North Side Asphalt & Material Transport, Inc. v. Foreman

• Decision Date: 22 March 1988
• Docket Number: No. 49A02-8702-CV-59,49A02-8702-CV-59
• Citation: 520 N.E.2d 457
• Court: Indiana Appellate Court
• Parties: NORTH SIDE ASPHALT & MATERIAL TRANSPORT, INC., Appellant (Plaintiff), v. Charles E. FOREMAN, Clearwater Development Corp., and John E. Deuser as Managing Partner of Lake Clearwater, a Partnership, Appellees (Defendants).

Page 457

520 N.E.2d 457

NORTH SIDE ASPHALT & MATERIAL TRANSPORT, INC., Appellant (Plaintiff), v. Charles E. FOREMAN, Clearwater Development Corp., and John E. Deuser as Managing Partner of Lake Clearwater a Partnership, Appellees (Defendants).

No. 49A02-8702-CV-59.

Court of Appeals of Indiana Second District.

March 22, 1988.

Paul G. Roland, Ruckelshaus, Roland, Hasbrook & O'Connor, Arthur J. Sullivan, Steers, Sullivan, McNamar & Rogers, Indianapolis, for appellees (defendants).

BUCHANAN, Judge.

CASE SUMMARY

Plaintiff-appellant North Side Asphalt & Material Transport, Inc. (North Side) appeals from the grant of partial summary judgment and in the judgment of the remaining issues following a bench trial in favor of defendants-appellees Charles E. Foreman (Foreman), Clearwater Development Corp. (Clearwater) and John E. Deuser (Deuser), claiming that the trial court erred in ruling that North Side failed to exercise an option to purchase real estate when Foreman anticipatorily repudiated the option by contracting to sell the property to Clearwater.

We reverse and remand.

FACTS

The facts most favorable to the nonmoving party reveal that on October 15, 1978, North Side leased a one-half acre of real estate from Foreman. On June 28, 1979, the parties amended the lease agreement which increased the size of the rented parcel to one acre. At that time, Foreman extended North Side an option to purchase the property, providing in pertinent part:

"OPTION TO PURCHASE: Lessee shall have the right and option to purchase the leased property, during the term of the lease expiring December 31, 1983, at and for the sum of thirty two thousand ($32,000.00) dollars, payable $16,000.00 in cash upon exercise of the option, the balance within one year from date of purchase.... Lessee shall be entitled to a conveyance by General Warranty Deed upon payment of the full purchase price."

Record at 23 (emphasis supplied).

On June 29, 1979, Foreman executed a land contract with an option to purchase in favor of Clearwater which included the same parcel previously optioned to North Side. On December 15, 1983, North Side notified Foreman by certified letter of its intent to exercise its option. Three days later, Foreman sent North Side a letter indicating that he had sold the property to Clearwater. North Side tendered no money and filed its complaint for specific performance on December 30, 1983 and Foreman counterclaimed for back rent.

On July 14, 1986, Foreman filed its motion for partial summary judgment which was subsequently granted. The trial court ruled that because North Side did not tender the $16,000.00 down payment in accordance with the contract terms, it failed to exercise properly the option to purchase as a matter of law. Following a trial by court on October 17, 1986, Foreman was awarded $6,800.00 for rent and $3,000.00 for restoration of the property.

ISSUES

Because we reverse, we need only address the following issue: ¹

Whether the trial court erroneously granted Foreman's motion for partial summary judgment when it concluded that North Side failed to exercise its option to purchase as a matter of law?

PARTIES' CONTENTIONS--North Side maintains that the trial court improperly granted Foreman's motion for partial summary judgment because the sale of the property to Clearwater constituted a unilateral repudiation of the option agreement thereby waiving and frustrating North Side's duty to tender the down payment under the option.

Foreman responds that the trial court's grant of partial summary judgment was correct because North Side's failure to tender the down payment in a timely fashion did not constitute a proper exercise of the option.

CONCLUSION--The trial court improperly granted Foreman's motion for partial summary judgment.

The rule of summary judgment applicable to this case is that when there is no genuine issue as to any material fact, a trial court may not grant a motion for summary judgment unless the moving party can establish it is entitled to judgment as a matter of law. Madison County Bank & Trust Co. v. Kreegar (1987), Ind., 514 N.E.2d 279; Tippecanoe Sanitary Landfill, Inc. v. Board of County Comm'rs (1983), Ind.App., 455 N.E.2d 971, trans. denied; Nationwide Mut. Ins. Co. v. Neville (1982), Ind.App., 434 N.E.2d 585, trans. denied; Ind. Rules of Procedure, Trial Rule 56(C).

An option to purchase real estate is a contract by which the owner of the realty agrees with another person that the latter shall have the power to purchase the property at a fixed price within a certain time period. Romain v. A. Howard Wholesale Co. (1987), Ind.App., 506 N.E.2d 1124; Bandy v. Myers (1967), 141 Ind.App. 220, 227 N.E.2d 183. Generally, the exercise of an option is effective only if it strictly adheres to the terms stipulated in the contract. Romain, supra; Hutchcraft v. Eastern Indiana Prod. Credit Ass'n (1985), Ind.App., 486 N.E.2d 644; Rowland v. Amoco Oil Co. (1982), Ind.App., 432 N.E.2d 414, trans. denied. This court has observed that when the contract requires an option holder to tender money within the option period and he fails to do so, the mere notice of intent to exercise the option does not form a binding contract to sell the real estate. Romain, supra; Hutchcraft, supra.

However, these cases are not helpful to Foreman. When North Side expressed its intent to exercise the option by the December 15, 1983 certified letter, Foreman's reply letter sent thirteen days before the option's expiration date disclosed that he had already sold the property to Clearwater. Record at 54. Foreman's purported sale of the property to Clearwater before the expiration of the option rendered Foreman's performance under the option agreement impossible. See Coons v. Baird (1970), 148 Ind.App. 250, 265 N.E.2d 727, trans. denied.

A number of courts have determined that when an optionor breaches a lease by an act totally inconsistent with the continuance of an option to purchase, as by conveying the optioned property to a third party, the optionee may bring an action for damages. See generally 49 AM.JUR.2D Landlord and Tenant Sec. 388 (1970).

In Schoonover v. Kahn (1964), Mo.App., 377 S.W.2d 535, the Missouri Court of Appeals affirmed a trial court's award of damages to the plaintiff-lessee when the defendant-landlord conveyed real property to a third party in breach of an option it had conferred upon the plaintiff. Although the plaintiff failed to exercise properly the option required by the contract, the Schoonover court reasoned:

"Appellants assert that Schoonover never tried to exercise the option by giving the prescribed 30 days' notice.... Defendants...