Genet v. President of Delaware & H. Canal Co.

• Decision Date: 17 January 1893
• Citation: 32 N.E. 1078,136 N.Y. 593
• Parties: GENET v. PRESIDENT OF DELAWARE & H. CANAL CO.
• Court: New York Court of Appeals Court of Appeals

136 N.Y. 593

32 N.E. 1078

GENET

v.PRESIDENT OF DELAWARE & H. CANAL CO.

Court of Appeals of New York.

Jan. 17, 1893.

Appeal from supreme court, general term, first department.

Action by Augusta G. Genet against the president of the Delaware & Hudson Canal Company to recover damages for an alleged breach of contract. From a judgment of the general term, (8 N. Y. Supp. 822,) reversing an order of the special term, which overruled a demurrer to the complaint, plaintiff appeals. Reversed.

Geo. C. Genet, for appellant.

Frank E. Smith, for respondent.

FINCH, J.

The questions in this case, which are both difficult and important, arise upon a demurrer which denies that the complaint of the plaintiff contains any cause of action. That complaint sets out literally the contract between the parties, which is in writing, and in the form of a lease. They differ widely as to its construction, the lessors describing it as an agreement merely, which, although relating to an interest in land, does not convey the land in fee, while the lessee construes it as a deed of the coal veins or strata underlying the surface, and as a severed parcel of the land itself. It is important to settle that question at the outset, for we shall find in the end that the application of very material rules of construction depends upon the legal character and effect of the paper which the parties executed. That paper denominates itself a ‘memorandum of agreement,’ and not an indenture or deed, and yet takes the form of a lease. It certifies that the parties of the first part have ‘leased’ to the party of the second part ‘all the coal contained in, on, or under’ the parcel of land specifically described. This general provision, however, is narrowed, restricted, and limited by other provisions of the lease which modify its effect and operation. It is stipulated ‘that if the coal in any of the veins shall not prove to be of a merchantable quality, or if it become impractical to mine the same in consequence of extraordinary expenses in mining or cleaning said coal, or if the veins should prove to be of such quality or thickness that the coal cannot be mined and prepared for market without greater expense than is bestowed upon coal taken from the same veins in the mines of the party of the second part for the time then being, then the liability of the party of the second part to mine, take, and pay for said coal shall cease; and it is further understood and agreed that in case the quantity of coal mined and taken out in any one year shall fall below the quantity agreed to be taken out in such year, in consequence of the unmerchantable quality of the coal in any of the veins, or in consequence of increased expense and difficulty in mining and cleaning the said coal, as hereinbefore recited, or in case the said land shall become so far exhausted as to render it impracticable or unprofitable to mine the stipulated quantity in any one year, then, in either case, the party of the second part are to pay for only the quantity of the coal that can be safely and economically taken out.’ Then follows a further limitation that the lessee shall only payroyalty ‘for the coal mined and taken out’ upon every ton ‘of clear merchantable coal, exclusive of culm or mine waste, that will not pass through a mesh of one-half inch square.’ There is also a precise description of what is meant by the phrase ‘merchantable coal.’ and what should be deemed such is, after inspection,to be left to the final decision of the defendant's superintendent, or other selected inspector. Reading the contract as a whole, I think we are bound to say that there was no sale of the bulk or body of the coal in place and as a severed portion of the land, and that there was no such intention, purpose, or agreement on either side. It is quite true that in an action between the same parties the second division of this court has expressed the opinion, very briefly, and I think incidentally, that this contract operated as a deed to convey the fee of the coal to the defendant corporation. 122 N. Y. 527, 25 N. E. Rep. 922. If the decision to that effect had been material to a disposition of the case, necessary to its determination, and within the issues presented, I should hold it conclusive as settling the law between these parties, however I might regard it in the future as a precedent. But the question was not in the case, or at all necessary to its decision. That action was brought by the plaintiff to recover damages against the defendant for not mining the coal with reasonable diligence, and for a misuse of the mine in connection with other properties. The first cause of action failed because there was no proof except that offered by parol of the assumption by defendant of any such obligation, and the second because whatever was done was held to be within the explicit terms of the contract itself. Thus, the right to use the shafts and machinery on plaintiff's land in aid of mining operations on adjoining lands was held to be expressly given as a present right by the terms of the instrument; the right to pile culm and waste upon the surface was found in its express permission; and the right of drainage through the gangways opened to other shafts to the lower point of the Marvin shaft, to be thence pumped out to the river, was deduced from the terms and conditions of the contract. It was not vital or essential to any of these conclusions that the contract did or did not convey the coal in fee. That opinion, therefore, does not bind us, but respect for it requires a careful examination of the question.

