Casto v. Cook

112 S.E. 502, 91 W. Va. 209, 1922 W. Va. LEXIS 108

• Court: West Virginia Supreme Court
• Decided: May 16, 1922
• Status: Published

Opinion

Lively, Judge:

Plaintiff on June 18th, 1919, by written contract, leased a house and lot in the City of Beckley from defendant F. M. Cook for a term ending the 1st day of March, 1920, with right to renew for a period of sis month, and paid therefor $26.67 and agreed to pay $20.00 per month as rental. In the'lease contract, which is under seal, is found the following stipulation: "It is mutually agreed between the parties hereto that if this property is sold, that on 30 days notice said second party will vacate same, provided that said second party shall have the right and option to purchase said property at any time during this lease, at the same price and on same terms offered to other purchasers, and if he is given notice to vacate said property then within 30 days, he shall have the right within 30 days to elect to purchase same. ’ ’

Failure of F. M. Cook to sell to plaintiff under the stipulation above quoted. is the cause of this litigation. Plaintiff took possession of the property and performed his obligations under the contract. On or about October 4th, 1919, he ascertained that defendant Cook was offering the property for sale at the price of $1800.00 and that negotiations for sale and purchase were pending between him and defendant Hollandsworth, the appellant. On this date he wrote a letter to Cook stating he had understood that he was offering the property for $1800.00, and that he had decided to purchase the property at that price and was ready to take it when the deed was made and ready for delivery. To this letter defendant Cook replied that he had understood from attorney Hardin, who had negotiated the lease contract, that plaintiff had declined to take advantage of the stipulation in the lease contract, and that he, Cook, had sold the property, or had contracted to sell it to another party and had directed a deed to be prepared therefor. Immediately upon receipt of this letter plaintiff took his lease contract and exhibited it to Hollandsworth, the prospective purchaser, and told him in substance that he desired to purchase the property at the price and on the terms offered by Cook to Hollandsworth, and that he intended to do so. Hollandsworth attempted to discourage • plaintiff from taking advantage' of his option contract by telling him that the seam of coal which formerly lay under the property had been extracted by Cook and that the surface was likely to fall in and make it unfit for residential purposes. However, plaintiff persisted in his resolve to purchase -the property under his option. By deed dated the 9th day of October, 1919, and acknowledged the 23rd day of that month, defendant F. M. Cook and wife executed and delivered a deed for the property in controversy to defendant Hollands-worth for $1.00 and other valuable consideration. It appears that the consideration paid was $1800.00. The property is described in this deed as lot No. 16, set out by metes and bounds, containing 17-100 oí an acre, and a part of lot No. 17, also set out by metes and bounds, and containing 14520 square feet. Lots No. 16 and 17 had been formerly owned by Hollandsworth who had conveyed them to defendant F. M. Cook, and there was a balance of the purchase money due thereon of $1155.67 secured by a vendor’s lien, and the difference between that sum and $1800.00, the purchase price, was paid in cash, the vendor’s lien released and the note secured thereby surrendered. At December Rules 1919 plaintiff filed his bill exhibiting his lease contract and the deed from Cook to Hollandsworth and setting out the above recited facts and charged that Hollandsworth was not an innocent purchaser for value, and that the latter and Cook wrongfully combined and conspired to defraud him and deprive him of his right to exercise his option to purchase the property; that at the time he wrote his letter of October 4th, he was then and has always been ready, willing and able to pay the said sum of $1800.00, and that Hol-landsworth since he had obtained and recorded his deed was about to institute legal proceedings against him to collect the rent and dispossess him of the property and prayed that the said deed of October 9th be cancelled and that Cook be required to perform his contract with the plaintiff and that Hollandsworth be enjoined from interfering with his possession of the property. He offers to pay the $1800.00 into court, or such other sum as Hollandsworth may have paid to Cook. Both Cook and Hollandsworth answer the bill denying that they had fraudulently conspired to deprive the plaintiff of his right to purchase the property, and both deny that there was any consideration paid for the option contained in the lease contract; that the option was not specific enough to be enforced in that it provided for the purchase of a house and lot in the City of Beekley, whereas the deed made from Cook to Hollandsworth conveyed not only lot No. 16 on which the house was located but also a part of lot No. 17; that when the plaintiff called tbe option be made no tender of money or other thing of value to Cook and made no arrangement for payment of the purchase price. Hollandsworth denies that he saw the option held by the plaintiff and denies that he had any knowledge of the same. Cook answers that at the time he contracted to sell the property to Hollandsworth he was informed and believed that Casto had abandoned any intention of ever buying the house and lot under the option clause in the lease.

