Court Opinion

ID: 9675274
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:47:46.025936+00
Date Added: 2024-06-11T18:16:33.045128
License: Public Domain

On Rehearing
SIMON, Justice.
The facts of this case have been fully Stated in our original opinion and need not be repeated. We held originally that plaintiff was not entitled to a specific performance of the contract for the reason that an earnest money deposit was provided for under the lease-option agreement of January 2, 1951, and the two letters exchanged between the parties in regard thereto, dated November 27, 1951 and June 11, 1952, respectively. We are still of the opinion that our holding was manifestly correct.
It appears that in the lease-option agreement dated January 2, 1951, signed by Lucas J. Schiro, the lessor, and Louis D. Haeuser, the lessee, the following provision was struck out: “Lessee is hereby given an option to purchase this property for the sum of $55,000 at any time during the term of this lease, which expires January 31, 1956,” and the following provision in lieu thereof was inserted: “Lessee is hereby given the option of purchasing this property at any time during the period commencing August 1, 1953 and ending August'1!, 1958 providing this property is under the present lease agreement at the time this option is exercised.”
It further appears that on November 27, 1951, Schiro wrote the following letter to Haeuser:
“Inasmuch as the lease signed between you as lessee and Lucas J. Schiro, lessor, January 2, 1951, has an option in it to purchase the property at any time during the period commencing August 1, 1953 and ending August 1, 1958 providing this property is under the present lease agreement at the time the option is exercised is now waived providing you exercise your option to purchase and agree to pass the act of sale not later than April 1, 1952. Inasmuch as we failed to put in the lease the sum and price at the time that this option is to be exercised it is distinctly understood that the price is $55,000 all cash. It is understood if the option is exercised a 10% deposit in cash will be made with D. Marsiglia, Inc., agents representing the vendor.”
It further appears that on June 11, 1952, Schiro again wrote Haeuser, as follows:
“This agreement signed this day will authorize you to exercise your option to purchase the property covered by the above lease. This option is to be for a period of 90 days from above date in the amount of $55,000. Should *921you .elect to exercise this option you must agree to pass the act of sale prior to the expiration of the 90 days. It is understood if the option is exercised a 10% deposit in cash will be made with D. Marsiglia, Inc., agents representing the vendor.
“If the above option and sale is not consummated prior to this 90-day period this agreement shall become null and void and the terms and conditions shall revert back to the agreement of the original lease signed January 2, 1951 between ourselves, giving you the understanding that the sale price although not stipulated in the lease shall be for $55,000.”
Inasmuch as Haeuser’s attempt to exercise the option took place after the expiration of the time limits set forth in the above letters, but during the period that the original lease-option agreement was in effect, the only option which he could have exercised was that contained in the original lease-option agreement, and plaintiff contends that the original lease-option agreement does not provide for a deposit.
We are not impressed with plaintiff’s contention for the manifest reason that though the original option agreement is silent as to the amount of the purchase price to be paid and the. obligation of the optionee to make a deposit of 10% of the price, this inadvertent omission is fully explained in the contents of the above-quoted letters. It will be observed that in the original lease-option contract the option to purchase the subject property could only be exercised between August 1, 1953 and August 1, 1958, with the proviso that the lease agreement be in existence at the time the option is exercised. The lease contract had a primary term of five years beginning February 1, 1951, with the right of renewal for five additional years. Since the option could only be exercised during the life of the lease, and the primary term would have expired on January 31, 1956, the option right not expiring by its own terms until August 1, 1958, the lessee, to enjoy the benefits of this option right beyond the primary term, would necessarily have had to exercise the right of renewal. In other words, the option privilege could not have been exercised prior to August 1, 1953, thus undoubtedly affording to the lessor during a period of two and one-half years the desirable benefits of monthly rentals without sale obligations. However, on November 27, 1951, Schiro wrote plaintiff, therein recognizing the original option-purchase agreement in all of its terms and conditions, but granting plaintiff the right to exercise the option provided that the sale be executed not later than April 1, 1952. Obviously, this proposal evidenced on the part of Schiro his anxiety and desire to sell the subject prop*923erty prior to the option date fixed in the original contract. In this letter Schiro called to plaintiff’s attention their mutual failure to have stated the purchase price in the original agreement, namely $55,000 cash, and with the accompanying predicate that plaintiff deposit 10% of the purchase price with D. Marsiglia, Inc., Schiro’s realtor.
The second letter of June 11, 1952 addressed by Schiro to plaintiff is of similar import and again proposes that plaintiff purchase the property at the same consideration with the well-understood obligation of making a 10% deposit, this proposal, however, to be exercised within a period of 90 days from June 11, 1952. The only reasonable construction of the letters, when weighed in connection with the original contract affords no other conclusion but that in the exercise of this option plaintiff was required to deposit 10% of the purchase price of $55,000. This deposit was required whether plaintiff exercised the option during the period provided under the original contract or whether he exercised it within the additional periods of time stipulated in the letters. It would be inconsistent to hold that the letters are sufficiently valid to supply one of the essentials of a perfect option, namely, the price, thereby affording to plaintiff a cause of action for specific performance of the contract, as is pleaded here, and simultaneously deny the existence of an obligation for a deposit of 10%, for both the price and the deposit are relevant to and are in connection with one objective, i. e., the express requirements of exercising the option agreement. The required deposit and the amount of the purchase price as clearly understood between the parties themselves became, under the peculiar facts of this case, inseparable provisions and an adjunct to each other in the exercise of the existing option.
