Thе trial court denied appellants specific performance which they sought by reason of a written contract between them and W. D. Jones and his wife Lillie Jones pertaining to certain realty. W. D. Jones died after the institution of the suit and his executrix was substituted as defendant. Respondents Dr. R. A. Benitez and his wife Fannie purchased the involved property from W. D. and Lillie Jones. Appellants *621 contended that the conveyance constituted a breach of the contract not to sell unless the first right to рurchase at a fixed price was refused by appellants. The trial court’s judgment was “that Specific Performance hereby is refused, and that plaintiffs’ petition be and hereby is dismissed.”
The Kershners’ (appellants’) house in Rolla, Missouri, fronted on North Tenth Street and their side yard extended east-wardly to Rolla Street. The Jones house (respondent Lillie Jones and W. D. Jones, her deceased husband) faced Rolla Street. Both the Kershner and Jones properties extended from Rolla Street on the east to an alley on the west. South of the Jones and north of the Kershner properties, and between and adjacent to each, were two full lots and a part of a third, which lots also extended from Rolla Street to the alley. There was an oral understanding between the Joneses and the Kershners that if Jones purchased the lots between their respective properties for $2,550, the Kershners would buy one half the ground for $1,275. Jones did purchase the lots for $2,550 and on July 10, 1945, obtained a warranty dеed to them. On July 21, 1945, Mr. and Mrs. Jones conveyed to the Kershners by warranty deed the west half of the lots. On the same day the Joneses and Kershners entered into ihis contract:
“This agreement made and entered into this 21st. day of July, 1945, by and between W. D. Jones and Lillie Jones, his wife of Rolla, Missouri, parties of the first part, and Karl Kershner and Helen Kershner, his wife, of Rolla, Missouri, parties of the second part.
“Witnesseth: That whereas the said parties of the first part purchased Lots fourteen (14) and fifteen (15) and five (5) feet off of the North side of Lot thirteen (13), in Block eighty seven (87), Bishop’s second addition to the city of Rolla, Missouri; and whereas said property also adjoined property of the said second parties in said block; and whereas the said parties of the first part have this day sold unto the said parties of the second part the West half of Lots fourteen (14) and fifteen (15) and the North five (5) feet off of Lot thirteen (13) in said Block eighty seven (87) Bishop’s second addition to the city of Rolla, Missouri ; and whereas, there is loсated on said lots, a small three room frame dwelling house which is now rented for $10.00 per month. It is, therefore, agreed between the parties hereto that if at any time the said parties of the first part desire to sell the East half of said lots which they have retained title to, that they will give to the parties of the second part, the first right to purchase said property at the price and sum which said parties of the first part paid for said property; and it is further agreed that if the said parties of the second part should desire to sell the West half of said lots which they have this day purchased from parties of the first part, that they will give the parties of the first part the first right to purchase said property at the price and sum which they paid the parties of the first part for said property; and if either parties improves said property before sale, the costs of the improvements to be added to the purchase price of said property.
“It is understood and agreed that each party is to have one half of the rent collected on the dwelling house above mentioned while the same is rented and that in case of destruction of said premises by fire, each party is to be entitled to one half of the insurance, if any, collected for the loss of said property.”
The contract, although signed on July 21, 1945, was not acknowledged by the parties until February 9, 1950. The contract was recorded on February 25, 1950.
On July 3, 1952, Mr. and Mrs. Jones conveyed to respondents Benitez the eаst half of the lots for $3,500. Prior to the date of that deed, respondents Benitez began and had “pretty well completed” the construction of a 1-story, 28 x 35, brick building on the east half of the lots. ■ This was done under some kind of an arrangement between Jones and Benitez by which Benitez proceeded with the construction of the building even though he did not receive a deed until he had paid all of the $3,500 purchase price.
*622 It was and is appellants’ position that the sale by Jones to Benitez was a breach of the contract, in that Jones did not first offer to sell the property to appellants for $1,275; that respondents Benitez had actual as well as constructive notice of the contract; and that consequently appellants were entitled to specific performance against all respondents.
Either in the spring or winter of 1952, Mrs. Jones was offered $4,000 for the east half of the lots and $4,000 for the Kersh-ners’ west half. She conveyed this information to the Kershners. Mr. Kershner testified that he answered thаt they (the Kershners) “would prefer to stand by the agreement; we wouldn’t pay more than the purchase price,” and that Mrs. Jones answered “All right.” Mrs. Jones testified that she conveyed the offer to Mrs. Kersh-ner who said, “No; that it was their yard and they liked it and they wouldn’t sell at any price” but that she would have Mr. Kershner call on his return from a trip; that Mr. Kershner did call and said, “Since he had time to talk it over, think it over, he decided he wasn’t interested in buying at all” — to which Mrs. Jones replied, “You wouldn’t release that contract, you wоuldn’t sell and you wouldn’t buy?!’ — and that Mr. Kershner replied-“No” and Mrs. Jones said “All right.” Mrs. Jones also ■ testified that what Mr. Kershner had said was that “he wasn’t interested in buying or selling at $4,000.”
It is at once apparent that, if the conversations between Mrs. Jones and the Kershners reasonably may be construed as a compliance with, the contract on the part of the Joneses, this is decisive of the case. However, while. Mrs. Jones’s statement that Kershner said he was not interested in
buying at all
might, standing alone, be construed as an abandonment of the contract by the Kershners, Cf. Grant v. Pagter,
Mr. Kershner testified that, in early April, 1952, Dr. Benitez asked him whether he (Kershner) would cancel his agreement with the Joneses because he, Benitez, was going to erect a building on the portion of the property owned by the Joneses. Kersh-ner replied that he would not cancel and Benitez said that he would proceed with the construction of the building under a 99-year lease from the Joneses.
The testimony of Dr. Benitez is conflicting and unsatisfactory in so far as it enables us to arrive at a definite conclusion as to the dates of his negotiations with the Joneses, the times of his talks with the Kershners, or the dates of the commencement and completion of the building. Reviewing all of his testimony, in the light of the Kershners’ testimony, and making our own findings of fact as it is our duty to do, we are of the opinion that Dr. Benitez did tell Kershner that, in view of the fact that the Kershners would not release the Joneses from the contract, he (Benitez) would proceed to erect the building under a 99-year lease from the Joneses; that thereafter Benitez decided to buy the east half of the lots because he had made up his mind that the contract “was' broken and that it wasn’t valid any more’.’; that he began construction of the'building in June 1952; that it was finally completed in the early part of August 1952; that by an early date in July 1952 the building was “pretty well completed” at least in so far as outside construction was concerned.
The Kershners made no protest while the building was being constructed because, according to Mr. Kershner, he thought, until some time in July, that Benitez was proceeding under a 99-year lease and that the written contract did not prevent such a lease. Some time in July Mr. Kershner first learned that Benitez had in fact purchased the property when he saw a report *623 in the local paper of the recording of a warranty deed from Jones to Benitez. This suit was filed August 6, 1952.
Benitez alleged in his answer that he had spent $5,000 on the building up to September 5, 1952, the date his answer was filed. He testified that he had spent $6,000 on the building up to the time the suit was filed оn August 6. There was evidence that the reasonable market value of the property as improved with the 1-story brick building was $15,000 to $17,000 at trial time.
Among others, it is respondents’ contention that the contract was unenforceable because it violated the rule against perpetu-ities and because it constituted a restraint on alienation.
There is, of course, a distinction between the rule against perpetuities and the rule against restraints on alienation. The rule against perpetuities fixes the time within which a future interest must vest, while the rule against restraints on alienation is to prevent the inalienability of present or future vested interests. American Law of Property, Vol. VI, § 26.2, p. 411; 70 C.J.S., Perpetuities, § 2b, pp. 575, 576.
