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JAMES W. DOUGLAS v. JOHN BENSON (01/05/82)

filed: January 5, 1982.

JAMES W. DOUGLAS, GEORGE P. HEILIG AND BLAIR F. GREEN,
v.
JOHN BENSON, JR., A/K/A JOHN W. BENSON, JR., AND JOHN H. MCCANN, III, T/D/B/A BENSON ASSOCIATES, A PENNSYLVANIA PARTNERSHIP



NO. 11 PITTSBURGH, 1980, Appeal from the Judgment of the Court of Common Pleas, Civil Division, of Armstrong County, at No. 1977-0616 Civil.

COUNSEL

Edward J. Steiner, Kittanning, for appellants.

Blair F. Green, Kittanning, for appellees.

Hester, Brosky and Van der Voort, JJ.

Author: Van Der Voort

[ 294 Pa. Super. Page 121]

The appellants are the lessees and the appellees the lessors of two adjacent tracts of coal land in Armstrong County known as the Lawson and Douglas properties. The appellees have cancelled the lease because of defaults in appellants' performance, and have filed suit in assumpsit to recover sums payable by the terms of the contract.

The appellants have counter-claimed, alleging alternatively (1) that they should recover extra costs incurred in performing under the contract because of material misrepresentations by the appellees as to over-burden and quality of coal, or (2) that they are entitled to recover that portion of their expenditures which were allegedly agreed upon in settlement negotiations which preceded this litigation.

The case was tried in the Court below by President Judge House, sitting without a jury. The Judge has filed a narrative summary of his Findings of Fact and Conclusions of Law to the effect that there were no material misrepresentations and no settlement agreement. He has found that the appellees are entitled to recover $29,516.54 in net earned royalties and $34,714.38 in trucking services rendered the appellants, a total of $64,230.92. He has also found that the appellants are entitled to recover the sum of $12,200 advanced by the appellants to the appellee Douglas as a loan but not repaid. Verdicts were returned in these amounts, exceptions were heard and overruled, and judgment was entered in the amounts found in the verdicts. The appellants have appealed because of the failure of the Court to grant the relief requested in their counter-claim.

The written contract between the parties, dated March 5, 1976, leased to the appellants the right to mine all mineable and merchantable coal found under an over-burden of no

[ 294 Pa. Super. Page 122]

    more than eighty (80) feet at a royalty of $3.00 per ton, and $2.50 per ton where the coal was under an over-burden of more than eighty (80) feet. The appellants were to pay a minimum royalty of $5,000 per month beginning April 1, 1976, whether or not coal was mined, such payments to be credited against future earned royalties. They were also to pay all engineering and drilling costs in mining the properties. The agreement stated that the appellants had been given "all maps, charts, graphs, records, analysis sheets, engineering reports, etc. relating to the Lawson property and the Douglas property." Appellants were also given the right to use and remodel at their own expense a railroad station adjacent to the Douglas property.

The appellants were obligated to commence mining operations on the Lawson tract within 90 days and to have in place by that time a six yard drag-line, bulldozers, pan and highlifts, as well as all other other necessary mining equipment. The appellee Douglas was given a first option to provide truck transportation for coal mined by the appellants under the agreement up to a total of six trucks, and he was also to be employed as an assistant superintendent at a salary of $300 per week as of the date of commencement of mining operations on the Lawson property.

On January 26, 1976, in anticipation of the agreement which materialized in March, the appellant Benson delivered to the appellee Douglas a check for $12,200 marked "Railroad Building" and a check for $45,000 marked "pre-paid drilling -- Lawson". No contemporaneous writing explained this transaction, and the evidence at the trial on these items was conflicting.

There had been an earlier contract between the parties dated November 5, 1975, granting the appellants the right to mine the Lawson property. Negotiations leading to the earlier agreement were begun in August, 1975, and the appellants made a $50,000 payment to the appellees at that time, characterized on the check as "Advanced Royalty on Lawson ...


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