GOLDEN OAK MINING CO., INC., n/k/a BISMARCK COAL, INC. v. CARSON HALL; GARY WAYNE HALL; and JERRY LYNN HALL
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RENDERED: August 27, 1999; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1998-CA-002370-MR
GOLDEN OAK MINING CO., INC.,
n/k/a BISMARCK COAL, INC.
APPELLANT
APPEAL FROM LETCHER CIRCUIT COURT
HONORABLE EDDY COLEMAN, JUDGE
ACTION NO. 86-CI-005
v.
CARSON HALL; GARY WAYNE HALL;
and JERRY LYNN HALL
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
BUCKINGHAM, HUDDLESTON, AND SCHRODER, JUDGES.
SCHRODER, JUDGE:
This is an appeal from a judgment in favor of
the owner of the surface rights of the mined property in an
action against the appellant coal company to enforce a contract
wherein appellant agreed to pay appellee for the coal mined
therefrom.
Upon reviewing the record herein and the applicable
law, we reject appellant’s arguments and, thus, affirm.
On April 10, 1978, appellee, Carson Hall, entered into
a contract with appellant, Golden Oak Mining Co., Inc. (“Golden
Oak”), granting Golden Oak “the right to mine under and upon the
lands of . . .” Hall.
At that time, Hall, who had a fourth grade
education and was a retired coal miner, was the owner of the
surface rights of the property in question, but did not own the
mineral rights.
The contract was prepared and negotiated by Paul
Sturgill, vice-president of Golden Oak, and was further signed by
Sturgill on behalf of Golden Oak.
The contract also granted
Golden Oak “the right to . . . haul coal and other mineral
product over the lands, . . . whether adjoining the abovedescribed premises or not.”
The contract stipulated that
payments to be made thereunder “shall constitute full payment for
all damages which may be incurred by removing the mineral.”
The
agreement was to remain in effect “until all the mineable and
merchantable coal has been removed.”
Golden Oak, in turn, agreed
to pay Hall “the sum of $.45 for each ton mined and sold from the
hereinabove described property.”
In the Fall of 1978, Golden Oak began surface mining
operations upon Hall’s property.
The surface mining operation
lasted approximately one year and a half, for which Hall was paid
approximately $44,000, including a $20,000 cash advance paid upon
execution of the contract.
Following the surface mining on Hall’s property, Golden
Oak began deep mining operations under the property at issue.
Hall maintains that the deep mining began sometime around the
early 1980’s, whereas Golden Oak contends that the deep mining
began in the Fall of 1984 and was completed in the Spring of
1985.
It is undisputed that the entries for the deep mining were
not on the Hall property but were on the other side of the ridge.
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When Golden Oak refused to pay Hall the royalties on
the deep mined coal, Hall brought the action herein to enforce
the contract on January 6, 1986.
It was and still is the
position of Golden Oak that pursuant to the contract, Hall was
only to be compensated for coal that was mined from the surface.
On July 26, 1990, the Letcher Circuit Court entered summary
judgment in favor of Golden Oak.
this Court.
The case was then appealed to
On November 11, 1991, this Court reversed the
summary judgment and remanded the action to the circuit court
“for further proof on the intent of the parties at the time of
making the contract.”
In that opinion, this Court explicitly
acknowledged that the lower court had found that the terms of the
contract were ambiguous, and, thus, there necessarily existed
material questions of fact which precluded summary judgment.
On remand, the parties put on further proof of their
intent in entering into the contract, and the case was tried by
deposition to the court.
On March 18, 1997, the court entered
its findings of fact, conclusions of law, and order in which it
entered judgment in favor of Hall.
In its findings the court
stated:
Considering the foregoing testimony, and
other testimony of record, and having again
reviewed the language of the CONTRACT stating
“First Party agrees to pay Second Party the
sum of $.45 for each ton mined and sold from
the hereinabove described property”, it is
the finding of this Court that the CONTRACT
meant exactly what the parties intended and
what it says -- that GOLDEN OAK would pay
$.45 for each ton of coal mined and sold from
the property, without distinction as to
surface mined coal or deep mined coal.
Looking at the CONTRACT itself, there is no
ambiguity whatsoever. Even if there were
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doubt in this finding, which there is not,
the rules of construction against the drafter
of the CONTRACT still demand the finding for
the Plaintiff, HALL.
On April 22, 1997, the court vacated the above order of March 18,
1997 and entered amended findings of fact, conclusions of law and
order in favor of Hall.
In this order, the court stated:
There is no patent ambiguity on the face of
the contract. It does not distinguish
between surface and deep mining. Therefore,
any ambiguity in the contract must be latent,
i.e., what each of the parties thought the
interpretation of that provision was. After
reviewing the testimony of the Plaintiff, Mr.
