Fries v. Fries

• Decision Date: 03 June 1991
• Docket Number: No. 900400,900400
• Citation: 470 N.W.2d 232
• Parties: Gerald D. FRIES, Janice H. Bishop, Joanne C. Jesse, and Douglas Norbert Fries, Plaintiffs and Appellees, v. Mary S. FRIES, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 232

470 N.W.2d 232

Gerald D. FRIES, Janice H. Bishop, Joanne C. Jesse, and Douglas Norbert Fries, Plaintiffs and Appellees, v. Mary S. FRIES, Defendant and Appellant.

Civ. No. 900400.

Supreme Court of North Dakota.

June 3, 1991.

Freed, Dynes, Reichert & Buresh, P.C., Dickinson, for plaintiffs and appellees; argued by George T. Dynes.

Chapman & Chapman, Bismarck, for defendant and appellant; argued by Daniel J. Chapman.

ERICKSTAD, Chief Justice.

Mary S. Fries appealed from a summary judgment granting Gerald D. Fries, Janice H. Bishop, Joanne C. Jesse, and Douglas Norbert Fries (herein, the Plaintiffs) specific performance of an option contract. We reverse and remand for entry of a judgment dismissing the Plaintiffs' action.

Mary and Jake Fries were married in 1945 and together had seven children during their marriage. The family lived on a 400 acre farm near Mott until 1968 when Mary "left the farm home the morning after she was beaten by Jake...." Fries v. Fries, 288 N.W.2d 77, 79 (N.D.1980). Jake and Mary were ultimately divorced. As part of the property division Jake received 240 acres of their farmland and Mary received the remaining 160 acres of farmland subject to a requirement that she cash rent the property to Jake for ten years. The divorce decree also provided that Jake was to have an option to buy Mary's 160 acres at $233 per acre, and that, if Jake exercised the option, the cash rent payments would be credited toward the purchase price.

Pursuant to the divorce decree, a "LEASE FOR OPTION TO BUY" was executed by Jake and Mary on May 21, 1982, which contained a provision stating that Jake had an option to purchase the property, until the lease terminated on December 31, 1988.

Jake learned in early 1987 that he had cancer, and during that summer he conveyed his 240 acres of farmland by quit claim deed to the seven children. Jake also assigned to the seven children his option to purchase Mary's 160 acres. Jake died later that year.

Six of the seven children ¹ thereafter attempted to partially exercise the option on Mary's quarter section:

"The undersigneds [sic], ... do herewith exercise the option to purchase from you a six-sevenths (6/7) interest in the ... property."

The written exercise of option also stated that "[t]he purchase price to be paid shall be the amount stipulated ..." in the lease and in Jake and Mary's divorce judgment. Both the lease and the divorce judgment provided that the purchase price would be $233 per acre for the property.

The children offered to pay Mary, in a letter dated December 6, 1988, "$9,668.58 for the 6/7ths interest." That amount was obviously derived by utilizing the $233 per acre price stipulated in the lease and divorce decree and then computing the cost of purchasing a 6/7ths interest in the total 160 acres, as follows:

160 acres x $233 per acre = $37,280

                less cash rent paid
                  5 years at $15/acre      =  12,000
                  5 years at $17.50/acre   =  14,000
                                              ------   26,000
                                                      -------
                Total purchase price                  $11,280
                

A 6/7th part of the total purchase price is $9,668.58 which is exactly what the children offered to pay in partially exercising the option. The December 6, 1988, letter also stated "if our figures are incorrect, we certainly are willing to recompute that." This statement in no way changes the fact that the offer was for a 6/7ths interest in the property. The statement is not an offer to purchase the entire property, but is only an expression of the optionees' desire to correctly compute the amount owing for their purchase of a 6/7ths interest in the property.

Mary refused to convey the land, and four of the children then commenced this lawsuit against her requesting the trial court to specifically enforce the option contract. Two of the children changed their minds about exercising the option and refused to join in this action as party Plaintiffs. The parties filed cross motions for summary judgment. The trial court granted the Plaintiffs' motion, entering a judgment requiring Mary to convey four-sevenths of the quarter section to the Plaintiffs.

On appeal, Mary asserts that, assuming Jake's option was assignable and was properly assigned, the attempt to purchase only part of the property (a six-sevenths interest in the quarter section) was an improper and ineffective exercise of the purchase option. We agree.

