Wheeling Creek Gas Coal & Coke Co. v. Elder

DAYTON, District Judge (after stating the facts as above). Were these causes properly removable to this court? 1 think so. The facts are very similar to those involved in Elkins v. Howell (C. C.) 1-10 Fed. 157, where, after careful consideration of the question, I held that: ‘Tn a suit by a purchaser to enforce specific performance of a contract for the sale of lands against the vendor and grantees, to whom lie conveyed the land subsequent to the contract with complainant, but before it was recorded, (here is a separate controversy with such grantees, involving their right to hold the land as against the complainant, which gives them the rigiit to remove the cause, where they are nonresidents and the requisite amount is involved.” This being so, and the causes being properly here for determination, I think it necessary at the outset to determine the character and scope of the original contract entered into between Staggers and the landowner — whether it be a contract of sale conditional, or an option to buy only — for the principles to govern in each contingency are materially different, in attempting to determine this, I am confronted with a direct conflict of authority, either one of which, in the absence of the other, would be binding upon me in the premises. The Supreme Court of Appeals of this state in the appeal in the Elder Case (Gas Co. v. Elder. 54 W. Va. 335, 46 S. E. 357) has construed this contract, the notice and acceptance, “not as options, but as actual sale, and the presence of a subsequent condition of defeasance does not make them options or any the less contracts of sale. Monongah v. Fleming, 42 W. Va. 538, 26 S. E. 201. Viewed as such, no acceptance was necessary.” On the other hand, the Circiiit Court of Appeals for this Fourth Circuit in Standiford v. Thompson, 135 Fed. 991. 68 C. C. A. 425, in construing a contract arising in the same neighborhood, doubtless using the same printed form and in the exact words, except names, dates, and descriptions, has held it to be only [220] an option, in which time would be held to be of the essence and strict compliance would be required. The Elder Case was decided by the state court in December, 1903; the Standiford Case by the federal court in February, 1905. I have determined to adopt the construction held in the Standiford Case, for four reasons: First, because I regard it as paramount in its binding force upon me as a subordinate federal judge; second, because it is the latest decision of the matter; third, because my personal judgment is in entire accord with the reasoning of Judge Bfawley, and in distinct opposition to that of Judge Brannon as set forth in their respective opinions; -and, fourth, because I further think the Supreme Court of Appeals in cases subsequent to the Elder One have in principle overruled it. In the Elder Case Staggers is held to have secured by this paper an estate by purchase in these coal lands, notwithstanding he never signed it, never paid a copper consideration for it, never attempted personally to comply with it in any single particular, never recorded it, and assigned it for a consideration of $1. By its express terms it lacked mutuality. The landowner had no right under it to enforce specific performance against him; it was wholly dependent upon his own will and pleasure whether he would comply or not, and he was given by its terms from August until the last day of November to make up his mind. In a more recent case, that of Rease v. Kittle, 56 W. Va. 269, 49 S. E. 150, where a much stronger contract of like character — stronger in that a valuable consideration for it is acknowledged in it — it is held: “A contract in writing by wbicb one party, for a valuable consideration, agrees to sell.and convey to tbe other a tract of land for a specified price within a, certain time, thereafter, the whole amount of the purchase money to be paid in cash within such time, and, on failure to take and pay for the land within the time stipulated, the contract to be void, is a continuing oi'fer to sell, and not revocable within the time limited.” And in Tibbs v. Zirkle, 55 W. Va. 49, 46 S. E. 701, 104 Am. St. Rep. 977, also decided since the Elder Case, it is held: “An option given for a valuable money consideration cannot be revoked until the time limit therein has expired. If such option is without consideration, it may be withdrawn or revoked at any time before acceptance.” In considering the contract involved in Rease v. Kittle, supra, 'where Howell, in consideration of $1 paid, was to have the right to purchase Kittle’s land at a fixed price per acre, and in case Howell failed to pay the balance of purchase money before the expiration of five years from date, then the contract to be void, Poffenbarger, J., says: “A peculiarity of these two contracts is