Co-Op. v. B. O. , 31 Ohio App. 2d 84 ( 1972 )

This writer is of the view that summary judgment was properly entered below and the judgment should be affirmed.

The motion for summary judgment appears to have been granted by the trial court on the ground of lack of consideration. This was not a ground urged by appellee in the motion for summary judgment. In order to base a summary judgment on this ground, it would have been necessary that the allegations of the petition which supported enforcement on the basis of promissory estoppel be negated factually by proper supporting documents. Since appellee, the moving party, was not seeking summary judgment on that ground, it was, of course, not done. Hence, this writer would agree that the entry of summary judgment on that basis was improper.

The principal ground advanced by appellee was that, as a matter of law, appellant could not recover because, in substance, the alleged contract contained no agreement as to price. Appellee is correct in this contention for the following reasons and an affirmance of the summary judgment should follow.

It must be remembered that the sole nature of the suit below was an action seeking specific performance. From early times, Ohio has followed the rule that specific performance of contracts will be granted only when the terms therein are certain and do not require subsequent arrangements to adjust their details and settle their terms. The State of Ohio v.The Heirs of M. Baum And Others, 6 Ohio 383, 49 Ohio Jurisprudence 2d 508, Specific Performance, Section 16 and cases therein cited. This is the rule of almost universal application. 49 American Jurisprudence 42, Specific Performance, Section 29.

The right to purchase, by which appellant seeks specific performance, is embodied in the following letter:

"Dear Mr. Deval:

"This refers to your Association's request that it be given the first refusal to purchase property fronting along the west side of Third Street situate north of Butler Street.

"This will advise that should the Railroad Company relocate its freight facilities from Marietta to West Marietta prior to June 1, 1969 and prior to that date place its property in Marietta on the market for sale, the Railroad Company will give to Washington County Farm Bureau Cooperative Association the first refusal to purchase so much of the premises outlined in green on attached print to which the Railroad Company has fee title. Such purchase shall be upon terms and conditions approved by the President and Directors of the Baltimore and Ohio Railroad Company and conveyance shall be subject to driveways, zoning restrictions, easements and servitudes howsoever created, etc. Very truly yours, (signed) E. E. Phipps."

Although described as an option in appellant's petition, it clearly is not, since an option, itself a contract, is a continuing offer to sell during the duration of its existence which on being exercised becomes a new, binding, and enforceable contract. The right acquired here is more properly designated a "right of first refusal," "first right to buy," or "right of pre-emption." 1A Corbin, Contracts, Section 261, 49 American Jurisprudence 2d 384, Landlord and Tenant, Section 368. The owner under such right is not obliged to sell and the holder of the right has no privilege to demand a conveyance at any time prior to the property being offered for sale. Whatever name may be applied to the "right" and whether it be considered a form of option or not, the requirement of certainty of terms is still applicable.

It is evident that no price has been agreed upon by the above. "The general rule is that price or compensation is an essential ingredient of every contract for the transfer of property * * * and must be definite and certain or capable of being ascertained from the contract itself. By this it is not meant that the exact figures must be stated in the agreement; however, where that is not the case, the price must, by the terms of the agreement, be capable of being definitely ascertained." 17 American Jurisprudence 2d 422, Contracts, Section 82. And when, with respect to agreements, as here, wholly executory, the reservation to a party of an unlimited right to determine the nature and extent of compensation he will make renders his promise too indefinite to be enforceable. 17 American Jurisprudence 2d 425, Contracts, Section 83.

The grant of the right here in question to appellant wherein it states "Such purchase shall be upon terms and conditions approved by the President and Directors of the Baltimore and Ohio Railroad Company" gives to such owner either (1) the right to dictate the price or (2) carry on further negotiations of the price. By either view, appellant cannot prevail. See In reMcVoy's Estate, 94 N.Y.S.2d 396.

The cases upon the question here presented are collected in the annotation in 2 A. L. R. 3d 701. At page 703, it is stated, after distinguishing the cases where there is a provision for price as fixed by a sale to others, or where there is a provision for a price at fair market value, or where there is a specific price limitation, the following:

"On the other hand, option agreements have generally been held unenforceable for lack of definiteness of price if the parties both fail to provide for a specific price to be paid for the property, and also fail to specify a practicable mode by which the price can be determined with certainty by the courtwithout any new expression by the parties themselves." (Emphasis added.)

The following are illustrations of provisions which have been held unenforceable:

"The parties of the first part agree that if they should sell two lots adjoining this tract on the east, they shall give the parties of the second part first choice." Rolfs v. Mason,202 Va. 690, 691, 119 S.E.2d 238, 239.

