WILLIAM HALL, Appellant, v. JOHN CENTER et al, Respondents

No. 2,193. WILLIAM HALL, Appellant, v. JOHN CENTER et al, Respondents. Contract — Specific Performance. — Equity -will decree specific performance of a covenant in a lease, -which provides that the lessee shall have the privilege of purchasing the premises for a fixed sum of money, on or before the expiration of the term. Appeal from tbe District Court of tbe Fifteenth District, City and County of San Francisco. The facts are stated in tbe -opinion. Winans & Belknap, for Appellant. Tbe doctrine of mutuality does not apply to tbis case. Tbe case of De Butte v. Muldrow, (16 Cal. 505-12-13,) is conclusive of tbe present, not only on tbe point of mutuality, but upon every other question that could be raised, and sustains tbe plaintiff’s claim to have specific performance decreed of tbe covenant sued on, and of tbe obligations of tbe lease, and, in addition to tbe facts there existing, furnishes an equitable claim for relief of tbe strongest kind, in tbe expenditure by appellant of $8,500, for tbe improvement of tbe land in controversy, on tbe faith of said covenant, and tbe expectancy of a deed thereunder, and his right to claim the same. The general rule requiring mutuality would not be applicable to this case, under its exceptions, if no mutuality existed; but here tbe very facts themselves, and the law by which they are expounded, both unite to establish a perfect case of mutuality. If the general rule requiring mutuality were operative, it would not be applicable to such a state of facts .as here exists. (Matter of Jane Hunter, 1 Edw. Oh. (N. Y.) 1; Wil-listonv. Williston; 41 Barb. 635; Paclckurstv. Van Cortland, 14 Johns. 15; Watts v. Waddle, 6 Peters, 392.) The case of Boucher v. Van Bushirlc, (2 A. IL Marsh,' 346,) which, in its general features, resembles tbe present case, is prima facie a seeming authority against plaintiff, but on inspection will be found to sustain the theory of plaintiff’s case. But there is a two-fold difference between that case and this. First — There the lessee did not pay any rent, as a consideration and mutuality for the contract to convey. Whereas, here the lease was for a stipulated rent which was duly paid by the lessee, and' the right or license to purchase was the inducement to his taking the lease and paying the said rent. Second — In Boucher v. Van Bushirlc there were no improvements shown to have been put by the lessees upon the premises, while the Court expressly intimates, at the close of its opinion, that if there had been valuable improvements made a specific performance would have been decreed. ' Upon this question of mutuality see: (Clason v. Bailey, 14 Johns. 484; Old Colony R. R. Co.'v. Evans, 6 Gray, 25-31; Plunkett v. Methodist Eps. Soc. 3 Cush. 65; Western R. R. Go. v. Babcoch, 6 Mete. 346-53-54; Hooker v. Pynchon, 8 Gray, 550; Dooley v. Watson, 1 Id. 414; Parker v. Perkins, 8 Cush. 318; Murphy v. Marland, Id. 375; Cetcliell v. Jerrett, 4 Greenl. 350-66-7; Rogers v. Saunders, 16 Maine, 92-7-101; Peck v. Baldiuin, 1 Root, ( Conn.) 455; City of Providence v. St John’s Lodge, 2 R. I. 46-59; Ives v. Hazard, 4 Id. 25-7; Telfair y. Telfair, 2 Desaussure Cb. 271; White y. Schuyler, 1 Abb. Pr. (N. X.) 301; McCrea y. Purmort, 16 "Wend. 450; Woodward y. Aspinwall, 3 Sandf. 292;) Wilson & Grittenden, and Jarboe & Harrison, for Respondents. We claim that the contract ought not to be enforced for want of mutuality. The general rule on the subject is perfectly well settled, and unless this rule is to be entirely discarded, it is plain that the case is not a proper one for equitable relief. (Pry on Specific Performance, p. 198; Law-renson y. Butler, 1 Scho. & Lef. 13; Bromley y. Jeffries, 2 Vern. 415; Armiger y. Clark, Bunb. Ill; Flight y. Bolland, 4 Russ, 298; Withy y. Cottle, 1 Sim. & Stn. 174; Adderly y. Dixon, Id. 608; Tyson y. Watts, 1 Maryl. Ch. Dec. 13; Duvall y. Myers, 2 Id. 401; Geiger y. Green, 4 Gill. 472; Parkhurst y. Van Cortland, 1 John. Ch 263, German v. Machín, 6 Paige, 283; Woodioard v. Harris, 2 Barb. 439; Phillips y. Berger, 8 Id. 527; Cabeen y. Gordon, 1 Hill. Ch. 39; Moore y. Fitz Randolph, 6 Leigh, 175; Sordine y. Glad-ing, 21 Penn. St. 50; Haiuley y. Sheldon, Harring. Ch. 420; Bronson y. Cahill, 4 McLean, 19; Boucher v. Van Buskirk, y. 2 A. EL. Marsh, 346; Cooper y. Pena, 21 Cal. 403.) In the last case the opinion discusses the question at some length, and cites with marked approval the Maryland cases on the subject. Thus approved, these cases must be received by the Court as expressing its own views; and they are undoubtedly in accordance with the authorities generally. If the contract here is a proper one to be specifically enforced, it is difficult to imagine a case in which the want of mutuality could be set up as a defence. The contract is for a mere privilege without any corresponding obligation; a privilege to be exercised or not, at the pleasure of the appellant. By the terms of the contract, he could take the property or refuse it; and it is natural to suppose tbat Ms election would depend on the value of the property as compared with the contract price. If the property advanced, he would take it, and secure for himself the benefit of the advance; but if it declined he would refuse it, and avoid the loss resulting from the decline. In either event, the parties with whom he contracted would be the only sufferers; and we submit that a contract so unequal in its operation, cannot be considered either fair or just. It gives an advantage for which nothing is returned, and it may safely be assumed that any effort to enforce it would have as its motive the profitable results of this advantage. In such a ease, the want of mutuality is a want of fairness and justice. [MAJORITY — "Wallace, J.,] "Wallace, J., delivered the opinion of the Court, Temple, J., Crockett, J., and Erodes, C. J., concurring : Center and Spreckles were owners of certain premises and leased them to Hall for a term at a stipulated rent. During the running of the lease, Spreckles conveyed his undivided half of the reversionary estate to the defendant Grim. The lease was signed by the lessors and lessee, and contained a clause to the effect that Hall should have the privilege of purchasing the premises at $1,750 on or before the expiration of the term. Hall entered into possession under the lease, and performed all its conditions on his part, and during the term “made valuable improvements thereon, to wit: of the value of $8,500.” Before the term expired he endeavored to avail himself of the privilege of purchasing the premises reserved to him in the lease, and with this view he made a tender of the purchase price in due time and form, and demanded a conveyance. The defendants refused to receive the purchase money, and having declined to convey, Hall brought this action to obtain a decree to compel them to do so. To his complaint, setting forth the foregoing facts in substance, a general demurrer was filed by the defendants, which was sustained by the Court below, and the action dismissed, upon the ground, as it is understood, that the plaintiff’s claim to be admitted to purchase was a mere privilege; that he had not bound himself to make the purchase, and, of course, could not have been compelled by the Court to do so; that there was, therefore, no mutuality in the agreement, and hence it could not be the subject of a decree for specific performance in a Court of equity. „ I do not think it necessary to enter upon a critical examination of the applicability to the facts of this case of the rule (which a review of the authorities would show to be far from general,) in Courts of equity, that a contract, in order to be the proper subject of a decree for specific performance should be mutual in its character, and such as might have been specifically enforced by either party against the other. The rule is one which is frequently adverted to, is well understood, and the reasons upon which it is rested are familiar. But the exceptions to its operation are numerous. Lord Bedesdale, in Lawrenson v. Butler, (1 Scho.&Lef. 13,) limits its application to a case “where nothing has been done in pursuance of the agreement,” by which it is to be understood that though an agreement may, at the time it was entered into, lack the element of mutuality, and for that reason may not be then such an agreement as equity would enforce, 'yet if the party seeking relief has subsequently, with the knowledge and the express or tacit consent of the other, placed himself in such a position that it would be a fraud for that other to refuse to perform, equity will relieve. In the case at bar, the contract of the lessors, by which they covenanted that the lessee should have the option to purchase or not at his election, was founded upon an adequate consideration, was certain in its terms, was fair and just in all its parts, and was not a hard or unconscionable bargain. Why should not such an agreement be enforced ? The reason assigned by Lord Bedesdale (and he was distinguished for the strenuousness with which he maintained the necessity of mutuality,) in tbe case already mentioned, is tbat tbe lessors bere might be in tbis situation, tbat if tbe land should rise in value they would be compelled by a decree to sell at a stipulated price, while if it bad decreased in value tbe lessee could not be compelled to take it at any price. But it is not easy to see why tbis would not be equitable. - May not tbe mere option to purchase be sold? Ór (to adopt tbe language of Judge Baldwin, in De Rutte v. Muldrow, (16 Cal. 513,) may not a man “as well agree to sell property upon tbe condition tbat another will consent to buy, as upon any other condition, or absolutely?”' 'And if tbe owner of an estate, has fairly made a contract for a sufficient consideration received by him, by which contract be has himself stipulated tbat another person may, at -the option of tbe latter, receive a conveyance of tbe estate upon tbe payment or tender of a fixed sum within a given time, what principle of equity is violated by making tbe owner comply with bis contract ? If tbe other party has obtained tbe option, be has fairly bought and paid for it, and there is no principle or policy of law violated in its purchase.' In tbe case at bar, tbe privilege to purchase tbe fee was inserted in and made a part of an indenture of lease. Had there been a covenant to renew tbe term at tbe option of tbe lessee, it would not be doubted tbat equity would enforce. tbe renewal by decree. (Cooper v. Pena, 21 Cal. 403.) How is it tbat tbe Court would thus compel tbe lessor to part with an estate for years at tbe mere option of bis tenant, but would at tbe same time permit him to violate bis agreement to part with tbe fee, if tbe tenant elect to purchase it? In tbe case at bar it appears, too, tbat an estate which was to be purchased at $1,750, has been improved by tbe tenant to tbe amount of $8,500; be has expended upon it nearly four times tbe original purchase price of tbe property. Tbis has been done in view of bis option to secure to himself both land and improvements by paying tbe stipulated price. I am unable to appreciate tbe principle of equity which will, under tbe circumstances, deprive bim of botb land and improvements absolutely, or turn Mm round to such satisfaction as he may be able to recover at law for the admitted wrong clono him upon the part of the defendants. The judgment is reversed and the cause remanded, with directions to overrule the demurrer to the complaint. Sprague, J., expressed no opinion.