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FOULKE v. MILLER (03/14/55)

THE SUPREME COURT OF PENNSYLVANIA


March 14, 1955

FOULKE
v.
MILLER, APPELLANT.

Appeal, No. 27, Jan. T., 1955 from decree of Court of Common Pleas of Delaware County, Nov. T., 1952, in Equity, No. 352, in case of Kirk Foulke, et al., trading as H. Hessey Miller v. H. Hessey Miller et ux. Decree affirmed.

COUNSEL

Wm. Chas. Hogg, Jr., for appellants.

Paul C. VanKyke, with him James A. Cochrane and Cochrane & VanDyke, for appellees.

Before Stern, C.j., Stearne, Jones, Bell, Chidsey and Musmanno, JJ.

Author: Bell

[ 381 Pa. Page 589]

OPINION BY MR. JUSTICE BELL

This case arose by a bill in equity for an injunction. The basic issue is: Did the agreements which prohibited defendants from dealing in cinders and cinder aggregates include slag?

The defendant, H. Hessey Miller, and his wife formerly owned a cinder business in the City of Chester, Pa., and traded under the name of "H. Hessey Miller". On or about January 1, 1943 Miller and his wife sold to plaintiffs a one-half interest in their business, which was described as that of "buying, selling and dealing in cinders and cinder products." The purchase price was $20,000. Pursuant to this written agreement plaintiffs and Miller and his wife entered into a written partnership agreement dated April 1, 1943, in which Miller agreed not to engage in a similar business within 300 miles of the City of Chester for a period of ten years.

On or about January 1, 1944 the defendants by written agreement sold to plaintiffs their remaining one-half interest in the business for the sum of $20,000. and their partnership was dissolved. Defendants in and by this 1944 agreement sold to plaintiffs "all of our interest of every kind and nature whatsoever of, in and to the above-mentioned business, and all assets of every kind and nature whatsoever in connection therewith."

Defendants also covenanted that neither of them would directly or indirectly, as an individual or as an officer or employee of a corporation, engage in the business of buying, selling or dealing in cinders or

[ 381 Pa. Page 590]

    cinder aggregates, or use the name of "H. Hessey Miller" in the business of buying, selling or dealing in cinders or cinder aggregates.

The Chancellors found that a substantial part of the purchase price was paid for the good will, the right to the exclusive use of the name "H. Hessey Miller", and complete freedom from interference or competition by Miller in any phase of the business for a period of fifteen years within a radius of 400 miles of the City of Chester.

At the time of the written agreements above mentioned, the principal uses of the cinders in the business conducted (originally by defendants and later) by plaintiffs and defendants as partners were for the construction of cinder or cinder concrete building blocks, and as fill-in for the construction of drive-ways and public roads. Cinder products or cinder aggregates were apparently used synonymously. Aggregates are any designated inert material which put together into a conglomerated mass forms concrete, mortar and plaster.

Due to strikes in the coal regions and increases in the price of coal, and the development of slag (cinder), plaintiffs in 1949 turned most of their business into slag cinder as distinguished from coal cinder.*fn* Plaintiffs' business now is fundamentally the same as it was in 1943 and 1944 and they now serve the same trade they served then.

The Chancellors found from the testimony of an experienced and impressive expert, Allen J. Johnson (who testified on behalf of plaintiffs) that cinders are the solid products of combustion and are found in

[ 381 Pa. Page 591]

    three forms or conglomerates of three forms, namely, ash (formed at low temperatures), clinker (formed at medium temperatures) and slag (formed at high temperatures); and, accordingly, the term "cinder" is a generic term used to described these three forms. Any one of the three forms of cinder can be formed in a boiler furnace or a blast furnace and any form of cinder can be changed into any other form. Coal cinder and slag cinder differ only quantitatively and not qualitatively in their chemical constituents because the percentage of elements in coal and in iron vary in nature and, further, because there is a larger percentage of combustible matter in the coal cinders, since it is not subjected to as high temperature as iron ore in the blast furnace, and finally, the iron oxide is higher in the cinder taken from a fuel furnace than from a blast furnace because in the blast furnace operation, greater care is taken to extract the iron. Mr. Johnson further testified that the terms "cinder" and "slag" are used interchangeably and are virtually synonymous.

Plaintiffs' expert was corroborated, as the Chancellors further found, by the definition in Webster's International Dictionary of the terms "cinders" and "slag". While Webster gives six definitions of the word "cinder" the first definition is, "1. The slag from a metal furnace; dross; scoria." The third definition is, "... the residue of anything burnt, esp. the small particles of clinker left by burning soft coal."

Slag is thus defined by Webster's Dictionary as "1. The dross, scoria, or recrement, of a metal ... called also esp. in iron smelting, cinder."

