Court Opinion

ID: 9544918
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:03:28.068866+00
Date Added: 2024-06-11T15:13:46.889395
License: Public Domain

BAKES, Chief Justice.
I
FACTS
Plaintiff appellant Gyurkey brought suit to enforce a right of first refusal to purchase real property in Ketchum, Idaho. Following the presentation of the plaintiff’s evidence, the district court dismissed plaintiff’s claims pursuant to I.R.C.P. 41(b). Gyurkey now appeals that decision.
In May, 1977, Western International Investors and Development Company, a partnership comprised of Lloyd Babler, Jr., Thomas Babler and Raymond Town [hereinafter Babler], owned eight lots in a subdivision located at the foot of Warm Springs Run, Ketchum, Idaho. These lots were known and designated as Lots 7 through 14, Block 1, Warm Springs Village Subdivision, 2d Addition Revised, Ketchum, Idaho. Lots 8 through 14 were listed for sale by Babler with the Ketchum real estate firm of Capik, Carr & Gillis during 1977. Phil Gillis of the firm acted as agent for Babler.
On May 11, 1977, plaintiff Gyurkey purchased Lot 14 of the subdivision for $27,777. Lot 14 is contiguous to the Lift Haven Inn, previously purchased by Gyurkey. The purchases of the inn and Lot 14 were effected *665in behalf of Gyurkey by Thomas Curran, a real estate broker and owner of Bitteroot Realty. Curran prepared, at the direction of Gyurkey, the purchase/sale agreement for Lot 14. At Gyurkey’s request, Curran included a right of first refusal on the adjoining Lot 13, stating as follows: “Seller agrees to give the buyer a first right of refusal on Lot No. 13, and buyer will have five (5) business days to meet any other offer on the same terms and conditions.” The agreement was submitted to Gillis and subsequently accepted by Babler on May 24, 1977. Between May and December, 1977, Gyurkey made two offers to purchase Lot 13 from Babler, one for $27,770 and one for $33,000. Both offers were submitted by Curran through Gillis and rejected by Babler.
Following negotiations on February 2, 1978, Babler signed an earnest money agreement presented by defendant respondents Cox, Ruscitto, and Barovetto. Under the terms of the agreement, the three were to receive Lots 8 through 13 in exchange for building on Lot 7 a house for Babler having a value of $204,000, less real estate commissions and $6,000 received as earnest money. During negotiations leading up to the agreement, Babler informed Barovetto about the right of first refusal which Gyurkey held on Lot 13. Barovetto was also told that Babler would have to place a fair market value on Lot 13 in order to give Gyurkey an opportunity to exercise his right of first refusal. Consequently, the agreement between Babler, Cox, Ruscitto and Barovetto provided that Lots 8 and 13 were valued at $50,000 each, and that Lots 9 through 12 were valued at $26,000 each. The listing agreement for the properties, dated May 20, 1977, had stated a selling price of $30,000 cash net for each of Lots 9 through 13, and $32,500 cash net for Lot 8. Also, Babler admitted at trial that the January, 1978, earnest money agreement was the first time that any of lots 9 through 13 had been listed at substantially different prices. It was agreed between Babler and the purchasers that should Gyurkey exercise his right of first refusal and purchase Lot 13 for $50,000, the money received by Babler from Gyurkey would be used in the construction of the residence for Babler.
Immediately following Babler’s acceptance of the Cox offer on February 2, 1978, Gillis called Bitteroot Realty for the purpose of informing Gyurkey that he had five days in which to exercise his right of first refusal to purchase Lot 13 for $50,000. Curran was out of town, so Gillis spoke with Millington, a real estate salesman at Bitteroot Realty. Millington took the message, and placed a call to Gyurkey’s residence. Gyurkey was not at home, and Millington left a message with Gyurkey’s answering service indicating that there was a pending sale of Lot 13 for $50,000 and that Gyurkey had five days in which to exercise his right of first refusal. Millington also asked Judy Campbell, a secretary at Bitteroot Realty, if she would relate the information to Gyurkey, knowing that Campbell had been seeing Gyurkey. Campbell telephoned Gillis to confirm the existence of the pending sale and related that information to Gyurkey that evening. Gyurkey admitted receiving both messages.
