]*482of which, defendant agreed to sell to Logan and Bannerot and they agreed to buy, for a period of ten years, 10,000 barrels of crude oil each month, provided defendant should produce that amount, and Logan, and Bannerot on their part agreed to erect and operate on lands leased to them under the contract an oil refinery of the capacity of at least 10,000 barrels per month.- Defendant further agreed to furnish the gas necessary to be used in connection with the refinery at the price of five cents per thousand feet. As was contemplated under other provisions of the contract, the plaintiff corporation was subsequently organized and the rights and obligations of Logan and Bannerot under the contract were, with the assent of defendant, assigned to it.

Plaintiff erected the refining plant; enlarged and extended it from' time to time until its capacity greatly exceeded 10,000 barrels per month; refined, as was agreed, and at the price agreed, all the crude oil furnished by defendant; and bought the gas supplied by the defendant for the operation of the refinery at the stated price of five .cents per thousand feet. There was no apparent objection on the part of either party to the acts of the other in carrying out the contract until March 25, 1922, when the secretary of the ■ defendant company notified the plaintiff by letter that in the future, in fact for that month, plaintiff could expect but 10,000,000 feet of gas per month, ‘‘in order to comply with the contract.” Plaintiff, maintaining that under the contract it was entitled to all the gas it required to operate its refinery, provided defendant had it to furnish, instituted this suit, praying in its bills of complaint that defendant be restrained from limiting its supply of gas to 10,000,000 feet per month, and from shutting off the supply as was threatened in defendant’s letter, and further, that defendant be expressly required to furnish all necessary gas in accordance-with the terms of the contract. As heretofore stated, plaintiff secured a temporary injunction, which however was dissolved when the demurrer to the original bill was sustained, and which was denied reinstatement when a demurrer to the supplemental and amended bill was also sustained.

Although elaborated in the briefs, there are but two issues [483]*483presented: First, Has equity jurisdiction to afford the relief asked? and, Second, Under the contract of May 21, 1913, is defendant required to furnish all the gas necessary for the operation of plaintiff’s plant, or, may it limit this supply to the amount required for the refining of 10,000 barrels per month; it being expressly stipulated in the contract that in ease defendant becomes unable to furnish that amount of oil, the buyers (that is to say, the plaintiff) could supplement the supply from outside sources? Should the first query be answered in the negative, it would- of course be unnecessary to consider the second.

First. Has equity jurisdiction to grant the injunction? Plaintiff confidently asserts that it has; defendant with equal assurance says it has not. This is an injunction to restrain the alleged breach of a contract, a proceeding which Pomeroy terms (Equity Jurisprudence, 2d ed. See. 1341) “A negative specific enforcement of that contract.” Analyzing the court’s jurisdiction in treating of such proceedings, the same author continues: ‘ ‘ The jurisdiction of equity to grant such injunction is substantially coincident with its jurisdiction to compel a specific performance.” Since in this case, the prayer is for mandatory relief as well, plaintiff both impliedly and directly subjects itself to the rules of equity governing specific performance. “The universal test of the jurisdiction, admitted alike by the courts of England and of the United States, is the inadequacy of the legal remedy of damages in the class of contracts to which the particular instance belongs.” Pomeroy, supra. The application of this universal test is the chief source of difference between counsel here. Counsel for plaintiff aver the inadequacy of the relief at law, citing cases to support their position. Counsel for defendant take the opposite view, and rely upon two cases decided by this court.

In the first of these, United Fuel Gas Co. v. West Virginia Paving Co., 74 W. Va. 484, 82 S. E. 329, plaintiff, a public service corporation, contracted to sell, and defendant, a manufacturer, agreed to purchase, gas at a stated price for a period of three years. During the term provided, defendant ceased using plaintiff’s gas, and purchased from [484]*484another company. Plaintiff instituted suit for specific performance and the court, in denying the relief prayed for, held that the plaintiff’s right of action at law for damages was “adequate and complete.”* In the other, Warren v. Coal Company, 85 W. Va. 684, 102 S. E. 672, plaintiff, the buyer, and one of the defendants, the seller, entered into a coal sales contract, for the salé and delivery of coal during a stated period. The seller became involved financially and did not deliver the coal as. agreed. The suit was instituted against the seller and its alienee to compel performance, which relief was denied by this court. These cases, the defendant argues, are in point with the case at bar. We cannot agree with the application. To use the language of the ease first cited, the' contracts in both eases were “for the sale of a common article of commerce at a fixed price, ’ ’ and, as stated, there was in neither ease any good reason why the plaintiff could not obtain complete compensation in damages. These cases were governed by the well settled principle that equity will not, in general, decree the specific performance of contracts concerning personal property, its value being ascertainable at law. There are instances, however, where because of some special or peculiar value of the subject matter, equity will assume control. We agree with counsel for plaintiff that the present case is such an instance. In the first place, the bill shows that the plaintiff invested $300,000 in a refining plant, so constructed as to be dependent upon gas for fuel; that it has purchased tank cars of considerable value; that it has contracted for extensive purchases of crude oil, in fact, for deliveries of 7500 barrels per week; that it has installed an' elaborate fire protection system requiring gas for its operation; that, assuming plaintiff’s construction of the contract to be correct, the defendant agreed to supply this gas from its wells located in the vicinity of the plaintiff’s plant; and that defendant now has an abundance of gas available for that purpose.

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Bluebook (online)
115 S.E. 431, 92 W. Va. 479, 1922 W. Va. LEXIS 63, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elk-refining-co-v-falling-rock-cannel-coal-co-wva-1922.