Hogan v. Richardson

• Decision Date: 08 December 1924
• Docket Number: 38
• Parties: HOGAN v. RICHARDSON
• Court: Arkansas Supreme Court

266 S.W. 299

HOGAN v. RICHARDSON

166 Ark. 381

No. 38

Supreme Court of Arkansas

December 8, 1924

Appeal from Ouachita Chancery Court, Second Division; George M LeCroy, Chancellor; affirmed.

STATEMENT OF FACTS.

Charles Richardson and Harriet Richardson, his wife, brought this suit in equity against C. B. Hogan and W. H. Strong to cancel a written option contract executed by the plaintiffs to the defendants, on the ground that they had withdrawn their offer before it was accepted by the defendants.

The defendants admitted that the instrument, which is the basis of this suit, was in law an option to purchase the oil, gas and other minerals therein described at the price of $ 6,000 but aver that the contract is a valid and binding one because it is based on a valid consideration, and asked for specific performance of the same.

The instrument upon which the suit is based is as follows:

"This agreement, made this 13th day of July, 1922, by and between Charles Richardson and Harriet Richardson, his wife hereinafter designated as party of the first part (whether one or more), and C. B. Hogan and W. H. Strong, of Denver Colo., hereinater designated as party of the second part (whether one or more).

"Witnesseth: That said party of the first part, for and in consideration of one ($ 1) dollar, and other good and valuable considerations given by party of the second part, hereby agree to sell and deliver by warranty deed an undivided one-half (1/2) interest in and to all of the oil, gas and other minerals in, under and upon the following described lands lying within the county of Ouachita and State of Arkansas, to-wit: NE 1/4 and E 1/2 of NW 1/4 of sec. 29, twp. 15 south, range 15 west, containing 240 acres, more or less; subject, however, to a certain oil, gas and mineral lease executed by party of the first part on the -- -- day of -- -- -- -- --, 19--, unto Sid Umstead on said lands, which lease is recorded in said county, and for the said consideration party of the first party agrees hereby to grant and convey unto the said party of the second part, and unto his heirs and assigns, the right to collect and receive, under the aforesaid lease, such undivided one-half (1/2) part and interest of all oil royalties and gas rentals due us, or that may become due us under the aforementioned lease.

"It is agreed that said party of the first part shall personally deliver an abstract of title to party of the second part, brought down to date of delivery, showing a good, marketable and record title in parties of the first part, and to allow attorney for party of the second part reasonable time after delivery to examine same, and, in the event any defects are discovered in this abstract party of the first part shall have time to cure same, and in the event party of the first part do not correct these defects pointed out, the said party of the second part shall be allowed additional time to correct same if he so elects.

"The said party of the second part, upon acceptance of title to the above described oil, gas and mineral royalty, shall place to the credit of the party of the first part, in the First National Bank of El Dorado, Arkansas, the sum of six thousand ($ 6,000) dollars, a receipt of which shall be sufficient acknowledgment of payment.

"Witness our hands and seal this 13th day of July, 1922.

(Signed) "CHAS. RICHARDSON,

her

"HARRIET X RICHARDSON.

mark

"Witness to signature: J. Morgan Russell."

The instrument was duly acknowledged and filed for record.

As Frank Staples, the agent of Hogan and Strong, was leaving, Charles Richardson stated that he wanted the receipt to show that, unless Hogan and Strong exercised the option and took the property, he would get his royalty back. Staples then executed to him the following:

"This is to certify that the agreement made between Chas. Richardson and wife and C. B. Hogan and W. H. Strong is not a deal unless ($ 6,000) six thousand dollars is deposited to their credit in First National Bank of El Dorado, Arkansas, according to the agreement herein.

"C. B. HOGAN,

"W. H. STRONG."

According to the testimony of Charles Richardson, the company was drilling a well on his land at the time he signed the option contract, and the well was down about 1,700 feet. About five days after the option was executed Charles Richardson went to El Dorado to get the $ 6,000 which he understood was to be deposited in a bank to his credit by that time. He found that Hogan and Strong had not exercised their right to purchase under the option contract; but that they had filed it for record. On the 20th day of July, 1922, the plaintiffs brought this suit as above stated to cancel said option contract as a cloud upon their title. The evidence shows that the option was worth $ 3,000.

Other facts appear in the record, but, inasmuch as they have no bearing on the issues raised by the appeal, we do not deem it necessary to state them.

