Texas Co. v. Crown Petroleum Corp.

• Decision Date: 08 August 1950
• Citation: 137 Conn. 217,75 A.2d 499
• Court: Connecticut Supreme Court
• Parties: TEXAS CO. v. CROWN PETROLEUM CORPORATION. Supreme Court of Errors of Connecticut

Page 499

75 A.2d 499

137 Conn. 217

TEXAS CO. v. CROWN PETROLEUM CORPORATION.

Supreme Court of Errors of Connecticut.

Aug. 8, 1950.

Reuben Sudarsky, Hartford, for the appellant (defendant).

Ralph C. Dixon, Hartford, with whom was David R. Hubbard, Hartford, for the appellee (plaintiff).

Before BROWN, C. J., and JENNINGS, BALDWIN, INGLIS and O'SULLIVAN, JJ.

INGLIS, Judge.

In this action the plaintiff seeks to enforce an option to purchase real estate granted to it in a lease as modified by a supplementary agreement between it and the defendant entered into after the latter acquired title to the property from the original lessors.

Notwithstanding the defendant's wholesale attack upon the finding, no change in it is warranted. The essential facts found are the following: On July 31, 1944, Ellik Nirenstein and five other members of his family, hereinafter referred to as the lessors, owned property located at the northeast corner of Albany Avenue and Oakland Terrace in Hartford. It had a frontage of about 87 feet on Albany Avenue and of about 119 feet on Oakland Terrace. The southern part of the property, extending from Albany Avenue north along Oakland Terrace for 59 feet, had been occupied by the plaintiff's gasoline station since 1930. The northern portion, with a frontage on Oakland Terrace of about 60 feet, was occupied by a two-family house.

By lease dated July 31, 1944, the lessors leased to the plaintiff that portion of the premises devoted to the gasoline station for the term of three years from September 1, 1944. The lease was drawn on a printed form. The first paragraph of clause 9 in the printed form provided for an option to purchase 'the demised premises' at any time during the term of the lease, with a blank space for the purchase price. Ink lines were drawn through this paragraph, but farther down on the same page of the form the following was typed in: '(9)--Option.--Lessor hereby gives to lessee the right and option to purchase the demised premises and all structures and improvements thereon at any time during the term of this lease or any extension or renewal thereof, for the sum of Twenty-Seven Thousand Five Hundred Dollars ($27,500.00).' Then followed immediately a description by metes and bounds of the entire property, with a frontage on Oakland Terrace of 119 feet. Except for the description, the phraseology of this paragraph followed that of the deleted printed paragraph. The option granted by the typewritten paragraph will be referred to as the specific price option.

The second paragraph of clause 9 as it appeared in the printed form read as follows: 'Lessor also agrees that if at any time during the term of this lease or any extension or renewal thereof, he shall receive a bona fide offer to purchase the demised premises which offer he shall desire to accept, he will immediately give the lessee written notice of the receipt of such offer and of his desire to accept same, and lessee shall have thirty days after receipt of such notice in which to elect to purchase said premises upon the same terms as those contained in such offer.' That paragraph was amended by deleting the words 'demised premises' and inserting in lieu of them 'demised premises and those hereinafter described.' This last phrase obviously referred to the description of the property which appeared in connection with the specific price option. The option granted in this second paragraph of clause 9 will be referred to as the first refusal option.

The third paragraph of clause 9 of the lease provided: 'Lessee's notice of election to purchase pursuant to either of the options granted in the two preceding paragraphs shall be sufficient if deposited in the mail addressed to lessor at or before midnight of the day on which option period expires. Lessor shall, when requested by lessee, deliver to lessee complete abstracts of title, furnish up-to-date survey * * * showing elevations of property and corners marked * * * upon receipt of which the lessee shall have a reasonable time in which to examine the title and, upon completion of title examination * * * shall tender the purchase price to lessor. * * *'

On January 22, 1945, the lessors notified the plaintiff that the defendant was offering to purchase the entire property for $22,500. Within a few days the plaintiff wrote the lessors that it was not interested in purchasing the property at that time but would continue to occupy it under its lease. By deed dated April 19, 1945, the lessors conveyed the entire property to the defendant subject to the plaintiff's lease. The defendant, like the plaintiff, is engaged in the business of operating gasoline stations.

When the lease was entered into, it was the understanding and agreement of the parties that clause 9 gave the plaintiff an option to purchase the entire property for $27,500 and a first refusal option also on the entire property. This understanding was known to the president of the defendant, and he acted throughout upon the basis of this understanding.

After it acquired title to the property, the defendant desired to sell the two-family house to Joe Guthman, who was willing to purchase it for $8000. The defendant's president, knowing that it was necessary to obtain the plaintiff's consent to make the sale, started negotiations to obtain that consent on July 2, 1945. After some correspondence the plaintiff and the defendant entered into a so-called supplementary agreement. This agreement, after reciting that the lease contained an option to purchase the entire premises, provided that the description of the premises covered by the option to purchase be amended by reducing the size thereof to an area having a frontage of 66.40 feet on Oakland Terrace. It further provided that the option price be reduced to $19,500, the $8000 difference representing the sale price of the part of the property to be sold to Guthman.

On August 22, 1947, nine days before the expiration of its lease, the plaintiff notified the defendant by registered mail that it exercised its option to purchase the premises described in the supplementary agreement for $19,500. Instead of requiesting the defendant to furnish abstracts of title and a survey, as provided in the option, the plaintiff itself procured a title search and survey. This work was not completed until October 9. On October 16 the plaintiff made a tender of the purchase price of $19,500, but the tender was refused by the defendant. The trial court concluded, upon subordinate facts which justify the conclusion, that the tender was made within a reasonable time.

The lease contained a provision that if the lessee held over after the expiration of the lease its tenancy should be from month to month only. It did stay in possession after September 1, 1947. On October 16 it mailed to the defendant its check for $250 to cover the rent for September and October. On September 30, 1947, the defendant caused a notice to quit possession to be served on the plaintiff. It later started summary process proceedings, and those proceedings were still pending at the time of the trial of this case.

Upon these facts the court concluded that the plaintiff was entitled to a conveyance of the property in accordance with the supplementary agreement and ordered specific performance.

The defendant makes two main contentions: that the supplementary agreement is unenforceable both because it lacked consideration moving from the plaintiff and because it was entered into under mutual mistake; and that the plaintiff did not exercise its option within the time limited by the contract.

It is obvious that the consideration given by the plaintiff for the supplementary agreement was the surrender of all claims of rights under the specific price option contained in the lease. The defendant's claim is that that surrender was no detriment because the option contained in the lease was to purchase only the 'demised premises,' which was the gasoline station, for $27,500 while the option in the supplementary agreement was to buy that property plus a strip about seven feet wide across its rear for the lessor price of $19,500. It is true that at one point the lease describes the property covered by the option as the 'leased premises.' That, however, is immediately followed by a description of the entire property by metes and bounds. This description was so placed in the lease that it evidenced the intention of the parties that the property so described should be subject to the option. This intention was further evidenced by the fact that the provision for a specific price option contained in the printed form of the lease had been deleted. That form described the property to be covered by the simple phrase 'the...