Shaver v. Consolidated Coal Co.

151 S.E. 326, 108 W. Va. 365, 1929 W. Va. LEXIS 233

Opinions

Litz, Judos:

The plaintiff, Clement L. Shaver, obtained a verdict and judgment for $251,853.85 against the defendant, The Consolidation Coal Company (plaintiff in error), for services rendered by him to the corporation as broker in effecting the lease of coal lands, owned by it, to J. A. Paisley “for and during the term of years necessary to excavate, mine and remove all of the coal in the leased premises.”

-The verdict and judgment is based upon an alleged oral agreement of January 18, 1923 (the day before the lease was executed), between C. W. Watson, as president of the defendant, and Shaver, in which the former agreed to pay the latter 5% of the value of the lease fixed at a sale price of the property of $500.00 per acre. The defendant admitted that plaintiff was to receive a commission of 5%, but contended, according to the testimony of Watson, that it was to be paid out of the rental installments, when and as received by the defendant. It also plead, and offered evidence to prove, as a bar to the action, that the plaintiff, without its knowledge, had represented Paisley for hire in the transaction.

Watson employed Shaver in the summer of 1920 to procure a purchaser for a tract of 11,720 acres undeveloped coal lands, belonging to the defendant, in Monongalia county. Having been intimately associated in a -business way and otherwise for many years, they were, at that time, apparently in the complete confidence of each other. Shaver, after ascertaining that a coal mining company, controlled by Paisley, owned adjoining lands, inquired of him by letter whether he would be interested in the purchase of the 11,720 acre tract. Whereupon, Paisley wrote Watson inquiring if Shaver had authority to negotiate the sale. -By letter dated September 21, 1920, Watson replied: “I have yours of the 13th instant enclosing communication from Mr. Shaver. Any sale of property made by The Consolidation Coal Company will have to be approved by the directors before it becomes binding, but I have no doubt they will carry out any deal made by Mr. Shaver.” On receipt of this advice from Watson, Paisley answered Shaver, stating that he was interested in the proposition. Negotiations between Paisley and Shaver, immediately initiated, • and continued by personal interviews, telephone conversations and interchange of letters, resulted in an option from the defendant, dated October 27, 1920, granting Paisley the right for sixty days to purchase the 11,720 acre tract and four other parcels of developed coal lands, owned by it, in Monongalia, Marion and Harrison counties, for a consideration of $6,436,700.00, 10% of which to be paid in cash, and the remainder in quarterly installments of $150,000 each with interest at 6%. oThe option was renewed for a further period of ninety days, but owing to a depression in the coal market, the right to purchase was not exercised., and further negotiations between Paisley and Shaver were suspended awaiting favorable developments in the coal business. December 6, 1920, while the option to purchase was pending, Shaver wrote Paisley: “Your wire did not connect at New York and just this morning received, though I had sent you a letter practically covering the same subject matter. Now, before asking this, we better have a conference and go over it fully. I do not want to fail, and the lack of authority or rather the timidity of calling a meeting of the directorate of Consolidation may interfere somewhat. I ami willing lo go my limit when you really need and must have it. I think you understand that.”

