Opinion ID: 2041799
Heading Depth: 1
Heading Rank: 2

Heading: 377 Forfeiture of rights under option.

Text: The parties disagree as to the nature of the agreement in question and as to whether time was of the essence in the agreement. Defendants contend that the agreement is an option. Clear View asserts that it is not solely an option but also contains elements of a contract to sell and a contract of sale. The agreement gives Clear View an option to purchase the land at a set price per acre for an unlimited time so long as it continues to purchase a minimum amount of acreage each year. The agreement is irrevocable except upon Clear View's failure to make the annual purchases. There is no requirement that it purchase and land unless it wants the benefit of the option to continue and no penalty is provided for a failure to purchase land except that the agreement can be terminated by the defendant. An option to purchase when consideration is given therefor is a continuing promise by the landowner to sell real estate to another at a specified price and within a specified period of time. Bratt v. Peterson (1966), 31 Wis. 2d 447, 451, 143 N. W. 2d 538; 8A Thompson, Real Property (1963 ed.), pp. 255-257, sec. 4443. The distinguishing feature of an option is that it does not bind the purchaser to purchase or exercise the option. 8A Thompson, supra, pp. 255-261, sec. 4443. We conclude that the agreement the parties entered into was an option agreement. The defendants contend that time is of the essence as to this agreement because it is an option. Thus, it is contended, upon Clear View's failure to purchase four acres prior to the agreement-anniversary on June 12, 1970, Clear View's rights under the agreement were forfeited and the contract could be terminated by the service of notice of termination.  On the other hand, Clear View contends, and the trial court agreed, that whether time is of the essence in a contract depends on the intention of the parties. Where, as here, the contract is silent on the question, evidence of the course of dealing between the parties is admissible to show their intention. The option agreement in this case did not expressly provide time was of the essence. However, this court has stated that the general rule of option agreements is that time is ordinarily of the essence whether or not the agreement specifically so provides. Conrad Milwaukee Corp. v. Wasilewski (1966), 30 Wis. 2d 481, 485, 486, 141 N. W. 2d 240; Megal v. Kohlhardt (1960), 11 Wis. 2d 70, 80, 81, 103 N. W. 2d 892. This rule is generally recognized by other jurisdictions. 91 C. J. S., Vendor & Purchaser, pp. 859, 860, sec. 11; 55 Am. Jur., Vendor and Purchaser, p. 509, sec. 40. The rule asserted by Clear View, and adopted by the trial court, applies to contracts to sell, generally. Anderson v. Nelson (1968), 38 Wis. 2d 509, 516, 157 N. W. 2d 655; Hoffmann v. Danielson (1947), 251 Wis. 34, 39, 27 N. W. 2d 759. Under the view that we take of this case, whether time is of the essence in this agreement is not controlling. This court has held that timely performance, even if normally required, can be waived or time for performance extended, either expressly or impliedly by the optionor's acts of conduct. See, e.g., Crolius v. Lorge (1927), 192 Wis. 130, 212 N. W. 253; Raddatz v. Florence Investment Co. (1912), 147 Wis. 636, 133 N. W. 1100; accord, 91 C. J. S., Vendor & Purchaser, p. 862, sec. 12; 55 Am. Jur., Vendor and Purchaser, p. 510, sec. 40. Among the actions of an optionor which will constitute a waiver or an extension of the time limitation for exercise is his continuing to negotiate past the termination date. Cf. Kubnick v. Bohne (1972), 56 Wis. 2d 527, 202 N. W. 2d 400; Bratt v. Peterson, supra .  The actions of the optionor may also estop him from insisting on timely performance even though timely performance might otherwise be required. This court has stated that estoppel consists of action or nonaction on the part of one against whom the estoppel is asserted, which induces reliance by another, either in the form of action or nonaction to the detriment of the latter. Bratt v. Peterson, supra, page 454. The trial court found, and we agree, that the defendants had accepted payments and made conveyances after the June 12th date over a period of years; that the parties showed by their actions that Clear View could exercise the option before the end of the building season, found by the trial court to be November of each year; that the defendants did not give sufficient, reasonable, formal notice to Clear View that it would rely upon the June 12th closing for the year 1970, to change the time of closing; and that the defendants' notice of termination, served in September, was premature and of no force and effect. It is undisputed that the negotiations for the purchase of four acres of the land in 1970, were commenced in the spring of that year between the lawyers for the parties and continued through the summer months up until the notice of termination was served. The course of the negotiations followed that of previous years, both as to time and the fact that the lawyers conducted the direct negotiations. The defendant, Jean Veitch, admitted that Richardson contacted her before June 12, 1970, and conveyed Clear View's proposal to purchase the four commercial acres. She rejected the proposed purchases because her understanding of the agreement was that all the residential acreage would be purchased before any of the commercial acreage. Jean Veitch also testified that after June 12, 1970, in fact early in July of that year, Richardson informed her of Clear View's amended proposal  to purchase three residential acres and one commercial acre; this proposal was also rejected for the same reason. Following the rejection of these proposals, the defendants hired another lawyer without notifying either Clear View or Richardson. In fact, the defendants never relieved Richardson as their lawyer until after his death in October, 1970, when their file was picked up at his office. Clear View continued to negotiate with Richardson until the notice of termination was received. While the defendants contend that the negotiations by Richardson do not bind them because he was not authorized to negotiate past the due date of the contract, we find this argument to be without merit. The relationship between lawyer and client is one of agency. See, e.g., Plan Credit Corp. v. Swinging Singles, Inc. (1972), 54 Wis. 2d 146, 154, 194 N. W. 2d 822; Novak v. Delavan (1966), 31 Wis. 2d 200, 211, 143 N. W. 2d 6; 7 C. J. S., Attorney and Client, p. 850, sec. 67. The defendant, Jean Veitch, testified that after the death of her husband in 1967, she told Richardson to conduct the annual negotiations, which he did until his death in 1970. She further testified that she never notified either Clear View or Richardson that she no longer wished him to act as their lawyer. Moreover, in every year since the first payment under the contract, the negotiations extended beyond the June 12th contract anniversary. This course of performance evidence is admissible to show that in prior years Richardson had the authority to negotiate past the anniversary date of the option. Under the circumstances of this case, Richardson had authority to negotiate past the anniversary date of the contract. The trial court correctly concluded that the defendants were bound by the negotiations of Richardson. The course of conduct between the parties over the life of the contract, plus the continued negotiations after June  12, 1970, consistent with that past course of conduct, is sufficient action by the defendants to have induced Clear View to reasonably rely on being able to exercise the option before the end of the building season. The defendants are, therefore, estopped from requiring a timely purchase of four acres in 1970. The defendants additionally contend that since Clear View has never tendered payment, either to them or to the court, for the acres to be purchased in 1970 and in 1971, they cannot have specific performance on the agreement. Generally, when the optionee is ready, willing and able to perform, repudiation of the agreement by the optionor waives or excuses tender. Annot., 157 A. L. R. 1311, 1325, 1326. As this court stated in Kreutzer v. Lynch (1904), 122 Wis. 474, 478, 100 N. W. 887: . . . it is . . . a fundamental principle governing most human affairs that conduct on the part of one justifying belief in the other that certain action on his part would be futile constitutes a waiver of such action. . . . The notice of termination made any further attempt by Clear View to purchase additional acreage under the option a futile gesture and was waived by the defendants. We have considered the authorities and other arguments advanced by the defendants and do not find them to be persuasive.