Opinion
Nov. 6, 1973.
Editorial Note:
This case has been marked 'not for publication' by the court.
Holland & Hart, James L. White, John S. Castellano, Wiley E. Mayne, Jr., Denver, for plaintiffs-appellants.
Seawell, Cohen & Sachs, Thomas C. Seawell, L. Bruce Nelson, Denver, for defendants-appellees.
Before SILVERSTEIN, C.J., and COYTE and RULAND, JJ.
RULAND, Judge.
The issue in this appeal is whether plaintiffs and Sound Corporation entered into an enforceable agreement for purchase of a radio station. Plaintiffs (referred to as Mission) filed this action seeking specific performance, or, in the alternative, damages. Following testimony of the first witness called by Mission in a trial to the court, the parties stipulated that Mission had no further testimony to offer on the issue of whether there was an enforceable contract in existence between the parties and that the trial court could consider a motion to dismiss made by defendants. The trial court granted the motion and entered judgment for defendants on the basis that the parties had not reached an enforceable agreement. Mission appeals from that judgment; we affirm.
Engene Winans, as agent for Mission contacted the president of Sound Corporation (Sound) relative to the purchase of a radio station owned by Sound. Subsequent discussions and written proposals culminated in execution of an alleged letter agreement dated October 25, 1971, and Mission relies upon that letter as representing the enforceable agreement between these parties.
The October 25 letter describes generally the assets to be purchased, the purchase price, method of payment, and contains a non-competition agreement. The letter recites that the initial payment of $12,500 is to be paid upon execution of a final contract approved by counsel for the respective parties. Allocation of the purchase price among the assets was left to future agreement (except for $75,000 allocated to the covenant not to compete). Although Federal Communications Commission approval of the station transfer is stated as a requirement in the October 25 letter, the letter failed to specify the time limti within which FCC approval was to be obtained.
Following execution of the October i5 letter, a draft of final contract was submitted by Sound, and thereafter Mission submitted a revised draft. None of these drafts were executed by the parties. Sound then entered into a contract for the sale of the radio station to Columbine Broadcasting Company, which action prompted Mission to file the present case.
To have an enforceable contract, it must appear that further negotiations are not required to work out important and essential terms. See American Mining Co. v. Himrod-Kimball Mines Co., 124 Colo. 186, 235 P.2d 804; Pierce v. Marland Oil Co., 86 Colo. 59, 278 P. 804. It is evident that additional terms or modification of existing terms of the October 25 letter was contemplated as demonstrated by: (1) the provision for deferral of the initial payment of $12,500 and deferral of the application to the FCC for approval of the station transfer until a 'final purchase contract' was signed; (2) a requirement that the 'final purchase contract' was subject to approval by counsel for the respective parties; (3) an agreement that the allocation of the purchase price among assets was to be established and then attached as a schedule to the final contract; and (4) Winans' testimony that he was not bound by anything except what his attorney found acceptable. Indeed, the contract drafts that were subsequently exchanged contained additional terms not specified in the October 25 letter on such subjects as risk of loss pending closing, warranty of condition by Sound on equipment, and procedure for collection of accounts receivable by Sound. The drafts show that complete agreement was not reached on these subjects.
In addition, the parties were unable to agree on the time limit within which FCC approval for the station transfer was to be obtained. The proposed agreement drafted by Sound allowed four months, and the Mission draft provided for seven months. This was an essential term upon which it was necessary for the parties to agree. See KVI, Inc. v. Doernbecher, 24 Wash.2d 943, 167 P.2d 1002.
It is therefore evident that execution of a 'final purchase contract' containing all essential terms was a condition precedent to the existence of an enforceable agreement between the parties, and, no such contract having been executed, the trial court properly entered judgment of dismissal.
Judgment affirmed.
SILVERSTEIN C.J., and COYTE, J., concur.