In order to obtain an enforceable right to the property, an optionee must exercise an option within the time and upon the terms and conditions provided in the option agreement. Wessels v. Whetstone, 338 N.W.2d 830 (N.D.1983). The offer contained in an option agreement must be accepted unequivocally and in accordance with the terms of the option. Northwestern Bell Telephone Co. v. Cowger, 303 N.W.2d 791 (N.D.1981). The acceptance must be unconditional and without modification or imposition of new terms. Alfson v. Anderson, 78 N.W.2d 693 (N.D.1956). Regarding the exercise of an option agreement 1 Williston On Contracts, Sec. 62, p. 206 (1957) states:

"When the optionee decides to exercise his option he must act unconditionally and precisely according to the terms of the option. When the acceptance is so made the optionor becomes bound. Nothing less will suffice unless the optionor waives one or more of the terms of the option.

* * * * * *

"The general attitude of the courts is to construe the attempt to accept the terms offered under the option strictly."

Because the optionee is free to exercise or not exercise the option, but the optionor is bound to perform if the option is properly exercised, courts strictly hold an optionee to "exact compliance" with the terms of the option. Hayward Lumber & Investment Co. v. Constr. Products Corp., 117 Cal.App.2d 221, 229-30, 255 P.2d 473, 478 (1953). "An option is a mere offer, and acceptance thereof must be made within the time allowed, and in minute compliance with its terms, or the optionee's rights thereunder will be lost, substantial compliance being insufficient to constitute an acceptance." Gurunian v. Grossman, 331 Mich. 412, 417, 49 N.W.2d 354, 357 (1951).

An option contract is not divisible unless the option agreement expressly provides otherwise. See Kastner v. Dalton Development, Inc., 265 Minn. 511, 122 N.W.2d 183, fn. 5 (1963). An attempt to purchase only a part of the property covered by an option is an ineffective exercise of the option. This rule is stated in James, Law of Option Contracts, Sec. 822, p. 330:

"In the absence of a provision in the option contract authorizing an election to purchase part of the property covered by the option, the optionee is not entitled to elect to purchase less than the whole, which is another way of saying that the election, by the optionee, must conform with the terms of the option."

This general rule of option contract law was applied in Hitchcock v. Page, 14 Cal. 440 (1859), a case with factual similarities to this case. In Hitchcock, supra, the owner of a large tract of land leased it to another for five years with an option to purchase the property at the end of the lease term. The lessee then assigned a part of the leasehold interest to another who attempted to exercise the option to purchase only a portion of the leased property. The California Supreme Court held that the attempted exercise of the option was ineffective, stating:

"The right, as we have seen, was the right to purchase the entire lot upon the agreed terms.... Such an agreement does not give a privilege of taking a small portion of the property. The vendee must take, or offer to take it all; he cannot take such part as he chooses and reject the rest." Hitchcock, supra, 14 Cal. at 443.

The Plaintiffs have advanced no reason why the general rule, that an optionee is not entitled to purchase less than the entire property covered by the option agreement, should not apply in this case. Neither have they cited any case in which a partial exercise of an option has been upheld in the absence of express language in the option providing for a partial exercise. The rule prevents the forced splitting or the forced joint ownership of property where those results were neither contemplated nor bargained for under the option agreement executed between the original parties.

The Plaintiffs attempted to only partially exercise the option by purchasing a six-sevenths interest in Mary's farmland. However, the purchase option under Jake and Mary's lease agreement was for the entire quarter section, and there was no language in the option making the subject property divisible or permitting a partial exercise of the option. Accordingly, we conclude that the attempt by the Plaintiffs to purchase a portion of Mary's quarter section was an ineffective exercise of the option.

Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. E.g., Schloesser v. Larson, 458 N.W.2d 257 (N.D.1990). Because the right to exercise the purchase option expired in December 1988, we reverse the judgment and remand for entry of a judgment dismissing the Plaintiffs' action on the merits.

GIERKE and LEVINE, JJ., concur.

MESCHKE, Justice, concurring and dissenting.

I respectfully dissent from the remand for entry of summary judgment dismissing altogether the plaintiffs' claim for enforcement of their option. I would remand for trial.

The written "Lease With Option To Buy" said:

IV.

During the period of this lease and up to and including the 31st day of December, 1988, LESSEE shall have the option to purchase this said property for the sum of $233.00 per acre, the LESSEE to be given credit upon said purchase price for all money paid under this lease.

V.

BUYER will have a reasonable time after the exercise of this option to complete the transaction and SELLER will furnish an abstract of title to said property, continued to date by a certified...