Meadow Heights Country Club v. Hinckley

• Decision Date: 10 December 1924
• Docket Number: No. 67.,67.
• Citation: 229 Mich. 291,201 N.W. 190
• Parties: MEADOW HEIGHTS COUNTRY CLUB v. HINCKLEY et al.
• Court: Michigan Supreme Court

229 Mich. 291

201 N.W. 190

MEADOW HEIGHTS COUNTRY CLUB

v.HINCKLEY et al.

No. 67.

Supreme Court of Michigan.

Dec. 10, 1924.

Appeal from Circuit Court, Jackson County, in Chancery; Benjamin S. Williams, Judge.

Suit by the Meadow Heights Country Club against Frederick P. Hinckley and another. Decree for plaintiff, and defendants appeal. Affirmed.

Argued before CLARK, C. J., and McDONALD, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ.Lucking, Helfman, Lucking & Hanlon, of Detroit (Cleveland G. Parshall, of Jackson, of counsel), for appellants.

Cobb, Bisbee & Wilson, of Jackson, for appellee.

WIEST, J.

In this case we determine whether the following option to purchase expired at the end of 10 years or remained until the expiration of the full holding under the lease. The lease was made February 25, 1905:

‘For the term of ten years from and after the 24th day of February A. D. 1905, with the privilege of a renewal for five additional years, on the same terms. * * *

‘First parties do hereby bargain and sell unto second party the exclusive right and option to purchase the premises hereinbefore described at a price not to exceed one hundred twenty-five dollars ($125.00) per acre, provided, however, that said right must be exercised immediately upon the termination of the lease or during the last three months thereof and that second party shall give to the first party at least thirty (30) days' notice in writing of such intention to purchase.'

The right to the renewal was exercised, and notice of election to purchase was given during the renewal period. Defendants, claiming the option did not extend beyond the 10-year period, refused to perform by deed, and plaintiff filed the bill herein to have specific performance decreed. In the circuit court decree passed for plaintiff, and the case is here on appeal by defendants.

The parties agreed that the option to purchase might be exercised at any time before the termination of the lease. When did this lease terminate? The lease was a present demise for the period of 15 years at the option of plaintiff. Delashman v. Berry, 20 Mich. 292, 4 Am. Rep. 392;Flynn v. Bachner, 168 Mich. 424, 134 N. W. 451, Ann. Cas. 1913C, 641. The lease itself extended the term. Luthey v. Joyce, 132 Minn. 451, 157 N. W. 708, L. R. A. 1916E, 1235;Bergstein v. Berquist, 152 Minn. 358, 189 N. W. 120. The parties contracted for a 15-year holding by plaintiff, if plaintiff so desired, and certainly there could be no termination of the lease until the right to hold thereunder ended. The lease expressed no new purpose, and carried no limitations during the extended period. The lease constituted the option to purchase; a covenant running with the demise of the land.

Defendants contend the lease and the option to purchase are as separate and distinct as though in separate instruments, and neither depends for validity upon the other. Upon this premise they say the renewal clause applies only to the lease and not to the option to purchase. This ignores the option to purchase as a substantial part of the contract, and was well answered by the Court of Appeals of Maryland in Stansbury v. Fringer, 11 Gill & J. 149:

‘Where a contract consists of several distinct and separate stipulations on one side, and a legal consideration is stated on the other, it must be considered that the entire contract was in the contemplation of the parties in each particular stipulation; and formed one of the inducements therefor, and no one stipulation can be supposed to result from, or compensate for the consideration, or any portion of it, exclusive of other stipulations, unless the parties have expressly so declared; and this will be the case, whether the consideration be a sum of money to be paid in gross, or a specific act to be performed, or several payments in money, or several acts to be performed. It is impossible to say in this case, from the face of the contract, that the appellee would have agreed either to occupy the land, or to pay the taxes or to erect a house, except for this very privilege of purchasing the title, which he now seeks to enforce.'

The option to purchase was not an agreement apart from the lease itself. We do not agree with counsel that such a provision is unusual in leases. The parties made the option to purchase an integral part of the lease, and we are not inclined to dismember their contract. The contract was made as a whole, and must be considered as such.

An option accorded a lessee to purchase premises during the term is not an agreement foreign to a lease, but quite intimately connected with the contract, for it permits the tenant to make improvements of a permanent nature without endangering loss thereof at the expiration of the lease. This was true in the case at bar, for the plaintiff wanted the use of the premises in connection with its clubhouse and its adjoining holdings, and rented and improved the premises, knowing it had the right to purchase at the agreed price at the...