Bohle v. Thompson

ALPERT, Judge. Oft times members of both the bench and bar are criticized for failing to distinguish the forest from the trees. In this case, however, the controversy arises from an attempt to separate the trees from the forest. On appeal, a veritable smorgasbord of issues are presented, including questions on parol evidence, conversion, effect of notice of prior interest in property, and attorney’s fees.

The appeal stems from a controversy concerning the ownership of standing timber on land located in St. Mary’s County. On September 23,1986, James K. and Helen Bohle, appellants, filed suit in the Circuit Court for St. Mary’s County against Charlotte Hall Lumber Company (“Charlotte Hall”) and Rodney and Jeanette Thompson, appellees, alleging counts in trespass and conversion against Charlotte Hall and two counts of fraud against the Thompsons. On the same day, Charlotte Hall filed a separate complaint against the Bohles, seeking injunctive relief and/or damages. Eventually, the case ⁶²¹ proceeded to trial on Charlotte Hall’s claims against the Bohles. 1 After a two-day court trial, the circuit court entered judgment in favor of Charlotte Hall in the amount of $60,000.

Further, the court imposed sanctions pursuant to Rule 1-341 in favor of the Thompsons against the Bohles in the amount of $7,500 after finding that the Bohles’ suit was “without substantial justification.” With the exception of an assessment of $553.85 in deposition costs, the court denied Charlotte Hall’s request for attorney’s fees. The Bohles then noted this timely appeal. FACTS The pertinent facts as the trial court found them are as follows. On February 25,1985, the Thompsons entered into a contract of sale with Brandywine Auto Parts, Inc. Profit Sharing Plan to purchase a 539 acre tract of land in St. Mary’s County.

Soon thereafter, discussions between the Thompsons and the Bohles ensued. These discussions concerned the possible purchase of a portion of the land from the Thompsons by the Bohles. In response to what he perceived to be the Bohles’ apprehension about Thompson’s plan to sell the timber on the property, Mr. Thompson stated to the Bohles that, in order to finance his purchase of the property, and consequently the Bohles’ purchase, he would have to enter into a contract to sell all the timber. ⁶²² On April 25, 1985, the Thompsons entered into a contract with Charlotte Hall to sell “all the merchantable hardwood timber that is 16 in. and up except poplar and sweet gum, 14 in. and up” on the tract of land. The contract also gave Charlotte Hall the right to enter the property and remove the timber.

Charlotte Hall was given two years from the date of settlement to cut and remove the timber, with an option to extend the contract for an additional six months upon payment to the Thompsons of a $5,000 fee. Subsequently, the Thompsons travelled to the Bohle residence and showed them the timber contract, which the Bohles read. On April 29, 1985, the Bohles and the Thompsons entered into a contract for the sale of approximately 100 acres of the 539 acre parcel of land. At settlement on June 28, 1985, the Thompsons obtained fee simple title to the 539 acre tract.

Shortly thereafter, a second settlement took place, at which the Bohles obtained fee simple title to approximately 137 acres of land. 2 In late July or early August of 1985, Charlotte Hall employees came onto the Bohle property and, during a two week period, they cut ten to twelve acres of timber. Subsequently, they commenced cutting on a part of the tract retained by the Thompsons. They returned in June, 1986 to renew cutting on the Bohle property. The Bohles told Charlotte Hall that if their employees cut any more trees on this property, the Bohles would have them arrested.

Subsequently, the county sheriff, at the behest of the Bohles, forced Charlotte Hall to remove its equipment from the Bohle property or risk impoundment of the equipment. This suit followed. On appeal, the Bohles ask us to decide whether the court erred: 1. in considering parol evidence of an assumption of an obligation against a purchaser under a written con ⁶²³ tract for the sale of real estate where the contract is silent as to the point and is otherwise clear and unambiguous. 2. in finding that Charlotte Hall’s complaint fairly pled a cause of action for conversion. 3. in finding that a cause of action for conversion was proved by Charlotte Hall against the Bohles. 4. in assessing damages against the Bohles under the conversion theory. 5. in assessing attorney’s fees against the Bohles in favor of the Thompsons. 6. in assessing unspecified attorney’s fees against the Bohles in favor of Charlotte Hall. 7. in granting judgment in favor of the Thompsons as to Count V of the Bohles’ complaint. 1. Parol Evidence Rule The Bohles contend that the trial court erred in allowing several witnesses to testify that the Bohles had knowledge of the timber contract prior to their purchase of the 100 plus acres from the Thompsons.