After receiving the information on the pending sale, Gyurkey approached an adjoining property owner concerning a joint purchase of Lot 13. The adjoining property owner indicated that he was not interested, and Gyurkey then told Curran of Bitteroot Realty that he was unable to exercise his right of first refusal because of insufficient funds. Thereafter Curran called Gillis on or about February 7, 1978, and informed him that Gyurkey was not going to exercise his right of refusal. This information was in turn relayed to respondents.
During March, April and May of 1978, Curran, on behalf of Gyurkey, periodically called Gillis to inquire whether the Cox-Babler exchange had been culminated. In May of 1978, Curran requested on behalf of Gyurkey, copies of the Cox-Babler earnest money agreement. That document was delivered to Curran who transmitted it to Gyurkey. Construction on the home began in July, 1978. Also, on July 4, 1978, a release agreement was executed between Babler, Cox, Barovetto and Ruscitto, and *666provided for the transfer of one lot per every $30,000 in labor and materials actually expended on the residence. The agreement stated that it was to “serve as a contract for [the] property exchange.” From the record in this case, it appears that Lot 13 has not yet been transferred. Later in July Gyurkey filed suit against the respondents alleging that he had not been notified of any bona fide offer for the purchase of Lot 13, and that the conveyance of Lot 13 “was and is in fraud of [his] rights under his first right of refusal.” As relief, Gyurkey requested “an opportunity to purchase said real property for the sum of $30,000 in accordance with the right of first refusal held by plaintiff.”
Following the presentation of plaintiff’s case, the court ruled against Gyurkey finding that the $50,000 purchase price had been determined by Babler in good faith, that Bitteroot Realty was plaintiff’s agent with respect to the purchase of Lot 13, and that notice of the pending sale had properly been given to Bitteroot Realty, and that in any event plaintiff had actual notice of the pending sale of Lot 13. Consequently, the trial court found that Gyurkey had been given the opportunity to exercise his right of first refusal and had failed to do so.
On appeal Gyurkey argues that the notice he received concerning the pending sale was insufficient to require him to exercise or else lose his preemptive right to purchase Lot 13. Additionally, it is asserted that the agreement between the respondents essentially provided for the sale of Lot 13 at the price of $30,000, and that appellant is entitled to purchase Lot 13 at that price pursuant to his right of first refusal.
II
NOTICE
Concerning the question of notice, we think the record is clear that, notwithstanding an asserted lack of agency on the part of Bitteroot Realty employees, the appellant received actual knowledge of the contents of Babler’s communication to Bitteroot Realty in regard to the sale of Lot 13. The question thus becomes whether that communication by Babler of itself was sufficient to require a decision by Gyurkey as to whether he would exercise his right of first refusal., We hold that it was not.
It is a basic principle of contract law that, in order to create a contract, an acceptance must be unconditional, identical to the offer, and must not modify, delete or introduce any new terms into the offer. Turner v. Mendenhall, 95 Idaho 426, 510 P.2d 490 (1973); C. H. Leavell & Co. v. Grafe & Assoc., Inc., 90 Idaho 502, 414 P.2d 873 (1966). The same principle applies to rights of first refusal. Where such a preemptive right to purchase is based upon the preemptor’s meeting the same terms and conditions of a third party’s offer which the seller intends to accept, the outstanding offer becomes in essence the seller’s offer to the preemptor by operation of the right of first refusal, and in order to accept that offer, the preemptor must fully meet the terms and conditions of the offer in his acceptance. See Sports Premiums, Inc. v. Kaemmer, 595 P.2d 696 (Colo.App.1979); Duane Sales, Inc. v. Carmel, 49 N.Y.2d 862, 427 N.Y.S.2d 930, 405 N.E.2d 175 (1980). It necessarily follows as a corollary to that rule that the holder of such a right of first refusal cannot be called upon to exercise or lose that right unless the entire offer is communicated to him in such a form as to enable him to evaluate it and make a decision. In most transactions, as is the case here, the seller receives a written offer to purchase setting forth the terms and conditions of the offer. The preemptor, under a right of first refusal requiring acceptance on the same terms and conditions, is entitled to no lesser means of receiving the offer than is provided to the seller by the third party offeror.