Paisley, being approached again on the subject by Shaver in August or September, 1922, indicated a desire to lease the property. September 15th, Shaver again wrote Paisley: “Since thinking of the matter we were discussing yesterday, it seems to me it would be well to look at the terms of the agreement we last had on this subject and adopt the rate of interest therein. You remember that we had considerable struggle then on that point and doubt it advisable to try to change it. Make your computations on a twenty-five year basis with as fair a cash payment as you feel you can stand. I suggest that you try to include the little plant on the Monongahela Diver Eoad, though I am doubtful about your getting it. Think I would make up my figures both waygf with the operations, and for the bare acreage withQU-tthe operations. You may remember that we starteéKinto deal last time on acreage and four plants; the-^one above discussed, the one at the edge of the towii” on the same road containing 82 acres, the onejjt Ltihiberport 700 plus acres and a small fuel plant on the Short Line at Clarksburg. This latter plant has been disposed of, it could not be had. You might return to the original proposition and in lieu of this plant, demand the one at the edge of town of 82 acres, be included. I merely make this suggestion for your benefit. What I am more anxious about than anything else is that there be no disposition on their part to jump the price and I don’t believe'there will be, but there is and has been some-provocation about it. One party'tried to get it at $600. An other party had just asked them $600. for coal of about equal quality and depth. The very earliest date that we can take this up in a definite way is the best date. You can communicate with me at Fairmont and I will keep your office advised of any change in my whereabouts.” Further negotiations between them ensued, resulting in an option from the defendant to Paisley, dated November 2, 1922, granting him the right until March 1, 1923, to lease the 11,720 acre tract upon the following terms: $500,000.00 to be paid as advanced royalties on the execution of the lease; $269,696.59 at the end of the first year; and the balance in 156 quarterly installments of $90,000.00 each; the lessee being also required to pay all taxes on the leased premises. This, as well as the option to purchase, was executed by Watson in the form of a letter to Paisley after a conference at the time with Shaver at the office of defendant in New York. Referring to the option of November 2, 1922, Shaver wrote Paisley on the same date, stating: “This paper will give you a very good working basis for your future efforts in the matter.” November 15th, he again wrote Paisley.: “In order that there may be no confusion about all this, I return the paper signed by you, as I had not forwarded it to Watson, and in lieu thereof write him a letter about as above draft and mail direct to him at once.” The draft of letter prepared by Shaver for Paisley to send Watson follows: “C. W. Watson, President, Consolidation Coal Company, New York City. The option to lease the 11720 acres of Pittsburgh coal known as Penmont field in Monongalia County, W. Va., you so kindly sent me at the instance of Mr. Shaver was duly received and I thank you for same. I find I have overlooked until now acknowledging the receipt of the paper though my office had wired Mr. Shaver and I had personally consulted him by phone in reference to the matter. I want to express my regret at this seeming negligence on my part. I am greatly interested in this matter and hope by the time specified therein that I may be able to exercise this option and take the property. Will keep you advised from time to time relative to matter.” Negotiations between Paisley and Shaver continued, and about January 8, 1923, after Paisley bad announced Ms intention to exercise the option; they met at the office of the defendant in New York, where and when Shaver introduced Paisley to Watson, and the proposed lease was further discussed. The three met again at the same place on January 18th for final agreement between Paisley and the defendant, the main questions remaining to be settled being the rate of interest to be applied in calculating the periodic royalty payments on a valuation of $500.00 per acre for the lands, and the security to be provided by the lessee for performance on his part. These two questions were adjusted by fixing the rate of interest at 5%, and permitting Paisley to relieve himself of all obligations under the lease by assigning it to a corporation which he might cause to be formed under the laws of West Virginia with a paid-in capital stock of at least $600,000.00 and which should contemporaneously with the assignment legally assume the performance of such obligations. Paisley and Watson were slow to reach an agreement on the rate of interest. The latter demanded 6% while the former insisted on 4%. They were in separate rooms while attempting to agree, with Shaver passing back and forth conferring first with one and then the other.

The deed of lease from the defendant to Paisiey, dated January 19, 1923, leasing the tract of 11,720' acres of undeveloped coal lands in Monongalia county and two other parcels in Marion and Monongalia counties which were then being operated for coal, required the lessee to paj^ to the lessor as royalties, $87,584.69 upon the delivery of the instrument, $87,584.64 June 25, 1923, and each three months period thereafter until the sum of $14,013,550.40 shall have been paid. It further required the lessee to pay the taxes on the leased premises, and to expend in the development of the property $200,000.00 during each of the years ending March 1, 1924, March 1, 1925, March 1, 1926 and March 1, 1927. The rights of the lessee were subject to forfeiture for failure to comply with certain terms of the lease. The consideration and terms of payment were calculated upon a basis of $500.00 per acre for the lands, with interest at 5%. The lessee was permitted to relieve himself of all personal obligations by assigning the lease to a corporation, in accordance with the said previous agreement of the parties. The lessor was required, upon payment in full by the lessee of the rents, royalties and taxes, to convey the lessee its title to the lands.

