Dalton v. Balum
| Decision Date | 11 April 1975 |
| Docket Number | No. 972--III,972--III |
| Citation | 13 Wn.App. 160,534 P.2d 56 |
| Parties | , 76 A.L.R.3d 1134 Roy G. DALTON and Ramona M. Dalton, husband and wife, Appellants, v. Joseph BALUM et al., Respondents. |
| Court | Washington Court of Appeals |
Patrick K. Shine, Morrison, Huppin, Ewing & Anderson, Spokane, for appellants.
Patrick H. Murphy, Spokane, for respondents Balum.
Paul A. Clausen, Clausen & Gemmill, and Wm. F. Nielsen, Hamblen, Gilbert & Brooke, P. S., Spokane, for respondents Brannan.
Plaintiff appeals from dismissal of his action for specific performance of a right of first refusal.
ISSUE: Can a lessor extinguish a lessee's right of first refusal without having first obtained and presented to the lessee a bona fide offer from a third party based on the following language: 'Lessors hereby grant lessee 1st right of refusal in event lessors sell premises. 30 day notice.'
The defendant, Joseph Balum, leased a 160-acre farm to the plaintiff, Roy G. Dalton, and included in the lease the language stated in the above issue. Defendant, having decided to sell the property, asked plaintiff if he wanted to buy it. Plaintiff asked how much he wanted for the property and defendant replied, '$500 an acre.' According to defendant's testimony plaintiff replied that he didn't want the property; that it was not worth $500 an acre; that he should sell it to someone else if he could because he had more property than he could handle at that time; and because help was hard to get. Plaintiff was unable to remember the offer by Balum, but two witnesses who were neighbors, supported the substance of defendant's testimony on this point.
More than 30 days after discussing the sale with the plaintiff, defendant sold the property in October 1972 to Brannan for $500 per acre. Thereafter, plaintiff brought this action for specific performance of his right of first refusal.
The trial court dismissed this action. Plaintiff contends that under the provisions of this lease there must be an acceptable bona fide offer from a third party with definite terms before the right of first refusal can be extinguished. Defendant argues that he is required only to have offered the property to his lessee at a price the same as, or not more than, the price at which the property was subsequently sold to a third party. Defendant claims that, after plaintiff had unequivocally told him that he did not want the property at $500 an acre, he had fulfilled his obligation to him under the lease and was entitled to sell the property to Brannan at $500 or more per acre.
The rule in Washington is that the owner of a right of first refusal is entitled to the opportunity to buy the subject property on the same terms contained in a bona fide offer from a third party acceptable to the owner. Bennett Veneer Factors, Inc. v. Brewer, 73 Wash.2d 849, 856, 441 P.2d 128 (1968); See Superior Portland Cement, Inc. v. Pacific Coast Cement Co., 33 Wash.2d 169, 199, 205 P.2d 597 (1949). 1
The above rule reflects the usual situation in which a third party has made an offer to the owner to sell the property. Under a right of first refusal the owner has the contractual obligation to offer the property to the optionee of that right on the same terms and conditions on which the offer was made to him by the third party.
However, the plaintiff argues that there must be an offer from a third party Prior to the time the owner may offer the property to a holder of the right of first refusal. We disagree. If plaintiff desired the right to purchase on the same terms and conditions as set forth in a bona fide offer by a prospective purchaser, words to that effect should have been used. The use of the term 'first right of refusal' does not carry with it a widely accepted legal interpretation requiring submission of a bona fide offer from a third person which must first be submitted to the lessee and upon which he has 30 days to accept or reject. The term has become a short-hand definition of various contract rights which are more particularly enunciated in the body of the agreement.
Facts similar to the instant case are found in O'Connell v. Weitzman, 168 Cal.App.2d 400, 336 P.2d 592 (1959), where the owner first made repeated offers to the lessee holding the 'first opportunity to purchase', of his desire to sell, and the lessees not only failed to make any concrete offer but also flatly stated they did not wish to buy. The owner accepted the unequivocal statement of disinterest by the lessees as a waiver of the first right of refusal and sold to a third party. The court held that the statement of the lessees that they were 'not interested in buying this property,' with no further communications from the lessees until after the owners had placed themselves in a position of danger by giving an option to a third party, constituted a sufficient waiver to excuse the owners from making any further offer.
If, as was true in many of the authorities cited by the plaintiff, the defendant had quoted a price to the plaintiff-lessee, and had later sold for a lesser price, or if the plaintiff-lessee had offered a price and indicated a continuing desire to negotiate for a price, we could see the necessity for a new communication and quotation of price to the plaintiff-lessee. However, we are satisfied that the plaintiff refused to buy the property in the latespring or early summer of 1972,...
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