Chapman v. Mutual Life Ins. Co. of New York
| Decision Date | 20 November 1990 |
| Docket Number | No. 89-224,89-224 |
| Citation | 800 P.2d 1147 |
| Parties | Frank R. CHAPMAN and Sharon Chapman, Appellants (Plaintiffs), v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, Appellee (Defendant). |
| Court | Wyoming Supreme Court |
Les Bowron and Michael D. Zwickl of Beech Street Law Offices, Casper, for appellants.
Jerry A. Yaap of Bishop, Bishop & Yaap, Casper, for appellee.
Before URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.
Frank R. Chapman and Sharon Chapman appeal from a district court judgment rejecting their suit for specific performance of a real estate transaction. Their claim is based on a preemptive right they hold over a 22.6 acre tract owned by defendant Mutual Life Insurance Company of New York (MONY). MONY had sought to convey the 22.6 acres to a third party buyer, Truda Siefers, in the sale of a 273 acre block which included the smaller tract. Because this court finds that the district court committed clear error in finding that an offer had been made on the 22.6 acre tract which required exercise of Chapmans' preemptive right, we reverse the dismissal of Chapmans' suit against MONY. However, for the same reason, the absence of an offer, we decline to grant specific performance to the Chapmans. Instead, MONY will be enjoined from selling the 22.6 acre tract until such time as it receives a bona fide offer on that specific parcel of land and has properly given the Chapmans an opportunity to exercise their right of first refusal.
On July 31, 1984, the Chapmans entered into a contract for deed with J. Mark Fullerton for approximately 20 acres of land with improvements, as particularly described in the agreement. The agreement also gave the Chapmans a right of first refusal for purchase of an adjacent parcel of approximately 20 acres, which is referred to in this case as "Tract B." MONY, holder of a mortgage from Fullerton on real estate that included Tract B, also signed the contract. Fullerton defaulted on his mortgage in August, 1987, and MONY accepted a deed in lieu of foreclosure. MONY then assumed Fullerton's position as owner and seller to the Chapmans.
Through its local real estate agent John W. Phillips, MONY subsequently advertised a large parcel of land broken out into several tracts, including Tract B, for sale. On April 8, 1988, Truda Siefers submitted an offer to purchase approximately 273 acres of the advertised real estate, including Phillips then learned of the Chapmans' preemptive right on the 22.6 acre Tract B in a conversation with Fullerton. He informed MONY of the Chapmans' right of first refusal and was told to contact the Chapmans and offer them the opportunity to buy the property at the offered price. Phillips then called the Chapmans on April 24, 1988, and told them that they possibly had a right of first refusal on Tract B, that Siefers had made an offer, that the offer was for $700 per acre on the irrigated land, and that MONY was giving them an opportunity to buy the land. The Chapmans' response was that at the price of $75,000 for 273 acres Siefers was paying only about $260 or $270 per acre, and that was what they should have to pay. Phillips then contacted Siefers, told her of the Chapmans' preemptive right on Tract B, and asked her to give him a statement of how she arrived at the values in her offer for the entire 273 acre parcel.
Tract B, for $75,000. MONY accepted the offer on April 11, 1988.
Siefers informed Phillips that she had valued the irrigated land at $696.07 per acre and dry land at $105.00 per acre. She considered Tract B irrigated. Consequently, on April 25, 1988, Phillips prepared a Purchase Offer, Acceptance and Agreement on Tract B for the Chapmans' signatures at a price of $15,731.18 (22.6 acres X $696) and sent it to them, together with a cover letter and a copy of Siefers' offer for the larger parcel. The Chapmans were given until 5:00 p.m. on April 28, 1988, to respond.