The Morgantown Gas Coal Company, a corporation, thereafter formed, at the instance of Paisley, with paid-in capital stock of approximately $600,000.00 was, by formal agreement between itself and the lessor, substituted as lessee as of the date of the original lease. The lessor consented to a postponement of time for the beginning of improvements on the property, and, by writing dated December 1, 1926, waived the royalties for 1926, 1927 and 1928. According to the books of The Morgantown Gas Coal Company, the lessee has paid as royalties and taxes, and expended in improvements on the leasehold premises, the following sums of money:

ROYALTIES

Jan. 20, 1923. .$ 87,584.69

June 25 . 87,584.69

Sept. 25 . 87,584.69

Dec. 25 . 87,584.69

Mar. 25, 1924. . 87,584.69

June 25 . 87,584.69

Sept. 25 . 87,584.69

Dee. 25 . 87,584.69

Mar. 25, 1925. . 87,584.69

June 25 . 87,584.69

Sept. 25 . 87,584.69

Dee. 25 . 18,213.66

Mar-. 25, 1927. . 30,000.00

June 25 . 30,000.00

Sept. 25 . 30,000.00

Dec. 25 . 30,000.00

July 31, 1928. . 34,246.95

July 25 7,428.02

Aug. 25 7,026.72

Aug. 25 7,203.89

Sept. 25 5,654.46

Sept. 31 7,740.91

Total.$1,170,946.20

TAXES

1923.;. $38,484.19

1924. 47,055.92

1925.■ 53,551.33

1926. 58,317.31

1927. 56,097.00

Total. $253,505.75

IMPROVEMENTS

$403,575.05

No one witnessed tbe agreement between Watson and Shaver fixing the amount and terms of payment of Shaver’s commission, which was entered into at the office of the defendant in New York, January 18, 1923. Shaver stated his version of the contract as follows: "Senator Watson stepped out the door and I was sitting in a chair on the outside, about two or three steps away,. I think the board was inside, I presume meeting, he said will 5% satisfy you? I said it will provided it is paid to me over a period of eight to ten years, provided it is all paid within a period of eight or ten years. He said let it run along for two or three years and if it is all right, we will pay it all to you if you want it.” Watson, denying that the commission was to be paid absolutely, testified that Shaver was to receive 5% of the respective royalty installments as and when paid. A resolution was adopted by the board of directors of the' defendant on the day of the agreement fixing the amount and terms of payment in accordance with the testimony of Watson, the contents of which, Watson said, were known to Shaver by reading the resolution himself, hearing it read by the witness or it being discussed by both.. Shai^er denied knowledge of the resolution and further stated that on the 19th of January he requested of Sprig’g’ D. Camden, a vice-president of the defendant, a copy of any resolution entered by the board of directors with reference to his commission, but was told by Camden that the resolution “was not ready or had not been prepared”; that he made a similar request of Camden some time later with like result, and was not furnished a copy of the resolution in question until May 7th. Camden does not testify. Watson testified also that a resolution was adopted by the board of directors of the defendant at the time the option was granted to Paisley to purchase the property fixing the commission of Shaver at 5% of the respective purchase price installments. The court, however, refused to admit this resolution in evidence over the objection of the defendant. Shaver denied that there was any agreement concerning his commission under the option of sale.

