Holiday Inns Of America, Inc. v. Knight

450 P.2d 42 (1969)

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Nature of the Case

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Facts

A contract granted an option to purchase real property $198,633. The option could be exercised by giving written notice thereof no later than April 1, 1968. The contract provided for an initial payment of $10,000 and for four additional payments of $10,000 to be made directly to the optionors on July 1 of each year, commencing in 1964, unless the option was exercised or canceled before the next such payment became due. These payments were not to be applied to the purchase price. The cancellation provision provided that 'it is mutually understood that failure to make payment on or before the prescribed date will automatically cancel this option without further notice.' The initial payment and payments for 1964 and 1965 were made on time. After the execution of the contract, P expended 'great amounts of money' to develop a major residential and commercial center on the land adjacent to the option property. This caused the option property to increase substantially in value since the contract was executed. In 1966 P mailed the check dated June 30, 1966. D received the check on July 2, 1966, and returned it to P on July 8, stating that the option contract was canceled. On July 8 P tendered another check and D again refused it. A third attempt was made, and it too was refused. P sued to determine if the contract was still enforceable. D got the summary judgment, and P appealed.