Estate of Dennis I. Smith, Deceased v. Harold C. Samuels
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IN THE COURT OF APPEALS
OF THE
STATE OF MISSISSIPPI
NO. 2001-CA-00752-COA
ESTATE OF DENNIS I. SMITH, DECEASED, LILLIE MAE SMITH,
ADMINISTRATRIX, LILLIE MAE SMITH, INDIVIDUALLY, MIKE SMITH
AND LARKIN SMITH
APPELLANTS
v.
HAROLD C. SAMUELS
APPELLEE
DATE OF TRIAL COURT JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANTS:
ATTORNEYS FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
CERTIORARI FILED:
MANDATE ISSUED:
03/07/2001
HON. STUART ROBINSON
LINCOLN COUNTY CHANCERY COURT
PAUL E. ROGERS
J. STEVENSON RAY
MARY JACQUELINE WATSON
CIVIL - CONTRACT
SPECIFIC PERFORMANCE ORDERED
AFFIRMED - 07/23/2002
8/13/2002
BEFORE SOUTHWICK, P.J., BRIDGES, AND BRANTLEY, JJ.
BRANTLEY, J., FOR THE COURT:
¶1. Harold C. Samuels filed a complaint seeking specific performance of an option contract against the
estate of Dennis Smith, Lillie Mae Smith, Mike Smith and Larkin Smith. The Chancery Court of Lincoln
County ordered specific performance. Aggrieved, the Smiths appeal arguing that the option contract was
invalid, unsupported by valuable consideration and a condition precedent to the contract was never fulfilled.
Finding no error, we affirm.
FACTS AND PROCEEDINGS
¶2. Dennis Smith discussed borrowing approximately $300,000 from Samuels in 1990. Samuels was
unable to make a loan for the complete amount, but he solicited W. Hewitt Smith and Peter F. Swalm for
additional funds. On August 3, 1990, a promissory note was executed by Dennis Smith and his wife, Lillie
Mae Smith, in the amount of $301,000. Mr. and Mrs. Smith executed a deed of trust for two tracts of land
(referred to as "Tract I" and "Tract II") as security for the note on the same day.
¶3. Also, Mr. and Mrs. Smith granted Samuels an option to purchase a portion of Tract I as consideration
for the loan. In 1995, Mr. Smith and Samuels executed an extension of the option until July 10, 1999, in
connection with an extension of the repayment of the loan. Mr. Smith died on May 2, 1996. Samuels gave
notice of his intention to exercise the option by sending a letter and proposed purchase agreement to the
estate on May 7, 1996. Pursuant to the terms of the option, in July 1999, Samuels exercised the option by
tendering the agreed purchase price of $170,000 to Trustmark National Bank of Brookhaven. However,
Mrs. Smith refused to honor the option.
¶4. Samuels filed a complaint seeking specific performance and tendered $170,000 into the court on July 8,
1999. A motion for summary judgment was filed on July 12, 2000, by Samuels. After a hearing, partial
summary judgment was granted in favor of Samuels finding that the unspecified location of the easement
was not a material fact that would void the contract.
¶5. A trial was held on the remaining issue of whether specific performance could be ordered. The trial
judge entered a judgment, ordering that the contract be enforced. Aggrieved, the Smiths (Mr. Smith's wife
and two sons) appeal, arguing that the "agreement to agree" as to the location of the easement was a
material fact and rendered the contract void. Additionally they argued the contract was void due to lack of
valuable consideration and due to a condition precedent that could not be fulfilled.
I. WHETHER THE CHANCELLOR ERRED IN FINDING THAT THE EXACT
LOCATION OF THE EASEMENT WAS NOT AN ESSENTIAL ELEMENT TO THE
FORMATION OF AN OPTION CONTRACT.
¶6. The option contained a reserved easement specifically described as to size, but not as to the location
which was to be decided upon after the option to purchase the property was exercised. The Smiths argue
that the description of the easement is essential to the contract. Accordingly, as the location must be agreed
upon at a later time, the contract is void. However, the chancellor found that the lack of specificity in the
location of the easement was not essential to the contract and that the contract was enforceable if supported
by consideration.