From January 19, 1923, to March 25, 1927, Shaver accepted 5% of the royalty installments when and as received by the lessor as payments on his commission, aggregating $50,319.90, executing in each instance a formal receipt for the amount of payment. The receipt for the first payment, the form of which was adhered to in the subsequent receipts, follows:

“THE CONSOLIDATED COAL COMPANY

INCORPORATED

New YorK, N. Y.

To S. L. Shaver, Dr.

Fairmont, W. Va.

Ileg. in month of January 1923.

For the following amounts as per bills rendered.

Jan. 19 for commission on first quarterly royalty payment in connection with the J. A. Paisley lease, 5% of $87,584.69— $4,379.23.

Certified correct.

E. A. Friend, Accountant.

Approved for payment.

A. M. Bowles, General Atiditor.

Forty three hundred seventy nine and 23/100.Dollars

In settlement of the above account.

Receipt attached.

.192.

Place Date

Do not detach receipt from voucher. Please date, sign and return if satisfactory, if not, return for correction.

New York, 19, 1923.

Received from The Consolidation Coal Company $4,379.23 being 5% of $87,584.69 as commission on first quarterly royalty payment in connection with the J. A. Paisley lease.

C. L. Shaver.”

On March 3, 1923, H. H. Snoderly, assistant secretary of the defendant, mailed the plaintiff a memorandum of agreement, in duplicate, executed by the defendant, fixing the commission of Shaver at 5 %. of the respective royalty installments when and as received by the lessor, with the request that he sign and return one of the copies. Shaver refused to sign the paper, and in his letter of March 25, 1923, so advising Snoderly, said: “Yours of the 3rd instant enclosing proposed contract between your Company and myself relative to commission allowed me on Paisley matter therein discussed received, and also yours of the 13th instant relative to same matter. Now, after a careful consideration of this matter as set forth in the xoaper you have enclosed, signed by S. D. Camden, Vice President, and yourself Assistant Secretary of said Company, under date of March 3, 1923, it occurs to me that perhaps the contract is a little more one sided than is fair to me. Inasmuch as I advanced the price of the property mentioned in said Paisley lease from the Consolidation from $400.00 per acre to the basic price of $500.00 per acre, in all an advance of $1,000,000.00, that my future position in the matter ought to be a little more clearly defined than this paper sets forth, as I feel that so long as that advance in price of a little more than $1,000,000.00 stays in any future negotiations on said property that my rights should in no wise be set aside. Therefore, I am returning the paper unsigned witli the idea that we may at a'later date discuss the matter more fully.

Very truly yours.

C. L. Shaver.”

In his deposition taken in New York April 10, 1928, at the instance of the defendant, Paisley testified to various concessions obtained by the lessee from the lessor with the assistance of Shaver after the execution of the lease, including the waiver of royalties for 1926, 1927 and 1928. The deposition of Paisley, taken by the plaintiff in Cleveland, Ohio, November 5, 1928, was also introduced by the defendant. In this deposition, after detailing the negotiations between himself and Shaver, resulting in the lease, he was asked: “Now, for this work that Shaver was doing, that you have told in your main examination and you have told about in your cross-examination, did you have any agreement with Mr. Shaver, the plaintiff, about paying him?” He replied: “I did.” He further stated that such agreement was evidenced by the following writing: “Mr. C. L. Shaver, Fair-mont, West Virginia. Dear Sir: Referring to the deal recently closed between ourselves and The Consolidation Coal Mining Company for the lease of their Penmont properties together with mines No. 93 & 45. This is to certify that you or your heirs are to receive $750.00 per quarter for forty (40) quarters, no interest, for services rendered. The first quarter to start as of March 1st, 1923. Inasmuch as the March 1st payment was made to The Consolidation Coal Mining Company yesterday, we enclose you check herewith for $750.00, being the March 1st payment. It being further understood that this letter signed by myself is no way to be a contingent liability so far as I am personally concerned but that I am obligated to see that this agreement is to be made a part of the new Company which is to be organized to take over this field of coal. This letter written in duplicate and your acknowledgment on one copy to be returned to me to complete our understanding’.

