Catawba Athletics, Inc. v. Newton Car Wash, Inc.

281 S.E.2d 676 (1981)

CATAWBA ATHLETICS, INC.
v.
NEWTON CAR WASH, INC.

No. 8025SC917.

Court of Appeals of North Carolina.

September 15, 1981.

Lefler, Gordon & Waddell by Lewis E. Waddell, Jr., Newton, for plaintiff-appellant.

Thomas W. Warlick and Isenhower, Long, Gaither & Wood by J. Michael Gaither, Newton, for defendant-appellee.

MORRIS, Chief Judge.

The major question presented for review is whether plaintiff gave timely notice of its intention to exercise its option to purchase the property in question. To answer this question requires construction of the contract. The pertinent portions of the lease and option to purchase provide:

I. This lease and option shall begin as of the date hereof and, unless sooner terminated as herein provided, shall exist and continue until the 30th day of April, 1978.

. . . . .

IX. The Tenant is hereby given the option to purchase the leased property owned by the Landlord at any time during the term of this lease or at the end of the lease period at a price of Fifty Thousand ($50,000) Dollars. Such option shall be exercised by the Tenant by written notice to the Landlord at his usual place of business or at such other address as the Landlord may provide in writing to the Tenant.

. . . . .

(e) The election of the Tenant to exercise this option must be evidenced by a notice in writing addressed to the Landlord, mailed to the office of the Landlord, or to such other place as the Landlord may, from time to time, designate by notice in writing to the Tenant. If the Tenant elects to exercise the option, he shall give the landlord thirty (30) days written notice of his intention to exercise said option.

(f) If the Tenant fails to exercise said option, the lease will terminate and the Tenant will surrender and vacate the leased property within such period provided above.

When the language of a contract such as this lease and option to purchase is clear and unambiguous, the legal effect of the contract is a matter of law for the court. Kent Corporation v. Winston-Salem, 272 N.C. 395, 158 S.E.2d 563 (1968); Bank v. Corbett, 271 N.C. 444, 156 S.E.2d 835 (1967). If the contract is clearly expressed, it must be enforced as it is written, and the court may not disregard the plainly expressed meaning of its language. Barham v. Davenport, 247 N.C. 575, 101 S.E.2d 367 (1958). Options, "being unilateral in their inception, are construed strictly in favor of the maker, because the other party is not bound to performance, and is under no obligation to buy. It is generally held that time is of the essence in such contract, and the conditions imposed must be performed in order to convert the right to buy into a contract for sale." Winders v. Kenan, 161 N.C. 628, 633, 77 S.E. 687, 689 (1913); quoted in Carpenter v. Carpenter, 213 N.C. 36, 40, 195 S.E. 5 (1938); and Ferguson v. Phillips, 268 N.C. 353, 355, 150 S.E.2d 518 (1966). To render an option to purchase enforceable there must be an acceptance by the optionee which is in accord with all of the terms specified in the option. Trust Co. v. Medford, 258 N.C. 146, 128 S.E.2d 141 (1962); Eward v. Kalnen, 14 N.C.App. 619, 188 S.E.2d 742 (1972); Builders, Inc. v. Bridgers, 2 N.C.App. 662, 163 S.E.2d 642 (1968).

The lease and option to purchase under scrutiny specify that, "[t]he election of the Tenant to exercise this option must be exercised by a notice in writing addressed to the Landlord .... If the Tenant elects to exercise the option, he shall give the landlord thirty (30) days written notice of his intention to exercise said option." Plaintiff submits that this language permitted it to accept the offer contained in the option by giving defendant the required written 30-day notice at any time during the entire option period and "up to the last day of same." The lease and option to purchase specify that the lease and option to purchase began on 31 May 1973, and unless sooner terminated, existed and continued "until the 30th day of April, 1978." The uncontradicted evidence reveals that plaintiff mailed defendant written notice of its intention to exercise its option by letter dated 4 April 1978. Plaintiff argues that this notice was in compliance with the contract because it was mailed before the expiration of the lease and option to purchase on 30 April 1978, it being plaintiff's position that notice to exercise the option could be given any time within the period of the lease, even up to the date of its termination on 30 April 1978.

