John J. Petrush, Petrush & Miller, Ltd., Beaver Falls, for appellant.
Fred C. Houston, Jr., John F. Meck, Houston, Houston & Donnelly, Pittsburgh, for appellee.
O'Brien, C. J., and Roberts, Nix, Larsen, Flaherty, McDermott and Hutchinson, JJ. Roberts, J., files a concurring opinion in which Flaherty and McDermott, JJ., join. Nix, J., concurs in the result. Larsen, J., dissents.
On January 24, 1978, Appellant Rochester Machine Corporation (Rochester) filed a complaint for confession of judgment against Appellee Mulach Steel Corporation (Mulach)
pursuant to a warrant of attorney contained in a real estate and equipment lease. The basis for the confession of judgment was Mulach's alleged failure to make repairs to the leased premises and equipment as required in the lease agreement. Judgment was subsequently entered in the amount of $41,738.94, however, that judgment was opened. On January 23, 1979 a jury returned a verdict in favor of Rochester in the amount of $47,300.00. The trial court denied Mulach's motion for a new trial. A panel of the Superior Court reversed and granted Mulach a new trial on the ground that the trial court erred in admitting certain correspondence between the parties' attorneys. 287 Pa. Super.Ct. 270, 430 A.2d 280 (1981) (Opinion by Brosky, J.; Montgomery, J. dissenting). We disagree and accordingly reverse the order of the Superior Court.
The background of the case is as follows: On November 14, 1975, Mulach leased certain premises from Rochester for a period of one year. The lease was subsequently extended to November 14, 1977. On August 31, 1977 Rochester, through its attorney, sent a letter to Mulach which presented an itemized list of damages said to be caused during Mulach's occupancy. The letter demanded immediate payment of the estimated cost of repairs. On October 31, 1977, Mulach replied by way of a letter from its attorney. The letter consisted of an item by item response to each claim for damages asserted in Rochester's letter of August 31. With respect to some of the items, Mulach stated "Mulach accepts responsibility." With respect to several others, Mulach declined to accept responsibility, generally offering instead a brief explanation as to why it was not liable for the claimed item.*fn1
The general rule is that an offer to compromise is not admissible in evidence at trial as an admission that what is offered is rightfully due or that liability exists. Woldow v. Dever, 374 Pa. 370, 376, 97 A.2d 777, 781 (1953). Our threshold inquiry, then, is whether the correspondence between Mulach and Rochester can be fairly characterized as relating to an offer of compromise. Although this Court has not, heretofore, defined an offer to compromise, it is generally defined as the settlement of differences by mutual concessions; an adjustment of conflicting claims. Kelly v. Steinberg, 148 Cal.App.2d 211, 219, 306 P.2d 955, 960 (1957) (citing Webster's International Dictionary, (2d ed.). Under such a definition the demand by Rochester stating items of damages caused by Mulach and demanding the estimated amount for their repair cannot be construed as an offer to compromise a disputed claim. See Gallagher v. Viking Supply Corp., 3 Ariz.App. 55, 411 P.2d 814 (1966). Likewise,
Mulach's response cannot be construed as a settlement offer or as a counter-settlement offer. Mulach's response, accepting "responsibility" for some items of damage while refusing "responsibility" for others, does not in any way suggest that it is an offer to compromise a disputed claim. Rather it is nothing more, or less, than what it purports to be, an admission of liability with respect to some items of damages and a disclaimer of liability with respect to others.*fn2 There is no suggestion in the letter of efforts to negotiate a compromise. In fact, Mulach's letter ...