Eagle Tail, Inc. v. Orris

• Decision Date: 05 January 1962
• Docket Number: No. 6896,6896
• Citation: 69 N.M. 386,367 P.2d 700,1962 NMSC 6
• Parties: EAGLE TAIL, INC., a Corporation, Plaintiff-Appellant, v. Mrs. Lina H. ORRIS, Defendant-Appellee.
• Court: New Mexico Supreme Court

Page 700

367 P.2d 700

69 N.M. 386

EAGLE TAIL, INC., a Corporation, Plaintiff-Appellant, v. Mrs. Lina H. ORRIS, Defendant-Appellee.

No. 6896.

Supreme Court of New Mexico.

Jan. 5, 1962.

Wright & Kastler, Raton, for appellant.

Robertson & Skinner, Raton, for appellee.

MOISE, Justice.

On May 20, 1946, a lease agreement was entered into between Eagle Tail, Inc., plaintiff-appellant herein, and Mrs. Lina H. Orris, defendant-appellee, whereby a tract of land containing approximately 395.42 acres was leased by appellee to appellant for a term of years ending May 19, 1961, with a provision for renewal for an additional 15 years. This is a suit seeking specific performance of an option contained therein.

Article X of the lease, insofar as the same is material to a decision here read as follows:

'The lessor hereby gives and grants to the lessee the right and privilege, at its option and election, of purchasing the leased premises for a total purchase price to be determined on the basis of $75.00 per acre for the entire tract of land. Said option shall be exercised by the lessee, if at all, by mailing written notice to the lessor by registered mail at any time on or before the termination of this lease, or any renewal hereof. In the event that the lessee shall exercise said option as above provided, then immediately upon the mailing of such notice it shall be deemed and considered that the parties hereto have thereby agreed upon the sale and purchase of said premises, under the following terms and conditions: * * *.'

On September 20, 1949, a letter was sent by appellant to appellee containing the following language:

'In connection with Paragraph X of our leasehold agreement dated May 20, 1946, we understand that you desire some assurance from us that in case we should exercise the option to purchase, we would give you at least sixty days advance notice of our intention to exercise the option so that you might have the advantage of this information in handling your other business affairs.

'Accordingly we hereby agree that if we exercise the purchase option at any time prior to the calendar year 1976, we will advise you in writing of our intention to exercise the option at least sixty days prior to the actual exercise of the option.'

As early as September 5, 1956, appellant advised appellee that although it was not exercising its option at the time, it intended to do so in the future. Thereafter, starting about March 28, 1958, and continuing to July 21, 1958, a series of letters passed from appellant to appellee, the general tenor of which is demonstrated by four which we quote. On March 28, 1958, the following notice was sent:

'Notice of Election to Exercise Option Under Provisions of Leasehold Agreement, dated May 20, 1946.

'To: Mrs. Lina H. Orris

'1294 College Avenue

'Topeka, Kansas

'The undersigned, Eagle Tail, Inc., a corporation, as lessee, in accordance with and as provided by the terms and provisions of that certain written Leasehold Agreement, particularly Paragraph X thereof, dated May 20th, 1946, between Mrs. Lina H. Orris, as Lessor and Eagle Tail, Inc., a corporation, as Lessee (the same being filed for record June 7, 1946 and duly recorded in Volume 42 at page 488 of the Miscellaneous Records of Colfax County, New Mexico) the same being made a part hereof in its entirety by this reference as though set forth at length herein, does hereby give written notice that it elects to exercise the right and privilege of purchasing the said leased premises described in said leasehold agreement for the total purchase price of $75.00 per acre for the entire tract of land.

'This notice is given while said lease is in full force and effect.

'That a copy of said leasehold agreement is annexed hereto and made a part hereof.

'This notice is sent via registered mail in accordance with the terms and provisions of said leasehold agreement.

'You will govern yourself accordingly and in accordance with the terms and provisions of said leasehold agreement.

Dated and signed this 29th day of March, 1958.'

On April 25, 1958, appellant wrote as follows:

'Your letter of April 18, 1958 with check enclosure has been received. By letter dated September 5, 1956, you were advised by us as follows:

"We feel that to protect our investment at Eagle Tail Airport will require our eventual purchase of the land.

"While this letter is not an exercise of our option, we would like to know whether you would be interested in selling us the entire tract of land under any terms other than those expressed in the leasehold agreement.'

