## Facts

- Rochester Machine Corporation leased industrial premises and equipment to Mulach Steel Corporation for one year starting November 14, 1975; the lease was extended to November 14, 1977.
- The lease required Mulach to make specified repairs and included a warrant of attorney authorizing confession of judgment.
- Near the lease’s end, Rochester’s attorney sent Mulach an August 31, 1977 letter with an itemized list of alleged damages and a demand for immediate payment of estimated repair costs.
- Mulach’s attorney responded by letter dated October 31, 1977, addressing each item; for some, Mulach stated it “accepts responsibility,” and for others it denied responsibility with brief explanations.
- Rochester later sought to use Mulach’s letter as proof of liability for the items Mulach accepted, while Mulach contended the correspondence was inadmissible settlement-related material.

## Issues

1. Whether the parties’ attorney correspondence constituted an offer to compromise that was inadmissible to prove liability.
2. Whether Mulach’s statements that it “accepts responsibility” for specified damage items were admissible as distinct, unqualified admissions of fact.

## Decision

- The Supreme Court of Pennsylvania reversed the Superior Court’s order granting a new trial and reinstated the jury verdict for Rochester.
- The Court held Rochester’s letter was an unequivocal demand for payment, not a compromise proposal.
- The Court held Mulach’s response contained clear, unqualified admissions of responsibility for certain items and was not itself an offer to compromise.
- The trial court did not err in admitting the letters or in denying Mulach’s motion for a new trial.

## Legal Principles

- Offers to compromise are generally inadmissible to prove liability.
- The exclusion for compromise negotiations does not bar “distinct” or “independent” admissions of fact, even if made during discussions between counsel.
- An admission made in negotiation context remains admissible unless it is expressly qualified as hypothetical or made “without prejudice” or solely for settlement purposes.
- Determination turns on the content and function of the communication, including whether it proposes reciprocal concessions or a settlement figure.

## Conclusion

Because the correspondence reflected a demand and a set of itemized admissions and denials—without settlement terms or qualifying language—Mulach’s unqualified statements accepting responsibility were admissible as factual admissions, and the verdict for Rochester was reinstated.


Rochester Mach. Corp. v. Mulach Steel Corp., 449 A.2d 1366 (Pa. 1982)