Yours very 'truly,

J. A. Paisley.-

Accepted: C. L. Shaver

Jany 22-1923.”

It appears that this paper was dictated by Paisley to a stenographer in the presence of Shaver on the day, and immediately after, the lease was executed; and that Shaver inserted the words “or your heirs” in the rough draft before the instrument was re-written and signed. Payments were made by Paisley to Shaver, as provided therein, until March 3, 1928. Denying that Paisley had agreed to pay him, or that he had received from Paisley any sum for services rendered him prior to the execution of the lease, Shaver testified that the quarterly payments were agreed upon as compensation for services to be rendered by him for the benefit of Paisley or the lessee, and that in pursuance, of such agreement he had rendered valuable services to Paisley and The Morgantown Gas Coal Company in securing the various concessions from the lessor and performing other acts in connection with the lease. In corroboration of his testimony on this point, the plaintiff introduced, over the objection of defendant, a letter from Paisley to himself, dated April 10, 1928, reading’: “It is to be'regretted that conditions have changed so that the writer has not been able to carry out the lease with The Consolidation Coal Company. I feel that the contract with you, namely $750 per quarter for forty quarters was for services which you were to render from time to time in working out between us and Consolidation the necessary adjustments which would enable us to carry on. Now the question of payments of commissions you were to receive from The Consolidation Coal Company, being brought in the courts through suit brought by you has certainly closed the door, for further negotiations in our behalf through you. We also call your attention to the fact that you consulted the Consolidation people and Attorney Tusca Morris in behalf of ns to the end that they were to pay Judge Cox's fees in connection with the mining rights in the suit brought by the Continental Coal Company, his fees being one-half of $35,000.00. Won’t you kindly advise how this matter now stands ? I attach you herewith letter dated April 9th, written to Mr. Snoderly, whereby you will note we are obliged to run for cover. I feel in this connection that our Company's obligation with you should also cease. I would have liked, to have had the door kept open trading up and down until matters would adjust themselves. Might it be that your bringing suit has worked the opposite from our understanding and your employment with us.

Yours very truly,

The MorgaNtowN Gas Coal Company By J. A. Paisley.”

The plaintiff adduced the testimony of nine witnesses to show the reasonable value of his services, which was later excluded by written instruction to the jury. Watson testified that practically all of the terms of the lease were worked out between Shaver and Paisley before he met Paisley; that lie relied very largely upon the judgment of Shaver, who was entirely in the confidence of the defendant, and, to the extent that any agent could act, had full authority in the premises, lie answered in the. affirmative, however, a question on cross-examination as to whether he dictated the terms that should be proposed to Paisley from time to time. The following questions and answers appear in the direct examination of Shaver: “Q. You have been shown certain letters exchanged between you and Mr. Paisley while these various negotiations were on. The first being- dated December 6, 1920, the second September 15, 1922, and the last November 15, 1922, in which you offered him advice in reference to this transaction. What was your reason for writing those letters 1 A. Trying to bring their minds, the minds of these people together, to bring about the sale of the coal. Q. In one of those letters vou advised Mr. Paisley there was talk of an offer of $600.00 an acre for this coal from other corporations. What was your reason for advising him that? A. I presume' now to prompt him, if he wanted the property, to take it. Q. In other words, you were warming up the purchaser, is: that it ? A. Truly. ’ ’ He also denied in this connection that he was representing, or had received any compensation from,. Paisley in the transaction.

In support of the writ, the defendant contends: (1) That the verdict is not warranted by the evidence; (2) tliat the' plaintiff, having accepted as payments on his commission 5% of the royalty installments when and as received by the defendant for a period of four years, is estopped to assert a different basis of payment; (3) that the evidence tendered by plaintiff show the reasonable value of his services in negotiating the lease was improperly admitted; (4) that the jury were improperly directed in two instructions tendered by the plaintiff; (5) that the court committed reversible error in refusing instructions Nos. 3 and 5 offered by the defendant; (6) that the resolution adopted by defendant’s board of directors October 27, 1920, authorizing the option to Paisley to purchase the property and fixing the amount and terms of payment of plaintiff’s commission, should have been admitted; and (7) that the letter of April 10, 1928, from Paisley to Shaver was incompetent evidence.

