Title: Duke v. Whatley

State: mississippi

Issuer: Mississippi Supreme Court

Document:

580 So. 2d 1267 (1991) Jimmy DUKE and Peggy Duke v. Lillian J. WHATLEY, Charley Whatley and Glenda Whatley. No. 89-CA-1320. Supreme Court of Mississippi. May 8, 1991. *1268 James C. Helveston, Edwards Storey Marshall & Helveston, West Point, for appellant. Lee S. Coleman, Coleman & Coleman, West Point, for appellee. Before DAN M. LEE, P.J., and PRATHER and BANKS, JJ. DAN M. LEE, Presiding Justice, for the Court: This is an appeal from the Clay County Chancery Court wherein the chancellor denied the plaintiff's request to specifically enforce an agreement between Mrs. Lillian J. Whatley and Jimmy and Peggy Duke. At the end of a one day hearing, Chancellor Brand rendered a bench decision against the plaintiffs. The opinion concluded that the litigants were parties to a contract which was not enforceable in that the agreement lacked specificity of price as required by the law governing contracts for the sale of realty and the remedy of specific performance. Subsequent to his bench decision, the chancellor entered a formal decree which memorialized the prior bench opinion. The plaintiffs, Jimmy and Peggy Duke, being aggrieved, have appealed assigning one issue, which is the central issue of the suit, as error. After a review of the record and briefs and for the reasons that follow in this opinion, we affirm the final decree entered by the chancellor, finding the agreement between the parties lacking the requisite specificity of purchase price needed to support the remedy of specific performance. Mrs. Lillian J. Whatley is a Tennessee resident who owned one hundred and seven (107) acres of land in rural Clay County, Mississippi, located approximately seven miles from the city of West Point. This property had been in Mrs. Whatley's late husband's family for many years and was apparently the family homestead. Jimmy and Peggy Duke live in a rural residential area which is adjacent to the subject property. At some point in 1985, the Dukes entered into a lease/option agreement with Mrs. Whatley wherein the Dukes leased this property with an option to purchase at the end of the lease period for a purchase price of fifty thousand dollars [$50,000.00]. The Dukes used this property as pasture land in connection with their cattle operation. The original lease/option agreement expired without the option being exercised by the Dukes, and the original contract is not in issue here. However, near the end of the expiration of this lease, the Dukes *1269 made plans to have a new, similar agreement executed with Mrs. Whatley. First, Mr. Duke contacted a local attorney who drafted a, "REAL PROPERTY LEASE AND OPTION TO PURCHASE." Terms of the agreement included the following. *1270 My commission expires ____. Mr. Duke drove to Tennessee and delivered the agreement to Mrs. Whatley. Within a few days, Mrs. Whatley made significant modifications in the agreement and returned the document by mail. The Dukes readily noticed that Mrs. Whatley had lined through almost all references to an option contract in the agreement. Mrs. Whatley also initialed each section which she omitted with an "L.W.," to publish the fact that she was changing the terms. She omitted everything in the language which is quoted above with the exception of the first sentence which addressed lease payments. Mrs. Whatley omitted all terms which concerned purchase price, the application of lease payments to a purchase price, the conveyance by deed and all references to "option to purchase" contained in the body of the agreement. The document, after modified by Mrs. Whatley, provided the following. My commission expires 11-4-90. Additionally, at the bottom of the second page of this two page agreement, Mrs. Whatley added the following paragraph in her own handwriting. 