Lusco v. Tavitian, 45132

• Decision Date: 10 December 1956
• Docket Number: No. 1,No. 45132,45132,1
• Citation: 296 S.W.2d 14
• Parties: Madonna LUSCO, Respondent, v. Tatos TAVITIAN, Appellant
• Court: Missouri Supreme Court

Page 14

296 S.W.2d 14

Madonna LUSCO, Respondent, v. Tatos TAVITIAN, Appellant.

No. 45132.

Supreme Court of Missouri, Division No. 1.

Dec. 10, 1956.

J. K. Owens, Kansas City, for appellant.

James Daleo, Julian M. Levitt, Kansas City, for respondent.

VAN OSDOL, Commissioner.

This is an action for specific performance of a contract for the purchase and sale of described real property in Kansas City. The trial court found for plaintiff, and entered a judgment and decree directing that defendant execute and deliver to plaintiff a warranty deed, and that plaintiff contemporaneously pay to defendant the amount of $20,000 and execute and deliver to defendant a note secured by a deed of trust for the remainder of the purchase price, all in compliance with an option to purchase executed by defendant and alleged and found to have been exercised by plaintiff. Defendant has appealed.

The option to purchase was contained in a lease whereby defendant, Tatos Tavitian, leased the described property to plaintiff, Madonna Lusco, for a term of five years beginning on the 1st day of June, 1951, and ending on the 31st day of May, 1956. The option to purchase was as follows,

'For and in consideration of the payment by lessee of the sum of One Thousand Dollars on or before June 1, 1951, and the payment of the sum of Two Hundred Fifty Dollars on or before June 1, 1952, and Two Hundred Fifty Dollars on or before June 1, 1953 and Two Hundred Fifty Dollars on or before June 1, 1954 and Two Hundred Fifty Dollars on or before June 1, 1955, the lessor does hereby grant to lessee an option to purchase said property on the 31st day of May, 1954 or any day thereafter but prior to the expiration of the five year lease ending May 31, 1956. Purchase by lessee to cancel future payments on option. The purchase price for said property to be in the sum of Sixty Thousand Dollars, which is to be paid as follows: Twenty Thousand Dollars down and the balance of Forty Thousand Dollars represented by buyers promissory note, secured by first deed of trust, bearing interest at the rate of 5% per annum and payable in monthly installments of $754.86 including interest, until the whole sum named is fully paid, with permission given to make two or more payments at any time.'

The real property involved consists of described lots and building thereon situate on Holmes Street, and is used by plaintiff, lessee-optionee, in transacting her business denominated 'The Majestic Bar.' The business is under the management of plaintiff's husband, Tudie Lusco.

It is contended by defendant-appellant that plaintiff did not timely accept or exercise her privilege of purchase under the option, and so was not entitled to invoke the remedy of specific performance. Plaintiff-respondent contends that she exercised the option long prior to the time provided in the option by orally notifying defendant's agent of her acceptance; that the option to purchase or offer to sell did not expressly require payment of the purchase price as a part of or as a condition precedent to the exercise of the option, and the payment of the purchase price could have been made within a reasonable time after plaintiff had notified defendant's agent of plaintiff's election to purchase; or, in the alternative, plaintiff-respondent contends that if the payment or tender of the purchase price, or a part thereof, way by the terms of the option essential to the exercise of the privilege of purchase, defendant waived the time of payment, or was estopped to assert the essentiality of timely payment.

