Summary
holding that parties' allegation that they were ready, willing and able to purchase the property subject to an option is sufficient for specific performance
Summary of this case from Glick v. ChocoruaOpinion
No. 4656.
Argued June 3, 1958.
Decided July 1, 1958.
1. The provision in a lease of real estate that "for the consideration aforesaid" the lessor covenants "that she will not sell or assign . . . [the premises] without first giving the [lessee] an opportunity to purchase at the same price that is offered by a bona fide offer" precluded sale during the lease or renewal thereof unless the lessee should be afforded the first opportunity to buy.
2. Such provision was restrictive and independent of any right of the lessor to terminate the lease, thus entitling the lessee to an opportunity to buy in the event of sale even though the lease was not to be terminated by the sale.
3. Hence a conveyance of the premises to a third party by the lessor's successor while the lease was still in effect by renewal without first giving the lessee an opportunity to purchase constituted a breach although the conveyance was subject to the lease.
4. A bill for specific performance by a lessee seeking a conveyance of real estate sold in violation of a lease provision that the lessee should have the first opportunity to buy "at the same price offered by a bona fide offer" which alleged that the lessee was "ready, willing and able to pay" could be maintained and equity did not require that the plaintiff lessee show a useless tender.
5. The fact that the lessee in such case by renewal of the lease after the property had been sold to another subject to the lease recognized the purchasers as his landlords did not estop the lessee from seeking to enforce his pre-emptive right to purchase the property.
BILL IN EQUITY, for specific performance, seeking an order that the defendants convey to the plaintiff certain premises in Contoocook known as the Danforth block. Trial by the Court (Wheeler, C. J.). The bill was dismissed at the close of the plaintiff's evidence, subject to his exception. Reserved and transferred by the Presiding Justice.
There was evidence of the following facts. The plaintiff held a lease of the premises in question from the late Mrs. William A, Danforth given under date of November 7, 1951, for a term of one year with right of renewal on or before November 10 of each year by notice in writing to the lessor, such right "not [to] extend beyond November 10, 1956." The lease contained the following provision: "7. For consideration aforesaid the party of the first part covenants that she will not sell or assign the William A. Danforth block, so-called, without first giving the party of the second part an opportunity to purchase at the same price that is offered by a bona fide offer."
Mrs. Danforth deceased during the first term, and thereafter the plaintiff gave due notice of renewal of the lease by notice in writing sent in 1952 and 1953 to the defendant church as legatee under Mrs. Danforth's will, and in 1954 and 1955 to the defendants Metro after the premises in question had been conveyed to them on August 27, 1954, by deed providing that the conveyance was "subject to the occupancy of all present tenants of the premises." It appeared that before this conveyance the defendant church gave the plaintiff no opportunity to purchase the premises at the price which the other defendants were willing to pay and did pay, which was $10,500.
The defendants urged in support of their motion to dismiss that there was no evidence that the plaintiff had renewed the lease or that he could have put himself in a position to take up the option; and that since the conveyance was made subject to the lease there was no breach of covenant by the defendant church. The evidence of the notices to renew the lease was received after the defendants' motion was made when the Trial Court permitted the plaintiff to reopen "to supply what appears to be lacking."
Charles W. Tobey, Jr. (by brief and orally), for the plaintiff.
Upton, Sanders Upton and Wesley E. Whitney (Mr. Whitney orally), for the defendants.
The ground upon which the Trial Court relied in granting the defendants' motion to dismiss does not appear. In Robinson Company v. Drew, 83 N.H. 459, 461, this court said: "If [the optionor] says that he may decide to sell and that if he does, he will give the optionee the right to buy at the price he sets, the optionee, having given consideration, has acquired a conditional right to buy, and the fulfillment of the conditions makes the right capable of enforcement." The principle so stated is applicable to the case before us even though the price was here to be determined by the amount of an acceptable bona fide offer to buy, rather than that of a selling price set by the optionor himself. When an acceptable price was offered by the defendants Metro to the defendant church, the plaintiff's right to buy became capable of enforcement. See 1 Corbin, Contracts, s. 261; 2 Powell, Real Property, s. 244.
