145 Ark. 21 | Ark. | 1920
This action was brought by the appellee against the appellants to enforce specific performance of a contract of which the following is the memorandum:
“Memo, oe Understanding.”
“Between Mr. Spry and Mr. Wilson re approximately 10,000 Rieres in Arkansas owned by Mr. Wilscm/ but in the name of Trust & Guarantee Company, Limited; and described in annexed list.
‘ ‘ Mr. Spry to put estimators on at once and complete / examination. ¡
“Within forty-five days from today Mr. Spry shall decide whether he wants right to buy, and Mr. Wilson is not to sell in meantime to another.
“Within that forty-five days Mr. Spry may for $24,-000 have the right to bny the land for $200,000' within two years from today.
“If Mr. Spry decides to bny, then the $.200,000 shall be paid $50,000 in cash and $50,000 at the end of each year thereafter, with interest on amount unpaid at 6 per cent., payable quarterly. Title to be good and usual provisions for Mr. Spry to search title at his own expense and to have back any part of price paid if title not good, in which event the agreement to be void. Deed to be executed to Mr. Spry and put in escrow upon payment of first $50,000 and to be delivered when whole price paid as stipulated.
“If Mr. Spry after examination, within forty-five days, wants right to buy, he is to pay $3,000 cash and $3,000 at end of each three months, until the $24,000 is paid, or Mr. Spry decides to purchase and pays the $50,-000 cash on price, and these sums to be forfeited if he do not purchase for the $200,000. Mr. Spry may at any time within the two years abandon right to purchase and stop further liability for the $24,000 payments.
“Mr. Wilson to pay proportion .of taxes and rates for this year up to date of Mr. Spry’s decision and Mr. Spry to pay taxes and rates for time up to his decision as to buying for $200,000.
“This memo not to be binding upon Mr. Spry or Mr. Wilson until Mr. Spry decides within forty-five days that he wants the right to buy and pays the first $3,000. E. E. Ward to continue collecting rent and net surplus after his trouble in looking after same and protecting property to be paid to Mr. Spry during time that Spry pays taxes and rates. February 16, 1919.”
Appellee alleged that appellant Wilson was the owner of the lands mentioned in the memorandum. The lands are described in appellee’s complaint. He alleged that the title to the lands was in the appellant Trust & Guarantee Company, Ltd., hereafter called company; that the company held the naked legal title for the benefit of appellant Wilson, who owned the lands in fee simpie. He alleged that the time mentioned for exercising the option was extended, and that within the period of snch extension appellee exercised the option and offered to purchase the lands on the terms specified and tendered to Wilson the sum of $3,000 as the first cash payment and offered to perform all the things required of him by the option contract; that Wilson refused to carry out the contract. Appellee prayed for specific performance.
The appellants denied the material allegations of the complaint and pleaded the statute of frauds and set up that there was no note or memorandum signed by the parties, and that there was no contract or agreement between them.
The facts are substantially as follows: Wilson, who lived in Canada, owned about 10,000 acres of land in Arkansas which he wished to sell. John C. Spry lived in Chicago and desired to buy this land. On February 6, 1919, Spry and Wilson met at Chatham, Canada. The meeting resulted in an understanding or agreement between Wilson and Spry, a memorandum of which was made in pencil by Wilson at the time, and after Spry left for Chicago, a copy was made by Wilson with a list of the lands attached, was enclosed in a letter written by Wilson and mailed to Spry the next day. In this letter Wilson designated the enclosed instrument as “a copy of our memorandum of understanding,” arid further said: “We may either sign this memo now or we may leave it until you decide to buy and pay the first $3,000. ’ ’ On February 19, 1919, Spry in a letter to Wilson acknowledged the receipt of the letter and memorandum of understanding, and protested that the time given him for the examination was too short, and asked that the time be extended until May 1st. But he added, “However, we accept your proposition and will do the best we can to finish our examination within the time specified.”.
