Timlin v. Brown , 158 Pa. 606 ( 1893 )

Opinion by

Mr. Justice Dean,

Timlin, the plaintiff, was the owner of fifteen acres of land. Brown, one of defendants, was mining coal on land adjoining, and believed the seam extended under the fifteen acres; he opened negotiations with Timlin, which resulted in a parol agreement giving him the right to mine. A written agreement was entered into between Timlin and Brown and Hunter, which, although dated April 1, 1882, does not appear to have been formally executed until the close of the year.

The contract, as first agreed upon with Brown alone, was for the right to mine for a term of five years from April 1,1882, at a royalty of one cent per bushel, witli a minimum of 6000 bushels annually; after sinking the shaft, Brown took Hunter in partnership with him; the first contract was then canceled, the one sued on executed, and dated the same as the first, the royalty being reduced to half a cent per bushel, the term extended from five years to ten, and the minimum annual output raised from 6000 to 10,000 bushels. It provides: (1) That Brown & Hunter shall have the right to mine under the whole fifteen acres for ten years from the first of April, 1882. (2) They shall pay monthly to Timlin a half cent per bushel royalty. (3) Timlin to have coal for use in his own house at cost of digging, but to be paid no royalty on that coal. (4) Timlin to get 200 bushels slack coal annually free of charge, but to be paid no royalty on the slack. (6) Brown & Hunter, as a minimum, to mine 10,000 bushels each year, but to have the right to mine as much more as they choose. (6) In case they fail to mine 10,000 bushels, they agree to pay for 10,000 bushels. (7) Brown & Hunter agree to give up the mine at the end of the term in good workmanlike condition.

In June, 1882, Brown sank a shaft about twenty-four feet, and struck about twenty-seven inches of coal; he drifted off from the bottom of the shaft 250 feet and worked out rooms; the mine was thus operated for about two years, when, as he alleges, the roof became dangerous, and he abandoned the shaft for mining purposes; he then ran down a slope at another point, reaching coal at a short distance from where he had ceased working in the drift. From this slope defendants mined coal up to 1st of April, 1889, when the last settlement was made betweexr them. The defendaxxts alleged at the trial that the coal seam had then run dowxi to less than a foot in thickness, and in consequence they ceased operations ; Brown, however, admits that subsequently, on November 11, 1889, he assigned the contract to one Case, aixd there is evidence that some mining was done under it in 1890..

The plaintiff’s demand was for the minimum royalty, $50.00 per yeai’, for the three years from April 1,1889, the date of last settlement, up to April 1,1892, the end of the ten years term; also for 450 bushels of slack not delivered, worth three cents per bushel; in addition, daxnages for removirxg the derrick at the shaft, and sufferixig the shaft itself to fall in, were demanded.

The court instructed the jury, that, under their contract, defeixdaxxts were liable for the minimum royalty, $50.00 per year, for the last three years of the term. This instruction is the error alleged in appellants’ 2d, 3d, 4th axid 5th assignmexrts. It is argued that, under the contract, if defendants prosecuted their xnixiing operations until the seam had become so thin it could no longer be mined at a profit, they were released from their covenant to pay. This brings us to a construction of the contract.

It was a sale of the coal ixr place under the fifteen acres, at the price of a half cent per bushel, to be paid monthly as the coal was mined, with right to a term of texi years in which to mine and remove it; they further agreed to mixxe at least 10,000 bushels each year, but, in case they failed to do so, then they agreed to pay a royalty on 10,000 bushels. That is, the contract was a sale of a.11 the coal under the fifteen acres for the xninixnum price of $500; if there were xxxore thaxi 100,000 bushels mined withixx the texi years, half a cent a bushel was to be paid on the excess in addition to the $500.

The grant is absolute of all the coal oxi the tract; the minimum and maximum prices are fixed absolutely. It is not a mere license to mine. This stipulation in the contract, “In ease the said Brown & Hunter fails to get out the amount before stated, they agree to pay a royalty on 10,000 bushels each and every, year,” fixes, without regard to contingencies, the liability to pay. Not only is this the obvióus meaning of the contract from its words, but the evidence shows the parties themselves must have so understood it. The first contract provided only for a five years term and a minimum of 5,000 bushels annually, but after the shaft had struck a workable seam at a slight depth, the first contract was canceled and the one in suit, doubling the minimum and term, was made. Presumptively, there was no uncertainty in the mind of either party about the existence of workable and marketable coal in the fifteen acres; and subsequent operations, for seven years, showed the correctness of their judgment; even then, defendants assigned the lease to Case, who mined under it the eighth year. There is nothing in the contract indicating any intention to modify or relieve the defendants from their absolute obligation to pajr on the contingencies of the mine proving unprofitable, or of exhaustion, of the coal before the end of the term; the plaintiff protects himself against selling too cheap by stipulating, in addition to the $500, for half a cent a bushel on the excess above 100,000 bushels, but defendants do not protect themselves from buying too dear, by stipulating for a deduction should the quantity fall short of 100,000. This is not the case of parties dealing under a mutual mistake as to the existence of the subject of a contract, where afterwards it was proved to have had no existence, as in the authorities cited by the learned counsel for defendants; here workable coal under plaintiff’s land did exist; defendants bought it at a fixed price; neither knew nor could know the exact quantity; defendants, in effect, say they were mistaken in their estimate of the quantity; instead of ten years work, as they thought, they took out all it was profitable to mine in seven or eight; but the existence of the coal was undoubted, the quantity alone was problematical. Defendants were willing to pay at least $500 absolutely for it; the plaintiff stipulated for more money if it should turn out there were more bushels than estimated.

