Randolph v. Koury Corp.

• Decision Date: 27 January 1984
• Docket Number: No. 15846,15846
• Citation: 312 S.E.2d 759,173 W.Va. 96
• Court: West Virginia Supreme Court
• Parties: Hughey E. RANDOLPH v. The KOURY CORPORATION, etc.

Page 759

312 S.E.2d 759

173 W.Va. 96

Hughey E. RANDOLPH v. The KOURY CORPORATION, etc.

No. 15846.

Supreme Court of Appeals of

West Virginia.

Jan. 27, 1984.

[173 W.Va. 97] Syllabus by the Court

1. "Being a restraint upon alienation, a condition against assignment by a lessee or an assignee of a lessee is governed by the rule of strict construction, and it does not exist unless it has been clearly and definitely provided in the lease or some other written instrument made collateral thereto." Syllabus Point 2, Easley Coal Co. v. Brush Creek Coal Co., 91 W.Va. 291, 112 S.E. 512 (1922).

2. Unless there is some statutory prohibition or an express provision in the lease to the contrary, a lease on real property, other than a tenancy at will, is assignable.

3. Where a lease is assignable and it contains an option to purchase, unless there is clear language in the lease that limits the assignability of the option, it is also assignable.

4. Where a party has a contractual obligation, he, as the obligor, may not escape performance when the other party, the assignor, has assigned the contract right to a third party, the assignee, by pointing to some defect in the assignment, unless such defect renders the assignment void.

5. "In the exercise of its appellate jurisdiction, this Court will not decide nonjurisdictional questions which were not considered and decided by the court from which the appeal has been taken." Syllabus Point 1, Mowery v. Hitt, 155 W.Va. 103, 181 S.E.2d 334 (1971).

John J. Nesius, Davis & Nesius, So. Charleston, for appellant.

Alfred B. McCuskey, II, St. Albans, for appellee.

MILLER, Justice:

The Koury Corporation appeals from an order of the Circuit Court of Kanawha County which required it to convey to Hughey E. Randolph a parcel of property located in St. Albans, West Virginia. The controversy below centered on the question of whether a purchase option contained in a lease between the Koury Corporation and the American Oil Company was assignable On March 28, 1958, the Koury Corporation leased a parcel of real estate to the American Oil Company. The lease was for an initial term of ten years, with renewal options. The lease also granted an option to the American Oil Company to purchase the property for $40,000 during the term of the lease or during any renewal term.

to Mr. Randolph. Another issue is whether the terms of the assignment had been met when Mr. Randolph attempted to exercise the option. A further issue relates to Koury's claim that specific performance was improper because the option price and the fair market value of the property were grossly disproportionate. We find no reversible error and affirm the judgment of the circuit court.

The granting clause of the lease contained language of assignability: "That LESSOR has leased, let, demised and by these presents does lease, let and demise unto LESSEE, its successors, sublessees and assigns, the property situate in the City of St. Albans, County of Kanawha, State of West Virginia." The clause relating to the option to purchase contained this language: "LESSOR covenants and agrees, upon payment of the purchase price, to convey the said property to LESSEE, its successors and assigns, by a recordable instrument having good and marketable title in fee simple." (Emphasis added) ¹

In 1968, portions of the lease were renegotiated because the American Oil Company wanted to enlarge and remodel the station. As a result of the negotiations, a "Lease Supplement" dated March 20, 1969, was entered into. In the supplement, the rent due under the lease was increased. The "Lease Supplement" did not modify the provisions regarding the purchase option.

By assignment dated April 19, 1978, Amoco Oil Company, successor to the American Oil Company, assigned the 1958 lease with all supplements to Hughey E. Randolph. The assignment was to be effective June 1, 1978. Counsel for Mr. Randolph, by letter dated June 8, 1978, notified the Koury Corporation of Mr. Randolph's election to exercise the purchase option.

The Koury Corporation did not respond to this letter, and subsequently refused to convey the property to Mr. Randolph. Mr. Randolph then instituted an action for specific performance in the Circuit Court of Kanawha County.

The Koury Corporation defended by asserting that the option was not assignable. It also contended that even if it were assignable, the assignment between Amoco and Mr. Randolph required that title be conveyed to Mr. Randolph by June 30, 1978, and since title was not conveyed by that date, the assignment had expired. Finally, Koury suggested at trial that because the purchase price in the option was substantially below the fair market value of the property, it was inequitable to order specific performance.

ASSIGNABILITY OF THE OPTION

In arguing against the assignability of the option to purchase, Koury relies heavily on Rease v. Kittle, 56 W.Va. 269, 49 S.E. 150 (1904), where we characterized an option to purchase real estate as a personal right. We held that in the absence of words of assignability, it could not be assigned.

Here, we deal with a lease that does contain language of assignability.

