Lacoe v. Lehigh Valley Coal Co.

• Decision Date: 25 June 1927
• Docket Number: 22,20
• Citation: 139 A. 140,290 Pa. 495
• Parties: Lacoe et al., Appellants, v. Lehigh Valley Coal Co
• Court: Pennsylvania Supreme Court

139 A. 140

290 Pa. 495

Lacoe et al., Appellants, v. Lehigh Valley Coal Co

Nos. 20, 22

Supreme Court of Pennsylvania

June 25, 1927

Argued May 11, 1927

Appeals, Nos. 20 and 22, Jan. T., 1927, by plaintiffs and defendant, from judgment of C.P. Luzerne Co., Jan. T., 1911 No. 57, on case tried without a jury, in suit of Ralph D Lacoe et al. v. Lehigh Valley Coal Co. Affirmed.

Assumpsit for coal royalties. Before JONES, J., without a jury.

The opinion of the Supreme Court states the facts.

Judgment for plaintiffs for $133,507.50, being for certain royalties allowed. Both plaintiffs and defendant appealed.

Error assigned in each case was judgment, quoting record.

All assignments of error are overruled and the judgment of the court below is affirmed.

John P. Kelly, of O'Brien & Kelly and Henry A. Knapp, of Knapp, O'Malley, Hill & Harris, with them Paul Bedford, for Ralph D. Lacoe et al. -- Under the terms of the lease the lessee was not entitled to include the "pea coal" in the minimum tonnage and thus avoid paying royalty on the "pea coal": Hull v. Coal Co., 255 Pa. 233; S. Coal Co. v. Searle, 248 Pa. 385.

The lease must be construed in the light of the circumstances at the time of its execution, June 1, 1868: Lehigh Val. Coal Co. v. Searle, 248 Pa. 385.

The construction of the lease by the parties indicates that the royalty on pea coal was not to be included in the minimum.

The decisions of this court amply sustain the proposition that fuel coal under the terms of this lease is not to be used by the lessee free of charge: Glick v. Coal Co., 221 Pa. 428; Hull v. Coal Co., 255 Pa. 233; Coxe v. Heisley, 19 Pa. 243.

The semi-annual payments of minimum rentals were not semi-annual "settlements." They did not purport to be. The parties assumed, and rightfully assumed, that they were simply receipting for what they got. Acceptance of the minimums did not constitute a waiver of the other claims of the lessors: Corona Coal & Coke Co. v. Dickinson, 261 Pa. 589.

P. F. O'Neil, with him F. W. Wheaton, for Lehigh Valley Coal Co. -- When the provisions of a coal lease, relating to royalties, are obscure and are susceptible of two different meanings, and the lessor for a long time has accepted payment of royalties on a basis determined by one construction of the lease, he will not be permitted to set up another construction and claim royalties based upon such construction: McKeever v. Coal Co., 219 Pa. 234.

Before FRAZER, WALLING, SIMPSON, KEPHART and SADLER, JJ.

OPINION

MR. JUSTICE FRAZER:

Both parties to this action have appealed from the judgment and decree of the lower court, where the case was tried without a jury. The questions involved are practically the same in both appeals and will be disposed of in one opinion. The questions for determination arise from conflicting interpretations of a coal mining lease, executed June 1, 1868, between the predecessors of the parties, the coal land being situated in Luzerne County anthracite coal region, and embracing several tracts comprising a total of about 565 acres. By virtue of various assignments, transfers and operation of law, the interests of lessors have become vested in plaintiffs below and those of lessees in the Lehigh Valley Coal Company, defendant. The conclusions of law reached by the learned judge at the trial embrace the controlling questions in dispute, and as practically all material facts were agreed to at the trial by the respective parties, and the issues thus greatly simplified, the court below had chiefly for its determination the interpretation of those sections of the lease which govern the adjustment of tonnage and the payment of royalties as they apply to the coal mined under the lease.

