Appeal from a decree of the Hustings Court of the city of Roanoke in a suit for specific performance of a contract to sell land. Hon. J. L. Almond, Jr., judge presiding. Decree for complainant. Defendants appeal.
Present, Campbell, C.J., and Holt, Hudgins, Gregory, Eggleston and Spratley, JJ.
SPRATLEY, J., delivered the opinion of the court.
This is a suit for the specific performance of a contract to sell land. The case is so largely dependent upon the facts and the construction to be put on them, that it is necessary to set out the evidence in considerable detail.
The First National Exchange Bank of Roanoke, Virginia, and R. H. Thomas, hereinafter referred to as executors, are the duly qualified executors of the estate of Paul Massie, who owned, at the time of his death, several parcels of real estate in the city of Roanoke. The Roanoke Oil Company, Incorporated, hereinafter referred to as the oil company, desiring to establish a gasoline station for filling service purposes, entered into negotiations with the executors and obtained a lease of a parcel of that estate.
The lease was dated November 1, 1935, but was not acknowledged until January 11, 1936. This delay is explained by the fact that it was desired to secure the signatures of various beneficiaries of the estate, located at distant points.
The land is described in the lease by metes and bounds, and also as "being the westerly portion of the property of Paul Massie's estate, located on the north side of Salem Avenue," fronting one hundred and fifteen feet thereon.
The lease is for a term of ten years, beginning November 1, 1935, at a rental of fifty dollars per month. Among numerous covenants and provisions, it contained the following clause:
"Eighth: If, during the term of this lease, the Lessors receive a bona fide offer of sale of the said premises, free and discharged of this lease, and desire to sell the said premises upon the price and terms of said offer, then the Lessors
shall have the right to terminate this lease, provided that they give to the Lessee an opportunity to purchase the said property at the price and upon the terms of the said offer. If the Lessors receive such an offer, which they are willing to accept, they shall notify the Lessee in writing of the said offer and of their willingness to sell the said property upon the price and terms thereof, and the Lessee shall have a period of five days from the receipt of such notice within which to purchase the said property at the price and terms of said offer, and if the Lessee shall fail to notify the Lessors within five days after receipt of such notice of its desire to purchase said property at such price and terms, then this lease shall forthwith terminate, except that the Lessee shall be entitled to retain possession of the said premises for a period not exceeding ninety days, from the time when the Lessors shall notify the Lessee of the said offer, for the purpose of removing therefrom any buildings, fixtures and equipment erected or installed thereon and of replacing the said premises, to their now present state and condition, and the Lessee shall continue to pay the stipulated rent for said premises during such period it may so retain possession thereof."
At the time of the execution of the lease, the Massie estate owned, and still owns, in addition to the property described in the lease, an adjoining parcel on the east, upon which there is a building leased to and occupied by the Roanoke Steam Laundry.
The oil company, immediately after taking possession of the property covered in its lease, constructed and equipped a gasoline filling station at a cost of approximately $3,500.
Mr. Paul Stonesifer, the trust officer of the First National Exchange Bank, handled the negotiations on behalf of the executors for the lease, while Mr. H. F. Stoke, vice-president of the oil company, represented the latter. The directors of the oil company, in addition to Mr. Stoke, comprising all of the stockholders and officers of the company, are J. D. Wells, president, John A. Lucas, vice-president, and Ira F. Walton, secretary-treasurer.
Stonesifer met Walton on the afternoon of July 6, 1936, and briefly told him that the executors had received an offer from a Mr. Jones, the owner of the Roanoke Steam Laundry, for the purchase of the two adjoining parcels of land on Salem avenue, owned by the Massie estate, one occupied by the steam laundry and the other by the oil company, and that he was writing the latter a letter relative thereto, which his company would receive the next day. Walton says he then asked Stonesifer, "I wonder if by any chance there could be a splitting up of that property, and we buy the portion of it that we are now occupying and Mr. Jones buy a portion of it?" Mr. Stonesifer replied, "No, as far as we are concerned, we cannot do that, it belongs to the estate, and we will have to sell it as a whole, and we cannot split it up." On the same afternoon after receipt of the above information, the directors of the oil company held a meeting, and decided to call on Jones, to find out whether he would continue their lease, and his attitude towards the lease. They were unable to make any satisfactory arrangements with Jones.
The following letter, omitting the formal parts thereof, dated July 6th, signed by Stonesifer, was received by the oil company on July 7th:
"As Co-Executor of the Estate of Paul Massie, Deceased, we have received an offer of $20,000 cash for the property standing in Paul Massie's name, which is occupied by the Roanoke Steam Laundry and yourselves.
"Clause Eight of lease dated November 1, 1935, between the Executors of the Estate of Paul Massie and yourselves provides that the lessor shall have the right to terminate the said lease provided they give the lessee an opportunity to purchase the said property at the price and upon the same terms of said offer. The lessors are willing to accept the above-mentioned offer and we hereby notify you thereof.
