Drake v. Lacoe

Opinion by

Mb. Justice Dean,

The plaintiffs to No. 3, November Term, 1888, of the common pleas of Lackawanna county, filed this bill against defendants, praying for an accounting as to certain coal royalties pa}rable to them under two certain sealed instruments executed and delivered by their ancestor Gharles Drake, dated respectively the 28th of November, 1863, and the 13th of April, 1865. The first dated agreement granted to Ralph D. Lacoe and J. B. Shiffer the coal on a tract of land in Lackawanna county, containing about 78 acres, excepting from its operation the upper vein. The term of the lease was for ten years, and such other and further time as the lessees should continue to pay the royalty. The lessees agreed to pay a yearly minimum rental of $500, semi-annually, on the first days of October and April of each year, for which they were granted the privilege of mining and carrying away five thousand tons of coal, “ miners’ weight,” at ten cents per ton, and agreed to pay the same price per ton for all coal mined. The lease granted the usual mining rights, with the right of constructing all shafts, tunnels, slopes and air-shafts, and the using of all the surface deemed necessary. It was agreed that the lease should be forfeited if at any time an installment of rent should be unpaid for a period of six months.

Subsequently, this agreement was assigned by Lacoe and Shiffer to the Massachusetts Coal Company, and on the 13th of April, 1865, Charles Drake leased to the same company the upper vein excepted in the lease to Lacoe and Shiffer, and by same contract granted the right to convey over or under said land, the coal contained in the same vein on a forty acre lot adjoining, known as the “ Zeph. Knapp lot.” The coal company agreed to pay semi-annually a rent or royalty of ten cents per ton, “ miners’ weight,” and in addition to deliver to Drake, his heirs or assigns, free of cost, fifty tons of lump or prepared coal as he might elect, annually, during each year the lessee mined the coal of the lessor, or upon the forty acres adjoining, or in any way passed over or \ised the land to Drake. By its terms, this lease was made subject to the provisions of the lease between Charles Drake and Lacoe and Shiffer, as to its continuance, the payment of taxes and the inspection of books, as well as in the conduct of the mining operations, in a workmanlike manner. Both leases were afterwards assigned to R. D. Lacoe and J. B. Shiffer, who, with one Gaines, leased the coal in the seventy-eight acres to the Glenwood Coal Company, at an advance in royalty payable to themselves, and under different terms as to forfeiture and other provisions from those contained in the lease with Charles Drake. From 1872 to 1876, the Glenwood Company mined from the upper vein and reported the mining to Lacoe and Shiffer, and Lacoe and Shiffer sent a statement of the number of tons of prepared coal to Charles Drake or his devisees. Charles Drake died in 1873. His devisees, who are the plaintiffs in this suit, Thomas Drake, Ebenezer Drake, George K. Drake, have owned since his death and still own their interests in the land. Lyman K. Drake’s interest was conveyed, and his interest in the accrued royalty assigned, to M. W. Morris and Isaac Everett.

Twenty-seven thousand eight hundred and sixty-eight tons, 12 cwt., of prepared coal were mined from 1872 to 1876, as reported in the statements. The Glenwood Company became insolvent, and Messrs. Lacoe and Shiffer repossessed themselves of the land and coal and again leased to John Jermyn and others.

The defendants paid the $500 minimum royalty semi-annually as required by the first lease. The plaintiffs, a short time before this suit, complained the returns were not by “ miners’ weight,” but in tons of twenty-two hundred and forty pounds of prepared coal only, and so made a demand for payment with interest for the coal mined, and demanded that it be mined and returned in “ miners’ weight,” in accordance with the lease. The defendants refused, and the plaintiffs immediately after-wards filed the bill in this case, asking for an account, that the lease for the upper vein be declared forfeited for nonpayment of royalty, and that they have such other relief as to the court should seem meet.

The defendants, in their answer, do not deny the averments of plaintiffs’ bill as to the execution of the lease to Lacoe and Shiffer and the Massachusetts Coal Company, nor any of the material facts set out, except that averring default in payment. They aver, however, that the leases had subsequently, by the construction put upon them by both parties, become merged; that they were treated as one instrument, and the minimum royalty of $500 stipulated for in the first lease constituted their maximum liability as to annual payments under both leases ; that this sum had been paid by them and accepted by plaintiffs as in full of all demands.

