Lehigh Coal & Navigation Co. v. Harlan & Henderson

27 Pa. 429

• Court: Supreme Court of Pennsylvania
• Decided: July 1, 1856
• Status: Published

Opinion

The opinion of the court was delivered by

Woodward, J.

This is an action of covenant on a mining lease. One of the grounds assumed by the plaintiffs below (now defendants in error) was that an owner of reputed coal lands, who leases them to a tenant as such, and induces him to make large expenditures in opening and preparing to work the veins, is liable in covenant to the tenant if the veins turn out to be worthless — that the law implies a covenant of warranty on the part of the lessor, that the veins will be found to be worth working, and sufficient at least to reimburse the expenditures of the tenant. The first two counts of the narr. and many of the points submitted on the part of the plaintiffs are founded on this proposition, but as the court below ruled it against the plaintiffs, and they have taken no writ of error, it is not up for review, and we allude to it only for the purpose of saying that it is not to be considered as ruled by anything we may say on the other parts of the case.

To develop clearly the questions which are to be ruled, a brief sketch of this controversy must be first given.

The Lehigh Coal and Navigation Company, owning lands in the Shai'p Mountain, near Tamaqua, which contained or were supposed to contain several distinct veins of coal, entered into a lease on the 11th March, 1842, with Denniston, Bowman & Co., for one of said veins, known as the Q. vein. The lessees covenanted to make at their own expense all the necessary improvements for opening and working said vein, which were to be finished by the 1st April, 1843, and their advances for which were to be reimbursed out of the first rents that should become due from them for coal taken under the said lease. The term was for seven years from 1st April, 1842, and they were to mine at least eight thousand tons of coal in each year, for which they were to pay: for large or broken coal and for egg coal 35 cents per ton, for pea coal 10 cents per ton.

The memoranda subsequently attached to this lease related to details which need not be noticed here, except that the term was extended to 1st April, 1850.

On the 29th June, 1846, the company made another lease to. some of the same individuals, under the name of John Anderson & Co., of another vein called the P. vein, for "the same term and upon the same rent that they held the Q. vein. They were to drive at their own expense a tunnel from the Q. to the P. vein, and were to mine from the two veins not less than 15,000 tons per annum. On the 27th January, 1847, the lessees assigned both these leases to the defendants in error, Harlan & Henderson, who went into possession of these two veins.

On the 12th April, 1847, the company entered into a lease with Harlan & Henderson, which is the instrument declared on, and which leased to them for the term of three years from 1st April, 1847, “ the right and privilege to mine and take away stone coal from the veins known as the It. and S. veins, and any other veins intermediate between said veins and the Q. vein in the Sharp Mountain,” yielding and paying therefor 25 cents per ton for chestnut coal, and 50 cents per ton for all coal of a larger size, subject to a deduction on the whole of said rent of 5 per cent.

Thus, by virtue of three several leases, the plaintiffs below became tenants of four distinct coal veins of the navigation company.

They commenced mining in the two first-named veins in February, 1847, and after the third lease they pushed the rock tunnel from the Q. to the R. vein, which they reached in March, 1848. They found this vein 25 feet thick, but all in dirt fault, and after driving the gangway 415 feet in it without getting through the fault, they abandoned the vein early in December, 1848. They extended the rock tunnel on towards S. until they reached what they supposed was that vein, about a foot thick of shelly faulty coal, not fit for use. According to Mr. Patterson, the company’s agent, the plaintiffs never reached the S. vein at all.

From the court’s summary of the evidence it appears that there were mined during the three years 55,685 tons, of which 104 tons came -from the R. vein; all the rest from P. and Q.; that the gross rent therefor amounted to about $14,584; that the plaintiffs paid the company in cash $5160.95, and in houses built $4000 more; and that they have yet in hand $5423.06 of rent.

Having surrendered the premises at the expiration of the several leases, they instituted this action to recover damages for breach of the company’s covenants as contained in clauses or sections 11 and 12 of the lease of 12th April, 1847.

Under the 11th clause the plaintiffs claimed

1st. For work in faults in R., driving air shafts

and improving vein........$1549.85

2d. For driving faults in P. Q. and QQ. . . 4395.00

Equal to $5944.85.

And under the 12th clause, for timber and construction of chutes and screen building, for office, new chutes and fixtures, embankment of railroad, rock tunnel, driving slopes, and railroad iron in gangways of P. and R. and outside...........$15,032.04.

There was evidence that the work had been done and the materials furnished for which the plaintiffs claimed, but defence was taken on several legal grounds, the most important of which I proceed now to state and consider.

1. It was said that the lease of 1847 contains, upon a proper construction of it, no covenant for payment for any work done upon the P. and Q. veins by the plaintiffs.

