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Illges vs. Dexter

Supreme Court of Georgia1886-06-01
77 Ga. 36

Summary

Holding. The court affirmed the lower court's refusal to grant a new trial, holding that the contract language was unambiguous when interpreted in context and properly established that Dexter held an option to purchase the railroad at $100,000, rather than serving as an agent for the stockholders' sale.

The stockholders of the Rome and Columbus Railroad Company entered into successive agreements regarding the sale of their railroad. First, they agreed with an agent named Garrard to sell the railroad to General Logan for $100,000, with the offer open for thirty days. When that period expired without a sale, the stockholders extended the offer to Armory Dexter. The question presented was whether Dexter's rights constituted an option to purchase the railroad at $100,000, or whether he was appointed as an agent to sell it on behalf of the stockholders.

The court examined the language of the agreements in context, focusing on the parties' substantive intent rather than isolated phrases. The court concluded that by extending to Dexter "the option" that had previously been granted to Garrard, the stockholders intended to convey the same purchasing rights—namely, the privilege to buy the railroad at the $100,000 price that was the only value established in the transaction. Under this interpretation, Dexter could exercise the option by purchasing the property either for himself or on behalf of another party, provided he paid the stated price.

The lower court's construction of the contract, which recognized Dexter's right to purchase at $100,000, was upheld as sound and not requiring submission to the jury, since the terms of the agreement were not ambiguous when read in light of the referenced prior agreement with Garrard.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether contract construction is a matter of law for the court or a question of fact for the jury
  • Whether the terms granting an option to Dexter were ambiguous or clear
  • Whether the option granted to Dexter represented a right to purchase or an agency to sell

Procedural posture

The case came before the appellate court on review of the trial court's refusal to grant a new trial based on the judge's construction of the written agreement between the railroad stockholders and the defendant.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Clarke, Judge.

This case is here on a refusal of the judge of the court below to grant a new trial. The main ground in the motion relates to the charge of the court m reference to certain writings, which are hereinafter particularly mentioned. The judge construed these writings, and his construction controlled the verdict. The plaintiff in error says that the papers are ambiguous, and that the jury should have ascertained their meaning; and further, that if they are certain in their terms, the interpretation of the court was erroneous.

The principles of law involved in this motion are simple and familiar. The general rule unmistakably is that the construction of a contract is a question for the court. Code, §2754; 36 Ga., 454. On the other hand, it is equally clear that where the terms of a written instrument are ambiguous, its meaning should be left to the jury. Code, §§2757, 3801, 3804 ; 52 Ga., 572 ; 51 Id., 603; 57 Id., 36; 61 Id., 364; Erskine vs. Duffy, present term (76 Ga., 602).

Two questions, then, present themselves for our determination. One is, whether the terms of the contract between the stockholders of the Eome and Columbus Railroad Company and the defendant are uncertain in their meaning; the other is, whether, if the contract is free from ambiguity, the construction placed on it by Judge Willis is correct. The former of these questions must be solved through the study, not only of the agreement between such stockholders and the defendant, but the agreement therein referred to between them and Mr. Garrard. Probably this inquiry can be most successfully conducted by beginning with the latter contract. What, then, were its terms ? The principal and controlling provision in it is an engagement by the stockholders to sell the railroad to General Logan through his agent, Mr. Garrard, for $100,000. There are two other provisions which are incidental and subordinate to this main purpose. One is that the agreement to make the sale shall be binding for only thirty days; the other relates to the mode of conveyance in the event of a sale, and provides that the stockholders shall execute quit-claim deeds to all their “ right, title and interest,” under the deed which they had from the governor of the state. That such is the true construction of the contract now under consideration, seems to us perfectly clear. It was dated April 12th, 1881, and by its own terms expired within thirty days. It appears that no sale occurred in the period named. On May 12th, 1881, another agreement was entered into between the stockholders and Mr. Garrard, agent, as aforesaid. This contract simply extends for thirty days the time within which the former shall be of force. It is true this supplementary contract speaks of extending w the option for the sale and purchase of our stock in said railroad,” thereby introducing the new words “ option ” and “ purchase.” We apprehend that no change in the meaning of the original instrument was intended by this variation in phraseology. A sale necessarily involves a purchase, and in drawing the paper, the writer doubtless employed both words to denote the same transaction, the word sale describing it from the vendor’s standpoint, and the word purchase describing it from the vendee’s relation to it. The word “ option ” means privilege, and in this connection makes no material difference in effect.

The proposition to sell to General Logan, through Mr. Garrard, produced no results. At the end of the sixty days, during which it remained open, the railroad was still in the hands .of the stockholders, and they still desired to sell it. In this state of affairs, the writing between the stockholders and the defendant was signed. It will, of course, be noted that, so far, the only purpose shown by the instruments which they had executed was a purpose to sell. But one price had been named and but one buyer contemplated. That price was $100,000, and that buyer General Logan. No agency had been mentioned except an agency for the purchaser. The sellers were to act for themselves. The paper made between the stockholders and the defendant is as follows:

“We, the undersigned stockholders in the Columbus and Rome Railroad Company, do hereby extend the option on sale of Columbus and Rome Railroad heretofore granted to Louis F. Garrard, on April 12th, 1881, and expiring on June 12th, 1881, to Armory Dexter, to commence on the 12th day of June and to expire the 12th day of July, 1881.

(Signed) E. C. Hood, A. Illgbs,

Louis F. Garrard, , Thos. J. Nuckolls,

P. Pbeer, T. E. Blanchard,

L. M. Burrus, M. E. Gray.”

The dominating idea here is the one expressed in these, words, “ We, the undersigned stockholders in the Columbus and Rome Railroad, do hereby extend the option on sale of Columbus and Rome Railroad heretofore granted to Louis F. Garrard ... to Armory Dexter.” The other language merely mentions, as matter of description, the date of the Garrard proposition, and limits the time within which the present one is to be obligatory. What, then, are Mr. Dexter’s rights under this contract? Does it confer upon him right to purchase at a stipulated price, as his counsel insist, or does it appoint him agent to sell for the stockholders, as counsel for Mr. Illges contend ? If there was no reference to Mr. Garrard, so that the paper read, “ We, the stockholders, do hereby extend the option on sale of Columbus and Rome Railroad to Armory Dexter,” there would be an ambiguity growing out of the phrase, “ the option on sale.” It might mean the privilege on the sale of the road, to sell it, or the privilege, on such sale, to buy it. We think that there is no ambiguity, when the reference to the Garrard proposition is considered. “ The option” which the agreement gives Dexter is “ the option ” which Garrard had. What, then, was that ? Literally it was an option to buy at the price of $100,000, as agent for General Logan.

In construing contracts, it is important to look to the substantial purpose which must be supposed to have influ enced the minds of the parties, rather them at the details of making such purpose effectual. Lieber’s Her., 100, 135,160.

Dealing thus with the Dexter agreement, we may fairly suppose that the Garrard proposition was in the thoughts of the stockholders, not so much to fix what particular individual should be the purchaser of the road as to settle, as a vastly more important element, the price at which it should be sold. It is to be noted in this connection that in no other way is any value set upon the property m the transaction with Mr. Dexter. We conclude, then, that the stockholders did not intend to treat with Mr. Dexter as one whose “ option ” embraced in it an agency for General Logan, but one whose “ option ” was the same as Mr. Garrard’s, m that it included the privilege of buying the road at the same price named to him. If this construction is correct, Mr. Dexter could either buy for himself or another, provided he paid $100,000. This is the view presented by the circuit judge, and we assent to it as sound.

Judgment affirmed.