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filed: May 15, 1981.


No. 787 April Term, 1979, Appeal from the Order of the Court of Common Pleas of Beaver County, Civil Division, No. 108 of 1978, D.S.B.


Fred C. Houston, Jr., Pittsburgh, for appellant.

John J. Petrush, Beaver Falls, for appellee.

Price, Brosky and Montgomery, JJ. Montgomery, J., files dissenting opinion.

Author: Brosky

[ 287 Pa. Super. Page 272]

This is an appeal by Mulach Steel Corporation from the trial court's denial of a new trial after that court sustained the validity of a judgment by confession. The issues for our determination are whether the court erred in admitting certain letters into evidence, and in charging the jury to add

[ 287 Pa. Super. Page 273]

    attorney's commission to any verdict in favor of plaintiff.*fn1 We reverse and remand for a new trial.

On November 14, 1975, Rochester Machine Corporation leased certain premises to Mulach Steel Corporation until November 14, 1976. This lease subsequently was extended to November 14, 1977. The appellant, during the lease term, breached the covenants of the lease. In response, the appellee caused the entry of judgment against appellant by confession for the sum of $37,944.49 together with costs of suit plus attorney's fees of 10% for collection, making a total of $41,738.94. Later, upon the petition brought by appellant, the court granted a rule to show cause why the judgment entered should not be opened. The parties subsequently entered into a consent order that the judgment entered against appellant by confession on January 24, 1978 be opened and that the case proceed to trial before the court and jury.*fn2

Appellant has raised two questions: first, did the court commit error in admitting into evidence letters written by respective counsel for the parties; and, second, did the court err in instructing the jury to add 10% attorney's commission if the jury found a verdict in favor of plaintiff.

A letter dated August 31, 1977 was sent by Rochester Machine Corporation to Mulach Steel Corporation entitled, "Lease from Rochester Machine Corporation of Realty in New Brighton, Pennsylvania." It detailed the extensive repairs needed to be made by Mulach for damages caused during the occupancy, estimated to exceed $30,000, plus the rental value of the premises during the time repairs were being made.*fn3 In response to this letter came a letter from appellant's counsel dated October 31, 1977. The letter

[ 287 Pa. Super. Page 274]

    states, "Mulach accepts responsibility" for some but not all damages caused to appellee's property.*fn4

The lower court explained in its charge to the jury Mulach's obligation to surrender the premises at the end of the term, or renewal thereof, in as good condition as they were at the beginning of their tenancy. The court also explained to the jury the admission and denials contained in Mulach's letter of October 31, 1977 and reviewed all the evidence as to the condition of the premises, the liability to make repairs, the admission of needed repairs and the denial of liability as to others. The court said:

You are to decide the weight to give to these admissions and declarations and denials contained in said letters, and you are to consider such letters with all the other evidence in the case and you are the ones finally to determine what the facts are in the case.

At the conclusion of its charge, the court asked respective counsel if they have any objections, amendments or additions to the charge. Appellant objected to the court's charge on attorney's commission. Furthermore Mulach contends the letter of October 31, 1977 was inadmissible evidence because it was an offer to compromise. Rochester claims that letter is an admission of a party opponent. The trial court concluded the letter was not an offer to compromise or settle.

The record, however, does not necessarily support the trial court's conclusion. The communications were initiated by Rochester long before judgment was entered by Rochester on January 24, 1978. Mulach responded to Rochester's inquiry before confession was entered. It is a logical inference under these circumstances that Rochester desired some extra judicial resolution of the dispute, otherwise, they would have simply had a judgment entered pursuant to the lease agreement. In fact, Rochester apparently weighed the October 31, 1977 response in their mind for some time before

[ 287 Pa. Super. Page 275]

    deciding to have a judgment entered. Thus, it is not unprobable that the communications between the parties were part of a negotiation process which did not resolve into a compromise or settlement but was initiated with that goal in mind.

The August 31, 1977 letter from appellee to appellant stated in pertinent part:

The extensive repairs made necessary by damage during your occupancy are as follows:


1. Install new lay-in ceiling in toilet room.

2. Install trim on door.

3. Refit two (2) doors.

4. Install 37 lin. feet of handrail to match existing.

5. Re-glaze one sash in office.

6. Board up opening 10'-0 X 12'-0 with 2x4's and 1/2" plyscore.

7. Re-install 19'-0 of existing handrail.

8. Install new roll-up steel door 29'-0 X 22'-0 with electric operator 220V, 3 phase A.C.

9. Install new roll-up steel door approx. size 20'-0 X 20'-0.

10. Repair slats on roll-up steel door approx. size 20'-0 X 20'-0.

11. Repair and/or replace as needed approx. 625 sq. ft. steel siding.

12. Repair block and re-fit garage door on rear Black Building.

13. Refit door and repair operator on small garage door.

Our client has received an estimate from a contractor (Vanport Construction, Inc., Box 409, Beaver, PA) that the cost ...

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