They further averred, that they had accounted in tons “ miners’ weight ” for all coal mined according to the reasonable interpretation of the lease, and denied plaintiffs’ right to assert a forfeiture of the lease for the upper vein, because: 1. They had fully accounted. 2. If any such right could be asserted under the words of the grant, plaintiffs, by long delay, had waived their right.

The issue was referred to W. W. Lathrope, Esq., as master to take testimony, find facts and suggest decree. He had many hearings, took the testimony of more than forty witnesses, which, with much documentary evidence, is presented to us in more than 300 pages of the printed paper book.

The master finds as a fact, which is not disputed, that no coal was mined under the first lease, except about 700 tons. He also finds that the $500 minimum royalty provided for in that lease was annually paid in cash to plaintiffs. And further, from the years 1871 to 1876 inclusive, while the Glen wood Coal Company was in possession of the property, the 27,868 tons, 12 cwt., of coal were mined from the upper vein, the one granted to the Massachusetts Coal Company by the second lease of 13th of April, 1865.

If the number of tons, by a proper interpretation of the term “ miners’ weight,” be correct, and. the $500 minimum royalty to be paid annually on the first lease of the lower vein, can be transferred and applied in payment of this coal mined under the second agreement from the upper vein, then plaintiffs have substantially been paid in full; there is nothing left of serious contention between the parties.

As to the meaning of the term “ miners’ weight,” much of the oral testimony was that of miners and mine operators ; they testified as to their experience and observation, and gave in some cases their opinions; very often they were at variance. Without any testimony on the subject, we would not hesitate to say that the obvious meaning of the term was, such quantity of coal as was computed at a ton in paying the miner who mined by the ton. It did not mean a net ton of 2000 pounds or a gross ton of 2240 pounds, or the parties would have so said. The defendants made returns to plaintiffs of the number of tons of prepared merchantable coal, which they allege embraced the number of tons the miners were paid for digging; the miners mined and brought out in weight, much more, but after eliminating from the weight on the mine wagon all bone, slate, dust, and material that was not marketable as coal, there was left the number of tons reported to plaintiffs.

This is, in substance, the finding of fact by the master, who says: “ 13. Full statements of the coal thus mined were rendered by the defendants Lacoe and Shiffer to Charles Drake in his lifetime, and afterwards to the plaintiffs or some of them. No objection to their accuracy was made until shortly before the bringing of this suit. The objection then made was, while they showed the number of tons of prepared coal, they did not show the number of tons miners’ weight, as called for by the lease.

“ 14. Under all the evidence, the phrase ‘ miners’ weight ’ in 1863, and during the years when the said coal was mined by the Glenwood Coal Company, meant such quantity of coal, slate and dirt, as was agreed upon between the operators and the. miners to be sufficient to make a ton of prepared coal.”

W e think this finding of the master correct. These returns of prepared coal were regularly made for years, and received by plaintiff without demand for the weight of material brought out by the miners; there was no fraud nor any concealment. By somewhat rude methods, about 20 per cent of the mine wagon’s contents was deducted as worthless ; the remainder, as coal, the miner was paid for; then the operator returned as representing this, the number of tons of prepared coal marketed by him. Plaintiffs knew this during all the years the returns were being made, yet received them without objection. The parties themselves, having thus interpreted the contract, it is too late now to question its correctness. It is probable that if this accounting had been called for when the accounts were rendered, a detailed statement of the weight of material brought out of the mine, and just what number of pounds of this material was fixed as the miners’ ton, would have been required of defendants; not necessarily for the purpose of charging them with something that was not marketable as coal, but, at least, that the accuracy of the returns of prepared coal might be tested by a comparison with the weight of the material in the mine wagon.

As the finding of the master in this particular under the evidence is correct, and has been approvedrby the court, the quantity of coal mined from the upper vein must be taken as 27,868 tons, 12 cwt. Why should not defendants pay for it the price agreed upon in the second lease ?

