Opinion
September 5, 1967. —
October 3, 1967.
APPEAL from a judgment of the county court of Rusk county: DONALD J. STERLINSKE, Judge. Modified and affirmed.
For the appellant there was a brief and oral argument by Rodney Lee Young of Ladysmith.
For the respondent there was a brief and oral argument by Daniel B. Merriam of Ladysmith.
This is an action to recover the value of certain rent payments and contributions made toward the purchase of certain personal property pursuant to an option and partnership agreement. Plaintiff and defendant are brothers.
In the late summer of 1956, defendant, then an officer in the Merchant Marine, purchased a dairy farm in Rusk county for the sum of $33,000, paying $15,000 cash, the balance being financed by the assumption of an existing Federal Land Bank mortgage in the amount of $6,175, a mortgage to the Dairyland State Credit Corporation in the amount of $5,000 and a second mortgage on farm chattels to the seller in the amount of $6,460; and the remainder of $365 was paid by credits given to the purchaser by the seller.
On September 1, 1956, defendant entered into a farm lease with the plaintiff. By the terms of the lease plaintiff was to pay as rent and as a consideration for the agreements therein contained certain specified mortgage payments, consisting of one quarter of the gross milk production to Dairyland State Credit Corporation to apply as payments on the mortgage, the mortgage payments due to the Federal Land Bank and the interest payments on the chattel mortgage in favor of the seller. In addition, plaintiff was to pay the real estate and personal property taxes for the term of the lease, insurance premiums for the term of the lease, and all farm operating expenses.
The lease further provided:
"It is further understood and agreed that Lessee shall have the right to purchase a one-half interest in the farm acquired from Kempton Spooner by first parties and that a final arrangement for the purchase and transfer of said one-half interest shall be made between the Lessee and Lessors within three years from the date hereof, provided the said Lessee has fulfilled all of the obligations required of him to be performed under this agreement.
"It being the intention of the parties hereto to make a supplemental agreement on or before three years from the date hereof whereby Lessee shall receive proper credits as above provided towards the payment of his share of the purchase price and for a conveyance of the respective interest of the parties hereto in and to said farm and farm personal property."
Plaintiff was to receive as a credit on his purchase price in the event he should elect to purchase a one-half interest in the farm all of the payments made to Dairyland State Credit Corporation, the Federal Land Bank, and to the seller on the chattel mortgage.
Plaintiff never sought to purchase the one-half interest but, pursuant to the lease, moved on to the farm and operated it individually from September 1, 1956, until June 23, 1957. During that time the plaintiff complied with all of the terms of the lease except he failed to pay the taxes and he failed to make the interest payments on the chattel mortgage.
On or about June 23, 1957, the defendant returned to assist in the operation of the farm by mutual agreement of the parties. At that time the parties agreed to operate the farm as partners, with each receiving one half of the gross income of the farm. Each agreed to execute an assignment of one-fourth of his share of the gross income to Dairyland State Credit Corporation and from the balance the parties were to contribute equally to a farm-operating account from which operating expenses were to be paid and equipment was to be purchased.
Under the amended agreement defendant was to assume all interest payments and principal amounts due on the chattel mortgage. Pursuant to the amended agreement the parties operated the farm as a partnership until about September 20, 1959.
About September 5, 1959, a fire occurred on the premises destroying the barn and adjoining outbuildings and all of the hay stored therein. The parties thereafter discussed the necessity of making arrangements to rebuild and refinance, but they became involved in an argument as to the farm operation whereupon the plaintiff left the farm and moved to California.
The trial court denied defendant's motion for a nonsuit and allowed the plaintiff to recover the amount paid as principal to the Federal Land Bank and also allowed one half of the gain of young livestock and one half of the gain of machinery purchased, plus an amount for logging and sawing labor. From this was subtracted certain amounts plaintiff owed under the lease but had not paid and an amount representing the deficit in the number of cows. Plaintiff was granted judgment of $2,033. Defendant appeals from the judgment.
The following issues are raised on this appeal: (1) Did the trial court err in denying defendant's motion for a nonsuit; (2) by his failure to exercise the option of purchase, did the plaintiff lose his right to recover credits on rent payments?
Defendant contends that the trial court should not have allowed recovery of rent credits because the plaintiff never exercised his option to purchase and thereby forfeited all rights to credits from rent payments. Defendant concludes that plaintiff failed to prove a cause of action for recovery of the rent credit and therefore plaintiff should have been nonsuited. He makes no argument, however, against that portion of the judgment awarding recovery for the increase in livestock and machinery purchased during the partnership operation of the farm nor against that portion of the judgment allowing recovery for services in logging and sawing.
Under the terms of the lease agreement only payments made by the plaintiff to Dairyland State Credit Corporation, the Federal Land Bank, and Kempton Spooner were to be credited to the plaintiff if he exercised his option to purchase under the lease.
Here the complaint alleged that the plaintiff made contributions toward the real estate and personal property during the period the parties operated the farm as a partnership, that in addition at the request and insistence of the defendant he performed extra logging and sawing duties and that he raised fifteen bred heifers and seventeen unbred heifers which remained on the premises. There is evidence in the record that supports the findings that plaintiff is entitled to recover his share of the value of the increase of livestock and machinery and the allowance for logging and sawing labor.
Therefore, the defendant's motion for a nonsuit was properly denied. We have held that a motion for nonsuit is equivalent to a demurrer to the evidence and, in passing on such motion, it is incumbent to view evidence in a light most favorable to the plaintiff; and the court must give plaintiff the benefit of the most favorable inferences that can reasonably be deduced therefrom. Weihert v. Piccione (1956), 273 Wis. 448, 78 N.W.2d 757, United States Fidelity Guaranty Co. v. Milwaukee Suburban Transport Corp. (1962), 18 Wis.2d 1, 117 N.W.2d 708.
With regard to the rent credits, it is clear by the terms of the agreement that the payments were rent and were to become credits against the purchase price only if plaintiff elected to purchase. It is not contended that the original lease agreement was anything more than an option to purchase. It was a continuing promise or offer given by the defendant to sell a one-half interest in the farm to the plaintiff at a specified price within a specified period of time. Bratt v. Peterson (1966), 31 Wis.2d 447, 143 N.W.2d 538. There is a dispute in the testimony as to whether plaintiff was told to get off the farm. There is no finding that defendant breached the option contract. Therefore, when plaintiff failed to exercise his option within the time specified and admitted that he never affirmatively sought to exercise the option, he relinquished all of his rights under the lease. This does not work a forfeiture. As the court pointed out in Megal v. Kohlhardt (1960), 11 Wis.2d 70, 83, 103 N.W.2d 892:
"In cases of an unexercised option there is no forfeiture in the sense that exists with respect to a contract for the sale of realty. The optionee merely pays a consideration for the optionor's not revoking his offer to sell and selling to another during the option period. If the optionee lets the option period expire without exercising the option, he nevertheless has had the benefit of the consideration that he paid for the option. Because this is so, there is no reason of policy why he should receive a refund of the money paid for the option."
There being no other agreement to provide for the refund of rent credits, this item of recovery in the sum of $650 should be disallowed.
By the Court. — Judgment to be modified consistent with the opinion and, as so modified, affirmed. The appellant to have costs.