that in no event could the optionor have any remedy against the optionee. He could not sue within the time limited for performance, for .all that time was accorded to the optionee in which to perform or not as he might elect. The contract provided that, upon the expiration of that time, it should be null and void, so that neither party could then have any remedy against the other. That is one of the peculiarities of the contract in this case. There was no time when Kittle could sue Howell. He could not sue within the five years nor after the expiration of that period. However, there is mutuality in the contract, for a consideration has been paid, although it is insignificant in amount,” and because of the payment of the dollar consideration, and it alone, conclusions are reached that, while the contract is enforceable “before payment or tender of the purchase money within the time stipulated, such contract does not vest in the person to whom the [221] offer of sale Is made any title to the land, either lesa I or equitable, and his assignment of his rights under the contract passes no title to the assignee.” How can such rulings be reconciled with those maintained before time in the Elder Case, by the same court, where the contract did not have the dollar consideration to stand upon? In this more recent case the decision in the Elder one is in no way sought to be distinguished; it is not referred to. The conclusion is inevitable that, by tills common but unfortunate method of ignoring cases in which the same court lias found itself on the wrong track, it avoided the embarrassment of direct acknowledgment of the fact. These latter rulings of the Supreme Court of Appeals of West Virginia are, in my judgment, in full accord with the clear and irrefutable reasoning of Judge Brawley in Standiford v. Thompson, supra, whereby this contract is held to not be a contract of sale of the coal land upon a condition subsequent, vesting a title in the land at once in the purchaser, subject to be defeated on the nonpayment of the money upon the day specified, but an option, “an unaccepted offer to sell,” without consideration, and therefqre, under the rulings in Rease v. Kittle and Tibbs v. Zirkle, subject to withdrawal at any time before acceptance. If not withdrawn and acceptance of and compliance with it is undertaken, time becomes of the essence, and the compliance must be strictly in accord with its terms and conditions. If it be made to the optionor alone, it is not subject of assignment, as held in Rease v. Kittle, supra. If to the optionor, “his heirs or assigns,” it is subject of assignment, but an assignee can occupy no better position thereby than that of the original optionor. Such as-signee must be entitled in his own right to the whole of the option contract, not a part of it. He must be in a position to be required to specifically perform after acceptance, as well as to require specific performance on his part. Such assignee must be a legal entity at the time, either as person, partnership, or corporation. As well said, too, by Judge Brawley in the Standiford Case: “if tbo subject of the contract is one likely to be of greater or less value, according to the effluxion of time, and a definite time is fixed therein for its performance, there is a necessary implication that time was the essence of the contract relating to it. As said by the court in Waterman v. Banks, 144 U. S. 403. 12 Sup. Ct. 646, 36 L. Ed. 479: ‘This principle is peculiarly applicable where the property is of such character that it will likely undergo sudden, frequent, or great fluctuations in value. In respect to mineral property, it has been said that it requires, and of all properties, perhaps, the most requires, the parties interested in it to be vigilant and active in asserting their rights.’ ” Viewed in the light of these principles, it is clear that this writing to Staggers was an offer to sell to him this coal land until November 30, 1H99, unless withdrawn before that time by the landowner; that, being given to him “and his assigns,” he could transfer his right, such as it was, to an assignee; that he did assign such right to D. H. and S. II. Pearsall jointly, who did not, holding such right, attempt to accept the offer as such assignees within the time limit, but “D. H. Pearsall, Treas. Wheeling Creek Gas Coal and Coke Company,” did eight days before its expiration, attempt to accept such offer; that such Wheeling Creek Gas Coal & Coke Company at that [222] time had no existence either as a person, firm, or corporation, and no assignment to it at the time could have been legally made by the Pearsalls, if it had had entity, because the assignment of Staggers of it to them was to them alone, and not to thqjn “and their assigns.” They alone as individuals could accept the offer under the ruling in Rease v. Kittle. They