Kottler v. Martin

85 S.E.2d 314 (1955) 241 N.C. 369

Joseph KOTTLER
v.
Oliver V. MARTIN and wife, Carrie F. Martin.

No. 389.

Supreme Court of North Carolina.

January 14, 1955.

Hartsell & Hartsell and William L. Mills, Jr., Concord, for defendants-appellants.

John Hugh Williams, Concord, for plaintiff-appellee.

PARKER, Justice.

The essence of the defendants' argument is this: the option must be construed strictly in favor of the makers, and since the plaintiff stipulated that the jury should answer the issue: "Has the plaintiff ever offered to the defendants in cash or in certified checks the purchase price specified in the option?" "No," the plaintiff is not entitled to specific performance, because tender of the purchase price was essential.

The general rule governing the question presented for decision is thus stated in 55 Am.Jur., Vendor and Purchaser, Sec. 41: "Where the option by its express terms requires that the payment of the purchase money or a part thereof accompany the optionee's election to exercise the option, the making or tender of the payment specified, unless waived by the optionor, is a condition precedent to the formation of a contract to sell. On the other hand, the terms of the option may require merely that notice be given of the exercise thereof, and may not require the payment of the purchase money in order to exercise the option. * * * Whether the purchase price or a part thereof must be paid or tendered in order to exercise an option is, therefore, a matter of construction of the particular option involved." See Annotation 101 A.L.R. 1432.

"Where an option contract provides for payment of all or a portion of the purchase price in order to exercise the option, to entitle the optionee to a conveyance he must, as a rule, not only accept the offer but pay or tender the price within the prescribed time, but payment or tender is not essential unless it is a condition precedent." 66 C.J., Vendor and Purchaser, Sec. 24(2).

"The `exercise' of an option is merely the election of the optionee to purchase the property." 66 C.J., Sec. 21. "Except where required by statute to be in writing, an option may be exercised or accepted orally unless the contract requires a written acceptance, in which case a verbal notice is not sufficient." 66 C.J., Sec. 22. In North Carolina there is no statute which requires the exercise or acceptance of an option to be in writing, and the option in the case here makes no such requirement.

This Court said in Winders v. Kenan, 161 N.C. 628, at page 634, 77 S.E. 687, at page 689: "The acceptance must be according to the terms of the contract, and if these require the payment of the purchase money or any part thereof, precedent to the exercise of the right to buy, the money must be paid or tendered, and a mere notice of an intention to buy or that the party will take the property does not change the relations of the parties." This case was an action to compel specific performance. The instrument provided that "`upon the payment of ten thousand ($10,000.00) dollars, two thousand of which is to be paid the 1st day of April, 1905, and the remainder in four annual payments * * *.'" It was held that the right to buy could not be exercised until payment or tender of the purchase price is made.

In Gaylord v. McCoy, 161 N.C. 685, 77 S.E. 959, 960, the instrument provided "`And it is further understood and agreed that if the said George O. Gaylord and his heirs and assigns shall not demand of the undersigned parties the deed herein provided for, and tender payment as herein provided for, on or before the 3d day of November, 1909, then this agreement to be null and void, * * *.'" Tender was held to be required.

Hudson v. Cozart, 179 N.C. 247, 102 S.E. 278, was an action to enforce specific performance of a contract to convey a parcel of land, pursuant to an option to purchase the same. The option provided for the execution and delivery of a deed on 15 March 1916, provided, and upon condition that the purchase price was paid in cash on the same day. Tender of the money was held essential.

For other cases where the contract required that the payment of the purchase money, or a part thereof, accompany the optionee's election to exercise the option, and that payment or tender is requisite see: Trogden v. Williams, 144 N.C. 192, 56 S.E. 865, 10 L.R.A.,N.S., 867; Edwards Lumber & Land Co. v. Smith, 191 N.C. 619, 132 S.E. 593, which cites as its sole authority Hudson v. Cozart, supra.

First Citizens Bank & Trust Co. v. Frazelle, 226 N.C. 724, 40 S.E.2d 367, 369, was a civil action to enforce specific performance of an option to purchase certain real property described in a lease. The option contained these words: "`The party of the second part agrees to pay the purchase price upon receipt of said deed.'" In this case the Court said: "The defendants also contend that there was no tender of the purchase price as required under the decisions of this Court, citing Edwards Lumber & Land Co. v. Smith, 191 N.C. 619, 132 S.E. 593, and similar cases. We do not so hold. The option does not require payment or tender of the purchase price until a deed for the premises is delivered to the plaintiff."

See Annotation 101 A.L.R., p. 1437 et seq. for cases holding tender or payment not necessary.

The option in this case provides that the plaintiff "may at any time during the term of this lease elect to purchase said property at the sum of $6,700.00." The lease here does not provide when the payment of the purchase price is to be made. The jury found, according to stipulation of the parties, that the defendants have never tendered to the plaintiff a deed for the property described in the option. It is to be observed that the option right involved here is not a mere offer without consideration of the privilege of purchasing the property within a specified time which might have been withdrawn at any time by the lessors before acceptance. Here there was a valuable consideration moving from the lessee to the lessors; the payment by the lessee of all rentals theretofore due was the consideration for his irrevocable right to purchase the leased premises at the specified price, if he should elect to do so. Therefore, payment or tender of the purchase price by the plaintiff is not requisite under the language of the option, until a good and sufficient deed for the real property described in the option is tendered by the defendants to the plaintiff.

Cates v. McNeil, 169 Cal. 697, 147 P. 944, 948, was an action wherein a lease provided that the lessee, after having paid the rent for a specified number of years should then have the option to purchase the property at a specified price per acre. What the Court said in this case is appropriate here: "There is nothing in the option clause which requires payment of the price of the land to be made or tendered when the option right is exercised in order to constitute an acceptance. Payment may or may not be made an essential condition to the exercise of such a right, just as the parties see fit to provide for in the option agreement. But nothing is said about payment in the option clause here. It is not even mentioned. What the respondents acquired under the option clause was an irrevocable right of option to purchase the property at a specified price if they should at the end of ten years elect to do so, and all that was necessary on their part to do, as far as the terms of the option are concerned, in order to constitute a binding contract for the sale and purchase of the premises, was to give notice of their acceptance of the right. This they did. Payment of the purchase price at that time was not a condition required by the option, and it is not for the court to incorporate terms in it which the parties to it did not incorporate or even mention. Of course, payment would be essential before respondents would be entitled to a conveyance of the land, but that is a matter pertaining to the performance of the contract of purchase and sale which had been created by the acceptance."

The plaintiff and the defendants stipulated that the jury should find by its verdict that the plaintiff notified the defendants of his election to exercise the option during the lease period, that the plaintiff is ready, able and willing to comply with the terms of the option, and that the defendants have never tendered a deed for the premises to the plaintiff.

In accord with the jury's verdict it is the duty of the defendants to prepare and tender to the plaintiff a good and sufficient deed for the real property set forth in the option. Crotts v. Thomas, 226 N.C. 385, 38 S.E.2d 158, and cases cited.

The assignment of error as to the denial of the defendants' motion for judgment of nonsuit is overruled. The assignment of error as to the signing of the judgment is without merit, because the judgment is supported by the record. Lea v. Bridgeman, 228 N.C. 565, 46 S.E.2d 555.

In the trial below we find

No error.