The court was of opinion that that instrument was a lease only of the R. and S. veins, but that it contained covenants which reached beyond the veins immediately demised, and embraced the P. and Q. veins, and that the plaintiffs might recover under it for work done upon these veins.

To get at the meaning of the words “ said veins,” as they occur in the 11th and 12th sections, it is necessary to trace them back through the whole context to the premises, and there we have seen already, what the learned judge below admitted, that the thing demised consisted of the R. and S. veins. But in the first covenant which follows the formal parts of the lease propér, it is provided that “ the said party of the second part shall mine and take away from the said veins, and from the P. and Q. veins now in possession of the said party, at least fifty thousand tons of coal in each and every year during the continuance of this lease, provided the said veins by all proper management can be made to yield or produce said quantity of coaland it is supposed that here the four veins were so run together and blended, that all the subsequent covenants concerning “ said veins” refer to the four instead of the two veins; that there was in fact a merger of the two former leases in this one.

We cannot take this view of the matter. For the two purposes of fixing the whole production of the four veins, and making the rents under the three leases payable at one and the same time, this article of the lease does unite the P. and Q. veins with the R. and S. veins, and does so far modify the former leases. But this is the whole effect of this covenant. A similar instance is found in the prior leases. By the lease of 1842, 8000 tons per annum were stipulated for from the Q. vein, and when the lease of 1846 was made for the P. vein, it stipulated for a joint production from the “two veins" of a quantity not less than fifteen thousand tons per annum. Now, nobody ever supposed that this was a merger of the lease of 1842 in that of 1846; these plaintiffs certainly did not think so in January, 1847, when they took assignments of each of these leases as still subsisting. Why, then, when a third lease is made on the same principle, should it be accounted a merger of the two former ?

Where the same parties are carrying on mining in several veins belonging to the same landlord, and the covenants bind them to work in all the veins, it is advantageous to both parties to fix the rate of production in such manner that if one vein will not yield it another may. It is advantageous to the landlord, that he may be sure of his anticipated rent; to the tenant, that he may obtain profit on the largest possible amount of coal. Some of the veins may run into fault, whilst increased mining may be carried on in others; or, for many other reasons, preparatory work may have to be done in one vein which shall suspend mining therein, while the hands and implements for mining in that vein may be profitably employed in another. A rigid rule that should require a given number of tons from each vein, would lead to frequent disappointment and difficulty, whilst one that fixes the aggregate of all the veins, admits of adaptation to those unforeseen circumstances which in this business are always occurring. It was, we suppose, for the purpose of guarding against contingencies in one vein or another that might affect the gross 'production, as well as to make all the rents payable at one time, that this covenant was introduced into the lease of 1847; and its whole scope and effect are to be limited to these objects.

The next succeeding covenant proceeds to distribute, the rights and duties of the parties under numerical heads or sections, from 1 to 13, inclusive; and when the expression, “said veins,” occurs in these sections, we are to understand it as referring not to the four veins, grouped in the covenant we have been considering for the special purposes stated, but to the two veins which are the subject-matter of the lease. Established rules of construction require all such detail covenants to be referred to the premises, unless a different reference be clearly indicated by the language used. Here there is nothing to manifest an intention to merge the former leases, and the details arranged throughout these thirteen articles cannot apply to the P. and Q. veins, for they are inconsistent in some points with the regulations prescribed by the former leases for these veins. For instance, it is covenanted in the 4th article, that the lessees will, at their own expense, make all the necessary improvements for “ opening and working the said veins” — a provision which it would he absurd to apply to veins already opened, and in which the party promising was then actually engaged in mining. But if the expression, “ said veins,” refers exclusively to the R. and S. veins in the 4th article, what warrant have we for saying that the same words, when used in the 11th and 12th articles, include the P. and Q. veins ? Obviously none. Covenants, like all other contracts, are to be construed according to the intentions of the parties as nearly as the words will permit; and there is no surer guide to the understanding and intentions of the parties, when words are equivocal, than their acts and declarations under the agreement, called commonly its contemporaneous construction. The conduct of these parties, and especially their correspondence, prove that they understood the lease of 1847 as we have expounded it. We feel great confidence, therefore, in our conclusion that sections 11 and 12 have no reference whatever to the P. and Q. veins, but that improvements and work in these veins were left to stand for compensation, upon the provisions of the prior leases. It may be added, that the diversity of rents under the several leases is a strong reason against the assumption of a merger.

2. The next objection taken to the plaintiffs’ recovery was, that they having agreed to look for payment for work done upon the B. and S. veins to compensation by an allowance to be made out of’the coal rents, agreed by them to be paid to the company, cannot claim for said work out of any other fund than one arising from rents of the said veins.

