Prichard's Estate, Matter of

• Decision Date: 10 March 1981
• Docket Number: No. 64664,64664
• Citation: 302 N.W.2d 554,410 Mich. 587
• Parties: In the Matter of the ESTATE of C. Carlton PRICHARD, Deceased. Ronald C. MURRELL, Plaintiff-Appellant, Cross-Appellee, v. PARAGON TRANSPORT, INC., Defendant-Appellee, Cross-Appellant.
• Court: Michigan Supreme Court

Page 554

302 N.W.2d 554

410 Mich. 587

In the Matter of the ESTATE of C. Carlton PRICHARD, Deceased.

Ronald C. MURRELL, Plaintiff-Appellant, Cross-Appellee, v. PARAGON TRANSPORT, INC., Defendant-Appellee, Cross-Appellant.

No. 64664.

Supreme Court of Michigan.

March 10, 1981.

Matheson, Bienenman, Parr, Schuler & Ewald by R. Ian Hunter and James D. Osmer, Bloomfield (Dickinson, Wright, McKean, Cudlip & Moon by Kenneth J. McIntyre, Detroit, of counsel), for Robert C. Murrell.

Schlussel, Lifton, Simon, Rands, Kaufman, Lesinski & Jackier, Southfield and Simpson, Moran & Burnett, Birmingham, for Paragon Transport, Inc.

PER CURIAM.

We are asked to decide how the lapse of time, after the exercise of an option to purchase, affects the right to complete that purchase when the instrument creating the option is silent on the point. On this record, we believe the probate judge was correct in requiring a "reasonable" amount of time and in concluding that the 40 days extended to the plaintiff was not a reasonable amount of time to allow him to complete this purchase.

I

On May 6, 1976, C. Carlton Prichard, the owner and sole shareholder of Earl C. Smith, Inc. ("Smith"), died testate. Among the provisions of his will was a paragraph on disposition of his stock in Smith:

"In the event that Ronald C. Murrell who is now in my employ as manager of Earl C. Smith, Inc., a Michigan corporation, all of the capital stock of which is owned by me, continues in my employ until the time of my death and should he desire to purchase all of the capital stock of the said Earl C. Smith, Inc., it is my will and I direct and empower my executor to grant him, the said Ronald C. Murrell, the right of first refusal to purchase all, but not less than all, of said capital stock at its fair market value. Payment shall be made by the said Ronald C. Murrell upon such terms and conditions as my executor and the said Ronald C. Murrell shall mutually agree. Said right shall be personal to the said Ronald C. Murrell and shall not be subject to assignment in any manner whatsoever."

On April 30, 1976, Mr. Prichard had returned from Mayo Clinic in Minnesota and, for an unexplained reason, told Mr. Murrell to "Get the hell out of my house and never cross my path again." Mr. Murrell responded that Mr. Prichard would have his resignation in the morning. The next day, Mr. Murrell typed and apparently mailed his resignation and cleaned out his office. Mr. Prichard entered the hospital on that day.

On May 4, 1976, a notice was sent to the members of the Smith Board of Directors notifying them of a special meeting to be held May 6, 1976. The subject of the meeting was stated to be Mr. Murrell's resignation. Mr. Murrell attended the meeting at the request of the directors. At the meeting, the directors persuaded Mr. Murrell to withdraw his resignation.

After Mr. Prichard's death, the executor of Prichard's estate recognized a right of first refusal in Mr. Murrell and solicited bids to establish the fair market value of the Smith stock. The highest bid ($2,850,000) was received from Paragon Transport. The bid was accepted on November 15, 1976, subject to Mr. Murrell's right of first refusal. By letter of November 17, 1976, the executor advised Mr. Murrell that he had until December 15, 1976 to purchase the stock for $2,850,000.

On December 9, 1976, Mr. Murrell wrote to the executor requesting a 30-day extension of time in which to exercise the testamentary option. The executor denied the request. On December 15, 1976, Mr. Murrell then exercised his right of first refusal and tendered a $50,000 deposit.

On January 21, 1977, Mr. Murrell notified the executor that Manufacturers National Bank, one of the sources from which he had been seeking financing, had rejected his loan application. That same day, Paragon increased its offer to $2,950,000. On January 24, 1977, the executor told Mr. Murrell that his right to consummate the purchase had ended. Mr. Murrell did not then object. The executor then accepted Paragon's latest offer.

On January 26, 1977, Mr. Murrell wrote to the executor asserting the continued existence of a right to purchase the stock and objecting to the acceptance of Paragon's offer. On January 28, 1977, Mr. Murrell initiated this action in probate court to prevent the sale of stock to Paragon and to require sale to him.

On February 2, 1977, Mr. Murrell obtained from Michigan National Bank of Port Huron a loan commitment sufficient to complete the transaction. That same day he notified the executor of the Michigan National Bank action and offered to complete the purchase within two weeks.

On February 28, 1977, after hearing the testimony of Mr. Murrell and other witnesses, the probate court entered orders holding that Mr. Prichard's will granted Mr. Murrell a right of first refusal to purchase the Smith stock, and forbidding the sale of the stock to anyone other than Mr. Murrell. The circuit court affirmed. The Court of Appeals reversed in three separate opinions. 94 Mich.App. 116, 288 N.W.2d 598 (1979).

II

Judge Robert Burns "focus(ed) on the reasonableness of the actions taken by the executor in terminating plaintiff's right and entering the January 24, 1977, contract with defendant." 94 Mich.App. 124, 288...