Another matter is set up in the pleadings which, in view of the evidence, has little relevancy to the merits of the case. After F. M. Cook had purchased the two lots from Hollandsworth originally, he sold the property in controversy to P. L. Cook for the sum of $1200.00, but no writing was entered into concerning that sale, but P. L. Cook took possession and paid all the purchase price therefor; but a short time before the lease contract was entered into he, P. L. Cook, moved out of the property and re-sold the same to F. M. Cook, who paid him the purchase price either in cash or by a note which a short time afterwards was paid; so that the equitable title of P. L. Cook to the property was extinguished in that way and it is clear from the evidence that he has no interest therein, and did not have at the time of the lease. Both F. M. Cook and Hollandsworth in their answers aver that F. M. Cook had no authority from P. L. Cook to execute the lease contract with Casto. However, it appears that F. M. Cook at the time the lease contract was entered into had both the equitable and legal title to the property.

Depositions were taken, and at the hearing the circuit court found that plaintiff had sustained the allegations of his bill and decreed that the deed from Cook and wife to Hollandsworth, dated the 9th day of October, be set aside and cancelled, and that Cook and wife execute and deliver to the plaintiff a deed to the land in controversy upon the payment by the plaintiff of the sum of $1800.00 with legal interest from the 23rd day of October, 1919, and upon his failure so to do, within a time stated, that a special commissioner then appointed for that purpose should make and deliver such deed to the plaintiff upon payment by him of $1800.00 with interest to the general receiver of the court; and inasmuch as the wife of F. M. Cook did not join in the lease contract, and not being a party to the suit, that upon her failure to join with her husband, or in the event that the special commissioner should make a deed upon the failure of Cook so to do, then the general receiver should hold the purchase price of $1800.00 until such time as it should be ascertained what sum should be paid therefrom to Cook’s wife in satisfaction of her contingent right of dower. From this decree Hollandsworth prosecutes this appeal and assigns as errors: (1) that the clause in the lease, called the option contract, was not enforceable because it was without consideration; (2) that it was void for uncertainty of description; (3) that the option was without consideration and therefore could be withdrawn and repudiated by Cook at any time before acceptance by Casto and that*3Cook did repudiate it and withdrew the offer to sell by conveying the property to Hollandsworth; (4) that it was necessary for Casto to tender with his notice of acceptance of the option the $1800.00 before it could be enforced; (5) that it was error for the court to set aside the deed of October 9th, because Etta B. Cook, the wife of F. M. Cook, was not a party to the suit, and that she had a right to execute this deed, and that the court had no right to decree against her.