Under the first assignment it is argued that the testimony of Watson concerning the contract is confirmed by the admitted facts and circumstances, chiefly among which, are the letter of Shaver, dated March 25, 1923, refusing to sign the contract in writing without stating his understanding of the parol agreement, and his acceptance by formal receipt over a period of four years of 5% of the royalty installments as payments on commission. It is true that these and other circumstances relied on by defendant may be considered as strengthening the testimony of Watson. They are not, however, in our judgment, of such conclusive character as to overthrow the verdict.

In considering the question of estoppel, it would seem to be a fair inference from the plaintiff’s statement of the agreement that he was to be paid the percentage of his commission from the royalty installments as received by the lessor for at least two or three years and as long thereafter as he did not demand full payment, although the lessee had performed satisfactorily to the lessor during the first “two or three years. ’ ’

As the plaintiff sought to recover both on special contract and quantum meruit, the admission of evidence tending to show the reasonable value of his services, which was excluded after the evidence of both parties on the special contract had been presented, is not error.

Only two instructions were given in behalf of the plaintiff, each of which is complained of by the defendant.

Plaintiff’s instruction No. 1. “The Court instructs the jury that if you believe from a preponderance of all the evidence in this case that the defendant, being the owner of the coal and other propertjr mentioned in the declaration, employed the plaintiff as a broker to find, procure for and produce to the defendant a purchaser or lessee for the said property, upon terms and at a price to be agreed upon between the defendant and such purchaser or lessee; that the plaintiff found, procured for and produced to the defendant as such purchaser or lessee, one James A. Paisley; that the defendant accepted said Paisley as such purchaser or lessee, and executed to him the instrument filed as plaintiff’s exhibit No. 9; then the plaintiff’s contract with the defendant as such broker was fully performed and he was entitled to compensation for the services rendered; and unless the jury shall find from the evidence that the plaintiff and defendant had expressly otherwise agreed, the plaintiff’s right to receive such compensation would not be impaired by any subsequent default on the part of said Paisley or of the Morgan-town Gas Coal Company as Ms successor in title.”

Plaintiff’s instruction No. 2. “The Court further instructs the jury that if they believe from a preponderance of all the evidence in this case that the plaintiff, in assisting to bring about -the lease or sale from the defendant to one James A. Paisley of the property mentioned in the declaration herein, and without knowledge of the defendant, rendered certain services on behalf of the said Paisley, with the understanding that he would receive compensation therefor from said Paisley, and did in fact alone will not bar plaintiff’s right to recover in this suit compensation from the defendant for his services as defendant’s agent or broker in the same transaction, provided, you further believe from a preponderance of all the evidence that the plaintiff in said transaction was ■a mere middleman, whose duties and authority, as regards both parties, were limited to bringing the defendant and said Paisley together, and that he had no duty or authority from either to fix or determine price or terms.”

The main points of criticism are that instruction No. 1, which is, in effect, a binding charge, ignores the defense of dual agency, and instruction No. 2 incorrectly defines a “middleman”. A binding instruction in behalf of the plaintiff which ignores a material defense supported by substantial proof is erroneous. Blackwood v. Monongahela Valley Traction Company, 96 W. Va. 1; Frank v. Monongahela Valley Traction Company, 75 W. Va. 364. The error is not corrected by an instruction in behalf of the defendant properly .submitting- the issue.