made no attempt to accept it. The attempted acceptance of it on behalf of the Wheeling Creek Gas Coal & Coke Company was wholly abortive, because, first, it had no right to accept, having no assignment until April 26, 1901, after its incorporation; and, second, the Pearsalls had no right to assign the offer to it or any one else under the terms of the assignment under which they held. But it is said the Pearsalls were acting for and on behalf of an association of individuals at the time known as the “Wheeling Creek Gas Coal & Coke Company,” who had agreed to purchase this coal. No such agreement in writing is shown, and in my judgment the allegations of the bill clearly show that no such agency existed whereby these Pearsalls could have bound the individual members of this “association” in a purchase of this realty from the landowner in a way to defeat the statute of frauds. At most, as shown by the subsequent act of incorporation, these individuals had agreed to take stock in the corporation to be chartered in futuro. But if all this were not true, there is another reason why these bills cannot be maintained. Final decrees, dismissing these causes, were entered on April 18, 1902. On July 11, 1902, Thompson and his associates purchased these coal lands from these landowners, paying a caslj consideration, incidentally twice as large as that provided to be paid them under the Staggers option. Not until October 7, 1902, was an appeal taken in the Elder Case. No stay to these final decrees was asked or given. They were final in the full sense of the word, at least from April to October, during which time Thompson and his associates purchased, paid for, and took and recorded deeds to the lands. The Supreme Court of West Virginia in Wingfield v. Neall, Trustee, 60 W. Va. 106, 54 S. E. 47, 10 L. R. A. (N. S.) 443, 116 Am. St. Rep. 882, has held that the rule of “the civil law and equity jurisprudence that the object of an appeal was to take the whole case to the higher tribunal, there to be tried and determined de novo upon the issues between the parties, as though the cause had originated in the appellate court,” has been abrogated by statute in this state, and now an appeal from the circuit to the supreme court of appeals is the beginning of a new, and not a continuation of an old, suit. Therefore “one who, after final decree and termination of the suit, and before an appeal is obtained, purchases, in good faith, property which is the subject of the litigation, will be protected in such purchase.” This establishes a rule of property in this state by its court of last resort, and therefore should be followed by the federal courts. The fact that in the deeds taken by Thompson and his associates there is charged to be an agreement that they would “assume the conduct, management and result of a suit of Wheeling Creek Coal & Coke Company against first party (landowner) in the circuit court of Marshall county, and to indemnify and save harmless the first party from any loss or damage in case said suit may be decided against them,” [223] does not affect the force of this decision in this case. In the Wing-field Case it was charged the purchaser between final decree and appeal had notice of the litigation, but such knowledge was held immaterial. Here such covenant possibly should be held mere sur-plusage, for the suit in the circuit court of Marshall county was at the time ended. At most it can be construed only as an agreement to indemnify the landowner in any action at law brought by the company against him for breach of his contract. It cannot affect the title of Thompson and his associates to the coal laud, or authorize the cancellation of their deed therefor as prayed for. Nor does the fact that after the reversal of the final decree in the Elder Case the then parties to the other causes consented to the entry of orders therein whereby these final decrees were “set aside and held for naught” change the situation as to Thompson and his associates in regard to the coal lands involved in these causes. This for the simple reason that these consent decrees were not entered until February, 1904, nearly two years after they had purchased, taken, and recorded deeds, during which time the final decrees were in force. These consent orders setting aside these final decrees were made, so far as appears, without their knowledge, and certainly when they were not parties and therefore in no way bound thereby. Specific performance is not a matter of right, but is one of sound discretion, controlled by established principles of equity, and will be granted or withheld by the court upon consideration of all the circumstances of each particular case. 7 Words & Phrases, 6(505. These cases seem to me to be very clear ones where such discretion should not be exercised, and the causes must be dismissed, with costs.