This is an appeal from cross-motions for summary judgment in an interpleader action brought by Christopher B. Manos, Jr., P.C., escrow agent, holding $25,000 in earnest money for the purchase of property, between Paul Sheridan, seller, and Crown Capital Corporation, purchaser, beсause Crown refused to go through with the purchase of 2.26 acres of commercial real estate and buildings in Carrollton, Carroll County, for $1,075,000. Crown, the author of the contract, contended that it had the right to a free look at the property under the agreement; had the right
The property was zoned commercial, containing commercial buildings on the 2.26 acres. On August 24, 1998, the agreement prepared by Crown’s representatives was executed by Crown’s president and presented to Sheridan as an offеr to purchase the property as zoned. On September 4, 1998, Sheridan accepted the offer and executed the agreement. Crown deposited $25,000 as earnest money with Christopher B. Manos, Jr. as escrow agent. Crown had 120 days from the acceptance to inspect the property and to determine if it was satisfactory to its intended use under the agreement. After the one hundred twenty-first day, Crown had to deposit an additional $75,000 in earnest money, unless it had earlier given notice of termination after inspection if the propеrty was not satisfactory to the purchaser’s intended use.
On December 8, 1998, Crown gave notice that
[t]he undersigned represents Crown Capital Corporation, Purchaser under the above-referenced Contract. Pursuant to Section 8 (a) of the Contract, this letter shall constitute notice to Seller that Purchaser [sic] that the Property is unsuitable for the intended use, and that Purchaser hereby terminates the Contract, effective immediately.
Cub Foods, a potential anchor tenant of Crown’s, withdrew its interest; this caused the development, and not the property, to be economically unsuitable for Crown’s development, because now the development was “not economically feasible for any reason.” Thus, Crown exercised what it believed was its opportunity (free look) to tie up the property for 120 days under what it believed was its absolutе discretion to terminate the agreement for any reason without any liability, but there was no inspection performed for it.
1. Sheridan contends that the trial court erred in granting summary judgment to Crown. We agree.
Ambiguity exists when a contract is uncertain of meaning, duplicitous, and indistinct; or whеn a word or phrase may be fairly understood in more than one way, such constitutes ambiguity.
Verret v. ABB Power T & D Co.,
Therefore, the trial court as a matter of law had the duty to ascertain the intent of the parties by applying the rules of construction of contracts to determine if the ambiguity remains unresolved. OCGA §§ 13-2-1; 13-2-2; 13-2-3;
Early v. Kent,
The cardinal rule of construction is to ascertain the intent of the parties, which is to formulate an enforceable аgreement.
Mut. Life Ins. Co. &c. v. Davis,
“When it is possible to do so without contravening any rule of law, the courts will construe a contract as binding on both the parties.”
Good Roads Machinery Co. v. Neal & Son,
Contracts are construed most strongly against the drafter, which, here, was Crown. OCGA § 13-2-2 (5);
Hertz Equip. Rental Corp. v. Evans,
Thus, the сontract must be construed as a whole rather than in separate and distinct parts, giving effect to all terms; the contract should not be determined by examining isolated clauses and provisions as the trial court has done.
Sage Technology v. NationsBank N.A. South,
Where the purchaser of rеal estate provides earnest money but had a discretionary contingency in the sales contract, there exists no mutuality of obligation, because there is no binding promise for a promise as mutual consideration; however, earnest money constitutes consideration for the promise to sell rather than a contingent promise to buy, because it is something of value in return for the promise to sell. See
Brack v. Brownlee,
[WJhere there is no other consideration for a contract, the mutual promises must be binding on both parties, for the reason that only a binding promise is sufficient consideratiоn for a promise of the other party. But where there is any other consideration for a contract so that each promise does not depend upon the other for consideration, mutuality of obligation is not essential. Mutuality is not required where there is considеration other than mutual promises.
(Citations, punctuation and emphasis omitted.) Brack v. Brownlee, supra at 819.
The trial court erred in granting summary judgment to Crown.
2. Sheridan contends that the trial court erred in denying his cross-motion for summary judgment. We agree.
As held in Division 1, which controls this Division as well, the physical ability to develop a commercial shopping center on the land was the satisfactory use the purchaser intended and not any discretionary use intended by the purchaser, because the contract did not give the purchaser such unrestricted discretion as to use, including economic feasibility; thus, unsatisfactory economic use was not within the expressed intent of the parties under the four corners of the agreement and cannot be implied by the trial court to revise the contract.
Crooks v. Crim,
“No precise technical words are required to create a condition subsequent.”
Munford, Inc. v. C & S Nat. Bank,
[Wlhere a contract specifies conditions which may be accepted or refused in the discretion of one of the contracting parties (as where work must be done “to his satisfaction”), such discretionary acceptance may take the form of either a condition precedent or subsequent. If the former, no rights arise until the discretion is exercised; if the latter, the contract “is valid until the contracting party exercises his discretion to annul it, the burden then bеing on the opposite party to show that the discretion was not fairly exercised if he wishes to insist on enforcement.” [Clayton McLendon, Inc. v. McCarthy,125 Ga. App. 76 , 79-80 (186 SE2d 452 ) (1971) (Deen, J., concurring specially).]
Charter Investment &c. Co. v. Urban Med. Svcs., supra at 299 (5).
This agreement clearly provided for a condition subsequent for the termination of the contract in the event thаt the inspection of the property revealed that the property could not be satisfactorily physically developed for commercial shopping center use. If the physical condition of the land would not permit development as a commеrcial shopping center, revealed upon timely inspection and notice, then the agreement terminated automatically upon such notice by the purchaser to the seller. In the event that no inspection was made, the condition subsequent could not be invoked to terminate the contract. In this case, no inspection was ever made by the purchaser nor were any physical conditions identified that could prevent the development of a commercial shopping center by Crown had an inspection been timely conducted. Thus, the condition subsequent never occurred.
Therefore, under the express terms of the agreement, Crown’s notice of unauthorized termination and refusal to close the purchase of the property constituted an unexcused failure to perform the agreement, i.e., a default. Thus, Crown was in default under Section 19. Sheridan was entitled to recover the earnest money as reasonable liquidated damages under the agreement.
The evidence in this case is undisputed, and as a matter of law, Sheridan is entitled to the grant of summary judgment.
Lau’s Corp. v. Haskins,
Judgment reversed.