Skelly Oil Co. v. Ashmore

• Court: Missouri Supreme Court
• Writing for the Court: HYDE; Criticisms of this rule by eminent authorities have been set out in the dissenting opinion of STORCKMAN; STORCKMAN; WESTHUES, C. J., and DALTON, J., dissent and concur in separate dissenting opinion of STORCKMAN; STORCKMAN
• Citation: Skelly Oil Co. v. Ashmore, 365 S.W.2d 582 (Mo. 1963)
• Decision Date: 11 March 1963
• Docket Number: No. 47911,47911
• Parties: SKELLY OIL COMPANY, a Corporation, Respondent. v. Tom A. ASHMORE and Madelyn Ashmore, Appellants.

Page 582

365 S.W.2d 582

SKELLY OIL COMPANY, a Corporation, Respondent. v. Tom A. ASHMORE and Madelyn Ashmore, Appellants.

No. 47911.

Supreme Court of Missouri, En Banc.

March 11, 1963.

Emerson Foulke, Joplin, for appellants.

William T. Robbins, Kansas City, Robert E. Seiler, Joplin, Seiler, Blanchard & Van Fleet, Joplin, of counsel, for respondent.

HYDE, Judge.

This suit for specific performance was transferred by Division Two to the Court en Banc because of the dissent of one of the Judges. We adopt the statement of facts, the statement of the contentions of the parties and the ruling on the validity of the contract involved from the Divisional opinion as hereinafter set out without quotation marks.

This is a suit by the purchaser, Skelly Oil Company, a corporation, against the vendors, Tom A. Ashmore and Madelyn Ashmore, husband and wife, in two counts. Count One is for the specific performance of a contract to sell the north half of a certain described southwest corner lot (fronting 97 1/2 feet on Main and 195 feet on 42nd Streets) in that part of Joplin lying in Newton County. Count Two seeks an abatement in the purchase price of $10,000, being the proceeds received by the vendors under an insurance policy on a building on the property, which building was destroyed by fire in the interim between the execution of the contract of sale and the time for closing of said sale by the exchange of the $20,000 consideration for the deed to the property. The case was tried in Jasper County upon a change of venue granted from Newton County. The trial court found the issues in favor of the purchaser, decreed specific performance, and applied the $10,000 insurance proceeds on the $20,000 purchase price. The vendors have appealed.

The vendors acquired this property about 1953, and operated a grocery store in the concrete block building, with fixtures and furniture, and a one story frame 'smoke house' thereon. Deeds of trust on the property, securing notes of the vendors to the Bank of Neosho were of record. At all times here material and up to September 30, 1961, the property was leased to Don Jones at a rental of $150 a month. The vendors had a fire insurance policy, with a standard mortgage clause in favor of the Bank of Neosho attached, on the buildings and fixtures, issued February 8, 1958, for a term of one year.

Joe Busby, of the Kansas City office of the Skelly Oil Company real estate department, and Mr. Ashmore conducted the negotiations resulting in the contract of sale. The Ashmores lived in Lawton, Oklahoma. Mr. Ashmore had engaged in the real estate business since 1951. Busby secured the execution of a Skelly printed form of option by the vendors, dated July 31, 1957, for Skelly 'to purchase' for the sum of $20,000, 'payable in cash upon delivery of deed' said property, 'together with the buildings, driveways, and all construction and equipment thereon, at any time before' August 31, 1957. The words 'and equipment' were 'x-ed' out on said option. The option provided in typewriting (referring to the Jones lease): 'Purchaser agrees to honor present lease on above property until expiration.' The option originally lapsed August 31, 1957. Busby had an agreement for the mutual cancellation of the lease prepared by Skelly's legal department for execution by the Ashmores and Jones, and on August 20 took up securing a cancellation of the lease and possession with Ashmore and his lawyer, Mr. Foulke. Mr. Foulke did not know how long this would take and the option was extended to January 1, 1958. Busby knew Ashmore filed an ejectment suit against Jones, was 'patiently waiting' to hear from Mr. Foulke, and on trips to Joplin would inquire if any headway was being made on securing possession. On December 30, the option was extended to March 1, 1958. Skelly's legal department concluded this lease entitled Jones to possession until September 30, 1961. Skelly acquired the property immediately south of the Ashmore property, continued the operation of a service station thereon, and decided to go ahead and exercise the Ashmore option with Jones in possession under his lease and later combine the two properties and erect a service station that required more area than the Ashmore property.

Busby and Ashmore met in Joplin on February 25. Busby informed Ashmore Skelly had decided to purchase under its option with Jones in possession under his lease. The parties orally agreed to certain details, some being mentioned hereinafter in connection with the contract of sale. Busby also informed Ashmore Skelly could not complete the transaction by March 1, and the Ashmores extended the option from March 1 to March 10, 1958. No consideration passed for any extension of the option.

