Ely Jellico Coal Co. v. Matthews
Ely Jellico Coal Co. v. Matthews
Opinion of the Court
Opinion op the Court by
— Affirming.
About the year 1900 Harrison Hughes, J. D. Fault ner, J. P. G-addy and L. F. Stanfill owned several hundred acres of valuable coal land in Ely Hollow, Knox County, Kentucky. They formed soon after that time what is known as the “Ely Jellico Coal Company,” and took stock in it in proportion to their interest in the land; Hughes took about forty per cent, of the stock, Stanfill about four and Faulkner and G-addy the remainder. They began work to open a mine; tipples and inclines were built and other necessary work done. The mine was opened and operated for three or four weeks in the fall of 1902, when the company leased it and a portion of the real estate to W. E. Hughes for a ten per cent, royalty on the coal mined. Shortly before this lease was made, appellee, John G-. Matthews, became the ■owner of Harrison Hughes’ stock and took part in the lease to W. E. Hughes. At an annual meeting of the. stockholders of the company, after Matthews became the owner of Hughes’ stock, J, D. Faulkner was elected president, J. F. Stanfill secretary, and J. D. Faulkner, J. G-. Matthews, J. P. G-addy and L. D. Stanfill, the wife of L. F. Stanfill, whose name their stock was in, were elected directors, and were holding that position on February 20th, 1906, at which time a call meeting was had. The only directors present at this meeting, however, were J. D. Faulkner, W. D. Faulkner, J. P. G-addy and J. F. Stanfill, who allowed a claim amounting to $400.00
About September, 1907, separate actions were-brought against J. D. Faulkner and L. F. Stanfill, and in May, 1907, shortly after the allowance was made to Gaddy, an action was brought against him and the other directors, by John G. Matthews. The Ely Jellico Coal Company was made a defendant in each of the actions. The petition in each action alleged that the allowances were made without authority; that they were fraudulent; that they were made by a collusion and scheme to which the three persons receiving the allowances were parties; that the allowances were wrongfully made and with the intention of injuring Matthews. It was also alleged that the persons to whom the allowances were made, before they became unfriendly to- Matthews, acted in the positions named without any agreement or contract to the effect they were to be paid for their services; that there was nothing in the articles of incorporation or bylaws which authorized them to make such disposition of the company’s funds; that they performed the services without any intention of receiving pay therefor; that the services they rendered were not worth more than $50.00 each, and did not equal the value of the services rendered the company by J. G. Matthews, which were performed without charge; -that -the services rendered by the persons named, were performed with the sole intention of advancing the interest of the company in which they were stockholders and with no expectation of pay and such remained their intention until they became unfriendly with Matthews. Defendants, appellants here, denied all these allegations, and alleged that their services were of greater value than the allowances made, and that Matthews rendered no services of value for
■The cases were consolidated and the lower court found that all the allowances were improperly made; directed the appellants to pay the sums received by them back into the treasury, with interest, and adjudged the costs of the actions against them. The judgment also allowed J. Gk Matthews and J. M. Eobison, who had purchased four shares of Matthews’ stock while the action was pending, $1,000.00 with which to pay their attorneys for services rendered in the consolidated actions. Appellants complain strenuously of the lower court’s action.
The record is very large; consisting of about fifteen hundred pages of testimony and two hundred pages of briefs, in addition to which we had the help of an oral argument. A great portion of the testimony has no bearing upon the issues involved arid should not have been placed in the record. After Matthews purchased Hughes’ stock, the company leased to him a considerable portion of the remainder of the property at seven cents per ton royalty, and built a railroad from the L. & N. E. E. track through Ely Hollow, by Hughes’ tipple to a point where Matthews had erected a tipple on the property leased by him. It appears that all the parties interested in the coal mines got along peaceably until the fall of 1905, about the time the railroad was finished, at which time it appears that Matthews and J. P. Graddy had an estrangement, and very soon after this J. D. Faulkner and his son also became embittered toward Matthews. This was very unfortunate, as the mines were making money; having up to the time of the trial paid over 200 per cent, on the stock, which was worth, at least, two dollars for one. The parties to this action seem to be fairly good citizens, but somewhat will
The allowance of $1,000.00 to appellee’s attorneys, to be paid out of the treasury of the company, was not too much for the services they rendered in the lower court .and in this court, for, as the testimony and record show, they spent a great deal of time and labor in preparing the case. It is true, a great deal of the record consists of incompetent and irrelevant testimony, but both parties were equally guilty of placing it on the record. They, as individuals, and not the company, should have been compelled to pay for this redundant matter, but no motion was made in the lower court to have this done, and we are unwilling to pass upon the question for the first time here.
For these reasons, the judgment of the lower court is affirmed. •
Case-law data current through December 31, 2025. Source: CourtListener bulk data.