Furthermore, we have cases that recognize that a lease is ordinarily assignable unless there is some clear language prohibiting assignability, as we stated in Syllabus Point 2 of Easley Coal Co. v. Brush Creek Coal Co., 91 W.Va. 291, 112 S.E. 512 (1922):

"Being a restraint upon alienation, a condition against assignment by a lessee or an assignee of a lessee is governed by the rule of strict construction, and it does not exist unless it has been clearly and definitely provided in the lease or some other written instrument made collateral thereto." ²

See also Rees v. Emmons Coal Mining Co., 88 W.Va. 4, 106 S.E. 247 (1921); cf. Miller v. Fredeking, 101 W.Va. 643, 133 S.E. 375 (1926); 11B Michie's Jurisprudence Landlord & Tenant § 57 (1978).

The general rule elsewhere is that unless there is some statutory prohibition or an express provision in the lease to the contrary, a lease on real property, other than a tenancy at will, is assignable. ³ Crump v. Tolbert, 210 Ark. 920, 198 S.W.2d 518 (1946); Kassan v. Stout, 9 Cal.3d 39, 106 Cal.Rptr. 783, 507 P.2d 87 (1973); Ochsner v. Langendorf, 115 Colo. 453, 175 P.2d 392 (1946); Rauch v. Circle Theater, 176 Ind.App. 130, 374 N.E.2d 546 (1978); Valley Oil Co. v. Barberian, 344 Mass. 759, 183 N.E.2d 109 (1962); Todd v. Board of Educational Lands and Funds of Neb., 154 Neb. 606, 48 N.W.2d 706 (1951); Kruger v. Page Management Co., Inc., 105 Misc.2d 14, 432 N.Y.S.2d 295 (1980); Gripentrog v. City of Wahpeton, 126 N.W.2d 230 (N.D.1964); Powerine Co. v. Russell's, Inc., 103 Utah 441, 135 P.2d 906 (1943); 49 Am.Jur.2d Landlord and Tenant § 398 (1970); 51C C.J.S. Landlord and Tenant § 31 (1968). In the present case, we note that the lease was assignable. Furthermore, we are aware of no statute that prohibits assignability of leases. ⁴

We do not appear to have a case where we have considered the question of whether a purchase option contained in an assignable and it contains an option to purchase, lease is assignable and passes with the assignment of the lease. Other courts have held that where a lease is assignable, unless there is clear language in the lease that limits the assignability of the option, the option is also assignable. Berrien County Fruit Exchange v. Pallas, 314 Mich. 66, 22 N.W.2d 74 (1946); Jamson v. Poulos, 184 Neb. 480, 168 N.W.2d 526 (1969); Summa Corp. v. Richardson, 93 Nev. 228, 564 P.2d 181 (1977), appeal on remand, 95 Nev. 399, 596 P.2d 208 (1979); Holmes v. Harris, 33 N.J.Super. 395, 110 A.2d 329 (1954); Humble Oil & Refining Co. v. Lennon, 94 R.I. 509, 182 A.2d 306 (1962); Rickard v. Dana, 74 Vt. 74, 52 A. 113 (1902); 49 Am.Jur.2d Landlord and Tenant § 374 (1970). We believe this rule is consistent with our general rule favoring assignability as set out in Easley Coal Co. v. Brush Creek Coal Co., 91 W.Va. 291, 112 S.E. 512 (1922).

In the case before us, we find no language in the lease that expressly provides that the option itself is not assignable. As previously noted, there is language in the option clause that suggests assignability but we need not rely upon this language in resolving the question before us. The inquiry ends when we find that the lease is assignable and contains no express language prohibiting assignment of the option.

We, therefore, find no merit in regard to Koury's nonassignability issue.

VALIDITY OF ASSIGNMENT

Koury maintains that the contract of assignment between Amoco and Mr. Randolph expired by its own terms because it contained language to the effect that the assignment would terminate "[i]n the case of the failure of the Assignee as a result of Assignee's acts or omissions, to exercise purchase option and title is not conveyed to Assignee for any reason by the 30th day of June, 1978."

Additionally, Koury contends that Mr. Randolph failed to comply with the terms of the contract since it required him to deposit a certified check with an attorney approved by the assignor, Amoco, once Mr. Randolph exercised the option. ⁵ There appears to be no dispute factually that this provision was not complied with by Mr. Randolph.

Koury cites several cases to sustain its position, but we believe they are inapplicable. It relies on the single Syllabus of Rutherford v. MacQueen, 111 W.Va. 353, 161 S.E. 612 (1931), where we said that "[a] party relying upon a contract is bound by all its legitimate terms." From this, it argues that since Mr. Randolph did not place the $40,000 in escrow with Amoco's attorney, he did not comply with the assignment contract. However, this begs the question of whether Koury, who is not a party to the assignment contract, is entitled to assert its provision as a defense.

A similar problem exists regarding Koury's reference to Weaver v. Burr, 31 W.Va. 736, 8 S.E. 743 (1888), and Pollock v. Brookover, 60 W.Va....