Such testimony, they contend, contravenes the express language of both the contract of sale and the deed, which purported to convey the land and the trees to them in fee simple. Further, they argue that the contract of sale contains an integration clause. The parol evidence rule provides that: when the contractual language is clear and unambiguous, and in the absence of fraud, duress, or mistake, parol evidence is not admissible to show the intention of the parties to vary, alter, or contradict the terms of that contract. General Motors Acceptance Corp. v. Daniels, 303 Md. 254, 261-62 , 492 A.2d 1306 (1985).

Unfortunately for the appellants, the parol evidence rule has no application to the present circumstances. Simply put, the parol evidence rule does not bar a stranger to a ⁶²⁴ writing from introducing extrinsic evidence to impeach, contradict, or vary the terms of the writing. Grove v. Rentch, 26 Md. 367, 378-79 (1867); Alderson v. Ames, 6 Md. 52, 57 (1854). See also Zenith Radio Corp. v. Hazel-tine Research, Inc., 401 U.S. 321 , 347 n. 12, 91 S.Ct. 795 , 810 n. 12, 28 L.Ed.2d 77 (1971).

In any event, the evidence was introduced by Charlotte Hall to show that appellants possessed knowledge of the earlier timber contract; it was not introduced to vary or contradict any contract between the Bohles and the Thompsons. In fact, any agreement between those parties is irrelevant to Charlotte Hall’s claim of ownership to the timber. Because Charlotte Hall is not a party to the Bohle-Thompson contract of sale or deed transferring title to the real property, any purported agreements between those parties is not relevant to a determination of its rights under the earlier timber contract. Thus, Charlotte Hall’s introduction of the evidence in question was not to vary the Bohle-Thompson agreement, but rather to show that the Bohles knew of the prior timber agreement.

Consequently, Charlotte Hall’s position is that the Bohles took title to the property subject to the timber agreement. 3 To sustain appellants’ argument would result ⁶²⁵ in a prohibition against the introduction of any evidence that would tend to indicate that a subsequent purchaser was on inquiry notice or had actual notice of a third person's rights in property. It is well settled that the owner of a fixture and the owner of the realty upon which the fixture is attached may agree that the fixture will remain personalty, and such an agreement is binding on subsequent purchasers of the realty who have notice of the agreement. Hankins v. Luebker, 224 Ark. 425 , 274 S.W.2d 356, 358 (1955); Leawood Nat’l Bank v. City Nat’l Bank & Trust Co., 474 S.W.2d 641, 644 (Kan.App.1971); Sutton v. Frost, 432 A.2d 1311, 1315 (Me.1981); Lee-Moore Oil Co. v. Cleary, 295 N.C. 417 , 245 S.E.2d 720, 725 (1978); Lundgren v. Mohagen, 426 N.W.2d 563, 565 (N.D.1988); Burlington Northern R. Co. v. Scheid, 398 N.W.2d 114, 119 (N.D.1986); Harris v. Rapke, 138 Misc.2d 538 , 524 N.Y.S.2d 1003 (City Ct.1988); Johnson v. Hicks, 51 Or.App. 667 , 626 P.2d 938, 941 (1981); C.I.T. Financial Serv. v. Premier Corp., 747 P.2d 934, 937 (Okl.1987); Royal Store Fixture Co. v. Patten, 183 Pa.Super. 249 , 130 A.2d 271, 274 (1957); Boeringa v. Perry, 96 Wash. 57 , 164 P. 773 (1967). The above rule has been applied to determine rights under timber contracts and subsequent sales of the realty upon which the timber stands.