We construe the “allowances” of the 12th section to relate to the work provided for in sections 4, 7, and 8, and these allowances, it is expressly stipulated, are to be made from the rents hereinbefore agreed to be paid, which, according to our construction, mean the rents to accrue from the R. and S. veins. The company seem to have provided by their several leases, that each of their coal veins should pay for its own development. And this is according to the usual course of.mining leases. The landlord has invested his money in the title of the coal land — the ténant is expected to invest his in opening and working the veins. Both look for their reimbursements to the coal to be mined; the tenant, generally, as in the instance before us, expecting the first fruits, and these to be gathered by deductions from the rent; the landlord, to obtain his rent unimpaired after the improvements have been paid for. The lease of 1847 seems to have been constructed on these general and familiar principles. But who is to bear the disappointment, when veins thus opened prove inadequate to reimburse the outlays? If the tenant may charge the expenses against the accruing rent of other veins held of the same landlord, he may charge the landlord personally; and then a mining lease, without an express covenant to that effect, amounts to a warranty that coal will be found sufficient to reimburse the cost of opening. The court below held that no such covenant could be implied, and as this opinion is not complained of, we are to take it for the present as correct. In support of it, there is one consideration of considerable weight that might be urged. Mining is so much of an art, that tenants, who take leases of this sort, are generally more capable of judging correctly the quality of coal veins than the landlord of whom they lease. It is no uncommon thing, to find, in the mining districts, men who never read a page of any scientific work, but who, bred up to the business of mining, understand all the peculiarities of coal veins better, and can reason, a priori, on their probable yield more soundly than the most learned professor, who has had no practical experience. Hence it is, that when a miner and an owner of coal lands, who is not a miner, come together to treat for a lease, the advantages which always belong to superior knowledge are on the side of the tenant. If he have doubts of the vein to be worked, he knows how to prove it before his expenditures are made, or stipulated to be made. He is not the party who stands in need of legal implications for his protection; and if he is content to go on without an express covenant of warranty, it will be a grave question, to be decided when it arises, whether he does not go on at his own risk without an implied covenant in his favour. However this may be in general, we must assume that it was so in this instance; and then it is clear, from the construction we have adopted, that the plaintiffs agreed to look for the allowances, mentioned in the 12th article, to the rents to accrue from the R. and S. veins. The mistake which the court made in holding that the covenants sued upon reached beyond the premises leased in the instrument containing the covenants, led them to the illogical result of holding the landlords liable for the tenants’ mistakes, while at the same time they decided that the tenants took the veins “ subject to the ordinary risk of mining, without any covenant express or implied of the existence of coal, or of the quantity, or of the quality of coal.”

The rent of these veins was to be measured by applying the stipulated prices to the number of tons mined. These tons were to be added to the production of the other veins, to make up the stipulated aggregate of 50,000 tons from all the veins, but for the purposes of the rent they were to be estimated separately. This must have been so, because the rate of compensation was different from that fixed in the prior leases for the P. and Q. veins. And there was no difficulty in keeping a separate account of the production of the R. and S. veins. It was necessary in settlement with the hands employed, and, in point of fact, it was done, as appears by the exhibit, in the paper-books of the mining operations, from April 1st to July 1st, 1848. To that separate account, and only to that, we hold the allowances stipulated for in section 12 were chargeable.

But the allowances and payments contemplated in the 11th section stand on a different footing. These were to be made for dirt faults and rock faults, and upon our construction, for such faults in the R. and S. veins only. Of course compensation was not recoverable in this action for rock, slate, or dirt faults in P., Q., or QQ., and between these veins and the R. vein no intermediate veins were found. Nor were the slope and rock tunnel to be compensated in damages, for these were to be made by the tenants “ at their own expense,” and to be allowed for under the 12th section by deductions from the rent accruing in the R. and S. veins. But for the dirt, slate, and rock faults that should be encountered in driving the gangway of R. and S., compensation was to be made —and that generally — and not out of accruing rents or any other particular fund. An important qualification, however, applicable to all these faults, was that the company were first to be consulted and to approve, “ by their assent in writing, of running sueh gangways in or through any faults.”

Here two other grounds of defence are brought to view. In the first place, it is said that for the work done in faults the plaintiff cannot recover, because it was not done by the written assent of the company — and secondly, that the abandonment of the work by the plaintiffs was a complete bar to any claim made by them under the lease.

If either of these objections is well founded, the plaintiffs were not entitled to recover by virtue of the 11th section — if both, they were doubly barred.

