Shell Oil Co. v. Kapler

• Decision Date: 21 December 1951
• Docket Number: No. 35584,35584
• Citation: 235 Minn. 292,50 N.W.2d 707
• Parties: SHELL OIL CO. v. KAPLER et al.
• Court: Minnesota Supreme Court

Page 707

50 N.W.2d 707

235 Minn. 292

SHELL OIL CO. v. KAPLER et al.

No. 35584.

Supreme Court of Minnesota.

Dec. 21, 1951.

Syllabus by the Court.

1. A purchaser may not have the necessary cash in hand, but that alone does not disqualify him if he is otherwise so situated that he is reasonably able to command the requisite cash at the required time.

2. Generally speaking, a purchaser is financially ready and able to buy: (1) If he has the needed cash in hand; or (2) if he is personally possessed of assets--which in part may consist of the property to be purchased--and a credit rating which enable him with reasonable certainty to command the requisite funds at the required time; or (3) if he has definitely arranged to raise the necessary money--or as much thereof as he is unable to supply personally--by obtaining a Binding commitment for a loan to him for that purpose By a financially able third party, irrespective of whether such loan be secured in part by the property to be purchased.

3. Where the purchaser relies primarily, not upon his own personal assets, but upon the proceeds of a contemplated loan or loans to be made to him by a third party, he is financially able to buy Only if he has a Definite and binding commitment from such third-party loaner.

4. A presumption is merely a procedural device for controlling the burden of going forward with the evidence, and it has no additional function other than the limited one of dicating the decision Where there is an entire lack of competent evidence to the contrary; the very moment substantial countervailing evidence appears from any source, it vanishes completely, and the case is to be decided by the trier of fact as if the presumption had never existed.

5. If the decedent was a party to the conversation, then, pursuant to M.S.A. § 595.04, it would have been incumbent upon the court to strike as inadmissible the testimony of the other parties to the conversation who were interested in the outcome of the action.

6. Where any issue is settled as a matter of law by the record, the case having been fully developed at the trial, this court will determine such question of law and thereby avoid the delay and expense of further litigation.

7. It is the general rule that ordinarily the fairness of a contract is to be determined in the light of the circumstances that existed at the time of its making rather than by the effect of subsequent events which intervene before specific performance is sought.

8. The hardship of performance of a contract arising from a subsequent increase--or decrease--in the value of the property, in the absence of fraud or bad faith in the inception of the contract, is no reason for refusing specific performance.

Morley, Cant, Taylor, Haverstock & Beardsley and Franklin D. Gray, all of Minneapolis, for appellant.

T. H. Wangensteen, Frank E. Clinite, Minneapolis, for respondents.

MATSON, Justice.

Appeal from an order granting a new trial.

Defendants and William F. Brabetz, now deceased, as owners of a gasoline service station in Minneapolis, on April 24, 1939, entered into an agreement with the Shell Oil Company, Inc., whereby they leased the service station to the latter for a term of five years commencing September 16, 1940. Subsequently the lease was renewed for an additional five-year term expiring September 15, 1950. In 1949, the lessee assigned the lease to the Shell Oil Company, a corporation, plaintiff herein. For convenience, the original lessee and its assignee will both be referred to herein as plaintiff.

Paragraphs 15 and 16 of the lease are as follows:

'15. At any time during the term of this lease, and of any renewal thereof, Shell shall have the option to purchase the above described premises, together with all appurtenances thereto, and all buildings, improvements and equipment thereon, for the sum of Twenty Five Thousand & no/100 Dollars ($25,000.00). Should Shell elect to exercise said option, it shall give Lessor notice of said election.

'16. If at any time during the term of this lease, or any renewal thereof, Lessor desires to sell said property to a prospective purchaser other than Shell, who is able, willing, and ready to buy said property, Lessor shall to notify Shell, giving the name and address of the prospective purchaser and the price and terms of the proposed sale. Said notice shall be accompanied by Lessor's affidavit that such prospective sale is in good faith. Shell shall thereupon have the prior right and option to purchase said property from Lessor at the price and upon the terms agreed to by said prospective purchaser, which prior right and option shall be in addition and without prejudice to Shell's rights under paragraph 15 hereof. If Shell desires to exercise its option, it shall so notify Lessor within fifteen (15) days after Shell has received from Lessor the aforesaid notice of Lessor's intention to sell said property to a third party. The right of Shell to purchase at any offered price shall be a continuing right during the existence of this lease, or any renewal thereof, whenever Lessor, or any successor in title, may desire to sell said property. Shell's failure to exercise any option granted by the provisions of this paragraph shall not in any way affect this lease, Shell's rights under paragraph 15 hereof, or its right to the estate herein created.'