Several other letters passed between Wilson and Spry in which Spry was insisting on a definite promise for the extension of time until May 1st to make the examination and to indicate his acceptance or rejection of the option. The letters revealed that Spry had requested his attorney and agent Denton to interview Wilson concerning the matter, and Wilson’s final word on this subject was contained in a letter to Spry of March 1, 1919, in which he says, “Mr. Denton has been at me today to extend the time until May 1st, for you to make the examination of the property in Arkansas, and I thought by my last letter I had gone as far as I should. However, at Mr. Denton’s request I now tell you that if you keep at the job I will keep on extending the time until you finish it, but not beyond, however, the 1st of May.” In answer to this letter Spiw, among- other things, says: “We wish to complete our examination as promptly as possible, as it is costing us between $25 and $30 a day to cruise it. Thanking you for the extension granted and assuring you that we.will complete the work just as soon as possible,” etc. In one of the letters to Wilson, Spry complained because it was reported to him that other people had recently been looking over the property, and he asked Wilson if they had authority from him to do so.. In reply to this letter ÍNilson stated, “I, of course, would have no objection whatever to parties examining the timber with the object of buying it because the memorandum for purchase of right to buy from me has never been signed by you or myself, and you are perfectly free to buy any other tract of timber land, as I am perfectly free to sell to any other person. In another letter Spry informed Wilson that the examination would be completed by April 29 and requested Wilson to meet him in Toronto on that date, saying,-“By that time we will have complete information as to the property and will be prepared to give you a decided answer as to whether we desire to purchase.” In answer to this letter Wilson stated that he did not see that it was necessary for Spry to come to Toronto, and stated further: “If you decide to take the property, you might sign the memorandum of agreement which you have in typewriting and forward it to me. * * * If we signed up, then you could instruct your solicitor to search the title immediately and have the sale completed. I am and have been waiting to get your answer.”
In response to other letters from Spry requesting Wilson to meet him in Toronto to talk definitely about that property, Wilson wrote, “We could not make anything more definite than we have made it, and if you desire to sign that you might write on the back of it as follows, ‘ ‘ To Matthew Wilson: I decide as of 2d April, 191.9 (that is, within the 45 days), to take the right to buy within lands on within terms,” and if you sign that it will complete the matter, and I can then lay it before those interested with me and give you an answer within a very short time.”
In a telegram from Spry to Wilson dated April 28, 1919, Spry urg*ed Wilson to meet him in Toronto, saying, among other things, “I see no reason why we ban not get together. There are some minor matters that should be adjusted prior to signing the agreement which you will doubtless want to discuss with the bank and which I am satisfied will be agreeable to you.” Wilson testified that he received a ’phone message from Spry asking him to come down' to Toronto to see if they could get together on the proposition, that he wanted some changes; that he replied asking Spry to sign the memorandum agreement; that he went to Toronto, within the time of the extension, and met Spry; that Spry paid his expenses in going there, amounting to $25; that about a week or two weeks before that time he had an offer of $250,000 for the land, and that he told Spry about it when they met in Toronto, and further told him that “if he would sign the memorandum, I would turn the offer over to him and split the profit,” that he was willing to carry out the terms of the written memorandum, subject to the Bank & Trust Company agreeing to it, but he was presented p with a new agreement; that he was not willing to execute a deed according to the terms of that agreement; that he held the land until he lost the offer mentioned, and in a week or two weeks sold it for $5,000 or $6,000 more than his contract with Spry called for.
Wilson further testified that when Spry presented the new agreement he ashed Spry what was wrong with the memorandum, why he would not accept that? Spry said the agreement which he produced did not vary much, hut it did vary much. It provided that the $3,000 was to he paid when the title was accepted. That was not according to the memorandum, and Spry would.not agree to pay the $3,000 until he was satisfied as to the title. Wilson also testified to other particulars which he said Spry insisted on having embodied in the agreement, but which were not contained in the original memorandum ; that Wilson did not owe the bank anything; on the contrary he had a large deposit with them; that the bank had no authority to represent him.
Spry testified that Ford, his agent who had exáminecl the property, reported to him on April 28, and he and Ford left that night for Toronto; that he called Wilson over the ’phone at Denton’s.office in Toronto and told him that he was ready to close up the. trade; that he accepted his proposition; that Wilson came on April 30, and.he told Wilson that he was ready to close up and pay the first $3,000. In the conversation Wilson stated he had .been offered, $250,000 for the land and “asked me how I would like to join him and take one-half. I told him that I did not want him to sell my property; that it was my property. Then he went to make up the agreement, and he did not get it up right at the time'. * * * In other words, he was proposing a change in the contract. I told him I wanted exactly what we agreed to do, and I could not get him to do anything. I refused to accept the modification'that Wilson suggested. I had tbe $3,000 and tendered it to him. I was financially able to carry out the contract. * * *-He was to give us a perfect title. He was to furnish the abstract and we were to do the curing of the title. When we got to Toronto, the reason I did not sign the written memorandum prepared by Mr. Wilson was that he wanted a few little changes about the title. He prepared a new contract and changed it altogether. ” ■
On cross-examination Spry testified that “on the 30th of April we tried to arrive at various understandings and modifications in the memorandum, but I told him at the time that I was willing to carry out the original contract.”