Plew v. Colorado Lumber Products, 28 Colo.App. 557 , 481 P.2d 127 (1970), cert. denied, (Colo.1971); Spencer v. Strange, 184 So.2d 878 (Miss.1966); Pegg v. Mid-State Develop. Corp., 164 Mont. 525 , 529 P.2d 1399 (1974); Borton v. Medicine Rock Land Co., 275 Or. 59 , 549 P.2d 1122 (1976). See generally 18 A.L.R.2d 1150 (1951). Although some of the timber cases refer to the timber contracts as affecting an interest in realty, this distinction as to characterization is not relevant.

To the contrary, the fixtures in ⁶²⁶ the cases, supra, were characterized as personalty, the ownership of which would pass with the ownership of realty where the subsequent purchaser of realty was without notice of the prior interest. Further, a person who owns both realty and fixtures upon the realty may effect a constructive severance of the fixtures as personalty in a sales agreement, said agreement being binding on subsequent purchasers of the realty with notice. Leawood Nat’l Bank, supra; Lundgren, supra. The inappropriateness of application of the parol evidence rule is so patent that only one of the cases above even discusses such an argument: Here we are concerned with the rights arising between the original owner of the personalty, who has no interest in the real property to which it was affixed, and a subsequent vendee of the owner of the realty.

Dealings regarding personalty between the owner of the personalty and the owner of the realty, and knowledge thereof on the part of a subsequent purchaser of the realty, may be shown by parol. Loe-Moore Oil Co., supra, 245 S.E.2d at 725 . In Maryland, the general rule regarding fixtures has been adopted, and subsequent purchasers of realty with notice have been bound by the prior characterization of the fixtures as personalty. See Baldwin v. Sherwood Distilling Co., 118 Md. 177, 181 (1912); Central Trust Co. v. Arctic Ice Machine Mfg., Co., 77 Md. 202, 222 , 26 A. 493 (1893); Walker v. Schindel, 58 Md. 360, 369 (1882).

Whether the property involved is characterized as realty or personalty, a subsequent purchaser of realty with actual notice of a third person’s equities in property takes title subject to those equities. To apply the parol evidence rule to prevent the owner of the personalty from proving that a subsequent purchaser of the realty possessed actual notice of the prior interest would, in effect, result in the emasculation of the general principles of law stated above. It would also expand that doctrine to envelop situations where the ⁶²⁷ evidence in question was not being offered to vary, alter, or contradict a writing, see Pumphrey v. Kehoe, 261 Md. 496, 504 , 276 A.2d 194 (1971); in fact, the contents of the contract of sale between the Thompsons and the Bohles and the subsequent deed to the property are wholly irrelevant. To the extent pertinent, the rights of the Bohles and Charlotte Hall may be determined without reference to either document.

Finally, we held in Peruzzi Bros., Inc. v. Contee, 72 Md.App. 118 , 527 A.2d 821 (1987), that “one who is not a bona fide purchaser may not invoke the parol evidence rule.” Id. at 123 , 527 A.2d 821 . Peruzzi Bros, involved a dispute over ownership of a small strip of property. There, appellee purchased property from appellant’s predecessor in title and entered into an oral agreement with appellant’s predecessor regarding the strip in question. The predecessor placed pipes in the ground to indicate the new boundary although no deed regarding this strip of property was created.

Several years later appellant purchased an adjacent parcel of property from the same person and requested a confirmatory deed covering the disputed property. In refusing to apply the parol evidence rule to the earlier transfer to appellee, the court noted that “appellant was not a bona fide purchaser without notice of appellee’s claims.” Id. Thus, even if the parol evidence rule were somehow applicable in this case, the Bohles would be precluded from relying on it to exclude evidence tending to show that they were not bona fide purchasers without notice of any claims. Accordingly, we hold that the trial court did not err in admitting testimony tending to show that appellants had actual knowledge of the timber contract between Charlotte Hall and the Thompsons prior to their purchase of land from the Thompsons. 2.

Charlotte Hall’s Complaint — Conversion Appellants assign as error the trial court’s “finding” that the complaint stated a cause of action for conversion. Appellants do not point to any specific element of conversion lacking in the complaint; rather their argument con ⁶²⁸ sists of two theories: (1) a finding by the trial court of conversion and related damages is inconsistent with the injunctive remedy requested by Charlotte Hall and (2) the complaint was too vague and ambiguous for appellants to frame a proper answer to it. Responding to appellants’ second argument first, we hold that appellants have waived any argument that they may have possessed as to whether Charlotte Hall’s complaint properly pleaded a cause of action for conversion. The record in this case does not reveal that appellants filed anything other than a motion for a more definite statement in attacking the sufficiency of the complaint.

