Brooks v. Terteling , 107 Idaho 262 ( 1984 )

BISTLINE, Justice.

The present appeal is concerned with an option to purchase land executed between the owners of the land, Orville P. Brooks and his wife Elizabeth Brooks, and the holder of the option to purchase, N.L. Terteling.

The land in question is 2.82 acres of lakefront property located on the Payette Lake near McCall, Idaho. The trial court found on conflicting evidence that the option agreement was part of a single transaction involving the sale by the Brooks of an additional 24.18 acres which, together with the 2.82 acres under options, had originally comprised a single 27-acre parcel. The trial court further found that the consideration for the concurrent land purchase agreement also comprised the consideration for the option agreement. After reviewing the record, we hold that the trial court’s finding was supported by substantial competent evidence and accordingly affirm it.

The trial court also found that the option agreement was not unconscionable in its terms. The option provided that Mr. Terteling would have “an option and first right of refusal to purchase said real property at such time and in the event Brooks desire to sell or dispose of all or any interest in said real property.” The option further provided for a fixed purchase price of $8,382.50 — a price which both parties have stipulated to have been a fair price for the land in question in 1956 when the agreement was entered into. Because the agreement reflects a voluntary transaction, fair at its inception, consummated between competent persons, and lacks both the unfair surprise and one-sidedness typically associated with unconscionable agreements, we likewise affirm the trial court on this point. See, e.g., I.C. § 28-2-302. See also Stearns v. Williams, 72 Idaho 276, 240 P.2d 833 (1952).

It appears to us, however, that the underlying cause of much of the present litigation is certain language, quoted in part, supra, found in the option agreement itself. The relevant part of Section 2 of the “Option to Purchase” states the following:

“At any time hereafter, should Brooks desire or propose to sell or dispose of, or create any outstanding interest of any kind or nature in all or any part of said real property, and before so doing, they shall give notice, in writing, to Terteling of that intention on their part; and at any time within a period of thirty days after delivery thereof, Terteling may exercise the option herein granted to purchase said real property, which exercise of said option shall be accomplished and effected by Terteling through delivery of notice, in writing, to Brooks within said thirty day period of time, stating that its option as contained in this instrument is thereby being exercised.” (Emphasis added.)

The primary bone of contention concerning the above-quoted language involves the underscored language and the question of what acts by the Brooks comprise the creation of an outstanding interest such as would trigger Mr. Terteling’s option to purchase. It is Mr. Terteling’s contention that such language includes within its wide embrace not only prospective sales of the property but devises to family members and the death of Mr. and Mrs. Brooks as well. Thus, under the interpretation urged by Mr. Terteling, the option agreement signed by the parties does not merely provide Mr. Terteling with a right of first refusal should Mr. and Mrs. Brooks decide to sell their property, but rather comprises an absolute guarantee that the property would automatically become Terteling’s upon the demise of Elizabeth and Orville Brooks.

However, it is our view that the Brooks neither desired nor intended such a sweeping surrender of their property rights and that the contract itself does not support such an interpretation. We note in this regard that the agreement is entitled and referred to throughout as an “option to purchase” rather than, for instance, a land sale agreement with a retained life estate subject to certain limitations, as it would in fact be under the interpretation proffered by Mr. Terteling. “An option to purchase or to sell is not a contract to purchase or sell.” Catmull v. Johnson, 541 P.2d 793, 796 (Utah 1975); Black’s Law Dictionary 986 (rev. 5th Ed.1979). In claiming this to be a de facto sale of the property we believe respondents are in error. In addition, especially where there is an ambiguity in the language employed in the operative portion of the contract, we may look to the recitals to determine and construe the intent of the parties as expressed in the entire document. Maddux & Sons, Inc. v. Trustees of Arizona Laborers, Teamsters and Cement Masons, Local 395 Health and Welfare Trust Fund, 125 Ariz. 475, 610 P.2d 477 (1980); Bowen v. Sil-Flo Corp., 9 Ariz.App. 268, 451 P.2d 626 (1969); Brackett v. Schafer, 41 Wash.2d 828, 252 P.2d 294 (1953). In the present case, the recital to the contract itself states the following:

“Whereas, it is the desire and intent of the parties hereto that Terteling shall have an option and first right of refusal to purchase said real property at such time and in the event Brooks desire to sell or dispose of all or any interest in said real property; ____”

The above-quoted language, we believe, clearly evidences an understanding by the parties that their agreement was primarily for a right of first refusal to purchase. “In construing a contract the court will give effect to the language employed according to its usual, plain and ordinary meaning.” Scharbach v. Continental Casualty Co., 83 Idaho 589, 593, 366 P.2d 826, 828 (1961); Messinger v. Cox, 33 Idaho 363,194 P. 473 (1920). In addition, we note that to the extent that any ambiguity arises from the use of the words “interest” and/or “create any outstanding interest of any kind or nature,” such ambiguity must be construed most strongly against the party who prepared and provided that language — in this case, the respondent Mr. Terteling. Werry v. Phillips Petroleum Co., 97 Idaho 130, 540 P.2d 792 (1975); Dale’s Service Co., Inc. v. Jones, 96 Idaho 662, 534 P.2d 1102 (1975). It is the view of this Court that the language employed between these parties and in this case meant just what it said: that should the Brooks, their heirs or assigns, decide to sell or otherwise encumber the subject property, that property shall first be subject to a right of first refusal at the agreed price by Mr. Terteling, his heirs or assigns. However, under the circumstances of this case, it is our view that neither the death nor devise of the property by Mr. and Mrs. Brooks trigger the option to purchase held by Mr. Terteling. Because we believe the trial court adopted the erroneous interpretation urged by Mr. Terteling, we accordingly modify that part of the judgment below.

Affirmed as modified. No costs or attorney’s fees.

HUNTLEY, J., concurs. DONALDSON, C.J., concurs in the result.