Kern v. Kelner
| Decision Date | 06 March 1947 |
| Docket Number | 7022. |
| Parties | KERN v. KELNER. |
| Court | North Dakota Supreme Court |
Rehearing Denied May 28, 1947.
Syllabus by the Court.
1. An option to purchase real property is a mere privilege given by the owner to the prospective purchaser and in itself gives to the optionee no right to purchase said property until the optionee exercises the right within the time specified and in accordance with the terms granting the option.
2. Where the owner of land enters into a written contract with a prospective tenant who is indebted to him for a pre-existing debt, whereby the tenant is to farm the land for an indefinite term of years, and in the contract it is agreed the landlord is to own all of the crops raised upon said land each year, to apply each year one fourth as rent for the land the remaining three fourths upon the payment of the indebtedness due from the tenant; and where it is agreed that when the indebtedness is paid, and not otherwise, the tenant may exercise an option to purchase the land for a stated sum within one year from the payment of the indebtedness. The contract is one and indivisible and the tenant has no right to exercise such option or to tender the agreed purchase price of the land and demand a deed until the indebtedness is paid.
Mark H. Amundson, of Bowman (Mackoff, Kellogg & Muggli, of Dickinson, N. D., on petition for rehearing), for plaintiff-respondent.
Theo. B Torkelson, of Bowman, for defendant-appellant.
This is an action for specific performance of a written contract wherein the plaintiff was given an option to buy the land hereinafter described. The trial court found for the plaintiff and the defendant appealed demanding a retrial in this court.
Fundamentally the determination of one major fact settles the dispute. In December 1930, the defendant loaned to the plaintiff $3,000 and obtained his promissory note for this amount due in one year with interest at 8%. The plaintiff had the note signed by his father and his mother, as joint makers. Owing to the financial condition of the plaintiff the defendant made little attempt to collect the money due, no part was paid and the statute of limitations ran against suit. From time to time thereafter defendant tried to induce the plaintiff to make payments on the note but it was not until November 30, 1940 that the parties came to an agreement. At that time the debt amounted to over $5,000 and on November 30, 1940 the plaintiff gave to the defendant his note for $3,000 due November 30, 1942, with interest at the rate of 2% per annum payable annually, the interest not paid when due to bear interest at the same rate.
On November 28, 1941, the defendant, being the owner of the land involved, entered into a written contract with the plaintiff for the renting of this land to the plaintiff 'during the season of farming in the year 1942 and subsequent years as hereinafter provided.' This contract contains the common usual printed provisions of such contracts between landlords and tenants to the effect the tenant was to furnish all of the power and machinery necessary and farm in a good and husbandlike manner 'and not to sell or remove * * * any of the produce of said farm * * * of any kind * * * until division thereof, without the written consent of the' defendant 'and until such division the title and possession of all hay, grain, crops and produce raised, grown or produced on said premises and proceeds of each of the same, shall be and remain in the' defendant. Through some oversight this last provision with reference to the title and possession of the crops is omitted from the copy of Exhibit A, attached to the transcript, but it is a part of the instrument Ex. A signed by the parties to this action. The quotations are from the contract, Ex. A.
The defendant had the right to hold any portion of the crop that would belong to the plaintiff in case the latter should fail to fulfill his contract, in order to reimburse the defendant for any payments he was required to make, and one of such payments was the hail lien hereinafter mentioned. The contract further contains this very significant paragraph 'It is further understood and agreed between the parties that whereas the said party of the second part is indebted to the party of the first part upon a promissory note of three thousnd dollrs, dted the 30th dy of November, A. D. 1940, with interest thereon t the rte of two per cent per nnum, ll of the crops to be rised by the prty of the second prt upon the sid premises ech yer during the life of this contrct shll be delivered to the order of the prty of the first prt t the Scrnton Equity Exchnge t Scrnton, North Dkot; tht the vlue thereof shll be determined s of the mrket price thereof on the 1st dy of October of the yer in which delivered, unless otherwise greed upon by the prties hereto; nd of the proceeds so to be determined, the one-fourth shll be considered s rentl due the prty of the first prt for the use of the sid lnd, nd the remining three fourths thereof shll be pplied towrd the pyment of the sid promissory note of three thousnd dollrs hereinbefore mentioned nd the interest thereon, until the sme shll hve been fully pid; nd in considertion of the premises, the prty of the first prt hereby grnts to the prty of the second prt n option to purchse the sid premises from the prty of the first prt for the sum of twelve hundred fifty-eight dollrs nd 85 cents; which option my be exercised within one yer fter the sid note shll hve been fully pid, but not otherwise:'
In this contract the plaintiff is the party of the second part and the defendant is the party of the first part. The foregoing phrase 'in consideration of the premises' means in this case in consideration of all the antecedent conditions and obligations of the contract.
