Holk v. Snider

316 So. 2d 675, 294 Ala. 318, 1975 Ala. LEXIS 1196

• Court: Supreme Court of Alabama
• Decided: March 6, 1975
• Docket: S.C. 986
• Status: Published

Opinions

FAULKNER, Justice.

On March 11, 1972, Mr. and Mrs. Hoik signed an instrument designated an offer to purchase certain real estate in Baldwin County. The instrument was apparently drafted by Mrs. Frances Mallory, a real estate agent for Mrs. Snider. She had an exclusive listing of the property for thirty days. The offer was subject to three conditions :

1. The owner accepts an offer of $40,000 as consideration for the property, including earnest money of $500, a down payment of $10,000, and the balance payable in annual installments, under a contract and agreement to buy and sell between the owner and purchasers over a period of 5 years, with interest at 7% per annum.

2. The owner shall furnish a warranty deed when the consideration is paid in full. A survey and title insurance was also to be delivered to the purchaser when the contract price was paid in full.

3. The offer expired at midnight, March 25, 1972. If the offer were not accepted prior to March 25, 1972, the offer was null and void, and the earnest money was to be returned to Mr. and Mrs. Hoiks by Mallory. If the offer were accepted by Snider and not consumated by Mr. and Mrs. Hoik within a period of thirty to sixty days after acceptance by Mrs. Snider, the earnest money was to be retained by Mrs. Snider as damages.

The Hoiks signed the. instrument on March 11, 1972. The instrument shows on its face it was accepted by Mrs. Snider on March 15, 1972. Mrs. Snider and Mr. Henderson, one of the witnesses who attested her signature, testified at the trial that Mrs. Snider signed on March 11, 1972. Mrs. Snider relented on cross-examination and said she did not know whether she wrote the date of March 15 in the blank. On May 13, 1972, Mr. and Mrs. Hoik executed a contract and agreement as purchasers. Meanwhile, Mr. Hoik had given his personal check for $4,500 and his company’s check for $5,000 to the agent, Mallory, representing the down payment when added to the earnest money of $500. The $4,500 check payable to Frances G. Mallory was deposited by the agent in her escrow account. The check for $5,000 payable to Frances G. Mallory was never deposited.

The contract and agreement was dated May 13, 1972, and was signed by Mr. and Mrs. Hoik on that date as purchasers. The contract provided for the $10,000 cash payment, description, balance of $30,000 payable in annual payments of $6,000 over a period of five years at 7% interest per annum, immediate possession by the purchasers, delivery of a warranty deed, survey, and title policy upon payment of the purchase price in full, and a forfeiture clause in the event of default by the purchasers in the payments. The contract further provided that “Time is of the essence of this Contract.”

A copy of the contract was mailed to Mrs. Snider on May 12, 1972, to the Beachcomber Restaurant, by certified mail, return receipt requested, by the agent. Approval of the contract and a proposed closing statement was requested of Mrs. Snider by the agent in the letter. The weekend was suggested as a time for closing. This letter was returned to the sender marked “Unclaimed” by the postal service. On June 2, 1972, another certified letter was mailed to Mrs. Snider by the agent, addressed to Mrs. Snider at 3806-9th Avenue, Wylam, Birmingham, Alabama. In this letter Mrs. Mallory related to Mrs. Snider that she had previously mailed to her a copy of the proposed contract signed by Mr. and Mrs. Hoik. She further requested a closing time. This letter was returned to the sender as being unclaimed by the addressee. On June 19, 1972, a copy of the June 2 letter was mailed to Mrs. Snider at the Beachcomber Motel. It was also unclaimed and returned to the sender. On July 5, 1972, Mr. Hoik wrote to Mrs. Mallory. A portion of the letter follows:

“As you know, this transaction was to be completed within thirty to sixty days and we paid the balance due on the down payment on May 13, 1972. As of this date, you have been unable to secure a contract and agreement signed by Edna E. Snider and to provide other items called for in the Officer [jic] to Purchase. In view of this, request that you return to us the amount paid as the balance due on the down payment, retaining the Earnest money Binder, and taking what legal action is necessary to secure a signed contract for the purchase of this property. Upon notification that Edna E. Snider has complied with her obligation under the accepted Offer to Purchase, we will pay the balance due on the down payment within ten days.”

The principal disputes in this case are whether the instrument dated March 11, 1972, is a contract for the sale of land or an option to purchase land, and could it be specifically enforced in an action at law.

We construe the instrument to be an option to purchase the land in question. It appears from the record that all of the parties considered the instrument to be an option. It was called an option to purchase in paragraph 4 of the bill of complaint. We are of the opinion that the option can be specifically enforced. Smith v. Cleveland, 289 Ala. 401, 268 So.2d 14 (1972); Fulenwider v. Rowan, 136 Ala. 287, 34 So. 975 (1902). In Fulenwider this court defined an option as neither a sale nor an agreement to sell. It is simply a contract by which the owner of property agrees with another that he shall have the right to buy the property at a fixed price within a certain time. He does not sell his land; he does not then agree to sell it; but he does then sell something, viz.: the right or privilege to buy at the option or election of the other party. The second party gets in praesenti not lands, or an agreement that he shall have lands, but he does get something of value, that is the right to call for and receive lands if he elects. The owner parts with his right to sell his land, except to the other party for a limited period.

The contract here was mutual and binding on both parties. Mrs. Snider interprets the instrument as an option but says that time was of the essence; that the option was not exercised within sixty days from March 11, 1972. She disputes the fact that she accepted on March 15, 1972, the date appearing on the face of the instrument. She contends that she accepted on March 11. The date of acceptance and the date of exercise of the option are the major points of her argument. In our opinion her argument is without merit. The option did not provide that time was of the essence. The contract and agreement did provide for time being the essence, but the option did not. Time is not the essence of a contract unless it is expressly stated by the parties or unless it naturally follows from the circumstances of the particular case. McFadden & Bro. v. Henderson, 128 Ala. 221, 29 So. 640 (1900); Fulenwider, supra. It does not appear from the record of this case that time was of the essence. Mrs. Snider refers to the fact that there appeared to be a “hurry-up” effort on the part of Mr. and Mrs. Hoik to close on May 14, 1972, as being indicative that they considered time being the essence. She apparently overlooks the fact that Mrs. Mallory was her agent, and it was her agent who sent her the letters on May 12, June 2, and June 19, 1972, enclosing the contract and agreement for the approval of Mrs. Snider. We are not convinced from the evidence of the case that the parties intended time being the essence.

We are of the opinion that the evidence of this case does not sustain the action of the trial court.

The record shows that Mr. and Mrs. Hoik have been ready, willing, and able to perform on their part since the date of the exercise of the option, and they are entitled to have specific performance.

Reversed and remanded.

BLOODWORTH, ALMON and EMBRY, JJ., concur. HEFLIN, C. J., concurs in the result.