Cameron v. Double A Services

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                          Nos. 89-404 and 89-528


Charles and Gwendolyn Cameron,               Supreme Court
et al.

     v.                                      On Appeal from
                                             Grand Isle Superior Court

Double A. Services, Inc.,                    December Term, 1990
Henry F. Richardson and
James E. and John J. Brooker


George T. Costes, J.

Jesse D. Bugbee of Kissane, Yarnell & Cronin, St. Albans, for plaintiffs-
  appellees

Keith J. Kasper of McNamara, Fitzpatrick & McCormick, Burlington, for
  defendants-appellants Double A. Services, Inc. and Richardson

Robert J. Perry of Perry & Schmucker, South Burlington, for defendants-
  appellants Brooker



PRESENT:  Allen, C.J., Gibson, Morse and Johnson, JJ. and Barney, C.J.
          (Ret.), Specially Assigned



     GIBSON, J.   In this declaratory judgment action, defendants Double A.
Services, Inc. and Henry Richardson, president and sole shareholder of
Double A. Services, Inc., appeal from a judgment that plaintiffs (the
Camerons) have the right, pursuant to their right of first refusal, to
purchase certain real estate that is the subject of a purchase and sale
agreement between Double A. Services and defendants James and John Brooker.
The Brookers, whose counter-claim and cross claim are still pending before
the trial court, have also filed briefs seeking reversal.  We affirm.
                                   I.
     In July of 1985, the Camerons sold a parcel known as Cam-Well Farm to
Double A. Services with the understanding, which was never reduced to
writing, that Double A. Services would attempt to keep the land in agri-
cultural use.  The transfer was financed through a mortgage held by the
Camerons and memorialized in a warranty deed, promissory note, mortgage
deed, mortgage agreement, and a document entitled "Option."  The mortgage
agreement required written notice to be provided to the Camerons before the
property could be conveyed or encumbered in any way.  The option granted
members of the Cameron family "a right of first refusal" to repurchase the
property, and provided in relevant part:
          The Cameron family or each of them will have thirty days
          from the date of notice of proposed sale in which to
          notify the Optionor of their desire to exercise this
          Option. . . .

          . . . .

          At the time that the Optionor receives a bona fide offer to
          acquire the premises, the Optionor will be deemed to
          offer the property to each Optionee under the identical
          terms offered by the third person.
     In the spring of 1987, Double A. Services entered into discussions with
James and John Brooker about a potential sale of the property.  On May 6,
1987, the Brookers and Double A. Services executed a purchase and sale
agreement, which included a document entitled "Addendum # 1" bearing the
same date.  Although the Camerons became aware of the negotiations, they
were given no written notice of the agreement until they received a letter,
dated May 20, 1987, from Double A. Services indicating that a purchase and
sale agreement had been signed.  The letter provided no details.  Through
their attorney, the Camerons obtained a copy of the agreement, including
addendum one, on June 21, 1987.
     Three days later, a second addendum dated June 24, 1987 was delivered
to the Camerons.  It provided in pertinent part:
          1) Seller has the right to plant and harvest grass crops
          on the property from January 1, 1988 until Purchasers
          sell each lot to new owners for residential building
          purposes.  Unless otherwise agreed to by the Purchasers,
          the Seller shall cease use of each lot upon its sale by
          Purchasers, and Seller recognizes that he may lose crops
          as a result of the termination period.

          . . . .