Instruction No. 2, in effect, told the jury that no matter what services Shaver may have rendered in behalf of Paisley for which Paisley agreed to pay him compensation, he is not •thereby barred from recovering against the defendant, if his “duties and authority, as regards both parties, were limited to bringing the defendant and said Paisley together, and that he had no duty or authority from- either to fix or determine price or terms.” This is plainly an incorrect statement of the law. It is much more important to know what Shaver actually did in attempting to advance the interest of “both parties”, than his actual duty or authority in the premises. “It is the rule of law that, except with the free and intelligent consent of his principal, given after full knowledge of all of the circumstances, the agent cannot in the same transaction, act for his principal arid the adverse party. If, therefore, without such consent, the agent undertakes to also serve the other party in the same transaction, he •commits such a breach of his duty to his own principal, and so violates the rules of sound policy and morality, that he forfeits all right to compensation from the principal who first employed him.” Mechem on Agency, Vol. 1, page 1190. “Inasmuch as a broker is in duty bound to refrain from secretly undertaking to represent interests adverse to those of his employer, it is unlawful for him to attempt to act in the capacity of broker for both sides to a negotiation without the knowledge and consent of each of them, and in the event of his doing so he is not entitled to be compensated by either.” 4 R. C. L., page 328. “This rule applies whether or not the principal is prejudiced by the double agency, and even though the transaction is advantageous to him.” 9 C. J., page 567. The authorities are practically unanimous in holding that there is one notable exception to the rule, “ and that is to the effect that a broker employed as a mere middleman, or in other words, one engaged not to negotiate a sale or purchase, but simply to bring two parties together and permit them to make their own bargain, may recover an agreed compensation from either or both, though neither may know that compensation is expected from the other. A broker is simply a middleman, within the meaning of this exception, when he has no duty to perform but to bring the-parties together', leaving them to negotiate and come to an agreement themselves without any add from him. If he takes, or contracts to take, any part in the negotiations, however, he cannot be regarded as a mere middleman, no matter how slight a part it may be.” 4 R. C. L., page 330. “Where an agent is representing two or more principals of divergent and opposing interests, and from the nature of his employment they are entitled to his judgment, discretion or personal influence, he will not be permitted to act unless with their full knowledge and consent.” McDermott et al. v. Fairmont Gas & Light Company et als., 88 W. Va. 692, 706. There is little effort on the part of counsel to justify the instruction. They insist, however, that the evidence was insufficient to warrant the submission of the issue of dual agency, and that the instruction, even though incorrect in form, could not, therefore, -have prejudiced the rights of the defendant.

Defendant’s instruction No. 3, refused. “If you believe from the evidence that the plaintiff and the defendant en tered into a verbal contract by which the defendant was to compensate the plaintiff for his services by paying him five per cent (5%) on the rents or royalties when and as received by the defendant, and further to pay to the plaintiff within two or three years after the 19th day of January, 1923, or at a reasonable time after said date, a further sum representing 5% on royalty payments thereafter to accrue, provided James A. Paisley or the Morgantown Gas Coal Company as his successor should substantially keep and perform the terms, covenants and conditions of their lease from The Consolidation Coal Company; and if you further believe that at the end of three years from the date of said lease the said Morgantown Gas Coal Company as lessee had become and persistently remained in default in the performance of the terms and conditions of said lease and owed the defendant $213,798.42, or other large sums of rent which it failed to pay, and failed and omitted to make investments of a permanent nature upon the leased premises as required by the contract; then and in such event you should not find for the plaintiff more than the unpaid balance of five per cent (5%) of the royalty payments actually received by the defendant prior to the institution of this suit.” According to the records of the defendants, the lessee was in arrears about $150,000 for royalties, in addition to the accumulated interest on overdue installments, while the books of the Mor-gantown Gas Coal Company show an arrearage as of that date of about $70,000. The taxes on the property had been paid by the lessee and the construction of the shortage in improvements deferred by consent of the lessor. Under this instruction the jury would have been compelled to find from the delinquency in royalties disclosed by the books of the Morgantown Gas Coal Company that the lessee had not substantially performed the terms, covenants and conditions of the lease. This, in our opinion, was not such omission as to justify the legal conclusion of failure on the part of the lessee to substantially fulfill the requirements of the lease for “two or three years”.

