#### GEORGE W. MOTE et al. v. WHITE LAKE LUMBER CO.

(Filed 3 November, 1926.)

1. Deeds and Conveyances — Contracts—Timber.

Deeds for standing timber conveys a fee simple interest in such timber determinable as to all such timber that is not cut and removed within the time specified in the contract.

2. Same — Extension Period — Option—Payment of Consideration.

Where a deed conveys timber growing upon land to be cut and removed within a stated time, with extension periods upon a further consideration to be paid within each of such periods or at stated times, the contract for each such period is but an option until the consideration is paid, and such consideration so to be paid, is necessary for the acquisition by the vendee of the extension rights accorded him.

3. Equity — Estoppel—Deeds and Conveyances — Timber Deeds — Extension Periods.

Where the rights to cut and remove timber growing upon lands are acquired by purchase and conveyance from the original grantee, who agrees and covenants to pay the consideration for the extension periods therein granted, the vendor is estopped in equity from claiming forfeiture of the extension period and a revesting of the title in himself, by asserting to his vendee’s purchaser that all moneys necessary to secure this extension had been paid by the original grantee and knowingly permitting extensive operations to be made for the continued cutting and removal of the timber.

4. Same — Recovery of Extension Price — Consideration.

Where equity will estop the grantor in a timber deed from enforcing a forfeiture of the rights of the purchaser of his vendee in cutting and removing the timber, etc., because of his vendee’s failure to pay the consideration of the extension period, the vendor may recover the amount of this consideration from such purchaser.

Civil actioN, tried before *Daniels, J.,*at April Term, 1926, of BLADEN.

This action was instituted on 8 February, 1926, by the plaintiff and his wife against the defendant.

*461Oil 22 January, 1906, Silas Norris conveyed to E. W. Boatrigbt certain rights to cut and remove timber from tbe land now owned by tbe plaintiffs. Boatrigbt conveyed bis interest under said timber deed to tbe Bell Lumber Oo. Thereafter, tbe Bell Lumber Co. conveyed tbe timber rights to tbe defendant, White Lake Lumber Oo. Norris died and bis land was divided among bis heirs at law, and under said division tbe plaintiffs became tbe owners of certain lots of tbe Norris land.

In tbe deed from tbe Bell Lumber Oo. to tbe defendants^ White Lake Lumber Oo., appears tbe following covenant: “And we, tbe grantors herein, hereby jointly and severally covenant and agree, binding ourselves, our heirs, executors, administrators, successors and assigns, to pay out of our own funds at tbe proper times to tbe proper parties all extension money required to keep all tbe timber deeds hereinbefore mentioned in full force and effect, save only that in all cases where a longer period than seven years from and after tbe extension maturing date in tbe year 1918 has been, or may hereafter be granted, all extension money becoming due after tbe lapse of such period of seven years shall be payable by tbe grantee, out of its own or their funds.”

On 12 May, 1922, tbe plaintiffs executed and delivered to tbe defendant a timber deed for tbe timber on tbe lots of tbe Norris land owned by tbe plaintiffs, assuring to tbe defendant “tbe right to cut tbe timber and exercise tbe rights, easements, etc., upon so much of tbe Silas Norris land as is now owned by them (plaintiffs) until said date of 22 January, 1931, tbe final limit of tbe extension period.” This conveyance executed by tbe plaintiffs contained a clause as follows: “And whereas, under tbe terms of said deed, by tbe Bell Lumber Oo. to tbe White "Lake Lumber Oo. tbe said Bell Lumber Oo. agreed to pay all extension moneys that might accrue, due upon tbe timber as described in said deeds of Silas Norris to E. W. Boatrigbt up to and including 22 January, 1926; and whereas, tbe said George W. Mote, as owner of that portion of tbe original tracts of land on which tbe timber was sold as hereinbefore described, has received full payment of all extension money to which be is entitled on account of bis ownership of a portion of said original tracts up to and including 22 January, 1926,” etc. Tbe said deed from plaintiffs to defendant, after describing tbe property contained a further clause as follows: “Upon condition, however, that should said timber be not cut and removed on or before 22 January, 1926, then tbe said White Lake Lumber Co. shall pay to George W. Mote, bis heirs or assigns, tbe sum of $100.00 per annum for each year of said additional period after 22 January, 1926, in advance of or before 22 January of each year of said additional five-year period,” etc.

