Eastern Kentucky Mineral & Timber Co. v. Swann-Day Lumber Co.

• Decision Date: 30 April 1912
• Citation: 148 Ky. 82,146 S.W. 438
• Parties: EASTERN KENTUCKY MINERAL & TIMBER CO. v. SWANN-DAY LUMBER CO.
• Court: Kentucky Court of Appeals

146 S.W. 438

148 Ky. 82

EASTERN KENTUCKY MINERAL & TIMBER CO. v. SWANN-DAY LUMBER CO.

Court of Appeals of Kentucky.

April 30, 1912

Appeal from Circuit Court, Fayette County.

Action by the Eastern Kentucky Mineral & Timber Company against the Swann-Day Lumber Company. From a judgment for defendant plaintiff appeals. Affirmed.

H. Clay Howard, of Paris, Wm. O. Bradley, of Louisville, John T Shelby, of Lexington, Robt. H. Winn, of Frankfort, and Jos C. Lykins, of Lexington, for appellant.

A. F. Byrd, of Lexington, and Jouett & Jouett, of Winchester, for appellee.

CARROLL J.

In July, 1874, John D. Spencer and his wife signed and acknowledged the following paper, which for convenience we will call a "deed," and it was duly recorded in the clerk's office of Wolfe county: "Know all men by these presents: That John D. Spencer, of the county of Wolfe, and state of Kentucky, and Rebecca Spencer, wife of John D. Spencer, for and in consideration of one dollar, and other considerations hereinafter mentioned, to be paid by Henry C. Howard, W. E. McKinney, A. L. Greer and John W. Greer, the receipt of which is hereby acknowledged, do hereby grant, bargain, sell and convey to the said Howard, McKinney, Greer and Greer, their heirs and assigns forever, the undivided seven-eighths (7/8) of the minerals and timber, with the right of way to timber and minerals when the same are being mined and worked. Said tract of land is bounded and described as follows, to wit: *** The grantor reserves one-eighth interest in the minerals and timber of said land, outside of the seven-eighths conveyed, and is to share with grantees, as above mentioned. That is to say, the grantor is to receive one-eighth of the net profits of all minerals and timber taken from said tract, so soon as mining operations commence, said grantor also reserving of the timber herein conveyed, a sufficient quantity for mill, fuel, and fencing, for his own use on his farm. This deed is not to embrace, or intended to convey, anything but the minerals and timber as stated, and not to interfere with the farming interest of said territory, only so far as is necessary to work and mine minerals, and getting out timber." By regular conveyances, whatever right, title, and interest the grantees had under this deed came into the ownership of the appellant company. John D. Spencer died in 1883, and in 1887-88 his children and heirs at law conveyed a fee-simple title to all the land embraced in the boundary mentioned in the above instrument to remote vendors of the appellee company, and by regular conveyances the estate so conveyed came into the possession of appellee. About 1902, the appellee commenced to cut and remove timber from the land, and in 1904 this action was brought by the appellant for an accounting and to recover from appellee the value of the timber so cut and appropriated. The master commissioner to whom the case was referred reported that the appellant was entitled to recover $4,852, as the value of seven-eighths of the timber cut and appropriated by appellee. Afterwards, upon considering the case on exceptions to the commissioner's report, the lower court entered a judgment dismissing the petition, and as a result this appeal is prosecuted.

A number of reasons are advanced by counsel for the contesting parties in support of and in opposition to the judgment of the lower court; but we have reached the conclusion that the controlling decisive question in the case is whether the deed executed by Spencer should be treated as contended by counsel for appellant as conveying to the grantees therein an unconditional fee-simple interest in the timber and minerals, or, as insisted by counsel for appellee, as only conveying to the grantees the right to the timber and minerals upon the condition that they commenced within a reasonable time to convert it into salable or manufactured products. If the deed conveyed the fee absolutely, the appellant should succeed; but if it only granted the fee with the condition annexed that the grantees should begin operations within a reasonable time, the judgment below was correct.

