Kentucky Counties Oil Co. v. Cupler

• Decision Date: 10 October 1924
• Citation: 204 Ky. 799
• Parties: Kentucky Counties Oil Company v. Cupler.
• Court: Kentucky Court of Appeals

204 Ky. 799

Kentucky Counties Oil Company v. Cupler.

Court of Appeals of Kentucky.

Decided October 10, 1924.

Appeal from Allen Circuit Court.

THOMAS, THOMAS & LOGAN for appellant.

CHANEY & DIXON for appellee.

OPINION OF THE COURT BY TURNER, COMMISSIONER — Affirming.

Prior to the 12th of October, 1921, appellant, through one of its officials, had oral negotiations with appellee, Cupler, and his associate McPherson, with a view to selling them an oil lease, known as the Sanders lease in Allen county, for $7,000.00.

On that day Cupler paid to the company $1,500.00, and there was executed to him the following writing:

"Bowling Green, Ky., Oct. 12, 1921, $1,500.00. Received of E. H. Cupler fifteen hundred and 00/100 dollars on a/c purchase of Sanders lease, Allen Co., purchase price $7,000.00. Balance to be paid within 30 days. Balance due $5,500.00. The above to represent first payment on said lease. Kentucky Counties Oil Co., G. Howard Duvall, Comptroller."

McPherson, Cupler's associate, who had been a party to the previous negotiations, and who was to put up part of the money for the purchase, declined to enter into the deal, and Cupler was unable to raise the balance of the purchase price within the thirty days. There was, however, granted to him one or two extensions of time in which to raise the money, and in one form or another negotiations looking to that end were continued up to the 21st of December. On that day Cupler received a telegram from his father at his former home in Maryland indicating that a friend there would go into the deal with him, but desired certain detailed information as to the title, acreage, etc., of the lease. This telegram was shown to the official of the company who had theretofore conducted the negotiations upon its part, and that official informed Cupler that another was at that time negotiating for the purchase of the property, but that he did not expect the deal to go through. That official also suggested to Cupler that he go to his home in Maryland to see if he could interest his friend there, with the understanding Cupler was to be notified if anything occurred in his absence as to the sale of the property, and with the additional understanding that he might wire the money back from Maryland and close the deal in that way.

On the 23rd of December appellant sold the lease to a third party.

This is an equitable action by Cupler wherein he seeks a recovery from the company of the $1,500.00 so paid. The answer is a denial of the sale, and it is affirmatively pleaded that by verbal agreement defendant had agreed to sell the lease to the plaintiff, but had accepted the $1,500.00 as a payment for an exclusive option on the lease for a period of thirty days, and that at the time of its payment it was understood and agreed same was to take the place of an option contract or escrow agreement, and that the $1,500.00 was to take the place of the customary payment made on such escrow agreements, and in payment for the exclusive option, with the further agreement that if plaintiff failed to complete the purchase and pay the balance of the purchase price within thirty days defendant might retain the $1,500.00 as liquidated damages, and as payment for the exclusive option.

The cause was prepared and on final submission the court entered a judgment for the plaintiff for the $1,500.00 with interest, from which this appeal is prosecuted.

The answer of defendant affirmatively alleges:

"That by a verbal agreement and as a result of verbal negotiations it agreed to sell to the plaintiff a certain lease and the defendant at the request of plaintiff agreed to accept $1,500.00 as earnest money or as payment for an exclusive option on said lease for a period of thirty days,"

and then refers to the receipt executed by the defendant at the time of the payment, above quoted, and alleges it was agreed at the time the same was to take the place of an option contract or escrow agreement, and that the $1,500.00 was paid for such exclusive option, and with the understanding that if plaintiff failed or refused to complete the purchase and pay the balance of the purchase money in thirty days such first payment should be retained by defendant as liquidated damages, and as...