Rainey v. Hogsett

100 F. 207, 40 C.C.A. 335, 1900 U.S. App. LEXIS 4246

• Court: Court of Appeals for the Third Circuit
• Decided: February 16, 1900
• Docket: No. 3
• Status: Published

Opinions

ACHESON, Circuit Judge.

On February 20, 1893, by deed of that date, Robert Hogsett conveyed certain coal lands, situate in Fayette county, Fa., unto William J. Rainey, who gave a bond! secured by a mortgage on the property, for a balance of the purchase money, payable in 10 equal annual installments, with interest. This suit is a scire facias on the mortgage brought to recover the installment, payable on February 20, 1898. The deed and mortgage were executed under an agreement in writing dated December 28, 1892, containing the following provision:

“(6) It is intended that the party of the second part shall have by the proposed purchase at least five hundred (500) acres of mineable coal, it being assumed that the ribs, etc., of said mines available and tit to make good coke are sufficient, with the solid coal, to make that quantity. It is not expected, however, that, the party of the second part will make a survey of said coal and mines before accepting the deed and taking possession. But it is provided that, if there is any shortage in the said quantity of 500 acres, the same shall be allowed for at the rate of eight hundred dollars per acre, and credited upon the first Installment of the mortgage given by the party of the second part. And it shall be the duty of the party of the second part to make his claim for shortage, if any he finds, within three months after entering upon the said property, and he shall give the party of the first, part full opportunity of investigating the same by making any additional surveys he may desire to make.”

The purchaser, William J. Rainey, having entered upon the property, made within the specified time the following claim for shortage:

“Mr. Robert Hogsett, IJniontown, Pa. — Dear Sir: A survey of the Mt. Braddock property purchased by me from you under agreement dated December 28, 1892, reveals the fact that the unmined coal in the tracts amounts to four hundred and seventy-four acres, and that the ribs, etc., of said mines available and fit to make good coke contain ten acres of mineable coal, which makes sixteen acres less than the agreement provided I should have. I therefore make a claim for this shortage of sixteen acres, at the rate of eight hundred ($800.00) dollars per acre, amounting to twelve thousand and eight hundred ($12,800) dollars, to be deducted from the first installment of bond and mortgage given by me to you for balance of purchase money, as provided for in said agreement. W. J. Rainey.

“Cleveland, Ohio, May 10, 1893.”

This claim Hogsett would not agree to, and he rejected it. In June, 1893, he. had a survey' of the property made, and it would seem that from the report thereof made to him he took and thereafter maintained the position that there was no shortage of coal at all. On the day before the first installment of the mortgage matured, namely, on February 19, 1894, the parties made a supplemental agreement, the terms of which were embodied in the following receipt signed by Hogsett, and given by him to Rainey:

“Uniontown, Pa., Feb. 19, 1894.

“Received of William J. Rainey his check for $25,000.00, being payment of the interest due on bond dated February 20, 1893, and $5,720.00 on account of installment of principal due February 20, 1S94; and I hereby agree that the time of payment of the balance of this installment shall be extended one year from this date, and all the remaining payments are extended one year from the time fixed in said bond. If there shall be any shortage in the acreage of coal, the amount to be deducted on account thereof shall be deducted from the payment of February 20th, 1890. The amount of said shortage is to be ascertained within six months. ■ Robert Hogsett.

“S. E. Ewing, Witness.” .

There was evidence in the case to show that there was an actual shortage in the mineable coal of about 26 acres, and evidence to show a still further shortage was offered and rejected. There was also evidence to show that within the sis months specified in Hog-sett’s receipt of February 19, 1894, Rainey, by his agent, saw Hog-sett, and claimed a shortage of 26 acres, and endeavored, unsuccessfully, to have Hogsett come to an agreement with respect to the amount of shortage, but that Hogsett denied there was any shortage, and persisted in such denial. The court instructed the, jury that the amount of defalcation for shortage in coal to which Rainey was entitled was limited to the 16 acres claimed by him in his notice of May 10, 1893, and directed a verdict accordingly.

In so instructing the jury, the trial court, we think, failed to give effect to the intention of the parties, with respect to the allowance for shortage in the coal, as disclosed by the original agreement and the supplemental agreement, taken together. The leading intention of both parties, as declared in the sixth paragraph of the agreement of December 28, 1802, was that the purchaser should get at least 500 acres of mineable coal, and that for any shortage he was to be allowed a deduction at the rate of §800 an acre. To accomplish this ruling purpose, ii. was provided that the purchaser should make claim within three months after entry; that then the vendor should have full opportunity for investigation, by additional surveys, if desired; and, finally, that the deduction be made from the first installment of purchase money, which fell due February 20, 1894. This scheme failed, but from no fault of Rainey. He made claim within the stipulated time, and then gave Hogsett full opportunity for investigation. The latter sent his surveyor into the mines, and had a survey made. The result was a denial by Hogsett of any shortage. Thus the question of the amount of shortage was entirely open between the parties when the supplemental agreement set forth in Hogsctt’s receipt of February 19, 1894, was entered into. This is recognized in and by that paper, which states:

‘•]f there shall he any shortage in the acreage oí coal, the amount to he deducted on account thereof shall be deducted from the payment of Kebruary 20, 1815(5. The amount of said shortage is to be ascertained within six months.”

Xow, upon the face of this stipulation, there is neither concession of the existence of any shortage, nor limitation upon deduction, if shortage should be found. To restrict the allowance for shortage, it is necessary to read into the paper unexpressed terms.

Looking at the language employed in Hogsetfe receipt, is it to be believed that the parties intended that, although within the designated six months it should be demonstrated that there was a shortage of 2(5 acres, yet the deduction should he restricted to 16 acres? If such was the intention, nothing was easier than to say so. Wliy should Ilogsett he permitted to fall hack on a claim unduly limited by reason of a mistake of fact, and which claim he refused to accept when he had the opportunity to do so, and, indeed, had utterly repudiated? To construe the recited provision in Hogsett’s receipt as not only postponing the deduction for shortage two years, but also as giving him six months more time within which to reduce, if he could, the amount of the claim Rainey had made, strikes us as a very one-sided rendering of it. Certainly, the language used does not require a construction which compels Rainey to pay for more coal than he got. The fairer reading of the clause is that within the specified six months the true amount of shortage, if any existed, should be ascertained. This is the apparent meaning of the clause, and, we think, is its real meaning. This conclusion leads to a just result, and effectuates the fundamental intention of the parties, unequivocally expressed in the original agreement. In Canal Co. v. Hill, 15 Wall. 94, 21 L. Ed. 64, it was declared that, where the substantial thing which the parties have in mind can be gathered from their whole agreement, it will control mere formal provisions, which are intended only as means of attaining the substance; and in Heryford v. Davis, 102 U. S. 235, 244, 26 L. Ed. 160, it was said that the construction of an instrument is to be determined by the ruling intention of the parties, gathered from all the language they have used. The judgment of the circuit court is reversed, and the case is remanded to that court, with direction to grant a new trial.