Was there a consideration for the option contained in the lease? It is asserted by appellant that there was none; that the cash payment of $26.67 and the monthly payment of $20.00 per month was for the rent alone as shown by the lease and therefore the option claimed was a mere nudum paotum, and the offer to sell could be withdrawn or repudiated at the will of the lessor. Cook says the money paid under the lease was simply for rent of the property, and it is conceded that the rental value of the property -was well worth the amount paid. But Bardin, the agent of Cook, who negotiated and prepared the rental contract confirms Casto’s statement that he would not have rented the property, unless lie liad been given the right to purchase so as to protect his tenancy. The agreement itself bears out this evidence. The lease was for sis months with privilege of renewal for like term, but it was contemplated that, the property might be sold during the lease, and it was stipulated that if sale should be made, then Casto would vacate upon 30 days notice, but in such event he was given the right to protect his occupancy by purchasing the property at the price offered to another, and he was given 30 days to decide whether he would buy after he had received notice to vacate and terminate the lease. Cook obtained a tenant for his property at stipulated rentals and the consideration was mutual. But Cook did not want the lease to interfere with a sale and in consideration of the agreement of the lessee to waive -his lease, and vacate on 30 days notice, he granted him the option to purchase. .However, it is rather well established that where a contract consists of several and separate stipulations on one side and a legal consideration is stated on the other, it will be considered that the entire contract was in contemplation and that each particular stipulation formed a part of the inducement of the contract in its entirety, and is therefore supported by the consideration. As was said by Judge PoffenbaRGER in Rease v. Kittle, 56 W. Va. 273, “A man may be willing to take a lease with the privilege of purchase of the property, or a renewal of the lease, but unwilling to accept it in any other way. The option of purchase inserted in the lease is inducement to the contract on both sides.” It is-well established that if the option to purchase forms a part of the lease, the consideration for the lease furnishes consideration for the option. Swanston v. Clark, 153 Cal. 300; Stanwood v. Kuhn, 132 Ill. App. 466; Souffrain v. McDonald, 27 Ind. 269; Wolf v. Lodge, 159 Iowa 162; Murphy v. Anderson, 128 Minn. 106; Feudtner v. Ross, 74 N. J. Eq. 214; Bullock v. Cutting, 140 N. Y. S. 686; Brink v. Mitchell, 135 Wis. 416; Mathews Slate Co. v. New Empire Slate Co., 122 Fed. 972.

Was the option unenforceable for uncertainty of description? While this assignment of error is merely stated, and no argument made or authority cited to sustain it, and therefore it might he considered as abandoned, it may be well to observe that- the lease is for a house and lot in the City of Beekley, described as “being the same property now occupied by P. L. Cook adjoining the lot of John Williams and F. M. Cook.” This lot is composed of all of lot No. 16 and 14520 square feet of lot No. 17 as laid out and numbered. It was enclosed by a fence and was shawm to Casto when.the contract was made and pointed out to him as the property described in the lease. The evidence clearly establishes that the “lot” within this enclosure was the property which was leased and. optioned. The parties were not contracting with reference to any particular lot as laid out on a map or surveyed, and whether the fence around the house enclosed a part of lot No. 16 or lot No. 17 was not considered by the parties. Extraneous- evidence can be resorted to in order to identify the subject matter of the contract, and this was satisfactorily done. Bartlett v. Johnson, 89 W. Va. 46; New River Mineral Co. v. Painter, 100 Va. 507; State Savings Bank v. Stewart, 93 Va. 447.