Having this view of the question of law that controls the case, it is important at the outset to get a clear understanding of the facts, not only in their relation to the parties at the time the contract was executed, but subsequently, as these facts will furnish valuable aid in getting at the intention of the parties and assist materially in the proper construction of the deed. And it is a well-settled principle in the law of contracts that, when the instrument in question is fairly susceptible of more than one construction, it is admissible to have the aid of all pertinent extrinsic facts and circumstances that will throw light on the intention of the parties in its execution, and enable the court to carry out their purpose as expressed in the writing. As was said in Lexington & Big Sandy Ry. Co. v. Moore, 140 Ky. 514, 131 S.W. 257: "In the construction of all contracts, the intention of the parties making the contract, if it can be arrived at from a consideration of the instrument, must control, and in aid of what the parties intended it is admissible in the construction of many contracts that are on their face free from ambiguity to consider their situation and the circumstances and conditions surrounding them at the time the contract was entered into, not for the purpose of modifying or enlarging or curtailing its terms, but to shed light upon the intention of the parties. And the intention of the parties thus gathered will prevail unless it does violence to the meaning of the contract as written. Page on Contracts, § 1123; Kauffman v. Raeder, 108 F. 171 , 54 L.R.A. 247; Smith v. Kerr, 108 N.Y. 31 , 2 Am.St.Rep. 362; Hildrith v. Forrest, 4 J. J. Marsh. 217. In other words, if a written contract, when viewed from the standpoint of the parties at the time it was executed, can be made to carry out their intention as expressed in the writing, the court will adopt the construction that will accomplish this end."

Fortunately there is little dispute about the material facts. The land described in the deed was at the time of its execution practically all wild, uncultivated, uninclosed mountain land. The nearest railroad was some 40 miles away, and there were no navigable streams convenient that would lend any assistance in the transportation of timber or minerals that might be obtained. The mountainous condition of the surrounding country, the great distance from railroad facilities, and the lack of water means of transportation, produced a present condition that made the timber and minerals on the land of little or no value for commercial purposes, or indeed for any purpose. There was no local demand for timber or minerals, and in the absence of transportation facilities no incentive to attempt to put these products on the market. Spencer, the grantor, was a man of intelligence and good business capacity, and although he lived some nine years after the instrument was executed, it does not appear that he made any complaint of the failure of the grantees to begin the development of the natural resources that they had purchased. At the time the writing was executed, there were strong indications that a railroad would be constructed through or in the immediate vicinity of the land. A route was then being surveyed, and the grantees who were interested in building the road doubtless believed, as did Spencer, that it would only be a short time until a railroad would be in operation to this body of land. But, for reasons not necessary to notice, the contemplated railroad was abandoned, and it was not until some 16 years afterwards, or about 1890, that a railroad was built by other parties on the route that was being surveyed in 1874, and then for the first time the timber and minerals, particularly the timber, became valuable. For the reasons suggested, during the 16 years, from 1874 to 1890, no steps whatever of any kind or character were taken by appellant or its vendors to sell or manufacture any timber from the land or develop its mineral resources. It is a further admitted fact that, although the railroad was opened in 1890, neither the appellant nor any of its predecessors in title made any effort to take possession of the property that they claim was granted by the instrument, or to do anything towards converting into money the timber and minerals conveyed. Indeed, not until 1904, when this suit was brought, 30 years after the deed was executed, did the appellant or any of its vendors take any action in relation to the property or exercise any acts of ownership whatever over the property, or pay any taxes on it, or take any steps towards asserting right, title, or interest in it. The delay in failing to take any action before 1890 is excused upon the ground that, as no railroad was built until then, nothing could have been done towards the development of the property, and, as it remained undisturbed, there was no occasion for assertion of interest or title upon its part. The inaction after 1890 is attempted to be justified upon the theory that in 1887-88 the Spencer heirs sold the property, and so there was no reason for asserting ownership until some overt act of trespass was committed; and it is said that the appellee did not commence to appropriate the timber until 1902, and that within a reasonable time thereafter this action was brought to assert its rights.

It is not controverted that the predecessors in title of the appellee company, and the purchasers from the children and heirs of John D. Spencer in 1887-88, knew of the existence of the writing he had executed in 1874. It had been put to record, and whether the purchasers from the Spencer heirs or their vendees...