Rochester Mach. Corp. v. Mulach Steel Corp.

• Decision Date: 15 May 1981
• Citation: 287 Pa.Super. 270,430 A.2d 280
• Parties: ROCHESTER MACHINE CORPORATION, v. MULACH STEEL CORPORATION, Appellant.
• Court: Pennsylvania Superior Court

Page 280

430 A.2d 280

287 Pa.Super. 270

ROCHESTER MACHINE CORPORATION, v. MULACH STEEL CORPORATION, Appellant.

Superior Court of Pennsylvania.

Argued April 16, 1980.

Filed May 15, 1981.

Fred C. Houston, Jr., Pittsburgh, for appellant.

John J. Petrush, Beaver Falls, for appellee.

Before PRICE, BROSKY and MONTGOMERY, JJ.

BROSKY, Judge:

This is an appeal by Mulach Steel Corporation from the trial court's denial of a new trial after that court sustained the validity of a judgment by confession. The issues for our determination are whether the court erred in admitting certain letters into evidence, and in charging the jury to add attorney's commission to any verdict in favor of plaintiff. ¹ We reverse and remand for a new trial.

On November 14, 1975, Rochester Machine Corporation leased certain premises to Mulach Steel Corporation until November 14, 1976. This lease subsequently was extended to November 14, 1977. The appellant, during the lease term, breached the covenants of the lease. In response, the appellee caused the entry of judgment against appellant by confession for the sum of $37,944.49 together with costs of suit plus attorney's fees of 10% for collection, making a total of $41,738.94. Later, upon the petition brought by appellant, the court granted a rule to show cause why the judgment entered should not be opened. The parties subsequently entered into a consent order that the judgment entered against appellant by confession on January 24, 1978 be opened and that the case proceed to trial before the court and jury. ²

Appellant has raised two questions: first, did the court commit error in admitting into evidence letters written by respective counsel for the parties; and, second, did the court err in instructing the jury to add 10% attorney's commission if the jury found a verdict in favor of plaintiff.

A letter dated August 31, 1977 was sent by Rochester Machine Corporation to Mulach Steel Corporation entitled, "Lease from Rochester Machine Corporation of Realty in New Brighton, Pennsylvania." It detailed the extensive repairs needed to be made by Mulach for damages caused during the occupancy, estimated to exceed $30,000, plus the rental value of the premises during the time repairs were being made. ³ In response to this letter came a letter from appellant's counsel dated October 31, 1977. The letter states, "Mulach accepts responsibility" for some but not all damages caused to appellee's property. ⁴

The lower court explained in its charge to the jury Mulach's obligation to surrender the premises at the end of the term, or renewal thereof, in as good condition as they were at the beginning of their tenancy. The court also explained to the jury the admission and denials contained in Mulach's letter of October 31, 1977 and reviewed all the evidence as to the condition of the premises, the liability to make repairs, the admission of needed repairs and the denial of liability as to others. The court said:

You are to decide the weight to give to these admissions and declarations and denials contained in said letters, and you are to consider such letters with all the other evidence in the case and you are the ones finally to determine what the facts are in the case.

At the conclusion of its charge, the court asked respective counsel if they have any objections, amendments or additions to the charge. Appellant objected to the court's charge on attorney's commission. Furthermore Mulach contends the letter of October 31, 1977 was inadmissible evidence because it was an offer to compromise. Rochester claims that letter is an admission of a party opponent. The trial court concluded the letter was not an offer to compromise or settle.

The record, however, does not necessarily support the trial court's conclusion. The communications were initiated by Rochester long before judgment was entered by Rochester on January 24, 1978. Mulach responded to Rochester's inquiry before confession was entered. It is a logical inference under these circumstances that Rochester desired some extra judicial resolution of the dispute, otherwise, they would have simply had a judgment entered pursuant to the lease agreement. In fact, Rochester apparently weighed the October 31, 1977 response in their mind for some time before deciding to have a judgment entered. Thus, it is not unprobable that the communications between the parties were part of a negotiation process which did not resolve into a compromise or settlement but was initiated with that goal in mind.

