This suit was brought in the Circuit Court of Montgomery County by Samuel E. Rosser and wife, Blanche E. Rosser, against Paul L. Ashurst and wife, M. E. Ashurst. The complaint's single count claimed damages for breach of a contract. The defendants pleaded the general issue and the general issue in short by consent in the usual form. There was a jury verdict in favor of the plaintiffs in the sum of $1600. Judgment followed the verdict.
On July 10, 1958, Samuel E. Rosser and Blanche B. Rosser, as Sellers, and Paul L. Ashurst and M. E. Ashurst, as Purchasers, executed a written agreement wherein the "Seller agreed to bargain and sell to Purchaser" a house and lot situate in the City of Montgomery. In parts here pertinent the agreement provided:
Contemporaneously with the execution of the agreement from which we have quoted above, the Purchasers, Paul L. Ashurst and wife, M. R. Ashurst, executed a promissory note payable to the Sellers, Samuel E. Rosser and Wife, Blanche B. Rosser, in the principal sum of $4,500. In regard to payment, the note provided:
The Ashursts went into possession of the house and lot on or about August 1, 1958. They paid the sum of $151 for the month of August, 1958, and the same sum for each month through July, 1959. The Ashursts vacated the premises on or about July 24, 1959, without making any other payment to the Rossers. Shortly after the Ashursts vacated the premises, the Rossers advertised the property for sale in a Montgomery paper. Being unable to effectuate a sale in that manner, the Rossers listed the property for sale with a real estate agent, who negotiated a sale to one Weldon, which was consummated on or about December 15, 1959.
This suit was brought by the Rossers in March, 1960, claiming damages in the sum of $2,500 from the Ashursts for breach of an agreement to purchase the suit property.
The only argued assignments of error relate to the action of the trial court in overruling the Ashursts' motion for a new trial.
It is first insisted that the trial court erred in overruling those grounds of the motion for new trial which took the point that the verdict was contrary to the great weight of the evidence.
The appellants' position, if we understand it correctly, is that the evidence shows that the instrument of July 10, 1958, is not an executory contract for the purchase and sale of the suit property, but is a lease with an option to purchase.
This court has made a distinction between (1) a sale of lands where the present conveyance thereof becomes the executed contract; and (2) an agreement to sell lands by a contract to be performed in the future and if fulfilled results in a sale; and (3) what is generally called an "option"—which is originally neither a sale nor an agreement to sell—a contract by which the owner of the property agrees with another that he will have the right to buy the property for a fixed and lawful consideration and within a certain time prescribed. Lauderdale Power Co. v. Perry, 202 Ala. 394, 80 So. 476, and cases cited.
The agreement here under consideration did not constitute a conveyance of the suit property. The question is whether it is an executory contract to purchase and sell or an option.
One of the essentials of an executory contract of purchase and sale of land is the obligation of the purchaser to buy and of the seller to sell. Burmeister v. Council Bluffs Inv. Co., 222 Iowa 66, 268 N.W. 188.
Under the terms of the agreement here under consideration, the Rossers are clearly obligated to sell. But there is no language in the agreement which specifically obligates the Ashursts to purchase. This creates a difficulty, but the absence of such a specific provision is not conclusive of the character of the agreement. McGuire v.
It seems to us that a careful consideration of the terms of the agreement shows it to be one of purchase and sale and not an option. The agreement was signed by the Ashursts, who are referred to throughout as "Purchaser" or "Purchasers." This circumstance alone does not make the instrument a bilateral contract, but it is an indication that both parties intended to be bound by the terms and conditions of the contract. McGuire v. Andre, supra. Perhaps the most persuasive feature of the transaction is that the Ashursts undertook to bind themselves to pay the purchase price by the execution of the note which is referred to in the agreement. See Le Blanc v. Watson et al., 5 Cir., 13 F.2d 76, where the agreement there under consideration was in several respects similar to that here involved.
