Morrison v. Johnson

• Decision Date: 24 March 1921
• Docket Number: No. 22278.,22278.
• Citation: 148 Minn. 343,181 N.W. 945
• Parties: MORRISON v. JOHNSON.
• Court: Minnesota Supreme Court

148 Minn. 343

181 N.W. 945

MORRISON

v.JOHNSON.

No. 22278.

Supreme Court of Minnesota.

March 24, 1921.

Appeal from District Court, Meeker County; Richard T. Daly, Judge.

Action by Jacob G. Morrison against John W. Johnson. Judgment for defendant. From a denial of a new trial, plaintiff appeals. Affirmed.

Syllabus by the Court

An option to purchase property if given for a valuable consideration is a valid contract, but if given without a consideration is a mere offer which may be withdrawn at any time before acceptance.

The consideration for an option must be separate and distinct from the purchase price to be paid for the property, and the burden of proving it rests in the party asserting the option.

The payment of $1 will sustain a short-time option to purchase on fair terms.

Although an option contract recites the payment of a consideration, it may be impeached by showing absence of consideration.

It will be presumed that the evidence warranted the assumptions of fact in the charge unless the record shows the contrary.

An ‘option’ is merely an agreement to hold an offer to sell property open for a specified time. Alva R. Hunt, of Litchfield, for appellant.

N. D. & C. H. March, of Litchfield, for respondent.

TAYLOR, C.

Defendant had a verdict and plaintiff appeals from an order denying a new trial. The record contains the pleadings and a very brief bill of exceptions. The complaint alleges:

‘That upon the 11th day of March, 1919, the defendant executed and delivered to the plaintiff his certain option contract in writing wherein he agreed that the plaintiff, at any time within twelve months, might purchase of the defendant for the sum of fourteen thousand and forty dollars, the southwest quarter of section 29, township 119, range 30,’ on the terms therein specified.

‘That on or about July 12, 1919, plaintiff having procured a buyer for said land at the price of $15,200 elected to purchase said land under said option agreement and on that day produced and counted down the sum of $1,000 (the initial payment) in money and then and there offered the same to the defendant in compliance with the terms of said option contract, but that the defendant then and there refused to accept said money and repudiated said contract,’ to plaintiff's damage in the sum of $1,160.

The answer, among other things, contains allegations to the effect that defendant was induced to sign the contract by fraudulent misrepresentations, that there was no consideration for it, and that defendant had revoked and annulled it before plaintiff made his tender.

The bill of exceptions sets forth the contract, which is as follows:

‘For and in consideration of the sum of $1.00 to me in hand paid, the receipt whereof is hereby acknowledged. I hereby grant unto Jacob G. Morrison, of Litchfield, Minnesota, an option for twelve months from date hereof to purchase for the sum of fourteen thousand and forty dollars the following described land: [Here follows the description of the land and the terms of payment.]

‘That at any time during this option, that said party makes the payments above mentioned, I agree to give him a good and sufficient deed of conveyance of said land, clear of incumbrances, with full covenants of warranty and also a complete abstract of title to the same.

‘In testimony whereof, I have hereunto set my hand and seal this 11th day of March, A. D. 1919.

John W. Johnson.'

The bill of exceptions further sets forth that on July 12, 1919, plaintiff tendered the initial payment and demanded that defendant carry out the contract, but that defendant refused to receive the payment and refused to perform the contract on his part. It further sets forth that there was evidence on the part of defendant tending to prove that before plaintiff made his tender defendant had notified him that the option was withdrawn and annulled, and evidence on the part of plaintiff to the contrary. It further sets forth in substance that the court instructed the jury that defendant had the right to withdraw the option at any time before plaintiff accepted it, and that plaintiff was not entitled to recover if defendant had notified him that the option was withdrawn before he made the tender, but further instructed them that plaintiff was entitled to recover if he made the tender before he was notified that the option had been withdrawn.

The sole question presented is whether the court erred in instructing the jury that defendant had the right to withdraw and cancel the option at any time before its acceptance, and in further instructing them that plaintiff was not entitled to recover if defendant had in fact given notice that the option was withdrawn before plaintiff made his tender.

[1][2] An option is merely an agreement to hold an offer to sell property open for a specified time. If the agreement is made for a valuable consideration it becomes a binding contract and the offer cannot be withdrawn; if made without consideration it does not become a binding contract until accepted and the offer may be withdrawn at any time before it has been accepted. 27 Ruling Case Law, 338; Pollock v. Brookover, 60 W. Va. 75, 53 S. E. 795,6 L. R. A. (N. S.) 405;Friendly v. Elwert, 57 Or. 599, 105 Pac. 404,111 Pac. 690,112 Pac. 1085, Ann. Cas. 1913A, 357, and note at page 364; James on Option Contracts, § 102. The contract in question is not executed by plaintiff and contains no provisions obligating plaintiff to do anything. Consequently it is not supported by a consideration unless a consideration was given as a part of the transaction in which it was executed. Such consideration must be separate and distinct from the obligation of the optionee to pay the stipulated price in case he elects to purchase the property. Ide v. Leiser, 10 Mont. 5, 24 Pac. 695,24 Am. St. Rep. 17;Murphy v. Reed, 125 Ky. 585, 101 S. W. 964,10 L. R. A. (N. S.) 195, 128 Am. St. Rep. 259; James on Option Contracts, § 703.

The burden rested on plaintiff to show that the option was supported by a valuable consideration. The complaint does not allege a consideration. The answer avers that there was no consideration. The bill of exceptions contains no statement relating to the matter of consideration. The only thing in the record tending to show a consideration is the recital...