Butler v. Richardson, 1873.

• Decision Date: 04 August 1948
• Docket Number: No. 1873.,1873.
• Citation: 60 A.2d 718
• Parties: BUTLER et al. v. RICHARDSON et al.
• Court: Rhode Island Supreme Court

60 A.2d 718

BUTLER et al.

v.RICHARDSON et al.

No. 1873.

Supreme Court of Rhode Island.

Aug. 4, 1948.

COPYRIGHT MATERIAL OMITTED.

Appeal from Superior Court, Providence and Bristol Counties; Patrick P. Curran. Judge.

Bill in equity by Lila G. Butler and another against F. Sturges Richardson and wife for specific performance of a contract in a lease whereby respondents agreed to sell certain realty to complainants. From a decree in favor of complainants, respondents appeal.

Appeal denied and dismissed, decree affirmed, and cause remanded for further proceedings.

Harold W. James and Fred M. Langton, both of Providence, for complainants.

Worrell & Hodge, of Providence (Paul H. Hodge, of Providence, of counsel), for respondents.

CONDON, Justice.

This is a bill in equity for specific performance of a contract in a lease by which respondents F. Sturges Richardson and Uzelle deR. Richardson, husband and wife, agreed to sell certain leased real estate to complainants Lila G. Butler and Maude H. Platt who were in possession as lessees thereof. After a hearing on bill, answer and oral proof in the superior court a decree was entered granting such relief and also permanently enjoining respondents from prosecuting at law a pending action of trespass and ejectment involving the real estate in question. From such decree respondents have appealed to this court.

Under their reasons of appeal, they have raised the following points: First, that the language of the lease did not create an option binding them to sell the demised real estate but merely gave complainants a first refusal to purchase; and, second, that whether such language created an option or a first refusal, complainants never entered into a contract to purchase because they never legally elected to do so. In substance, their contentions are that the trial justice erred in construing the lease as creating an option and that he was clearly wrong in finding that complainants had complied with its terms and conditions.

It appears from the evidence that respondents, who were joint owners of real estate situated at 16 Chapin Road, Barrington, in this state, entered into an indenture of lease thereof to the complainants on August 28, 1945 for a term of one year. Immediately after the lessee's covenants in the indenture there is a covenant which reads as follows: ‘It is mutually agreed that, at any time while the Lessees are the occupants of the premises herein leased, as Lessees under this lease or any extension thereof or renewal thereof, or as tenants from month to month or otherwise, the Lessors will give them an option to buy at a price of $15,000. Or if the Lessors shall have any offer for the purchase of said premises, which the Lessors are willing to accept, the Lessors prior to accepting same, give the Lessees an opportunity to purchase the said premises on the same terms, by notifying the Lessees in writing of such offer and giving the Lessees 10 days thereafter in which the Lessees shall decide if they will purchase said premises on the same terms. In the event the Lessees exercise this option to buy, any and all rents paid up to the date of delivery of Deed to the Lessors shall be deducted from the sale price. In this event taxes insurance and water bills during the terms of this lease up to the delivery of deed shall be paid back to the Lessors by the Lessees. In the event the Lessees do purchase the above mentioned property, the regular brokers commission will be paid by the Lessors to Farnum & Hill.’

The complainants entered into possession and lived on the demised premises until December 29, 1945, when they went to Florida. While they were there Mrs. Richardson personally called in February 1946 and showed them a telegram dated February 22, 1946 from Mrs. Miriam Hill of Farnum & Hill, respondents' agents, stating that they had a purchaser for the leased premises. Thereafter Mrs. Richardson gave complainants the following written notice: ‘As per telegram received from my real estate agent with an offer to purchase my property at 16 Chapin Road, Barrington, Rhode Island, kindly exercise your rights to purchase as per terms of your lease, as same will expire ten (10) days from today, March 4, 1946.’ Complainants were surprised that there was a ten days provision in the lease. They had left the lease in Barrington and apparently could not recollect that such a provision existed therein affecting their option to purchase, although they knew the lease gave them that option.

However, regardless of their lack of recollection of the precise provisions relating to the option they treated Mrs. Richardson's notice as applying thereto and without being informed or making any inquiry as to the amount of the offer which respondents' agents had received they immediately wrote to Mrs. Hill that they were exercising their option to purchase for $15,000. They also inquired of her ‘regarding the amount required to bind the deal * * *.’ Mrs. Hill requested $500 and complainants promptly sent her their check for that amount.

They returned to Barrington on April 29, 1946 and continued to pay rent while waiting for respondents to deliver a deed and close the deal. In the meantime respondents became estranged from each other and nothing was done about completing the transaction. Finally upon the advice of their counsel, complainants, in June 1946, declined to pay rent. Counsel had told them that such action on their part probably ‘would bring things to a head.’ Thereafter on July 20, 1946 they were served with a writ of trespass and ejectment for nonpayment of rent, thus indicating that respondents did not intend to go through with their contract to sell. Consequently on July 26, 1946 complainants brought the instant bill and obtained an ex parte order temporarily restraining respondents from prosecuting further their action at law. Later, after a hearing, the superior court issued a preliminary injunction continuing such restraining order until further order of the court.

The first question is, did the language of the lease which we have quoted above constitute an option to purchase or merely a first refusal. We think it may be reasonably construed to do both without impairing complainants' express and explicit right of option. It is clear from the language of the lease that the complainants desired at least a year, the term of the lease, to decide whether to purchase the real estate for the price of $15,000, and that the respondents intended to grant that right. This is confirmed by the provision in the lease that, in the event complainants exercised their right to purchase, the rents paid by them were to be deducted from the purchase price and they were to reimburse respondents for taxes, insurance and water bills paid by them during the lease. There can be no question that respondents granted the lease to the complainants as potential purchasers of the demised premises for a definite price under certain conditions. Complainants might become actual purchasers in two ways, one at their own election for $15,000, and the other if respondents received an offer from a third person which complainants expressed a willingness to meet within ten days after receiving notice of such offer.

The option provision is clear and...