1/5/87 [Lillian J. Whatley] /s When the Dukes received the contract in the mail and noted the changes that Mrs. Whatley made, they fully accepted the revisions and returned the agreement to their attorney who recorded the document at the Clay County Courthouse. The Dukes have made all payments which were required under the agreement. Under fundamental principles of contract law, the agreement which the Dukes sent to Mrs. Whatley was an offer which she rejected by way of a counter offer in that she changed the terms of the agreement. Mrs. Whatley's counter offer was fully accepted by the Dukes. Despite Mrs. Whatley's promise to extend to the Dukes a "first chance to buy," she sold the property to her step son and daughter-in-law, Charley and Glenda Whatley, in March of 1989. The purchase price was thirty-five thousand dollars [$35,000.00]. When Mrs. Whatley married Charley's father, Charley was a grown man; however, Charley and Mrs. Whatley have always had a close, familial relationship. Charley refers to Mrs. Whatley as "mother," and Mrs. Whatley refers to Charley and Glenda as her son and daughter-in-law, whereas they are actually her step son and step daughter-in-law. Charley and Glenda Whatley live in Saraland, Alabama. Charley Whatley was raised on this land, and he purchased the property with a view toward returning there and building a home. Mr. Whatley stated that he considered this property to be home, and a strong motivation behind his purchase of this land was a desire to keep it in the family. Charley Whatley described the circumstances surrounding his purchase of the property. Record at 40. A question of law is before the Court in this appeal. What type of agreement did the parties have, and is it such an agreement which can be specifically enforced under the contract and real property laws of this state? "The judicial task is to view the terms of the document, find their legal meaning, and adjudge their enforceability vel non. The familiar manifest error/substantial evidence rules have no application to our appellate review of such questions." Busching v. Griffin, II, 542 So. 2d 860, 863 (Miss. 1989). *1272 The written decree issued by the chancellor referred to the agreement as either an option contract or a right of first refusal. This reference to the agreement between the parties as either an option contract or a right of first refusal begs a question. Which of the two is at issue here? There is an important distinction between options and first refusal (pre-emptive) rights. Pace v. Culpepper, 347 So. 2d 1313, 1315-16 (Miss. 1977). Williston on Contracts describes the distinction between options and first refusal contracts as follows. Williston on Contracts, § 1441A (Jaeger, 3d ed. 1968). Turning now to the document at hand, the agreement which the Dukes submitted to Mrs. Whatley clearly obligated the latter to offer her land for sale at the end of the lease period. The terms of the agreement would have bound Mrs. Whatley as offeror with the Dukes as offeree. Ergo, it was a true option. For under a true option, the seller is obligated to go through with the sale while the option remains in force. Mrs. Whatley rejected the idea of an option contract by making material changes in the agreement and proposed a right of first refusal. Under a right of first refusal, no obligation matures on the seller's part unless the seller forms a desire to sell. "Should I, Lillian J. Whatley decide to sell at the end of three years, I will give Peggy and Jimmy Duke the first chance to buy." [Emphasis added]. Without question, the agreement between the parties had no binding effect, unless Mrs. Whatley decided that she wanted to sell her land at the end of the three year lease period. Thus, Mrs. Whatley extended an offer for a right of first refusal which the Dukes accepted. A similar agreement was before this Court in 1926, in the case of Giglio v. Saia, 140 Miss. 769, 775, 106 So. 513, 513 (1926). In Giglio, the lessee of a store building had a five year written contract with the following provision. Giglio, 140 Miss. at 775, 106 So. at 513. Before the expiration of the lease, the appellant attempted but failed to rent the store for another five years. Id. at 775, 106 So. at 513. The lessor refused to renew the lease, and the lessee sought the remedy of specific performance and an injunction against any attempt by the lessor to interfere with lessee's use of the building. Id. at 775, 106 So. at 513. This Court declined to recognize specific performance because the agreement was riddled with indefinite and unresolved terms. Giglio v. Saia, 140 Miss. 769, 776, 106 So. 513, 513 (1926). To like effect is Allen v. Powell, wherein a lease for agricultural land contained a first refusal clause. Allen v. Powell, 260 So. 2d 182, 183 (Miss. 1972). The lessees sought specific performance, and the Allen Court applied the rationale of Giglio holding the agreement too indefinite for the enforcement of specific performance since the terms upon which the lease could be renewed were not included. Allen v. Powell, 260 So. 2d 182, 184 (Miss. 1972). This Court is further instructed by Etheridge v. Ramzy, wherein a "Buy and Sell Agreement letter