The authorities cited were all cases determined in the supreme court of Pennsylvania. The decisions of that court are entitled to great weight in the present inquiry, not only because of its character and ability, but also because coal mining in that state is an enormous industry, over which its courts naturally watch with anxious care, and to the law controlling which they are required to give constant study. They have held, until the rule must be deemed firmly established in those tribunals, that a transfer of all the coal in, on, or under a given described surface, even though taking the form of a lease, and terminable in a fixed number of years, is a sale of the coal, and a grant of it in fee as a severed parcel of the land. The doctrine is perhaps most fully developed in Sanderson v. Scranton, 105 Pa. St. 472. It was there said that a mineral lease was often in fact a sale; that it differs from an ordinary lease, in that the latter gives only the temporary use and for a fixed period which is the term, and so implies and leaves in the lessor a reversion, while the former conveys the entire interest in the coal and leaves no reversion; that in such a case there is a severance of the surface from the underlying strata, which creates a divided ownership in the land, the coal belonging in fee to one and the surface to another. The court said frankly that the case was not free from doubt, because the agreement was in form a lease for a fixed period, with a rent reserved and power of distress. Whatever we may think of the general doctrine, one thing about it is quite obvious,-it applies to a case and only to a case in which by the terms of the agreement, and in contemplation of the parties, the whole body of the coal, considered as of cubical dimensions, and capable of descriptive separation from the earth above and around it, (Massot v. Moses, 8 Morr. Min. R. 607,) and as it lies in its place, is absolutely and presently conveyed. The thing sold must be such that it can be identified as land, and severed as land from the estate of which it forms a part. Every case upholding the doctrine which I have been able to examine has that marked characteristic. Caldwell v. Fulton, 31 Pa. St. 475; Caldwell v. Copeland, 37 Pa. St. 427; Armstrong v. Caldwell, 53 Pa. St. 284; Scranton v. Phillips, 94 Pa. St. 15; Sanderson v. Scranton, 105 Pa. St. 469, 109 Pa. St. 588; Fairchild v. Fairchild, (Pa. Sup.) 9 Atl. Rep. 255;Montooth v. Gamble, 123 Pa. St. 240, 16 Atl. Rep. 594;Kingsley v. Iron Co., 144 Pa. St. 613, 23 Atl. Rep. 250; Lazarus' Estate, 145 Pa. St. 1, 23 Atl. Rep. 372. That feature seems to me to be not merely accidental or incidental, but a vital and essential element of the doctrine as it is asserted and applied. But that feature does not exist in the present case. The broad words of the primary grant are indeed sufficient, within the cases cited, to carry title to the coal as land, but they are cut down, narrowed and restrained by the specific provisions which follow. It is not the mine as such, it is not the veins or strata as such, it is not the coal in place, it is not even the whole of the coal which one party contracts to sell and the other party to buy, but only some unknown and indeterminate fraction or portion of the coal, which no human power can locate or identify as land. It is mineral product, not land, which is the subject of the dealing. It is to be- First, such portion of the coal as shall prove to be ‘merchantable’ and which equals in quality the average yield of the adjacent mines, the quality to be conclusively settled by the defendant's superintendent or other inspectors after it is mined; it is, second, to be such and so much as does not pass a screen with half-inch meshes; it is to be, third, only so much as can be safely and economically mined; it is to be, fourth, so much merely as can be mined and cleaned without greater expense than the mining on adjoining properties requires; and it is to be, fifth, no more than it will be profitable to mine when the veins approach exhaustion. Further than that, if a ‘fault’ is disclosed in the mine which occurs when by some convulsion of nature the vein has been broken off, and its continuity lifted or depressed, so that earth and rock end the drift, and must be cut through and removed to recover the vein, it is provided that the...