          4) Prior to July 24, 1988, Seller may remove all
          personal property from the barns including plumbing,
          electrical, tanks, drinking bowls, gutter cleaners,
          stanchions, and any other mechanical apparatus as long
          as the structures (barns) remain.
The trial court found that, if the Camerons exercised their right of first
refusal, addendum two would, as a practical matter, prevent them from
farming the property or using it for any purpose but residential develop-
ment; further, it would allow Double A. Services to harvest grass crops in
perpetuity if the property were not developed residentially.  The Brookers,
who were agreeable to addendum two, planned to develop the property.
     In early July 1987, the Camerons notified Double A. Services that they
intended to exercise their right of first refusal, but noted that the con-
ditions and effect of various addenda needed to be ironed out.  A closing
date, initially set for July 28, 1987, was continued to August 19, 1987.
Resolving the details, however, proved to be insurmountable; the Camerons
refused to accept the terms included in addendum two and Double A. Services
insisted upon including those terms.  The Camerons did not go to the
closing, choosing instead to file this action on August 17, 1987.  The trial
court declared that addendum two was not binding on the Camerons and that
they have the right to purchase the property under the terms of the purchase
and sale agreement and addendum one.
     On appeal, defendants make numerous arguments, which may be
consolidated into the following contentions: (1) addendum two is binding
upon the Camerons; (2) the Camerons waived their right of first refusal by
failure to accept the offer and tender performance; (3) the trial court
committed reversible error by referring to the right of first refusal as an
option; and (4) admission of Mr. Cameron's testimony about pre-sale dis-
cussions with Double A. Services regarding future uses of the property
constitutes reversible error. (FN1)
                                   II.
     It is undisputed that the right of first refusal gives the Camerons
the power to accept the offer of sale on "the identical terms offered by the
third person," the Brookers.  At trial, the parties disagreed, however,
about whether addendum two was a part of the original purchase and sale
agreement.  The trial court found that addendum two was intended to modify
the agreement, concluding that addendum two was an attempt by Double A.
Services to withdraw the original offer after it had ripened into an irre-
vocable option in favor of the Camerons.  On appeal, defendants contend
that the court was clearly erroneous in its finding and conclusion.
     Findings made by a trial court will not be set aside unless, taking the
evidence in the light most favorable to the prevailing party, and excluding
the effect of modifying evidence, they are clearly erroneous.  Bruntaeger v.
Zeller, 147 Vt. 247, 250, 515 A.2d 123, 125 (1986).  We will uphold the
court's conclusions if they are supported by its findings of fact.
Gallagher v. McCarthy, 148 Vt. 258, 263, 532 A.2d 557, 559 (1987).  It is
the function of the trial court, as factfinder, to judge the credibility of
the witnesses and the weight to be given their testimony.  Id. at 263, 532 A.2d  at 560.
     Defendants insist that their uncontradicted testimony establishes that
addendum two was merely a memorialization of terms that were part of the
original oral agreement.  The trial court's findings and conclusions, how-
ever, implicitly reflect a decision not to accept defendants' testimony.
Ample support for this decision is provided by the terms and circumstances
surrounding the creation of addendum two.  When the Camerons requested a
copy of the Brookers' offer, they were given the purchase and sale agreement
and addendum one.  Addendum two was not included.  In fact, it was not then
in existence since it was not executed until June 24, 1987.  As defendants
admit, addendum two was drafted after they became aware the Camerons were
interested in exercising their right of first refusal, and was delivered to
the Camerons three days after the other documents.  Addendum two's practical
effect would make it all but impossible for the Camerons to purchase the
property and retain its agricultural character, which is what Double A.
Services knew the Camerons wanted to do.  Condition four is in direct con-
flict with an express easement in the warranty deed from the Camerons to
Double A. Services, which set forth water line rights and responsibilities
on the property.  Under these circumstances, the trial court could reason-
ably infer that addendum two was an attempt to withdraw the original agree-
ment, and decline to accept defendants' testimony that it was a later-
memorialized part of the original agreement.  See Connors v. Town of Dorset,
134 Vt. 233, 235, 356 A.2d 536, 537 (1976) ("Where the evidence is conflict-
ing or would support different inferences, credibility and weight are for
the trial court when it sits as the trier of facts."); cf. Toys, Inc. v.
F.M. Burlington Co., ____ Vt. ____, ___, 582 A.2d 123, 127 (1990) ("The
question whether there was a contract between the parties does not depend
alone upon the specific facts found but also upon the reasonable inferences
to be drawn from them.").  Accordingly, we cannot conclude that the trial
court's finding is clearly erroneous or its conclusion unsupported.
      The Brookers also argue that the purchase and sale agreement plus
addendum one was not supported by consideration from the Camerons and could
therefore be withdrawn by Double A. Services at any time before the Camerons
accepted the offer.  The Brookers apparently contend that the Camerons were
required to provide consideration at or after the time of the Brookers'
agreement with Double A. Services in order to make the offer irrevocable.
Although the Brookers do not explicitly say so, they seem to argue that ad-
dendum two worked as a revocation or withdrawal of the original agreement.
     First, we note that this contention is at odds with defendants'
position that addendum two was an integral part of the original agreement.
Second, under the terms of the right of first refusal, the Camerons were not
