Texaco, Inc. v. Kennedy
| Decision Date | 02 January 1973 |
| Docket Number | No. 46868,46868 |
| Citation | 271 So.2d 450 |
| Parties | TEXACO, INC. and John E. Courtney, Complainants-Appellants, v. Mrs. Bonita KENNEDY, Defendant-Appellee. |
| Court | Mississippi Supreme Court |
Watkins & Eager, Jackson, for complainants-appellants.
McClendon & McClendon, Jackson, for defendant-appellee.
Texaco, Inc., appeals from a decree of the Chancery Court of the First Judicial District of Hinds County which denied specific performance of a contract entered into by Mrs. Bonita Kennedy, the appellee, and Texaco, Inc.
In 1949 Mrs. Kennedy and the Texas Company (predecessor to Texaco, Inc.) entered into a lease agreement concerning a service station and its site in the city of Jackson. The lease, effective October 5, 1950, granted the appellant possession of the property for an original period of ten years, with provision for two five-year renewal options, thus creating a possible twenty-year covenant. Under the agreement Texaco also obtained an exclusive right-to-purchase option for the premises. The exercise of this option by the lessee is the basis of this controversy since the lessor, after notice, declined to convey the property to Texaco. Mrs. Kennedy's refusal to convey emanated from her belief that Texaco's offer to exercise the option was insufficient to obligate it to complete the purchase since there was no tender of the purchase price within the twenty-year lease term, and the further belief that the lessee had no right to purchase while 'holding over' after the expiration of the primary term and in any event the contract was ambiguous and not susceptible of being specifically performed.
The trial court found the first and last paragraphs in Section 10 of the lease to be irreconcilable and concluded that a patent ambiguity was presented and therefore declined specific performance of the contract. The first paragraph of Section 10 provides:
Lessor hereby grants to lessee the exclusive right, at lessee's option, to purchase the demised premises . . . at any time during the term of this lease or any extension or renewal thereof . . .
The last paragraph of Section 10 follows:
Lessee's notice of election to purchase pursuant to either of the options granted in this clause shall be sufficient if deposited in the mail addressed to lessor or by telegraph at or before midnight of the day on which option period expires.
On September 21, 1970, during the primary term of the lease, the appellant notified the appellee by letter of its intention to purchase, using the following language:
. . . This is to notify you that Texaco Inc. (formerly named The Texas Company) elects to and does hereby exercise its exclusive right to purchase the leased premises for the sum of $40,000.00 subject, of course, to all of the terms, covenants and conditions of said purchase option and it will be appreciated if you will arrange to deliver to us an Abstract of Title or other evidence of title (title insurance policy will be satisfactory) and a current survey of the property at your earliest convenience.
On appeal Texaco contends that it has properly exercised the option to purchase before the termination of the lease and is therefore entitled to specific performance of the contract. Mrs. Kennedy contends, however, that by the terms of the option it was necessary for the purchase price to have been tendered to her prior to the expiration of the contract on October 5. The issue presented is whether Section 10 of the lease is characterized by ambiguous language rendering it reasonably susceptible to more...
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