We disagree. The written notice given by plaintiff was insufficient to constitute a valid acceptance of defendant's offer to sell the property contained in the lease and option to purchase. The contract clearly specifies that to exercise the option the tenant must give the landlord 30 days written notice of its intention. Under the contract the lease and option to purchase both terminated on 30 April 1978. In order properly to exercise the option to purchase plaintiff must have given defendant written notice at or before 30 March 1978.

The notice requirement must have reference to some future date or event. To have any significance, the notice requirement must mean that the notice must be given 30 days before plaintiff is entitled to purchase. Since the option and, thus, the right or offer to purchase were to terminate on 30 April 1978, the notice must have been given at least thirty days before that date. This was the obvious meaning of the agreement.

The timeliness of the notice was essential to this contract as it is to the usual option to purchase agreement. See Ferguson v. Phillips, supra; Barham v. Davenport, supra; Douglass v. Brooks, 242 N.C. 178, 87 S.E.2d 258 (1955). The purpose of the notice requirement was, first, to give defendant ample time to fulfill its offer and, second, as the contract stipulated, it functioned as evidence that plaintiff had exercised the option and accepted defendant's offer. For these reasons, we think it was essential that the notice be given in accordance with the stipulations of the offer. Since the uncontradicted evidence shows that plaintiff did not give the proper notice as required by the option to purchase, plaintiff cannot have specific performance of the lease and option to purchase.

In its reply plaintiff raised the issue of whether defendant had waived the notice requirement of the lease and option to purchase by informing plaintiff prior to 30 March 1978 that it did not intend to honor the terms of this agreement. This contention is based upon the theory that notice from the optionor that it would not carry out the terms of the option made unnecessary the giving of notice by the optionee of its intent to exercise the option.

The pleadings and affidavits do give rise to an issue of fact as to whether defendant's president, Abernathy, advised plaintiff's president, Houck, in March 1977 that defendant did not intend to comply with the terms set forth in the lease and option to purchase. However, this issue is immaterial. As a matter of law, even if defendant's president had notified plaintiff of its intention not to fulfill the option, plaintiff would still be bound to give the thirty-day written notice required by the option.

An option to purchase given by the owner of land imposes no obligation on the optionee to purchase the land. The option is merely a continuing offer to sell the land which is irrevocable until the expiration of the time limit of the option. An option "is a contract to give another the right to buy, and not a contract to sell." Winders v. Kenan, supra, 161 N.C. at 633, 77 S.E. at 689. The option can ripen into a sale or binding contract of sale only by the optionee's exercise of the option, i. e., acceptance of the offer unconditionally as made. 77 Am.Jur.2d, Vendor and Purchaser, § 40, p. 219; Trust Co. v. Medford, supra. The fact that the optionor, before the time for exercising the option expired, gave notice that it would not comply with its contract will not excuse the optionee from giving proper notice of his election to purchase and offering to comply with the terms of the option. The reason being, that until the option is accepted in accordance with the terms of the original contract, no contract to purchase exists, and the optionor is under no obligation to convey the property. See generally 77 Am.Jur.2d, Vendor and Purchaser, § 40, p. 220. An optionee, such as plaintiff in this case, is not entitled to specific performance of a contract to purchase when the contract does not exist because it has not been accepted. Thus, since, as established, plaintiff did not give proper notice of his intent to exercise the option to purchase it is immaterial whether defendant had previously repudiated the lease and option to purchase agreement.

Upon a thorough examination of the record we find that there were no issues of material fact, and defendant was entitled to judgment as a matter of law. Accordingly the judgment of the trial court is

Affirmed.

HARRY C. MARTIN and HILL, JJ., concur.