Herring v. Wallace Lumber Co., 163 N.C. 481 (1913)

Nov. 5, 1913 · Supreme Court of North Carolina

163 N.C. 481

A. R. HERRING v. WALLACE LUMBER COMPANY and CUMBERLAND LUMBER COMPANY.

(Filed 5 November, 1913.)

1. Deeds and Conveyances — Stipulations—Performance by Grantee.

The grantee in a deed is bound by stipulations or covenants contained in the deed which purport to bind him, though he may not have executed it.

2. Same — Assignee with Knowledge — Timber — Reduced Price— Breach of Contract — Measure of Damages — Railroads.

Where one has taken an assignment of an entire contract, with full knowledge of its terms, and has accepted the benefits thereof, he must also come under the burdens imposed therein upon his assignor, and the legal liabilities incident to them; and it appearing in this case that the plaintiff conveyed timber on his lands to a corporation for a reduced price, under the usual form of deeds of this character, the timber to be removed within a certain period of time, upon consideration that the corporation should build a stanclarcbgauge railroad between certain points and running through the lands conveyed, by which the logs were to have been removed; and it further appearing that the present defendant took an assignment of this deed and the entire contract contained therein, with full knowledge of its terms and the conditions imposed on the grantee named therein; and is in the present ownership and enjoyment of the rights conveyed; and that the railroad agreed upon had not been built, it is Held, that the defendant, having elected to repudiate its obligation to construct the railroad, is bound under the general equitable principle of indebitatus assumpsit, to make good the loss which the plaintiff has sustained, to be properly admeasured by the difference between the contract price and the actual value of the timber; and further Held, that if the defendant or its assignor was not authorized to build a railroad of this character (Revisal, 2698), as it had contracted to do, this defense would not affect the result. Herring v. R. R., 159 3ST. C., 382.

3. Pleadings — Allegations—Evidence—Prayer for Relief.

Where all the issuable and relevant facts relative to a recovery of damages for the breach of warranty and other stipulations in a conveyance of standing timber have been pleaded, and appropriate evidence has been introduced, it is immaterial that the prayer for relief in the complaint demands the penalty provided for in the deed, and damages in accordance with the pleadings and evidence may be recovered.

Appeal by defendant Cumberland Lumber Company from O. H. Allen, Jand a jury at tbe August Term, 1913, of Samp-sow.

. Civil action. Tbe action was instituted to recover a stipulated penalty for failure to build a standard-gauge railroad over lands of plaintiff and others from Wallace, N. C.', to Delway, N. C.

On a former trial and again on tbe present trial there was allegation, with proof, to tbe effect that on 8 July, 1908, plaintiff and other landowners in bis neighborhood had bargained the lumber growing on their land to the defendant, the Wallace Lumber Company, and that the said company, in addition to the specified contract prices, had agreed to build' over the lands of the grantors a standard-gauge railroad to Delway, N. C., and had stipulated, further, that the road should be completed and ready for transportation by March, 1908; that the timber should be hauled out only; on said railroad, and, on default in building said railroad, the company should forfeit and pay a sum equal to 10 per cent of the value of the timber for the first year and 2% per cent for the second year, etc.; that subsequently the plaintiffs A. E. Herring and wife executed their formal deed, conveying the timber to the Wallace Company, with privilege of removing the same within ten years, etc., with the right and privilege of ingress and egress, etc., and of constructing all roads and railroads and tramroads, etc., necessary and required for the proper cutting and removal of the timber; and with the • further intent to express the agreement between the'parties,, the deed in question contained the following provision: “That the said party of the second part shall construct and build a standard-gauge railroad from Wallace, N. 0., or a point thereabout, to Delway, N. C., the same to be completed and ready for use and transportation on or before 15 March, 1908, and that the trees sold in this deed are not to be removed from the land except by said railroad. In case of failure to construct said railroad within the time specified above, then and in that case the said parties of the second part shall forfeit and pay to the said parties of the first part a sum equal to 10 per cent of the purchase price of said trees, and for each year thereafter 2% per cent additional for five years, or until the ten years expire.”

