Ingram v. Kasey's Associates

Citation531 S.E.2d 287,340 S.C. 98
Decision Date01 May 2000
Docket NumberNo. 25116.,25116.
PartiesHenry INGRAM, Respondent, v. KASEY'S ASSOCIATES, a South Carolina Limited Partnership and Roy Prescott d/b/a Remy's, Inc. and Remy's, Inc. Petitioners.
CourtUnited States State Supreme Court of South Carolina

G. Richardson Wieters, of G. Richardson Wieters, P.C., of Hilton Head, and Stephen A. Spitz, of Columbia, for petitioner Kasey's Associates.

H. Fred Kuhn, Jr., of Moss & Kuhn, of Beaufort, for petitioners Roy Prescott d/b/a Remy's, Inc. and Remy's, Inc.

Samuel S. Svalina, of Svalina Law Firm, and J. Brent Kiker, of Kiker & Douds, P.A., both of Beaufort, for respondent.

TOAL, Justice:

Kasey's Associates ("Kasey's") and Roy Prescott ("Prescott") appeal the Court of Appeals' decision that Henry Ingram's ("Ingram") written notice of intent to exercise his option was sufficient to fulfill the terms of the option contract. The decision of the Court of Appeals is REVERSED for four main reasons: (1) the Court of Appeals used no equity doctrines, even though Ingram sought an equitable remedy; (2) the Court of Appeals did not strictly construe the option contract in favor of the optionor and against the optionee; (3) the Court of Appeals disregarded specific findings of fact made by the trial judge that Ingram was unable to pay the purchase price within the lease period; and (4) the Court of Appeals recognized only the general rule of options, which does not apply to all option contracts in every context.

FACTUAL/PROCEDURAL BACKGROUND

On March 1, 1984, Ingram entered into a ten-year commercial lease with Kasey's for Remy's Restaurant ("Remy's") located on Hilton Head Island, South Carolina. After entering into the lease, Ingram and Prescott entered into an oral sublease for the operation of the restaurant, its furniture, fixtures, and equipment. As a part of this arrangement with Prescott, Ingram received a percentage of the profits from the video poker machines he installed in Remy's. From March 1, 1984 until the end of the lease term on February 28, 1994, Prescott operated the restaurant and paid the rent.

The lease between Ingram and Kasey's contained a provision giving Ingram the right to purchase the property at any time during the lease term for a certain sum based upon an amortization schedule attached to the lease. The lease contained the following 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.

The remainder of the paragraph describes how to calculate the purchase price, lists the credits Ingram would receive if he purchased the property, and refers to the amortization schedule.

During the fall of 1993, as the lease was nearing the expiration of the term, Ingram and Kasey's discussed whether Ingram desired to purchase the property. Ingram indicated he would not exercise his option and that Kasey's and Prescott were free to negotiate a deal to lease the restaurant. Relying on Ingram's representations, Kasey's and Prescott entered into a new lease for Remy's to become effective on March 1, 1994, and Kasey's spent $135,000 to acquire adjacent property in order to expand Remy's.

Despite his previous representations, on February 22, 1994, Ingram provided written notice to Kasey's that he intended to exercise his option to purchase the property. The February 22, 1994 letter to Bernard Craig ("Craig"), general partner of Kasey's, states in part:

This will serve to advise you that I am hereby exercising my option and right to purchase the above-referenced premises pursuant to the option contained in the above described lease Agreement dated March 1, 1984, between Casey's [sic] Associates, a South Carolina Limited Partnership, as Lessor, and myself, as Lessee.

Craig responded with a letter on February 24, 1994 stating that Ingram had represented he was not going to exercise the option, and Craig had relied on these representations by purchasing adjacent property and beginning renovations on Remy's. Craig also advised Ingram that the property had to be purchased on or before the close of business on February 28, 1994 in accordance with the lease term. However, in the event Ingram paid the purchase price, Kasey's executed its deed to Ingram and transmitted the deed to its attorney for delivery to Ingram upon payment of the purchase price. Ingram never tendered any portion of the purchase money prior to the end of the lease term on February 28, 1994. On March 8, 1994, Ingram wrote Craig that he was ready, willing, and able to close the sale on March 10, 1994. Kasey's attorney responded that he would not close because the lease required Ingram to tender the purchase price before its expiration on February 28, 1994.