We are fortified in our views by the letter of August 21, 1954 from plaintiff to Schiro’s realtor wherein plaintiff enclosed his check in the amount of $5,500 representing the required deposit of 10% of the purchase pi'ice of the subject property. If a deposit was not required under the option agreement only a blanket acceptance would have been necessary to effect a binding contract, entitling plaintiff to demand title. This circumstance renders appropriate the provisions of LSA-Civil Code, Article 1956, reading: “When the intent of the parties is doubtful, the construction put upon it, by the manner in which it has been executed by both, or by one with the express or implied assent of the other, furnishes a rule for its interpretation.” Johnson v. Shreveport Properties, 213 La. 485, 35 So.2d 25; see Pendleton v. McFarlane, 222 La. 569, 63 So.2d 1; Texas Company v. McDonald, 228 La. 353, 82 So.2d 37.
*925It is well established by the jurisprudence of this state that in the absence of a contrary intention, any contract to sell providing for a cash deposit of a portion of the purchase price by the prospective purchaser is presumed to be an agreement in which earnest money is given to bind the sale that either party may withdraw from such an agreement under Art. 2463 of the LSA-Civil Code, and that therefore neither party to such an agreement is entitled to specific performance. Ducuy v. Falgoust, 228 La. 533, 83 So.2d 118, and cases cited therein; see also Northcut v. Johnson, 143 La. 447, 78 So. 731; Snyder v. Wilder, 146 La. 811, 84 So. 104; McCain v. Hicks, 150 La. 43, 90 So. 506; Yates v. Batteford, 19 La.App. 374, 139 So. 37 and 746; Searcy v. Gulf Motor Co., La.App., 37 So.2d 445; 6 Tulane Law Review, 129; 26 Tulane Law Review, 498, 500, 511; 15 La.Law Review, 837, 839.
However, under Art. 2463, the party receiving the earnest incurs the obligation of returning double the earnest when he recedes from the contract to sell. Although plaintiff has not specifically prayed for a judgment decreeing double his deposit, his petition contains allegations fully setting forth a deposit by him of $5,-500, representing 10% of the purchase price, with Schiro’s realtor, and contains a prayer for general and equitable relief. Furthermore, defendant admits the $5,500 deposit by plaintiff, but raises the defense that the deposit was earnest money.
We fail to find nor have we been pointed out any fact or circumstance which would justify the holding that the deposit in this instance was intended other than as earnest. In the absence of these facts we must necessarily conclude that this deposit was earnest money and that, to be relieved from the obligation of selling under the option agreement, Schiro thus incurs the obligation of returning to plaintiff double the amount of earnest. Hence, plaintiff is entitled to a judgment for this amount under the pleadings and in accordance with the nature and justice of the case. Legier v. Braughn, 123 La. 463, 49 So. 22; Yates v. Batteford, supra; Fox v. Doll, La.App., 46 So.2d 682, reversed on other grounds, 221 La. 427, 59 So.2d 443; LSA-C.C. Art. 2463.
In our original opinion we further decided that the evidence showed that the plaintiff had sublet the property which is the subject of this suit to a corporation known as National Lumber & Demolishing, Inc. without the knowledge or consent of the lessor and that such a sublease constituted a violation of the lease contract, thus voiding and abrogating the option contained therein. In that conclusion we now believe that we have committed error.
We find no evidence of a formal sublease, but merely a use of the premises *927for the same purposes by a family corporation which was almost totally owned by the plaintiff. The record further discloses that two payments of rent were made directly to the lessor’s agent by the alleged subtenant corporation, and that these payments constituted a “paper transaction” for 'convenience only. An examination of the lease contract discloses that in order to hold any sublease a violation of the lease-option agreement, there would have had to be an observance on the part of the lessor of the stipulated conditions contained therein. The lease contract provided that if the lessee violate any of the conditions therein- stipulated, including the prohibition of subletting without the consent of the lessor, and this violation after written notice continue for a period of 60 days, then at the option of the lessor either the rent for the whole unexpired term of the lease would become due and exigible or the lessor could proceed for past due installments only with reservation of right to proceed for remaining installments, or could immediately cancel the lease. Thus it is obvious that a violation of the terms of the lease did not work an automatic cancellation. The lessor had first to comply with the conditions of 60 days’ written notice stipulated so as to make available to him the right of cancellation.
We therefore hold that the alleged violation by lessee of the lease contract is without merit.
For the reasons assigned it is ordered, adjudged and decreed that the judgment of the lower court be and the same is hereby reversed, annulled and set aside. It is further ordered, adjudged and decreed that plaintiff’s demand for specific performance of the contract sued on be and the same is denied but that he have judgment in his favor and against Mrs. Rosalie Castrogiovanni, surviving widow of Lucas J. Schiro, and Joseph L. Schiro, Mary Claire Schiro, and Francis J. Schiro, legal heirs of Lucas J. Schiro, in the full amount of $11,000, representing double the earnest money, with legal interest from date of judicial demand until paid. All costs to be borne by plaintiff-appellee.

. He stated “Inasmuch as we failed to put in the lease the sum and price at the time that this option is to be exereised it is distinctly understood that the price is $55,000 all cash.”