Shelton v. Eisemann
79 So. 75, 75 Fla. 644 (1918)
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Rule of Law:
When a contract for an option to purchase property is made explicitly 'subject to' a prior option contract held by the seller, the seller's obligation to perform is contingent upon their voluntary exercise of the prior option. No duty to exercise the prior option is implied.
Facts:
- The Palmetto Hotel and Improvement Company granted Charles Eisemann a six-month written option to purchase its hotel property.
- On the same day, Eisemann granted M. H. Shelton a six-month written option to purchase a portion of that same property from him.
- The contract between Eisemann and Shelton contained the clause: 'Subject, however, to option contract made between the Palmetto Hotel and Improvement Company... to Charles Eisemann...'.
- Shelton was a witness to the execution of the original option contract between the Hotel Company and Eisemann.
- Within the six-month period, Shelton notified Eisemann that he wished to exercise his option to purchase the property.
- Eisemann chose not to exercise his option to purchase the property from the Palmetto Hotel and Improvement Company.
- Consequently, because Eisemann never acquired title to the property, he was unable to convey it to Shelton.
Procedural Posture:
- M. H. Shelton (plaintiff) filed an action for breach of contract against Charles Eisemann (defendant) in the Circuit Court for Manatee County (trial court).
- The case was referred to a referee for resolution.
- Shelton filed a motion to strike and a demurrer to Eisemann's amended pleas.
- Upon reviewing the demurrer, the referee examined the entire record and found Shelton's initial declaration (complaint) to be legally insufficient.
- The referee entered an order that Shelton take nothing by his suit and granted him leave to file an amended declaration, stating that failure to do so would result in dismissal.
- Shelton did not file an amended declaration, the cause was dismissed, and a final judgment was entered.
- Shelton (plaintiff-in-error/appellant) took a writ of error to the Supreme Court of Florida to appeal the referee's judgment.
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Issue:
Does a contract giving an option to purchase land, which is explicitly made 'subject to' a prior option contract held by the seller, obligate the seller to exercise that prior option if the buyer chooses to exercise their option?
Opinions:
Majority - Ellis, J.
No. A contract explicitly made 'subject to' a seller's pre-existing purchase option does not obligate the seller to exercise that option; it merely makes performance contingent on that exercise. The court reasoned that the 'subject to' clause's plain meaning was to make Eisemann's duty to sell to Shelton dependent on the contingency of Eisemann first choosing to exercise his own option with the Palmetto Hotel and Improvement Company. To interpret the clause otherwise would render it superfluous, as it would effectively transform Eisemann's 'option'—a right to choose—into an 'obligation' to purchase upon Shelton's demand. The court stated that an option is merely a right to choose, and Shelton, knowing this, entered into a contract that was contingent upon Eisemann making that choice. Because Shelton's declaration alleged a duty to purchase that was inconsistent with the contract's explicit terms, the declaration failed to state a valid cause of action.
Analysis:
This decision clarifies the legal effect of 'subject to' clauses in the context of sequential option contracts. It establishes that such language creates a condition precedent, meaning the promisor's duty to perform is not triggered unless they voluntarily fulfill the condition. This precedent protects the discretionary nature of an option, preventing an option holder from being forced into a primary transaction against their will. The case underscores the principle of freedom of contract and the need for precise drafting; if parties intend to compel the exercise of a prior option, the contract must state so explicitly.