The bill could not properly be dismissed upon the basis of Blanchard v. Ames, 60 N.H. 404, relied upon by the defendants both in this court and in the court below. That case involved a lease for a term of six years by which the lessor had reserved the right to sell the leased water power after two years, "giving [the lessee] the first right to purchase the same, providing he will give the same amount other parties will give." Instead of terminating the lease, the lessor conveyed the water power by deed reserving the lease and the plaintiff's right of occupancy for the balance of the term. In holding that the conveyance without prior offer to the lessee was not a breach of the covenant, the court pointed out that the purpose of the agreement was to enable the plaintiff to enjoy the full term of the lease, and that it was not "an independent stipulation, but an agreement to preserve to the plaintiff the enjoyment of the water-power for the whole six years on the condition named . . . ." (Id., 406), a purpose which was accomplished by reservation of the lessee's rights on conveyance. Provisions comparable to those of the lease in the Blanchard case supra were described in Callaghan v. Hawkes, 121 Mass. 298, 299 as "enabling and not restrictive," conferring upon the lessor "a right which he would not otherwise have had," and were similarly construed. See Levy v. Peabody, 238 Mass. 164, accord. See also, anno. 136 A.L.R. 138, 146; 2 Tiffany, Landlord Tenant 1679.
The provisions of the lease which the plaintiff in this case seeks to enforce did not manifest a similar purpose to permit the lessor to terminate the lease by sale, subject only to the plaintiff's preemptive right to buy. The provisions in the plaintiff's lease were restrictive, and independent of any right of the lessor to terminate the lease, thus entitling the plaintiff to an opportunity to purchase' in the event of sale, even though his lease was not to be terminated by the sale. The agreement of the parties precluded sale during the lease unless the lessee should be afforded the first opportunity to buy. In such circumstances conveyance by the lessor's successor was a breach, even though the conveyance was subject to the lease. Robinson Company v. Drew, 83 N.H. 459, supra.
The plaintiff's standing to seek specific performance is not open to serious question in other respects. His status as a tenant in possession under the lease was not left in doubt, since the Trial Court permitted the case to be reopened for proof of the several renewals.
While no proof was offered of the plaintiff's ability to pay a price of $10,500, his pleadings allege that he is "ready, willing and able to pay" the amount paid by the defendants Metro. This is commonly regarded as sufficient. 4 Pomeroy, Equity Jurisprudence (5th ed.) s. 1407a. Since the evidence indicates that the option was repudiated by the defendant church, equity would not require that the plaintiff show a useless tender. I American Law of Property s. 3.82; Durepo v. May, 73 R. I. 71. If the plaintiff is entitled to the relief sought the defendants can be protected by a conditional decree providing for payment by the plaintiff upon conveyance of the premises. Lessard v. Sleeper, 96 N.H. 268.
The defendants' further argument that the plaintiff is estopped to maintain his bill because he has recognized the defendants Metro as his landlords cannot be accepted. Recognition that they were in fact owners of the reversion was not necessarily inconsistent with the plaintiff's claim that he was deprived of an opportunity to purchase. If the conveyance to the Metros was made subject to the plaintiff's rights as tenant, it was nevertheless sufficient to pass title to the reversion, even though subject to a duty to convey to the plaintiff should he be entitled to enforce his pre-emptive right. See Swanson v. Priest, 95 N.H. 64.
In support of their motion to dismiss the defendants raised no issue of hardship to them and the conveyance between them contained notice of the rights of tenants at least sufficient to put the defendants Metro upon inquiry. A finding that specific enforcement of the contract would work unnecessary hardship would not have been warranted as the evidence stood. "If discretion was exercised it does not clearly appear upon what evidence the result was reached." Gerry v. Neugebauer, 83 N.H. 23, 27. Because the dismissal was entered at the close of the plaintiff's evidence, the defendants have had no opportunity to present the defenses pleaded by their answer. The issue of the plaintiff's equitable right to a conveyance will remain to be determined upon all the evidence. Robinson Company v. Drew, supra, 464. See Johnson v. Shaw, 101 N.H. 182, 189.
New trial.
WHEELER, J., did not sit; the others concurred.