Normile v. Miller, 487PA83

• Court: United States State Supreme Court of North Carolina
• Citation: 326 S.E.2d 11,313 N.C. 98
• Decision Date: 27 February 1985
• Docket Number: No. 487PA83,487PA83
• Parties: Michael M. NORMILE and Wawie Kurniawan v. Hazel Elizabeth MILLER. Lawrence J. SEGAL v. Hazel Elizabeth MILLER.

Page 11

326 S.E.2d 11

313 N.C. 98

Michael M. NORMILE and Wawie Kurniawan v. Hazel Elizabeth MILLER.

Lawrence J. SEGAL v. Hazel Elizabeth MILLER.

No. 487PA83.

Supreme Court of North Carolina.

Feb. 27, 1985.

Parker Whedon, Charlotte, for plaintiffs-appellants.

Levine & Levine by Miles S. Levine, Charlotte, for plaintiff-appellee.

FRYE, Justice.

Defendant Hazel Miller owned real estate located in Charlotte, North Carolina. On 4 August 1980, the property was listed for sale with a local realtor, Gladys Hawkins. On that same day, Richard Byer, a real estate broker with the realty firm Gallery of Homes, showed the property to the prospective purchasers, Plaintiffs Normile and Kurniawan. Afterwards, Byer helped plaintiffs prepare a written offer to purchase the property. A Gallery of Homes form, entitled "DEPOSIT RECEIPT AND CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE," containing blanks for the insertion of terms pertinent to the purchasers' offer, was completed in quadruplicate and signed by Normile and Kurniawan. One specific standard provision in Paragraph 9 included a blank that was filled in with the time and date to read as follows: "OFFER & CLOSING DATE: Time is of the essence, therefore this offer must be accepted on or before 5:00 p.m. Aug. 5th 1980. A signed copy shall be promptly returned to the purchaser."

Byer took the offer to purchase form to Gladys Hawkins, who presented it to defendant. Later that evening, Gladys Hawkins returned the executed form to Byer. It had been signed under seal by defendant, with several changes in the terms having been made thereon and initialed by defendant. The primary changes made by defendant were an increase in the earnest money deposit ($100 to $500); an increase in the down payment due at closing ($875 to $1,000); a decrease in the unpaid principal of the existing mortgage amount ($18,525 to $18,000); a decrease in the term of the loan from seller (25 years to 20 years); and a purchaser qualification contingency added in the outer margin of the form.

That same evening, Byer presented defendant's counteroffer to Plaintiff Normile. Byer testified in his deposition that Normile did not have $500 for the earnest money deposit, one of the requirements of defendant's counteroffer. Also, Byer stated that Normile did not "want to go 25 [sic] years because he wanted lower payments." Byer was under the impression at this point that Normile thought he had first option on the property and that "nobody else could put an offer in on it and buy it while he had this counteroffer, so he was going to wait awhile before he decided what to do with it." Normile, however, neither accepted or rejected the counteroffer at this point, according to Byer. When this meeting closed, Byer left the pink copy of the offer to purchase form containing defendant's counteroffer with Normile. Byer stated that he thought that Normile had rejected the counteroffer at this point.

At approximately 12:30 a.m. on 5 August, Byer went to the home of Plaintiff Segal, who signed an offer to purchase with terms very similar to those contained in defendant's counteroffer to Plaintiffs Normile and Kurniawan. This offer was accepted, without change, by defendant. Later that same day, at approximately 2:00 p.m., Byer informed Plaintiff Normile that defendant had revoked her counteroffer by commenting to Normile, "[Y]ou snooze, you lose; the property has been sold." Prior to 5:00 p.m. on that same day, Normile and Kurniawan initialed the offer to purchase form containing defendant's counteroffer and delivered the form to the Gallery of Homes' office, along with the earnest money deposit of $500.

Separate actions were filed by plaintiff-appellants and -appellee seeking specific performance. Plaintiff Segal's motion for consolidation of the trials was granted. Defendant, in her answer, recognized the validity of the contract between her and Plaintiff Segal. However, because of the action for specific performance commenced by Plaintiffs Normile and Kurniawan, defendant contended that she was unable to legally convey title to Plaintiff Segal. Both plaintiffs filed a motion for summary judgment. Plaintiff Segal's motion for summary judgment was granted by the trial court, and defendant was ordered to specifically perform the contract to convey the property to Segal. Plaintiffs Normile and Kurniawan appealed to the Court of Appeals from the trial court's denial of their motion for summary judgment. That court unanimously affirmed the trial court's actions. Discretionary review was allowed by this Court on petition of Plaintiffs Normile and Kurniawan.