On August 7, 1950, plaintiff sent to defendants a written notice of exercise of the option to purchase the premises, buildings, and equipment for $25,000 as granted in paragraph 15 of the lease. On August 11, 1950, defendants sent plaintiff written notice that they (defendants) had a prospective purchaser, Robert Grennan, who was ready, willing, and able to pay $35,000 for the leased premises, and that they desired to sell under paragraph 16 of the lease.

Defendants contended that plaintiff must either meet Grennan's good-faith offer or allow defendants to sell under paragraph 16. Plaintiff asserted, however, that it had exercised its option under paragraph 15 and commenced an action for specific performance. The prospective purchaser, Grennan, personally had only $100 to apply on the purchase price, but testified that he could borrow $10,000 from his father and brother, and that he expected to raise the additional $25,000 from the Pure Oil Company, which, in the event of his purchase, was interested in securing a lease to the station. Grennan had no express agreement with the Pure Oil Company, but had carried on negotiations with a rental representative of that company who testified that he was reasonably sure that his company would be willing to finance Grennan to the extent of $25,000.

In answer to five special interrogatories, a jury specifically found:

(1) That the decedent, William F. Brabetz, had been present at a meeting of the parties in 1939 when a conversation was had as a preliminary to a renewal of the lease;

(2) That plaintiff's representative had Not told defendants, as a preliminary to renewal of the lease, that defendants under paragraph 16 could receive an offer of purchase At any time during the term of the lease, the that plaintiff would have to meet such offer if it wished to purchase the property;

(3) That Grennan had in good faith made defendants an offer of $35,000;

(4) That Grennan was Not ready, willing, and able to buy said property for cash with the assistance of the Pure Oil Company; and

(5) That the Pure Oil Company had never agreed to loan Grennan $25,000 for the purchase of the property.

With the aid of the jury's determinations, the trial court made specific findings:

(1) That plaintiff, by notice mailed to defendants on August 7, 1950, had duly exercised the option granted by paragraph 15 of the lease and had thereby created a contract with defendants for the purchase and sale of the property, and that defendants had refused to convey the property to plaintiff pursuant thereto, although the latter was ready, able, and willing to pay the agreed sum of $25,000;

(2) That Robert Grennan, the prospective purchaser designated in defendants' notice mailed to plaintiff on August 11, 1950, was not at the time of the giving of such notice, or at any time subsequent thereto, ready and able to buy the property for $35,000 cash, although his offer was made in good faith.

Pursuant to these findings, the trial court concluded, as a matter of law:

(1) That defendants' notice to plaintiff of the proposed sale to Grennan was of no legal effect;

(2) That defendants had breached the contract created by plaintiff's exercise of the option under paragraph 15; and

(3) That plaintiff had no adequate remedy at law and was entitled to a judgment of specific performance for a conveyance of the premises.

The trial court, however, upon defendants' motion for amended findings (and for judgment notwithstanding the jury's answers to the interrogatories) or a new trial, granted a new trial exclusively for errors of law occurring at the trial. These alleged errors consist of:

(1) The denial to defendants of the right to introduce expert testimony that the premises were reasonably worth $40,000 in 1950; and

(2) That the trial court erred in submitting to the jury the interrogatory as to whether William F. Brabetz, decedent, had been present at a meeting of the parties in 1939.

It is from this order granting a new trial that plaintiff has appealed.

1. In granting a new trial, the district court was of the opinion that its exclusion of evidence to show that the premises were reasonably worth $40,000 in 1950 was prejudicial error with regard to the issue of whether Grennan was able to command the purchase price. Although as found by the jury, Grennan had obtained no binding commitment from the Pure Oil Company that it would loan him $25,000 upon the premises to be purchased, the trial court apparently assumed that evidence of a 1950 valuation of $40,000 would go to establish or enhance the probability that he...