. It was further proved that the timber had been sold to the company at a reduced price and below its actual value by reason of this provision as to constructing the railroad, and there was evidence tending to show the difference in amount. It further appeared that, soon after the execution of this deed, the Wallace Company conveyed and assigned to its codefendant, the Cumberland Lumber Company, the timber in question, together with “all the rights, title, and interest to all the standing timber and timber rights, together with all rights of way owned or controlled by the said, party of the first part within the counties of Duplin, Sampson, and Pender, and all other rights, privileges, and easements conveyed and contained in the deeds hereinafter set forth, made and executed to the said party of the first part, and for a full description of said rights, easements, rights of way, timber and timber rights, reference is hereby made to said deeds in tbe registers’ offices in tbe said counties of Sampson, Duplin, and Pender,” tbe deed of plaintiff to the Wallace Company being one of those referred to in tbe latter instrument.

In tbeir answers, filed separately, botb companies deny any and all liability for tbe stipulated penalty, claiming tbat tbe building of a' standard-gauge railroad is not witbin tbe powers conferred by tbeir charters, and also by reason of 'the inhibitive provisions of section 2598 of tbe Revisal.

At a former trial of tbe cause, tbe Superior Court judge having intimated an opinion against tbe right of plaintiff to make recovery, tbe plaintiff submitted to a nonsuit and appealed. On such appeal, tbe ruling of tbe lower court was reversed, and it was held tbat, although tbe stipulation as to building a standard-gauge railroad might be ultra vires — and this tbe Court did not decide — when it was made to appear tbat tbe purchaser bad by reason of such stipulation obtained tbe timber at a reduced price, if be took advantage of such a position and tbe stipulation was avoided on tbat account, tbe vendor should be allowed to recover for tbe actual value of tbe timber sold, tbe proper measure of damages being tbe difference between tbe price paid and such actual value.

See opinion of Associate Justice Wallcer, for tbe Court, 159 N. C., 382, to which reference is also made for a very full and clear statement of tbe facts relevant to tbe questions then presented. This opinion having been certified down, and it having been made to appear tbat tbe Wallace Company was no longer existent, having been, dissolved in accordance with tbe provisions of law, tbe'questions, at issue recurred on tbe liability of tbe Cumberland Company, and in addition to tbe facts'admitted of record, issues were submitted and verdict rendered thereon as follows:

1. What, if any, is tbe difference between tbe actual value of tbe timber conveyed by tbe plaintiff and tbe price-paid as set out in the deed? Answer: $900.

2. Did tbe Cumberland Lumber Company purchase from tbe Wallace Manufacturing Company tbe timber- of tbe plaintiff with notice of the railroad clause and forfeiture clause set out in tbe original contract and deed with tbe Wallace Manufacturing Company? Answer: Yes.

3. What amount, if any, are the defendants indebted to the plaintiff? Answer: $900, with interest.

4. Is the plaintiff’s canse of action set forth in his amended complaint barred by the statute of limitations? Answer: No.

There was judgment on the verdict, and the defendant the Cumberland Lumber Company excepted and appealed, assigning for error, chiefly, that, on the facts in evidence, the said company could not be in any way held for failure to construct the railroad.

George E. Butler and R. L. Herring for plaintiff.

H. L. Stevens for defendant.

Hoke, J.,

after stating the Case: It is very generally held here and elsewhere that the “grantee in a deed poll, containing covenants and stipulations purporting to bind him, becomes bound for their performance, though he does not execute the deed.” Maynard v. Moore, 76 N. C., 158, approved in Long v. Swindell, 77 N. C., 181; Fort v. Allen, 110 N. C., 191; Bank v. Loughlan, 122 N. C., 613; Burbank v. Pittsburg, 48 N. H., 475; Bowen v. Beck, 94 N. Y., 86; Easter v. R. R., 14 Ohio State, 48; Ga. So. Ry. v. Reeves, 64 Ga., 492; Smith’s Lead. Cases, 9 Amer. Ed., pp. 222-223.