Sturgill, and Thad Duff, the Defendant’s
original negotiator, the Court finds that the
provision covered both surface and deep
mining. Particularly persuasive are the
Plaintiff’s testimony about the conversations
he had with Mr. Sturgill regarding payment
from deep mining and Mr. Duff’s testimony
that the contract between the parties was not
one of the Defendant’s standard surface
contracts and that a cash advance to a
surface owner of property is unusual.
From the order of April 22, 1997, Golden Oak now appeals.
Golden Oak first argues that the court erred in
ignoring the remand instructions of the Court of Appeals to
consider “further proof on the intent of the parties at the time
of making the contract.”
Golden Oak maintains that the trial
court’s finding in the March 18, 1997 order that the contract was
unambiguous ignored the law of the case that the contract was
ambiguous and the court failed to look at the intent of the
parties to resolve said ambiguity.
While it is true that the law
of the case is that the contract was ambiguous, see Williamson v.
Commonwealth, Ky., 767 S.W.2d 323 (1989), the court vacated its
order of March 18, 1997 and, thus, cured any error in previously
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finding that the contract was unambiguous.
The amended order of
April 22, 1997 specifically finds there was a latent ambiguity
and considers the testimony of Hall, Sturgill, and Thad Duff in
finding that the parties intended the contract to encompass deep
mined coal as well as surface mined coal.
The court was
particularly persuaded by Hall’s testimony about conversations he
had with Sturgill regarding payment from deep mining and Duff’s
testimony that the contract between the parties was not a
standard surface contract and that a cash advance to a surface
owner of property was unusual.
Thus, Golden Oak’s claim that the
court did not consider the evidence regarding the intention of
the parties in resolving the ambiguity is without merit.
Golden Oak next argues that the trial court erred in
failing to apply the rules of contract construction to determine
the intent of the parties.
Golden Oak presented evidence that
coal companies typically do not compensate surface owners for
deep mining activities underneath their property unless there is
a use of that surface associated with the deep mine.
Golden Oak
essentially complains that the court did not look at this
evidence regarding custom in the industry and ruled that the
parties did not intend to include deep mined coal.
In
determining the intention of the parties, the court should look
at the object or purpose of the agreement, the situation of the
parties, conditions under which the agreement was made, and the
circumstances surrounding execution of the agreement.
L.K.
Comstock & Co., Inc. v. Becon Construction Co., 932 F. Supp. 948
(E.D. Ky. 1994), affirmed, 73 F.3d 362 (6th Cir. 1995).
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Thus,
while custom in the industry may be a relevant factor, it is not
the only factor that the court could consider in determining the
intent of the parties.
A trial court’s findings of fact will not be overturned
unless they are clearly erroneous.
CR 52.01; Alvey v. Union
Inv., Inc., Ky. App., 697 S.W.2d 145 (1985).
If supported by
substantial evidence, the trial court’s findings of fact are not
clearly erroneous.
Faulkner Drilling Co., Inc., v. Gross, Ky.
App., 943 S.W.2d 634 (1997).
The finder of fact is free to
believe part of the evidence and disbelieve other parts.
Calvert v. Watkins, Ky. App., 971 S.W.2d 823 (1998).
Sroka-
From our
review of the record, the court properly considered the testimony
of Hall, Sturgill, and Duff in seeking to ascertain the situation
of the parties and the circumstances surrounding execution of the
contract.
Further, the conversations between Hall and Sturgill
regarding deep mining were certainly relevant.
The court was
also free to look at the fact that the contract was not a
standard surface contract in rejecting the evidence regarding
custom in the industry.
In sum, we cannot say the trial court’s
findings of fact regarding the intent of the parties were clearly
erroneous.
Golden Oak’s remaining argument is that the trial court
erred in assigning credibility to the testimony of Hall.
Golden
Oak maintains that Hall’s misrepresentation regarding his
interest in the property at issue should preclude the court from
assigning any credibility to Hall’s testimony.
Under CR 52.01,
due regard must be given to the trial court to judge the
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credibility of the witnesses.
Church & Mullins Corp., v.
Bethlehem Minerals Co., Ky., 887 S.W.2d 321 (1992), cert. denied,
514 U.S. 1110, 115 S. Ct. 1962, 131 L. Ed. 2d 853 (1995).
Despite the controversy surrounding Hall’s interest in the
property at issue, upon reviewing the record, we cannot say the
trial court abused its discretion in adjudging Hall a credible
witness.
For the reasons stated above, the judgment of the
Letcher Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE, CARSON
HALL:
Forrest E. Cook
Whitesburg, Kentucky
Will T. Scott
Pikeville, Kentucky
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