The Bank of Neosho forwarded the abstract of title to Skelly.

The option provided it could be accepted 'by giving written notice' to the vendors. By letter to the Ashmores under date of March 4, 1958, Skelly explicitly stated: 'This letter is to inform you that Skelly Oil Company does hereby exercise its option to purchase the above described property for the sum of $20,000.00, subject to all the terms and conditions of the above referred to option, and with' further understandings, among others, to the effect: The fixtures and equipment in the store building were to remain the property of the Ashmores; the Ashmores were to assign the Jones lease to Skelly and Skelly was to remit to the Ashmores $5.00 a month for Jones' use of said fixtures and equipment; the Ashmores were to remove said fixtures and equipment within sixty days after the termination of said lease by lapse of time or otherwise, Skelly assuming no responsibility for the repair or physical condition of said fixtures and equipment. The letter also stated that upon approval of the title and the obtaining of necessary permits 'we will get in touch with you further toward closing.' Immediately following the signature of the purchaser on said letter appears: 'ACKNOWLEDGED and AGREED TO This 7th day of March, 1958, Tom A. Ashmore Madelyn Ashmore.' The vendors mailed the original thereof to the purchaser.

The latter part of March Busby telephoned to Ashmore in Lawton and they agreed to meet in Joplin on April 16, 1958, to close the transaction.

The concrete block building, furniture and fixtures were destroyed by fire on April 7, 1958, without fault of either party.

Skelly's Kansas City headquarters advised Busby, who was in St. Joseph, on April 7 of the fire. The next day Busby telephoned Ashmore from Kansas City. In this conversation Ashmore said he had insurance on the building and fixtures, naming the company in Kansas City carrying it. Asked on cross-examination whether he told Ashmore the fire would have no effect on the deal, Busby answered: 'I told him absolutely not, we would go through with our deal. Q. Just like it was? A. Sure, just like this contract, sir, we're obligated, we can't get out of it.' Busby called the insurance company and was informed there was $10,000 insurance on the building and $4,000 on the fixtures. He reported this to the purchaser's legal department. Then, after research, the legal department concluded that Skelly was entitled to have the insurance on the building applied on the purchase price. The closing papers were prepared accordingly.

The closing of the transaction was considered by the parties on April 15, 16 and 17. Busby and Ashmore met on the evening of the 15th. Mr. Winbigler of Skelly's legal department arrived on the 16th. They informed Ashmore they were there to close the purchase of the property; that Skelly thought it was entitled to the insurance proceeds on the building and would like an assignment of the insurance proceeds. When Ashmore disagreed, they informed him Skelly would close the deal and pay him the contract price but would not waive its rights to the insurance proceeds in so doing. Ashmore would not agree to this. They then went to Mr. Foulke's office and informed him of the situation. Mr. Foulke told them he needed time to check into the matter before he could advise his client. Busby and Winbigler returned to Kansas City.

By letter dated April 26, 1958, the Ashmores notified Skelly that the 'option agreement' was rescinded 'because it was given without consideration and is therefore not binding on us and for the further reason that you have refused to complete the purchase unless we reduce the agreed price, which constitutes a breach of the terms of the agreement.'

A month or so later the Phoenix Insurance Company, under the standard mortgage clause, paid the Bank of Neosho the balance due on the vendors' notes, $7,242.46, and $2,757.54, the balance of the $10,000 insurance on the building, to the vendors, and also paid the vendors the $4,000 insurance carried on the furniture and fixtures.

This purchaser's claims are founded on the contract of sale in its letter of March 4, 1958, and the option therein referred to, which letter was 'acknowledged and agreed to' by the vendors. Said claims are not based on a mere option to purchase where the improvements on the property were damaged prior to the purchaser's exercise of the option. Vendor and Purchaser, 55 Am.Jur., Sec. 27, p. 492; 92 C.J.S. Vendor & Purchaser Sec. 4, p. 832; Annotations, 65 A.L.R.2d 989; 23 A.L.R. 1225.

The vendors say that the letter and option were prepared by the purchaser and ambiguities and doubts therein are to be resolved in favor of the vendors; that the purchaser paid no consideration for the option or the three extensions; that specific performance will result in inequity, hardship or loss to vendors (2 Restatement, Contracts, Sec. 367; 81 C.J.S. Specific Performance Sec. 40, p. 512; Miller v. Coffeen, 365 Mo. 204, 280 S.W.2d 100, 103), and that the trial court's decree of specific performance constitutes an abuse of discretion (2 Restatement, Id., Sec. 359). It is stated that, since there was no binding contract between the parties prior to...