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Northwest Racing Association v. Hunt

FEBRUARY 17, 1959.




Appeal from the Circuit Court of Stephenson county; the Hon. HARRY E. WHEAT, Judge, presiding. Affirmed.


Northwest Racing Association, a Corporation, hereafter called plaintiff, brought suit in the Circuit Court of Stephenson County for the construction of a lease with an option agreement therein. The defendants were the co-executors and sole heirs of George E. Hunt, deceased, and Miles H. Daley. Miles H. Daley was the spouse of the co-executor, Virginia Daley. Daley entered into a contract with the executors and sole heirs of George E. Hunt, deceased, for the purchase of certain real property leased by the plaintiff. The lease was in effect at the time of the suit herein and contained the following provision which will hereafter be referred to as the "first option."

"It is further agreed by and between the parties hereto as a part of the consideration hereof that upon request made by lessee at any time before the legal termination of this lease, lessor will sell and convey the leased premises as hereinabove described by good and sufficient warranty deed free and clear of any and all encumbrances excepting taxes for the then current year to lessee upon receipt from lessee as consideration for such conveyance the sum of Twenty Thousand Dollars ($20,000) in cash, less any sums that lessee may have paid lessor as rent for said premises during term of this lease and prior to the date such request, or option, may be exercised; provided that in addition thereto lessee pay lessor a sum equal to the amount of the general taxes paid by lessor subsequent to the year 1954 on said property." (Emphasis supplied.)

In addition the lease also contained language which we shall hereafter refer to as the "second option." This language was as follows:

"It is further agreed between the parties hereto that in the event of a contemplated sale of said premises by lessor during the term of this lease to a third party, lessor agrees to give lessee written notice of said contemplated sale at least thirty (30) days prior to the date warranty deed is to be delivered to such third party; such notice shall include the terms and conditions on which it is proposed to make such sale and such notice shall be sent to lessee by registered mail at the address of its registered agent; and thereupon within thirty (30) days from the date of mailing said notice lessee shall have the right to purchase said premises upon the terms and conditions proposed, and on the failure of lessee to exercise such option within the time aforesaid, the option hereby granted to lessee in this and the foregoing paragraphs shall be and stand cancelled and revoked. This option shall be valid whether the demised premises be sold in a single transaction or together with other real estate whether adjoining or not." (Emphasis supplied.)

The heirs and executors entered into an agreement with Daley, whereby Daley would purchase the leased premises. Attempting to conform to the provisions of the second option in the lease, the heirs and executors served notice upon the plaintiffs that Daley had entered into a contract for the purchase of the subject premises. All terms of the contract between the heirs and executors on the one side and Daley, on the other, were made known in the notice served upon the plaintiff. Daley offered to pay a substantially larger amount than was provided for in the first option.

Thereafter, the plaintiff offered to perform according to the first option. That is, it contended that it had the right under the first option, to purchase at the price fixed by the first option without regard to the terms and conditions of any attempted sale under the second option and offered accordingly.

The defendants refused to sell to the plaintiff for the price fixed in the first option and plaintiff brought its action for a construction of the lease, and for an injunction to restrain the defendants from proceeding with the contemplated sale to Daley. In the complaint, the plaintiff alleged that the sale to Daley was an attempt to deprive the plaintiff of its option to purchase the property and was not in fact a bona fide sale. The trial court found that plaintiff had lost any right it had to purchase the premises by its failure to purchase the premises upon the terms and conditions of the sale to Daley under the second option. Further, the court ordered that the defendants were free to proceed with the performance of the contract of sale of the premises to Daley.

Plaintiff relies on two points on this appeal. It contends that it had the right to purchase at the price fixed in the first option and also contends that the sale to Daley was voidable because Daley was the spouse of one of the co-executors.

Neither position is tenable.

Plaintiff in its brief and argument contends on the one hand that a purchase option placed in a lease for the benefit of the lessee is to be construed with that in mind. It also argues that every effort should be made to give some effect to every part of the contract. It is contended that the second option is in conflict with the first option and the first option is controlling. If the options are in conflict or are repugnant, one to the other, then the second option should be rejected.

[1-3] In Thomas Hoist Co. v. Newman Co., 365 Ill. 160, 6 N.E.2d 171, the court said, "It is the duty of a court, when construing written contracts, to determine and give effect to the intention of the contracting parties. In arriving at this intention effect must be given to each clause and word used, without rejecting any words as meaningless or as surplusage. Mittel v. Karl, 133 Ill. 65; Lehndorf v. Cope, 122 Ill. 317, 6 R.C.L. (p. 837) but where there are two clauses in a contract which are so entirely repugnant to each other that they cannot stand together, the first shall be received and the latter rejected. Benjamin v. McConnel, 4 Gilm. 536; 6 R.C.L., p. 847."

Only in the event that the options are entirely repugnant would we be justified in rejecting the second option. Analyzing the contract, we believe that the first option was to be exercised at the instance of the plaintiff and plaintiff was given the right to purchase the premises at a stipulated price. The second option was to be exercised at the instance of the lessor and gave the lessor the option to sell the premises to a third person subject to the right of the plaintiff to purchase after receiving the requisite notice of the contemplated sale "upon the terms and conditions proposed." In the event the plaintiff failed to purchase upon the terms and conditions proposed, then both options granted the plaintiff were revoked.

Giving the language used its plain and natural meaning we conclude that there is no conflict or repugnancy. In our judgment there are two options, each susceptible of interpretation and each harmonious and consistent with the other. There being no repugnancy, no part of the contract may be disregarded. "In considering the contract, we must interpret it in its entirety, and we cannot alter a contract or make a new one for the parties to ...

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