Paul Ashurst was called as a witness by the plaintiff and much is said in brief filed here on his behalf to the effect that his testimony, which stands uncontradicted in many respects, shows that it was his intention to enter into a lease and option contract rather than a contract to purchase and sell. He stated that while he read some parts of the agreement before executing it, he did not read it all and that before executing the agreement he inquired of the attorney who prepared the instrument at the instance of the Rossers as to what would happen in the event he was unable to go through with the purchase of the property. He stated that the attorney told him to read Paragraph 8 of the agreement and that upon reading that paragraph he was under the impression that there was no obligation on his part to purchase the suit property, but that if he could not on July 1, 1959, pay the amount due the Rossers on their equity in the property, he could abandon it, thereby losing the monies which he had paid to them, with the cost of the improvements which he might make.
Some of Ashurst's testimony is to the effect that there was a contemporaneous parol agreement which changed the effect of the written instrument.
It is a rule of law that in the interpretation of an instrument in writing, we are permitted to place ourselves in the situation of the contracting parties at the time of its execution, and to consider the occasion which gave rise to it, the relative positions of the parties, and the obvious design they intended to accomplish, but this rule cannot be so extended as to supplement the writing with provisions of a contemporaneous oral agreement which changes its meaning. Tennessee & Coosa R. Co. v. East Alabama Ry. Co., 73 Ala. 426.
We have given careful consideration to the agreement and to the testimony of Mr. Ashurst. We cannot agree that the finding of the jury to the effect that Ashurst agreed to purchase the suit property is not sustained by the weight of the evidence.
The only other insistence for reversal is that the trial court erred in overruling grounds of the motion for new trial which took the point that the verdict of $1,600 is excessive.
As to the measure of damages, it was said by this court in Adams v. McMillan, Ex'or, 7 Port. 73, as follows:
To like effect see West v. Cunningham, 9 Port. 104, 107; Hutton v. Williams, 35 Ala. 503; Howison v. Oakley, 118 Ala. 215, 23 So. 810.
The money paid by the Ashursts for the months of July, 1958, through June, 1959, under the terms of the agreement was retainable by the Rossers as rent, since the Ashursts did not carry out their agreement to purchase. The amount so paid was in the nature of a penalty and not liquidated damages. Cf. Lobman v. Sawyer, 37 Ala.App. 582, 74 So.2d 502, cert. denied, 261 Ala. 699, 74 So.2d 505. The Ashursts remained in possession of the property in the month of July, 1959, and paid the sum of $151 to the Rossers for that privilege. This payment, under the evidence, should be considered as rent.
In the sale to Weldon, the Rossers received the sum of $4,695.60 for their equity, which is $195.60 more than they would have received for their equity if the Ashursts had performed their agreement to purchase.
But the Rossers suffered certain expenses because of the Ashursts' failure to purchase, which we think must be taken into consideration. The Rossers had to make payments on their mortgage indebtedness from August 1 through December 15, 1959, which amounted to $231.83. They had to pay a real estate agent a commission of $937.50 and attorney's fees, which were provided for in the agreement, amounted to $300. The total of these expenditures is $1,469.33, but this sum must be reduced by $195.60, the amount which the Rossers received for their equity over and above the value of that equity at the time of the execution of the agreement. Thus the failure of the Ashursts to perform their agreement to purchase resulted in a loss to the Rossers of the sum of $1,258.73. As we view the record, the judgment is excessive in the amount of $291.62.
The judgment is therefore amended by a remittitur duly entered in the sum of $291.62. The judgment, as so corrected, is affirmed at the cost of appellees. See Cassels v. Alabama City, G. & A. R. Co., 198 Ala. 250, 73 So. 494; Lampkin v. Thomas, 202 Ala. 316, 80 So. 398.
Corrected and affirmed.
LIVINGSTON, C. J., and GOODWYN and COLEMAN, JJ., concur.