On redirect examination Spry testified that the land was worth $300,000.
Ford testified that he had been employed by Spry to examine the property and went with him to Toronto to close the deal with Wilson. He was present in Denton’s office on April 29th and heard Spry’s conversation with Wilson over the ’phone. Spry asked Wilson to come down to Toronto and prepare the necessary papers for closing the contract and told him that he had accepted the proposition and was- in Toronto ready to close and pay the money. He was also present part of the time at the meeting in Toronto and heard Spry tell Wilson “I accept your proposition, I am here to close this deal out and I tender you your money.” Wilson, Spry, Den-ton, and witness were present at that time. He testified that $275,000 to $300,000 was a fair market value of the land in April, 1919.
Denton testified that Spry and Ford were in his office and he heard Spry’s conversation over the telephone when he called Wilson. Spry told Wilson that he accepted his option on the Arkansas lands and was there prepared to close it. He was also present in the office of the Trust Company where Wilson, Spry, Ford and witness met. He heard Spry say to witness, “I told you yesterday over the telephone that I accepted your offer, and I am here to carry it out and settle up with you. ’ ’ At this conference there was a discussion about the modification of the contract, but no new contract was arrived at.
Denton was a member of the King’s counsel in the Province of Ontario, Canada, and the attorney for Spry. The testimony of this witness, which it is unnecessary to set forth further in detail, is to the effect that from the very start of that meeting at the office of the Trust Com-. pany on April 30, Mr. Wilson began backing and trying to get out of carrying out Ms contract as Spry and witness understood it. He stated that the desire of Spry and witness was to have the memorandum agreement not changed in material particulars, but only reduced to such form as a lawyer would care to see it go out of his office. The only object they had in view was to put the memorandum in definite form. Spry urged upon the witness that he wanted the deal to go through as he expected to make some money out of it. The witness further stated that Spry tendered Wilson the $3,000 and left his check with witness to pay it when Wilson would accept it, and that Wilson made no objection to the manner of the payment.
The court found that Wilson was the owner of the lands in controversy, the title to which was in the Trust Company for the use and benefit of Wilson. That the memorandum was of a contract between Wilson and Spry by which Wilson was to give Spry the option to purchase the lands upon the terms mentioned in the memorandum, provided Spry accepted such option to purchase by May 1, 1919. That Spry did accept the con-i tract by that time and tendered to Wilson $3,000, the same being the first payment according to the terms of the option contract. •
The court thereupon entered a decree for a specific performance of the contract for an option according to its terms. From that- decree is this appeal.
The memorandum of agreement and the letters concerning it must be considered together in determining whether or not there was a contract between Wilson and Spry for an option to Spry to buy the lands of Wilson. St. Louis, I. M. & S. Ry. Co. v. Beidler, 45 Ark. 1; McDonough v, Williams, 77 Ark. 261-72; Mann v. Urquhart, 89 Ark. 239-47. These, with the oral testimony, unmistakably prove that there was such a contract.
Learned counsel for appellants contend that there ivas no binding contract between Wilson and Spry because the memorandum had not been signed by Spry, and because there was no consideration and no mutuality of agreement. As we view the law applicable to the 'facts of this record, these contentions are untenable for the following reasons: The memorandum of agreement between Wilson and Spry was made in pencil by Wilson at the time the contract was entered into, and on the following day a copy thereof, with a list of the lands, was enclosed in a letter from Wilson to Spry. Even if the memorandum had not been made contemporaneous with the agreement, the letter signed by Wilson and mailed to Spry the next day in which he stated, ‘ ‘ I am enclosing you herewith a copy of our memorandum of understanding,” was sufficient to meet the requirement of the statute of frauds if the contract were complete in other essentials. For, as stated in Wood on Statutes of Fraud, sec. 345, pp. 649-50: “Where a memorandum in writing is to be proved in compliance with the statute, it differs from a contract in writing in that it may be made at any time after the contract, and before the action is brought. It is not necessary that the memorandum should be contemporaneous with the contract, but it is sufficient that it has been made at any time afterward and then anything’ under the hand of the party sought to be charged, admitting that he had entered into the agreement, will be sufficient to satisfy the statute, which was only intended to protect parties from having parol agreements imposed upon them.” Baird v. Harris, 209 Fed. 291-5.