They answer, the two leases, the one for the upper vein from which the coal was mined, and that for the lower, from which none of it was taken, were by the acts of the parties merged, made one instrument, and the annual payment of $500 stipulated for in the first, if appropriated in payment for this coal, leaves nothing due on the second; that defendants, without objection from plaintiffs, did in fact so apply it.

The evidence to establish the fact that the first and second agreements were treated as one by the plaintiffs is far from convincing. Some of the receipts for installments of the $500, given after the death of the grantor, specify that the money was paid on the first lease ; one, dated April 9,1875, mentions that the payment was on lease of November 28,1863, and u supplement given to Massachusetts Coal Company.” But with the exception of this one receipt, all those given before February 18,1880, used words which could only have reference to the first lease to Lacoe and Shiffer. On this date, however, a supplementary agreement was made between four of plaintiffs and Lacoe and Sbiffer, which gave to them the right to transport other coal through this laud as well as a license to deposit culm upon it. In consideration, they agreed to pay to the Drakes $600 in cash and 50 tons of coal annually, the 50 tons to be in lieu of that agreed to be delivered under the lease to the Massachusetts Coal Company. Then follows this clause : “ 5. Except as herein altered, amended and supplied, the said recited original leases and all and singular the provisions thereof, shall be and remain in full force and effect.” This is a distinct positive affirmation of the continued existence of the covenants in each of the first two agreements, except in the immaterial particulars wherein they were altered by the third.

The provision in the first lease for a payment of not loss than $500 annually, and that of the second for the payment of ten cents “ miners’ weight ” for each and every ton of coal mined, were not mentioned. This last agreement is a supplement to the first two, because it grants or supplies rights and privileges omitted in them ; the second lease, while referring to the first for description, is in no sense a supplement, for it supplies nothing to the first and is between different parties. All the receipts which adopt the words, “ supplementary thereto,” or words of like import, except the one of April 9, 1875, are dated after this third agreement, and the fair inference is, refer to it. These facts, on which the master bases his finding, are not “ narrow ground,” as stated by the learned court; they are established or undisputed facts in the conduct of the parties, irreconcilable with any other conclusion than that plaintiffs treated the first and second agreements as fixing on defendants the separate liability for the minimum $500, and also the royalty for the coal mined; and the master was clearly right when he found, as a fact, that the evidence failed to show any agreement by plaintiffs, express or implied, that the $500 minimum in the first lease should be applied in payment of coal mined under the second. This finding is also concurred in by the court, although not for the reasons given by the master. We then have the fact established, that there is due and owing to plaintiffs from somebody, $5,864.75 for coal mined on the land described in the two leases ; the master is of opinion that defendants ought to pay this sum, and suggests a decree accordingly; the court is of a different opinion and dismisses the bill, because: 1. There was no privity in contract between the parties. 2. There was no privity in estate, consequently defendants were not accountable to these plaintiffs for the coal mined from their land.

