Murphy v. Schuster Springs Lumber Co.

• Decision Date: 18 December 1926
• Docket Number: 3 Div. 778
• Citation: 215 Ala. 412,111 So. 427
• Parties: MURPHY et al. v. SCHUSTER SPRINGS LUMBER CO.
• Court: Alabama Supreme Court

111 So. 427

215 Ala. 412

MURPHY et al. v. SCHUSTER SPRINGS LUMBER CO.

3 Div. 778

Supreme Court of Alabama

December 18, 1926

Rehearing Denied Jan. 13, 1927

Appeal from Circuit Court, Butler County; A.E. Gamble, Judge.

Bill in equity by the Schuster Springs Lumber Company against Ada F Murphy and others. From a decree overruling demurrer to the bill, respondents appeal. Reversed, rendered, and remanded.

Somerville Gardner, Thomas, and Miller, JJ., dissenting in part.

Powell & Hamilton, of Greenville, for appellants.

Steiner Crum & Weil, of Montgomery, for appellee.

SOMERVILLE J.

The litigation herein arises between the vendor and the purchaser of standing timber, and turns upon the proper construction of the italicized portions of this paragraph of the written contract of sale:

"Said timber to be cut and removed from said lands within five years from the date of this conveyance, with the option and privilege of extending this contract for not exceeding three years from the expiration hereof on lands upon which timber has not been cut, by the payment to the undersigned grantors, by the W.T. Smith Lumber Company, the sum of fifty cents per acre per year for the time said extension is desired: Provided that grantee agrees to make reasonable efforts to cut and remove said timber within said five-year period; and provided further that, in the event of such extension, no timber measuring less than ten inches in diameter at the stump at the time of cutting shall be cut and removed. At the expiration of this contract, or an extension of same, all rights and privileges herein granted shall cease, and grantee shall have no further right to use or go upon said lands for any purpose except to remove apparatus and machinery; and all timber remaining uncut at the expiration of this lease or extension of same shall revert to and become the absolute property of the grantor(s) herein named, their heirs or assigns."

The complaining purchaser seeks to enforce by decree in equity the stipulated right to extend the period for the cutting and removal of the timber. The theory of the bill of complaint is that the contract of sale exhibits an unconditional grant to the purchaser of an option to extend the period for three years from the termination of the first, or five-year, period, by paying to the vendor the additional sum of 50 cents per acre for so many acres as then remained uncut; and that the "provided" clause is not to be construed as a condition, either precedent or subsequent, but as a covenant merely, which is compensable in damages for any injury resulting from the purchaser's failure "to make reasonable efforts to cut and remove said timber within the five-year period." The bill presents also, by pertinent allegations, the alternative theory of a right to the extension, even though the "provided" clause be held to be a condition precedent, by reason of matters and circumstances which, it is conceived, fairly excused the purchaser's failure to cut and remove the timber within the five-year period; showing, in fact, that the requirement of such a performance under such conditions would have involved more than "reasonable efforts," and hence was not contemplated by the contract. And, it is alleged, "the W.T. Smith Lumber Company could not have cut and removed said timber from said lands within said five-year limitation by reasonable effort"; and "complainant made reasonable effort to cut and remove said timber from said lands within said five-year limitation, but was wholly unable to do so."

The bill of complaint, as amended, shows that the W.T. Smith Lumber Company was the original purchaser of this timber, distributed over 1,300 or 1,400 acres, under the contract dated May 17, 1920; that on November 15, 1922, that company sold and conveyed to this complainant all of this timber, with the same rights, privileges, and burdens as were granted and imposed by the original deed of sale to the first purchaser; and that neither the Smith Lumber Company, nor its subvendee, this complainant, has ever cut any timber whatever under this contract; the entire acreage granted remaining uncut and undisturbed at the termination of the five-year period on May 17, 1925.

The theory of respondents is that the "provided" clause of the contract is a condition precedent to the purchaser's exercise of the right to extend the contract; and that the bill is wanting in equity, because, the attempted explanations and excuses notwithstanding, the failure to cut and remove any timber within the five-year period exhibits a failure to make the "reasonable efforts" required.

