Safeway System, Inc. v. Manuel Bros., Inc.

• Decision Date: 25 April 1967
• Docket Number: No. 87,87
• Citation: 228 A.2d 851,102 R.I. 136
• Parties: SAFEWAY SYSTEM, INC. v. MANUEL BROS., INC.
• Court: Rhode Island Supreme Court

Page 851

228 A.2d 851

102 R.I. 136

SAFEWAY SYSTEM, INC. v. MANUEL BROS., INC.

No. 87.

Supreme Court of Rhode Island.

April 25, 1967.

Moore, Virgadamo, Boyle & Lynch, Francis J. Boyle, Jeremiah C. Lynch, Jr., Newport, for complainant

Factor, Chernick & Hillman, William C. Hillman, Thomas H. Needham, Providence, for respondent.

OPINION

JOSLIN, Justice.

This is a bill in equity by the complainant-vendee to compel specific performance of a contract for the purchase and sale of real estate. A demurrer to the bill was overruled and the cause was then heard on bill, answer and proof. It is here on the appeal of the respondent-vendor from a judgment ¹ entered in the superior court conditionally ordering the real estate described in the bill of complaint to be converyed to the complainant-vendee.

The pertinent facts are not in dispute. It appears that the vendee entered into negotiations for the purchase of a portion of a large tract of land owned by the vendor soon after it learned that the Housing Authority of the city of Newport contemplated acquiring the premises located at 39 Chapel street which were owned and occupied by the vendee in the conduct of its business of warehousing and transporting household goods and effects. Those negotiations culminated on October 13, 1964 in the execution of a buy and sell agreement. In essential part it recited that the vendor would sell and the vendee would purchase a tract of real estate for the sum of $43,000 of which the receipt of $2,000 was acknowledged as a deposit. Transfer of title was to be by a warranty deed conveying a good and marketable title, and the deed was to be delivered and the purchase price paid at 10 o'clock in the morning of October 30, 1964 at the office of the vendee's attorney or at such other time and place as should be mutually agreed upon by the parties. A further stipulation concerned the pending Chapel street acquisition; and the agreement was that the October 30 performance date would be automatically extended for periods of one month each until acquisition of and payment for that property. That stipulation was in turn limited by the further proviso that the time for performance should 'not be extended for a period in excess of 6 months from said October 30, 1964 (i.e. beyond April 30, 1965).'

The Chapel street property had not been acquired by October 30, 1964, and apparently the agreement was thereafter automatically extended each month for six successive months. As the April 30, 1965 deadline approached, the parties, apparently aware that the Chapel street acquisition would not take place by that date, ² directly and through counsel communicated for the purpose of fixing a time for the consummation of their agreement; and on April 28, 1965 the vendee's counsel in conversation with the vendor's then counsel attempted to set up a closing date. That arrangements were not completed by April 30 or, indeed, during the following week, was not the vendee's fault. When its repeated attempts to arrange for a time and place for the delivery of the deed and the payment of the agreed purchase price failed, this suit was commenced.

The dispute between the parties arises out of that clause in the agreement which provided for extension of the date of performance. It reads as follows:

'In the event the Newport Housing Authority does not acquire and pay for the Chapel Street real estate presently owned by the purchaser on or before October 30, 1964, then the seller agrees that this Agreement shall be automatically extended for periods of one month each, until said Chapel Street real estate is acquired and paid for by said Newport Housing Authority; provided, however, that this Agreement shall not be extended for a period in excess of 6 months from said October 30, 1964.'

I.

The vendee contends, and the trial justice found, that the language of the foregoing clause was clear and unambiguous and that on April 30, 1965 each of the parties was unconditionally obligated to perform its respective agreements notiwithstanding that on that date the Housing Authority had not as yet either acquired or paid for the Chapel street property. The judgment directing the vendor to convey the real estate was in substantial measure predicated on that construction.

The vendor, although agreeing that the contract is unambiguous, gives it a different meaning. It argues that performance by each of the parties was contingent upon the Housing Authority acquiring and paying for the Chapel street property on or before April 30, 1965, and it contends that the failure of either of these conditions to materialize during the contract's lifetime discharged both of the parties from their contractual obligations.