Defendant’s instruction No. 5, refused. “The jilry are further instructed, that if they find that shortly after the 19th day of January, 1923, it developed that the plaintiff and the defendant were not in the agreement as to the proper meaning and interpretation of the contract between them for the plaintiff’s compensation and if the defendant' advised the plaintiff of the exact nature of its interpretation of said contract by submitting a written form thereof to him for signature which written contract the plaintiff rejected and if thereafter with knowledge of the exact nature of the contract as claimed by the defendant, the. plaintiff accepted compensation or commissions and received receipted vouchers therefor without protest, or without • protest except in one particular, the plaintiff by his conduct has estopped himself to deny the propriety of the defendant’s interpretation of the •contract except in so far as, in receipting said vouchers he •expressly dissented therefrom, and then only to the extent of his dissent.” The facts recited in this instruction, as we have already stated, although proper to be-considered by the jury as corroborating Watson, cannot be accepted as conclusively estopping the plaintiff from relying on his version of the contract.

It is established, as a general rule, that self-serving statements in the records of a corporation cannot be adduced by it in support of its claims against a stranger. The particular record, however, might be competent if assented to by the adverse party as the memorandum of a transaction between himself and the corporation. The testimony of Watson that he had, before its adoption, discussed with Shaver the resolution of October 27, 1920, and later advised him that it had been adopted, is not sufficient, in our opinion, to warrant its admission under the exception to the rule, in view of the inability of Watson to state definitely that he had called the •attention of Shaver to that feature of the memorial fixing Ms commission and terms of payment.

The letter from Paisley to Shaver, dated April 10, 1928, was admitted without laying the foundation. This was error. It was purely hearsay, self-serving to the author, and inadmissible under any exception to the rule.

From the foregoing recital and conclusions it remains to be •determined whether the defendant was prejudiced by the erroneous rulings of the trial court in granting tlie plaintiff’s instructions, and admitting the letter of April 10, 1928. It is insisted that no legal injury resulted to the defendant because (1) there was not sufficient evidence to carry to the jury the issue of dual agency, and (2) that the erroneous instructions were cured by proper instructions given on behalf of the defendant.

. The majority of the Court, after thoroughly considering the record, are unable to say as a matter of law that Shaver acted merely as a “middleman”, or that'no relation of em: ployment existed between him and Paisley prior to the execution of the lease.

As already indicated, plaintiff’s instruction No. 2 positively and completely presents his theory of the law governing the defense of dual agency, and is, therefore, in the opinion of the majority of the Court in conflict with defendant’s instructions Nos. 9 and 10 on the same issue, correctly stating the law. Generally, a complete positive instruction incorrectly stating the law governing a material point is not cured by another inconsistent instruction properly presenting the law applicable. Stuck v. Kanawha etc. R. R. Co., 76 W. Va. 453. “A bad instruction is not cured by a good one given to the jury, and with which it is in conflict.” State v. Garner, 97 W. Va. 222. Judge Miller, speaking for the Court in that case, said: “ It is true that an incomplete instruction, one which does not state the law fully, may be cured by other instructions given, and the defective one thus made whole, but a positively erroneous instruction, which may mislead the jury to the prejudice of the party affected, will not be cured by a good instruction. ’ ’ He also stated in the same opinion: “The reason for this salutary rule is that the court cannot tell which of the instructions the jury regarded, whether the good or the bad one, to the prejudice of the party affected thereby.” Plaintiff’s instruction No. 1 has been sufficiently considered.

For the reasons stated, the judgment will be reversed, the verdict set aside, and a new trial awarded the defendant.

Judgment reversed; verdict set aside; new trial awarded: