Ingram v. Kasey's Associates

• Decision Date: 03 June 1997
• Docket Number: No. 2715,2715
• Citation: 493 S.E.2d 856,328 S.C. 399
• Court: South Carolina Court of Appeals
• Parties: Henry INGRAM, Appellant, v. KASEY'S ASSOCIATES, A South Carolina Limited Partnership and Roy Prescott d/b/a Remy's. Inc. and Remy's, Inc., Respondents. . Heard

Page 856

493 S.E.2d 856

328 S.C. 399

Henry INGRAM, Appellant, v. KASEY'S ASSOCIATES, A South Carolina Limited Partnership and Roy Prescott d/b/a Remy's. Inc. and Remy's, Inc. Respondents.

No. 2715.

Court of Appeals of South Carolina.

Heard June 3, 1997.

Decided Aug. 18, 1997.

Rehearing Denied Dec. 22, 1997.

Certiorari Granted Dec. 17, 1998.

Frank F. Pape, Jr., of McGee & Pape, Hilton Head Island, and Samuel S. Svalina, of Svalina, Richardson, & Smith, Beaufort, for appellant.

G. Richardson Wieters, Hilton Head Island; and H. Fred Kuhn, Jr., and James H. Moss, both of Moss & Kuhn, Beaufort, for respondents.

CURETON, Judge

Henry Ingram appeals from an adverse judgment on his claim for specific performance arising from his attempt to exercise an option to purchase contained within a long-term lease. We reverse and remand.

I. FACTS

On March 1, 1984, Ingram agreed to lease property for ten years from Kasey's Associates, Ltd. (Kasey's). The lease provided for an option to purchase with the rental payments applied to the purchase price if Ingram exercised the option. An amortization schedule was attached to the lease. The option provision in the lease reads as follows:

2. OPTION TO PURCHASE

LESSEE shall have the right to purchase the PREMISES at any time during the term hereof, as is described in this paragraph; provided however, that this right shall terminate forthwith upon default of the LESSEE, as provided in Paragraph 6 hereof.

* * * * * *

6. DEFAULT AND REMEDIES

In the event: (a) LESSEE fails to comply with any term, provision, condition, or covenant of this lease; ... then in any of such events, LESSEE shall be in default and LESSOR shall give LESSEE written notice of the default, together with ten (10) days thereafter to cure the default.

A restaurant known as Remy's is on the leased property. Ingram entered into an oral sublease with Roy Prescott, who operates the restaurant. Prescott paid the monthly rents throughout the term and granted Ingram the right to place video game machines in the restaurant. In the spring of 1993, Prescott and Bernard Craig ¹ began negotiations to enter into a lease upon the expiration of Ingram's lease. Craig's letter at this time discussed the terms of a potential agreement and noted that "Henry [Ingram] would no longer be involved."

In late 1993, Prescott began looking for a new location as he wished to vacate the restaurant at the end of Ingram's lease. Ingram claims, however, that he believed Prescott was negotiating to purchase the property from Craig on behalf of both Ingram and Prescott. Eventually, Prescott orally agreed to buy out Ingram's interest for $40,000. However, on February 20, 1994, Prescott told Ingram he could only pay $10,000. Ingram claims he was unaware that Prescott and Craig entered into an agreement on January 10, 1994 for Prescott to lease the property directly from Kasey's. The agreement states that Craig and Prescott intend to terminate Ingram's interest "voluntarily or involuntarily." Craig and Prescott testified Ingram said he would not exercise the option and Kasey's and Remy's were free to make their own arrangements.

Since Prescott's offer of $10,000 was unacceptable to Ingram, he informed Craig that he was going to exercise his option to purchase the property. Ingram wrote Craig on February 22, 1994, stating: "This will serve to advise you that I am hereby exercising my option and right to purchase the above referenced premises." The letter questioned the effect of a 1990 condemnation and asked for a correct amortization schedule. Craig responded with a letter stating that Ingram had represented he was not going to exercise the option, and Craig had relied on those representations by purchasing adjacent property and beginning renovations on Remy's. The letter demanded that Ingram pay past due rent and deposit what Craig believed to be the correct purchase price in the bank account of Kasey's before the expiration of Ingram's lease on February 28, 1994.

On February 25, 1994, Ingram responded in writing and disputed the purchase price. Ingram agreed to pay the past due rents and in fact did so before February 28. Craig responded on February 28, 1994 and demanded that Ingram deposit what Ingram believed to be the correct purchase price before the close of business that day. On March 8, 1994, Ingram wrote Craig that he was ready, willing and able to close on the sale. Craig, through his attorney, responded that he would not close because his position was that the lease required Ingram to tender the purchase price before its expiration on February 28.