Tbe plaintiffs contended that under tbe terms of tbe deed to tbe defendant that there was tbe sum of $100.00 extension money due them *462on 22 January, 1926, and tbat said extension money bad not been paid by tbe defendant as required by said contract, and tbat, as tbe defendant bad entered upon tbe land and built a tramroad tbereon and bad begun cutting and removing tbe timber without tbe payment of said extension money tbat tbe defendant should be restrained from further cutting tbe timber, and also should be required to pay tbe plaintiffs for tbe timber already cut upon said premises.

'Angus Cromartie, agent of defendant, testified tbat a few days prior to 22 January, 1926, be read a deed from tbe plaintiffs to tbe White Lake Lumber Co., which contained a clause reciting tbat tbe plaintiffs bad received all tbe extension money up to and including 22 January, 1926, and tbat in order to be entirely certain about tbe matter be approached tbe plaintiff, G. W. Mote, and stated to him tbat be desired to stake out a right of way across tbe land referred to, and “asked Mr. Mote if be contended tbat anything was to be paid him by tbe White Lake Lumber Co. for tbe year 1926 under tbe terms of tbe deed of 12 May, 1922?” George W. Mote “then told him tbat be bad been paid for tbe year 1926, and tbat nothing was or would be due or owing to him on tbat account by tbe White Lake Lumber Co.; and thereupon said Mote showed (witness) tbe route tbat be preferred tbe tramroad of defendant should take across said land, and helped to pick out a place across said land to put tbe tramroad.” Tbe witness further testified tbat tbe plaintiffs bad full knowledge of all tbe defendant was doing, saw from day to day tbe progress of tbe work, and never gave any intimation tbat they bad or would have any claim adverse to tbe rights of tbe defendant until 8 February, 1926, when this action was instituted.

Tbe evidence of defendant was not contradicted by tbe plaintiffs so. far as tbe record discloses. The defendant, in bis answer, denied its liability to tbe plaintiffs, but offered, however, to pay tbe sum of $100.00 extension money in dispute. This offer was declined by tbe. plaintiffs.

Tbe trial judge rendered tbe following judgment: “This cause, coming on to be beard and being beard at this term, and tbe court being of tbe opinion tbat tbe language of tbe deed or contract referred to in tbe second article of tbe complaint is such tbat a forfeiture of tbe defendant’s title to tbe timber in controversy should not be declared, it is ordered, adjudged and decreed tbat tbe restraining order heretofore issued herein be and tbe same is hereby dissolved, and tbat tbe prayer of tbe plaintiffs for a perpetual injunction be and tbe same is denied.

It is further ordered, adjudged and decreed tbat tbe plaintiffs have and recover of tbe defendant tbe sum of $100.00 and interest tbereon from 22 January, 1926, and tbe cost of this action to be taxed by tbe clerk.

*463It is further ordered, adjudged and decreed that the defendant do enter into, execute and deliver to the clerk of the court a good and solvent bond in the sum qf $1,500.00, in favor of the plaintiffs herein and providing indemnity for them against loss or damage on account of cutting and removing the timber in controversy and exercising the rights and privileges provided for in the deed or contract already referred to herein in the event they should finally be adjudged and entitled to such damages, which bond shall be approved by said clerk.”

From the judgment so rendered plaintiffs appealed.

*F. F. McCulloch and A. McL. Graham, for plaintiffs.*

*J. Bayard Ciarle for defendant.*

BeosjdeN, J.

Deeds for standing timber convey a fee-simple interest in such timber, determinable as to all such timber as is not cut and removed within the time specified in the contract. *Austin v. Brown,*191 N. C., 624.

In *Timber Co. v. Wells,*171 N. C., 262, *Justice Hoke,*in discussing the nature and effect of extension clauses in timber deeds, says: “The cases on the subject are to the effect, further, that a stipulation of the kind now presented, providing for an extension of the time within which the timber must be cut, is in the nature of an option, and it is held by the great weight of authority that contracts of this character do not of themselves create any interest in the property, but only amount to an offer to create or convey such an interest when the conditions are performed and working a forfeiture when not strictly complied with.”'

Upon this principle of law, the plaintiffs assert that, as the defendant did not pay the extension money as required in the deed, the right to cut the timber terminated on 22 January, 1926.

