DELL, CHIEF JUSTICE.
This is a declaratory judgment action instituted for the purpose of determining the validity of option provisions "to extend this lease" and "to purchase said property"; and to have the option provisions contained in the lease stricken and declared null and void.
On December 22, 1958, Walter Shirley, as lessor, and the defendant, Dalton Motors, Inc., as lessee, entered into a written lease covering certain business property owned by Shirley. The lease, which was for a 5-year term commencing January 1, 1959, contained the following provision:
"Lessor agrees to give tenant a first option to extend this lease for an additional five (5) years, the terms and conditions to be agreed upon at the time of the option renewal. It is also agreed that lessor will give tenant a first option to purchase said property at any time after January 1, 1959, at a price to be negotiated and to be agreeable between the parties at the time of sale."
Thereafter, without the actual knowledge of the defendant, Shirley and his wife sold and conveyed the premises to Hartzell Coal Company on August 31, 1959, which company in turn sold and conveyed it to the plaintiff, Richard King, on September 1, 1959. Both of the purchasers had actual knowledge of the terms of the lease.
After causing the Shirleys, Hartzell Coal Company, and Helen R. King, plaintiff's wife, to be joined as third-party defendants, the defendant, Dalton Motors, Inc., filed a third-party complaint and a counterclaim seeking, among other things, specific performance of the option-to-purchase provision. It appeals from a summary judgment in favor of the plaintiff and third-party defendants.
2. The phrase "first option to purchase," or like language in lease agreements, has frequently been challenged as being too vague and indefinite to permit enforcement. It is generally agreed that if the "first option" provision specifies that the purchase price and other terms of the sale are to be determined by the offer of a third person the terms of the option are sufficiently ascertainable to render the contract definite and certain.
However, the technical meaning usually ascribed to certain phrases is not controlling where the agreement otherwise indicates that the parties did not intend to use the words or phrases in their technical sense. The intention of the parties must be gathered from the instrument as a whole and cannot rest solely upon isolated clauses. For example, most courts properly hold that "first option" provisions are conditional in that the lessee's right to purchase the property is dependent upon the lessor's willingness to sell.
Similarly, the language used in the instant case indicates that the phrase "first option to purchase" was not used in its ordinary sense so as to give the lessee the right to purchase the property at the same
Defendant contends that the recent trend of authorities is to find certainty even in situations where the parties indicate that the terms of purchase are to be agreed upon in the future. Most of the decisions cited are distinguishable on their facts or involve agreements in which the technical meaning of the "first option" phrase is not negated by other language in the instrument. However, in Brenner v. Duncan, 318 Mich. 1, 3, 27 N.W.2d 320, 321, the court found the following lease provision to be sufficiently definite and certain to permit enforcement:
"That in the event the land is to be sold, the tenant will be given first preference and allowed to purchase said land if the parties can agree on the price." (Italics supplied.)
We have carefully examined the rationale of this and similar decisions
3. Our conclusions apply with like effect to the "first option to extend" provision of the lease, although an exception has sometimes been said to exist where the amount of the rent is the only provision left for future agreement.
4. The plaintiff's other assignments of error are without merit and are not of sufficient general interest to require discussion.