This deed, therefore, from plaintiff and wife to the Wallace Lumber Company, in section VII, contains affirmative stipulation that the grantee “shall construct and build a standard-gauge railroad, to be completed, etc.; that the trees sold in this deed are not to be removed.from the land except by said railroad, and, in case of failure, a pecuniary penalty of specified amount is collectible by the grantor, the plaintiff; and the defendant, the Cumberland Lumber Company, having taken an "assignment of the entire contract, to wit, “all the rights, title, and interest to all the standing timber and timber rights, together with all rights of way, etc., and all other rights, privileges, and easements conveyed and contained in said deed,” and being-in the present ownership and enjoyment of these rights, etc., must come under the obligations of the covenant and be held responsible for the liabilities legally and necessarily incident to it. In Norfleet v. Cromwell, 70 N. C., 634, imported also on a former appeal, 64 N. C., 1, defendant, tbe grantee of lands draining into a canal, was sued for bis pro rata of necessary repairs thereto on a covenant made by defendant’s grantor. After bold-ing defendant liable by reason of tbe covenant, being one running witb tbe land, tbe Court, on page 641 of tbe second appeal, proceeded as follows: “Independently of tbis, however, there are two' arguments which might be out of place in a mere court of law, but which a court of equity is entitled to notice, that must be considered conclusive of the question:

“1. The consideration for the covenant was the grant of an easement which became appurtenant to the land, and passed with it to the defendant on his purchase. This easement he has accepted and enjoyed, and it is his only title to drain the land into the canal. The principle is generally conceded, and it is certainly equitable, that when the benefit and burden of a contract are inseparably connected, both must go together, and liability to the burden is a necessary incident to the right to the benefit. Qui sentit commodum sentire debet et onus; Notes to Spencer's case, 1 Smith L. C., 143; Savage v. Mason, 3 Cushing, 318; Coleman v. Coleman, 7 Harriss, 100.” The principle is eminently sound and has been approved with us in different cases and in other courts of recognized authority. Younce v. Lumber Co., 148 N. C., 34; R. R. v. R. R., 147 N. C., pp. 368-385; R. R. v. Bank, 42 Neb., 469; Smith v. Rodgers, 14 Ind., 224.

The present defendant, then, having taken over the contract with full notice and knowledge of the terms, and being bound by its covenants to build the railroad, as far as this could be effected by agreement between the parties, has elected to repudiate the obligation, and, it having been fully established that this agreement to build the road over the land was allowed substantial effect in reducing the selling price of the timber, under the general equitable principle of indebitatus assumpsit, as stated in our former decision, the defendant should make good the loss which the plaintiff has suffered, to be properly admeasured by the difference between the contract price and the actual values. Tbe rights of tbe parties have been properly adjusted, under these principles, and we find no reason for disturbing tbe results of tbe trial. It bas been repeatedly beld in tbis State tbat these contracts, conveying standing timber, are contracts concerning realty, and must be so considered and dealt with in determining tbe rights of tbe parties, and, tbis being true, several of tbe authorities heretofore cited are to tbe effect tbat tbe covenant in question here is one running with tbe land (Norfleet v. Cromwell, supra; Ga. Ry. v. Reeves, supra; Burbank v. Pittsburg, supra), and as such binding on tbe present owner to tbe extent tbat tbe same is lawful, whether with or without notice; see generally on tbis subject, tbe well considered case of Wiggins v. Pender, 132 N. C., 628; but, it having been clearly established tbat tbe Cumberland Company bas taken an assignment of tbe entire contract, with full notice and knowledge of its terms, we rest our decision on tbe principle tbat tbis company, having accepted tbe benefits of tbe contract, must also come under its burdens and tbe legal liabilities incident to them. We are not unmindful of tbe fact tbat tbe suit was instituted to collect tbe penalty, and tbat tbis is tbe specific prayer for relief, but all of tbe issuable and relevant facts having been made to appear both by allegation and proof, tbe relief may be awarded according to tbe facts established, and tbe prayer for relief is not of tbe substance. There is no error, and tbe.judgment in plaintiff’s favor must be

Affirmed.