Case Name: A. T. DORSEY v. NORTH CAROLINA TALC AND MINING COMPANY
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1919-01-03
Citations: 177 N.C. 60
Docket Number: 
Parties: A. T. DORSEY v. NORTH CAROLINA TALC AND MINING COMPANY.
Judges: 
Reporter: North Carolina Reports
Volume: 177
Pages: 60–64

Head Matter:
A. T. DORSEY v. NORTH CAROLINA TALC AND MINING COMPANY.
(Filed 3 January, 1919.)
1. Appeal and Error — Reference—Findings.
Exceptions to the findings of fact set out in a referee’s report aiiproved by the trial judge will not be considered on appeal when supported by legal evidence.
2. Contracts — Breach — Timber — Deeds and Conveyances — Damages — Actions.
Where the vendor of standing timber has conveyed it by deed, with covenant of seisin under contract that the purchaser will manufacture it into lumber and pay therefor upon a stumpage basis, as cut, and the parties have been enjoined by the owner of the superior title of a part of the lands containing the most valuable timber, after the purchaser had cut over the remaining portion: Held, the purchaser was justified in stopping further performance of his contract, and his action will lie against his vendor for damages for breach of contract, wherein the rights of both parties may be determined.
3. Contracts— Breach— Fraud— Representations— Knowledge — Vendor and Purchaser.
The right to rescind a contract is not dependent upon fraud or misrepresentations alone, and may rest on other grounds, such as breach of warranty, or mistake, or on the ground -that a vendor is held to know the truth of his statements which are material and have induced the purchaser to enter into the contract.
4. Vendor and Purchaser — Contracts—Breach—Damages—Profits—Timber-
Where the purchaser of standing timber, to be paid for by stumpage as. it was being cut, has cut the timber from the lands, excepting a certain-more valuable part, and as to this he had made preparation and incurred expense, when he was stopped by the vendor’s breach of contract, he may recover the profits he would have made on the uncut timber which are ascertainable with reasonable accuracy, including the expense, etc., incurred.
5. Appeal and Error — Reference—Findings—Vendor and Purchaser — Dam-. ages — Counterclaim.
Where the referee finds, upon legal evidence, that the purchaser of timber had paid his vendor for all damages caused to the latter’s property in-cutting timber from his lands, the findings, when sustained by the trial judge, are conclusive, and his exception to the allowance of his counter-, claim for them will-not be considered on appeal.
ActioN for damages -for breach of contract, heard before Lane, J., at Spring Term, 1918, of SwaiN, upon exceptions of defendant to report of referee T. J. Johnston. The court overruled exceptions and confirmed report. From judgment for plaintiff defendant appealed.
S. W. Black for plaintiff.
Frye & Frye and Bourne, Parker & Morrison for defendant.

Opinion:
BeowN, J.
The report of the referee is a very clear and intelligent statement of the controversy, and from the findings we gather these facts, supported by ample evidence:
The defendant conveyed to plaintiff, with covenants of seisin and warranty, certain timber on a boundary of land, particularly described, lying in Swain County, in consideration of one thousand dollars cash and other considerations expressed in the written contract. The plaintiff contracted to cut and manufacture into'lumber the kind of timber conveyed and to pay stumpage as it was cut. Prior to execution of the-contract defendant sent its agent to point out the boundaries to plaintiff's agent, which was done. Plaintiff, immediately upon the signing of the contract, moved his logging outfit, consisting of oxen, horses, sawmills, etc., upon the boundary, beginning work in the fall of 1913, and continuing until about 1 February, 1915, when he ceased work and removed his logging operation from the property.
Prior to plaintiff's removal from the property, the Whiting Manufacturing Company, claiming a large section of the boundary included in plaintiff's contract, caused an injunction to issue from the Superior-Court of Swain County against the plaintiff and the defendant, enjoin ing the plaintiff from going upon that portion of the tract of land claimed by it. Plaintiff ceased work at once as he was then operating on the disputed territory, upon which he had already cut 121 cords of wood at an expense of $272,25, constructed a flume, built roads, and made all necessary preparations for logging.
After plaintiff was enjoined from further operation on the section of this boundary claimed by Whiting Manufacturing Company, no effort was made by the defendant to adjust- the controversy, nor was any offer made to turn over to plaintiff any other lands in lieu of the boundary claimed by the Whiting Manufacturing Company. The plaintiff, after allowing his mills and teams to remain idle several weeks, having practically completed all of the operation on the remainder of the boundary, removed his teams, mills and logging equipment, and demanded settlement under his contract with the defendant.
The referee found as a fact that the land which plaintiff was prevented from cutting over because of the injunction contained 180 acres, mainly situated on the watershed of Ledbetter Creek, and the said boundary included a large amount of the best timber on the entire boundary; that said land had been pointed out to plaintiff's agent prior to the signing of the contract by the agent of the defendant as being a portion of the boundary included in the contract.
The referee, finding as a fact that at the time plaintiff was enjoined by the Whiting Manufacturing Company he had completed the logging of remainder of the boundary, concluded as a matter of law that the failure of title on part of the defendant to 180 acres of land covered by its contract with the plaintiff was such a breach of contract on part of the defendant as justified the plaintiff in abandoning the further prosecution of the contract, and when he had thus rightfully terminated the same that the parties were at arm's-length and entitled to a settlement of all matters between them, including the question of damages sustained by either party and any sums due by either of said parties to the other under the terms of the contract.
