Nobles v. Christian & Craft Grocery Co. , 113 Ala. 220 ( 1896 )

HEAD, J.

On December 1, 1894, the appellants, Stephen P. Nobles et al., being the owners of certain timber lands, sold to N. B. Polk& Son all the merchantable pine timber thereon, from one foot in diameter and up, at the price of $1,800, for which the purchasers gave sellers their three notes, one due January 1, 1895, another May 1, 1895, and the other September 1, 1895, each for $600. The writing evidencing the sale contained the clause: “Contract commencing January 1, 1895, and ending January 1, 1896.” Right of way over the land was, by stipulation, secured to purchasers to enable them to convey said timber to the Bigbee river. The agreement also contained the following clause: “And it is fully understood and agreed to by the parties of the second part [the purchasers] , that the parties of the first part retain in said sale by this contract and our promissory note bearing even date with this contract, a lien on all timber on hand at the' time this note becomes due, cut from said lands since January 1, 1895, .to May 1, 1895, for the payment of said note due May 1, 1895, for $600. And on all timber cut from May 1, 1895, until the last note is paid, of $600, due September 1, 1895.”

“On and prior to October 30th, 1894,” (as the bill states) “said Polk & Son were cutting timber from said lands, under an agreement with complainants (the said sellers) to give them a given sum per 1,000 feet, for stumpage, for such timber as they might cut from said lands, and on that day (October 30, 1894) Polk & Son entered into a contract with appellee, Christian & Craft Grocery Company, providing, ‘That for and in consideration of the advances hereafter to be made to us by the Christian & Craft Grocery Company, we, Napoleon B. Polk and Andrew J. Polk, doing business under the firm name and style of N. B. Polk & Son, hereby agree and bind ourselves to ship to the said Christian & Craft Grocery Company, all of the timber, we shall hereafter get out from the lands of Steve Nobles, said Christian & Craft Grocery Company to sell said timber, and apply the net proceeds thereof to such account as we may, from time to time, owe to them, and should there at any time remain a balance of the net proceeds of said timber after paying the. account that may be due to the Christian & Craft Grocery Company, they shall pay the same over to us, our survivors, successors, personal representatives, or assigns.

“We further agree and bind ourselves to deliver said timber, as fast as the same is ready for shipment, to raftsmen to hold possession thereof for the said Christian & Craft Grocery Company, it being intended that our delivery to such raftsmen shall be a delivery of said timber to the said Christian & Craft Grocery Company.”

The lands referred to in the contract are averred to be the same as those from which the timber was sold by the subsequent contract of December 1, 1894; and the Grocery Company, when its contract was made, had notice that timber was being gotten off the land under a stumpage contract of some character.

The bill avers that on May 1, 1895, the said Grocery Company had on hand 504 pine logs which had been cut by N. B. Polk & Son from said lands, and by them shipped to the Grocery Company under the said contract of October 80, 1894, and that on or about July 15, 1895, the Grocery Company sold said logs and credited the proceeds, amounting to over $700 to Polk & Son, upon an indebtedness then due to the Grocery Company. It is averred that the Grocery Company had notice that complainants had a lien upon the timber cut from the said lands, for stumpage upon the same, and that the notice was received by them prior to the time when they received the said 504 logs, and that complainants, after May 1, 1895, and before said logs were sold by the Grocery Company, claimed of that company either payment of the note due May 1, 1895, or delivery to them of said logs, but the Grocery Company declined to acknowledge the validity of any lien or claim held by complainants .

The bill is filed to enforce the alleged lien on said 504 logs, or their proceeds, for the satisfaction of the note due May 1, 1895.

The Grocery Company interposed the following demurrers to the bill, which the chancellor sustained :

1st. Because said bill of complaint fails to show that N. B. Polk& Son has on hand any of the logs delivered to the defendant at the date of the maturity of the note Exhibit “B” to the original bill of complaint.

2d. Because said bill of complaint shows that said logs were to be delivered to this defendant for its account, and to be credited to N, B. Polk & Son, the surplus, if any, to go to Polk & Son; and it fails to show there was any surplus.

