Kastner v. Dalton Development, Inc., 38889

• Decision Date: 07 June 1963
• Docket Number: No. 38889,38889
• Citation: 122 N.W.2d 183,265 Minn. 511
• Parties: Albert H. KASTNER, Appellant, v. DALTON DEVELOPMENT, INC., Respondent.
• Court: Minnesota Supreme Court

Page 183

122 N.W.2d 183

265 Minn. 511

Albert H. KASTNER, Appellant, v. DALTON DEVELOPMENT, INC., Respondent.

No. 38889.

Supreme Court of Minnesota.

June 7, 1963.

Syllabus by the Court

1. While an order denying a motion to amend findings is not appealable, whether or not the motion includes an alternative motion for a new trial, the error claimed is nonetheless reviewable when properly presented on an appeal from an appealable order or judgment.

2. A finding that the optionor of a contract granting an option to purchase certain land was without notice of an assignment of such contract by the optionee supports the conclusion that, as to such optionor, the assignment had no effect, and valid defenses and equities which arose between the original parties subsequent to the assignment but prior to notice to him inured to the benefit of the optionor. Held, plaintiff, as assignee of an option contract of which assignment the optionor had no notice, must stand in the place of his assignor in determining whether or not such optionor was in breach of contract.

3. The interpretation placed upon a contract by the parties themselves is to be considered by the court, and is entitled to great, if not controlling, influence in ascertaining their understanding of its terms.

4. To be effectual, election to exercise an option must be unequivocal, unambiguous, and according to the terms of the option.

5. A finding that there was failure to exercise the option is sustained by the evidence where it is shown that the optionee first attempted to exercise only part of the option, and where the parties thereupon agreed that the option contract itself was not divisible; where the optionee next attempted to exercise the option by letter, but misdescribed the land upon which the option was intended to be exercised; and where at the time the optionee last attempted to exercise the option, it had been placed in bankruptcy by a creditors' petition, and the optionor was therefore justified in refusing to deal with the optionee.

Thomas, King, Daubney, Swenson & Collatz, St. Paul, for appellant.

Vogel, Lemmons & Lenzmeier, St. Paul, for respondent.

FRANK T. GALLAGHER, Commissioner.

Appeal from an order of the district court denying plaintiff's motion for amended findings or for a new trial.

At the outset defendant contends that this appeal is limited in legal effect to a consideration of the order denying a motion for a new trial. It is true that an order denying a motion to amend findings is not appealable, whether or not the motion includes an alternative motion for a new trial, but the error claimed is reviewable when properly presented on an appeal from an appealable order or judgment. Donarski v. Lardy, 251 Minn. 358, 88 N.W.2d 7. On the merits, however, review is limited to a determination of whether the findings are supported by the evidence. Frisbie v. Frisbie, 226 Minn. 435, 33 N.W.2d 23.

The facts giving rise to the issues raised on the merits are these. Sometime prior to September 1960, Shuster, Inc., (hereafter referred to as Shuster) a general contractor, and defendant, Dalton Development, Inc., (hereafter referred to as Dalton) a corporation formed for the purpose of acquiring and developing land, entered into an agreement whereby the former acquired an option to purchase some lots in Dalton Park, land then owned by Dalton. In September 1960, Shuster and Dalton entered into a second option agreement whereby Dalton granted to Shuster an option on Lots 3, 4, 5, and 6, Block 7; Lot 1, Block 1; and Lots 1 to 18, Block 6, Dalton Park Addition, which option was to run until May 1, 1961. This agreement was made in consideration of relinquishment by Shuster of the option previously granted by Dalton. The agreement of September 1960 provided for payment by Shuster of a purchase price of $200 per lot. Dalton agreed to furnish an abstract showing good and marketable title and to convey by limited warranty deed.

