Rutledge & Taylor Coal Co. v. Mermod, Jaccard & King Jewelry Co.

• Decision Date: 03 January 1922
• Citation: 237 S.W. 849,209 Mo.App. 292
• Parties: RUTLEDGE & TAYLOR COAL COMPANY, a Corporation, Appellant, v. MERMOD, JACCARD & KING JEWELRY COMPANY, a Corporation, Respondent
• Court: Missouri Court of Appeals

237 S.W. 849

209 Mo.App. 292

RUTLEDGE & TAYLOR COAL COMPANY, a Corporation, Appellant, v. MERMOD, JACCARD & KING JEWELRY COMPANY, a Corporation, Respondent

Court of Appeals of Missouri, St. Louis

January 3, 1922

Appeal from the Circuit Court of the City of St. Louis.--Hon. Benj. J. Klene, Judge.

REVERSED AND REMANDED (with directions.)

Judgment reversed and cause remanded.

Marion C. Early for appellant.

(1) When a contract creating a relation between the parties thereto, terminating at a fixed time, contains a provision giving one of the parties an option to renew the relation for a further period, such option expires with the time fixed by the contract for that relation in the first instance and cannot be exercised thereafter. (2) This foregoing applies when the contract is for current sales or services terminating at a fixed time, with option for renewal, which is the precise case under discussion. Monmouth Electric v. Gas. Co., 83 N.J. L. 531; San Pedro Salt Co. v Hauser Packing Co., 13 Cal.App. 1; Helena Light Co v. Northern Pacific, 186 P. 702. (3) The same rule holds good for options for renewal in leases, being merely a special application of the general principle, stated under 1 above, and therefore authority for 2 above. Renaud v Daskm, 35 Conn. 312; Thiebaud v. First Natl. Bk., 42 Ind. 212; Jones on Landlord & Tenant, par. 339; Shamp v. White, 106 Cal. 220; Robertson v. Drew, 116 Pa. 638; Leavitt v. Mykell, 203 Mass. 506; Samuelson v. Palmer, 96 Kan. 587; Insurance Co. v. National Bank, 5 Mo.App. 333, 71 Mo. 58. (4) Similarly a tenant's option to purchase the fee cannot be exercised after expiration of the lease in which that option is given. Magoffin v. Holt, 62 Ky. (1 Duvall) 95; Tilton v. Sterling Coal Co., 28 Utah 173; Cates v. McNeil, 169 Cal. 697. (5) The word "renewal" has no technical meaning; and when an option for renewal is given in a contract creating a current relation between the parties thereto, it is indistinguishable from an option for extension so far as time of exercising the option is concerned. Insurance Co. v. National Bank, 71 Mo. 58; Blanchon v. Kellerstrass, 200 Mo.App. 610; Medicus v. Altman, 199 Mo.App. 466; Helena Light Co. v. Northern Pacific, 186 P. 702. (6) Options are construed in favor of the party that is bound and against the party having the option. Kolachny v. Galbreath, 26 Okl. 772; Harding v. Gibbs, 125 Ill. 85; Frye on Specific Peformance, par. 733; Stembridge v. Stembridge, 87 Ky. 91; Mitchell v. Probst, 152 P. 597. As a matter of fact, excessive damages were allowed. It was proved that respondent could have bought the coal at much lower figures than it actually did.

McLaran & Garesche and E. H. Wayman for Respondent.

(1) The option given to the respondent in this case was to renew its contract with the appellant. (2) The word "renew" or "renewing" has a common and definite meaning, as "to recommence;" to repeat; to reestablish, revive or to give a new existence to that which has expired by forfeiture or lapse of time. Moers v. City of Reading, 21 Pa. 201; Commonwealth v. Bartilson, 85 Pa. 487; Sponhaur v. Malloy, 21 Ind.App. 292; Kedey v. Petty, 153 Ind. 184; Tannenbaum v. Bloomingdale, 58 N.Y.S. 235-237; Century Dictionary. (3) The respondent, according to the common acceptation of the word "renew," could not renew its contract with appellant until the contract had expired, and, hence, it was not required to exercise its option to renew until the contract was susceptible of renewal. (4) Where an option is silent as to the time within which it must be exercised, the party to whom the option is given is entitled to a reasonable time within which to exercise it. (5) The contract in this case was written by the appellant, and will be construed against it. Belch v. Schott, 171 Mo.App. 357. (6) Respondent was not required to accept the proposal made by appellant to furnish coal after the contract expired, inasmuch as such proposal was a conditional one and was not a proposal to furnish coal at all events save those specifically mentioned in the contract.

