Wilhite v. Central Investment Properties

409 N.W.2d 348, 1987 N.D. LEXIS 360
CourtNorth Dakota Supreme Court
DecidedJuly 6, 1987
DocketCiv. 11276
StatusPublished
Cited by5 cases

This text of 409 N.W.2d 348 (Wilhite v. Central Investment Properties) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wilhite v. Central Investment Properties, 409 N.W.2d 348, 1987 N.D. LEXIS 360 (N.D. 1987).

Opinion

MESCHKE, Justice.

Central Investment Properties appeals from a judgment awarding $30,673.67 to *349 I.J. Wilhite and others, denying Central a declaratory judgment fixing the option price for one parcel of land, and denying Central restitution of part of its purchase price for a partial assignment of an option on land. We affirm.

I. BACKGROUND

On August 20, 1974,1.J. Wilhite and Myron Atkinson obtained a “Land Option Agreement” from Clara Tatley to purchase 2,850 acres, approximately 18 quarter sections, of her farmland near Bismarck. The Option Agreement granted them the right to buy one quarter section of the land “between January 1 and April 15 of each calendar year,” beginning in 1974, but “in no event shall such option extend beyond the year 1991.” In addition to this “main option,” paragraph seven, as modified by an Addendum, set out a “secondary option”: “In any calendar year [Wilhite and Atkinson] may elect to purchase one additional quarter section of land.” “By way of example only, and in order to indicate the intentions of the parties hereto as to the nature of this transaction,” the Option Agreement had a sample schedule attached which indicated that if only the main option was exercised each year for one of the available eighteen quarters, the arrangement would last until 1991.

Except for a price of $500 per acre on six specified quarters, the stated option price was $400 per acre. The price was subject to increase at the beginning of each of the seventh and thirteenth years “in proportion to the increase of the Bureau of Labor Cost of Living Index pertaining to North Dakota over the preceding six year period.” 1

Later, Atkinson transferred half of his one-half interest in the Option Agreement to Richard Schirber and also transferred his remaining interest in four quarters in Section Eighteen to trusts created for his seven children, naming a bank as trustee. The Option Agreement was then owned one-half by Wilhite, one-fourth by Schirber, and, as to the land in Section Eighteen, one-fourth by the bank as trustee for Atkinson’s children (hereafter the “Wilhite Group”). Atkinson continued to own one-fourth except as to the land in Section Eighteen.

Exercising the main option each year from 1974 through 1977, the Wilhite Group purchased four quarters. On August 1, 1977, the Wilhite Group entered into a “Sale of Interest in Land Option Agreement” (“Assignment”) with Central, a partnership of ten individuals, selling the option rights to the four quarters in Section Eighteen to Central, to be exercised through the secondary option. Central paid a total of $384,000 for the Assignment, $48,000 cash and $336,000 by a promissory note to the Wilhite Group, payable in four annual installments of $48,000 each plus a balloon installment of $144,000 due on August 1, 1982.

The Assignment said:

“Sellers do hereby sell to buyers, and buyers purchase from sellers, that part of sellers’ interest in and to that certain Land Option Agreement ... insofar as and only insofar as such Option Agreement covers the right and option to purchase all of [Section Eighteen], in compliance with the provisions of modified paragraph 7 of said Agreement ... and further limited and restricted to the exercise of said option pursuant to modified paragraph 7 of said [Option Agreement], commencing with the year 1978 and ending on April 1, 1988.
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“In each year buyers agree to notify sellers of their election to exercise the option to purchase on or before November 1st of said year, and shall tender the option exercise price to the sellers. Sellers will acquire in their own name the tract designated upon which buyers have exercised their option and deliver title thereto to the buyers. In the event the buyers do not make such election un *350 der the [secondary option] provisions of modified paragraph 7 of [the Option Agreement], the sellers shall be entitled to exercise the [secondary] option as to lands other than those in [Section Eighteen]_” (emphasis added.) 2

On September 7, 1977, Clara Tatley conveyed her land to her heirs, subject to the Option Agreement. Her heirs conveyed the land to the Tatley Farm Trust, which thereafter made the conveyances to fulfill the Option Agreement.

Central exercised its assigned secondary option in December of 1977,1978, and 1979, each time purchasing a quarter in Section Eighteen and leaving the northeast quarter of Section Eighteen [hereafter “NE1/4”]. 3 The Wilhite Group purchased two more quarters by exercising its main option in 1978 and in 1979. Thus, at the end of 1979, nine quarters had been purchased and nine quarters, including the NE1/4, remained subject to the Option Agreement.

During the following years, Central did not elect to purchase the NE1/4. The Wil-hite Group purchased four more quarters by exercising the main option for one each year from 1980 through 1983 and also purchased two additional quarters in December 1980, apparently exercising the secondary option. 4 (These purchases were each at the stated option price since Tatleys did not use the cost of living adjustment to increase the price in 1980 or after.) So, at the end of 1983, only three quarters, including the NE1/4, remained in Tatleys’ ownership subject to the Option Agreement.

On July 10, 1982, the Wilhite Group extended the time for Central to pay most of the $144,000 balance on the promissory note after payment of $24,000, scheduling six $20,000 installments at four-month intervals, beginning December 1, 1982.

On November 2, 1983, Atkinson notified Central that the Wilhite Group “do not intend to exercise their option” in 1984, and that “if no party exercises the option” before April 15, 1984, “it would appear that the option expires.” On November 16, 1983, William Kelsch, attorney for Central, inquired about quarters remaining available for purchase. Atkinson replied that only the NE1/4 and two other quarters had not yet been purchased. Atkinson wrote Central on February 6, 1984, and again on March 9, 1984, reiterating that “it does not appear [the Wilhite Group] intend to exercise their option” in 1984 and that the option would apparently expire “unless other arrangements are made with the landowner.”

By letter on March 16, 1984, Kelsch objected, asserting that Central had paid for the right to have until April 1, 1988, to purchase any quarter in Section Eighteen and that, because the Wilhite Group had purchased “at an accelerated rate,” it would be impossible for Central to defer purchase of the NE1/4 beyond 1986. Central requested confirmation that it would have until April 1988 to purchase the *351 NE1/4 “under the terms of the Tatley Option.” In early April 1984, Atkinson informally advised Kelsch that arrangements had been made for Central to have until April 1988. Central then paid the next installment on its note to the Wilhite Group.

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Bluebook (online)
409 N.W.2d 348, 1987 N.D. LEXIS 360, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wilhite-v-central-investment-properties-nd-1987.