A minor insistence, also, is that the exercise of the option to extend demanded of the purchaser, not only a timely notice of its intention to claim the right, but also a tender to the vendors of 50 cents per acre on the uncut lands before the expiration of the five-year period; and that the purchaser's performance of those obligations is not sufficiently shown by the allegation of the bill that "complainant, about the time, or just before, said five years had expired, gave notice to respondents that it would insist on an extension of said lease or contract, *** tendered to respondents an extension agreement, and offered to pay to respondents for all uncut timber on said lands at the rate of 50 cents per acre."

If the proper construction of the contract is that the right to its extension depended upon the vendors' notification by the purchaser of the latter's intention to extend, and his tender of the additional consideration in money, before or at the expiration of the five-year period, then it is clear that the allegations of the bill would not be sufficient to show a compliance with those requirements, because the word "about" in this connection may as well mean a short time after, as a short time before, the date specified. Alabama G.S.R. Co. v. Arnold, 84 Ala. 159, 4 So. 359, 5 Am.St.Rep. 354; Platt v. Jones, 59 Me. 232, 241; Colter v. Greenhagen, 3 Minn. 126, 130 (Gil. 74); 1 Words and Phrases, 26.

There are authorities which support that construction of this contract. "The provision in question, conferring as it does a privilege, and unilateral in its obligation, partakes to some extent of the nature of an option, in which time is ordinarily of the essence, and the accepted doctrine in reference to this and other instruments containing the same and similar language is that they should be strictly construed. Product Co. v. Dunn, 142 N.C. 471 ; Alston v. Connell, 140 N.C. 485; ^[1] Estes v. Furlong, 59 Ill. 298; Dyer v. Duffy, 39 W.Va. 148 [19 S.E. 540, 24 L.R.A. 339]; Mason v. Payne, 47 Mo. 517; 21 A. & E. [ Ency.Law] (2d Ed.) 931." Bateman v. Lumber Co., 154 N.C. 248, 251, 70 S.E. 474, 475 (34 L.R.A. [ N.S.] 615).

The reason for this rule of strict construction has been thus stated:

"It would be inequitable to hold one party bound beyond the time fixed for performance, and permit the other party, at his election, to postpone performance to suit his convenience or interest, with no obligation to perform at any time. This would especially true in contracts relating to standing timber, the value of which is, as this record discloses, fluctuating--and, to a large extent, speculative. The timber is subject to destruction by forest fire, in which event the owner of the land would have no remedy for loss sustained by its destruction. Again, to permit the optionee to await his convenience to comply with the terms upon which his option depends burdens the owner with obligation to hold the land in its uncleared, nonproducing condition, he paying the tax thereon." Granville Lumber Co. v. Atkinson (D.C.) 234 F. 424, 432.

This is in accord with the generally recognized principle that in option contracts, unless expressly negatived, time is always of the essence of the contract. 25 R.C.L. 237, § 39.

In the recent case of Stark et al. v. Burford (Ala.Sup.) 109 So. 148, a majority of the court held, as to a contract substantially resembling this, that the tender for extension might be effectively made within a reasonable time after the termination of the first period. The writer concurred with Justices Gardner, Miller, and Bouldin, on the assumption stated in the opinion of Justice Miller, that the grantor's covenant to extend the time for cutting and removing the timber did not create an independent option in favor of the grantee, but was of the substance of the original grant. Chief Justice Anderson and Justices Sayre and Thomas dissented. The writer's more thorough examination of the contract in the Burford Case, supra, now convinces him that the covenant to extend was nothing more than an independent option, as here, unilateral in character, and properly governed by the stricter rules of performance applicable to option contracts.

A majority of the court, composed of Chief Justice ANDERSON, and Justices SAYRE, SOMERVILLE, GARDNER, THOMAS and BOULDIN, now hold that a tender of performance by the purchaser was not effective, unless made within the five-year period, and that the allegation of the bill of complaint in this behalf was not in itself sufficient. All of the majority, except Justices GARDNER and BOULDIN, hold that the case of Stark v. Burford (Ala.Sup.) 109 So. 148, must be overruled on that point. Justices GARDNER and BOULDIN think it can be distinguished from the instant case, and that it should not be overruled. Justice MILLER adheres to the case of Stark v. Burford, and dissents from the majority view.

The bill of complaint alleges that, when the alleged tender for extension was made by the purchaser, the vendors refused it on the ground that reasonable effort had not been made to cut and remove the timber within the five-year limitation, and forbade complai...