95 N.Y.2d 66 (2000)
A conveyance of growing trees in perpetuity, which transfers not only existing timber but also future growth, coupled with a perpetual right to enter the land for removal, constitutes a sale of an interest in land and creates a freehold estate, not merely a sale of goods under the UCC.
Summary
This case concerns the nature of timber rights in New York: whether they are considered a sale of goods under the Uniform Commercial Code (UCC) or an interest in real property. The plaintiffs, landowners, argued that the defendant’s perpetual timber rights, acquired through a series of conveyances from a reservation in their deeds, were subject to the UCC and had been abandoned due to a failure to harvest within a reasonable time. The Court of Appeals held that the timber rights constituted a valid, perpetual estate in land, not a sale of goods, because the conveyance granted the right to all present and future timber, along with a perpetual easement for its removal. Therefore, UCC provisions regarding reasonable time for performance did not apply.
Facts
Plaintiffs owned parcels of land in Hamilton County, within the Adirondack Park. J. Earle Harrer, a common grantor, had previously sold these parcels, but reserved the rights to all hardwood and softwood timber “forever” in the deeds. Harrer then conveyed these timber rights, along with a right-of-way easement, in perpetuity, to Imaco, Inc. in 1978. Imaco conveyed these rights to Technopulp AG., which later became Zepa Consulting AG, the defendant. In 1996, the defendant began harvesting timber, leading the plaintiffs to file a trespass action, arguing the timber rights had lapsed due to the passage of time.
Procedural History
Plaintiffs sued Zepa for trespass, seeking damages, injunctive relief, and a declaration of rights. The defendant asserted a valid freehold interest in the timber. The Supreme Court denied the plaintiffs’ motion for a preliminary injunction and granted summary judgment to the defendants, holding Zepa held a valid estate in the timber. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether timber rights held in perpetuity, granting the right to all present and future timber and a perpetual easement for its removal, constitute a sale of goods governed by the Uniform Commercial Code (UCC), specifically UCC 2-107 and 2-309, or a conveyance of an interest in land creating a freehold estate.
Holding
No, because the conveyance of timber rights in perpetuity, including rights to future growth and a perpetual easement for removal, constitutes a transfer of an interest in land, creating a freehold estate, and is not governed by the UCC provisions for the sale of goods. The Court emphasized the intent to convey a perpetual interest, not just a right to sever existing timber.
Court’s Reasoning
The Court reasoned that while UCC 2-107 allows for the sale of standing timber to be considered a sale of goods, it doesn’t mandate it. The key is the intent of the conveyance. Here, the original reservation and subsequent conveyances of the timber rights demonstrated an intent to create a perpetual interest in the land, not just a contract for the sale of goods. The court relied on McGregor v. Brown, 10 N.Y. 114 (1854), stating, “Such a grant of timber, which transfers not only the timber then growing but also that which may grow in the future, and gives the buyer the right at any time thereafter to enter upon the premises and remove all the timber and wood, is a transfer of such an interest in land as constitutes a freehold estate.” Because the conveyance included rights to future timber and a perpetual easement, it created an interest in land. The Court noted the plaintiffs had record notice of the timber rights when they purchased the property. The Court distinguished cases involving only the right to sever standing timber, emphasizing that the perpetual nature of the rights and easement was critical. The Court explicitly stated that UCC 2-107 permits, but doesn’t require, a contract for the sale of standing trees and timber to constitute a sale of goods.