
    Genet v. Delaware & H. Canal Co.
    
      (Supreme Court, General Term, First Department.
    
    December 29,1890.)
    Mines and Mining—Leases—Royalties.
    The lessee of coal lands agreed to paya certain sum per ton for “clear, merchantable coal, exclusive of culm or mine waste that will pass through a mesh of one-half inch square.” At that time the sizes of coal since known as “pea,” “buckwheat, ” and “bird’s-eye” were considered as worthless, and included in the waste products under the name of “culm; ” but the lessee afterwards separated from the coal passing through a mesh less than half an inch square, and sold, coal of the last two sizes. Held, that the royalty agreed on was payable on such coal. Van Brunt, P. J., dissenting.
    Appeal from judgment on report of referee.
    Action by Augusta G. Genet against the president, etc., of the Delaware & Hudson Canal Company. Plaintiff appeals from a judgment for defendant entered on trial by a referee.
    Argued before Van Brunt, P. J., and Brady and Daniels, JJ.
    
      G. G. Genet, for appellant. F. E. Smith, for respondent.
   Brady, J.

The judgment appealed from is twofold: First, a money judgment in favor of the plaintiff for $4,947.21; and, second, a judgment dismissing one cause of action upon the merits. If upon a consideration of the whole case, therefore, the judgment dismissing the cause of action suggested is erroneous, there must be a new trial, without reference to the exceptions relating to other parts of the case. The basis of the action is an agreement between the parties by which certain coal lands in the state of Pennsylvania were leased to the defendants, one of the terms of which required the defendant to pay 12| cents for each ton of clean and merchantable coal exclusive of culm or mine waste, to be passed through a mesh of one-half inch square. The first cause of action, after referring to the agreement mentioned, the working of the mine, and the rendering of accounts, alleges that the defendant, in preparing the coal for market, used a mesh five-eighths of an inch square, instead of half an inch square, as required by the agreement, and that, as a result, 10 per cent, of all the coal mined, or 30,000 tons, had passed through a five-eighths mesh which would have gone over a half inch mesh, and this amount was omitted from the account. The second cause of action alleges the. preparation by the defendant of what is known as “pea” coal, by screening what goes through a five-eighths mesh over a mesh of seven-sixteenths of an inch; and seeks to recover the stipulated royalty on the whole of the pea coal taken from the mine in question, and claimed to amount to 150,000 tons. The third cause of action alleges that the coal left after the preparation of the pea coal is again screened by defendant, and separated into two other grades of coal, called “buckwheat” and “bird’s-eye,” and that such coal, to the amount of 100,000 tons, had been taken and carried away by the defendant, the value of which was $25,000, which sum was claimed. The fourth cause of action was a charge that the defendant had mined and taken from the land in question at least 1,200,000 tons of coal, but bad paid plaintiff for less than half that amount, and that the accounts rendered by the defendant were false. The prayer for judgment was for a general accounting for the value of all coal mined; for the value of the small coal that would pass through a half-inch mesh,—that is, all pea coal, and all buckwheat and bird’s-eye coal; for damages to the amount of $10,000, caused by recrushing the coal, and reducing the same to dust or culm; and for general relief. In reference to these different sorts of coal the referee found that the various sizes or grades in which anthracite coal is placed upon the market are called “lump,” “steamboat,” “grate,” “egg,” “stove,” “chestnut,” “pea,” “buckwheat,” and “ bird’s-eye, ” and these sizes, with the exception of pea, buckwheat, and bird’s-eye, were substantially the same as those in which anthracite coal had been placed upon the market for more than 40 years; and that the sizes of coal now called “pea,” “buckwheat,and “bird’s-eye” were formerly considered worthless, and were included in the other waste products of the mine under the name of “culm;” that the size now called “pea” was first separated from the culm and put on the market about 1857, but did not become one of the sizes commonly dealt in until about 1865 or later, while buckwheat and bird’s-eye have been so separated and sold only since about 1880. As will have been observed, the third cause of action relates to the size just mentioned, and which was dismissed upon the trial.

The question which presents itself in limine is whether the dismissal of that cause of action was erroneous or not. The agreement was made on the 28th of March, 1864, and contains the following; “And the said party of the second part agree to pay for the coal mined and taken out in pursuance of this agreement at the rate of twelve and a half cents (12J) for every ton of (2,240) twenty-two hundred and forty pounds of clear, merchantable coal, exclusive of culm or mine waste that will pass through a mesh of one-half inch square. ” At that time, as found by the referee, the sizes now called “pea,” “buckwheat, ” and “bird’s-eye” were considered worthless, and were included in the other waste products of the mine under the name of “culm.” It is quite apparent that the language of the agreement to which particular attention has been called, “exclusive of culm or mine waste, ” was adopted with reference to the then supposed worthlessness of that product of the mine. And it is equally evident from an interpretation of the whole instrument that there was no intention on the part of the plaintiff to convey to the defendant any beneficial result of mining operations as a gratuity; nor is there any ground for the defendant to claim the right thereunder to appropriate the same to its own advantage without due compensation. The manifest design of the agreement, was to authorize the defendant to conduct such mining operations as would develop a marketable article, for which a marketable compensation was to be paid. It was thereby made the duty of the defendant to pay for all coal mined and taken out in pursuance of the agreement, exclusive of culm or mine waste,—so exclusive because it was supposed to possess no marketable quality, and, indeed, had none, as already suggested, until 1865, and subsequent to the making of the agreement between the parties. It makes no difference whether the agreement makes the defendant the absolute owner of the coal as if by deed in fee-simple or a lessee with rights and privileges in reference to the mineral found upon or under the surface, inasmuch as the mining of the coal involved the payment for its appropriation of a royalty agreed upon by the parties. It would be absurd to hold that, under such an agreement, no matter how it may be designated in legal parlance, the coal was transferred unqualifiedly; and it is not at all likely that any court of justice will so adjudicate. Whenever coal is taken from the land embraced within the agreement it must be paid for, whether it is the result of a new process with regard to culm or not. It is true that the defendant, under a strict construction of the agreement, would be under no obligation to utilize the ou]m; but, having done so, the product became a part of the subject-matter of the contract, and gave the plaintiff the right to insist upon such compensation as might be awarded, if the royalty provided for by the agreement had no application. But, even if this be not so, the utilization by the defendant of the culm, in which he had no property, and as to which the agreement gave him no rights, and which was in fact owned by the plaintiff, created an independent cause of action which could be. enforced herein, hut which was disregarded by the, referee, and, it is thought, erroneously. The record in this case has been the subject of many examinations, with its numerous exceptions and complications, but the recurrent thought has been that the exclusion of the third cause of action was improper, and deliberate consideration of that proposition has led to the conclusion herein stated,—a conclusion which renders it entirely unnecessary to consider any of the other exceptions presented on behalf of the plaintiff. The judgment should be reversed, and a new trial ordered, with costs to appellant to abide event.

Daniels, J„ concurs.

Van Brunt, P. J.,

(dissenting.) I dissent from the conclusions of Mr. Justice Brady and concurred in by Mr. Justice Daniels. The coal lands were leased to the defendants for mining purposes. The rent was fixed upon the basis of a payment of 12 J cents for every ton of merchantable coal which would pass through a mesh f inch square. The evidence showed that this necessarily excluded buckwheat and bird’s-eye coal. It is evident that all the coal mined by the defendants belonged to them, and, if they found, after the execution of the lease, that they could make use of what they previously had been compelled to throw away, I see no basis arising from that fact for a change in the standard by which the rent is to be measured. The parties fixed the method of determining the rent, and the court cannot now alter the contract.  