3d. Because said bill shows that the complainants have a full, complete and adequate remedy at law.

4th. Because said bill of complaint is repugnant and inconsistent in this : That it seeks in one portion therein to claim from this defendant stumpage at a given sum per thousand feet for said timber, and in another portion it claims of defendant payment of the note made by N. B. Polk & Son.

"We remark, in order that it may be 'corrected in any further prosecution of the cause, that the bill is fatally defective, on demurrer properly assigned, in that it fails to show that the 504 logs in controversy were cut after January 1, 1895. The contract, given its strictest construction in favor of complainants, confines the lien retained by complainants, for the security of the note maturing May 1, 1895, to timber cut after January 1, and before May 1., 1895. For aught the bill shows, these logs were cut prior to January 1, 1895. The objection is not sufficiently presented by the demurrer, and we do not make it a ground of affirmance.

The paramount consideration on this appeal is the proper construction to be given that clause of the contract which limits the lien retained by the complainants to “all timber on hand at the time the note becomes due,” &c. It is obvious upon the whole bill, that it was the design of the parties, when they entered into the contract of sale of the timber, that Polk & Sons, the purchasers, should have the right to carry on the timber business, and, in the regular course of such business, up to May 1, 1895, dispose of the timber to be cut bjr them from the lands, between the dates specified, free from any liens or claims on the part of the sellers; and that the lien retained should attach only to such timber as the purchasers might have on hand, undisposed of, on May 1, 1895. The question then-arises whether the bill shows that these logs had been so disposed of by the purchasers prior to said May 1, 1895.

It is contended by the complainants that the effect of the contract of October 30, 1894, between Polk & Son and the Grocery Company,under which it is averred the latter received the logs in controversy, was to constitute the Grocery Company agent of Polk & Son,to receive the timber shipped to it, and sell the same and apply the proceeds to the payment of any indebtedness which might be owing it by Polk & Son, or, if no such indebtedness,to pay the proceeds over to Polk & Son, and that the shipment and delivery of the logs to the Grocery Company created or effectuated no right or title in it to the logs ; that its only legal or equitable right in the premises was that arising after sale by it of the logs, to apply the proceeds to any indebtedness owing it — the logs, until sale, remaining the absolute property of Polk & Son. Hence, as contended, the logs, being in the hands of the Grocery Company, unsold, on May 1, 1895, they were being held, by it as agent for Polk & Son, its principals; and that being the day for the lien of complainant to attach, or rather for the ascertainment of the property upon which it would attach, the lien became complete and effectual upon the logs in question.

We do not think the contract will bear this interpretation. It is very clear the parties to it contemplated that Polk & Son would need advances to carry on their business, and arrangements were desired to be made to obtain them from the Grocery Company. Security was necessary to effectuate the arrangement. The written agreement, whilst not effectual as an obligation on the part of the Grocery Company to make advances to Polk & Son, was capable of ripening into, and controlling the interpretation of, legal rights, by dealings of the parties under it. Advances actually made, and timber actually delivered, under the agreement, created a valid pledge of the timber, with the stipulated power to sell and apply the proceeds to the payment of the advances. The advances being made, the pledge was, by the carefully guarded contract, effectual from the delivery of the timber to the raftsmen, who were made, for that purpose, the agents of the Grocery Company.

Nor do we doubt that a pledge, effectuated by these moans and for these purposes, was a disposition of the timber by Polk & Son, within their reserved power under their contract of purchase with the complainants. They had the right, under that contract, to make the timber available for the carrying on of their business, in the exercise of which they were not confined to absolute sales and use of the proceeds, but could utilize it as the means of security for loans, according to usual and customary business methods. The pledge of these logs in question, haying been perfected before May 1, 1895, the lien of the complainants was subject to it, and can not be enforced without an offer to discharge it. The bill was not framed ''with any view of redemption, or to reach any surplus of proceeds of the Grocery Company, after the discharge of its own pledge, and the first and second grounds of demurrer were, consequently, well taken. The third and fourth grounds were bad.

• The decretal order of the chancellor sustaining the demurrer must be affirmed.

Affirmed