On the bottom of a fallen (but wedged in a tree) hemlock trunk. According to wikipedia, 'Serpula himantioides is a species of fungus that causes damage to timber referred to as dry rot. ... Serpula himantiodes is a pre-harvest pathogen that exerts economic impact on lumber supply. It is considered the wild sister species of S. lacrymans, the pathogen that causes dry rot in wooden building structures.'