'Thereafter, some time between the 20th day of September and the 8th day of October, 1956 in a meeting with us in your motel room in Colorado Springs, Colorado, you were orally advised that we intended to exercise the option contained in paragrant X of the Leasehold Agreement dated May 20, 1946 unless different terms of sale were agreed upon. In response to this oral notice, you advised us in substance that if we exercised this option you would be a bearcat.

'Following this meeting, we have been in more or less constant negotiation with you on the acquisition of this property and no agreement has been reached.

'Then on March 28, 1958, we mailed you a written notice of election to exercise option, which you have received.

'On April 14, 1958, we mailed you our letter containing Cashier's Check in the amount of $7,414.13 which you received and which you returned to us with your letter of April 18, 1958. We do not know what position you may eventually take as to the validity of our letter of September 20, 1949, which you mention in your letter to us dated April 18, 1958. Regardless of whether our letter of September 20, 1949 is a valid modification of the Leasehold Agreement between us dated May 20, 1946, we wish to protect our rights under any eventuality.

'Accordingly, we are returning herewith Cashier's Check No. 47140 of the First National Bank in Raton dated April 14, 1958 in the sum of $7,414.13, representing the initial payment of twenty-five per cent of the total purchase price of the property calculated on a total of 395.42 acres, all in accordance with paragraph X of the Leasehold Agreement dated May 20, 1946 as the same may or may not be amended by our letter of September 20, 1949 and in accordance with the Notice of Election to Exercise Option heretofore mailed to and received by you.

'The date of the exercise of said option shall be fixed and determined in the light of and in view of all matters hereinbefore set forth, our previous correspondence and conversations, the provisions of the Leasehold Agreement dated May 20, 1946 and any valid amendment thereof, our Notice of Election to Exercise Option, and our letter of April 14, 1958 to the end that our actions shall constitute a timely and effective election to exercise said option regardless of whatever position you may take in attempting to prevent us from effectively and timely exercising said option. All tenders made by us and notices given to you in every form shall be construed and considered by you as continuing tenders and notices.'

On May 29, 1958, appellant again wrote, and after recounting some of the previous correspondence, stated:

'Accordingly, we hereby exercise the right and privilege of purchasing the leased premises all as provided by paragraph X of the Leasehold Agreement dated May 20, 1946, (which agreement is made a part of this letter by reference as though set forth at length herein) and further as in paragraph X(A) of said Agreement provided, enclose herewith Cashier's Check No. 47140 of First National Bank in Raton in the amount of $7,414.13.

'Will you kindly furnish us with an abstract of title as provided by Section X(B) of said Agreement?'

Finally, on July 5, 1958, appellant wrote as follows:

'You have been given written notice by Eagle Tail, Inc., of our intention to exercise the option to purchase as contained in the Leasehold Agreement dated May 20, 1946, as amended by letter to you on September 20, 1949. You have had more than sixty days notice of this intention to purchase.

'Accordingly, we hereby exercise the right and privilege of purchasing the leased premises provided by paragraph X of the Leasehold Agreement dated May 20, 1946, (which agreement is made a part of this letter by reference as though set forth at length herein) and further as in paragraph X(A) of the said Agreement, we enclose herewith Cashier's Check No. 47140 of the First National Bank in Raton in the amount of $7,414.13.

'Please furnish us with an abstract of title pursuant to Section X(B) of said Agreement.'

Appellee replied to some of the letters written to her. In each instance she found fault with the notice given, stated that no notice of intention to exercise the option had been given, and refused to recognize any right to purchase as having been exercised by appellant. After being finally advised to this effect by a letter dated July 21, 1958 which was written in response to the July 5, 1958, letter quoted above, appellant, on August 19, 1958, brought suit seeking specific performance of the option agreement.

Appellee answered asserting that appellant had at no time advised appellee in writing of its intention to exercise the option, in advance of its attempted exercise of it. In her answer brief filed herein appellee states that the notice to be effective was required to 'indicate a specific future time at which the option will be formally exercised,' and that since appellant failed to give advance notice of a specific future time there has been no effective exercise of the option.

It thus becomes apparent that the entire controversy turns on whether appellant's agreement, as stated in the September 20, 1949, letter, to advise 'in writing of our intention to exercise the option at least sixty days prior to the actual exercise of the option' was complied with by the letters hereinbefore quoted. (The September 5, 1956, letter is also...