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ROSE v. MITSUBISHI INTL. CORP.

November 4, 1976

Jack ROSE
v.
MITSUBISHI INTERNATIONAL CORPORATION et al.



The opinion of the court was delivered by: CAHN

 CAHN, District Judge.

 Plaintiff, Jack Rose, is suing for money damages for breach of an alleged contract in the form of a letter of intent. The matter is before the court on the motion of Mitsubishi International Corporation ("MIC") for summary judgment under Fed.R.Civ.P. 56.

 In 1973, plaintiff had an option enabling him to purchase from Northern Metal Company a deep-water port facility located on the Pennsylvania side of the Delaware River. On March 29, 1973, MIC and Federal Steel Corporation ("Federal") executed a letter of intent to plaintiff which plaintiff approved the same day. The letter of intent provided for contribution by MIC of funds required to exercise plaintiff's option. It also provided for the formation of a new corporation by MIC and Federal which would participate with plaintiff in a joint venture involving the deep-water port facility. The obligation of MIC and Federal to provide financing was subject to certain conditions including:

 
"6. A reputable United States title insurance company shall issue title policies indicating clear and marketable title to the real estate and interests in real estate referred to herein and indicating that the same can continue to be used in the future for the purposes for which they are presently in use."

 The letter of intent provided that the obligations of the parties were to be completed by May 15, 1973, but this deadline was extended by mutual agreement until May 22, 1973. On May 21, 1973, MIC notified plaintiff that it would not proceed under the letter of intent. Thereafter, plaintiff instituted this action against MIC, Richard Kates, an officer of Federal, and Raritan Corporation, *fn1" the parent of Federal. Jurisdiction is based upon diversity of citizenship. *fn2"

 In its motion for summary judgment, MIC contends first that the letter of intent is not, as a matter of law, a binding contract. The weight of the case law *fn3" provides that the question of whether a particular document constitutes a legally binding agreement is to be determined as a matter of fact by the trier of facts. Field v. Golden Triangle Broadcasting, Inc., 451 Pa. 410, 305 A.2d 689 (1973), cert. denied, 414 U.S. 1158, 94 S. Ct. 916, 39 L. Ed. 2d 110 (1974); Associated Hardware Supply Co. v. Big Wheel Distrib. Co., 355 F.2d 114 (3d Cir. 1966); Melo-Sonics Corporation v. Cropp, 342 F.2d 856 (3d Cir. 1965). Therefore, summary judgment cannot be entered on the ground that, as a matter of law, the letter of intent is not an enforceable contract.

 The second thrust of MIC's summary judgment motion is that the plaintiff was unable to comply with condition 6 of the letter of intent which required the issuance by a reputable title insurance company of "title policies indicating clear and marketable title to the real estate and interests in real estate" to be purchased in accordance with the option. The title report specifically set forth the following exception:

 
"14. Subject to the laws and authority of the Federal and State Governments, their political subdivisions and agencies, over portion of premises extending beyond the low water mark, to regulate commerce and navigation, as well as to exert governmental title and ownership in the area lying beyond the original low water mark of Delaware River."

 Under the law of Pennsylvania pertaining to navigable waters a riparian owner's absolute title extends only to the high water mark. Flanagan v. City of Philadelphia, 42 Pa. 219 (1862). Between the high and low water lines the owner's title to the soil is qualified, being subject to public rights of navigation and fishing, and subject to improvement of the stream as a public highway. This qualified right of the public is sometimes referred to as a "navigational servitude". Freeland v. Penna. Railroad Co., 197 Pa. 529, 47 A. 745 (1901); Wainwright v. McCullough, 63 Pa. 66 (1869); United States v. Pennsylvania Salt Mfg. Co., 16 F.2d 476 (E.D.Pa.1926), aff'd, 30 F.2d 332 (3d Cir. 1929).

 Beyond the original low water line the Commonwealth holds the title and its right is not merely a servitude. The surveys and affidavits filed in support of MIC's motion for summary judgment reveal that a portion of the premises to be conveyed extends beyond the original low water mark of the Delaware River. The exception in the title report refers to both the navigational servitude between the high and low water marks and ownership by the Commonwealth beyond the low water mark.

 Applying the foregoing principles, MIC urges that the case of Black v. American International Corp., 264 Pa. 260, 107 A. 737 (1919) requires entry of summary judgment in its favor. In Black, the plaintiff brought a price action to compel the defendant to pay the purchase price for 54.91 acres of land forming part of Hog Island in the Delaware River. The defendant buyer claimed that title to the property was in the Commonwealth of Pennsylvania and not in the plaintiff because the property was beyond the original low water line in the Delaware River. Although the trial court rendered judgment for Black, the Supreme Court of Pennsylvania reversed as a matter of law, holding that Black's title to the property was neither clear nor marketable. In Black, it was undisputed that part of the land in question was developed by dumping dredged materials. The Supreme Court stated at page 262, 107 A. at page 738:

 
"Below its ordinary low water the ownership of the soil under the river is in the Commonwealth, the title of the abutting riparian owner extending only to ordinary low water mark, subject to the rights of navigation, fishery, and improvement of the stream between high and low water marks . . . ."

 The Supreme Court of Pennsylvania concluded that the title was sufficiently doubtful to excuse ...


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