BRUERE, C. Allen, P. J., and Becker and Daues, JJ., concur.

OPINION

BRUERE, C.

--The plaintiff (appellant) instituted this action to recover the sum of six hundred and thirty-eight dollars and twenty five cents, being the contract price of coal delivered by it to defendant during the month of March, 1917, under a written contract between the parties.

The defendant filed a counterclaim, in which it prayed judgment against the plaintiff for seventy-seven hundred and eighteen dollars and fifty-seven cents, being the alleged damages sustained by it and arising out of plaintiffs refusal to renew its said contract.

Plaintiff's claim was not contested and the circuit court, sitting as a jury, allowed said claim in full. The issue on defendant's counterclaim was resolved in favor of the defendant and judgment was entered in its favor for the sum of sixty-four hundred and forty-three dollars and eighty-seven cents, said sum being the difference between the amount found in favor of the defendant on its counterclaim and the amount found in favor of plaintiff on its cause of action. After an unavailing motion for a new trial plaintiff appealed the cause to this court.

On the 31st day of March, 1916, the plaintiff contracted in writing to sell the defendant, during the period beginning April 1, 1916, and ending March 31, 1917, such quantities of coal as defendant required at its building in the City of St. Louis, at prices fixed by the contract. The contract contained the following provision:

"The party of the second part also has the privilege of renewing contract for another year under same terms and conditions."

The contract is silent as to the time when the right to renew should be exercised. It is admitted that defendant did not elect to renew the contract prior to its expiration. Nothing was said or done by either party, prior to the expiration of the contract, that related in any way to the renewal of the contract. But on April 2, 1917, the defendant addressed the following letter to the plaintiff:

"We hereby desire to notify you that we wish to exercise the privilege of renewal for one year the contract signed March 31, 1916, for the delivery of coal at our building as per said contract, and that we are ready to sign the succeeding contract at any time same may be presented.

Yours very truly,

MERMOD, JACCARD & KING JEWELRY CO.,

(Signed) Per J. C. ESTES."

On April 4, 1917, the plaintiff replied to said letter as follows:

"Your favor of the 2nd received expressing your desire to renew contract we had with you last year on Security nut coal for requirements of your building at Broadway and Locust Sts., estimated at 12 tons per day.

"Beg to inform you that it was necessary for you to have expressed this desire prior to March 31st, which was the expiration date of your contract. It would have been impossible for us to have renewed on April 2nd a contract that had expired March 31st, as on the date of your letter (April 2nd), no contract was in effect.

"If you will be interested in making a new contract for your requirements of Security nut, we will be glad to discuss the matter with you, and while we have contracted a very large portion of our tonnage, especially during the period prior to September 1, 1917, we will endeavor to find some way, if possible, to make you a quotation provided car supply at our Security mine will be in excess of three days per week.

"Thanking you for past favors and awaiting to hear from you, we are,

Yours truly,

J. W. SEXTRO, Vice-President."

On May 2, 1917, the defendant wrote and the plaintiff duly received the following letter:

"We are in receipt of your favor of the 4th ult. in reference to the renewal of the contract to supply our building with coal for the year ending March 31, 1918, and in reply would say that we cannot accept your refusal to carry out this contract as final.

"We really believe that as we notified you within a reasonable time that we wished to renew the contract as specified, that we are within our rights, and that you are obligated to furnish the coal at prices quoted.

"We are now buying coal wherever we can get it at the best possible prices, and will keep account of the amount purchased, and the difference between the price we have to pay, and the price at which you agreed to furnish it, and we will expect you to reimburse us to this extent.

"We, of course, would prefer that you furnish us with the coal as specified in the contract of April 1st 1916, and we feel sure that you can furnish it as a great deal less price than we must pay for it, and we ask you to reconsider your refusal to furnish the coal.

Yours very truly,

MERMOD, JACCARD & KING JEWELRY CO.

(Signed) Per J. C. ESTES."

Defendant received no reply to the letter of May 2, 1917.

The above was all the evidence introduced relating to a renewal of said contract. Defendant did not obtain any coal from plaintiff after March 31, 1917, but purchased such coal as it required at its said building, for the period of one year after March 31, 1917, in the open market, at prices in excess of the said contract price. The difference in price thus paid was the amount of damages claimed in its counterclaim.

The sole question raised by this appeal is, whether or not the defendant was required to exercise its option to renew within the life of the contract.

Appellant contends that the option to renew could not be exercised after the expiration of the original contract. The lower court tried the case on the theory that the defendant had a reasonable time after the expiration of the contract within which to exercise its option; and respondent contends for that theory...