It is further asserted that it was the duty of Casto, in order to preserve his right to specific -performance of his contract, to have tendered to Cook the $1800.00, the full purchase price, at the time he gave notice that he would buy the property under the option contract, and we are cited to Weaver v. Burr, 31 W. Va. 737. That doctrine was there announced with dissent by Judge SnydeR, who argued-that the legal effect of the contract was that the conveyance and payment of the purchase money were concurrent and dependent covenants or acts. And in Barrett v. McAllister, 33 W. Va. 738, decided about one year later, that doctrine was disapproved. Judge BRANNON says on p. 752 of the latter case: “If that case (Weaver v. Burr) is to be construed as holding that in such a case the person who has accepted- the proposal (of sale) and given notice thereof, cannot demand a deed to invest him with title, but must pay or tender the purchase money regardless of his right to such deed; and on failure of such tender or payment the option is at an end, we do not concur in that feature of the case.” The view taken by Judge SnydeR in his dissent in Weaver v. Burr is there adopted and approved, and it was held that, “The obligation of such proposer (optioner) to deliver such deed and the obligation of the holder of the option to pay the money are mutual and dependent, and are to be performed simultaneously.” And in Watson v. Coast, 35 W. Va. 464, it was held that where payment is not made an act of acceptance in the option, or required to be. made within the time fixed for acceptance, payment or tender within the time is not essential to the formation of a contract, but only an element in the performance of it. See Turner v. McCormick, 56 W. Va. 161. There is a clear distinction between payment as an election, and payment as a performance. Breen v. Mayne, 141 Iowa 399. If the terms of an option make payment a condition precedent, or a part of the acceptance, a notice of intention to buy, or that the optionee will take the property does not make a completed contract; the money must be paid or tendered. Winders v. Kenan, 161 N. C. 510; Borst v. Simpson, 90 Ala. 373. But in the option under consideration there is no such condition precedent. Gasto is given the right to purchase at the same price and on the same terms offered to other purchasers. This he proposed to do when the deed was ready in his notice of October 4, 1919, and was met with the reply from Cook that he had sold the property to another party and had that day instructed a deed to be prepared. What use would there be in making a tender? Smith v. Gibson, 25 Neb. 511; Mansfield v. Hodgdon, 147 Mass. 304; Butler v. Threlkeld, 117 Iowa 116. It is clear that Casto would be entitled to specific performance of his contract, but Cook has divested himself of the title which is now in Hollandsworth. Can the title be extracted from Hollands-worth? Was Hollandsworth an innocent purchaser for value? It appears that while Cook and Hollandsworth were negotiating for the sale and purchase, and before any consideration passed or the deed was executed, Casto advised Hollandsworth of his lease and option. Hollandsworth admits that he saw Casto’s contract of purchase, which he partly read, but was without his glasses at the time, and could not read it well. At that time the deed had been prepared but had not been signed by Cook. Besides, Hol-landsworth says he knew Casto had possession of the property at the time he began negotiations for purchase, and it was his duty to ascertain what right or claim Casto had to the possession. He had constructive notice of whatever a reasonable inquiry would have revealed. In order to sustain his position as an innocent purchaser he must be a complete purchaser before he receives notice of another’s right in the property. Doswell v. Buchanan’s Admr., 3 Leigh 365. In equity whatever is considered as sufficient to put a person upon inquiry is regarded as notice, for knowledge of a fact will be imputed where the exercise of prudence and diligence would have disclosed it. Cain v. Cox, 23 W. Va. 609. A .purchaser of property is affected with notice of whatever claim or interest the person in possession has, and which reasonable inquiry would have revealed. Chapman v. Chapman, 91 Va. 397. We are of the opinion that Hollandsworth was not an innocent purchaser for value without notice.

Under the pleadings and evidence the circuit court properly found that Casto was entitled to a conveyance of the property upon payment of the purchase price of $1800.00. But the decree cancels the deed made by Cook to Hollands-worth and directs a deed to be made by Cook, or through a commissioner for him, to Casto upon payment of the purchase price to Cook, or if made by a commissioner, paid into the hands of the court’s officer, the general receiver. Cook has already received from Hollandsworth the purchase price, and if, as the decree directs, Casto must pay Cook when he executes and delivers a deed, it is apparent that Cook Avill have received ¡double ¡payment and Hollands-worth will have received no consideration for the money paid by him to Cook. It is true he might recourse on Cook, and finally be reimbursed if such a proceeding would avail to bring about that result. The decree does not conserve Hollandsworth’s rights. If he be required to give up the property, his money should be refunded. Hollandsworth having had notice of Casto’s superior right to the property at the time he took the deed and paid the 'purchase money, holds the legal title in trust for Casto, and the decree should require him to convey to Casto upon payment of the purchase money. Etta B. Cook, the wife of F. M. Cook, having joined in the deed to Hollandsworth has parted with her dower interest in the property conveyed, has no interest in the subject matter of the litigation, and it was error to make provision for payment of her inchoate right of dower, as was done in the decree. The decree will be reversed in so far as it annuls the deed made from F. M. Cook and wife to C. J. Hollandsworth, dated October 9, 1919, and in so far as it requires Cook to execute and deliver deed to plaintiff, and makes provision for ascertainment and payment of a sum to Etta B. Cook in extinguishment of her inchoate right of dower; and the cause remanded for further proceedings in accordance herewith. Costs on this appeal are awarded to Hollandsworth as the party substantially prevailing and against F. M. Cook.

Reversed in part. Remanded.