"In the event you fail to notify us within five (5) days, this lease shall forthwith terminate and you shall be entitled to retain possession for a period not longer than ninety (90) days.
Will you please give us a reply to this letter within the five-day period?"
On July 7th, after receipt of this letter, John A. Lucas, vice-president of the oil company, went to the bank, and had a conference with J. T. Meadows, the president of the bank. Mr. Meadows informed him that he did not know of the Jones offer, did not know of the option contained in the lease, and did not know that the letter of July 6th had been written. He said he was informed by Meadows that the oil company could exercise its right under the lease and under the letter, to buy the property at that price, but the only offer they had to make was one for the entire property.
After the meeting of the directors of the oil company on July 7th, each of the directors made separate efforts to secure financial aid to purchase the property, and agreed to meet to report the result of these efforts on July 8th, at twelve o'clock.
In response to a telephone message on the morning of July 8th, Walton and Lucas drove to the bank, and had a conference with Meadows and Stonesifer, lasting from forty minutes to an hour. Both Walton and Lucas testified that they made it clear at this conference, that while the oil company preferred to make some arrangement to continue its lease, and not to buy any of the property, it would, if necessary to protect its investment, raise the necessary amount to purchase the whole property; but that they would have to report to their board of directors any suggestion made before their company could be committed. Either at their suggestion, or at the suggestion of the officers of the bank, the latter agreed to see Jones, and ascertain whether, and, if so, in what way he would split his offer for the property, so that the oil company might be in a position to buy only the leased premises; and if successful, such a proposition would be later submitted to the oil company. That the officers of the bank repeatedly told them that they could not do anything except sell the whole property; that they did not have but one proposition to offer and this was in the letter of July 6th; and that they had to raise $20,000, or
get off. Walton and Lucas further testified that no definite agreement was reached at this conference, and there was nothing to report back to a meeting of the oil company directors; that there was no notice of cancellation of the offer; and that the letter of July 6th was not withdrawn, or anything said indicating that it was written by mistake. Lucas also testified that he remembered distinctly that either Meadows, or Stonesifer stated that "Jones would not be satisfied with a portion of the property because he already owned another location and would either have to acquire this entire property or move."
Stonesifer, in his testimony, in referring to these conferences, did not say that the letter of July 6th was written by mistake. He would only say that this letter was for the purpose of making the oil company cognizant of the terms of the lease, and of the receipt of an offer the executors had received for the entire property.
Meadows did not recall the language used by Walton and Lucas, but got the impression from them that being anxious to protect their lease, they were concerned with the suggested cancellation of same. He testified that neither of them said anything to indicate that they understood they had received a definite offer to buy the entire property. He said they were told that the first letter was merely to notify them of the offer, and to give to them an opportunity to negotiate for the purchase of that part of the property occupied by them.
The officers of the oil company, after ascertaining from the executors that they could immediately executed a deed for the property, without securing the signatures of the absent beneficiaries, on July 8th, reached an understanding with a man named Johnson, whereby the latter would put up $20,000 for the purchase of the property. Johnson agreed to lease the filling station lot to the oil company for ten years at the same rental, with no right of cancellation reserved in the lease, and, in addition, gave to it the right to purchase the lot at any time during the ten-year period at the price
of $12,000, if purchased during the first year; but the price was to increase $600 each year thereafter.
Johnson desiring to consult his attorney, went with Stoke, on July 8th, to the office of Mr. Hazlegrove, who, as it happens, is a member of a law firm, which also represents the First National Exchange Bank in many matters. Mr. Hazlegrove knew nothing of this particular transaction with the executors, or the bank, but expressed an opinion to them that the letter of July 6th, was not intended as an offer to sell the whole property to the oil company. Stoke took the position that the oil company was obligated, under the circumstances and by its lease, to buy the whole property, or to vacate. The latter, referring to the original negotiations for the lease, said that it was his understanding, both at the time the lease was made and at the present time, that the option clause required them to purchase the entire property, or to vacate, if an acceptable offer was made by another and accepted. There is no testimony in the record that Mr. Hazlegrove was representing the executors at the time that he was consulted by Mr. Johnson, as his attorney.
Now, in the meantime, Wells had arranged to secure from another source a loan of $12,000 on the property, which with $8,000 the oil company could put up, would finance the proposition.
The directors of the oil company met on July 8th, and received the reports of its officers to secure a loan to finance the purchase of the whole property. Between one and two o'clock of that day, they decided to buy the property, and to give notice to that effect at once. In accordance therewith, the following letter of July 9th was written, and delivered on the morning of that day to the officers of the First National Exchange Bank, representing the executors:
"The Roanoke Oil Company, hereby accepts the proposal contained in your letter of July 6, 1936, to purchase the property described therein, located in Roanoke, Virginia, and abutting on Salem Avenue, Part Street, and Norfolk ...