Opinion ID: 1611002
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Heading Rank: 3

Heading: Having concluded the option right was exercised, enforceability of the contract must next be determined

Text: On that subject this court said in Decker v. Juzwik, supra, loc. cit., 255 Iowa 378, 121 N.W.2d 652: A decree of specific performance rests in the sound discretion of the court. Its object is to best effectuate the purposes for which the contract was made, and it should be granted upon such terms and conditions as justice requires. Restatement, Contracts, § 359. It is also well settled, specific performance will not be decreed unless contract terms are so expressed the court can determine with reasonable certainty the duty of each party and the conditions relative to performance. Smith v. Stowell, 256 Iowa 165, 170, 125 N.W.2d 795, and Pazawich v. Johnson, 241 Iowa 10, 14, 39 N.W. 2d 590. In that respect defendant pension fund argues the agreement is fatally uncertain as to, (1) when payment of the purchase price is to be made; (2) when possession is to be given; (3) who shall pay taxes; (4) whether insurance is to be carried and by whom; and (5) whether interest is to be paid. With regard thereto this statement in 81 C.J.S. Specific Performance § 34, p. 494, is both pertinent and informative:    a contract to convey land can be specifically enforced even though no certain and definite time is fixed for payment of the purchase price, at least when an obligation to pay within a reasonable time is implied;   . Also a lack of provision for the time of payment of interest, such as annually or semiannually, does not create an important uncertainty or ambiguity; and a failure to state the time for making a conveyance does not make the contract too ambiguous, uncertain, or indefinite for specific enforcement, at least where the time of conveyance is not of the essence of the contract. So, the failure of a contract for the sale of realty to fix a definite time for consummation of the transaction does not prevent specific performance if the contractual terms are so expressed that the court can determine with reasonable certainty the parties' duties and the conditions under which performance is due. See also 49 Am.Jur., Specific Performance, section 23, page 36. In Carter v. Bair, 201 Iowa 788, 208 N.W. 283, this court was confronted with the matter of specific performance arising out of an option to purchase contained in a lease. Dealing with certainty of the terms of that agreement, we stated at 201 Iowa 789-790, 208 N.W. 283: Nothing is said about possession; but the purpose of the contract was to put the plaintiffs in the enjoyment of the property, inferentially as a residence, for which they, as tenants, were to pay $25 per month. On exercising the option, they were to continue to pay the $25 per month, and in addition were to pay the interest, at 7 per cent, and by plain implication were to pay the taxes after the last tax payment that would become delinquent during the original term of the lease. Defendant is to have the interest. This represents the use of the purchase money. Plaintiffs are to pay interest and taxes, and we think this must be for the use of the property, and that they are entitled to continue in the possession. Nothing is said about title, but the law would imply that the defendant should furnish marketable title. Nothing is said about conveyance, but here too the law would imply a covenant to convey when the purchase money is paid. All of the essential elements of a contract are present. We think that, though many of the ordinary provisions of a contract of sale are not provided for in terms, they are such as may, and under the circumstances ought to be, supplied by intendment. Schermer v. Wilmart, 282 Pa. 55, 127 A. 315. The contract before us discloses the agreed purchase price is $45,355, description of the real estate is definite and certain, title is to be conveyed free and clear of all encumbrances, upon payment of the prescribed price, and seller agrees to furnish merchantable Abstract of Title and Deed. It is now apparent all remaining to be done is that pension fund provide an abstract showing it holds merchantable title, and upon payment of agreed price deed be delivered. According to the record, plaintiffs already occupy the land as lessees. Resultantly their possession as owners will reasonably coincide with conveyance of title. We conclude the agreement as written is sufficiently and reasonably certain to warrant the requested specific performance. VI. But pension fund argues, even if the contract is so reasonably certain as to be specifically enforceable, such a decree should not issue because of their sale of the land to defendants Robert and Birdell Butson. On the other hand, plaintiffs contend defendants Butsons are not bona fide purchasers, therefore sale of the property to them does not preclude an action for specific performance. This court dealt with that precise question in Hayne v. Cook, 252 Iowa 1012, 1029-1030, 109 N.W.2d 188, 197, and there said: The rule is well established that to be a good faith purchaser for value, one must show he made the purchase before he had notice of the claim of another, express or implied. It is his burden.    