Contracts, such as the instant one, which confer a right which may be enforced by specific performance are subject to the rule against perpetuities and to the rule against restraints on alienation. 41 Am.Jur., Perpetuities and Restraints on Alienation, § 35, p. 78; American Law of Property, Vol. VI, § 26.64, p. 506.
Thе instant contract does not create an option to purchase either in the Joneses or in the Kershners. It is not a contract for the sale of real estate, and it does not involve an option given in connection with a lease. As we view it, the contract attempted to create in the Kershners a right that the Joneses would make no sale of the east half of the lots without first offering the property to the Kershners for $1,275; in other words, a promise to make no sale without first giving the Kershners an option to purchase for $1,275. Likewise, the Kershners, in exchange for the Jones’s promise, agreed not to sell the west half of the lots without first giving the Joneses an option to purchase that property for $1,275. This type of contract is sometimes referred to as one creating a pre-emption (American Law of Property, Vol. VI, § 26.64, pp. 506, 507), a contract containing a promissory restraint (Rest, Property, Div. IV, § 404, p. 2381), or a contract containing a continuing negative promise, H. J. Lewis Oyster Co. v. West,
The instant contract, reasonably construed, does not violate the rule against perpetuities because the rights conferred by it are personal to the holders thereof and terminated at their dеaths. (Inasmuch as all four of the contracting parties were alive at the time of the alleged breach, we need not determine whether the contract rights existed during the life or lives of either or both the promisees or of either or both the promisors.) There is no specific provision that the contract shall be binding upon the heirs and assigns of- the parties. Nor is there any indication in the contract that the parties intended that its terms would be binding beyond the lives of the parties. Thus, becausе the rights conferred by the contract were personal to the parties to it and did not extend beyond the periods of their respective lives, the instant contract does not violate the rule against perpetuities. Williams v. Diederich,
Does the instant contract unreasonably restrain alienation? That rule *624 is based upon (among other things) the desirability of “keeping property responsive to the current exigencies of its current beneficiаl owner” and upon the desirability of avoiding the retardation of the natural development of a community by removing property from' the ordinary channels of trade and commerce. See Rest., Property, Div. IV, pp. 2379, 2380; American Law of Property, Vol. VI, § 26.1, p. 409; § 26.3, p. 412. However, not every restraint on alienation is undesirable and not every restraint on alienation should be prohibited. See American Law of Property, Vol. VI, § 26.4, p. 414; § 26.63, p. 505.
The instant contract does not by its specific language constitute аny restraint upon alienation. This, because the contract permits the conveyance of either the west or east half of the lots to any person, provided it is first offered to the other parties at a stipulated price. Thus, a method for alienation is provided. However, it appears that, by reason of the inclusion of a stipulated price, the contract imposes a substantial restraint on alienation. This, because if there occurred a marked increase in the market value of the properties between the time of the contract and the time when either of the parties wished to sell, it is obvious that neither owner would sell.
We have found only one case apparently involving a substantially similar agreement. In Saraceno v. Carrano,
In Magee v. Mercantile-Commerce Bank & Trust Co.,
The, view .is expressed in both Rest., Property, Div. IV, § 413, illustrations 1, 2, 3, p. 2442, and Comment on Subsection (2), Clause (a), p. 2444, and in American Law of Property, Vol. VI, § 26.65, p. 507, and § 26.67, p. 510, that where a contract like the instant one fixes the price at which property must be offered for sale, there is a substantial curtailment of- the property’s alienability and that such is obnoxious to the rule against restraints. These authori *625 ties take the position that, where the contract provides that the sale shall be at the offerer’s own price or at the price offered by another bona fide purchaser, there is no substantial restraint; but that where the price is stipulated and the value of the property at the time it may be offered for sale is much greater that its value at the time of the contract, there is an obvious restraint on alienation, since the owner will retain the property rather that sell it at a great saсrifice. American Law of Property, § 26.67, at p. 511, contains the statement that “The better reasoned cases have held such pre-emptions void.” However, the courts, in the cases cited in the footnote to support that statement, while perhaps in a general way furnishing some basis for it, do not, in our judgment, base their decisions specifically upon the fact that a fixed price pre-emption contract was involved. In Washington University L.Q., 1952, p. 337, an article on “Satisfying Missouri’s Perpetuity Rules” under a subhеading “Restraints in Substance, Though Not in Form”, states: “The terms of a conveyance may require that before conveyed land may be sold, a designated person, usually the grantor, must be given the first refusal. The extent of the restraint thus imposed upon the conveyee’s freedom of alienation by such pre-emptive provisions will vary with the amount of the refusal price, which may or may not be set forth in the conveying instrument. If the price to be fixed must compare favorably with the value of the land, at the time alienation is sought, the restraint will be slight, and might well be upheld. However, if the price may be fixed at a price substantially lower than the then value of the land, the conveyee will be loath to sell, and a substantial restraint may thus be imposed which should not be permitted.”
In Bing v. Burrus,
All of which causes us to conclude that, whether a particular restraint in substance on alienation like or similar to the instant one, and imposed by contract as in the present case, and which does not, violate the rule against perpetuities, is valid or invalid depends on whether or not it is reasonable or unreasonable under the particular facts and circumstances. Thus, we- *626 do nоt subscribe, to the' view' that every restraint which is for life or lives and whether effected by specific language absolutely prohibiting a sale or by á provision fixing a price at which property must be offered for sale to one before it may be sold to another, is invalid. As noted, we adopt the view that contracts, such as the one in question, which require an offer to a specified person at a fixed price before the property may be, sold to another, are valid or invalid, depending upon the purpose or purposes to be accomplished by the particular contract.
An analysis of the provisions of the instant contract makes it apparent that no object other than a restraint on alienation of ■ the lots in question could have been accomplished by the contract. While Mr. Kershner testified that the purpose of the contract “was to prevent the encroachment of undesirable buildings which would be injurious to the values of both proрerties as residences”, the contract itself not only does not evidence such a purpose but by its very terms negatives it. This, because the contract contains the provision that “if either parties improves said property before sale, the costs of the improvements to be added to the purchase price of said property.” And there are no provisions which in any way restrict the kind, quantity, 'Or quality of improvements which may be made by the owners of either the east or west half оf the lots. The evidence was that the lots were in a commercial area. Thus, irrespective of what purpose the parties may have intended to accomplish, the fact is that their contract specifically negatives the possibility' of the accomplishment of any desirable objective. The contract could not accomplish the maintenance of the lots as yards or decorative adjuncts to the parties’ residences, or prevent the encroаchment of commercial establishments, or, in so far as the agreement is concerned, prevent the use of the lots for any purpose whatever. And there is no prohibition or restriction in the contract as to leasing, either as to the identity of lessees, the’length of a lease, or the purposes for which the property might be used under a lease.
The parties knew at the time the contract was executed that if the value of the lots substantially increased, the owners of eithеr the east or west half of the lots would not offer their property to the owners of the other property at the fixed price of $1,275. And they knew that if property values remained stationary or decreased, they had obtained no substantial advantage by reason of the contract. Thus, in view of the provisions of this contract, it would appear that the parties had no other stated purpose, and could have accomplished nothing more, than to arbitrarily restrain the alienation of- the lots for the lives of the respective parties. See 73 C.J.S., Property, § 13(b), pp. 195, 196. It does not appear that there was any relation between the restraint imposed and the accomplishment of any purpose other than the prevention of a sale. The restraint imposed was, at best, to require an option to come into being, but the restraint imposed effectively prevented that option from ever arising. ■
It follows that no socially or economically desirаble objective could be accomplished by enforcing this contract despite the restraint on alienation brought about'by the contingency of the substantial increase in the value of this land. Under these circumstances, we are of the opinion that the contract constituted an unreasonable restraint on the alienation of this property and for that reason, the trial court correctly refused to grant relief to appellants.
The judgment is affirmed.
PER CURIAM.
The foregoing opinion by COIL, C., is adopted as the opinion of the court.
All concur.