By the terms of the contract lessee was given the right to take out "all the merchantable coal upon the premises," by proper, skillful and careful working, "until all the coal shall have been mined and exhausted"; and it provided that lessee shall pay to lessors $16,000 per annum (excepting less amounts in the first three years), for which lessee is to have the right to mine and remove 100,000 tons of coal annually, the royalty being thus sixteen cents per ton; but if in any one year more than 100,000 tons and less than 200,000 tons are mined the rental or royalty shall be fifteen cents per ton and if 200,000 tons or more are produced fourteen cents per ton; and if in any one year royalties be paid and sufficient coal not mined therefor, the deficit may be mined in any subsequent year; with an exception to the above named royalty provided in clause five of the lease to the effect that the royalty on pea coal shall be half price or eight cents per ton and another provision that forty per cent of the whole annual production shall be lump coal, and if the other coal produced is found to exceed sixty per cent of the whole output, the royalty on such surplus shall be ascertained by adding twenty-five per cent to the royalty on that amount.

No questions of fact as to the yearly and total tonnage mined being in dispute, the statements showing an output or payments of the stipulated minimum royalty of $16,000, the questions to be determined are those of law, involving the interpretation of the lease as it must have been intended to operate at the time of its execution.

Plaintiffs first claim they are entitled under the lease to twenty-five per cent additional royalty on prepared coal in excess of sixty per cent of the total production, which claim is based on the very clear provisions of the sixth clause of the lease which says: "Forty per cent of the production shall be lump coal and whenever at any settlement it shall be found that the prepared coal is in excess of sixty per cent of the whole production, the rental or royalty for such excess of prepared coal shall be ascertained by adding twenty-five per cent to the rentals upon such excess." There should be no doubt as to the proper interpretation of this clause. Of all coal mined annually, whether 100,000 tons or less, forty per cent shall be lump coal and the aggregate of other grades of coal is not to be over sixty per cent; but if it is found at "any settlement" that the amount was over sixty per cent then to the total of the fixed royalty on that excessive output of prepared coal an amount equal to twenty-five per cent of that excess royalty is to be added. The court below found there never was in any one year, since the lease began, lump coal mined to the amount of forty per cent of the whole production. In fact, there was only a negligible quantity ever produced and finally in the year 1898 production was abandoned entirely. Notwithstanding there was at first very little and finally no lump coal produced, manifestly there was an open and flagrant violation of the terms of the lease governing the subject of such coal. As the evidence shows, this matter was at no time adjusted or even considered with definiteness at any settlement between the parties. It seems to have been vaguely touched upon at one or two meetings of their representatives but nothing final as to the disposition of the matter was reached, nor were formal protests or complaints made by lessee against the exaction of this requirement. There was, however, a letter produced in evidence from lessee's mine superintendent to the representative of lessors, written in 1873, in which it was stated that he "entertained grave doubts whether any allowance should be made on that account," that the character of the coal was such that "we cannot make a greater proportion of lump coal," and he included in the communication a personal interpretation of the lease, to the effect that "The clause of the lease was made to prevent any unnecessary waste through breaking down coal that could be sold as lump." It is claimed by lessee that by the acceptance of this letter and of successive statements of mining operations, remittances of royalty payments and vouchers, lessors "acquiesced in the opinion of lessee that the veins were not suited to the production of lump coal in considerable quantities." We find nothing, however, in the evidence to show that the act of "acceptance" of the letter can be twisted into an excuse for and an acquiescence in the plain failure or negligence of lessee to produce lump coal to the extent of forty per cent of the total output. The letter of the superintendent can mean nothing in connection with the interpretation of the lease. It is merely in the nature of a lament and a rather obvious rejection of the lump coal requirement, an indirect effort to evade that provision; while as to the statements and other papers in evidence, the trial judge found that "an inspection of the vouchers will disclose that they purport to be simply payments of the semi-annual minimum rentals and not semi-annual settlements or receipts in full." ...