It is a general rule announced in 66 C.J.S. Notice § 11, pp. 642, 643, 644, `that whatever puts a person on inquiry amounts in judgment of law to notice, provided the inquiry becomes a duty, and would lead to a knowledge of the facts by the exercise of ordinary intelligence and understanding. A person who has sufficient information to lead him to a fact is deemed conversant with it, and a person who has notice of facts which would cause a reasonably prudent person to inquire as to further facts is chargeable with notice of the further facts discoverable by proper inquiry. So, wherever facts put a person on inquiry, notice will be imputed to him if he designedly abstains from inquiry for the purpose of avoiding notice. A person must use every reasonable means to ascertain such facts as may be open to his observation, and he must exercise reasonable care to ascertain facts coming to his notice.' Johnson v. Chicago, B. & Q. R. Co., 202 Iowa 1282, 1288, 1289, 211 N.W. 842. Also see numerous citations both in Vol. 66 C.J.S. and in the 1960 pocket part. And in 37 A.L.R.2d 1112, 1113 appears this editor's statement: The view taken by, or recognized in, the majority of decisions, consistent with the general principle that possession of real estate is constructive notice of all rights of the possessor, is that the possession of real property by a tenant, provided the possession is of that extent and nature generally necessary to constitute constuctive notice, charges a subsequent purchaser or mortgagee with notice of the tenant's agreement with the owner-landlord to purchase the property. See also Bartels v. Hennessey Brothers, Inc., Iowa, 164 N.W.2d 87, 94; Golden v. Bilbo, 192 Iowa 319, 184 N.W. 643; Leebrick v. Stahle, 68 Iowa 515, 27 N.W. 490; and State v. Jewell, 250 Wis. 165, 26 N.W.2d 825, 28 N.W.2d 314. The undisputed record reveals plaintiffs have been in continuous possession of the land, as tenants, since 1945. Had Butsons made the inquiry required on their part, existence of the option to purchase could easily have been discovered. Additionally, the testimony of Mr. Harrison, farm manager, lends support to the conclusion, Butsons were knowledgeable of plaintiffs' claim. In that direction Harrison testified: Between the date of Exhibit 1, February 14, 1966, and the date of the sale of the real estate to the Butsons, I did nothing myself, in connection with letting it be known to the public that the real estate involved in this litigation was for sale. However, it leaked out somehow that Emmo was unable to purchase and that is my first contact then with other people. I didn't let it be known other than when Mr. Anderson came and asked me if it was true that this farm was for sale and I said well, from my understanding, the Contract was null and void and it would be and if he wished to put a bid on it, I would take it and send it in to the proper authorities. I took his bid and sent it in to the Executive Committee. Mr. Butson also contacted me and that was the extent that it was made known to the public so far as I know that it was for sale. In addition to farm manager's testimony, a letter sent by plaintiffs' counsel to Butsons, introduced in evidence, discloses they were advised plaintiffs were holding pension fund to their option agreement. On the basis of the foregoing, coupled with unfavorable inferences stemming from Butsons' failure to offer evidence, contrary to that presented by plaintiffs, we conclude they stand charged with prior constructive knowledge of plaintiffs' rights, thereby removing them from the status of good faith purchasers for value without notice. Resultantly, Butsons stand in the position of a trustee and may be compelled to perform specifically in accord with the contract between plaintiffs and defendant pension fund. In support hereof see Connolly v. Des Moines & Cent. Iowa Ry. Co., 246 Iowa 874, 888-889, 68 N.W.2d 320: 92 C.J.S. Vendor & Purchaser §§ 302-303, pp. 183-184; 49 Am.Jur., Specific Performance, sections 147-148, pages 170-172; and 55 Am.Jur., Vendor and Purchaser, section 36, page 505.