Court Opinion

ID: 9845979
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:32:22.0983+00
Date Added: 2024-06-11T09:16:30.567721
License: Public Domain

Justice Copeland
dissenting.
I agree with the majority that the decision in this case turns on application of the law of the Commonwealth of Virginia. Under Virginia law,
“ ‘[W]here the consideration for the promise of one party is the promise of the other party, there must be absolute mutuality of engagement, so that each party has the right to *266hold the other to a positive agreement. Both parties must be bound, or neither is bound.’ ” Capps v. Capps, 216 Va. 378, 381, 219 S.E. 2d 901, 903 (1975), quoting Town of Vinton v. City of Roanoke, 195 Va. 881, 896, 80 S.E. 2d 608, 617 (1954); American Agricultural Chemical Co. v. Kennedy, 103 Va. 171, 176, 48 S.E. 868, 870 (1904).
Where a party suing to enforce a contract promise has given no consideration in exchange for that promise, there is no legally binding contract and the contract cannot be enforced. An illusory promise, being not a legally binding promise at all, is not sufficient consideration to make a contract mutually binding and enforceable. Town of Vinton v. City of Roanoke, supra. The point is well stated in Corbin on Contracts § 145 (1963):
“If what appears to be a promise is an illusion, there is no promise; like the mirage of the desert with its vision of flowing water which yet lets the traveller die of thirst, there is nothing there. By the phrase ‘illusory promise’ is meant words in promisory form that promise nothing; they do not purport to put any limitation on the freedom of the alleged promisor, but leave his future action subject to his own future will, just as it would have been had he said no words at all.”
The majority holds that plaintiff-seller’s promise to execute to the defendants as purchasers a Special Warranty Deed upon defendants’ payment of the final installment of the purchase price provides sufficient consideration to constitute a valid contract under Virginia law citing Midkiff v. Glass, 139 Va. 218, 223-24, 123 S.E. 329, 330 (1924).
The case sub judice is distinguishable from Midkiff because of the additional paragraph present in the contract under consideration here which provides as follows:
“6. Buyer agrees that in the event of prior sale of said lot(s), this agreement and note shall be cancelled and voided without further liability to either party, except for refund of all payments made hereunder to Buyer, and to accept the decision of seller without recourse, that said prior sale of lot(s) has been made.”
*267The question is whether the above paragraph makes the plaintiff-seller’s promise to sell and to give a Special Warranty Deed after all installments have been paid, an illusory promise so that there is no consideration to support the defendant-buyers’ promise to buy. If the seller’s promise to sell is in reality an illusory promise, then the plaintiff cannot enforce this contract against the defendants because there are no mutually binding promises and as noted above, under Virginia law, both parties must be bound or neither is bound. Capps v. Capps, supra.
The issue is what is meant by “prior sale of said lot” in paragraph 6 of the contract. Seller-plaintiff urges and the majority decides that it means a sale of the lot prior to the sale of the same lot on the same date to the second buyers. This alleged interpretation is adopted because it is said that the company has many agents in different places selling these lots and a certain lot may be sold twice in the same day. In that event, the second buyer would get a refund of his down payment because of the prior sale.
The majority so construes this paragraph in order to avoid declaring the contract invalid. Even though maintaining the validity of the contract is a laudable goal, our function is to interpret the contract that the parties have written and not to rewrite the contract for them. A new contract cannot be written for the parties under the guise of construction nor can the contract be altered so as to conform it to the court’s notion of the contract the parties should have made in view of the surrounding facts and circumstances. Ames v. American National Bank of Portsmouth, 163 Va. 1, 176 S.E. 204 (1934). There is no basis in the contract for the majority’s construction. In fact, I believe that the majority’s construction ignores the plain English that seller chose in composing paragraph 6. Words are to be given their ordinary meaning unless it is clearly shown a different meaning was intended, id., and no such showing has been made in this case.
The buyer-defendants argued at the trial level, in the Court of Appeals and in this Court (through incorporation in its brief before this Court of its brief in the Court of Appeals) that prior sale means any sale prior to the payment of the last installment. In that event, seller, at the time this contract was entered into, made no binding promise to sell the lot to the defendants. In*268stead, the seller made only an illusory promise to sell the lot to the defendants if it did not sell to someone else before all installments were paid by the buyers. From the very words of the contract itself, I believe that this is the only correct interpretation of paragraph 6.
