Janssen v. North Iowa Conference Pensions, Inc. of Methodist Church

• Citation: 166 N.W.2d 901
• Decision Date: 08 April 1969
• Docket Number: No. 53211,53211
• Parties: Emmo JANSSEN and Dena Janssen, Appellants, v. NORTH IOWA CONFERENCE PENSIONS, INC. OF the METHODIST CHURCH, Robert M. Butson and Birdell Butson, Appellees.
• Court: Iowa Supreme Court

Page 901

166 N.W.2d 901

Emmo JANSSEN and Dena Janssen, Appellants, v. NORTH IOWA CONFERENCE PENSIONS, INC. OF the METHODIST CHURCH, Robert M. Butson and Birdell Butson, Appellees.

No. 53211.

Supreme Court of Iowa.

April 8, 1969.

Westfall, Laird, Burington, Bovard & Heiny, N. LeRoy Walters, and Richard R. Winga, Mason City, for appellants.

Remley & Heiserman, Anamosa, and Hobson, Cady & Drew, Hampton, for appellees.

RAWLINGS, Justice.

On plaintiffs' action in equity seeking specific performance in accord with written option contract for purchase of land, or in the alternative, damages, trial court held the option was not exercised. Plaintiffs appeal. We reverse.

In course of trial plaintiffs presented evidence and defendants rested offering no testimony.

February 14, 1966, plaintiffs and defendant North Iowa Conference Pensions, Inc. of the Methodist Church, entered into a written agreement by which plaintiffs were granted an option right to purchase the subject farm. The form instrument used was a Farmers Home Administration (FHA) option contract, with certain changes made by Dallas M. Harrison, defendant pension fund's farm manager.

Relevant provisions of the agreement state:

'1. In consideration of the sum of $1.00, the undersigned (herein called the 'Seller'), who covenants that he is the owner thereof, hereby, for himself and his heirs, executors, administrators, successors and assigns, Offers and agrees to sell and convey to Emmo Janssen and Dena Janssen, Geneva, Iowa (hereinafter called the 'Buyer'), and hereby grants to the said Buyer the exclusive and irrevocable option and right to purchase, under the conditions hereinafter provided, the following-described property, located in Franklin County, State of Iowa: (Property Description).

'* * *

'The title to said property is to be conveyed free and clear of all encumbrances except for the following reservations, exceptions and leases, and no others: (None)

'* * *

'2. This option is given to enable the Buyer to obtain a loan insured or made by the United States of American, acting through the Farmers Home Administration, United States Department of Agriculture, and its duly authorized representatives, (hereinafter called the 'Government'), for the purchase of said property. It is agreed that the Buyer's efforts to obtain a loan constitute a part of the consideration for this option.

'3. The total purchase price for said property is $45,355.00; said amount includes $_ _ mentioned in paragraph 1.

'Upon payment of the above amount by the buyer, the seller agrees to furnish merchantable Abstract of Title and Deed.

'* * *

'8. This option may be exercised by the Buyer, at any time while the offer herein shall remain in force, by mailing, telegraphing or delivering in person a written notice of acceptance of the offer herein to D. M. Harrison, at Hampton, in the city of Hampton, County of Franklin, State of Iowa.

'This option to buy must be exercised by Buyer on or before March 15, 1966 in order that Buyer may take advantage of Feed Grain Program.' (Emphasis supplied).

February 26, 1966, a $6000 check, signed by plaintiff Emmo Janssen, payable to North Iowa Conference Pensions, Inc. of the Methodist Church, D. J. Keith, Treasurer, was delivered to pension fund's farm manager. It was accepted and kept until late in March or early April, when the farm manager offered return of the check to plaintiffs. They refused to accept it.

Later, with a letter bearing date May 20, 1966, the check was sent back to plaintiffs by the farm manager upon order of pension fund's board of trustees.

June 21, plaintiffs' counsel returned the check to pension fund's farm manager, with a request the abstract of title be brought up to date and delivered for examination. In addition defendants Butsons were advised, plaintiffs had exercised their option to buy the land, planned to hold defendant pension fund to the agreement, and Butsons, having negotiated for purchase of the same property, should govern themselves accordingly. The record is not clear as to when Butsons actually effected purchase but a deed conveying the land to them was recorded September 21, 1966.

