Rogers v. Jones , 126 Ariz. 180 ( 1980 )

OPINION

WREN, Judge.

This is an appeal from an order vacating summary judgment and granting a new trial on a suit for specific performance of a real estate option. We reverse.

The facts which are essential to our resolution of this case are in substantial accord. Appellants, Dr. Frank A. Rogers and Frances Rogers, husband and wife, who resided in California, owned as community property 165.2 acres of farm land near Wellton, Arizona.

On January 12, 1973, appellants and ap-pellee, Floyd Jones, who had custom farmed the property for several years, entered into a written lease of the farm for a term expiring December 31, 1975. This lease contained the following option for purchase:

The Lessors, for and in consideration of the covenants and agreements herein contained to be paid, done and performed by the Lessees and for and in consideration of the additional sum of Ten and No/100 ($10.00) Dollars and other good and valuable consideration, hereby grants to the Lessees an option to purchase the leased premises on or before termination of this lease, for the sum of NINE HUNDRED FIFTY and NO/100 DOLLARS ($950.00), per irrigable acre based on 165.2 acres.

On or about October 1, 1975, Jones submitted an offer to purchase the property with a down payment of $16,900 and the balance payable at $16,000 per year with interest at eight percent. Dr. Rogers rejected the offer by a letter dated October 14,1975. Thereafter, on November 6 and 7, 1975, the parties executed a new lease for the crop year of 1976, which contained no purchase option. On December 31, 1975, the last day of the first lease, Jones and his attorney called Dr. Rogers and advised him that Jones was exercising the option and would make payments over a three year period. Dr. Rogers rejected the payment proposal but stated that he would sell if full payment following a down payment was made within two years. At the attorney’s request, Dr. Rogers forwarded to the attorney a confirming telegram.

Escrow instructions in accord with their purchase agreement were prepared, the down payment was deposited with the escrow agent, and the instructions and conveying documents were forwarded to Dr. and Mrs. Rogers. However, Mrs. Rogers refused to sign the proffered escrow documents and on January 14, 1976, Jones was so advised in a letter by Dr. Rogers. On May 19, 1976, Jones filed an action for specific performance, the underlying lawsuit to this appeal.

On February 8, 1977, the trial court entered summary judgment in favor of Dr. and Mrs. Rogers, having construed the option as requiring payment in cash upon exercise of the option or within a reasonable time thereafter; and that the subsequent agreement, between Jones and Dr. Rogers as to deferred payments, constituted an invalid amendment of the option in violation of A.R.S. § 33 — 452: “a conveyance or incumbrance of community property is not valid unless executed and acknowledged by both husband and wife . . . .” It is undisputed that the property in question was community property of the appellants, and that Mrs. Rogers, after signing the original lease and option, had not entered into the subsequent negotiations with Jones in any way.

On February 23, 1977, Jones filed a motion for new trial based upon newly discovered evidence, claiming discrepancies in the testimony of Dr. Rogers at a hearing on a separate action of forcible detainer. Thereafter, the trial court granted the motion for a new trial and vacated the summary judgment order of February 8, 1977. This appeal followed.

Appellants assert two issues for our review:

1. That the terms of the option agreement required a tender of the entire sum in cash prior to termination of the lease or at least within a reasonable time thereafter, and,

2. That summary judgment in their favor was proper since there was no newly discovered evidence raising a factual issue to justify setting aside the judgment and ordering a new trial.

Appellees counter by asserting that the option was properly exercised on December 31, 1975, and that the husband thereafter had authority, as agent of the community, to bind appellee, Frances Rogers to the deferred payment agreement. Appellees further assert that there was a genuine issue of material fact as to whether Jones had properly exercised the option and that, therefore, summary judgment in any event was improper.

Appellees additionally advance the argument that, since this appeal is from an order granting a motion for a new trial, the trial judge should not be reversed in the absence of a clear abuse of discretion. King v. O’Rielly Motor Co., 16 Ariz.App. 518, 494 P.2d 718 (1972); Caldwell v. Trem-per, 90 Ariz. 241, 367 P.2d 266 (1962). They assert that the sole inquiry should be whether the trial judge abused his discretion in ordering a new trial. We need not, however, reach this issue as to the scope of our review, as we have determined that there was no valid exercise of the option for purchase and that the appellants are entitled to judgment as a matter of law.

Our research leads us to the conclusion that the law is crystal clear that an option agreement must be strictly construed, in that it must be exercised in exact accord with its terms and conditions. Oberan v. Western Machinery Co., 65 Ariz. 103, 174 P.2d 745 (1946). In Hayward Lumber & Investment Co. v. Construction Products Corp., 117 Cal.App.2d 221, 255 P.2d 473 (1953), it was stated that:

Since the optionor is bound while the optionee is free to accept or not as he chooses, courts are strict in holding an optionee to exact compliance with the terms of the option.

If an option expresses a manner in which payment is to be made, the optionee must comply therewith in order to cause a contract of purchase to come into existence, 17 C.J.S. Contracts § 42, p. 680.

An examination of the option clause here discloses that there are no provisions for terms, mortgages or interest. The language simply grants an option to purchase the leased premises on or before termination of this lease for the sum of [$950.00] per irrigable acre. In our opinion, such language cannot be construed as being “silent” on the time or manner of payment permitting a deferred payment agreement. No payment in cash was ever tendered, before or after the termination of the lease, and neither was there a repudiation or modification of the cash requirement by Mrs. Rogers.

We therefore find that full payment in cash on or before the termination date was an integral part of the option. To hold otherwise would be to rewrite the contract. Under the posture of these facts a suit for specific performance cannot lie. The appellants are therefore entitled to judgment as a matter of law and the court erred in vacating it and directing a new trial. Since the claim of newly discovered evidence could have no bearing on this determination, we do not respond to it.

Judgment reversed with directions to the trial court to enter judgment in favor of the appellants.

DONOFRIO, J., concurs.