If appellants’ contention is that Charlotte Hall’s complaint failed to plead a cause of action against them, the filing of a Motion to Dismiss, not a Motion for a More Definite Statement, would have been the proper action to take. Wright & Miller, Federal Practice & Procedure, Vol. 5, § 1376, p. 732-33 (1969). See also G & H Clearing & Landscaping v. Whitworth, 66 Md.App. 348 , 356 n. 5, 503 A.2d 1379 (1986) (Md.Rule 2-322 derived from .Federal Rules of Civil Procedure, § 12). Appellants further contend that the complaint only sought injunctive relief and related damages.

Therefore, they argue that the trial court erred in ordering them to pay damages for conversion of appellees’ timber. Our review of the complaint reveals that the primary relief sought by Charlotte Hall was injunctive in nature. It is obvious, however, that damages were also contemplated, as shown by the request in the complaint, that the court “assess damages against the defendant, both compensatory and punative [sic].” Further, the complaint contains a general prayer for “such other and further relief as the nature of this case may require.” Appellants’ reliance on Campbell v. Welsh, 54 Md.App. 614 , 460 A.2d 76 (1983), cert. denied, 297 Md. 108 (1984), is misplaced. In Campbell , appellant initially filed a complaint seeking to have property conveyed from his mother’s estate to him pursuant to an alleged oral agreement between his mother and himself prior to her death.

The ⁶²⁹ complaint included a general prayer for relief. Subsequently, he amended his complaint to include a damage claim for improvements that he made on the subject property in the event that specific performance was not granted. This court held that appellants’ claim for specific performance was barred by the Statute of Frauds. Further, appellants’ damages claim was added after the six month statute of limitations had expired for claims to be presented against an estate of a decedent.

The appellant in Campbell tried to circumvent the 6-months statute of limitations by arguing that his claim for damages was subsumed within the general prayer for relief in the original complaint. This court disagreed, stating: That does not mean, however, that a general prayer for relief suffices as the presentment of a claim under § 8-104 or that a specific prayer for relief filed after the six-month period, though permissible under Maryland Rule 320, constitutes a timely presentment under § 8-103 merely because such relief might have been possible under the general prayer. Section 8-103, read in conjunction with § 8-104, requires that the claim directed to be presented within the six-month period be sufficiently clear and certain as fairly to apprise the personal representative of what the claimant is seeking. That requirement simply is not met by a general prayer for relief, which tells the personal representative next to nothing.

The personal representative cannot be left to guess what kinds of specific claims might eventually spring forth from such a prayer at one or more points in the future. Upon this record, it is clear that appellant’s alternative claim for money damages was not timely presented, and that the court was correct in its entry of summary judgment. Cf Hamilton v. Thirston, 94 Md. 253 [ 51 A. 42 ] (1902). Id. 54 Md.App. at 631-32 , 460 A.2d 76 .

Unlike Campbell , where the general prayer for relief told “the personal representative next to nothing,” here, as ⁶³⁰ indicated above, Charlotte Hall specifically asked the court to assess both compensatory and punitive damages. In this case, the facts pled in Charlotte Hall’s complaint give rise to both equitable relief and damages for conversion. Although the trial court’s reasoning for refusing to grant injunctive relief is not in the record, it is apparent that the contract between Charlotte Hall and the Thompsons expired by its terms on June 28, 1987, which was two years from the date of settlement. 4 Trial was held on the 21st and 22nd of April, 1988. Under the contract, Charlotte Hall was precluded from coming onto the land after June 28, 1987, and “all Lopwood, or Slabs, or Tops, if any, reverts back to and becomes the Property of the First Part.” Thus, the trial judge may have felt that he was precluded from granting injunctive relief at this juncture of the case. 5 In Bowie v. Ford, 269 Md. 111 , 304 A.2d 803 (1973), the Court of Appeals stated that “the law of this state is well settled that if the specifically requested remedy cannot be granted, relief suitable to the nature of the case is authorized under the prayer for general relief.” Id. at 122 , 304 A.2d 803 (cited cases omitted).