Defendant Miller apparently regretted the sale of his business because he attempted to persuade plaintiff, Kirk Foulke, to sell the business in 1945; and in 1948 attempted to persuade Foulke to hire him as a

[ 381 Pa. Page 592]

    consultant. Later on in that year Miller asked Foulkes' permission to go into the slag business. Foulke replied, "Hessey, that is still the cinder business. ... you sold out fair and square and this is part of the cinder business." Miller replied, "... there is no law can stop me from making a living ..." Miller thereupon went into the slag business and held himself out as "The Original H. Hessey Miller" within eight blocks of Plaintiffs' property.

The Chester Blast Furnace, which supplied plaintiffs with slag, was plaintiffs' sole available source of slag. In September, 1952 defendant, H. Hessey Miller, obtained the exclusive right to purchase slag from the Chester Blast Furnace. The loss of this source of supply will, unless restrained, force plaintiffs into bankruptcy.

The Chancellors found all the important facts in favor of the plaintiffs and issued an injunction against H. Hessey Miller.

"Findings of fact made by a Chancellor who saw and heard the witnesses, when confirmed by the Court en banc, will not be reversed on appeal if they are supported by adequate evidence: Pregrad v. Pregard, 367 Pa. 177, 80 A.2d 58; Barrett v. Heiner, 367 Pa. 510, 80 A.2d 729. However, that well-settled principle is confined to findings which are true and genuine findings of fact. "With respect to [a] inferences and deductions from facts and [b] conclusions of law, both the Court en banc and the appellate Courts have the power to draw their own inferences and make their own deductions and conclusions: Barrett v. Heiner, 367 Pa. 510, 80 A.2d 729; Noonan Estate, 361 Pa. 26, 63 A.2d 80; Payne v. Winters, 366 Pa. 299, 77 A.2d 407; Smith v. Smith, 364 Pa. 1, 70 A.2d 630.': Kalyvas v. Kalyvas, 371 Pa. 371, 375-376, 89 A.2d 819": Peters v. Machikas, 378 Pa. 52, 56, 105 A.2d 708.

[ 381 Pa. Page 593]

Defendant's principal contention is that the words "cinders" and "cinder products" and "cinder aggregates" did not include slag in 1940 or 1944; and that since slag was not used by plaintiffs at the time of the agreements the parties could not have intended the agreements to include "slag" and defendant can now engage in the slag business.

The issue boils down to what was the intention of the parties when they used the terms "cinders", "cinder products" and "cinder aggregates".

In Betterman v. American Stores Company, 367 Pa. 193, 80 A.2d 66, the Court said (pages 203-204): "'"The cardinal rule in the interpretation of contracts is to ascertain the intention of the parties and to give effect to that intention if it can be done consistently with legal principles."'" [citing cases] ...

"'"... in order to ascertain that intention, the court may take into consideration the surrounding circumstances, the situation of the parties, the objects they apparently have in view, and the nature of the subject-matter of the agreement"' ..."

In construing a contract the intention of the parties must be ascertained from the entire instrument, and each and every part of it must be taken into consideration and given effect if reasonably possible: Neal D. Ivey Company v. Franklin Associates, Inc., 370 Pa. 225, 87 A.2d 236; Mowry, Exr., v. McWherter, 365 Pa. 232, 74 A.2d 154.

Where a written contract is ambiguous or conflicting, or its meaning is doubtful or obscure, parol evidence is admissible to clarify the ambiguity and to resolve the doubts, in order to ascertain and determine the intention of the parties: Barium Steel Corporation v. Willey, 379 Pa. 38, 44, 108 A.2d 336; Albert v. Schenley Auto Sales, Inc., 375 Pa. 512, 100 A.2d 605; Waldman v. Shoemaker, 367 Pa. 587, 80 A.2d 776.

[ 381 Pa. Page 594]

In the light of these principles the Chancellors properly took into consideration the evidence offered by appellant and by appellees.

One other contention of the defendant remains, but it likewise must be rejected. If the words "cinders" and "cinder products" and "cinder aggregates" were intended by the parties, as both the Chancellors and the lower Court found, to include all forms of cinders and cinder products and aggregates, and "slag" is a form of cinders, the fact (if as defendant contends, it was a fact) that plaintiffs at the time of the contracts had not bought, sold or dealt in any slag cinders would not prevent plaintiffs from dealing in slag cinders if and when they became profitable or otherwise desirable. Neither the present contracts nor the law limits plaintiffs to the form of cinders used by them at the time of the agreement. Cf. Dowgiel v. Reid, 359 Pa. 448, 59 A.2d 115.

Disposition

Decree affirmed. The costs shall be paid by appellant, H. Hessey Miller.


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