Johnson v. Chavies Coal Co.

299 S.W.2d 629
CourtCourt of Appeals of Kentucky
DecidedMarch 1, 1957
StatusPublished
Cited by1 cases

This text of 299 S.W.2d 629 (Johnson v. Chavies Coal Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson v. Chavies Coal Co., 299 S.W.2d 629 (Ky. Ct. App. 1957).

Opinion

SIMS, Judge.

These five cases were .consolidated at the hearing before the trial judge. They were briefed together in this court and all will be disposed of in this opinion.

In the first action,'S. B. Johnson, Cora Johnson, Mary Moore and J. E. Johnson were adjudged a lien in the sum of $1,322.-04 “on the entire assets of the Chavies Coal Company wherever found.” It was further ordered that the “assets still remaining on the Johnson farm, or a sufficient amount thereof, be sold first, and the proceeds applied to the satisfaction of her (Cora Johnson’s) one-fourth interest in this judgment, and also the costs of this action.” The remaining four suits were dismissed at Cora Johnson’s cost, and she appealed.

For a proper understanding of these consolidated actions, it is necessary to here give certain facts relative to the Johnson family and a brief history of the various coal companies involved in this litigation.

Cora Johnson, J. E. Johnson, Sr., S. B. Johnson and Mary Moore were brothers and sisters and joint owners of a farm located at Chavies in Perry County, which will be referred to as the Johnson farm. Mary Moore died in 1946, and was survived by two daughters, Malta Little and Otie Farra. J. E. Johnson, Sr., died in 1950 and his widow, Ada Johnson, is his personal representative. J. E. Johnson, Sr., usually went by the name of Joe and among his survivors is a son, J. E. Johnson, Jr. To save time and space we will refer to these men as Joe and Joe, Jr. We will refer to many of the other members of the Johnson family by their given names.

The Chavies Coal Company, the Blue Grass Mining Company, the Blue Bird Mining Company, the Black Gold Mining Company and the Darb Fork Coal Company will be referred to respectively as Chavies, Blue Grass, Blue Bird, Black Gold and Darb Fork. All of these companies were closed corporations with but few stockholders, consisting mostly of Joe and his family. Cora never owned any stock or interest in any of them.. As we read the record, Joe formed other corporations interested in the coal mining business, one of which, the Johnson Supply Company, was involved indirectly in these consolidated actions.

On February 1, 1917, the joint owners of the Johnson farm leased to the Coneva Coal Corporation for a term of 99 years the mining rights in the farm, reserving to themselves the privilege of cultivating the land. The lessors were to receive a royalty of eight cents per ton but for the-third and successive years the lessee-guaranteed to them a minimum royalty of $2,000 per year, with a lien reserved to-lessors on the lease-hold and equipment, to secure the payment of all royalties. The-lease further provides that “if it shall become permanently impossible with due diligence and capital to carry on said mining-operations on said tract of land with profit,”' the lessee could surrender the lease on-thirty days’ notice.

Coneva mined this property until 1930-when it got into financial difficulties and',. Joe, who was a lawyer, forced it into receivership. Cora testified Joe was not act— [631]*631ing as her attorney in putting Coneva into receivership. The assets of Coneva were appraised at $2,500 and were bid in at the receiver’s sale for $2,000 by Joe, Jr., who transferred them to his father as trustee. The Chavies Coal Company was then organized by Joe and it took over the assets of Coneva which had been transferred to Joe by his son. Chavies bid in $2,300 of equipment at a court sale of the Jackson Block Coal Company’s assets. Joe was surety on Chavies’ note when it purchased this equipment. Some of this Jackson Block Coal Company’s equipment was used in the Chavies mine.

Chavies was operated until 1936, but it lost money and ceased operation that year. The record shows that coal could no longer be mined at a profit by Chavies, and the trial judge so held. The mine and its equipment lay dormant until 1939 when the joint owners of the Johnson farm forced it into receivership, and T. C. Johnson was appointed receiver for Chavies on May 11, 1939, with his bond fixed at $500. Cora also testified Joe did not represent her in this receivership action. It is worthy of note that the receiver did not file a report until December 5, 1951, which was after Cora brought suit to recover her alleged one-fourth interest in the equipment and one-fourth of the reasonable rental value for the use of same. In this receivership action the joint lessors sought to recover from Chavies $1,322 earned royalties, and $6,000 minimum royalties provided for in the lease. This action lay dormant on the docket from 1939 to 1951 without complaint by Cora or any other of the lessors until these present actions were started.

The receiver was unable to operate the mine or to sell the equipment and he seems to have done but little to protect the assets of Chavies. With the knowledge and consent of the lessors he appears to have let Joe take charge of these assets as his individual property. Cora lived in Lexington some 25 years prior to the institution of these actions and while she testified she never constituted Joe her agent to act for her in the coal business from the time the Johnson farm was leased to Coneva in 1917 until his death in 1950, yet she left everything to Joe and S. B. Johnson, her two brothers, and never questioned their actions until she started these suits. While Cora denied she knew of Joe taking over the assets of Chavies, the record convinces us, as it did the trial judge, that she did know it and tacitly approved his action.

The assets of Chavies consisted chiefly of mining equipment which was old, run-down and in need of repairs and was of very little value according to the testimony of ap-pellees. However, the testimony of appellants ■ puts values on it ranging from a monthly rental of $1,500 to a gross value of all equipment at $300,000. Joe used in his other mines such of this equipment as was serviceable and left the rest of it in the Chavies mine. It is not denied that he settled a $15,000 claim against one of his companies by transferring a 10-ton motor to the claimant. But Joe, Jr., testified the motor was valued greatly in excess of its real worth and that it was one of the few pieces of equipment taken by Joe from the Chavies mine that was of much value.

On July 10, 1951, Cora brought an action against Blue Grass in which her complaint averred she has been the owner of one-fourth of the equipment used in its mine since April 1, 1946, and the rental value of this equipment was $200 a month, making her interest in same $50 a month, and she asked recovery of $5,100. In a second amended complaint she attempted to make the receiver, Joe’s executrix and the other joint owners of the Johnson farm parties defendant and she asked that they be required to answer and set up their interest in this equipment. For some reason which we do not understand,1 the trial judge refused to permit them to be made parties, but Cora took no exception to this ruling. Furthermore, Cora’s various pleadings asked no relief against the receiver, the executrix or S. B. Johnson, hence she is in no position to complain about the ruling of the trial court in the matter. ■ Cora [632]*632likewise filed similar suits against Chavies, Blue Bird, Black Gold and Darb Fork in which she sought to recover $50,000. Cora averred her interest in this equipment arose by operation of law and by oral agreement of the parties.

The joint answer of the several appel-lees was a general denial followed by a plea of the five and the ten year statutes of limitation.

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299 S.W.2d 629, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-v-chavies-coal-co-kyctapp-1957.