It will be observed that in plaintiff’s deed to defendant it was recited that the plaintiff ‘Tas received full payment of all extension money to which he is entitled on account of his ownership of a portion of said original tracts up to and including 22 January, 1926. The said deed contained a further clause providing that if the timber should not be cut and removed before 22 January, 1926, then the defendant “shall pay to George *W.*Mote, his heirs or assigns the sum of $100.00 per annum for each year of said additional period after 22 January, 1926, in advance of or before 22 January of each year of said additional five-year period.” The payments provided for in the contract were annual payments. If a payment had been made on 22 January, 1926, such payment under the terms of the contract, would have extended the period of cutting until 22 January, 1927. Plaintiff’s deed to the de*464fendant was dated 12 May, 1922, and it would seem clear that, if on 12 May, 1922, the • plaintiffs had been paid up to and including 22 January, 1926, the extension money for 1926, had, as a matter of fact, been paid in advance as provided in the second clause of the deed between the parties.

But, however this may be, the plaintiffs are not entitled to recover by reason of the application of the principle of estoppel. The undisputed evidence is that the agent of defendant called upon the plaintiffs prior to 22 January, 1926, in order to ascertain if any extension money was due the plaintiffs. The plaintiffs assured the defendant that they had been paid for the year 1926, and that “nothing was or would be due or owing to them on that account by the White Lake Lumber Co.” In addition to this positive statement by the plaintiff, he pointed out to the defendant a place to locate his tramroad, and, with apparent approval, permitted the defendant to build said tramroad over the land, move his machinery and other equipment thereon and to begin cutting and removing timber in the usual way.

The -ultimate and final question, therefore, is whether or not such conduct and statements on behalf of plaintiffs create an equitable es-toppel.

Bispham on Equity (5 ed.), see. 282, defines equitable estoppel as follows: “Equitable estoppel, or estoppel by conduct, has its foundation in the necessity of compelling the observance of good faith; because a man cannot be prevented by his conduct from asserting a previous right, unless the assertion would be an act'of bad faith towards a person who had subsequently acquired the right. It is the presence of this bad faith, either in the intention of the party or by reason of the result, which would be produced if he were permitted to deny the truth of his statement, that distinguishes this species of estoppel from estoppel at common law.” , This principle was approved by *Justice Walker*in *Boddie v. Bond,*154 N. C., 369.

In *Wells v. Crumpler,*182 N. C., 358, *Justice Walker*reasserts and enlarges the principle as follows: “We cannot imagine a case where the doctrine of equitable estoppel could more justly have been applied than to this one. Where a party who has, or claims, a right, either openly and unequivocally abandons it, or does not assert it when he should do so, and induces another by his silence or conduct to believe that the right does not exist, or that he makes no claim to it, if he has it, and abandons and surrenders it, and the other party, acting upon such conduct as it was intended that he should do, and is induced thereby to do something, by which he will be prejudiced, if the party who so acted is permitted to recall what he has done, equity steps in *465and protects the party thus misled to his prejudice, and will forbid the other to speak and assert his former right, when every principle of good faith and fair dealing requires and even demands, that he should be silent.” *Mfg. Co. v. Building Co.,*177 N. C., 104.

In *Cromartie v. Lumber Co.,*173 N. C., 712, the defendant offered to pay plaintiff the extension money more than once prior to the expiration of the period specified in the contract. The plaintiff said, “he was not going to charge it; that he had been paid for the timber . . . and would not require anything more.” The court held “that the plaintiff could still collect extension money, but that he could not, after leading defendant to believe that he would waive the extension money, treat it as a trespasser and sue for the value of the timber cut during the extension period.” Whereupon, judgment was entered against the defendant for the extension money due under the contract, from which judgment plaintiff appealed to the Supreme Court. The judgment so rendered was upheld, the Court holding that “while waiver is not in the proper sense of the term a species of estoppel, yet where a party to a transaction induces another to act upon the reasonable belief that he had waived or will waive certain rights, remedies or objections which he is entitled to assert, he will be estopped to insist upon such rights, remedies or objections to the prejudice of one misled.”

The facts in the *Cromartie case, supra,*and the principle of law declared therein are decisive of this, appeal. The decision in the *Gromar-tie case*was *per curiam,*but such an opinion carries all the force of a formal utterance. *Hyder v. Henderson County,*190 N. C., 663.

For the reasons given we hold that the judgment should be

Affirmed.