"Said lessor agrees, whenever he shall offer the above-described land for sale, he will give said lessee the first opportunity to buy the same." Wolf v. Lodge, 159 Iowa 162, 163,140 N.W. 429.

"If the premises are for sale at any time, the lessee shall have the refusal of them." Fogg v. Price, 145 Mass. 513, 515,14 N.E. 741, 743.

While it could hardly be disputed that it is not the function of a court to rewrite a contract for the parties, there is authority to support a view that even if a price is not specified, and unless the context of the agreement specifies otherwise, a first right of refusal imports and implies a right to purchase on the same terms and at the same price as contained in a bona-fide offer from a third person acceptable to the owner. King v. Dalton Motor, Inc., 109 S.W. 25 and authorities cited in footnote 6.

In King, the price was to be "negotiated and to be agreeable between the parties at time of sale." The court held the general meaning of the "first option to buy" inapplicable and that the provision was fatally defective. In my view, the phrase "shall be upon terms and conditions approved by the President," etc. is of like tenor. Even if it is not and accepting, arguendo, the implication that a price contained in a bona-fide offer from a third person would be acceptable to the owner, there is no evidence that such a bona-fide offer has been made or accepted. Hence, appellant's pre-emptive right was still dormant and no duty to convey was placed on appellee.

With respect to implications within the agreement in question, appellant urges that an implied provision exists that the price would be one based on fair market value. There are cases which uphold, as against claims of uncertainty, the right of specific performance when such a clause is specifically inserted by the parties. Portnoy v. Brown, 430 Pa. 401,243 A.2d 444.

In Wolf v. Lodge, supra, at 165, the agreement provided: "Whenever he shall offer the above described land for sale, he will give the lessee the first opportunity to buy the same." To the argument that this required an offering and determination of price at a reasonable or fair price, the court stated, at 165:

"Nothing in the instrument indicates a purpose of the parties to limit the price to the fair or reasonable value of the land. The lessor in no manner limited his right to retain the property indefinitely, and, as we think, did not intimate at what price, whether reasonable or otherwise, he would sell. Nor did he undertake that he ever would offer to sell. He merely stipulated that, whenever he should offer the land for sale, he would afford the lessee the first opportunity to buy. But he did not undertake to name a price in putting it on the market, nor did he agree that opportunity to buy should be at a specified sum or one in some manner to be ascertained."

The majority opinion agrees that appellant has no right to specific performance yet reverses the judgment. The rationale adopted for the reversal is readily apparent. The reversal here is for a remand to the trial court for further proceedings upon the assumption that appellant desires to seek to recover a money judgment for improvements erected on the premises upon the ground of unjust enrichment. This writer is confident this assumption will be a surprise to the parties and trial court below since no claim for such relief appears in any pleadings, motions, brief or arguments in the trial court or this court. The only reference in appellant's brief to such improvements is in support of an argument of enforceability of the agreement irrespective of consideration.

An examination of the petition, filed prior to the effective date of the Rules of Civil Procedure, discloses that only a cause of action for specific performance was pled and the only relief sought was the specific enforcement of the agreement. No cause of action for money was pled, hence, no summons bearing an amount of money sought was ever issued; nor was, after the effective date of the Civil Rules, any amendment as to relief in the form of the money for improvements made, demanded or even requested. Neither, after announcement of the court's decision below, was any request made that the case be retained for such purpose. Instead, appellant elected to stand on the sole issue below of whether specific performance would lie.

This appeal, thus, devolves into the dispositive question of whether summary judgment must be denied in a specific performance action where, as a matter of law, the remedy will not lie if there exists a potential but unasserted right to recover for improvements. The answer, in the view of this writer, is clearly no. It is not a question of whether a trial court could, under such circumstances, retain the suit for such purpose under the principle that the jurisdiction of an equity court once invoked will be retained to give complete justice between the parties, but, rather, where no such potential claim is raised and placed in issue, it must do so.

It is interesting to note in the two cases cited in the majority opinion, King's Heirs v. Thompson, 34 U.S. 204 andPreston v. Brown, 35 Ohio St. 18, that in King's Heirs the relief sought was pled in the alternative and, thus, placed in issue at trial and in Preston the Ohio Supreme Court, in commenting on King's Heirs, noted a demand for alternative relief was made. Additionally, in King's Heirs, unlike here, the parties making the improvements, upon the denial of specific performance relief, applied to the trial court and were granted a judgment for the value of the improvements. It was from the grant of such latter judgment, and not the denial of specific performance relief, that was the subject matter of the appeal.

It is the conclusion of the writer that whatever remedies appellant may have by virtue of its "right," it must now seek them in a separate proceeding. Summary judgment was properly entered below and I would affirm.