In the present case Gyurkey was never presented with the full terms of the offer submitted by respondents Cox, Barovetto and Ruscitto, and likewise never received the offer in the form that he was entitled to receive it. A written offer was presented by Cox to Babler in January, 1978, which was accepted and which became the earnest *667money agreement between those parties. In order to adequately apprise the appellant of the outstanding offer, Babler should have sent Gyurkey a copy of the written offer. Instead, Gyurkey received a relayed oral communication indicating a $50,000 cash sale price for Lot 13. That notice was clearly insufficient both in form and in substance.
Subsequently, in May, 1978, Gyurkey did receive a copy of the January, 1978, earnest money agreement. However, the respondents entered into an additional agreement on July 4, 1978, which set terms concerning the securing of payment and the transfer of the lots. Since the January, 1978, offer did not contain all the terms and conditions that were contained in the final agreement between the respondents, it is clear that the appellant’s right to receive notice of all the terms and conditions of the offer, which Babler intended to and in fact did accept, was not satisfied.
Ill
SEPARATE PRICING
Respondents argue that notice of the full transaction was not necessary and that appellant was adequately informed of the pertinent terms relating to Lot 13, because that lot was separately priced and therefore severable from the sale of the other lots. In prior cases, not involving the separate pricing of an included piece of property, the courts have overwhelmingly concluded that a seller may not defeat a preemptive right to purchase a particular piece of property by selling that property as part of a larger tract. Wilson v. Brown, 5 Cal.2d 425, 55 P.2d 485 (1936); Mark Keshishian & Sons, Inc. v. Washington Square, Inc., 414 A.2d 834, 839 n. 9 (D.C.App.1980); Myers v. Lovetinsky, 189 N.W.2d 571, 576 (Iowa 1971); Anderson v. Armour & Co., 205 Kan. 801, 473 P.2d 84, 89 (1970); Brenner v. Duncan, 318 Mich. 1, 27 N.W.2d 320 (1947); Guaclides v. Kruse, 67 N.J.Super. 348, 170 A.2d 488, 494-95 (1961); C & B Wholesale Stationery v. S. DeBella, 43 A.D.2d 579, 349 N.Y.S.2d 751 (1973); New Atlantic Garden v. Atlantic Garden Realty, 201 A.D. 404, 194 N.Y.S. 34 (1922), aff’d 237 N.Y. 540, 143 N.E. 734 (1923); L. E. Wallach, Inc. v. Toll, 381 Pa. 423, 113 A.2d 258 (1955); Atlantic Refining Co. v. Wyoming National Bank, 356 Pa. 226, 51 A.2d 719 (1947); see Garmo v. Clanton, 97 Idaho 696, 551 P.2d 1332 (1976) (reaching same conclusion as to non-contiguous parcels sold as part of the same transaction); see also Annot. 170 A.L.R. 1068 (1947). The question in this case goes a step further in asking whether the same is true where the relevant property has been separately priced in the transaction. In our review of the cases, we have found only one instance where the issue has been explicitly addressed, and that only in brief dictum. In Myers v. Lovetinsky, supra, the court simply stated that separate pricing “entitles the tenant to buy the [included lots] the same as if they had been sold alone by the landlord.” 189 N.W.2d at 575. However, we cannot agree.
In our view, the fact that the sale of Lot 13 was included as part of the sale of a larger tract of land, even though separately priced, denies appellant by the very nature of the transaction, the right to purchase Lot 13 on the same terms and conditions which Babler intended to accept. By possessing the right to purchase on the same terms and conditions, appellant had in essence the right to obtain precisely the same “bargain” on Lot 13 as the seller was willing to grant to a third party offeror. In such a transaction as presented here, it is simply impossible for a preemptive rightholder to verify the precise price, not to mention other terms and conditions, at which he is entitled to purchase the property in order to obtain the same bargain on the lot that the third party offeror is to receive. Any separate pricing of lots within the larger tract to be sold can really be nothing more than an allocation of value in relation to the whole, rather than an independent offer on the included lot, even if done in good faith, since the true value of the lot rests in its inclusion as part of the larger sale. The preemptor, however, is not entitled to a mere allocation, but rather to the benefit of the total bargain as it relates to the bur*668dened lot. Babler restricted itself to meeting that requirement when it granted Gyurkey the right of first refusal on Lot 13.
