Creely v. Hosemann


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Docket Number: 2003-CA-02353-SCT

Supreme Court: Opinion Link
Opinion Date: 02-10-2005
Opinion Author: DICKINSON,
Holding: Affirmed

Additional Case Information: Topic: Contract - Consideration - Exercise of option - Counteroffers - Statute of frauds
Judge(s) Concurring: Smith, C.J., Waller and Cobb, P.JJ., Carlson and Randolph, JJ.
Non Participating Judge(s): Diaz, J.
Dissenting Author : Easley,
Concurs in Result Only: Graves, J.
Procedural History: Bench Trial
Nature of the Case: CIVIL - CONTRACT

Trial Court: Date of Trial Judgment: 09-09-2003
Appealed from: Leflore County Chancery Court
Judge: Jon M. Barnwell
Disposition: Final judgment in favor of Hosemann on both the complaint and the counterclaim. The Chancellor ordered specific performance of the option contract.
Case Number: Go1-0194

  Party Name: Attorney Name:  
Appellant: Andrew Earl Creely, Sr.




ROGER M. TUBBS



 

Appellee: C. Delbert Hosemann, Jr. DAVID W. MOCKBEE JASON EDWIN WEEKS  

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Topic: Contract - Consideration - Exercise of option - Counteroffers - Statute of frauds

Summary of the Facts: Johnny Rayburn entered into a Contract and Agreement to purchase 1,142 acres of land from Dan O’Neal and E.C. Stewart, Jr. Rayburn later assigned his interest to Andrew Creely, Sr. Six days after the assignment to Creely, Danmar, Inc. and Stuart Company entered into a contract to sell Buck Ridge Hunting Club of Mississippi, Inc., the same property. The sole shareholder of Buck Ridge Hunting Club of Mississippi, Inc., was Delbert Hosemann. When Creely learned of the Buck Ridge contract, he and Rayburn filed a Complaint for Temporary Restraining Order, Permanent Injunction and Specific Performance of Contract against Dan O’Neal; E.C. Stuart, Jr.; Danmar, Inc.; and Stuart Land and Timber, LLC, to prevent the sale. Creely and Hosemann reached a compromise. In exchange for releasing his claim under the Buck Ridge contract, Hosemann received an option from Creely to purchase a one-half undivided interest in the portion of the 1,142 acres known as “The Scatters.” The suit was dismissed, and Danmar, Inc., and Stuart Land and Timber, L.L.C., executed a release of real estate purchase and sale agreement in favor of Buck Ridge Hunting Club and Hosemann. Sometime later, Creely wrote Hosemann a letter indicating that he did not want to sell the property. Hosemann filed suit against Creely seeking specific performance of the option contract. Creely filed a counterclaim alleging misrepresentation and fraud. The court entered a final judgment in favor of Hosemann on both the complaint and the counterclaim and ordered specific performance of the option contract. Creely appeals.

Summary of Opinion Analysis: Issue 1: Consideration Creely argues that Hosemann provided no consideration for the option agreement, because Hosemann gave up nothing by settling the litigation. It is not the potential recovery in the lawsuit that provides consideration in a settlement, but rather the right to pursue the recovery. In this case, Hosemann relinquished his right to pursue his claim that his contract for the purchase of the 1,142 acres was valid. This abandonment of the right to pursue a claim provides the necessary consideration. Additionally, the option contract’s recital of consideration creates a rebuttable presumption that consideration was provided. Creely also argues he is entitled to set aside Hosemann’s claim of consideration because it was based upon a misrepresentation. However, the record shows that it was Creely who did not inform Hosemann of defects. Creely argues that Hosemann should not be allowed to personally seek enforcement of the option contract because the buyer in the real estate contract was Buck Ridge Hunting Club, not Hosemann, and that if he had known that Hosemann did not personally have the contract, he would not have entered into the option agreement. There is no question that Hosemann had the authority to sign the option agreement and bind Buck Ridge Hunting Club to the consideration that was given for the option. Issue 2: Exercise of option Creely argues that Hosemann failed to exercise the option. Written notice to the seller of intent of the option holder to exercise an option has the effect of an acceptance, converting the option into an enforceable bilateral contract. It is not necessary for an option holder to tender the purchase price in order to exercise the option. Here, the option contract provided a specific time in which Hosemann was required to exercise the option. However, the contract failed to express a closing date. Therefore, the date of closing was to be within a reasonable time from the date of exercising the option. Because Creely and Hosemann engaged in numerous activities from the exercise of the option by Hosemann until he tendered payment, this issue has no merit. Issue 3: Counteroffers Creely argues that Hosemann’s seven counter-offers extinguished the option. Both parties made numerous attempts to prepare an acceptable deed and to negotiate missing or unclear terms, but these efforts do not rise to the level of counter-offers. When the option to purchase the land was exercised by Hosemann, the option became a valid and binding contract and the option agreement no longer existed. Issue 4: Statute of frauds Creely argues that changes to the option contract were not in writing and violated the Statute of Frauds. Because there were no material changes to the option contract, this assignment of error is without merit on its face.


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