It will be noticed, that, except a small part, all the coal mined was taken out of the upper vein, and was therefore mined under the second lease, that to the Massachusetts Coal Company of April 13, 1865. This company, before taking this lease, had acquired by assignment from Lacoe and Shiffer the first one ; then, on November 16, 1869, they re-assigried both leases to Lacoe, in which re-assignment Shiffer and one O. F. Gaines acquired with him an apparent joint interest, for, on May 25, 1871, they lease the coal at an advanced royalty to the Glen-wood Coal Company, which company mined the coal claimed for. In this agreement Lacoe, Shiffer and Gaines covenant to perform punctually the stipulations with reference to payment of royalties to the Drakes under the first two leases ; they assumed, in this contract, to be the lessees under these first grants, and agreed with the Glenwood Coal Company that they would settle with and pay the Drakes as agreed upon in the first leases for the coal mined. There was no pretence of claim to the coal except under the original leases, and a distinct positive acknowledgment of their liability to Drakes for all coal mined. The Glenwood Coal Company proceeded to mine the coal in the upper vein, and took out nearly 28,000 tons ; thej1' made returns of the coal as it was mined to Lacoe and Shiffer, who made returns to Drakes. They had acquired the leases, after the dissolution of the Massachusetts Coal Company, and thereafter both parties, Drakes and Lacoe and Shiffer, by the most significant acts and declarations kept up through many years, treated each other as if lessors and lessees under the original agreements. However comprehensive may have been the assignment to the Glenwood Coal Company, who mined the coal, Drakes were no party to it, and Lacoe and Shiffer made careful provision in the assignment they should not be. The written papers, the conduct of the parties, all show beyond controversy an intention to treat the Glenwood Coal Company, who, by the agreement of 25th of May, 1871, acquired the right to mine, as the mere ‘agents or under lessees of Lacoe and Shiffer, with no interruption to Lacoe’s and Shiffer’s constructive possession under the assignment to them of the original leases. It is a waste of time to discuss the question, whether, technically, the privity of estate between the Drakes and Lacoe and Shiffer was, in law, severed by the contract of 25th May, 1871, with the Glenwood Coal Company ; certainly, the relation between the defendants and plaintiffs, created by the first two leases and the assignment, never, in their understanding of it, ceased to exist; neither of the parties intended it should be interrupted; if defendants liad been answerable, had they themselves mined the coal, their liability, so far as concerns these plaintiffs, under this evidence, was not changed by their assignment to the Glenwood Coal Company.

Nor anywhere, in all this prolonged litigation, down to the announcement of such defence in the opinion of the learned court below on exceptions to the master’s report, while they allege they paid for it, do they intimate a denial of their accountability under the contract, for all the coal mined ; on the contrary, they aver, and attempt to prove, the measure of their accountability arises from a privity of estate constituted by the two instruments treated as one, and not from the separate stipulations of each.

The 5th paragraph of plaintiffs’ bill avers that Lacoe and Shiffer, during the years 1872, 1874, 1875 and 1876, mined from the upper vein 27,868 tons, 12 cwt., of coal, which they have not paid for.

This averment is thus answered by Lacoe and Shiffer: “ 5. They (defendants) admit that during the years 1872,1874, 1875, and 1876 there were mined from the upper vein from said property 27,868 tons, 12 cwt., of coal, but they deny they have neglected or refused to pay or cause to be paid the money due and owing therefor.” Then they go on to state, they paid for it by applying the minimum royalty of $500 under the first lease in discharge of the covenant to pay 10 cents per ton for coal mined from the upper vein under the second.

The whole contention of fact before the master turned on the two questions: 1. Had the defendants made correct returns under the contract ? 2. Had the parties united the two leases and agreed the money paid under the one should discharge the liability for coal mined under the other ?

Mr. Lacoe, in his testimony, says, in narrating a conversation with Drakes concerning the quantity being mined by the Glenwood Coal Company, “ it was talked of as a matter of interest'to both of us, they as our landlords, and we as the landlords of the parties that were mining.”

The master makes a most careful and elaborate report on the law and the facts ; passes fully on every question raised. The defendants made request specifically, for fourteen findings of fact and seventeen of law ; in not one do they ask that plaintiffs shall be turned out of court because the privity of estate between them had ended before the coal was mined. Nor do the exceptions before the court distinctly raise the point on which the bill was dismissed. The 24th, 26th, and 31st exceptions to the master’s report are sustained; they are general exceptions, and manifestly, from their connections, the other findings, and the issues raised, are intended to assert defendants were not bound to account because they had already accounted were not bound to pay for they had already paid. It is not conducive to the ends of justice to use a general exception so as to include a question of blended fact and law not raised before the master; both the learned court below and we have a right to the master’s finding of fact and conclusions of law after full hearing. The court has found, because defendants had made the contract of 25th May, 1871, and were not parties to the second lease with Charles Drake, plaintiffs’ ancestor, therefore there was no privity in estate that would warrant a decree for money which both the master and court have found was owing to plaintiffs.