Now, a reading of the memorandum will discover that it contains not only the terms of the contract for an option to purchase the lands but also the terms of the option contract itself if Spry decided to take it. There is a clear distinction between the contract for the option and the option contract itself which, to avoid a 'confusion, must be kept to the fore in the consideration of the facts of this record. The contract for the option was the then present contract being entered into between the parties by which Wilson on his part bound himself to grant to Spry forty-five days to examine the lands and in the meantime bound himself not to sell the lands to another, and Spry on his part bound himself to put estimators on the land at once and to complete the examination. Here then were parties capable of con-tracting, a subject-matter, a consideration, and mutual covenants; in other words, all of the essentials of a complete executory contract ón the part of Wilson to sell, and on the part of Spry to buy, an option on certain lands of Wilson if before the lapse of the time limit Spry decided to take it.
As the contract was for the sale of lands, there had to be a memorandum thereof and signed by the party to be charged before the same could be enforced. Neither the memorandum itself, nor the testimony aliunde,- shows that it was the mutual understanding of the parties at the time that the memorandum was to be made and signed before the contract would be binding upon them. True, several of the letters of Wilson indicated that he was of the impression that it was necessary for Spry to sign the memorandum in order to make the same binding upon Wilson; but this was a misapprehension of the law on the part of Wilson. Spry had no such misconception, and it was therefore not a mistake common to both parties, or a mutual mistake that would entitle Wilson to avoid the contract.
Under the statute of frauds, section 3754 of Kirby’s Digest: “The party to be charged is the one against whom the contract is sought to be enforced.” The contract, by this action, is sought to be enforced against Wilson, and, as we have already seen, the making of the memorandum by Wilson and enclosing the same in a letter signed by him in which he identifies and designates the writing as the ‘Memorandum of Understanding’, between him and Spry is sufficient, so far as he is. concerned, to satisfy the statute of frauds and to bind him to the terms of the contract. Vance v. Newman, 72 Ark. 359; Lee v. Vaughn, 101 Ark. 68.
It is a mistake to say that there was no consideration to Wilson for the contract, because Wilson at that time was anxious to sell his lands to Spry, and Spry would not enter into a contract to buy without the right to make a thorough cruise or examination of the land. To make such a cruise required time—as originally agreed upon, forty-five clays—and which time was afterward extended until May 1, 1919. While the cruise was being made, it involved an expenditure on the part of Spry of from $25 to $30 per day. . The obligation of making a continuous cruise of the lands within the time limit was imposed upon Spry by the terms of the contract, and the obligation, as we see it, was not alone for the benefit of Spry. Therefore, the case is differentiated by the facts from the cases relied on and cited by counsel for appellants where the contract imposed no condition to be performed by the optionee and where he makes the investigation solely for his own information and benefit. The rule is well established that where the contract binds the promisee, vendee, or optionee to perform some act which will be a real benefit to the promisor, vendor, or optionor, or a real detriment to the promisee, vendee, or optionee, there is a sufficient consideration for the agreement. James on Option Contracts, section 314. Ex parte Hodges, 24 Ark. 201; Rogers v. Galloway Female College, 64 Ark. 627-37; 6 R. C. L., section 67, and cases in note.
We can not agree with counsel that if Wilson for a sufficient consideration gave Spry forty-five days to examine the land there was no consideration for the extension until May 1, 1919, and that the agreement for this extension was a nudum pactum. The undisputed testimony, as disclosed by the correspondence shows that Spry in his letter of February 19, 1919, acknowledged the receipt of the “Memorandum of Understanding,” and, although accepting the proposition as to the forty-five days, nevertheless, in that letter, began negotiations for an extension of the time and continued the correspondence concerning this until Wilson granted the request. The letters of Wilson show that he was reluctant to grant such request and would not do so until Spry had requested his attorney and special agent Denton to present and urge the request in person upon Wilson. This was done, and Wilson closed the negotiation as to this in a letter to Spry in which he says: “However, at Mr. Denton’s request I now tell you that if you will keep at the job I will keep on extending the time until you finish it, but not beyond, however, the 1st of May.” Spry in answer to this letter thanked Wilson for the extension and stated: “We are sincere and are going right ahead as rapidly as conditions will permit.” The consideration exacted by Wilson, and which he deemed sufficient, was a continuous examination. This examination, as we have shown, was costing Spry from $25 to $30 per day and certainly was detrimental to him unless Wilson was bound by his promise to extend the time. The memorandum was what it purports to be, a “memorandum of understanding”— of an oral contract—that was entered into between Wilson and Spry on Februarv 16, 1919.