As disclosed supra, trial court found the check delivered by plaintiffs to farm manager did not suffice as a written memorandum of acceptance, in that it failed to satisfy the terms of the option agreement.

On appeal plaintiffs claim, in substance: (1) the option contract was exercised by delivery and acceptance of the check; (2) specific performance of an option contract will lie if the court can ascertain with reasonable certainty the terms of agreement; (3) defendants Butsons are not bona fide purchasers without notice so as to prohibit a specific performance decree; and (4) when a prima facie case is made, failure of the opposing party to present evidence gives rise to an inference, evidence if offered would be unfavorable. These contentions will not necessarily be dealt with in the order assigned.

I. Actions for specific performance stand in equity, our review therefore being de novo. Steele v. Northup, 259 Iowa 443, 448, 143 N.W.2d 302.

II. The first question presented is whether delivery by plaintiffs of the $6000 check to pension fund's farm manager constituted written notice of acceptance of the offer as contemplated by the option agreement.

At the outset this statement in Breen v. Mayne, 141 Iowa 399, 403--404, 118 N.W. 441, is of some significance: 'The only fixed rule regarding the manner of the exercise of an option under a contract granting it is to discover from the language of the instrument construed in the light of competent parol testimony, the intent of the parties with reference thereto. It may be that under the terms of a given option the only proper and binding method of election or acceptance is by the payment or a tender of the purchase price. On the other hand, there are many cases where the option may be exercised in parol or by any other method indicating an election to take the land--the payment of the purchase price and the making of the deed being subsequent matters in performance of a binding contract. In the one case, there is an election to sell, upon payment of the purchase price, which is a condition precedent to the foundation of the contract; and in the other there is an election to take the land upon the terms proposed, payment of the purchase price being a condition subsequent, or rather the performance of an executory contract theretofore entered into.

'It is important in such cases to distinguish that which pertains to the performance of a contract from that which pertains to its making. To make any sort of a contract there must be a meeting of minds upon a given subject. An offer without acceptance is not a contract, and as a rule the acceptance to be binding must be in accord with the terms of the offer, and not in some other manner. In other words, the party making the offer may prescribe the mode of acceptance, and to constitute a binding contract this method must be followed.' (Emphasis supplied.)

That brings us to intent of the parties as revealed by language of the instrument, construed in the light of competent parol testimony.

In dealing with admissibility of extrinsic evidence to show intent of the parties, this court stated in Hamilton v. Wosepka, Iowa, 154 N.W.2d 164, 168--171: 'It is sometimes said that if the words of a contract are plain and clear, evidence of surrounding circumstances to aid interpretation is not admissible. 'It is true that when a judge reads the words of a contract he may jump to the instant and confident opinion that they have but one reasonable meaning and that he knows what it is. A greater familiarity with dictionaries and the usages of words, a better understanding of the uncertainties of language, and a comparative study of more cases in the field of interpretation, will make one beware of holding such an opinion so recklessly arrived at.' 3 Corbin on Contracts, section 535.

"A word is but a symbol which may stand for one of an innumerable numbers of objects.' 2 Sutherland Statutory Construction, Third Ed., (By Horack), section 4502.

"No parol evidence that is offered can be said to vary or contradict a writing until by process of interpretation it is determined what the writing means. The 'parol evidence rule' is not, and does not purport to be, a rule of interpretation or a rule as to the admission of evidence for the purpose of interpretation. Even if a written document has been assented to as the complete and accurate integration of the terms of a contract, it must still be interpreted; and all those factors that are of assistance in this process may be proved by oral testimony.

"It is true that the language of some agreement has been believed to be so plain and clear that the court needs no assistance in interpreting. Even in these cases, however, it will be found that the court has had the aid of parol evidence of the surrounding circumstances. The meaning to be discovered and applied is that which each party had reason to know would be given to the words by the other party. * * *.'

'* * *

"Evidence of the circumstances is always admissible in aid of the interpretation of an integranted agreement. This is so even when the contract on its face is free from ambiguity. The polestar of construction is the intention of the parties to the contract as revealed by the language used, taken as an entirety; and, in the quest for the intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain are necessarily to be regarded. The admission of evidence of extrinsic facts is not for the purpose of changing the writing, but to secure light by which to measure its actual significance. Such evidence is adducible only for the purpose of interpreting the writing--not for the purpose of modifying or enlarging or curtailing its terms, but to aid in determining...