On the day this contract was executed the plaintiff paid $200 upon the said note, $60 of which was applied upon the interest, and credit was given the plaintiff for $140 reducing the principal to $2,860.
In 1942 the plaintiff raised a crop of 2,527 bushels and 20 lbs. of wheat on the land. This is the plaintiff's own allegation. Under the terms of the contract the defendant had title to all of this grain, but it was his duty to credit three fourths of the value of said crop as determined by the price of wheat on October 1, 1942, upon the note in question unless the plaintiff owed him anything under the farming operations. There was but one item which the plaintiff owed--a hail lien mentioned later. However, the defendant had the right to retain for himself 631 bushels and 50 pounds of wheat. The title to this was in the defendant, and this grain was in fact the rent. They value of the grain on the first day of October 1942, as found by the trial court and not disputed by either party was 95¢ per bushel, and for convenience we call the amount of wheat to be credited 1,896 bushels.
There was no crop matured in 1943, owing to hail but the record shows the plaintiff had the crop insured against hail and there was a hail lien impressed upon the land and all of the crop to be raised in 1943, amounting to $57.60. The plaintiff admits he owed this and on the trial of the case he agreed this should be collected by the defendant out of this 1942 crop.
Disregarding the hail debt as not an advance for the 1942 crop this would require the defendant to give the plaintiff a credit of $1,801.20 approximately on the principal and interest of the note, if the plaintiff had complied with his contract in turning over to the defendant all of the crop of 1942. The defendant received but 2,053 bushels at that time. He deducted one fourth of the entire crop as rent from this wheat and gave the plaintiff as credit upon the note $42.90 for interest and $1,249.60 on the principal. These are defendant's endorsements on the note.
The record shows that when the crop of 1942 was ready to be harvested the parties had a discussion in regard to the place of delivery of the grain owing to the fact that the Scranton Eqiuty Exchange elevator could receive no more grain. The parties were discussing the place of delivery and it was agreed that the plaintiff should deliver the grain in Scranton in a storage bin which the defendant owned there; and if all of the grain could not be delivered there the remainder was to be delivered to the defendant in a granary upon the plaintiff's land. We use the term delivery because of the terms of the contract though one of the elements of dispute is the apparent contention of the plaintiff that no portion of the grain was delivered to the defendant in 1942, and that no delivery took place until the year 1943 because the wheat was not sold till that time.
In the fall of 1942 the plaintiff stored in the defendant's bin in Scranton over 2,000 bushels of grain, the amount not being known at the time of delivery, but owing to the fear the bin was not strong enough to hold a larger quantity he stored the remainder in his granary on his own place. However, at that time the defendant was entitled to one fourth of all this grain raised as rent and was entitled to the remaining three fourths to apply on plaintiff's indebtedness to him. If a portion of the remaining three fourths was not necessary to satisfy the note that remainder would belong to the plaintiff.
The defendant did not see fit to sell the grain in the fall of 1942, and retained the portion in his storage bin until the latter half of 1943. At that time he transferred the grain and sold it to the Scranton Equity Exchange, receiving $1.14 per bushel therefor, and for the first time both parties learned the amount of this grain was but 2,053 bushels. There is no dispute about this. This remainder was the defendant's grain but...
To continue reading
Request your trial