McGee v. Clark

• Decision Date: 16 March 1977
• Docket Number: No. 49217,49217
• Citation: 343 So.2d 486
• Parties: Clyde McGEE and Evelyn McGee v. Raymond CLARK and Mary Clark.
• Court: Mississippi Supreme Court

Page 486

343 So.2d 486

Clyde McGEE and Evelyn McGee v. Raymond CLARK and Mary Clark.

No. 49217.

Supreme Court of Mississippi.

March 16, 1977.

Felts, Russell & Adams, Nathan P. Adams, Jr., Abraham, Gleason & Powell, Claude H. Powell, Greenville, Wells, Gerald, Brand, Watters & Cox, Martha W. Gerald, Jackson, for appellants.

Campbell & DeLong, Roy D. Campbell, Jr., Claude L. Stuart, III, Greenville, for appellees.

Before INZER, SUGG and LEE, JJ.

LEE, Justice, for the Court:

Raymond Clark and Mary Clark, his wife, filed suit in the Chancery Court of Washington County against Clyde McGee and Evelyn McGee, husband and wife, for specific performance of an option contract covering six hundred seventy-four (674) acres of land. The chancellor ordered specific performance and the McGees appeal here.

On August 30, 1965, appellants leased unto appellees the land involved for a period of ten (10) years beginning January 1, 1966, and ending December 31, 1975, at a yearly rental of eighteen thousand five hundred dollars ($18,500). At the same time, two (2) options were executed, one being a swap option for lands in Missouri, which has no bearing on this case, and the other granting appellees the right to purchase the land for the sum of three hundred thousand dollars ($300,000), at any time within the ten-year lease period, with the provision that rent for the year in which the option might be exercised would be applied to the purchase price. (Appendix I). The term of the lease was made subject to the options and the lease and option were interdependent.

Prior to execution of these instruments, appellants applied for a loan from the Federal Land Bank of New Orleans in the amount of one hundred forty-seven thousand dollars ($147,000), and, on August 19, they received a commitment for same. Appellees agreed to the loan and agreed that they would cooperate with appellants in the consummation of the loan. Attorney Waits from Leland handled the proceedings. It was his opinion that the option agreement and the lease agreement were separate and distinct instruments and that, in the event of default and termination of the lease, the Attorney McGee wrote Attorney Young in Missouri, who represented appellees, advising him that the supplemental agreement, which he transmitted with a letter dated September 9, 1965, (Appendix II) was required to be executed before the loan could be closed. This was a misrepresentation of the facts, because all the Federal Land Bank required was a subordination of the lease and option to its deed of trust. Attorney McGee did not know that the representation was false nor did Attorney Young. Since appellees had agreed to cooperate with appellants in obtaining the loan, they signed the supplemental agreement (Appendix III) and for that reason only. At the same time, they also executed the subordination agreement.

option would still remain in effect. He suggested to appellants that they contact Attorney Burrell McGee, a relative of appellants, and that he prepare a supplemental agreement for execution by the parties. Waits also indicated to Attorney McGee, or at least Attorney McGee received the impression, that the Federal Land Bank required the supplemental agreement and a subordination of the lease and option before it would close the loan.

The lease provided that the rental payments be made on November 1 in each year, and that

'(8) In the event of default by Lessees in the payment of any fixed annual rent and a continuance in such default for a period of thirty (30) days, or in case of breach by Lessees of any of the other covenants or conditions herein contained and their failure to cure such breach within a reasonable time after being so notified in writing by Lessors, Lessors shall have the right to re-enter and take possession of the premises, remove therefrom the goods and chattels of the Lessees and re-let said property to a third party. In such cases, the obligations of Lessees hereunder shall remain unaffected, except that Lessees shall be entitled to have credited against the unpaid rent due and to become due or other liability any amount of rent thus received from such third party on re-letting for the remainder of the term of this Lease.'

Appellees made the payments from 1966 through 1972 on the following dates:

December 2, 1966.

November 2, 1967

November 22, 1968

November 7, 1969

December 1, 1970

December 14, 1971

October 30, 1972

Appellees testified that McGee told them it was all right to pay the installments later than November 1. However, in December, 1971, McGee told his realtor, Heard, that appellees had defaulted in the rental payment and that he wanted him to collect same and terminate the option. When appellees were contacted by Heard, they immediately paid the 1971 rental, no written notice was given them to quit the premises, and no re-entry of the premises was attempted by appellants. Appellees made the 1972 payment on October 30, 1972, and on August 21, 1973, notified appellants in writing that they desired to exercise the option. Roy D. Campbell, attorney for appellees, testified that McGee telephoned him, acknowledged receipt of the written notice to exercise the option and asked him to get in touch with his attorney, Burnell Waits, and to work out a contract with him for the purchase and sale of the lands.