The findings of fact of the referee are all supported by evidence and have been approved by the judge. In such case it is well settled that we will not undertake to review them. Dumas v. Morrison, 175 N. C., 435; Maxwell v. Bank, 175 N. C., 180. This renders it unnecessary to consider many of defendant's exceptions.
The defendant excepts to the ruling of the court sustaining the referee's first conclusion of law: "That the failure of title on part of the defendant to 180 acres of land covered by its contract with the plaintiff under the conditions stated in referee's 13th, 14th, 15th, 16th, and 17th findings of fact was such a breach of the contract on part of the defendant as justified the plaintiff in abandoning the further prose- eution of tbe work under said contract." We are unable to see any error in sucb ruling. Tbe referee bad found as a fact tbat tbe lines of tbe boundary included in tbe contract were pointed out'-to tbe plaintiff's agent by tbe agent of the defendant before tbe contract was signed. Tbe 180 acres to wbicb title failed was included in this contract, and tbe inclusion of this land was one of tbe material inducements of tbe plaintiff to enter into tbe contract. Tbe plaintiff bad entered into tbe contract expecting to log this portion of tbe boundary and, as would necessarily follow, to secure tbe profits accruing from tbe manufacture and sale of same.
It was admitted tbat defendant's title to tbe 180 acres bad failed, and tbat both plaintiff and defendant were enjoined from cutting on it. Tbe plaintiff bad finished logging all tbe remainder of tbe boundary and there was evidently nothing else for him to do but move away. He could not continue operations in face of an injunction binding upon himself as well as defendant. Tbe defendant, by its contract, covenanted to and with tbe plaintiff tbat it was seized of the timber in fee and bad tbe right to convey tbe same. Tbat there was a breach of these covenants is found by tbe referee and not denied. IJnder sucb conditions tbe plaintiff bad a right to abandon tbe contract and demand damages for i,fcs breach.
Tbe right to rescind a contract does not rest upon fraud alone. It is often placed on other grounds than mere misrepresentation, sucb as warranty, or mistake, or on tbe ground tbat a vendor is held to know tbe truth of statements made by him concerning tbe property sold. Page on Contracts, sec. 152.
Tbe plaintiff bad never received back in any form tbe one thousand dollars advanced defendant on tbe contract, so it is found, and consequently is entitled to recover it, together with sucb damages as be sustained and tbat were reasonably within tbe contemplation of tbe parties.
Tbe referee concluded as a matter of law tbat plaintiff was entitled to recover certain profits be would have made in cutting tbe timber from tbe 180 acres of land from wbicb be was prevented by reason of tbe superior title of tbe Whiting Manufacturing Company, together with tbe money be bad expended on this land preparing to log it and manufacture tbe timber.
In bis 16th finding of fact, tbe referee finds tbat this 180 acres of land was situated on tbe waters of Ledbetter Creek'and included a large amount of tbe best timber to be found on tbe entire boundary. In bis 11th finding of fact be finds tbat at tbe time plaintiff was stopped from work by tbe injunction tbat be bad completed tbe building of tbe flume up Ledbetter Creek to tbe line of this land; tbat be bad built a road thereto and bad located one of bis mills at a point accessible to said area and bad commenced cutting timber on tbis part of tbe boundary; that be bad incurred all tbe incidental expenses necessary toward tbe operation of tbis- portion of tbe boundary, and bis only additional expense would bave been tbe cutting, logging and manufacture of tbe lumber. Upon these findings, tbe losses of plaintiff can be estimated with reasonable accuracy, including sucb profits as be bad a right to. expect to make from a performance of tbe contract.
We think tbe case comes well within tbe rule clearly stated by Justice Hoke in Wilkinson v. Dunbar, 149 N. C., 20: "When prospective damages are allowed to tbe injured party as arising under a breach of contract they must be sucb as are in reasonable contemplation of tbe parties and capable of being ascertained with a reasonable degree of certainty. Absolute certainty, however, is not required, but both tbe cause and tbe amount of tbe loss must be shown with reasonable certainty. Substantial damages may be recovered, though plaintiff can only give bis loss approximately. Compensation for prospective losses may be recovered when they are sucb as in tbe ordinary course of things are reasonably certain to ensue. Tbe broad general rule in sucb cases is that tbe party injured is entitled to recover all bis damages, including gains prevented as well as losses sustained. Tbis rule is subject to two conditions : tbe damages must be sucb as may fairly be supposed to^ have entered into tbe contemplation of tbe parties when they entered into tbe contract; that it must be sucb as naturally might be expected to follow this violation."
Tbe contract between tbe plaintiff and defendant is set out in detail by tbe referee and is of sucb character that damages for its breach, both past and prospective, may be ascertained with reasonable certainty.
Tbe defendant excepts to tbe ruling of tbe court upon its counterclaim. Tbe defendant in its answer alleged that tbe plaintiff by bis operation bad damaged its property in tbe sum of $10,000, and set up said amount as a counterclaim. Evidence was offered by both parties upon tbe matter. Tbe referee found as a fact that tbe plaintiff bad practically completed bis contract; that be bad taken off all of tbe timber included thereon on that portion of tbe boundary be bad operated over at tbe time be was served with tbe injunction; that be bad paid tbe defendant more than $4,000 for tbe timber taken off, and that tbis amount fully compensated tbe defendant for any damage to tbe property. These findings of fact are conclusive and disposes of tbe counterclaim.
Upon a review of tbe record, we must affirm tbe judgment of the Superior Court.
Affirmed.