¶7. The Mississippi Supreme Court has held that an option contract which does not set forth a price is
unenforceable. Duke v. Whately, 580 So. 2d 1267, 1273-74 (Miss. 1991). Additionally, specific
performance on an option contract may be granted if the option contains all the material and essential terms
and "leave none to be agreed upon as a result of future negotiations." Id. at 1273-74. Here, the question is
whether the location of the reserved easement is an essential term.
¶8. The Smiths cites several cases from other jurisdictions in support of their argument that this agreement
to agree to the location of the easement is essential and thereby voids the contract. However, these cases
are distinguishable from the present situation. In Scanlon v. Oliver, 44 N.W. 1031 (Minn. 1890), the
sellers had agreed to convey a small parcel of land within an eighty acre tract with the location of the small
parcel to be agreed upon later. The court held that there was not a contract because the subject matter of
the contract had not been determined. Id. at 1032. However, here, the subject tract of land has been
determined; it is the location of a reserved easement that has to be determined prior to execution of the
deed. Additionally, the Smiths cite to another case which supports Samuels's position. In Calder v. Third
Judicial Dist. Court, 273 P. 2d 168 (Utah 1954), the court held the contract to be valid even though the
property was not described and the buyers were to select a tract of land within a larger tract owned by the
sellers. Id. at 170-71.
¶9. In another Utah case cited by the Smiths, a contract was held to be valid because "the option agreement
here supplies a definite method to determine the land description without further agreement of the parties."
Coulter & Smith, Ltd. v. Russell, 976 P. 2d 1218, 1222 (Utah App. 1999). In that case, the description
of land would be determined by the annexation and zoning process. Id. Here, the subject property has
already been agreed; it is only the location of the easement that is yet to be determined.
¶10. While the Mississippi Supreme Court has not addressed this specific situation; however, other
jurisdictions have upheld similar contracts. In C-470 Joint Venture v. Trizec Colorado, Inc., 176 F. 3d
1289 (10th Cir. 1999), the Federal District Court of Appeals for the Tenth Circuit enforced a covenant to
convey an easement in which the parties failed to establish a specific legal description of the property until
the contract was performed. Id. at 1292. In addition, several courts have upheld contracts that grant
easements to the railroad in which the easement and description of the property is made definite by
subsequent selection. See Love v. U.S., 889 F. Supp. 1548 (E.D.N.C. 1994); McCotter v. Barnes, 101
S.E. 2d 330 (NC 1958).
¶11. We find these cases to be consistent with Mississippi's law. The Mississippi Supreme Court has stated
that:
[D]etermination that an agreement is sufficiently definite is favored in the courts, so as to carry out the
reasonable intention of the parties if it can be ascertained. A contract is sufficiently definite if it contains
matter which would enable the court under proper rules of construction to ascertain its terms,
including consideration of the general circumstances of the parties and if necessary relevant extrinsic
evidence. Having found a contract to have been made, an agreement should not be frustrated where it
is possible to reach a reasonable and fair result.
Bushing v. Griffin, 542 So. 2d 860, 863 (Miss. 1989) (citing Jones v. McGahey, 187 So. 2d 579, 584
(Miss. 1966)). In Bushing, the court stated that although the purchase price is essential, the method of
payment is not an essential term of a contract. Bushing, 542 So. 2d at 866. As here, Bushing dealt with a
landowner (here, the landowner's estate) who had second thoughts about the purchase price and thought
the price was too low. Id. The court found that if it let the landowner off the hook, the "integrity and
enforceability of written contracts would be greatly doubted." Id. Mrs. Smith testified that the price for
similar property was higher now than when her husband had signed the option.
¶12. We find that the determination of the exact location of the easement is not essential to the formation of
this contract. Therefore, we affirm the chancellor's finding.