The error with the vendor's position is that it ignores the legal consequences of the vendee's express waiver of those conditions. They obviously were inserted in the agreement for its benefit and their occurrence was just as obviously not of the essence to performance by the vendor of its obligations. Here the vendee, acting through counsel, stating on April 28, 1965, a date within the life of the contract, and continuing for more than a week thereafter, made reasonable attempts to arrange a closing date at which it would have been prepared and able to pay the purchase price and to accept a conveyance from the vendor. By so doing it effectively and unequivocally waived the benefit of those conditions and thereby became as unconditionally bound to fulfill its promise under the contract as it would have been had the conditions occurred during the life of the contract. Once the vendee became so obligated, the defense that performance could not be compelled unless the conditions were fulfilled was no longer available. 5A Corbin, Contracts § 1194, p. 367; Catholic Foreign Mission Soc'y of America v. Oussani, 215 N.Y. 1, 109 N.E. 80; Parkhurst v. Maynard, 285 Mass. 59, 188 N.E. 510.

II.

Alternatively the vendor concedes that we may find the language of the extension clause doubtful and ambiguous, rather than clear cut, and it argues that the clause by reason of that ambiguity should be interpreted more strongly against its writer, Connors v. Dagiel, 88 R.I. 113, 143 A.2d 297; Russolino v. A. F. Rotelli & Sons, Inc., 85 R.I. 160, 128 A.2d 337, and that in our search for its true meaning we should look to the construction which the parties themselves put upon it. Coe v. Zwetchkenbaum, 89 R.I. 358, 153 A.2d 517; Lapan v. Lapan, R.I., 217 A.2d 242, 245; Shepard Land Co. v. Banigan, 36 R.I. 1, 87 A. 531; Hassett & Hodge v. Cooper, 20 R.I. 585, 40 A. 841; Davis v. Manchester, 17 R.I. 577, 23 A. 1016. It then points to the evidence that the contract was drafted by the vendee's attorney and it calls our attention to the testimony of the vendee's president. He was the only witness to touch on the question of the intentions of the parties, and he testified in substance that his employer had no intention of becoming bound under the contract unless the Housing Authority acquired and paid for the Chapel street property by April 30, 1965. Premising its construction of the extension clause on an application of the rules relied upon to the factual matters referred to, the vendor's conclusion is that the vendee's promise to pay was contingent and dependent upon the occurrence of the conditions precedent and that their nonfulfillment discharged its obligations.

Even if we take that view of the contract, and there is much to be said for it, it does not follow that we must also accept the legal consequences the vendor attaches to the instrument thus construed. Its legal position is that a lack of mutuality of remedy makes specific performance an improper remedy and that such a lack exists whenever relief is not available to both contracting parties at all material times. In this case, the argument continues, the nonfulfillment of the conditions precedent would at any time up to and including April 30, 1965 have provided the vendee with a complete defense to a bill for specific performance. In those circumstances, the argument concludes, specific performance should not have been decreed against a party who would not have been entitled to equivalent relief against the other contracting party.

A similar contention was disposed of many years ago in Ives v. Hazard, 4 R.I. 14. In that case the seller was the only signatory to an instrument which recited that 'I agree to sell * * * the Peckham farm * * * for the sum of fifteen thousand dollars, ($15,000,) payable 25th March, 1853, when possession is to be given.' In rejecting the principle that an absence of mutuality of remedy and of contract dictated a denial of specific performance to the purchaser who, because he had not signed the agreement, could not have been compelled either at law or in equity to pay the agreed purchase price, this court said at page 28:

'It is now well settled by authority, that mutuality of remdy, existing at the time of action brought, is all that is required to enable a plaintiff to maintain his action; and that where there is a bill for specific performance in a court of equity, the bringing of the bill makes the complainant chargeable as on a memorandum of the contract signed by him. This renders the remedy mutual between the parties at the time when the action is commenced.'

Under the Ives principle, the inability of the vendor in this case to enforce the agreement against the vendee either at law or in equity at the inception of this agreement or indeed at any time prior to the latter's waiver of the conditions was not a ground upon which the court should have predicated a refusal to decree specific performance. Once the vendee brought its bill for specific performance the defense of lack of mutuality of remedy, if such a defense was available, see 2 Restatement, Contracts § 372, p. 677, disappeared. ³ Ives v. Hazard, supra; Smart v. Boston Wire Stitcher Co., 50 R.I. 409, 416, 148 A. 803.

III.

The vendor...