Morgan v. Forbes

• Decision Date: 26 November 1920
• Citation: 236 Mass. 480,128 N.E. 792
• Parties: MORGAN v. FORBES et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

236 Mass. 480

128 N.E. 792

MORGAN

v.FORBES et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Nov. 26, 1920.

Appeal from Superior Court, Suffolk County; Franklin T. Hammond, Judge.

Suit by Earle Morgan against J. Murray Forbes and others. From a decree for plaintiff, defendants appeal. Affirmed.Felix Rackemann and Harrison M. Davis, both of Boston, for appellants.

Taylor & Loker, of Boston, for appellee.

CARROLL, J.

An agreement in writing relating to the conveyance of real estate in Milton was entered into May 30, 1919. The price was $12,000, to be paid by the plaintiff on or before September 1, 1919, when the deed was to be delivered. Tender of payment was not made until September 30, 1919. October 9, 1919, this suit in equity was brought for the specific performance of the contract, There was a decree for the plaintiff.

[1] The defendants contend that the agreement is an option and time is of its essence. The plaintiff contends it is an agreement for the sale and purchase of real estate and that time is not of the essence of the contract. It is the established rule, both in law and equity, that time is of the essence of an option and if the agreement of the parties was an option, in order to hold the defendants, payment on or before September 1, 1919, was a condition precedent and relief cannot be given the plaintiff. Smith & Rice C. v. Canady, 213 Mass. 122, 99 N. E. 968;Boston & Worcester St. Ry. v. Rose, 194 Mass. 142, 80 N. E. 498;Carter v. Phillips, 144 Mass. 100, 10 N. E. 500;Trogden v. Williams, 144 N. C. 192, 56 S. E. 865,10 L. R. A. (N. S.) 867.

An option to purchase real estate is a unilateral contract by which the owner of the property agrees with the holder of the option that he has the right to buy the property according to the terms and conditions of the contract. By such an agreement the owner does not sell the land, nor does he at the time contract to sell. He does, however, agree that the optionee shall have the right at his election or option, to demand the conveyance in the manner specified. It is merely the right to an election which has been sold and the owner of this right is not bound to complete the sale. Barnes v. Rea, 219 Pa. 287, 68 Atl. 839;Pollock v. Brookover, 60 W. Va. 75, 53 S. E. 795,6 L. R. A. (N. S.) 403;Smith v. Bangham, 156 Cal. 359, 104 Pac. 689,28 L. R. A. (N. S.) 552.

The contract of May 30, 1919, was signed by the plaintiff and the defendant Forbes, acting for himself and his sister. Although it was not stated in express terms that Morgan agreed to buy the premises, the contract was not a mere option binding only upon the defendants, by which they gave the plaintiff merely the right to purchase at his election. It was a bilateral agreement by which Forbes agreed to convey the land, and considering the entire contract, Morgan in fact agreed to purchase it, and both parties were bound by the stipulations of the written contract. It recited that the price was $12,000 and was to be paid by Morgan on or before September 1, 1919; that he has herewith paid $500 as ‘bargain money,’ to be forfeited if he fails to ‘pay the balance of $11,500 on or before September 1, 1919.’ ‘A bargain is a contract or agreement between two parties, the one to sell goods or lands, and the other to buy them.’ Hunt v. Adams, 5 Mass. 358, 360,4 Am. Dec. 68. The words ‘bargain money’ have much the same significance as earnest, which under the statute of frauds is regarded as part payment of the price. Howe v. Hayward, 108 Mass. 54, 11 Am. Rep. 306. We do not decide, however, that the signing by both parties and the use of the words ‘bargain money’ would of themselves be sufficient to require the plaintiff to complete the purchase. See Benedict v. Pincus, 191 N. Y. 377, 84 N. E. 284.Moran v. Standard Oil Co., 211 N. Y. 187, 197,105 N. E. 217.

In the second paragraph it was agreed that the price to be paid by Morgan was $12,000. If this was an absolute promise to pay (see Benedict v. Pincus, supra), and not merely a promise to pay at his election, or if the whole contract shows it was intended by the parties that his promise to pay the stipulated sum was unconditional, then he was bound to make the purchase and the contract was one of purchase and sale. It was agreed that on the delivery of the deed the plaintiff was ‘to take over the present insurance on said house, * * * paying pro rata for the unexpired portion of the policies, and also the cost of mechanic's privilege for work contemplated,’ and in the fifth paragraph he promised ‘to pay one-half the local tax assessed for 1919 on house and land.’ Even if the contract should be construed to mean that the payment of taxes and insurance depended on his completing the purchase, it was further provided that he should supply a caretaker or pay the additional insurance premium if the house became unoccupied. This latter provision was subject to no such condition. He was under the positive obligation to the defendants to pay the insurance or provide a caretaker and they had a right to insist on its performance. He was also given the right, after 10 days, to enter upon the premises and make repairs and alterations and if he failed to complete the bargain, the repairs and alterations were to belong to the estate, free from all charges and mechanic's liens.

In addition to this, in the event of damage or destruction of the house by fire before final payment was made, the insurance recovered was to belong to Morgan, ‘the same as if the purchase had been completed.’ This right to the insurance in case of loss was expressly given him by the contract. It was not intended by this provision of the contract to give the plaintiff, as the holder of a...