Page v. Lyle H. Hall, Inc.

• Citation: 214 A.2d 459,125 Vt. 275
• Decision Date: 08 November 1965
• Docket Number: No. 1183,1183
• Parties: Carl A. and Edith M. PAGE v. LYLE H. HALL, INC.
• Court: Vermont Supreme Court

Page 459

214 A.2d 459

125 Vt. 275

Carl A. and Edith M. PAGE v. LYLE H. HALL, INC.

No. 1183.

Supreme Court of Vermont.

Nov. 8, 1965.

John S. Burgess and Ralph Chapman, Brattleboro, for plaintiffs.

John & O'Connor, Brattleboro, for defendants.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.

BARNEY, Justice.

The effect of the following language used in a mortgage deed is the key to this controversy:

Mortgagors shall have the right to cut timber from the premises on and after July 1, 1960 provided that they are not in default under any terms or conditions hereof.

Acting under this provision, the mortgagors sold certain standing timber on the premises to the defendant corporation in May, 1962, by a quitclaim deed which limited the right to cut to two years. When a letter sent in early June, 1962, did not halt the timber operation, the plaintiffs, as mortgagees, brought this equitable action in September, 1962, to enjoin the defendant's cutting.

During the hearing, the chancellor admitted parol evidence to explain the construction put on the language quoted above by the mortgagors and mortgagees at the time the transaction took place. The defendant objected vigorously, and its opposition to that ruling and its consequences is the principal theme of its appeal.

The generalized justification for resort to parol evidence in such circumstances is easy to state. Where a written instrument contains demonstrable ambiguities, evidence may be received of acts and expressions of the parties indicative of the construction they understood between themselves should be placed on the language used. Otherwise, written instruments are enforced according to their express terms. Randall v. Clifford, 119 Vt. 216, 223, 122 A.2d 833. As the case suggests, at pages 224-225, 122 A.2d 833, misrendering of terms is corrected by particular proceedings for reformation, not during actions for enforcement. It also, at page 224, 122 A.2d 833, points out some of the policy bases for forbidding parol modification of plain written language in suits on the instrument. As between the parties, it avoids the problem of a subsequent change in intention by one or both of them. Further, third parties, later entering the transaction, have some assurance that they may rely on the express terms of the original agreement.

On the other hand, the presence of ambiguous language is itself a warning to third parties, and a problem which can only be resolved by resort to the stated purpose of the parties concurrent with the transaction. But the ease of stating the rule, admitting parol evidence to clear up ambiguous language, is overbalanced by the difficulty of determining when it applies.

In this case, the quoted term of the mortgage appears clear, explicit and unambiguous. It gives to the mortgagors personally the right to cut the timber on the property after a given date if they are not in default under the mortgage. Any enlargement or abridgement of that right comes about as a matter of interpretation, either deriving from the construction the law itself puts on the term in the circumstances, or from the intention of the parties at the time, if such evidence is properly admissible.

The defendant takes the position, first, that the clause is clearly unambiguous and requires no interpretation through oral testimony. It then retreats from the position when it proposes to establish assignability of the right to cut timber from testimony introduced by it that Carl Page, at the time, gave the mortgagors the names of several lumber dealers to whom they could sell. Laying aside, for the moment, the right of the chancellor to accept or reject this testimony, which was challenged by other evidence, it should be stated that the defendant cannot have the benefit of two opposing positions as to this one clause. It is either ambiguous, or it is not. It is open to explanation and interpretation from contemporaneous conversations, or it is not. If it is so open, both sides are entitled to present such explanatory evidence.

If the clause in question is taken as unambiguous, the right to cut timber after July 1, although not otherwise restricted, has no language making it transferable or assignable. It is important or recognize that this is not a sale or conveyance of standing timber, such as was the case in Deerfield Lumber Co. v. Lyman, 89 Vt. 201, 210-211, 94 A. 837, or Ross v. Hamilton, 94 Vt. 234, 236, 113 A. 781. Our cases distinguish between agreements intended to transfer title to standing timber, like Dutton v. Davis, 103 Vt. 450, 452, 156 A. 531, and agreements merely giving rise to a right to cut. Norton v. Green, 94 Vt. 295, 298, 111 A. 458.

Such a right to cut is a personal right in the nature of a license, and is unassignable unless expressly made so. McCastle v. Scanlon, 337 Mich. 122, 59 N.W.2d 114, 121. See also 130 A.L.R. 1263; 54 C.J.S. Logs and Logging § 29e, p. 731. This means, of course, that any attempt on the part of the mortgagors to transfer or assign this right to cut must fail, and the quitclaim deed to the defendant, being unfounded, is of no force and effect. This is the very same consequence that the chancellor reached below by admitting explanatory testimony.

With both sides urging the conversations between the contracting parties in support of their own particular interpretations of the clause, the chancellor adopted the view that a latent ambiguity existed. He went on to hear their evidence, taking into account the situations of the mortgagors and mortgagees at the time agreement was reached, and also the ends sought to be achieved by the transaction.

The mortgage context is important. The critical phrase deals with the right to cut timber on the mortgaged premises. Mortgages also deal with such rights by legal implication. There is a general duty on both mortgagees and mortgagors, in connection with possession of the premises, not to do anyting to the property impairing its adequacy as security. 59 C.J.S. Mortgages § 294, p. 368. Neither can legally commit waste. Whiting v. Adams, 66 Vt. 679, 30 A. 32, 25 L.R.A. 598. This general doctrine was specifically held to apply to the cutting of timber in Hastings v. Perry, 20 Vt. 272, 278-280. Both mortgagor and mortgagee, however, are generally conceded to have implied authority to cut such timber as is reasonably needed on the premises for fuel, repairs or other related purposes as is justified by good husbandry. Whiting v. Adams, supra, 66 Vt. 679, 687, 30 A. 32; 36 Am.Jr. Mortgages § 359, p. 870.

It is not necessary to be exhaustive. What has already been said sufficiently demonstrates the latent equivocal nature of the phrase involved. Forslund v. Cookman, 125 Vt. 112, 114, 211 A.2d 190, 192. Certainly it cannot be determined from that language whether the expressed cutting right was limited, on the one hand, to timber to be cut for use on the place, or, on the other hand, to the sale of standing timber without reservation; nor is it clear whether or not the right to cut was conditioned upon the application of any proceeds on the indebtedness. There was ambiguity, and the receiption of parol evidence was not in error. Goodenough v. McGregor, 107 Vt. 524, 528, 181 A. 287; Aldrich v. Griffith, 66 Vt. 390, 398, 29 A. 376.

The chancellor found from the evidence that the parties contemplated that the standing timber would be part of the security of the mortgage, and that its loss would impair that security. He found that the mortgagors had the right to cut timber for farm use, or for proceeds to be applied on the mortgage, if they were not in default. The defendant contends that there is no support for these findings.

The evidence favoring the...