In Phillips Co. v. Maryland Broadcast Co., 184 Md. 187 , 40 A.2d 298 (1944), appellant sued for injunctive relief against appellee to prevent appellee from interfering with radio broadcasts on appellee’s station pursuant to a contract between the parties. A general prayer for relief was also included. The trial court dismissed the complaint. The Court of Appeals reversed, stating: ⁶³¹ As the contract has expired it is now too late to grant an injunction to restrain the appellee from interfering with the rights of the appellant under the contract.

But the appellant may have suffered damages by reason of the illegal cancellation of the contract by the appellee. The bill of complaint contains a prayer for general relief. Under the prayer for general relief, the Court is not confined to what may be specially asked, but may adapt the relief to the nature of the case as stated in the bill; and if the specific relief prayed for cannot be granted, the plaintiff may be given any relief which is consistent with and warranted by the allegations of the bill. Miller’s Equity Procedure, Sec 100; Hill v. Pinder, 150 Md. 397 , 133 A. 134 [1926]; Boehm v. Boehm, 182 Md. 254 , 34 A.2d 447 [1943].

Even though the granting of the injunction would be a nugatory act, the Chancellor should retain his jurisdiction until he makes a final decree determining all the rights and equities of the parties within the scope of the pleadings for the purpose of granting complete relief. Id. 184 Md. at 197-98 , 40 A.2d 298 . Under the present circumstances, expiration of the time frame provided for by the timber contract may have led the trial court to fashion relief by way of damages rather than an order for injunctive relief. Proof of Conversion Appellants contend that Charlotte Hall failed to prove that appellants’ converted its property.

Specifically, appellants state that Charlotte Hall failed to prove that it owned the timber in question. 6 To recover on a conversion theory, a plaintiff must prove “any distinct act of ownership ⁶³² or dominion exerted by one person over the personal property of another in denial of his right or inconsistent with it.” Hamilton v. Ford Motor Credit Co., 66 Md.App. 46, 64 , 502 A.2d 1057 (1986). Cf. Kalb v. Vega, 56 Md.App. 653, 665 , 468 A.2d 676 (1983), cert. denied, 299 Md. 427 , 474 A.2d 219 (1984) (“a wrongful exercise of dominion by one person over the personal property of another”). The wronged person is entitled to recover the fair market value of the property at the place and time of the conversion.

See Checkpoint v. Sweeney, 250 Md. 251, 253 , 242 A.2d 148 (1968); Abbott v. Forest Hill State Bank, 60 Md.App. 447, 454 , 483 A.2d 387 (1984); Kalb, supra, 56 Md.App. at 665 , 468 A.2d 676 ; Staub v. Staub, 37 Md.App. 141, 145 , 376 A.2d 1129 (1977). The “Contract of Sales and Timber Lease” entered into between the Thompsons and Charlotte Hall was a contract for the sale of all “the Merchantable Hardwood Timber” on the 539 acre tract of land to which the Thompsons possessed equitable title by virtue of the contract of sales agreement entered into on February 25, 1985. See Watson v. Watson, 304 Md. 48, 60 , 497 A.2d 794 (1985); Stebbins Anderson Co. v. Bolton, 208 Md. 183, 188 , 117 A.2d 908 (1955); Takas v. Doerfler, 187 Md. 62, 66 , 48 A.2d 328 (1946); Clarence Bull, Inc. v. Goldman, 30 Md.App. 665, 667 , 353 A.2d 661 (1976). The timber contract also provided to Charlotte Hall the right to enter onto the property to cut the timber.

Charlotte Hall was given two years from the date of settlement to cut and remove the timber from the property with an option to extend the contract an additional six months. Upon signing the contract, the Thompsons were to receive $10,000. On July 10, 1985, they were to receive an additional $90,000, and on December 10, 1985, they were to receive a final payment of $40,000. Under the Uniform Commercial Code, the sale of standing timber is a sale of goods, whether the purchaser or the vendor is to cut the timber.