There is no dispute that whatever faults were worked in R. were worked without the written assent of the company, but it is insisted, and so charged in the declaration, that the defendants waived and dispensed with the requirement of their assent in writing. Suppose they did, would covenant then lie upon a sealed instrument, so modified, by parol ? Let it be noticed that this was not a condition precedent to be performed by the plaintiffs, and which the defendants might have waived by parol without impairing the integrity of their covenant, or the plaintiffs’ right of action thereon, but it is part of the very covenant sued on— one of the conditions on which the doing of the work, and the consequent liability of the defendants, were suspended, and if it was changed by parol, the defendants’ action should have been assumpsit, and not covenant. The distinction is taken in Vicary v. Moore, 2 Watts 457, and followed in other cases between an alteration of the plaintiff’s stipulations, being but conditions precedent to the action, and those of the defendant, on which it is directly founded. The performance of the first may be waived, so as to entitle the plaintiff, without more, to an action on the defendant’s covenants, hut to sustain a count based specifically on covenants, modified by parol, would require us to give to the whole the quality and effect of a specialty. The cases of Greene v. Roberts, 5 Wh. 85, and McCombs v. McKennan, 2 W. & S. 218, cited in argument, are referable to this distinction.

The law of all the cases is, that when a plaintiff sues on a covenant which has been modified by parol in a point essential to the defendant’s liability, the action should be assumpsit, “ the written contract being treated as abandoned, or used no further than to mark the terms and extent of the new stipulations.”

Now the defendants in this case covenanted to pay for work that should be done under their written assent. They are sued on that covenant, and it is alleged, as a part of the plaintiffs’ case, that the written assent was dispensed with, and the parol assent substituted, and this alteration of the covenant, if ever made, was by parol. The contract, then, is no longer the covenant that was sealed, and the remedy must change with the contract. It is suggested that the action of covenant in Pennsylvania is an equitable action. Before our equity powers were full blown, this action was sometimes made to answer the purposes of a bill in equity, and now, under a 'plea of covenants performed with leave, &c., an equitable defence may be given in evidence; but the action, so far as regards the instrument sued on, is strictly an action at law upon a contract under seal. A party who brings such an action, and cannot make out a breach of the defendant’s covenant, as it stands written, signed, and sealed, has no case in a court of law. To bring down the covenant to parol in his declaration in order to suit his evidence, is to defeat his action.

It is apparent from all this case, however, that there never was a parol modification of the defendants’ covenant. The lease stipulated that the mining should be done under the eye of the defendants’ agent, and the plaintiffs proved that he assented to the work for which they claim damages. In the pleadings their case is that of a covenant modified by parol — in the evidence that of a covenant performed, not according to its tenor, but to the satisfaction of defendants’ agent. The agent denies his assent, and on this point, as is usual with parol evidence, there is conflict. It was to exclude such a conflict that the parties stipulated for the written assent, not of an agent of the company, but of the company themselves. There was no proof that the agent had authority to waive this stipulation. What then did his acquiescence amount to ? At most to an implied assumpsit, on which the company may possibly be liable for a quantum meruit; but it is too ■clear for argument that the acquiescence of the agent could not make them liable in covenant on the sealed instrument. Covenanting to pay for such work only as should be done under their written assent, they are not liable in this action for work done under the mere oral assent of an agent.

It would seem that the parties contemplated the occurrence of faults as a possible, but not very probable, contingency. The plaintiffs hound themselves to push on their gangways with “ all proper management, means, efforts, and exertions,” and if faults should occur they might cut through them at their own expense, without consulting the company, for the sake of reaching the coal, or if they meant to charge the company, they should give the company an opportunity to decide on prosecuting or abandoning the work, and their written assent to its prosecution should he the evidence of the corporate liability to pay for it. That the fault was to be tested before the company should be called on to decide whether to stop or proceed, is shown by the provision that ten yards lineal mining' into the fault was to be done by the plaintiffs without compensation, and the excess only to be paid for by the company, and that after being first consulted and approving by their assent in writing. When the plaintiffs undertook to work beyond the ten yards without the stipulated consultation and assent, they did that which was lawful and proper, and which seemed, perhaps, to be best for their own interests, but which they knew, if they ever read their own agreement, would not make the company liable to them.

The other ground of defence, that the abandonment of the work before the expiration of the term named in the lease was a bar to the action, need not be discussed, for the point last noticed is decisive against the plaintiffs’ right on the 11th section.

Nor is it necessary to consider another question suggested, whether, under the pleadings, the plaintiffs could recover back money once voluntarily paid, for the only ground on which they are entitled to recover at all is that which is found in the 12th section, and that is limited to the rents which accrued in the R. 'vein. But they have, confessedly, in their hands more of the company’s money than these rents amounted to, so that they were not entitled to a verdict on the only ground that their action had to rest upon.

It is obvious that the construction we have given to the lease would have led to the rejection of the evidence mentioned in the first error assigned, and to instructions that would have prevented a recovery.

It may be true that we are administering a severe measure of justice; but the plaintiffs made the contract such as it is, and if there be hardship in the case, it is self-imposed. Courts of justice are doing their appropriate work when they hold parties to the plain meaning of their written contracts. We only expound and enforce that which they agreed should be the rule of their conduct.

The judgment is reversed and a venire de novo is awarded.