II. WHETHER THE CHANCELLOR PROPERLY FOUND THAT ADEQUATE
CONSIDERATION SUPPORTED THE FORMATION OF THE CONTRACT.
¶13. The chancellor found that there was adequate consideration for the formation of the contract. On
review, we will not reverse a chancellor's findings of fact unless the decision was clearly erroneous,
unsupported by substantial evidence or an abuse of discretion. Estate of Haynes v. Steele, 699 So. 2d
918, 922 (Miss. 1997). "Where the instrument in controversy contains a statement or recital of
consideration, it creates a rebuttable presumption that consideration actually existed." Daniel v. Snowdoun
Ass'n, 513 So. 2d 946, 950 (Miss. 1987).
¶14. Here, option contract and extension recited consideration as ten dollars paid and other good and
valuable consideration. Samuels testified that he paid the ten dollars for both contracts. In addition, the
original option was in consideration of the services rendered in connection with the loan and for Samuels's
personal $151,000 contribution to the loan. As for the extension, Samuels not only paid the ten dollars, but
the extension was executed when Smith wanted to lower his monthly repayments. When W. Hewitt Smith
and Peter F. Swalm refused to lower the payments, Samuels agreed to defer payment on his portion of the
loan.
¶15. The Smiths failed to present any evidence to contradict the receipt of the consideration. They were not
present when the option and extension were executed. Therefore, the evidence does support the
chancellor's finding that there was consideration for the contract.
III. WHETHER A CONDITION PRECEDENT TO THE CONTRACT FORMATION
WAS NEVER FULFILLED AND CANNOT NOW BE FULFILLED.
¶16. The Smiths's final argument is that even if the contract clause dealing with the agreement to agree as to
the location of the easement is valid, it contains a condition precedent that can not be fulfilled due to Mr.
Smith's death. However, Samuels argued and the lower court agreed that the determination of the easement
was not so personal to Mr. Smith that the estate cannot step into the position of Mr. Smith.
¶17. We begin with black letter law that "the power of acceptance under an option contract is not
terminated by . . . death or incapacity of the offeror . . . ." Restatement (Second) of Contracts §37 (1981).
The Smiths cite to a number of cases from other jurisdictions, relying heavily on Lees v. Meyers, 634 N.E.
2d 258 (Ohio App. 1993). In Lees, Lees was granted the option to purchase Meyers's home, but only after
Meyers had expressed a desire not to reside in the home. Id. After Meyers's death, Lees attempted to
exercise the option. Id. The court found that the condition precedent had not be fulfilled. Id. However, this
case is different in that the determination of the reserved easement is not personal to Mr. Smith, unlike one's
desire to live in one place or another.
¶18. Additionally, the plain language of the clause states that "in the event the grantee, or his assigns,
exercise any of the aforesaid options to purchase or lease the aforesaid property, then there shall be
reserved" an easement. "[W]hen interpreting a contract, the court's concern is not nearly so much with what
the parties may have intended, but with what they said, since the words employed are by far the best
resource for ascertaining the intent and assigning meaning with fairness and accuracy." Warwick v. Gautier
Util. Dist., 738 So. 2d 212, 215 (¶8) (Miss. 1999) (citing Simmons v. Bank of Mississippi, 593 So. 2d
40, 42-43 (Miss. 1992)). The clear meaning of the clause of this contract was that the determination of the
easement would occur after Samuels exercised the option. This is not like an agreement that conditions the
performance on financing or the ability to pay. The estate can step into the position of Mr. Smith and
determine with Samuels the location of the easement prior to a deed being executed for the determination of
the exact legal description of the property. Therefore this issue is without merit.
¶19. THE JUDGMENT OF THE LINCOLN COUNTY CHANCERY COURT IS AFFIRMED.
ALL COSTS OF THIS APPEAL ARE TAXED TO THE APPELLANTS.
McMILLIN, C.J., KING AND SOUTHWICK, P.JJ., BRIDGES, THOMAS, LEE, MYERS
AND CHANDLER, JJ., CONCUR. IRVING, J., CONCURS IN RESULT ONLY.
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