After hearing the evidence the chancellor was of the opinion that the prayer of the plaintiff's complaint should be granted, and that the prayer of the defendants' cross-complaint should be dismissed for want of equity.

From a decree entered of record in accordance with the finding of the chancellor, the defendants have duly prosecuted an appeal to this court.

Decree affirmed.

Powell, Smead & Knox, for appellants.

1. One who signs a contract after opportunity to examine it cannot be heard to say that, when he signed it, he did not know what it contained. 71 Ark. 185; 78 Ark. 177; 105 Ark. 37; 110 Ark. 632; 119 Ark. 553. Even though ignorant, he is bound under the law to know the contents of the paper signed by him. 109 Ark. 537. The evidence does not support the contention of appellees that it was agreed that they would be paid the six thousand dollars in three days; but such evidence was not competent, since its effect was to vary the terms of the written contract. 142 Ark. 234; 150 Ark. 428; 140 Ark. 384; 10 R. C. L., §§ 208, 209; 203 Mass. 122, 89 N.E. 189.

2. Appellees cannot seriously urge, on appeal, the want of mutuality in the contract. That is the distinguishing element of an option contract, which the contract involved here is. 27 R. C. L., par. 31, Options.

3. Appellees contend that, because no definite time was fixed in which appellants must exercise their option, the contract is not enforceable. It is clear that the parties contemplated that each should have a reasonable time in which to perform their respective obligations, but, if no time was fixed in the contract, the law would imply a reasonable time. 150 F. 85; 48 S.W. 1106; 75 N.E. 482; 51 N.E. 614; 64 So. 51; 73 A. 694; 155 P. 460; 103 N.E. 939; 120 S.W. 100; 152 N.Y. 491; 86 S.E. 583; 73 S.E. 253; 14 S.E. 249; 64 A. 938. Until appellees tendered performance on their part, they could not insist that appellant did not act within a reasonable time. 108 N.Y. 168; 72 N.E. 947.

4. As to whether or not a nominal consideration of one dollar is sufficient to support an option contract, it appears that this court has not passed directly on that point. True, in Jones v. Lewis, 89 Ark. 368, the court seems to hold that it is not a good and valid consideration, but, in that case, no consideration was paid at all. The great weight of authority in this country is contrary to that holding, and upholds the nominal one-dollar consideration as sufficient to support the contract, especially if under seal. R. C. L. 27, Vendor and Purchaser; 70 So. 680; 97 P. 163; 82 N.E. 645; 129 N.W. 425; 103 Va. 230; 48 S.E. 891; 51 N.E. 580; 27 F. 828; 168 N.W. 486; 97 S.E. 654; 186 P. 437; 100 S.E. 644; 178 N.W. 696; 181 N.W. 945.

T. J. Gaughan, J. T. Sifford, J. E. Gaughan and Elbert Godwin, for appellees.

1. The contract lacks consideration, and therefore cannot be enforced. Whatever the rule of law in other States, it is settled in this State that courts of equity will not enforce voluntary contracts, nor validate voluntary conveyances by reformation. 15 Ark. 519; 80 Ark. 458; 44 Ark. 182; 127 Ark. 54; 152 Ark. 387.

2. Treating the contract as an option, appellee was clearly within his rights in withdrawing from the option before its acceptance, the consideration therefor being merely nominal. 6 L. R. A. (N. S.) 403 and case note; 21 L. R. A. (O. S.) 127; 10 L. R. A. (N. S.) 195; 86 S.W. 558; 121 F. 674.

3. Equity will not enforce an unconscionable contract. 6 Pomeroy, Eq. Jur. par. 785.

4. No time limit having been fixed in the option for its acceptance, it was subject to being withdrawn by the optioner at any time. 121 F. 678; 21 L. R. A. (O. S.) 129, note; 31 Minn. 512; 56 Ill. 204; 96 N.Y. 565; 5 N.Y.S. 866; 87 Ky. 91.

OPINION

HART, J., (after stating the facts).

The parties to this suit concede that the written instrument copied in our statement of facts, which is the basis of this lawsuit. is an option contract, within the rule laid down in Indiana & Arkansas Lbr. & Mfg. Co. v. Pharr, 82 Ark. 573, 102 S.W. 686, and we shall so treat it.

The consideration recited in the option contract was one dollar and the defendants did not complete the contract by the payment of the $ 6,000 recited in it before the plaintiffs withdrew their offer. There is some conflict in the authorities as to whether or not there must be a valuable consideration...