Court Opinion

ID: 9675276
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:47:46.034751+00
Date Added: 2024-06-11T18:16:33.072527
License: Public Domain

TATE, Justice
(dissenting).
I concur with'the majority opinion on rehearing insofar as it concludes that the use or sub-lease of the property by the family corporation of plaintiff did not defeat any of plaintiff’s rights under the option agreement contained in the lease. However, I respectfully dissent insofar as this opinion holds that any provision requiring a deposit upon exercise of an option *931converts the option agreement into an earnest money transaction.
Most favorably to the contention of the defendants-appellants, and as held by the majority opinion on rehearing, the option in the lease-option agreement of January 2, 1951, as amplified by the lessor’s letter of November 27, 1951 supplying omissions in the option agreement, provides as follows :
“Lessee is hereby given the option of purchasing this property for the sum of $55,000.00 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 is understood if the option is exercised a 10% deposit in cash will be made with D. Marsiglia, Inc., agents representing the vendor.” (Italicized portions quoted from supplementing letter of November 27, 1951.)
Defendants contend that the clause requiring a deposit upon exercise of what is specifically denoted as “the option” creates the presumption that this is an earnest money agreement under LSA-Civil Code Article 2463. While indeed, as the cited cases1 hold, a contract to sell providing for a cash deposit of a portion of the purchase price by the prospective purchaser is presumed to be an earnest money transaction from which either party may recede, none of the cited cases concerned a contract to sell resulting from the valid exercise of an option. To the contrary, LSA-C.C. Art. 2462 specifically and unconditionally provides that upon the exercise of an option, the resultant contract to sell may be specifically enforced by either party, and no case holding otherwise has been called to our attention.
I think that LSA-Civil Code Articles 2462 and 2463, read in conjunction and in the light of their legislative history, clearly indicate that while a “promise to sell” made with the giving of a deposit is an earnest money transaction from which either of the parties may recede, an option to purchase given for a consideration upon acceptance creates a “contract or agreement to sell”, the unconditional right to specific performance of which is given to either party to the option agreement irrespective of any deposit arrangements.
LSA-Civil Code Article 2462 provides as follows;
“A promise to sell, when there exists a reciprocal consent of both parties as to the thing, the price and terms, and which, if it relates to immovables, *933is in writing, so far amounts to a sale, as to give either party the right to enforce specific performance of same.
“One may purchase the right, or option to accept or reject, within a stipulated time, an offer or promise to sell, after the purchase of such option, for any consideration therein stipulated, such offer, or promise can not be withdrawn before the time agreed upon; and should it be accepted within the time stipulated, the contract or agreement to sell, evidenced by such promise and acceptance, may be specifically enforced by either party.” (Italics mine.)
LSA-Civil Code Article 2463 provides as follows:
“But if the promise to sell has been made with the giving of earnest, each of the contracting parties is at liberty to recede from the promise; to wit: he who has given the earnest, by forfeiting it; and he who has received it, by returning the double.” (Italics mine.)
That Civil Code Article 2463, referring to a “promise to sell” made with the giving of earnest, relates to the “promise to sell”2 of the first paragraph of the previous codal article and not to what in the second paragraph thereof is contradistinguished as a “contract or agreement to sell” resulting from acceptance of an option, seems to me to be clearly demonstrated by the legislative history of these two codal articles, which in abbreviated form is summarized in Moresi v. Burleigh, 170 La. 270, 274-275, 127 So. 624, 625, as follows: “Prior to Act 249 of 1910, option contracts were not- originally recognized by our Civil Code. Because of this hiatus in our law, article 2462 of the R. C.C, was amended by said act, appending a second paragraph. It is evident that the continuity of thought which formerly existed