Court Opinion

ID: 3923483
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:50:07.191662+00
Date Added: 2024-06-11T07:42:54.579270
License: Public Domain

At a former day of this court I wrote the unanimous opinion of this court reversing and rendering the judgment of the trial court. I have not changed my views with reference to the disposition that should be made of the case, and accordingly file my dissenting opinion.
All material facts have been stipulated and the sole question before us is one of law. The question presented in the lower court and here requires an interpretation of Articles XIV and XV of the lease contract copied in the majority opinion.
On September 20, 1935, the Sinclair Refining Company and Allbritton and his wife entered into a lease agreement which covered a specific tract of land in the City of Waco for a primary term of ten years. The lease agreement and commencement of its term was put into effect as of January 16, 1936, by supplemental agreement between the parties. The lease agreement was extended by the parties for an additional period of five years beginning on January 16, 1946, and was in full force and effect on November 13, 1946, the date on which the Sinclair Refining Company mailed to appellees from its New York office notice that it had elected to exercise its option to purchase the leased premises in accordance with the provisions of Article XIV. The written notice, with postage prepaid, was deposited in the United States registered mail and it provided in effect that Sinclair Refining Company had elected to exercise its option to purchase the leased premises for the sum of $12,000, as provided for in Article XIV. This notice was received by Allbritton and his wife on November 21, 1946. On November 25, 1946, appellees mailed to appellant Refining Company a letter stating that appellees had *Page 145 
received an offer of $17,500 for these premises and that appellees stood ready to sell the premises to the Sinclair Company for the sum of $17,500. On November 29, 1946, after receipt of such notice, the Sinclair Refining Company notified Allbritton and wife by mail that it was standing upon the right to purchase the property for the sum of $12,000 in accordance with the purchase option and the notice given by it on November 13, 1946. On February 12, 1947, Allbritton and wife brought a formal action in trespass to try title against Sinclair Refining Company and the sub-lessees of Sinclair Refining Company, pleading the lease contract whereby Sinclair Refining Company held the premises, and alleging a breach and repudiation of same on the part of the Refining Company. The allegation of breach and repudiation was grounded on the act of Sinclair Refining Company in refusing to purchase the premises for $17,500, and in standing on its rights under the duly exercised purchase option. The Sinclair Refining Company and its sub-lessees answered by appropriate pleading and pertinent to this discussion Sinclair tendered the sum of $12,000 and prayed that a decree of specific performance be entered requiring appellees to convey the leased premises to it in accordance with the purchase option contained in Article XIV of the lease agreement. The court (non-jury) awarded title and possession of the leasehold premises to the Allbrittons and denied the Sinclair Refining Company any relief upon its cross-action and defendants have appealed
Point 1 assails the judgment of the court in refusing to give effect to appellants' purchase option as contained in Article XIV of the lease contract. I think this contention should be sustained.
Appellees contend in effect that upon the exercise by appellant of its purchase option that they had a period of thirty days within which to invoke the purchase refusal as provided for in Article XV. Appellees in their brief say: "We submit the language with reference to the conditions under which the option could be exercised is complete and explict within itself. * * * The language made the option conditioned upon the giving of not less than thirty days notice. The thirty days was just as much a condition as the giving of any notice at all. The notice was not complete until it had been given thirty days. It is true that when an option is accepted within the time and in the manner specified, it becomes a completed contract, unless, of course, otherwise provided. But in this case, until the thirty days had elapsed, the time and manner specified had not been complied with, and therefore there was not a completed contract upon the giving of the notice. The ones preparing the contract recognized this and provided that the giving of the notice fixed the obligation of the lessors to sell but merely fixed the right of the lessee to purchase. Until there is a completed contract of sale, it could not be argued that the lease did not remain in full force and effect." The majority opinion in effect adopts this view. I cannot agree with such construction and think that it is a strained one.