In March 1994, Ingram filed suit against Kasey's, Prescott, and Remy's Inc. Ingram sought specific performance of the option to purchase and raised various other claims against the defendants. On May 16, 1994, the circuit court denied Ingram's motion for summary judgment and for a temporary restraining order. On April 27, 1995, the circuit court denied the defendants' motion for summary judgment but granted Ingram's motion to refer the claim for specific performance to the master-in-equity. On November 13, 1995, the master ruled in favor of the defendants on Ingram's claim for specific performance and damages. Ingram appeals.

II. SCOPE OF REVIEW

An action for specific performance is in equity. Collier v. Green, 244 S.C. 367, 137 S.E.2d 277 (1964). We may find facts in accordance with our own view of the preponderance of the evidence. Townes Assoc., Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976). However, we will not disregard the findings of the master who saw and heard the witnesses and was in a better position to judge their credibility. Tiger, Inc. v. Fisher Agro, Inc., 301 S.C. 229, 391 S.E.2d 538 (1989).

III. ACCEPTANCE OF THE OPTION

Ingram first contends the trial court erred in ruling that, in order to properly exercise the option, he had to tender the purchase price to Craig before the end of the lease's term. He contends his written notice was sufficient. We agree.

An option gives the optionee a power of acceptance "within the time and in the manner specified in the option." 1 Richard A. Lord, Williston on Contracts § 5:16, at 717-18 (4th ed.1990). See also Dargan v. Page, 222 S.C. 520, 73 S.E.2d 705 (1952). An acceptance must objectively manifest assent in a positive and unambiguous manner. 2 Richard A. Lord, Williston on Contracts § 6:3, 6:10 (4th ed.1990). When analyzing an attempt to accept an option, courts strictly construe, in favor of the optionor, the terms, conditions, and time limits of an option. 1 Richard A. Lord, Williston on Contracts § 5:18 (4th ed.1990). See, e.g. Cotter v. James L. Tapp Co., 267 S.C. 647, 230 S.E.2d 715 (1976); Edwards v. Rouse, 290 S.C. 449, 351 S.E.2d 174 (Ct.App.1986).

We are asked to decide what is required to accept an option which reads, "LESSEE shall have the right to purchase the PREMISES at any time during the [lease's] term." Initially, we note our general agreement with the following:

[O]ptions, like other offers, call for acceptance by a promise or an act, depending on whether the main contract is to be bilateral or unilateral. Especially in cases of options for the sale of land, most courts interpret the option as conditioned upon the giving of a promise to pay the price for the land, that is, as calling for the formation of a bilateral contract rather than for tender of the actual performance, which would be required for acceptance in a unilateral contract. This interpretation accords with the common law preference for bilateral contracts, as well as with the business need of appropriate time for arranging the necessary papers or other arrangements required to make the conveyance.

1 Richard A. Lord, Williston on Contracts § 5:18, 738-39 (4th ed.1990).

The trial judge ruled the term "purchase" requires payment of the price. In Paris Mountain Water Co. v. City of Greenville, 105 S.C. 180, 188, 89 S.E. 669, 671 (1916), "purchase" was defined as the "transmission of property from one person to another, by their voluntary act and agreement, founded on a valuable consideration." Creating a bilateral executory contract for the sale of land is consistent with this definition, as the rights, obligations, and liabilities of the contracting parties are fixed once the contract is created. ² Equitable title passes upon the creation of the executory contract for the sale of land. Brooks v. Council of Co-Owners, 315 S.C. 474, 445 S.E.2d 630 (1994). ³ Even though the purchase money has not changed hands, the contract mandates that it eventually does so.

We thus hold that Ingram purchased the property within the term of the lease by sending written notice of acceptance. ⁴ Once Ingram gave notice, he bound himself to a bilateral and executory contract for the sale of land. At this point, Ingram promised to pay, which triggered Kasey's already existing promise to convey. Both of these obligations were required to be discharged within a reasonable time of acceptance. ^{5 5} The entry into an executory contract for the sale of land creates legal obligations sufficient to satisfy the term "purchase" contained in the lease and option.

Moreover, our holding is consistent with the result in Conner v. Alvarez, 285 S.C. 97, 328 S.E.2d 334 (1985). Conner involved a renewable "lease agreement and option to buy," which provided for an appraisal to determine the purchase price of the subject house and lot, if the option was exercised in any year other than the year of the agreement's signing. The parties disputed whether the agreement allowed rental payments to be credited against the purchase price if acceptance occurred in any year other than the year of signing. In the passage relevant to the case at bar, the court held that while a prior attempt to exercise the option was insufficient because the optionee "was [not] prepared to follow through [with] his attempt to exercise," acceptance was completed through a second letter...