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POTTS RUN COAL COMPANY v. BENJAMIN COAL COMPANY (03/06/81)

SUPERIOR COURT OF PENNSYLVANIA


filed: March 6, 1981.

POTTS RUN COAL COMPANY,
v.
BENJAMIN COAL COMPANY, APPELLANT

No. 803 April Term, 1979, Appeal from the Order of the Court of Common Pleas of Clearfield County, Civil Division, at No. 77-1624-C.D.

COUNSEL

John M. Elliott, Philadelphia, for appellant.

Joseph Colavecchi, Clearfield, for appellee.

Spaeth, Wickersham and Lipez, JJ.

Author: Lipez

[ 285 Pa. Super. Page 129]

In this case we are called upon to determine whether, under the facts presented, the grantor of the right to mine coal and clay to exhaustion may maintain actions for trespass to land and conversion with regard to the coal and clay so conveyed. We hold it cannot.

[ 285 Pa. Super. Page 130]

The basic facts appear to be undisputed. Appellant Benjamin Coal Company is the ultimate assignee of the rights to mine coal and clay granted under a "lease agreement" executed by appellee Potts Run Coal Company as lessor. This agreement purported to convey to John L. Davis the right to mine until exhaustion, by any process of mining, all the merchantable and mineable coal and clay in certain tracts owned by Potts Run, for a period of three (3) years, and for successive one (1) year terms thereafter.*fn1 The lease

[ 285 Pa. Super. Page 131]

    agreement contained a clause prohibiting the sale, assignment or transfer of the lease without the written consent of Potts Run.*fn2 Potts Run later consented in writing to the assignment of the lease to Empire Coal Company. Thereafter, appellant Benjamin purchased all the outstanding stock and assets of Empire including the rights under the lease agreement. The written consent of Potts Run to this transaction was not obtained. Potts Run thereupon notified Empire that the assignment to Benjamin violated the antiassignment clause of the lease agreement and that mining operations should cease immediately. Nevertheless, Benjamin continued to remove the coal and clay from the tracts it had acquired from Empire.

In the present action, which is brought against Benjamin as the sole defendant, Potts Run seeks damages for trespass to land and conversion of minerals. After the pleadings were closed and discovery had been taken, Benjamin sought summary judgment as to both claims on the theory, inter alia, that Potts Run lacked standing to bring the actions. This appeal arises from the lower court's order denying summary judgment.*fn3

[ 285 Pa. Super. Page 132]

The lower court held that the original agreement, although titled a "lease," effected a sale in fee of Potts Run's interest in the described coal and clay. This conclusion is in accord with the established rule in Pennsylvania, Essex Coal Co. Appeal, 411 Pa. 618, 192 A.2d 675 (1963), Smith v. Glen Alden Coal Co., 347 Pa. 290, 32 A.2d 227 (1943), and apparently is not disputed by the parties. The lower court concluded that the interest conveyed by the original agreement "was a fee simple defeasible, subject to: (1) a special limitation (exhaustion of the coal and clay); and, (2) a condition subsequent (assignment without written consent)." Slip Opinion at 10. Despite the fact that Potts Run has never declared a forfeiture under the agreement nor sought to perfect its interest in the property through ejectment or otherwise, the lower court held that Potts Run's "power of termination after breach of condition subsequent is a future interest in land sufficient to sustain this action in trespass." Slip Opinion at 11.

Benjamin argues on appeal that the order of the lower court was in error in that an unperfected right of re-entry (power of termination) is insufficient to infuse Potts Run with standing to bring the present action, and that, therefore, summary judgment should have been granted as a matter of law. We agree.*fn4

The nature and incidents of a grantor's interest in merchantable and mineable coal and clay in which the right to mine to exhaustion has been conveyed away was extensively discussed by the Supreme Court in Smith v. Glen Alden Coal Co., 347 Pa. 290, 32 A.2d 227 (1943). Smith reiterates the established rule that:

     a lease of coal in place, such as this is, 'until such time as all the available merchantable coal shall have been mined and removed,' is a sale of an estate in fee simple and leaves the lessor with only an interest in the royalties to be paid him under that lease. That interest is personalty.