On April 26, 1988, the Chapmans responded with a letter offering to exercise their preemptive right for $5,992.58. They based this offer on Siefers' lump sum offer of $75,000.00 for 273 acres, which they interpreted as an offer of $265.00 per acre. MONY, through Phillips, sent a letter to the Chapmans on April 28, 1988, which again stated the purchase price as $15,731.18, and gave them until noon that same date to execute the purchase offer they had received from Phillips on April 25. The Chapmans responded immediately with a letter stating their intention to exercise their preemptive right and memorializing a telephone conversation between the parties in which they apparently agreed that MONY would prepare a new proposal with a response time of at least 72 hours. On April 29, MONY sent Chapmans another letter, again stating the $15,731.18 price and giving them until May 3, 1988, to exercise their preemptive right. The Chapmans did not respond to this offer. Instead, on May 6, 1988, they filed suit against MONY seeking specific performance by MONY at their price of $5,992.58, or $265.00 per acre. On May 10, 1988, MONY sent the Chapmans a letter stating that the purchase offer from Siefers had been voided, but that MONY believed the Chapmans had failed to exercise their right of first refusal and would market Tract B without further notice to them.
A bench trial was held on July 27, 1989. The district court found that Siefers had offered $15,731.18 for the 22.6 acre tract and concluded that the Chapmans had failed to exercise their right of first refusal although the offer was presented to them three times. Consequently, it dismissed the Chapmans' complaint.
The Chapmans argue that:
I. The trial court committed reversible error by receiving into evidence, matters which were parol and extrinsic to the written agreement entered into between Appellee and Siefers.
II. The trial court erred below by allowing Appellee and Siefers to reform their agreement.
III. The trial court erred in failing to recognize the strength and validity of Appellants' right of preemption over the sale of tract "B".
MONY responds that:
I. The specific findings of the trial court are presumed correct.
II. Answering arguments [I] and [II] of Appellants' brief, Appellee contends that the trial court committed no error in receiving parol evidence as to the MONY/Siefers contract.
A. The parol evidence rule does not exclude evidence which does not tend to vary or contradict the written instrument.
B. The parol evidence rule is inapplicable where the writing referred to is not relied upon as the basis of the action, but is a mere collateral instrument of evidence.
C. The parol evidence rule applies only where the controversy is between parties to the instrument sued upon.
III. The trial court recognized the appellants' right of first refusal.
This court has often stated its standard for reviewing cases on appeal. At the standard's crux, the trial court's findings are presumed correct and will stand unless clearly erroneous or inconsistent with the evidence or contrary to the great weight of the evidence. Roberts v. Vilos, 776 P.2d 216, 217 (Wyo.1989).
The parties go to great though unnecessary lengths to inform this court on the subject of parol evidence. We need not, and do not, consider these issues. The trial court committed clear error in finding that MONY received an offer on the 22.6 acre tract. There was no offer. Without an offer at a fixed price the preemptive right holders had no occasion to exercise their right of first refusal. Consequently, they could not and did not waive that right. However, for the same reason, it is also true that the Chapmans cannot require specific performance by MONY. By entertaining Siefers' offer for the larger parcel, MONY did not express an intention to sell Tract B, which intention is the stimulus that would breathe life into the Chapmans' preemptive right and provide grounds for specific performance.
It is clear from the language of the 1984 Contract for Deed executed by Fullerton, the Chapmans and MONY that the Chapmans hold a right of first refusal, or preemptive right, on Tract B. Paragraph 10. Additional Covenants, sub f. states, "[a]s part of this agreement, and for the consideration received herewith, Seller will give Buyers the first option to buyer [sic] and first right of refusal to match any future offers on the approximately 20 acres of irrigated farm land that was part of the original 40 acre tract with the farm house, more particularly described as follows: [Tract B]." This language expresses a right of first refusal as we characterized it in Hartnett v. Jones, 629 P.2d 1357, 1362 n. 1 (Wyo.1981): "A presumptive right gives a privilege to purchase on a condition precedent which is the formulated desire of the owner to sell, and frequently the holder of the right must purchase at a price established by negotiations with a third party." As applied to these facts, MONY's formulated desire to sell would be its intent to sell Tract B at a price fixed by a third party offer and expressed by its delivery of the complete terms of the offer to the Chapmans.
We agree with the view that when the condition precedent of the owner's intention to sell is met the right of first refusal "ripens" into an option and contract law pertaining to options applies. Myers v. Lovetinsky, 189 N.W.2d 571, 576 (Iowa 1971); Note, Protecting the Preemptor: Real Property Right of First Refusal in Light of Gyurkey v. Babler, 19 Idaho L.Rev. 277, 278 (1983). This ripening has important consequences for the preemptive right holder. When properly notified of...
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