#### A. H. BANGERT v. JOHN L. ROPER LUMBER COMPANY.

(Filed 13 October, 1915.)

1. Equity — Contracts—Interpretation—Forfeitures.

Equity does not favor forfeitures or penalties, and will relieve against them when practicable and in the interest of justice; and a court of equity will not be astute to place a construction upon a contract that will cause a forfeiture when another and reasonable construction may be placed upon it and avert such forfeiture.

2. Deeds and Conveyances — Timber Deeds — Extension Period — Terms—Successive Payments — Payment for Period.

Ordinarily the provision which allows an extension of time for cutting timber must be complied with by the grantee in accordance with the terms of the conveyance, in order that he may take advantage thereof; but where a time for cutting and removing has been fixed by the conveyance, with provision that the grantee may extend the time from year to year for five years upon giving notice and paying a certain fixed sum each year in advance, and it is admitted that before the expiration of the original period for cutting the grantee notified the grantor that he would *629avail himself of the full extension period of five years and tendered the sum specified, covering the full extension period, which; the grantor refused, it is Held, that the notice and prepayment required of the grantee for each successive year was inserted for the grantee’s advantage, and that notice and tender of payment made in apt time for the full five years period was sufficient.

Clark, C. J., and Hoke, J., dissenting.

Appeal by defendant from Connor, J., at tbe May Term, 1915, of CRAVEN.

Civil action to perpetually enjoin tbe cutting of timber upon certain lands. Tbe court rendered judgment enjoining tbe defendants from cutting and removing tbe timber and adjudged that certain funds in bands of trustees and deposited in bank, tbe proceeds of timber cut, be paid to plaintiff. Tbe defendant appealed.

R. A. Nunn for the plaintiff.

Moore & Dunn for the defendant.

Brown, J.

Tbe admitted facts are that defendant, as assignor of tbe Blades Lumber Company, acquired tbe right to cut and remove within ten years certain timber on plaintiff’s land by virtue of a deed dated 1 November, 1901, containing tbe following extension clause:

> “And tbe party of tbe first part hereby contracts and agrees to extend tbe time within which tbe parties of tbe second part are to cut and remove said timber from said land, after tbe expiration of tbe term herein-before specified for tbe removal thereof, from year to year for a period of five years, said extension to be made yearly upon tbe request of tbe parties of tbe second part, tbe said parties of tbe second part to pay to tbe party of tbe first part upon each yearly extension of said time tbe sum of twenty-five dollars.”

It is admitted that in January, 1911, shortly before tbe original time for cutting tbe timber expired, and prior to tbe time when tbe five years extension clause began to run, tbe defendant duly notified plaintiff that it would take tbe entire five years extension given it under tbe contract, and at same time tendered tbe plaintiff $125, being $25 per annum for tbe five years. Tbe defendant refused to accept tbe money, but stated be would extend tbe time each year upon payment of $25 per annum. Tbe defendant notified plaintiff before tbe close of each year that it would avail itself of tbe extension, and paid tbe $25 to plaintiff, but, after notifying plaintiff in apt time before tbe close of last year, defendant did not tender' tbe last $25 until four days after that year expired.

We have held that tbe provision as to extensions in a timber deed, when properly taken advantage of and made available, permits tbe *630grantee to out and remove tbe timber for the period of time covered by the extension. Bateman v. Lumber Co., 154 N. C., 250.

It is also held in Powers v. Lumber Co., 154 N. C., 405, that where the instrument requires payment of interest on original purchase price “each year in advance,” for an extension, tender of such interest not made within the time specified in the deed is insufficient. We adhere fully to what is decided in those cases, but there are two distinguishing features between them and the case before us. This contract does not necessarily require payment in advance, as in the Powers case. Its language is, “the said parties of the second part to pay to the party of the first part upon each yearly extension of said time the sum of $25.”

The notice being given in apt time, and the money tendered only four days after, it may well be considered doubtful if equity will so construe the contract as to cause a forfeiture of defendant’s entire interest. It is doubtful if it requires payment in advance, as in the Powers case.

Equity does not favor forfeitures or penalties, and will relieve against them when practicable, in the interest of justice. 2 Story Eq., page 644; Carpenter v. Wilson, 59 Atl. Rep., 187; Seldon v. Camp, 95 Va., 528.

A court of equity will not be astute to place a construction upon a contract that will cause a forfeiture when another and reasonable construction may be placed upon it, and avert such forfeiture. But as the plaintiff rests his right upon the strict letter of the contract, we think the defendant may well do the same.

It is admitted that the defendant gave full notice, before the original period for cutting the timber expired, of its intention to take the whole five years granted it in the deed. It is also admitted that at same time, and before the five years extension commenced to run, the defendant tendered the plaintiff the entire $125, in full payment for the whole period of five years extension, and plaintiff refused to accept it. Upon this state of facts a court of equity surely ought not to declare a forfeiture of defendant’s rights under the contract, and enjoin the cutting of the timber within the extension period.

As we construe the extension clause, the defendant had the right to take an extension for one year only, or for as many as five years. The reason the payment was fixed at $25 annually was because, when the deed was made in 1901 to the Blades Company, it was not known what extension period the grantee or its assigns would desire at expiration of the original ten years in 1911, within which to remove the timber, whether one year or as many as five years, if desired, at the rate of $25 per annum.

This clause was put in the instrument solely for the defendant’s benefit, and not for the plaintiff’s. It was the defendant’s privilege, *631under the contract, to exercise its right in January, 1911, before the ten years expired, and to notify plaintiff that it would avail itself of the entire period of five years extension and to tender the money. When defendant did so, it performed every requirement and condition of the contract upon its part. The defendant is in no default, and it was plaintiff’s duty to accept the money. The injunction is dissolved, and a decree will be entered in the Superior Court requiring the trustee to pay the plaintiff $25, and the remainder of the fund to the defendant.

All costs will be taxed against the plaintiff.

Eeversed.

Clabk:, O. J.,

dissenting: The contract between the parties is that there can be an extension “from year to year, for a period of five years, said extension to be made yearly, upon the request of the parties of the second part, the said parties of the second part to pay to the party of the first part, upon each yearly extension of said time, the sum of $25.” This is the contract of the parties, and I do not think the courts have the right to modify or change it, and that the court below decided it correctly.

Hoios, J., dissenting.