82 Ark. 573 | Ark. | 1907
(after stating the facts.) 1. The Supreme Court of Georgia in Black v. Maddox, 104 Ga. 157, defines an option as follows: “The obligation by which one binds himself to sell, and makes it discretionary with the other party to buy, which is simply a contract by which the owner of property agrees with another person that he shall have a right to buy the property at a fixed price within a certain time.” We approved this definition in the recent case of Bonanza Mining & Smelting Company v. Ware, 78 Ark. 306. See Ide v. Leiser, 24 Am. St. Rep. 17; 21 Am. & Eng. Enc. Law (2 Ed.), 924.
The distinction between an option and a contract for sale is made clear in Bonanza Mining & Smelting Co. v. Ware, 78 Ark. 306, supra, where we quoted from the Supreme Court of Pennsylvania as follows: “An option is an unaccepted offer. If states -the terms and conditions on which the owner is willing to sell his land, if the holder elects to accept them within the time limited. If the holder does so elect, he must give notice to the other party, and the accepted offer thereupon becomes a valid and binding contract. If an acceptance is not made within the time fixed, the owner is no longer bound by his offer, and the option -is at an end. A contract of sale fixes definitely the relative rights and obligations of both parties at the time of its execution. The offer and acceptance are concurrent, since the minds of the contracting parties meet in the terms of the agreement.” McMillan v. Philadelphia Company, 159 Pa. St. 142.
In .the light of this definition and the distinction between an option to buy and a contract of sale, it is plain that the contract under consideration is an option. It is unilateral, binding only the appellee, H. N. Pharr, to make warranty deed to the lands named -in the contract upon the terms therein mentioned when the appellant, the holder of the option, within the time designated therein accepted those terms, leaving it discretionary with the appellant for the full period named therein to determine whether it would accept and close the deal. The most difficult question for us has been to determine whether the contract in question was one of sale or only an option. There does not seem to be any Obligation on the part of appellant to take the land if the title is found to be perfect. As we construe the contract, it rather gives to appellee the privilege of examining the title, and the privilege of closing the “entire deal within sixty days” upon the terms mentioned, if it finds the title satisfactory. Appellee PI. N. Pharr alone signed the contract, and he only is bound to do anything, upon the conditions named, while the appellant is left free to close the deal or not as it sees proper in sixty days. This seems to us to be the proper construction of the contract. Such is the construction given similar contracts in Kelsey v. Crowther, 162 U. S. 404, 16 Sup. Ct. Rep. 808, and Hollman v. Conlon, 45 S. W. (Mo.), 275.
True, the contracts in the above cases had an express provision for the return of the money paid for the option in case of adverse report upon the title. But that duty is implied here from the fact that the $100 were paid and were received as “earnest money and part payment for the property, both parties doubtless contemplating that the title would be found perfect, and that the deal would be consummated within the time specified. Appellee H. N. Pharr had warranted that the title was perfect, and this implied an obligation on his part to return the $100 if the title was found imperfect.
2. Construing the contract as an option, the effect that should be given the element .of time specified therein is correctly stated in 21 Am. & Eng. Enc. Law, 931, as follows: “Where by the terms of a contract for an option the exercise thereof is limited to a specified and definite time, it is necessary that the option be exercised before the expiration of such time, otherwise the right is gone. Attempts to exercise the option after the expiration of the time limited, on the ground that in equity time is not of the essence .of a contract, have been uniformly met with the answer that where the parties -have seen fit to regard time as an essential element, the courts must likewise so regard it. However true in regard to executed contracts in general, the principle has generally been regarded as having no application to an offer to make a contract which by express agreement is to remain open for a specified time. There is, moreover, a strong inclination on the part of the courts to view any delay with great strictness, on the ground, that the party seeking to enforce performance was not bound, while the other party .was bound.” The doctrine of the text is well supported by the many citations in the notes from English and American courts. (See these and the case of Litz v. Goosling, 21 L. R. A. 127, where the subject of option contracts is elaborately discussed in notes and many authorities are collated.)
We have examined the many cases cited in the excellent brief of counsel for appellant to support its contention that “equity does not treat time as of the essence of the contract,” and we find that they are cases in which there was mutuality of undertaking and obligation, or else contracts of sale, where the language of the contract itself, or the facts adduced,. showed that time was not of the essence. Of course, these authorities arc not applicable to unilateral contracts that expressly fix a period beyond which the maker will not be bound, as in the case at bar.
3. But appellant .contends that, if time was of the essence of the contract, its letters of July 26th and 28th were an acceptance of the offer of appellee H. N. Pharr and bound him to specific performance. The letters were not an acceptance. They informed Harry N. Pharr that appellant would “be ready to close the option,” not that appellant was ready then and accepted the terms of the .offer by Pharr. Their recitals show that the closing of the deal on appellant’s part was to be left open until at least one day after the expiration of the option, and not to be completed then unless the deeds were approved by its attorney. There was nothing in these letters to bind appellant to close even on -the 29th. But that was too late. The “entire deal” under the option contract was “to be closed in 60 days,” not to be kept open after that time for appellant to say whether it would close it or not. There was absolutely no obligation on appellee H. N. Pharr to do anything under the contract until appellant accepted his offer within the time. Then his obligation was to make warranty deed. Appellant can not excuse its failure to get ready within the time by saying that Pharr was not ready and would not have been. Kelsey v. Crowther, 162 U. S. 404. Appellee Pharr was not in default until appellant was ready within the time to pay over the money and do the other things required by the option. The delay of one day was fatal. The option contract, the moment the sixty days expired, was dead. Its obligations were gone.
■ 4. We see nothing therefore in the letters of H. N. Pharr, or in his conduct subsequent to the expiration of the option, that would revive its' obligations as to him. There was no element of waiver or' estoppel in the case, and we are of the opinion that his defense to the suit was perfect.
The judgment is affirmed.
