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Ulrich and George hate each other for impersonal reasons that have nothing to do with them as individuals. Their family history of feuding insists that they feel animosity towards each other, though they have no specific gripe with the other man. The family feud is over land, specifically issues of...

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Ulrich and George hate each other for impersonal reasons that have nothing to do with them as individuals. Their family history of feuding insists that they feel animosity towards each other, though they have no specific gripe with the other man. The family feud is over land, specifically issues of access and ownership. Relevant issues around poaching and trespassing seemed to have exacerbated the bad feelings between the two families.

In the moments before the howls of the wolves are heard in the distance, portending the deaths of Ulrich and George, the men forgive each other and decide to be neighborly and gracious from that moment forward. The pointlessness of their mutual disregard enhances the poignancy of this moment of their mutual forgiveness, which also becomes pointless when they, and the reader, realize that their deaths are near. After all, neither family will be aware that the men had come to peace, so the feud will inevitably carry on.

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The reason that these two men hate each other goes back pretty far in time.  It goes back to the time when the grandfathers of the two men were in control of the lands that Ulrich and Georg now control.  It seems that von Gradwitz's grandfather managed to use the courts to get this land away from Znaeym's grandfather.

Here is a quote that shows this:

A famous law suit, in the days of his grandfather, had wrested it from the illegal possession of a neighbouring family of petty landowners; the dispossessed party had never acquiesced in the judgment of the Courts, and a long series of poaching affrays and similar scandals had embittered the relationships between the families for three generations.

Because of this ancient feud, the two men hate each other.  This is why they are out patrolling on the night that the storm hits.  Therefore, it is that old lawsuit that is going to (it seems) get them both killed.

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