required to provide consideration at or after the time of the Brookers'
offer.  It is undisputed that the Camerons had provided consideration for
their right of first refusal at the time they sold the property to Double A.
Services.  When the Brookers entered into their agreement with Double A.
Services on May 6, 1987, the right of first refusal ripened into an irre-
vocable offer from Double A. Services on the terms offered by the Brookers,
as found by the court.  See Bricker v. Walker, 139 Vt. 361, 364, 428 A.2d 1129, 1131 (1981) ("a right of first refusal in effect becomes an option
with the appearance of a purchaser, other than the optionee, who is ready,
willing and able to buy"); Buchannon v. Billings, 127 Vt. 69, 75, 238 A.2d 638, 642 (1968) ("An option is a continuing offer, and if supported by a
consideration, it cannot be withdrawn before the time limit.").
                                   III.
     Defendants contend that the Camerons waived their right of first
refusal by failing to communicate a "mirror image" acceptance of the offer
and refusing to attend the closing. (FN2) "The essence of the option must be
accepted according to its terms in order to generate a binding contract."
Toys, Inc., ____ Vt. at ___, 582 A.2d  at 126.  Tender of performance is not
required where there has been "a positive and unequivocal refusal to perform
. . . ."  Buchannon v. Billings, 127 Vt. at 76, 238 A.2d  at 642.  "An
optiongiver's evasion or prevention of the exercise of an option excuses
optionee's tender of performance and other conditions precedent to accept-
ance."  Id. at 76, 238 A.2d  at 643 (citing 1 W. Jaeger, Williston on
Contracts { 61D, at 206 (1957)); see Jenkins v. Thrift, 469 So. 2d 1278,
1280 (Ala. 1985) (where optionor refused to receive letter from optionee
exercising option, optionee's complaint requesting specific performance
within time frame of option constituted acceptance); see also Simoneau v.
Northern Terminals, Inc., 153 Vt. 146, 149, 569 A.2d 483, 484-85 (1989)
(liability for failure to honor right of first refusal established where
plaintiff filed suit without formally accepting offer or tendering
performance).
     In the instant case, the trial court found that the Camerons were
willing to perform under the terms of the agreement, including addendum one,
but that defendants were unwilling to convey the property under those terms.
Further, the court found that the Camerons expressed the requisite intention
to exercise their option and that tender of performance was excused by
defendants' insistence on addendum two.  We note that suit was filed by the
Camerons two days before the date of closing.  Although more than one inter-
pretation of the facts is possible, the resolution of conflicts in the
testimony is the function of the trial court, and we cannot say that the
trial court's findings are clearly erroneous.  Cf. Toys, Inc, ____ Vt. at
___, 582 A.2d  at 127 (when given the benefit of all the reasonable doubts
and reasonable inferences to be drawn from the facts, whether option was
accepted was a question that "must be left to the factfinder").
                                   IV.
     Defendants contend that the court's characterization of the right of
first refusal as an option requires reversal.  Initially, we note that the
right of first refusal is a separate document entitled "Option" and that
section one expressly states that "Double A. grants to the Camerons a right
of first refusal"; thus, the court may well have been using the title as a
shorthand reference.  Additionally, under our prior cases, "a right of first
refusal in effect becomes an option with the appearance of a purchaser other
than the optionee, who is ready, willing and able to buy . . . ."  Bricker
v. Walker, 139 Vt. at 364, 428 A.2d  at 1131; but see 1A A. Corbin, Corbin on
Contracts { 261, at 468 & n.9, 470 (1963) (although closely related, a right
of first refusal may or may not be an option contract).  In any event, even
if we assume it was erroneous to call the right of first refusal an option,
we perceive no reversible error in the court's characterization.  See
V.R.C.P. 61 (harmless error rule).
                                   V.
     The Brookers assert that Mr. Cameron's testimony about presale
discussions with Henry Richardson regarding future uses of the property
violates the parol evidence rule and requires reversal. (FN3) The Camerons,
however, argued before the trial court that the testimony was not being
offered to vary the written terms of their sale of Cam-Well Farm to Double
A. Services but, rather, to help explain why they wished to exercise their
right of first refusal.  The court allowed the testimony on the latter
theory.  The court's opinion indicates that it was fully aware of the parol
evidence rule and considered the testimony only for purposes that do not
offend the rule.  The testimony is not grounds for reversal.
     Affirmed.

                                        FOR THE COURT:

                                        ________________________________
                                        Associate Justice




FN1.     In their brief, the Brookers contend that the Camerons are
equitably estopped from asserting their right of first refusal and are
limited to demanding acceleration of the mortgage payments by the terms of
the mortgage.  These arguments were not presented to the trial court,
however, and have therefore been waived.  American Trucking Ass'ns v.
Conway, 152 Vt. 383, 387, 566 A.2d 1335, 1337 (1989)("issues not raised
before the trial court are waived on appeal").  We accordingly decline to
address them.
     Similarly, the Camerons argue that Double A. Services breached its
obligation to deal with them in good faith by its insistence on addendum
two.  The record before us provides no indication that this argument was
made before the trial court.  Given our disposition of the case, we need not
reach the contention.

FN2.     Defendants also contend that the Camerons waived their right of
first refusal by refusing to accept the terms of addendum two.  This
argument is premised on defendants' contention that addendum two is binding
on the Camerons, an argument we have rejected.

FN3.     The Brookers also objected at trial on the basis of relevancy, but
have not pursued this argument on appeal.