An option is unilateral and does not ripen into a contract of purchase and sale until exercised by the optionee. Until the optionee accepts there is no enforceable contract, the option being in effect but an offer on the part of the optionor, although an offer binding on the optionor by virtue of the consideration paid for the option until the time stipulated for the acceptance of the offer has expired. The optionee in exercising the option may or may not be required to pay the purchase price, or a part thereof, within the time, depending upon the terms of the option or offer. Ordinarily time is of the essence in the exercise of an option, and the requirement of the payment of the purchase price within the time stipulated for acceptance of the offer or exercise of the option is essential where the option by its terms makes such payment a part of or a condition precedent to the exercise thereof. The option by its terms may require a written notice of acceptance. If there be no stipulation as to the mode, manner or way the optionee should give notice of acceptance, any manifestation of the determination to accept will suffice, with resultant contract of purchase and sale (if the essential terms of such a contract, or method of determining them, are set forth in the written option or offer). Chapman v. Breeze, 355 Mo. 873, 198 S.W.2d 717; Suhre v. Busch, 343 Mo. 170, 120 S.W.2d 47; Lively v. Tabor, 341 Mo. 352, 107 S.W.2d 62, 111 A.L.R. 976; Hollmann v. Conlon, 143 Mo. 369, 45 S.W. 275; James on Option Contracts, Sec. 415, pp. 183-185.

If the manner of acceptance is not prescribed and if the acceptance be oral, there is initially upon such acceptance no mutuality of remedy. The optionor cannot enforce the contract should the optionee plead the Statute of Frauds, inasmuch as the optionee had not signed any written agreement or memorandum charging him with an obligation to purchase. However, should the optionee institute an action for specific performance against the optionor who did sign the option, any requirement of mutuality of remedy is supplied. Ray v. Wooster, Mo.Sup., 270 S.W.2d 743; Kludt v. Connett, 350 Mo. 793, 168 S.W.2d 1068, 145 A.L.R. 1014; Smith v. Wilson, 160 Mo. 657, 61 S.W. 597; Ivory v. Murphy, 36 Mo. 534; James on Option Contracts, Secs. 415-416, pp. 183-186; 49 Am.Jur., Specific Performance, Sec. 36, pp. 50-51.

Notwithstanding that time is of the essence, the optionor by his words, acts or conduct may waive the requirement of acceptance or exercise of the option within the time stipulated. Chapman v. Breeze, supra; Bammert v. Kenefick, Mo.Sup., 261 S.W. 78. In some circumstances the optionee's delay is excused. 81 C.J.S., Specific Performance, Sec. 106 e., pp. 630-631; Lorrillard v. Keyport Brick & Tile Manuf'g Co., 48 N.J.Eq. 295, 22 A. 203; Keyport Brick & Tile Mfg. Co. v. Lorrillard, N.J.Ch., 19 A. 381; and other cases collated in the Annotation 157 A.L.R. 1311, at pages 1313 et seq. It has been written that the optionor may not take advantage of the optionee's failure to exercise the option within the stipulated time if the optionor has caused the optionee to be misled as to his rights. James on Option Contracts, Sec. 869, pp. 410-412. It is a general rule that an optionor may not do any act or omit any duty calculated to cause the optionee to delay in exercising his privilege of purchase. 55 Am.Jur., Vendor and Purchaser, Sec. 40, pp. 509-511.

In considering this case, we shall assume that the option to purchase agreement contemplated the down payment or the tender of the down payment of $20,000 as of May 31, 1954, in order for plaintiff to exercise her privilege of purchase without making the 'option payment' of $250 due on or before June 1, 1954. It also may be assumed that, the down payment of $20,000 having been tendered or paid, the exchange of the warranty deed and the secured note between the respective parties, vendor and vendee, were mutual and reciprocal covenants to be performed within a reasonable time.

On June 2, 1954, all monthly rentals stipulated in the contract of lease and the stipulated annual amounts, consideration for the privilege of purchase, had been paid for the years 1951, 1952 and 1953; and all rent for the months of the year 1954 had been paid to and including the rent for the month of May. These payments had been made for plaintiff by plaintiff's husband to defendant's agent Cecil E. Williams.

Tudie Lusco, plaintiff's husband, testified that the had a conversation with defendant's agent Williams on December 2, 1953--'I told Mr. Williams that I was picking up the option next month.' On January 4, 1954. 'I says to him, 'Cece (defendant's agent Williams), I am going to give you a check for $20,000 right now, and we will have our lawyers get together and settle this up.' So he says to me, 'Tudie, you can't do that.' I says, 'Why can't I give you the twenty thousand now?' And he says, 'Well, look at your lease.' I says, 'Cece, I don't think I have the lease here, I think Mr. Daleo has...