Ritchie v. Cordray

• Decision Date: 15 September 1983
• Parties: , 10 O.B.R. 287 RITCHIE, Appellee and Cross-Appellant, v. CORDRAY et al., Appellants and Cross-Appellees. *
• Court: Ohio Court of Appeals

Page 213

10 Ohio App.3d 213

461 N.E.2d 325, 10 O.B.R. 287

RITCHIE, Appellee and Cross-Appellant, v. CORDRAY et al., Appellants and Cross-Appellees. ^*

Court of Appeals of Ohio, Tenth District, Franklin County.

Sept. 15, 1983.

Syllabus by the Court

1. An option is an agreement to keep an offer open for a specified time; it limits the customary power of an offeror to revoke his offer prior to its acceptance.

2. A real estate option contract is not a contract to buy and sell property--the offer does not become a contract to buy and sell unless and until its terms are accepted.

3. Where an offer prescribes the time, place, or manner of acceptance, those terms must be strictly complied with by the offeree; however, strict compliance can be waived by the offeror.

Theodore R. Saker, Columbus, for appellee and cross-appellant Ritchie.

Gayton, Walter & Tilton and Charles W. Gayton, Columbus, for appellant and cross-appellee Cordray.

Chester, Hoffman & Willcox, John J. Chester, Richard C. Addison and Donald C. Brey, Columbus, for appellant and cross-appellee Wilcox.

NORRIS, Judge.

All parties appeal from a decision of the trial court finding that they had failed to complete a contract for the sale of real property, and ordering that defendants, W. Daniel Cordray and Stanley R. Wilcox, return to plaintiff, John G. Ritchie, $50,500 that he had paid them pursuant to an option contract. Plaintiff appeals on the basis that the court awarded him insufficient damages.

On June 25, 1977, the parties entered into a "REAL ESTATE OPTION CONTRACT" which recited that plaintiff was paying defendants $32,500 for the "exclusive right and option to purchase" defendants' real property, and specified that the option was to be "exercised prior to midnight December 31, 1977 by giving to one or both of the Sellers a written notice * * * notifying the Sellers of the exercise of the Option by personally handing the same to one or both of the Sellers or by posting the same [by] certified mail to one or both * * * at 3580 Fisher Road, Columbus, Ohio."

Other provisions of the contract follow:

"FURTHER CONSIDERATION: As further consideration for this Option, the Buyer * * * shall cause to be paid to the Sellers, the sum of Three Thousand Dollars ($3,000.00) on the first day of each and every month during the term of this option, said payments being made on the first day of July, August, September, October, November and December of 1977. Upon the failure to make said payments, said Option shall be null and void. * * * If notice of the exercise of the Option has been given, then no further payments need to be made * * *.

"PURCHASE PRICE: The purchase price of said property shall be Six Hundred Fifty Six Thousand Dollars ($656,000.00), and in the event that the Option is exercised, the consideration above stated of Thirty Two Thousand Five Hundred Dollars ($32,500.00) shall be applied to reducing the purchase price, while the sums of Three Thousand Dollars ($3,000.00) per month, as above set forth, shall not be applied as a reduction of the purchase price.

"CLOSING: In the event that the Option to Purchase is exercised by the Buyer, * * * the closing of said transaction shall take place upon delivery of the balance of the purchase price which shall be no later than thirty days after the exercise of said Option.

" * * *

"OUTSTANDING LEASE: The Sellers agree that upon the exercise of said Option they will deliver to Buyer a good and sufficient Warranty Deed * * *. Subject, however, to the rights of the * * * lessees in and to a certain * * * lease agreement dated October 12, 1976 * * *."

On the afternoon of Saturday, December 31, plaintiff left a written notice of his exercise of the option under the door of defendants' place of business at 3580 Fisher Road (no one was present), and his attorney sent to the same address a Western Union "Mailgram" also purporting to exercise the option. The notice was discovered under the door on the next business day, January 2, 1978. When the sale was not consummated, plaintiff on February 21 filed suit for the return of the $50,500 he had paid to defendants, together with additional damages.

At trial, defendants contended that they attempted to set closings for the sale of the property during January and February 1978, but that plaintiff was unable to secure financing necessary to pay for the property. Plaintiff argued that defendants breached the contract by not delivering a deed to him.

In its decision, the trial court found that:

" * * * [I]n January and February, 1978, there was a breakdown in completion of the contract in issue, primarily the result of misunderstandings between the attorneys for both sides. The result was the failure of both plaintiff and defendants to complete the contract, both from the standpoint of obtaining necessary financing on the one hand and obtaining necessary deed, title binder and closing on the other. Under such circumstances, neither side should be penalized nor rewarded. Defendants have ultimately sold the property otherwise at a sizable profit. Plaintiff has lost its deposit and payments under the option."

Defendants raise three assignments of error:

"I. The trial court erred in finding defendants in breach of the option contract in that the option was never properly exercised by plaintiff.

"II. The trial court erred in finding defendants in breach of the option contract in that the trial court misinterpreted defendants' duties under that contract.

"III. The trial court erred in awarding damages to plaintiff in that plaintiff never had the financing necessary to purchase the property and in that plaintiff at all times failed and refused to purchase the property."

Plaintiff raises one cross-assignment of error:

"Cross-appellant assigns as error the failure of the trial court to award him an adequate judgment amount in this cause; in failing to follow the law as to damages and in failing to rectify the economic injustice inflicted upon cross-appellant."

The assignments of error will be discussed together.

An option is an agreement to keep an offer open for a specified time; it limits the customary power of an offeror to revoke his offer prior to its acceptance. See George Wiedemann Brewing Co. v. Maxwell (1908), 78 Ohio St. 54, 84 N.E. 594; Restatement of the Law 2d, Contracts (1981) 73-74, Section 25. In the ordinary real estate option contract, the seller offers to sell his real property upon fixed terms, and he and his prospective buyer agree that, in exchange for a consideration paid by the buyer, the seller will leave his offer open for a specified time. Within this context, the option contract is not a contract to buy and sell the property, but only a contract whereby the seller agrees to leave his offer to sell open for a time-certain. Confusion often arises since the option is combined with the main offer to sell and its attendant detailed terms.

However, the two are separate and independent, even though found in one document; the option is collateral to the main offer to sell. The main offer does not become a contract to buy and sell unless and until its terms are accepted. The option, on the other hand, is already a binding complete contract to leave the offer open--there has been both offer and acceptance, supported by consideration. See Sause v. Ward (1917), 7 Ohio App. 446, at 450-451.

Under the circumstances of this case, the parties...