The opinion of the court was delivered by: KRAFT
The gravamen of these three actions is the disputed ownership of a large deposit of silt on the surface of a 65.9 acre tract of land in Mahanoy Township, Schuylkill County, Pennsylvania. The tract is presently owned by Gilberton Contracting Company, Inc. (Gilberton), which instituted its action (C.A. 25474) against the District Director of Internal Revenue to compel a release of certain Government tax liens affecting the land.
The tax liens arose from outstanding assessments made against The Rhoads Company, Inc. (Rhoads), and Park Trent Coal Company, Inc. (Park Trent) for sundry unpaid taxes due the United States under various statutes for the years 1947, 1952, 1954 and 1955.
The United States filed separate actions to reduce to judgment the respective tax liabilities of the defendants Rhoads (C.A. 26079) and Park Trent (C.A. 27696) and to resolve the controversies over ownership of the pile of silt upon which the Government claims valid liens.
The cases were consolidated for trial without jury and tried to our late, revered colleague, Judge Grim, whose untimely death intervened before a decision was rendered.
By order dated December 23, 1965, Chief Judge Clary re-assigned these actions for our disposition. After a conference with counsel on February 7, 1966, the parties, through their respective attorneys, agreed that our adjudication should be made upon the record before Judge Grim, as supplemented by evidence adduced upon a further hearing before us on April 12, 1966,
at which Park Trent alone offered additional evidence.
After careful review of this rather confused and unsatisfactory record, as supplemented, and full consideration of the oral argument, briefs and suggested findings of counsel, we make the following
1. On June 1, 1951, Williamstown Collieries Company conveyed to Counties Coals, Inc. (Counties) the surface of a 65.9 acre tract of land situate in Mahanoy Township, Schuylkill County, Pennsylvania.
2. The deed was signed by H. R. Randall, (Randall) President of the corporate grantor. Randall and his son, D. V. Randall, were directors of the grantee, and the elder Randall's wife owned 30 of the 50 issued shares of Counties.
3. At a meeting of the Board of Directors of Counties held on June 1, 1951, a resolution was adopted which authorized the officers of Counties to execute a lease of the tract and a coal breaker, known as Park No. 3, to Rhoads for the processing of steam sizes of coal, for an initial term of ten years at a rental of $200 monthly. The coal breaker did not then exist, but its immediate construction by Rhoads, sub nomine Rhoads Contracting Company, was in contemplation.
4. Randall, who was also President of Rhoads, died before the trial of these actions, but his depositions were taken in May and June, 1963 for discovery purposes. Portions of his depositions were admitted in evidence at the trial on offer by the respective litigants.
5. In his depositions Randall testified that a written lease authorized by the resolution aforesaid was entered into between Counties and Rhoads, but he did not produce the lease nor did he offer a reasonable explanation for its absence. The alleged lease was never produced or offered at the trial by any of the parties nor was any copy. We find no written lease between Counties, as lessor, and Rhoads, as lessee, was executed.
6. On July 9, 1951, Rhoads, sub nomine Rhoads Contracting Company, borrowed $125,000 from the Hazleton National Bank for the purpose of constructing on the subject tract a wood and steel breaker for the processing of steam sizes of coal, identified as Park No. 3. It executed and delivered to the bank a collateral demand note for the amount of the loan, secured by its chattel mortgage on the coal breaker.
As additional collateral security for this loan, Counties, on the same date, also gave a mortgage to the bank, in like amount, upon the surface of the subject 65.9 acre tract. Both mortgages were recorded in Schuylkill County during July, 1951. No mention of accumulated silt is made in either instrument, since no silt was deposited on the land ...