Genest v. John Glenn Corp., 113798

• Decision Date: 03 June 1983
• Docket Number: No. 113798,113798
• Parties: Stan GENEST, Appellant, v. JOHN GLENN CORPORATION, an Oregon corporation, Eastside Properties, Inc., an Oregon corporation, and Glenn Wilbur and John C. Wilbur, Respondents. ; CA A23098.
• Court: Oregon Court of Appeals

Page 1383

661 P.2d 1383

62 Or.App. 562

Stan GENEST, Appellant, v. JOHN GLENN CORPORATION, an Oregon corporation, Eastside Properties, Inc., an Oregon corporation, and Glenn Wilbur and John C. Wilbur, Respondents.

No. 113798; CA A23098.

Court of Appeals of Oregon.

Argued and Submitted Nov. 19, 1982.

Decided April 13, 1983.

Reconsideration Denied June 3, 1983.

Paul J. Lipscomb, Salem, argued the cause for appellant. With him on the briefs was Ron MacDonald and Blair, MacDonald, Jensen & Lipscomb, Salem.

J. Michael Alexander, Salem, argued the cause for respondents. With him on the brief was Brown, Burt, Swanson, Lather & Alexander, Salem.

Before GILLETTE, P.J., and WARDEN and YOUNG, JJ.

WARDEN, Judge.

This is an action to compel specific performance of a contract to sell real property. The trial court found that the parties had agreed on a sale of the property for a definite price but refused to grant specific performance because of omissions in the terms and conditions of the sale. Plaintiff appeals. Our review is de novo.

Plaintiff began negotiations for the purchase of a restaurant business from defendant ¹ sometime in 1971. Throughout the negotiations, plaintiff dealt solely with Acmer Corporation through its president, Crain, a real estate and business broker with whom defendant had listed its business. The listing agreement provided for sale of the business, a ten-year lease of the real property with an option to renew and the "right of first refusal on real property at the end of the lease period." Plaintiff was interested in purchasing the real estate, and Crain's first offer, in the form of an earnest money receipt dated February 5, 1972, included provision for a ten-year lease of the premises with an option to purchase, exercisable after five years. The option did not specify the price, and defendant did not accept the offer. After further negotiations, plaintiff, defendant and Crain signed an earnest money agreement on February 21, 1972. It provided for a sale of the business and a ten-year lease of the premises, with monthly rent payments of $3,500 or five percent of gross food sales plus seven percent of gross liquor sales, whichever was greater. The agreement further provided:

"Lease to provide an option to purchase which can be exercised at any time from commencement of fifth year. Purchase price to be in the amount of $425,000 with 20 percent of lease payments to be allowed as credit against purchase; price to include rear office rental building, all parking areas and other existing buildings."

A supplement to the earnest money agreement, dated February 29, 1972, and signed by the same parties, provided:

"Offer to purchase accepted subject to the following modifications:

" * * *

"7.) Purchaser is hereby granted the option to purchase the real property on the following terms and conditions: Purchase price to be $425,000 with credit of 10 percent of total lease payments during the life of the lease being allowed as a credit against the purchase price. Option to purchase may not be exercised for a period of five years. Down payment and principal payments may not exceed 29 percent in year option is exercised."

Another supplement, signed the next day, stated:

"Counter offer of 2-29-72 accepted subject to:

" * * *

"3.) Credit on lease fees paid to be increased from 10 percent to 15 percent."

On March 23, 1972, plaintiff and defendant entered into a ten-year lease of the restaurant premises. The property leased was precisely described in an exhibit appended to the lease. The rent was as specified in the earnest money agreement. The lease contained an integration clause and also an option to purchase:

"Lessee submits to Lessor its option to purchase the real property upon which the Keg & Platter is located and adjacent property which presently is owned by the Lessor. Said option proposed by Lessee shall be not less than $425,000 and said option may be exercised by Lessee at any time after five years from the date of this agreement, and while this lease is in force and effect. The terms of Lessee's option to purchase said real property provide in part, that no more than twenty-nine percent (29%) of the total purchase price shall be paid as a down payment during the year the option is exercised; also, under the terms of this lease, Lessee shall have as a credit for the purchase of said real property an amount of fifteen percent (15%) of the total lease payments made to the date of Lessee's purchase of the real property, to apply to the purchase price." (Emphasis supplied.)

On March 31, 1972, the parties signed a sale agreement covering the restaurant business only. The earnest money agreement of February 21, with its amendments of February 29 and March 1, was attached to and was incorporated as part of the sale agreement, in a paragraph entitled "other terms of this agreement."

Five years later, plaintiff informed defendant of his intent to exercise the option. Defendant refused to sell the property, taking the position that the option was not a firm commitment to sell at any fixed price. ² Instead, defendant offered to sell plaintiff the property for $800,000. This action for specific performance followed.

The trial judge found that

"the manifest intent of the parties was that they be bound by the terms of the earnest money agreement in its final amended form. The lease and sales agreements were merely memorials of the pre-existing contract."

With that we agree. The earnest money agreement stated a fixed purchase price of $425,000. The first supplement to the earnest money agreement, prepared by Crain on behalf of defendant, stated, "Offer to purchase accepted subject to the following modifications: * * * Purchase price to be $425,000 * * *." The second supplement did not mention the purchase price. The earnest money agreement, including the two supplements thereto, was incorporated into the agreement for sale of the business, which was the final document signed by the parties.

The lease was drawn by defendant's attorney. As for the words "not less than" in the price part of the purchase option, plaintiff testified that, when he questioned Crain about the addition of those words, Crain assured him that the addition was irrelevant because the purchase price of the option was specifically spelled out in the agreement of sale. ³ Plaintiff, who was not represented by an attorney at the time he entered into the lease, testified that he signed the lease only because of that representation by Crain. Plaintiff also testified that he had told Crain that he was not willing to purchase the business at the agreed price without the option to purchase the real estate for $425,000. The trial court found that plaintiff was a credible witness. Crain testified that it was his intent as agent for defendant, in drafting the earnest money agreement with its amendments, that plaintiff be granted an option to purchase at a fixed price. Defendant John Wilbur, who actually participated in the negotiations on behalf of defendant, testified that at the time he considered the earnest money agreement to be a firm commitment to sell the property for $425,000 and that there were no further negotiations between the time of the final amendment to the earnest money agreement and the time the lease was signed. Moreover, as a memorial of the existing agreement to sell at a specified price, the option as expressed in the lease is accurate, inasmuch as $425,000 is "not less than" $425,000. We find that the parties agreed on an option to purchase for the firm price of $425,000. ⁴

The trial court...