I am not unmindful of the rule of contract construction that states that words in promissory form should not be interpreted so as to make them illusory unless the context shows an intent to leave performance subject to the party’s future will and desire. Corbin on Contracts § 546 (1963). From the context of paragraphs 4 and 6 of the contract, which the seller prepared, I believe that there is an objective manifestation by the seller of an intent to leave its performance subject to its future will and desire.
This contract was entered into on 5 May 1974 and on that date a $500.00 down payment was made. The first of the sixty installment payments of $135.25 was due over a month later on 19 June 1974. If the term “prior sale” in paragraph 6 was intended to mean a prior sale on the same day as the sale to the buyer-defendants, as the majority holds, then seller, who prepared this contract, should have provided that in the event of a prior sale the down payment would be refunded since that is the sole payment made on the day of the sale. Instead, seller provided for refund of all payments. The question then becomes, what did seller mean by “all payments”?
The contract must be construed as a whole. State Farm Mutual Automobile Insurance Co. v. Justis, 168 Va. 158, 190 S.E. 163 (1937). The intent of the parties must be gathered from the words they have used in the contract. Ames v. American National Bank of Portsmouth, supra. Paragraph 4 of this contract provides that,
“Seller . . . agrees upon receipt of all payments provided herein ... to record . . . and deliver a conveyance of said Lot(s) to Buyer consisting of a SPECIAL WARRANTY DEED. . . .” (Emphasis added.)
Certainly “all payments” in paragraph 4 means payment of the down payment and all installment payments by the buyers. In my view, the term “all payments” has exactly the same meaning in paragraph 6 that it has in paragraph 4 for the simple reason *269that the term is used and defined in paragraph 4 and is then used again two paragraphs later in paragraph 6. The term “all payments” determines the true intended length of the time period for a possible “prior sale” as objectively manifested in the contract language construed as a whole. A “prior sale” could be made by the seller at any time prior to payment of the last installment by the buyers in which event seller would refund all of the payments. Therefore, seller made only an illusory promise and the contract is unenforceable. As stated in Corbin on Contracts § 145 (1963):
“Such an illusory promise is neither enforceable against the one making it, nor is it operative as a consideration for a return promise. This is true even though the other promisor in fact bargains for a mere illusory promise in return and gets it.”
This same issue was addressed by the Court of Appeals in Tanglewood Land Co. v. Wood, 40 N.C. App. 133, 252 S.E. 2d 546 (1979). There Judge (now Justice) Carlton concluded that buyer’s argument (that paragraph 6 of the contract made seller’s promise to sell merely an illusory promise) was without merit because the buyer could sue for breach of contract and obtain either specific performance or damages.
Before a party can successfully sue for breach of contract and obtain damages or specific performance, there must first be a valid and enforceable contract which has then been breached. When the only consideration to support a promise to buy is an illusory promise to sell, then no valid and enforceable contract has ever been entered into because an illusory promise is not sufficient consideration and sufficient consideration is a prerequisite to the formation of a contract. When a party argues that all it received as consideration for its promise was an illusory promise, then that party is asserting a defense to the formation of a contract and thus, the question of breach of that contract is never reached. In the case cited by the Court of Appeals in Tanglewood Land Co. v. Wood, supra in support of its holding on this point, Davis v. Beury, 134 Va. 322, 114 S.E. 773 (1922), there was a valid and enforceable contract between the parties which seller had breached and buyer brought suit for an appropriate remedy.
*270“If the promisor bargains for some sort of real promise, and receives only an illusion, there is no contract for the reason that the offer has not been accepted [by a binding promise to convey] as well as for the reason that there is no sufficient consideration.” Corbin on Contracts § 145 (1963). (Emphasis added.)
Accordingly, I would hold that seller-plaintiff cannot enforce this contract against buyer-defendants because seller gave no binding promise to sell and convey a special warranty deed as consideration for buyers’ promise to buy. Since seller made only an illusory promise, no valid contract was ever entered into and the agreement is unenforceable.
Justice HUSKINS joins in this dissenting opinion.