That the absolute assignment of the term, and the acceptance of the assignee as tenant by the lessor, discharges the assignor from all obligations arising from privity of estate, is not questioned; and this is so, because such is the intention of the parties, either expressed, or implied from written instruments and conduct which reasonably admit of no other interpretation. But an assignment for an increased consideration, with wholly new stipulations, with right of re-entry for conditions broken, with an express assumption of continuing liability of the assignors to the owners under the original lease, and a manifest intention to sublet, not only is not evidence of intention to end the privity of estate, but is a positive re-affirmance of it.

But, aside from this, if even the evidence warranted the conelusion that the privity of estate had ended, the point was made too late. If not raised by demurrer, it should at least have been embodied in the answer. To join issue with plaintiffs on their averments, proceed to long and costly litigation, and then, when the questions forming the subject of contention have been decided against them, to raise an entirely new one in oral argument before the court, for it is not found in the record, such new question should either not have been noticed, or it should have been referred to the master for further hearing and a supplementary report on the law and facts. In effect, the master’s conclusions assume, and correctly too, there was a privity of estate between plaintiffs and defendants, and that is the foundation for the decree suggested by him. He rightly concludes that because of plaintiffs’ long delay in asserting a right to forfeit the lease for nonpayment, equity will not decree a forfeiture: Oil Creek R. R. Co. v. Great Western R. R. Co., 57 Pa. 72; Funk v. Haldeman, 53 Pa. 249; Thompson v. Christy, 138 Pa. 249.

The defendants’ 8th request, to find as a conclusion of law that this, being only a bill to recover a specific sum of money, therefore the remedy is at law and not in equity, was denied. After the evidence was heard, it was found that plaintiffs, by long acquiescence in tbe returns made of the weights, had precluded themselves from demanding any further or other accounting, or from giving any other interpretation to the term “miners’ weight” than that indicated by the returns; so, in fact, it was only determined, after hearing-, that the sum due them could have been recovered at law without an accounting; but this does not oust jurisdiction in equity. As is said in Adams’s Appeal, 113 Pa. 449: “ This question should be detex-rnined, not by what may have been shown by tbe answer and testimony adduced in support thereof, but by what appears on the face of the bill itself. If the averments therein contained, assuming them to be true, present a case of which equity lias either concurrent or exclusive jurisdiction, the bill should not have been dismissed, especially in view of the fact that tbe appellees did not object in limine by plea or otherwise to the jurisdiction of the court. While it is true that manifest want of jurisdiction may be taken advantage of at any stage of the cause, tbe court will not permit an objection to its jurisdiction to prevail in doubtful eases after the parties have voluntarily proceeded to a hearing on the merits, but will administer suitable relief.”

Here, from the averments in plaintiffs’ bill and the copies, of contracts, it appeared as if a final decree could be had only after the investigation of complicated accounts running through many years. It turned out from the evidence that returns had been made and received without objection during the years for which the accounts were asked, and several years elapsed before any other accounting was asked for. Even if the accounting was not such as stipulated for in the contracts, it was practically impossible then for defendants to make any other; therefore, equity demanded that plaintiffs should be content with what they had so long neglected to object to. The sum of tons in the accounts thus rendered, multiplied by ten cents, would have constituted plaintiffs’ claim for which an action at law would have been an adequate remedy. But the evidence and not the pleadings demonstrated this. Besides, the defendants practically conceded the jurisdiction by failing to demur. After full hearing, involving heavy costs, a doubt as to equitable jurisdiction is not sufficient to oust it. The master so decided, and in so doing he is fully sustained by the authorities. The decree suggested by him accomplishes the substantial justice in the cause; that of the court falls quite short of it, because it is not in accord with the evidence.

Therefore, appellants’ first assignment to the decree of the court dismissing the bill is sustained, and that decree is reversed ; it is further ordered that the bill be reinstated, and it is now ordered and decreed that defendants, JR. D. Lacoe and J. B. Shiffer, pay to the plaintiffs the sum of five thousand three hundred and seventjr-three dollars and forty-three cents (15,873.43), with interest from October 1, 1891; as to John Jermyn, the bill is dismissed. It is further ordered that said JR. D. Lacoe and J. B. Shiffer pay the costs both of proceedings in court below aid on this appeal.