Coxe v. Wyatt , 83 N.C. App. 131 ( 1986 )

349 S.E.2d 75 (1986)

Winnie A. COXE, Single; Jo Coxe Hasty, Single; Agnes Coxe Watkins, Single; J. Robert Matheson and wife, Jane S. Matheson; Betty M. Edwards, Widow; Mary Elizabeth Winstead and husband, Wharton H. Winstead; Betty S. Merritt; Ellen M. Kane, Widow; Francis Coxe
v.
J.W. WYATT and wife, D.B. Wyatt; the March Development Corporation.

No. 8612SC401.

Court of Appeals of North Carolina.

October 21, 1986.

Thorp and Clarke, by Herbert H. Thorp and F. Stuart Clarke, Fayetteville, for defendant-appellant.

Emanuel and Emanuel, by George W. Kane, III, Raleigh, for plaintiff-appellees.

Singleton, Murray & Craven, by Richard T. Craven, Fayetteville, for defendant-appellees.

ARNOLD, Judge.

Defendant appellant, The March Development Corporation, argues that the trial court erred in granting Wyatt defendants' motion for summary judgment and in denying the appellant's motion for summary judgment. March Development's argument is based on three contentions.

Appellant first contends that the lower court erred in finding that appellant's right of refusal was void as a matter of law. Specifically, appellant claims that the right of first refusal in the present case is not void because it does not fall within the category of preemptive rights as defined by Smith v. Mitchell, 301 N.C. 58, 269 S.E.2d 608 (1980). We disagree.

Smith required that in order for a preemptive right to be valid, it must meet a two-prong test of reasonableness. First, the preemptive right must not violate the rule against perpetuities. Second, it must link the price to the fair market value of the land or to a figure that the seller is willing to accept. Id.

Appellant attempts to distinguish the right of first refusal in the case sub judice from the definition of a preemptive right found in the Smith decision. In Smith our Supreme Court stated:

A preemptive right "requires that, before the property conveyed may be sold to another party, it must first be offered to the conveyor or his heirs, or to some specially designated person." 6 American Law of Property § 26.64 at 506-07 (1952).

Id. at 61, 269 S.E.2d at 610. Appellant claims that this language defines a preemptive right only to include a right of first refusal kept by a grantor when selling a particular piece of property. When interpreting the language used by the Supreme Court in Smith, it is helpful to look at the full passage of the American Law of Property from which the quote was taken.

In the American Law of Property the sentence immediately preceding the language actually quoted by Smith reads: "A preemption is usually found in a conveyance of property." 6 American Law of Property § 26.64 at 506-07 (1952). While most preemptive rights are usually rights reserved by the grantor upon conveyance of a piece of property, this is not always true. The right involved in the case sub judice is an example of a preemptive right of first refusal not held by the grantor. Thus, the restrictions set forth in Smith apply.

Having determined Smith to be controlling it next must be determined if the preemptive right in the present case withstands the two-prong test of reasonableness. The first requirement is not met. Appellant's right of first refusal violates the rule against perpetuities. The language which arguably created the preemptive right never mentioned how long it was to last. The right appeared perpetual in nature. This violates the requirement that an interest in property must vest, if at all, within a life-in-being plus twenty-one years. Smith v. Mitchell, 301 N.C. 58, 269 S.E.2d 608 (1980). Since the first prong of the test is violated, we need not deal with the second. Defendant appellant's right of first refusal is void as a matter of law.

Next appellant contends that the trial court erred in finding that a contract existed between plaintiff heirs and Wyatt defendants. We disagree.

The Wyatts made a signed written offer to plaintiffs to purchase the 21.18-acre tract of land. The offer contained the following language, "This offer is subject to the right of first refusal, if effective, in favor of The March Development Corporation...." Plaintiffs accepted the offer by letter on 29 March 1985. See generally Normile v. Miller, 313 N.C. 98, 326 S.E.2d 11 (1985). The language of the offer which mentions the alleged right of first refusal is insignificant because that right is void and ineffective. The letter of acceptance by the plaintiff heirs created a valid and enforceable contract.

Lastly, appellant contends that the trial court erred in failing to find a binding contract between appellant March Development and plaintiff heirs. Specifically, appellant argues that the 21.18 acres were offered to them unconditionally, independent of their right of first refusal. We disagree.

The letter sent to appellant by plaintiff heirs explicitly stated that the heirs had received and accepted a cash offer from Wyatt defendants. The letter next referred to the right of first refusal contained in the deed of 20 November 1980 and requested notification concerning the appellant's intention to purchase the property pursuant to the same terms and conditions. One would have to ignore a substantial portion of the letter to conclude that it contained an unconditional offer. We can find no enforceable contract between appellant March Development and plaintiff heirs. The trial court's order granting summary judgment in favor of defendant appellees and the order denying defendant appellant's motion for summary judgment is

Affirmed.

HEDRICK, C.J., and ORR, J., concur.