Before September 1960, Shuster had contracted work to be done on Lots 3 and 4, Block 7, Dalton Park, consisting of excavation and construction of basements for homes to be erected there. This work was commenced on May 5, 1960, and completed by May 16, 1960. As a result, the contractors performing such work acquired mechanics liens on the two lots and on August 15, 1960, one of them filed suits for foreclosure, naming both Dalton and Shuster defendants. These actions were pending when Dalton and Shuster entered into the option agreement in September 1960 and account for incorporation of the following provision in the agreement:

'Further, the second party agrees to deliver a clear title by limited Warranty Deed and Abstract of title on any lots to purchased; Said Lots shall be subject to the rights of third parties, which rights have accrued or shall be accrued by acts of first party hereto and shall be subject to lien rights for any improvements or alterations made thereto.' (Italics supplied.)

Shortly after commencement of the foreclosure actions, demand was made upon Andrew Shuster, president of Shuster, by Dalton's attorney, Richard Vogel, for discharge of the liens. Mr. Vogel, who acted as attorney for defendant throughout the transactions involved here, testified at the trial that he had a conversation with Mr. Shuster, who advised him that he would take the lots off Dalton's hands; that the liens were for a reasonable amount; and that there was no defense to them. Vogel further testified that liens were also developing on other property of Shuster and that the basements on Lots 3 and 4 were not capped, which was necessary in order to preserve the value of the improvements from destruction by the winter frost. For these reasons, the lots were conveyed sometime in November 1960 to grantees designated by the lien claimants in exchange for a release of Dalton from any personal liability arising out of the mechanics liens. ¹

On November 18, 1960, Shuster assigned all of its rights under the option agreement of September 1960 to plaintiff in consideration of his payment of $100 per lot, or a total of $2,300. Concurrently, an attempt was made to exercise the option. Mr. Shuster wrote Dalton purporting to exercise the option on five of the lots and requesting the abstracts of title to be sent to Shuster's attorney, John G. Bouthilet. Dalton turned the letter over to Vogel. Bouthilet thereafter telephoned him and after discussion they agreed that the option could not be exercised in part and that it was necessary to exercise the option on all 23 lots described in the option agreement. No further communication was addressed to defendant or its attorney until January 3, 1961, when Bouthilet wrote a letter to Dalton, subscribing the letter as attorney for Shuster, Inc., and purporting to exercise the option pursuant to the agreement but erroneously describing the property. ²

In a telephone conversation between Mr. Vogel and Mr. Bouthilet on January 9, 1961, it was agreed that the description of the property in the letter of January 3, 1961, was incorrect and that Mr. Bouthilet had intended to describe the 23 lots placed under option by the agreement. In the same conversation Mr. Vogel stated that Lots 3 and 4 in Block 7 were not available because they had been conveyed to grantees designated by the lien claimants. By letter dated January 10, 1961, Mr. Vogel confirmed this conversation. Thereafter on January 17, 1961, Bouthilet wrote to Vogel, again attempting to exercise the option ostensibly in behalf of Shuster and requesting that Vogel forward the abstracts of title to the property. On this occasion Bouthilet properly described the property. The attempt to exercise the option was upon All of the 23 lots, including the 2 lots which Vogel had advised were not available. ³

A creditors' petition in bankruptcy had been filed on January 9, 1961, by several creditors of Shuster, Inc. Vogel knew of this sometime prior to receiving the letter of January 17.

By the terms of the agreement of September 1960, it was incumbent upon Dalton to provide abstracts of title prior to payment by Shuster. It did not forward the abstracts to Mr. Bouthilet as he had requested in the letter of January 17. The only reason given was Vogel's testimony that it was Dalton's position that the letter of January 17 was ineffective and that the earlier attempt to exercise the option with respect to only five lots was not a bona fide effort to exercise it.

It is defendant's contention that throughout the transaction it had no knowledge of Shuster's assignment of the option to plaintiff and that at all times Dalton and its attorney, Vogel, understood that they were dealing with Shuster. Plaintiff testified that he spoke to Mr. Vogel about his interest in the option in February 1961. Mr. Vogel denies that he did so. The court found from the evidence that neither plaintiff nor anyone acting on his behalf notified Dalton of plaintiff's interest as an assignee, exercised the option, or made a bona fide offer to take up the option. From these facts, the court concluded that judgment should be entered for defendant.

In the first place the evidence strongly supports the finding of the court that defendant had no notice or knowledge of the assignment by Shuster....