[ 285 Pa. Super. Page 133347]

Pa. 290, 298-299, 32 A.2d 227, 232. See also, Blair v. Shannon, 349 Pa. 550, 37 A.2d 563 (1944); Hosack v. Crill, 204 Pa. 97, 53 A. 640 (1902). Under the rule as stated in Smith, Potts Run was conveyed away its entire estate in the merchantable and mineable coal and clay and received in return personal property in the form of a right to receive royalty payments. After Potts Run delivered the lease its interest in the described coal and clay was " a possibility of reverter, and this 'is not an estate present or future, but merely a possibility of having a future estate' . . . . [Even the grantor's] future interest in the mined out area after the exhaustion of the coal was not an estate in the mineral itself." Smith, supra, 347 Pa. at 302-303, 32 A.2d 227. Thus, under the terms of the lease agreement, Potts Run received a possibility of reverter in the nature of a contingent right of entry upon condition broken.*fn5 Potts Run's

[ 285 Pa. Super. Page 134]

    possession of this unexercised right of entry does not, however, create for it any estate in the coal and clay.

'Where an estate in land is granted, whether for years, for life, or in fee, the existence of a condition subsequent in no way lessens the quantity of the estate granted. The grantor is divested of the entire estate of the term or the fee, and the grantee is invested with the same estate. The effect of the condition is simply that, if a breach shall occur, the grantor shall have a right to re-enter and thereby become revested with his former estate. Before breach this is regarded as a mere possibility, coupled with no interest in the land . . . After breach of the condition, what was before a mere possibility becomes a right to secure a revesting of the former estate by entry, or by action at law. Until such entry or action the quantity of the estate of the grantee is still unimpaired. If the right of entry is never exercised, the estate remains as before. '

Smith, supra, 347 Pa. at 300, 32 A.2d 227 (emphasis added) quoting Bouvier v. Baltimore & N. Y. Ry. Co., 67 N.J.L. 282, 60 L.R.A. at pg. 764. See also, 28 Am. Jur. 2d, Estates, § 160.

Potts Run's interest in the merchantable and mineable coal and clay is thus not an estate in land, present or future, but is, instead, a possibility of obtaining a future estate in the minerals. Smith, supra, 347 Pa. at 302, 32 A.2d 227. Potts Run's interests under the lease may be described as personal property in the form of a right to royalties, and a contingent right of entry upon condition broken. Essex Coal Company Appeal, 411 Pa. 618, 192 A.2d 675 (1963); Walter Estate, 437 Pa. 544, 265 A.2d 368 (1970). Neither of these interests constitute an estate in land. Smith, supra, 347 Pa. at 302, 32 A.2d 227. Nor does the existence of the right of entry create any possessory interest in Potts Run.*fn6

[ 285 Pa. Super. Page 135]

"If the right of entry is never exercised, the estate remains as before. The grantee still has possession with all the advantages which, by the common law, belong to possession." 28 Am. Jur. 2d, Estates, § 162, at 288; see also, Restatement, Property § 57. In the present case Potts Run has not consummated forfeiture nor otherwise sought to obtain possession. The present action seeks damages, not possession.

It is, of course, well established that, in order to maintain an action for trespass to land, a plaintiff must have been in possession, either actual or constructive, at the time the trespass was committed. Griffin v. Delaware & Hudson Co., 257 Pa. 432, 437-38, 101 A. 750, 752 (1917); Humes Exec., Appellant v. Kramer, 286 Pa. 251, 133 A. 262 (1926); Roncace v. Welsh, 141 Pa. Super. 170, 14 A.2d 616 (1940). In the present case Potts Run has neither possession, nor any estate in the minerals upon which to predicate a right to possession.

The situations is similar in regards to the conversion claim. A plaintiff must have either actual or constructive possession, or the right to immediate possession at the time of the conversion. Gunzburger v. Rosenthal, 226 Pa. 300, 75 A. 418 (1910); Levy v. Terminal Warehouse Co., Appellant, 121 Pa. Super. 95, 183 A. 102 (1936); See also, 89 C. J. S. Trover and Conversion § 3 et seq. ; 18 Am. Jur. 2d, Conversion § 53 et seq. Again, Potts Run has neither a possessory interest, nor any ownership interest in the coal and clay, but only the possibility of obtaining an interest. Smith, supra; Essex, supra. Potts Run has no right to immediate possession but has only a contingent right in the nature of a possibility. Smith, supra; Essex, supra. Until that contingency

[ 285 Pa. Super. Page 136]

    is cleared and Potts Run's right to possession perfected and made immediate, it cannot maintain its present actions. See Prosser, Law of Torts (2d Edition 1971) 93-97; 37 P. L. E. Trespass §§ 26, 102; 31 C. J. S. Estates § 105 at 205.

Because there are no genuine issues of material fact and Benjamin is entitled to judgment as a matter of law, the lower court erred in refusing to grant the motion for summary judgment. See Pa.R.C.P. No. 1035.

Order reversed and judgment entered for appellant.


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