Md.Com.Law Code Ann., § 2-107(2) (1988 Cum.Supp.). Further, “the parties can by identification effect a present sale before severance.” Id. Because a contract of sale does not necessarily effect an ⁶³³ immediate transfer of an ownership interest, an issue arises as to the equitable ownership of the timber at the time the Thompsons entered into the contract of sale with the Bohles. “Title to goods cannot pass under a contract of sale prior to their identification to the contract____” Md. Com.Law Code Ann., § 2-401(1). “Unless otherwise expressly agreed where delivery is to be made without moving the goods, [i]f the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of the contracting.” § 2-401(3)(b). “In the absence of explicit agreement identification occurs [w]here the contract is made if it is for the sale of goods already existing and identified, ...” § 2-501(l)(a). A dearth of case law in Maryland determining the necessary circumstances for identification to occur leads us to an examination of case law in other jurisdictions.

In Lubecki v. Omega Logging, Inc., 674 F.Supp. 501 (W.D.Pa.1987), the court held that identification under § 2-107(b) occurred: because the contract for sale of timber specified, with the exception of the timber along Whitestown Road, the size and species of the trees to be severed by the defendant and the areas where such severance was permitted, identification occurred, effecting a present sale of the trees to the defendant. 13 Pa.C.S. § 2107(b). Consequently, the timber was “constructively severed,” and title to the timber passed to the defendant when the contract was made. See 13 Pa.C.S. § 2106(a) (a “present sale” means a sale which is accomplished by the making of the contract; a “sale” consists in the passing of title from the seller to the buyer for a price.) Id. at 507. Thus, the fact that the timber contract in Lubecki specified the size and species of the trees to be severed and the area where severance was to be permitted was sufficient to satisfy the identification requirement.

Further, that court considered the fact that the length of ⁶³⁴ time of the contract (one year) and the provision for additional consideration to be paid by the logging company if that time limit was exceeded indicated an intent to sever the timber immediately. Id. In Fisher v. Elmore, 610 F.Supp. 128 (E.D.N.C.1985), the United States District Court held that identification had not occurred; therefore, title to the timber did not pass until the buyer entered onto the property and cut and removed the timber. In so holding, the court explained: The provisions of North Carolina General Statute 25-2-501(1) determine the manner of identification.

Under the undisputed facts in this case, the buyer had to reduce the subject goods to his possession by cutting the timber before any payment was due. The buyer was under no compulsion to cut the first log nor was the buyer under any compulsion to cut any particular type of log. The buyer had the right to clear cut all of the standing timber including the pulpwood, hardwood and saw timber but until such time as this right was exercised, the seller had no entitlement to payment. If the buyer was delinquent in any payment, the contract could be immediately terminated and the buyer would have no further rights to continue cutting the timber.

It is manifest that the buyer had to select the timber and reduce it to its possession before any obligation arose to pay the seller and this event was the identification contemplated by the parties in the contract which, by operation of law, determined when the title passed pursuant to N.C.G.S. 25-2-401. Id. at 124-25. The situation before us is clearly more analogous to Lubecki than it is to Fisher . The Charlotte Hall timber contract specified the type of wood to be cut, the height over which wood could be cut, and the area to be cut.

Further, there is no indication in the record that the two year time frame in which Charlotte Hall could harvest timber was not a reasonable time to cut approximately 450 acres of timber. Unlike the situation in Fisher , Charlotte Hall was obligated to pay $140,000 to the Thompsons in ⁶³⁵ three separate installments without regard to how much timber was actually harvested. Thus, payment of cash was not contingent on the cutting of the timber. We hold that under § 2-107(2) the timber was identified to the contract at the time the contract was executed.

Therefore, Charlotte Hall already had title to the timber at the time the contract of sale between the Thompsons and the Bohles was executed. Although the trial court found as a matter of fact that the Bohles knew of, and even read, the timber contract prior to entering into the agreement to purchase a portion of the Thompson property, the Bohles argue that under § 2-107(3), Charlotte Hall was required to record the timber contract in the St. Mary’s County land records. Section 2-107(3) provides: The provisions of this section are subject to any third party rights provided by the law relating to realty records, and the contract for sale may be executed and recorded as a document transferring an interest in land and shall then constitute notice to third parties of the buyer’s rights under the contract for sale. The Bohles interpret the phrase