of intent," to purchase stock was held too uncertain and indefinite to allow specific performance. Etheridge v. Ramzy, 276 So. 2d 451, 456 (Miss. 1973). The Court found the agreement to be nothing more than a memorandum of intent to enter into a future contract as opposed to an enforceable option since the agreement lacked essential terms of covenants. Etheridge, 276 So. 2d at 454. Etheridge, 276 So. 2d at 456. Turning now to the facts at bar, we are compelled to draw the same conclusion. Without some written evidence of purchase price or a method of determining a purchase price, then the agreement would have to be regarded as merely a memorandum of intent. While courts may supply reasonable terms which the parties omitted in the contracting process, such as a time for performance, Smith v. Mavar, 198 Miss. 170, 175, 21 So. 2d 810, 811 (Miss. 1945), essential terms such as price cannot *1274 be left as open ended questions in contracts which anticipate some future agreement. Etheridge v. Ramzy, 276 So. 2d 451, 454 (Miss. 1973) (quoting 17 Am.Jur.2d Contracts § 26, at 362 (1964)) (emphasis added). See Corbin on Contracts § 29, at 84-85 (1963) ("contract to make a contract is not a contract at all."). Before a court can order specific performance, the court must be able to look at the instrument and determine what performance is required. Crocker v. Farmers & Merchants Bank, 293 So. 2d 438, 442 (Miss. 1974). Therefore, without knowledge of the parties intent of an essential term, this Court, and any court, is unable to determine what performance should be required. The agreement must be definite and certain in order to be enforceable. 17 Am.Jur.2d Contracts § 75 (1964). Welsh v. Williams, 85 Miss. 301, 303-04, 37 So. 561, 561 (1904). In McGee v. Clark, an option contract was before the Court on appeal of a chancellor's denial of specific performance. McGee v. Clark, 343 So. 2d 486 (Miss. 1977). This Court commented on the requirements of definiteness needed to support a decree for specific performance. McGee v. Clark, 343 So. 2d 486, 489 (Miss. 1977) (quoting Jones v. McGahey, 187 So. 2d 579, 584 (Miss. 1966)). Both Busching v. Griffin cases involved an option contract which recited a purchase price of fifty thousand dollars [$50,000.00] for five acres of land. In Busching v. Griffin I, we noted that a preliminary contract drafted in anticipation of a final agreement can leave no room for implication on what the parties agreed upon. Busching v. Griffin I, 465 So. 2d 1037, 1040 (Miss. 1985). If any essential term is left unresolved, there is simply no contract and no obligation on the parties. Busching v. Griffin I, 465 So. 2d 1037, 1040 (Miss. 1985) (citing Etheridge v. Ramzy, 276 So. 2d 451 (Miss. 1973)). See Knight v. Sharif, 875 F.2d 516, 525 (5th Cir.1989) (when preliminary agreement leaves open material term, there can be no implication of what parties will agree upon); see also South Mississippi Elec. Pwr. Ass'n v. Delhi Gas Pipeline Corp., 436 F. Supp. 244, 257 (S.D.Miss. 1977) (same). While we are concerned with a first refusal contract in the case at bar rather than an option contract, the distinction proves to be of little consequence. For we find a glaring omission, purchase price, in the agreement between the Dukes and *1275 Mrs. Whatley. Purchase price is an absolute requisite for the remedy of specific performance. Busching v. Griffin II, 542 So. 2d 860, 864 (Miss. 1989). (emphasis added). See Sturm v. Dent, 141 Miss. 648, 107 So. 277 (1926) (under Hemingway Code provision § 3119, failure of written memorandum to state purchase price held insufficient to compel specific performance); see also Wolf v. Lodge, 159 Iowa 162, 140 N.W. 429 (1913) (right of first refusal held not specifically enforceable due to absence of price); Andreula v. Slovak Gymnastic Union Sokol Assembly No. 223, 140 N.J. Eq. 171, 53 A.2d 191 (1947) (option to purchase realty not specifically enforceable where contract failed to specify price); Rolfs v. Mason, 202 Va. 690, 119 S.E.2d 238 (1961) (specific performance of option contract denied for want of certainty over price). Our case law demands greater specificity and definiteness than what is found in the agreement which we have before us. Specifically, the absence of a purchase price is fatal. Accordingly, the decree entered by the learned chancellor in this case on December 1, 1989, be and the same is affirmed. AFFIRMED. ROY NOBLE LEE, C.J., HAWKINS, P.J., PRATHER, ROBERTSON, SULLIVAN, PITTMAN, BANKS and McRAE, JJ., concur.