Cummings v. Bullock

• Decision Date: 07 October 1966
• Docket Number: No. 20188.,20188.
• Citation: 367 F.2d 182
• Parties: Veigh CUMMINGS, Appellant, v. Larry R. BULLOCK et al., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

367 F.2d 182 (1966)

Veigh CUMMINGS, Appellant, v. Larry R. BULLOCK et al., Appellees.

No. 20188.

United States Court of Appeals Ninth Circuit.

October 7, 1966.

John R. Saldine, Sacramento, Cal., Dwight L. King, Salt Lake City, Utah, for appellant.

Howard A. Potts, Sacramento, Cal., for appellees.

Before HAMLEY, HAMLIN and DUNIWAY, Circuit Judges.

DUNIWAY, Circuit Judges.

This is an action for specific performance of a contract to sell land. Jurisdiction rests on diversity of citizenship. The court found against the plaintiff and he appeals. We affirm. The sole question presented is whether the court erred in holding that plaintiff had failed to exercise an option to purchase contained in a lease of land located in Wyoming. A brief statement of the law may make its application to the facts more readily apparent.

1. The action was filed in the Northern District of California. The trial court was therefore required to look to the substantive law of California,¹ including its choice of law rules.² Under that law, questions affecting the title to real property are determined by the law of the jurisdiction where the property is located, here Wyoming.³ If the law of Wyoming is not shown to differ from that of California, then the court will look to California law for guiding principles of decision.⁴ Here the plaintiff argued below that "the law of Wyoming and California is the same with respect to the interpretation of the Contract and its performance," and we do not understand him to take a different position on appeal.

2. Under the law of Wyoming, "the exercise of an option must be strictly complied with,"⁵ and "options are to be strictly construed and where the option is to be exercised within a stated time and in a particular manner, that must be done exactly as prescribed unless, perhaps, there is some intervening circumstance which the law recognizes as one of the impossibilities which make failure of compliance an exception to the rule."⁶ The law of California is the same.⁷ Time is of the essence in exercising an option, unless the agreement is expressly to the contrary.⁸

We now consider the application of these principles to the facts, which are not disputed.

On September 2, 1958, appellant Cummings and the Bullocks executed a "Lease with Option to Purchase" in which the Bullocks, as lessors, leased the property to Cummings for a period of two years beginning on December 1, 1958. This document, all in typewritten form, provides in pertinent part:

"4. Lessee is granted an Option to Purchase the aforesaid described premises for the sum of $40,000.00, said option to be exercised on or before the 1st day of December, 1960 by payment to Lessors of the sum of $4,000.00 which said $4,000.00 shall be applied on the purchase price of $40,000.00.

"5. If Lessee shall exercise his Option to Purchase the leased premises, then and in that event Lessors agree to sign an agreement of sale in accordance with the Uniform Real Estate Contract attached to this Lease and Option, which said Uniform Real Estate Contract shall embody the terms of sale which shall govern between lessors and lessees if and when lessee exercises his option to purchase." (Emphasis added.)

The attached "Uniform Real Estate Contract," a printed form particularized here by the insertion of typed matter (which is italicized in the following quote) and by strike-outs as indicated, provides in part:

"Sellers and Buyer agree that sellers will execute a Warranty Deed to the Whipple Ranch premises covering said real property and the personal property leased by sellers to buyer under the terms of that certain lease and option agreement dated September 2, 1958. The Warranty Deed to the real property shall be placed in escrow with the First National Bank of Evanston, Wyoming, to be delivered by said bank to buyer upon receipt in full by the Bank of the payments required under this contract. Bill of Sale to personal property to be delivered upon receipt of payment due December 1, 1960.

"3. Said Buyer hereby agrees to enter into possession and pay for said described premises the sum of FORTY THOUSAND AND NO/100 Dollars ($40,000.00) payable at the office of Seller, his assigns or order First National Bank, Evanston, Wyoming strictly within the following times, to-wit: Four Thousand and no/100 ($4,000.00) cash, the receipt of which is hereby acknowledged, and the balance of $36,000.00 shall be paid as follows: $4,000.00 on the 1st day of December, 1961, and a like sum on the 1st day of December each year thereafter until the balance owing is paid in full."

On July 27, 1960, Cummings' attorney advised the Bullocks by letter that he had "received Notice from Mr. Veigh Cummings that he is planning on exercising his Option to Purchase * * * and As a consequence, Mr. Cummings is anxious to have Uniform Real Estate Contracts which were prepared and attached to the Lease with Option to Purchase, executed and placed in the Bank with the Warranty Deed at Evanston, Wyoming. As soon as the Warranty Deed and the executed Contract are in the hands of the Bank Mr. Cummings informs me that he will be able to pay the Option payment of $4000.00 which is due on the 1st day of December, 1960." This letter was clearly not an exercise of the option. The Bullocks did not reply.

On November 28, 1960, the same attorney, on behalf of Cummings, sent a cashier's check payable to the Bullocks in the amount of $4,000, to First National Bank, Evanston, Wyoming, by mail, together with a warranty deed to the property, a copy of the lease, and a covering letter which instructed the bank to surrender the check to appellees only upon receipt of the deed and the contract, executed by the Bullocks. On the same date, he sent a letter to the Bullocks, advising them that the check was at the bank and would be released to them upon the bank's receipt of the completed documents. The letter to the Bullocks was mis-addressed. The Bullocks had moved, and had advised Cummings' attorney of their new address. The bank received its letter on November 30, but Mrs. Bullock received hers not earlier than December 2. She immediately forwarded it, without opening it, to appellees' Evanston attorney. Mr. Bullock, who was in Evanston during this period, did not go to the bank on November 30, or December 1, but after receipt of appellant's letter by his attorney on December 5 did go to the bank, accompanied by that attorney. At the bank he requested payment of the check; the bank refused to pay until such time as Bullock returned the completed documents demanded by the attorney's letter. Bullock, on the advice of his attorney, refused. This action followed.

Because time is of the essence, because the agreement does not provide for the exercise of the option by mail, and because the letter to the Bullocks was not received by either of them until after December 1, that letter to them cannot be an effective exercise of the option.

We are left with the question of whether the delivery of the other letter, the cashier's check, and the accompanying papers to the bank constituted an exercise of the option. The trial court correctly held that it did not. The option agreement is...