I.

Was the supplemental agreement void for misrepresentation, mutual mistake and want of consideration?

It is undisputed that appellees executed the supplemental agreement and subordination of the lease and option for the purpose of enabling appellants to obtain a Federal Land Bank loan. The representation was material, it induced the appellees to execute the supplmental agreement, and it was false. The result here is the same regardless of whether the misrepresentation was wilfully and knowingly made or whether it was innocently made. Appellants, appellees, Attorney McGee and Attorney Young all thought it was necessary for In Rimer v. Dugan, 39 Miss. 477 (1860), the Court stated:

appellees to execute the supplemental agreement in order for appellants to obtain the Federal Land Bank Loan.

'The record further shows that Defendant had no title to the land he thus claimed to own, and for which complainant exchanged his land.

It is clear from the record that the complainant acted on the faith of defendant's representation, and that such representation was false. Whether the false representation was made with a knowledge that it was false, or without a knowledge that it was true, is wholly immaterial. If, knowingly, he represented what was not true, there can be no doubt he should be bound to make reparation. If, without knowing whether his representation was true or not, he took upon himself to make it to complainant, and upon the faith of it complainant acted, he is not less bound, although he may have been only mistaken, and therefore comparatively innocent.' 39 Miss. at 482-483.

Also, in Penn Mutual Insurance Co. v. Nunnery, 176 Miss. 197, 167 So. 416 (1936), it was held:

'His good faith is not the test. If the representation was false, and the appellee was justified in relying upon it, then she agreed to the release under a mistake into which she was led by the affirmative act of the appellant's special agent, and she therefore is not bound thereby. (Citations omitted).' 176 Miss. at 210, 167 So. at 418.

The supplemental agreement does not indicate, nor does the proof reflect, that the agreement was supported by new consideration. A new consideration is essential to the validity of the agreement. Producers Gin Association v. Beck, 215 Miss. 263, 60 So.2d 642 (1952). The chancellor found that the supplemental agreement was void because of the misrepresentation of a material fact and for lack of consideration, and we agree that the chancellor was correct in so holding.

II.

Was the option sufficiently complete and capable of being specifically performed?

Appellants contend that the option cannot be specifically enforced because material elements of the instrument are missing, rendering it indefinite, uncertain and ambiguous. The instrument provides (1) that appellants sell to grantees the lands for $300,000, (2) the time and method for exercising the option, (3) upon exercise of the option a binding contract of sale and purchase be executed, (4) that appellants pay cost of Internal Revenue stamps, recording fees, attorneys fees and commission fees, (5) the method of payment of the purchase price together with the interest rate, number and amount of installments, (6) that the note contain a prepayment clause and for payment of attorneys' fees, and (7) that grantors deliver unto appellees a good and sufficient warranty deed conveying the lands free and clear from liens.

In Jones v. McGahey, 187 So.2d 579 (Miss.1966), this Court said:

'A contract is sufficiently definite if it contains matter which will enable the court under proper rules of construction to ascertain its terms, including consideration of the general circumstances of the parties and if necessary relevant extrinsic evidence. Having found a contract to have been made, an agreement should not be frustrated where it is possible to reach a reasonable and fair result. Corbin, Contracts, § 95 (1963); 17 Am.Jur.2d Contracts, §§ 75-77 (1964); cf. Russell v. Douglas, 243 Miss. 497, 504, 138 So.2d 730 (1962).' 187 So.2d at 584.

In Burrow v. Timmsen, 223 Cal.App.2d 283, 35 Cal.Rptr. 668, 100 A.L.R.2d 544 (1963), the District Court of Appeals for the Second District reversed a judgment of the Superior Court of Los Angeles County denying specific performance of a land sale contract. There was written acceptance of a written offer to sell real estate for fifty thousand dollars ($50,000) with fifteen thousand dollars ($15,000) to be paid down and with a deferred balance of thirty-five 'We have concluded that the agreement is not so uncertain as to be incapable of enforcement. The modern trend of the...