Plaintiff appeals from a dismissal of his action for specific performance of a right of first refusal.
The defendant, Joseph Balum, leased a 160-acre farm to the plaintiff, Roy G. Dalton, and included in the lease the language stated in the above issue. Defendant, having decided to sell the property, asked plaintiff if he wanted to buy it. Plaintiff asked how much he wanted for the property and defendant replied, "$500 an acre." According to defendant's testimony plaintiff replied that he didn't want the property; that it was not worth $500 an acre; that he should sell it to someone else if he could because he had more property than he could handle at that time; and because help was hard to get. Plaintiff was unable to remember the offer by Balum, but two witnesses who were neighbors, supported the substance of defendant's testimony on this point.
More than 30 days after discussing the sale with the plaintiff, defendant sold the property in October 1972 to Brannan for $500 per acre. Thereafter, plaintiff brought this action for specific performance of his right of first refusal.
The trial court dismissed this action. Plaintiff contends that under the provisions of this lease there must be an acceptable bona fide offer from a third party with definite terms before the right of first refusal can be extinguished. Defendant argues that he is required only to have offered the property to his lessee at a price the same as, or not more than, the price at which the property was subsequently sold to a third party. Defendant claims that, after plaintiff had unequivocally told him that he did not want the property at $500 an acre, he had fulfilled his obligation to him under the lease and was entitled to sell the property to Brannan at $500 or more per acre.
However, the plaintiff argues that there must be an offer from a third party prior to the time the owner may offer the property to a holder of the right of first refusal. We disagree. If plaintiff desired the right to purchase on the same terms and conditions as set forth in a bona fide offer
Facts similar to the instant case are found in O'Connell v. Weitzman, 168 Cal.App.2d 400, 336 P.2d 592 (1959), where the owner first made repeated offers to the lessee holding the "first opportunity to purchase," of his desire to sell, and the lessees not only failed to make any concrete offer but also flatly stated they did not wish to buy. The owner accepted the unequivocal statement of disinterest by the lessees as a waiver of the first right of refusal and sold to a third party. The court held that the statement of the lessees that they were "not interested in buying this property," with no further communications from the lessees until after the owners had placed themselves in a position of danger by giving an option to a third party, constituted a sufficient waiver to excuse the owners from making any further offer.
If, as was true in many of the authorities cited by the plaintiff, the defendant had quoted a price to the plaintiff-lessee, and had later sold for a lesser price, or if the plaintiff-lessee had offered a price and indicated a continuing desire to negotiate for a price, we could see the necessity for a new communication and quotation of price to the plaintiff-lessee. However, we are satisfied that the plaintiff refused to buy the property in the late spring or early summer of 1972, and showed no further interest in purchasing the property at the quoted price of $500 per acre until he learned that it had been sold to Brannan in October 1972. We hold that defendant fulfilled his obligation to the
Judgment of the trial court is affirmed.
MUNSON, J., concurs.
GREEN, J. (dissenting)
The majority opinion undermines the right of first refusal by casting doubt on the well understood meaning of the term.
Under the majority decision, a tenant is required to accept or reject at his peril an offer from a lessor-owner at a time when a sale of the owner's property is not imminent, i.e., it places the onus upon the tenant to determine if the owner has in fact decided to sell the property. This is not the type of protection bargained for by the tenant. The protection sought by a tenant is the right to protect his tenancy by purchasing the property upon the same terms and conditions contained in a bona fide offer from a third party, i.e., at a time when a continuation of his lease is threatened by a pending sale.
This conclusion is buttressed by the language contained in the first refusal clause of the instant lease:
(Italics ours.) The use of the word "sells" contemplates a sale to a third party, and not merely an offer to the tenant at the owner's asking price when there is no actual sale pending.
Petition for rehearing denied June 10, 1975.
Review denied by Supreme Court September 5, 1975.
In Superior Portland Cement, Inc. v. Pacific Coast Cement Co., supra at 173-74, a right of first refusal dissimilar in terms to that of the instant case was used:
The court held that, if the defendant decided to sell during the term of the lease, the plaintiff was entitled to the first right to purchase the property at the price for which defendant was "willing or at any time or times offers to sell." The language "at any time or times offers to sell" necessarily contemplated an offer from a third party which, according to the contract terms, required that it be communicated to the optionee each time that an offer was made.