But, if we are mistaken in this conclusion, and if the memorandum is but an offer to sell, as counsel for appellants insist, still there was a complete contract. For the offer was made in the letter of February 17,1919, enclosing the memorandum containing the terms of the offer to Spry, and Spry in a letter of February 19, 1919, acknowledged receipt of the letter and stated: “We accept your proposition.” This completed the' contract for the option. It shows that the minds of the parties had met on the terms of the contract for the option in case Spry decided to take the option within the time granted him. The offer was made and accepted by letter. The contract could be made in that manner. St. L., I. M. & S. Ry. Co. v. Beidler, 45 Ark., supra; Gage v. Black, 97 Ark. 613; see also, Kempner v. Cohn, 47 Ark. 519; Steen v. Block, 105 Ark. 513; Porter v. Gossell, 112 Ark. 380. The acceptance of Wilson’s offer by Spry converted the offer into a binding contract. 6 R. C. L., section 27, p. 605.
Considering the memorandum and the letter enclosing it as an offer to Spry to sell him an option contract on certain terms, there was nothing in the memorandum or the letter specifying that the offer must be accepted by signing the memorandum. On the contrary, Wilson expressly stated: “We may either sign this memorandum now or we may leave it until you decide to buy and pay the first $3,000.
We conclude, therefore, that, from whatever angle the facts of this record may be viewed, they show a complete executory contract between Wilson and Spry for an option to Spry to buy Wilson’s lands upon terms which were definite and specified in the memorandum. The contract for the option contemplated that, if Spry decided to take the option, then the option contract itself was to be entered into upon the terms also specified in the memorandum of the contract for the option.
The next question is, did Spry comply with the -terms of the contract for the option so as to entitle him to the option thereof? The terms of the contract for the option required Spry to complete the examination and, if he decided to take the option, and pay the $3,000 cash for the option, to notify Wilson of that fact not later than May 1, 1919.
The undisputed testimony shows that Spry kept his estimators on the lands until the cruise was completed. Spry testified, and he was corroborated by two witnesses, to the effect that on the 29th and 30th of April he notified Wilson that he had accepted his proposition to buy the option; that he was ready to close the deal; and tendered to Wilson a check for the cash payment.
There is a decided conflict in the evidence as to whether Spry accepted the option to buy on the original terms. Wilson testified that when, in response to Spry’s invitation, he met Spry in Toronto to close the deal, Spry presented him with a new agreement in which Spry had altered the original terms of the option contract, and which he (Wilson) refused to accept because they were so altered. Spry, on the other hand, testified to the contrary, and that he was willing to take the option on the terms originally proposed, that his purpose was not to change the option contract in any essential particulars, but to have same framed and couched in fitting terminology for such contracts. A preponderance of the evidence on this point sustains the contention of Spry. After Spry decided to buy, and notified Wilson that he accepted his proposition and tendered him the first cash payment, of course, he was entirely within his rights in insisting that the option contract, the terms of which had been stated in the memorandum, be reduced to writing and clothed in appropriate language for such a contract.
If Spry decided to buy the option contract under the terms agreed upon, he was to pay $3,000 cash and $3,000 at the end of each three months until the $24,000 was paid. As the time that the original contract for the option had to run was extended until May 1, 1919, the payment or tender of payment of $3,000 cash on that day had the effect of extending the option for three months or until July 30, when the second payment was due, and so on in accordance with the terms of the contract until the $24,000, the consideration for the option contract, was paid.
The company held the naked legal title to the lands, but it held this title in trust for Wilson. The company-had no beneficial interest whatsoever in the lands, and it was only a necessary party in order that it might be required to make a deed and thus effectuate specific performance by Wilson, in the event Spry exercised his option and complied with its terms.
Inasmuch as Spry had complied with the contract for the option, he was entitled to have Wilson specifically perform that contract.
The findings and decree of the trial court were in accordance with the opinion herein expressed.- The decree is therefore correct, and it is affirmed.