between articles 2462 and 2463 was broken by said act, and matters foreign to provisions relative to promises to sell were interjected. But it in no wise changes the plain meaning of said provisions.” Similarly, after a comprehensive discussion of earnest money in the light of the Roman and French law and the legislative history of LSA-C.C. Art. 2463, this court recently in Ducuy v. Falgoust, 228 La. 533, 548-549, 83 So.2d 118, 123, concluded; “Obviously, Article 2463 * * * is a means zvhereby the parties relinquish their right to compel specific performance, reserving to themselves the right to recede from the contract, in which case they, by their own covenant, stipulate as liquidated damages, the amount that is recoverable for their failure to comply, i. e., the vendee *935by forfeiting the amount deposited and the vendor by returning the amount deposited with a like amount.” (Italics mine.)
Earnest money, a “means whereby the parties relinquish their right to compel specific performance” (Ducuy v. Falgoust, above cited 228 La. at pages 548-549, 83 So.2d 118 at page 123), is not applicable to acceptance of an option. Stated otherwise, by the very nature of the contract an option agreement providing for a deposit of a portion of the purchase price upon exercise of the option does not create any presumption that the deposit is intended as earnest money. To the contrary.
An “option is simply an election to purchase, with a continuing offer to sell, during the time limits, supported by a consideration”. Moresi v. Burleigh, 170 La. 270, 275, 127 So. 624, 626. When the right (option) to accept within a given time the owner’s “continuing offer to sell” certain property is purchased for a consideration by a prospective buyer, the latter by the very nature of the contract is not purchasing merely the right to deposit earnest money through which he relinquishes any right to compel specific performance: he is purchasing the option (or the unconditional right to elect) to accept, during the time given, the other party’s continuing offer to sell the property; upon exercise of which option by acceptance of the continuing offer he has (as specifically provided by the LSA-C.C. Art. 2642) the right to compel specific performance of the resulting contract to buy and to sell.
In the present case, the consideration paid by plaintiff to obtain the option to purchase the property was the leasing thereof from Schiro (defendants’ predecessor in title) for a period of five years at $500 per month. It is well settled that plaintiff’s execution of the lease containing the option agreement created a binding and absolute obligation, supported by sufficient consideration, on the part of Schiro and his successors in title to sell the property at any time during the limits. stated in the option agreement, even though plaintiff was not himself obligated to buy. J. F. Auderer Laboratories, Inc. v. Deas, 223 La. 923, 67 So.2d 179, 45 A.L.R.2d 1026; Kinberger v. Drouet, 149 La. 986, 90 So. 367; Succession of Witting, 121 La. 501, 46 So. 606; Murphy v. Hussey, 117 La. 390, 41 So. 692; cf., Standard Oil Co. of Louisiana v. Milholland, 167 La. 707, 120 So. 59.
It is not only legally incorrect; it is extremely unrealistic to hold that plaintiff bargained for and obtained the option, not to purchase the property upon timely acceptance, but merely to deposit earnest money. If the property depreciated in value, either on the open market or to plaintiff himself, plaintiff would have little occasion to exercise the option and make the required down-payment deposit pending completion of the sale arrangements. *937If on the other hand the property appreciated in value (as it apparently did), plaintiff’s deposit in acceptance of the option would (if characterized as earnest money) signify merely plaintiff’s acceptance of Schiro’s right to withdraw (upon payment of a comparatively slight penalty) from the latter’s agreement to sell.
For these reasons, I respectfully dissent.

. Ducuy v. Falgoust, 228 La. 533, 83 So. 2d 118; McCain v. Hicks, 150 La. 43, 90 So. 506; Snyder v. Wilder, 146 La. 811, 84 So. 104; Northcut v. Johnson, 143 La. 447, 78 So. 731; Searcy v. Gulf Motor Co., La.App.Orleans, 37 So.2d 445; Yates v. Batteford, La.App.Orleans, 19 La.App. 374, 139 So. 37, 139 So. 746.

. That the historical term “promise to sell” used in both these codal articles is not strictly accurate, Cf., Comment, “The Effect of Article 2462 of the Louisiana Civil Code”, 3 La.L.Rev. 629 (1941), is immaterial in this regard.