If a seller were permitted to satisfy its obligation under a right of first refusal in the manner asserted by respondents here, even if done in good faith, not only would the preemptor be denied assurance that he was obtaining the same bargain on the lot as was the third party offeror, but the door would be opened to a myriad of unscrupulous endeavors designed to defeat preemptive rights of purchase by manipulation of lot prices within the terms of a larger sale. Consequently, we conclude that even though Babler separately valued Lot 13 as part of the total transaction, Lot 13 still could not be sold as part of a larger parcel as long as the lot was subject to Gyurkey’s right of first refusal. Cf. Thomas & Son Transfer Line, Inc. v. Kenyon, Inc., 40 Colo. App. 150, 574 P.2d 107 (1977) aff’d 196 Colo. 386, 586 P.2d 39 (1978) (disregarding, without discussion, separate pricing of lots in deciding upon remedy).
IV
REMEDY
Next to be resolved is the question of Gyurkey’s remedy in this matter. Where the owner of property subject to a right of first refusal has sought to sell that property as part of a larger parcel, the majority of jurisdictions have held that the owner may be enjoined from making such a conveyance, and if the property has already been conveyed, the purchaser will be ordered to reconvey the encumbered property to the owner. At the same time, however, the majority rule also denies the preemptive rightholder the right to seek specific performance which would require the offering of the encumbered property to himself by the owner. The rationale behind the majority rule is that while the owner should not be permitted to defeat the preemptive right through a combined sale, he should not be compelled to sell the particular property when he has never received an offer, or intended to sell the property on the terms and conditions asserted by the preemptor. Myers v. Lovetinsky, supra; Guaclides v. Kruse, supra; C & B Wholesale Stationery v. S. DeBella, supra; New Atlantic Garden v. Atlantic Garden Realty, supra; L. E. Wallach, Inc. v. Toll, supra; Atlantic Refining Co. v. Wyoming National Bank, supra; see also Annot. 170 A.L.R. 1068 (1947).
As expressed by the majority rule, which we now approve and adopt, courts should not compel an owner to sell property on terms and conditions upon which he has not agreed or which he has not intended to accept. Such is also in keeping with the rule employed earlier in this opinion that a preemptor must precisely meet the terms and conditions of an offer if he is to exercise his preemptive right. Babler had not tentatively accepted an offer confined to Lot 13; however, it cannot be said that Babler’s willingness to sell Lot 13 together with the other lots also amounts to a commitment to sell it separately at what a court might determine to be its fair market value.1
*669The proper remedy in this case is to enjoin the owners from selling Lot 13 until they receive an acceptable bona fide offer for Lot 13 unrelated to the sale of any other property, and give Gyurkey the appropriate notice and opportunity to meet such offer pursuant to the right of first refusal. We take care to note that such bona fide offer should be free from any hidden agreements or dealings which would in effect again tie the sale of the burdened property to the sale of other property so that the owner could pad the price of the burdened lot by making compensating adjustments to the value of other sales or transactions.
The judgment is reversed and the case remanded for further proceedings consistent with this opinion. Costs to appellant.
McFADDEN, J., concurs.
(McFadden, J., registered his vote prior to his retirement on August 31, 1982.)

. In Garmo v. Clanton, 97 Idaho 696, 551 P.2d 1332 (1976), the Thompsons, owners of a 42-foot strip of land to which they had given two parties, Carbon and Sather, a right of first refusal, agreed to sell that property to Garmo in conjunction with other nearby parcels. In an attempt to circumvent the right of first refusal, the Thompsons did not contract to sell the property to Garmo directly, but agreed to devise the strip of land to the purchaser, Gar-mo, as part of the total transaction. Some ten years later, following the death of the Thompsons, it was discovered that Thompson had devised the 42-foot strip to a grandson. Garmo brought suit against the estate for specific performance of his contract to devise the strip. The holders of the preemptive right, Carbon and Sather, were joined, and they filed cross-claims and counterclaims, also seeking specific performance. The trial court determined that Carbon and Sather were entitled to an opportunity to purchase the strip of land for its fair market value as of 1975, the time of the Thompson/Garmo contract. We affirmed on the basis that the right of first refusal was enforceable, and that it was reasonable under the particular circumstances of that case, where many years had elapsed and the original optionors were deceased, that the optionee was entitled to purchase the strip of land at its fair market value. 97 Idaho at 699, 551 P.2d at 1335.