The August 31, 1977 letter from appellee to appellant stated in pertinent part:

The extensive repairs made necessary by damage during your occupancy are as follows:

Building

1. Install new lay-in ceiling in toilet room.

2. Install trim on door.

3. Refit two (2) doors.

4. Install 37 lin. feet of handrail to match existing.

5. Re-glaze one sash in office.

6. Board up opening 10'-0 X 12'-0 with 2x4's and 1/2 plyscore.

7. Re-install 19'-0 of existing handrail.

8. Install new roll-up steel door 29'-0 X 22'-0 with electric operator 220V, 3 phase A.C.

9. Install new roll-up steel door approx. size 20'-0 X 20'-0.

10. Repair slats on roll-up steel door approx. size 20'-0 X 20'-0.

11. Repair and/or replace as needed approx. 625 sq. ft. steel siding.

12. Repair block and re-fit garage door on rear Black Building.

13. Refit door and repair operator on small garage door.

Our client has received an estimate from a contractor (Vanport Construction, Inc., Box 409, Beaver, PA) that the cost of such repairs will be $21,276.

Cranes

The three overhead traveling cranes in the building have been poorly maintained during your tenancy. As a result, the pendants on all have to be replaced, and the motors and switch gear need to be replaced or completely reconditioned.

Our client estimates the cost of this work to be about $10,000.

Storage Yard Fencing

6' High PAGE STYLE OTR Construction

Fabric #9 gauge wire X 2 mesh X 72 ALUMINIZED

Line Posts 21/2 OD Pipe on 10' maximum centers

Top Rail 15/8 OD Pipe

Terminal Posts 3 OD Pipe

Gate Posts 4 OD Pipe

Gate Frame 2 OD Pipe, strong welded corner construction

Post Footers All posts set 36 deep in the ground in concrete

ALL MATERIALS ALUMINIZED, HOT DIPPED GALVANIZED OR ALUMINUM

QUANTITIES:

2 16' Double Swing Drive Gates

2 4 OD Gate Posts

1 3 OD Corner Post

13 lineal feet of fence

Erection of above

Burn off and take down existing fence as required to install the above materials.

Our client has received an estimate from a contractor (Pittsburgh Fence Co., Inc., P.O. Box 522, Carnegie, PA) that the cost of such repairs will be $1,250.

In view of the nature and extent of the damage and the cost of the required repairs (over $30,000), we must insist upon a prompt and definite commitment from you respecting the restoration of the premises to their former good condition.

In conclusion, we wish to inform you that under Pennsylvania law, in a situation of this kind the landlord is entitled not only to the cost of repairs, but also to the rental value of the premises lost during the period while repairs are being made. Thus, you will see that it is in your best interest as well as our client's to resolve this matter as soon as possible. (Emphasis added).

The October 31, 1977 letter in response from appellant states in pertinent part:

After our visit to New Brighton, I have had the client make a detailed reply to your letter of August 31, and it consists of the following:

BUILDING

1. Client insists that the lay-in ceiling in the toilet room had fallen when they took possession, and they will not do anything about this.

2. Mulach accepts responsibility.

3. Mulach accepts responsibility.

4. Mulach accepts responsibility.

5. Mulach accepts responsibility.

6. Mulach has already boarded this up just exactly as it was when their Lease began.

7. Mulach accepts responsibility.

8. Mulach does not accept responsibility. Our employees tell us that Mr. Jeffrey Bruce cut all the holes in that door, and we will do nothing about it. He denies this, but this is a factual issue.

9. Mulach will install the old door and will set it into the present space. This is as far as we will go.

10. Mulach accepts responsibility.

11. Mulach will repair the siding and paint the same.

12. Mulach accepts responsibility.

13. We question whether or not the owners' insurance would cover this item. It occurred when the building was broken into by third parties.

CRANES

Mulach will accept no responsibility for the cranes except to replace the pennants. The cranes are in better shape today than they were when Mulach began its Lease. Our electrician tested them all and they all function well. As a matter of fact, when we took over the building under the Lease, our electricians did a lot of rewiring of these cranes and improved their efficiency. All the moving parts are hard steel which should last some 10,000 years. There is nothing that we are willing to do except to replace the pennants.

STORAGE YARD FENCING

All of the damage to this fencing was caused by third parties breaking into the yard. All of this damage is on police reports in New Brighton.

Paragraph 4 of the Lease states, inter alia, as follows: "Rochester shall maintain the roof, structure and exterior of the leased premises." It is our position that it is through no fault of ours that this damage occurred to the fencing, and that it be up to the landlord to repair it.

(Emphasis added.)

As a general rule, evidence which results from communications between parties prior to trial which are incident to negotiations to settle a dispute are not admissible evidence in court even if no settlement is ever achieved. In Rankin v. Phillippe, 206 Pa.Super. 27, 211 A.2d 56 (1965), a case involving a defamation action we stated:

The plaintiff also argues that the statement of retraction prepared by the defendants and their subsequent refusal to publish that statement should have been...