First of all, we must consider the general rule as to options. In 10 Tex.Jur. 56, 57, we find: "An option is a mere offer which binds the optionee to nothing and which he may or may not accept at his election, within the time specified. Until so accepted it is not, in legal effect, a completed contract, but when accepted, within the time and in the manner specified, it becomes a completed contract, binding on both parties." In 51 C.J.S., Landlord and Tenant, § 82, pages 639, 640, we find: "The mere option to purchase binds only the lessor and must be accepted before a completed and enforceable contract of sale is effected; the option and the acceptance constitute the complete contract. On proper acceptance the option becomes a bilateral contract of purchase and sale, binding on both parties. Thereafter the lessor may not withdraw the option, or refuse to convey on the tender of the balance of the purchase price, or change the price to be paid; and the tenant may be sued on the contract if he neglects or fails to make the required payments. Equitable title vests in the lessee, and the option becomes completely merged in the contract of purchase." My view is that the above rule is applicable to the factual situation here. *Page 146 
Going back to Article XIV of the contract I find that it is comprehensive and explicit. First of all, it gives an exclusive option and the privilege to the lessee of purchasing the leased premises during the term of the lease or any extension thereof for the fixed sum of $12,000 in cash, provided lessee shall give lessors not less than thirty days notice of lessee's exercise of the option. Since the lessee exercised the option within said thirty day period, this provision of the purchase option agreement passes out of the case. In the second place, upon lessee giving such notice to the lessors, their duty became fixed and they became obligated to furnish to lessee free of expense an abstract of title prepared by a competent abstracter and certified from title in the government to the date of conveyance showing a good and merchantable title to the property. The duty imposed upon the lessors to furnish to lessee abstract of title is certainly contrary to the interpretation of lessors (and the holding of the majority opinion) that the lessors could immedately begin seeking a bona fide purchaser for the property for the purpose of increasing the purchase option agreement and that they would have thirty days in which to do so. I think such construction is eliminated and precluded by the second paragraph of Article XIV, which provides: "The giving of such notice by Lessee shall fix and determine the right of Lessee to purchase said premises and property and the obligation of Lessors to sell the same, and a reasonable time thereafter will be allowed Lessors to furnish abstract of title and to cure defects, if any, in said title preparatory to the delivery of the deed and other instruments of conveyance, and the payment of the purchase price. Such purchase shall serve to cancel the within lease in all particulars, and if Lessors shall have been paid rents subsequent to the date of delivery of deed, such payment shall be applied on and constitute a part of the purchase price of said properties." The foregoing provision is clear and comprehensive and expressly fixes the legal rights and duties of the parties at the time the notice is deposited in the mail, and provides in detail as to how the relation of landlord and tenant shall be terminated, and such provision is in irreconcilable conflict with the view of the majority opinion to the effect that the lessors would have thirty days in which to seek out a purchaser for the purpose of increasing the purchase option agreement. Since appellant exercised the option agreement granted it and gave notice (as provided in the lease) to appellees before appellees had a bona fide offer of $17,500 and before said offer was submitted to the appellant, in my opinion an enforceable contract was thereby created and the lessors became obligated to sell and the lessee to buy for the sum of $12,000. My view is that Article XIV is unconditional and contemplates a contract within its own terms and is not in conflict with any of the other provisions in the contract. The construction given to the contract by the majority opinion is, in effect, that the right of the Refining Company to purchase the premises for $12,000 was conditional upon the failure of the Allbrittons to obtain a greater bona fide offer from a third party within said thirty day period. Such a condition substitutes a new contract between the parties. Not only that, but such construction is in direct and irreconcilable conflict with the second paragraph of Article XIV, which provides that the giving of the notice shall determine the rights of the lessee to purchase the property and the obligation of the lessors to sell for the sum of $12,000 cash. The giving of the notice itself created the respective obligations. I think the case of Barnhart v. Stern,182 Wis. 197, 196 N.W. 245, supports my view. Nor do I find my view in conflict with Shell Oil Co. v. Blumberg, 5 Cir.,154 F.2d 251. The first to invoke the provisions of Articles XIV and/or XV fixed the duties and obligations of the respective parties. My view is that the only provision in the contract relating to such third party offer is found in Article XV of the lease agreement. It is clear that Article XV is not an irrevocable offer but is merely a covenant on the part of the lessors that in the event lessors should desire to sell the premises at any time during the term of the lease agreement, the lessee shall have the right to buy at the price offered by a bona fide purchaser. It is obvious that such price might well be above or below that stated in Article XIV. The purchase *Page 147 
refusal merely contemplates that if lessors desire to sell, they must first offer the premises to lessee and that lessee may or may not accept such offer at its election. The purchase option was put into the lease plainly for the benefit of the lessee and must be construed in that light. An option is an irrevocable option for the full term thereof and it is a covenant running with the land. See Stone v. Tigner, Tex. Civ. App. 165 S.W.2d 124, 127 (writ ref.); Keogh v. Peck,316 Ill. 318, 147 N.E. 266, 38 A.L.R. 1151.
I have carefully considered the lease agreement in its entirety and my view is that the lease is unambiguous and admits only the construction which I have given it.
My view is that since the cause has been fully developed, the judgment of the trial court should be reversed and here rendered in favor of Sinclair Refining Company decreeing specific performance of the contract for the sale of the property as prayed for in its cross-action filed in the trial court, and that such writs issue as may be necessary for the proper enforcement of the decree.