The cases of Kemble Iron Co. v. Scott, 15 W. N. 220; McCahan v. Wharton, 121 Pa. 424; and Muhlenberg v. Henning, 116 Pa. 138, are not in point. In each of these cases, the covenant for a minimum annual payment was, in view of the words of the contract, the subject of it and the surroundings, not unqualified. In Kemble Iron Co. v. Scott, supra, the existence and quality of the ore were both uncertain when the contract was entered into ; the case came into this court bjr appeal from a judgment in the court below on judgment for want of a sufficient affidavit of defence; the affidavit averred there was' neither quantity nor quality ; the judgment was reversed and the case directed to be submitted to a jury. In McCahan v. Wharton, supra, the contract was to prospect and dig for ore, and as soon as found in sufficient quantity to justify shipping, then in no event to pay a less royalty than fifty cents per ton on twenty-five hundred tons each year. Sufficient ore to justify digging and shipping was not found; this was held to be á good defence to the demand for the annual minimum; the manifest intent of the parties was to make the liability subject to the contingency of finding a sufficient quantity to justify shipping.

In Muhlenberg v. Henning, supra, the covenant was to mine clean, merchantable iron ore; the lessees for nine months made diligent search and expended a large amount of money, and failed to find either tire quantity or quality of ore specified; they alleged, that, on report of their failure to the lessor, a suspension of the work was consented to by him. The late Justice Clark, delivering the opinion of this court, said: “ The lessees were bound to prosecute the work without delay. . . . If, however, it was established by actual effort, that at the time of the contract there was no ore in the land of the kind contracted for, it cannot be pretended upon any fair and reasonable construction of the contract that the lessees, nevertheless, were bound for the royalty, for the payment of the royalty was undoubtedly based on the assumption of the parties that ore of the quality existed there.”

In all these cases, the existence of the subject of the contract was unknown or uncertain, or, if it existed, the quality could only be determined by actual use. In the case before us, at the date of the contract the quantity was as well known as it could be at that time, — no man ever yet knew how many bushels or tons of coal were under a tract of land until he mined it out; faults and clay veins may exist, which cut out the seam for sonm part of the area; it may not be persistent in thickness; may rise higher or thin down. But the existence of workable marketable coal under this land had been demonstrated by the lessees in sinking the shaft. The only element of uncertainty— the quantity — they took the risk of, by an unqualified covenant to pay a fixed minimum sum. The contract is like unto that in Jervis v. Tompkinson, 1 H. & N. 195, where the lessees, knowing a salt mine, entered into a contract to mine 2000 tons of salt every year, or pay for the deficiency. It was held immaterial, in view of the unqualified covenant, whether the salt could be profitably mined, or whether it had, during the continuance of the contract, become exhausted.

We think the learned judge of the court below put upon this part of the contract the proper construction, and defendants’ assignments of error to this portion of the charge are overruled.

The court further instructed the jury as follows: “Then as to the derrick that was there; we think that whatever the cost of the derrick itself is, and the putting of that shaft in repair by taking the débris out, is about all the plaintiff should be entitled to — whatever the evidence shows that to be.” This constitutes the subject of appellants’ first assignment of error. The undisputed evidence is, that defendants, when they commenced work, put up a small derrick to raise the coal from the bottom of the shaft; this method was continued for two years, when it was abandoned and the slope adopted. The shaft was of no further use except as an air shaft; the derrick, then, was wholly useless, and defendants had a right to remove it. While, to a certain extent, the preservation of this opening for ventilation was probably necessary to operating the mine, and would be covered by their covenant to “ give up the mine in a good workmanlike condition,” under no reasonable construction were they obliged to leave there a derrick which had been abandoned more than five years before, and a wholly different method of. raising the coal substituted. A derrick in no way affected the “ workmanlike condition ” of a slope mine, and therefore plaintiff had no well-founded claim for its value. It was error to submit this evidence to the jury.

It is argued by appellee’s counsel that the jury did not allow plaintiff for this item, and consequently the instruction did defendants no harm. We cannot certainly know this. The claim, excluding the derrick, was for three years’ royalty and the value of 450 bushels of slack coal, amounting altogether to $163.50; the verdict was for $126.40. There was conflicting evidence as to defendants’ liability for the slack, which was for the jury ; then, defendant Brown testified to quite a number of items for which he claimed credit, such as coal got by mother of plaintiff, and actual payments made to Timlin, the whole amounting to more than $50.00. All these credits were disputed by plaintiff. The jury may have allowed a part of these, and also have put a much less value on the derrick than that fixed by plaintiff. It is enough to say the error may have wronged defendants.

For that reason, the first assignment of error is sustained, the judgment is reversed, and á v. d. n. awarded.