I.

The first issue on this appeal is whether a time limit within which an offer must be accepted that is contained in a prospective purchaser's written offer to purchase real property becomes a term of the seller's subsequent counteroffer, transforming the counteroffer into an option contract or irrevocable offer for the time stated if signed under seal. We conclude that it does not.

Plaintiff-appellants argue that the counteroffer made by Defendant Miller to plaintiff-appellants became a binding and irrevocable option to purchase within the time for acceptance contained in their original offer to purchase. Essentially, plaintiff-appellants argue that the Court of Appeals was incorrect in holding that defendant's counteroffer was not an irrevocable option because the "promise to hold the offer open until 5:00 p.m., 5 August 1980, was not supported by consideration, ..." Normile, 63 N.C.App. at 694, 306 S.E.2d at 150.

As a preliminary matter, it is obvious that the thrust of both the Court of Appeals' and plaintiff-appellants' arguments center around their analysis of whether or not the counteroffer from Defendant Miller to plaintiff-appellants constituted a binding and enforceable option contract for the period of time for acceptance stated and contained in plaintiff-appellants' original offer to purchase form. This basic proposition seems to be premised upon the inaccurate notion that Defendant Miller's "counteroffer provided that the offer would remain open until 5:00 p.m. on 5 August 1980...." Normile, 63 N.C.App. at 693, 306 S.E.2d at 149. This same misconception is reflected in plaintiff-appellants' brief where they state, without citing any legal authority:

It is basic that when one party makes another a written offer which the offeree changes in some respects, signs and returns, the offer becomes a counteroffer by the original offeree to the original offeror, which consists of the altered provisions and all of the unaltered provisions of the original offer. Thus, since the time limitation for acceptance was not altered, one of the provisions of the counteroffer was that the time for its acceptance would terminate at 5:00 p.m. August 5, 1980.

The counteroffer, being under seal, constituted a binding option to sell, irrevocable during the stated time limitation for its acceptance, and enforceable by specific performance upon its acceptance. (emphasis added).

We do not agree that defendant's counteroffer to plaintiffs-appellants subsumed all the provisions of the original offer from the prospective purchasers. To effectively explain this conclusion, we begin with a brief description of how a typical sale of real estate is consummated. The broker, whose primary duty is to secure a ready, willing, and able buyer for the seller's property, generally initiates a potential sale by procuring the prospective purchaser's signature on an offer to purchase instrument. J. Webster, North Carolina Real Estate for Brokers and Salesmen, § 8.03 (1974). "An 'offer to purchase' is simply an offer by a purchaser to buy property, ..." J. Webster, supra, § 8.03. This instrument contains the prospective purchaser's "offer" of the terms he wishes to propose to the seller. Id.

Usually, this offer to purchase is a printed form with blanks that are filled in and completed by the broker. Among the various clauses contained in such an instrument, it is not uncommon for the form to contain "a clause stipulating that the seller must accept the offer and approve the sale within a certain specified period of time, ... The inclusion of a date within which the seller must accept simply indicates that the offer will automatically expire at the termination of the named period if the seller does not accept before then." Id. § 8.10. Such a clause is contained in Paragraph 9 of the offer to purchase form in the case sub judice.

In the instant case, the offerors, plaintiffs-appellants, submitted their offer to purchase defendant's property. This offer contained a Paragraph 9, requiring that "this offer must be accepted on or before 5:00 p.m. Aug. 5th 1980." Thus the offeree's, defendant-seller's, power of acceptance was controlled by the duration of time for acceptance of the offer. Restatement (Second) of Contracts § 35 (1981). "The offeror is the creator of the power, and before it leaves his hands, he may fashion it to his will ... if he names a specific period for its existence, the offeree can accept only during this period." Corbin, Offer and Acceptance, and Some of the Resulting Legal Relations, 26 Yale L.J. 169, at 183 (1917); see Restatement, supra, § 41; S. Williston, A Treatise on the Law of Contracts § 53 (1957).

This offer to purchase remains only an offer until the seller accepts it on the terms contained in the original offer by the prospective purchaser. J. Webster, supra, § 8.10. If the seller does accept the terms in the purchaser's offer, he denotes this by signing the offer to purchase at the bottom, thus forming a valid, binding, and irrevocable purchase contract between the seller and purchaser. However, if the seller purports to accept but changes or modifies the terms of the offer, he makes what is generally referred to as a qualified or conditional acceptance. Richardson v. Greensboro Warehouse & Storage Co., 223 N.C. 344, 26 S.E.2d 897 (1943); Wilson v....