O'Connell v. Weitzman

• Decision Date: 05 March 1959
• Citation: 168 Cal.App.2d 400,336 P.2d 592
• Court: California Court of Appeals Court of Appeals
• Parties: P. E. O'CONNELL et al., Plaintiffs and Appellants, v. Leonard WEITZMAN, etc., et al., Defendants and Respondents. Civ. 5937.

Page 592

336 P.2d 592

168 Cal.App.2d 400

P. E. O'CONNELL et al., Plaintiffs and Appellants, v. Leonard WEITZMAN, etc., et al., Defendants and Respondents.

Civ. 5937.

District Court of Appeal, Fourth District, California.

March 5, 1959.

Rehearing Denied March 30, 1959.

Hearing Denied April 29, 1959.

Oregon Smith, Ontario, for appellants.

Daniel J. Cowett and Joseph A. Katz, San Bernardino, for respondents.

SHEPARD, Justice.

This is an action for specific performance which arises out of a dispute over the rights of the lessee under a 'first opportunity to purchase' clause contained in a real property lease.

The trial court, after full trial on the merits, found: that 1 January 1953 defendants James W. Harrison and Sylvia L. Harrison, his wife (hereinafter called Harrisons), as owners, leased certain realty to Helen Glasgow, which realty was a portion of a larger tract owned by Harrisons; that Paragraph Fifteenth of said lease contained the following provision: 'If the Lessors should decide to sell this property the Lessee herein is to be given the first opportunity to purchase same'; that this clause referred to the entire tract owned by Harrisons and not to the particular portion under lease; that on 6 January 1954 Helen Glasgow assigned her rights under the lease to plaintiffs without the knowledge or consent of Harrisons, but that Harrisons after knowledge of the assignment continued to accept the rent from plaintiffs without protest or objection; that Harrisons on several occasions prior to the assignment of the lease by Helen Glasgow to plaintiffs, informed said Helen Glasgow that the property was then for sale and on each such occasion said lessee, Helen Glasgow, declined the offer and was not willing to purchase said realty or any part of its; that after the assignment of the lease to these plaintiffs Harrisons also offered to sell the property to these plaintiffs 'who stated they were not interested in buying this property'; that after offering the property to the plaintiffs herein Harrisons executed to defendant Weitzman an option for the sale of the entire tract of realty described in the complaint herein, which option was exercised on 9 January 1956 and a deed from Harrisons to Weitzman was recorded 11 April 1956; and that at the time the option was given to Weitzman plaintiffs were in possession of that portion of the property covered by their lease. The court further concluded from these findings that Harrisons were not obligated to advise plaintiffs of the price and terms of sale offered by defendants Weitzman after plaintiffs had rejected Harrisons' offer to sell plaintiffs the property. The court rendered judgment denying plaintiffs any relief. From this judgment plaintiffs have appealed.

Appellants submit, by their brief, two issues to this court:

'1. An issue of law. Were the lessors required to notify appellants that they had received an offer at a price at which they wished to sell and were they required to notify appellants of the price and terms so offered and give them the first opportunity to purchase the property at that price and upon those terms?

'2. An issue of fact. Whether the property was in fact ever offered to appellants even without quoting a price.'

Appellants, by their opening brief, adopt most of the court's findings except the finding of an offer by Harrisons to these plaintiffs and also excepting the conclusion that Harrisons had fulfilled their obligation under said Paragraph Fifteenth.

Appellants contend that the Harrisons were required to notify appellants that they had received an offer at a price at which they wished to sell, and were required to notify appellants of the price and terms of that offer and give them the first opportunity to purchase the property at that price and upon those terms. They cite in support of that contention a wide variety of authorities. Since these authorities follow one general trend we need not discuss all of them.

Moreno v. Blinn, 81 Cal.App.2d 852, 185 P.2d 332, 333, largely relied upon by plaintiffs, involved a lease with 'first right to purchase' clause to the lessee, in which case Blinn offered to sell to Moreno for $7,500 and later, without further notice to Moreno, sold to a third party for $4,500. Under this state of facts the court gave judgment for Moreno, which was affirmed on appeal. It is obvious that ordinary fair dealing required that Blinn, when he lowered the price by $3,000, reveal that fact to Moreno before selling to a third party.

Nelson v. Reisner, 51 Cal.2d 161, 331 P.2d 17, involved a right of first refusal on a new lease. The trial court found on conflicting evidence that the lessee had fulfilled the lease conditions and that the owner entered into a new lease with a third party without the knowledge or consent of the defendant. The trial court also found that defendant had not waived his right to first refusal because plaintiff's purported offer of a new lease was exorbitant, unreasonable, and not made in good faith. Here again, we have the same situation as in the Moreno case. Clearly, the ordinary principle of fair play would require the lessor to make an offer on the new lower figure where he at first obtained a refusal on a much higher figure.

Whiteside v. Petersen, 204 Misc. 1079, 128 N.Y.S.2d 17 (contract never consummated, no proof of owner's desire to sell); R. F. Robinson Co. v. Drew, 83 N.H. 459, 144 A. 67 (failure to inform lessee of reduced price after lessee's refusal to pay higher price); Tamura v. De Iuliis, 203 Or. 619, 281 P.2d 469 (lease renewal clause effective, owner produced no proof price he quoted had been offered him); Jurgensen v. Morris, 194 App.Div. 92, 185 N.Y.S. 386 (owner knew lessee wanted to buy, inconclusive negotiations, sale without notice of new price); De Rutte v. Muldrow, 16 Cal. 505 (knowledge by plaintiff of defendant's prior purchase rights, owner deeded to both plaintiff and defendant); Martin v. Baird, 124 Cal.App.2d 598, 269 P.2d 54 (question of whether offers and counteroffers had evolved into a contract, equity disregarding form in search for true intent of parties); Straus...