Court Opinion

ID: 8913428
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:59:24.17953+00
Date Added: 2024-06-11T17:08:44.942770
License: Public Domain

McMILLIAN, Circuit Judge,
dissenting.
I respectfully dissent. In my. opinion the agreement between the Broadheads and Tupelo Timber, Inc. was a bare option contract to purchase standing timber and not a timber deed.
Further, even assuming for the purposes of argument that this agreement was more than an option contract and the substantial equivalent of a timber deed, I do not agree that Tupelo was the owner of a compensable interest in property by virtue of this agreement.
I do not dispute that under pre-Uniform Commercial Code (UCC) Arkansas law a deed to growing trees or standing timber authorizing the grantee to cut and remove the trees within a specified time was a conveyance of an interest in real property, e. g., Henry Quellmalz Lumber & Manufacturing Co. v. Roche, 145 Ark. 38, 223 S.W. 376, 377 (1920). However, the UCC as amended and adopted ■ by Arkansas, Ark. Stat.Ann. § 85-2-107 (Cum.Supp.1979) (effective Jan. 1, 1974), is applicable to timber sales. See Davis v. Kolb, 263 Ark. 158, 563 S.W.2d 438, 439 (1978). Section 85-2-107(2) provides in part:
A contract for the sale apart from the land ... of timber to be cut, is a contract for the sale of goods within this Article [chapter], whether the subject matter is to be severed by the buyer or by the seller, even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance.
Thus, under § 85-2-107(2) a contract for the sale of timber to be cut, like the agreement in the present case, is a contract for the sale of goods rather than a conveyance of an interest in real property.
In my view Tupelo had at most a contract and a claim that the United States in condemning this land for a wildlife reserve had *942taken its contract. Valid contracts are property which is protected by the fifth amendment. E. g., Lynch v. United States, 292 U.S. 571, 579, 54 S.Ct. 840, 843, 78 L.Ed. 1434 (1934). However, this argument confuses the contract with its subject matter. The United States condemned the land, including the standing timber; the United States did not take the contract. Therefore, I think this case is controlled by United States v. 677.50 Acres of Land, 420 F.2d 1136 (10th Cir.), cert. denied, 398 U.S. 928, 90 S.Ct. 1817, 26 L.Ed.2d 90 (1970). See also Omnia Commercial Co. v. United States, 261 U.S. 502, 43 S.Ct. 437, 67 L.Ed. 773 (1923); 4 Nichols on Eminent Domain § 13.33, at 13-237, 239-41 (3d rev. ed. J. Sackman 1980).
In United States v. 677.50 Acres of Land, the United States condemned certain lands subject to division order contracts relating to the transport of oil through pipelines from wells on the land to gathering stations. Upon completion of the project for which the land was condemned, the claimant would have been unable to use its pipelines to purchase, gather or transport oil from the land. The court held that the claimant did not have a compensable interest in the land taken by virtue of the division order contracts and that the contracts had not been taken by the condemnation, only frustrated. 420 F.2d at 1138. Here, the United States in taking the land, including the standing timber, by eminent domain necessarily frustrated Tupelo’s contract rights in the standing timber. However, such an effect was merely incidental to the taking of the land. I would find that Tupelo did not have a compensable interest.1

. Tupelo arguably has an action for breach of contract against the Broadheads, although their defense would probably be based on commercial frustration, see Ark.Stat.Ann. § 85-2-615 (1961) (Excuse by failure of presupposed conditions); Pete Smith Co. v. City of El Dorado, 258 Ark. 862, 529 S.W.2d 147 (1975).