Ingram did not have the money to purchase the property on February 28, 1994, March 8, 1994, March 10, 1994, or March 14, 1994. None of Ingram's lenders officially agreed to loan him the purchase money and Ingram had no written loan agreements. In fact, one of the lenders indicated the affidavit he provided to support Ingram's summary judgment motion was a "hoax" and that he did not have the money to loan Ingram. The trial testimony also indicates that none of the lenders identified by Ingram were contacted until after the lease expired on February 28, 1994.

On March 14, 1994, Ingram sued both Kasey's and Prescott for specific performance arising from his attempt to exercise his option to purchase property contained within the ten-year lease. Ingram also filed a lis pendens on the leased real and personal property on March 14, 1994. On November 13, 1995, the trial judge entered an order denying specific performance of the option contract. Ingram appealed and on August 19, 1997, the Court of Appeals reversed the trial judge's decision and remanded the matter to the trial court for further factual findings on the issues of estoppel, waiver, abatement of purchase price, Ingram's ability to close within a reasonable time, and unclean hands. Ingram v. Kasey's Assocs., 328 S.C. 399, 493 S.E.2d 856 (Ct.App.1997). Kasey's and Prescott have appealed on the following issues:

(1) Did the Court of Appeals err in holding Ingram properly exercised the option by sending written notice of his acceptance, without tendering the actual purchase price, prior to the expiration of the lease?
(2) Did the Court of Appeals disregard specific findings of fact made by the trial judge that Ingram was unable to pay the purchase price either within the lease period or soon thereafter?
LAW/ANALYSIS

Kasey's and Prescott argue that the Court of Appeals erred in holding that written notice of Ingram's intent to exercise the option, without the actual tender of the purchase price, was sufficient to fulfill the terms of the option contract. We agree. Our discussion will be divided into two parts. Part I will address the law of specific performance because that is the equitable remedy Ingram requests. Part II will address the law of options. The Court of Appeals found there was one general, overriding rule that applied to all option contracts. Although this general rule exists, it does not apply to every circumstance. In particular, when an option is embedded in another type of contract, such as a lease, option law depends greatly upon the context in which the option was entered.

I. Specific Performance

Ingram's action for specific performance of his option contract is in equity. Collier v. Green, 244 S.C. 367, 137 S.E.2d 277 (1964). In equity actions an appellate court can review the record and make findings based on its view of the preponderance of the evidence. Townes Assoc. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976); Pruitt v. South Carolina Med. Malpractice Liab. Joint Underwriting Ass'n, 335 S.C. 118, 515 S.E.2d 544 (Ct.App.1999). However, this Court is not required to disregard the findings of the trial judge 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); Wright v. Trask, 329 S.C. 170, 495 S.E.2d 222 (Ct.App.1997).

Specific performance should be granted only if there is no adequate remedy at law and specific enforcement of the contract is equitable between the parties. King v. Oxford, 282 S.C. 307, 318 S.E.2d 125 (Ct.App.1984) (citing Monteith v. Harby, 190 S.C. 453, 3 S.E.2d 250 (1939)). In order to compel specific performance, a court of equity must find: (1) there is clear evidence of a valid agreement; (2) the agreement had been partly carried into execution on one side with the approbation of the other; and (3) the party who comes to compel performance has performed his or her part, or has been and remains able and willing to perform his or her part of the contract. Gibson v. Hrysikos, 293 S.C. 8, 358 S.E.2d 173 (Ct.App.1987) (citing Thomson v. Scott, 6 S.C. Eq. (1 McCord Eq.) 32 (1825)). At a minimum, Ingram must demonstrate that he was ready and willing to perform his part of the contract (i.e. willing to tender the purchase price) on February 28, 1994, the date the lease expired, or on March 14, 1994, the date he brought the action for specific performance.1 The record indicates that Ingram was not in a position to pay Kasey's the purchase price for Remy's on either date.

Ingram admits that prior to February 28, 1994 he did not have the purchase money in any depository account either under his control, his attorney's control, or in any escrow account. Ingram also admits that in order to close on the property he would have to "scramble around and see if [he] could raise up the money." Although Ingram claims he had several sources who could provide the purchase money, as of March 14, 1994, none of his identified lenders officially agreed to loan him the money, and he had no...

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