NORMILE v. MILLER

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Docket Number

No. 8226SC999

Attorney(S)

Parker Whedon for plaintiff appellants, Normile and Kurniawan. Levine, Goodman Carr by Miles S. Levine for plaintiff appellee, Lawrence J. Segal.

Judges

BRASWELL, Judge.

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Smart Summary

Factual and Procedural Background

The case involves two consolidated lawsuits where separate plaintiffs, each potential buyers of the same parcel of real estate owned by defendant Hazel Elizabeth Miller, sought specific performance of written contracts to purchase the property located on Oakland Avenue in Charlotte, North Carolina. Plaintiffs Michael M. Normile and Wawie Kurniawan made an initial written offer to purchase the property, which included a provision requiring acceptance by 5:00 p.m. on August 5, 1980. Defendant Miller responded with a counteroffer containing modifications to the terms, signed under seal, and delivered it to Normile and Kurniawan.

Normile and Kurniawan indicated difficulties in accepting the counteroffer and delayed acceptance. Meanwhile, defendant Miller accepted a separate offer from plaintiff Lawrence J. Segal on similar terms. Normile and Kurniawan were notified of the sale to Segal before they accepted the counteroffer. Despite this, they later signed and delivered the counteroffer with the required binder. Miller refused to convey the property to Normile and Kurniawan, who then filed suit seeking specific performance, as did Segal. The trial court granted summary judgment in favor of Segal and denied the motion of Normile and Kurniawan. Normile and Kurniawan appealed.

Legal Issues Presented

Whether the counteroffer made by defendant Miller to Normile and Kurniawan constituted a binding and enforceable option contract to sell the property.
Whether defendant Miller revoked the counteroffer by accepting a separate offer from Segal prior to acceptance by Normile and Kurniawan.
Whether the presence of a seal on the counteroffer rendered the offer irrevocable absent consideration.

Arguments of the Parties

Normile and Kurniawan's Arguments

The counteroffer signed by Miller, which contained a provision that the offer would remain open until 5:00 p.m. on August 5, 1980, and was signed under seal, constituted a binding option contract, making the offer irrevocable during that period.
The seal on the contract implies consideration, thus supporting enforceability of the option.

Defendant Miller and Segal's Arguments

The counteroffer was not supported by any actual consideration, and the seal alone does not make the offer irrevocable.
By accepting Segal's offer and notifying Normile and Kurniawan of the sale before their acceptance, Miller effectively revoked the counteroffer.
Normile and Kurniawan’s delayed acceptance and knowledge of the sale preclude formation of a binding contract.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Caldwell v. Deese, 288 N.C. 375, 218 S.E.2d 379 (1975)	Summary judgment requires no genuine issue of material fact and entitlement to judgment as a matter of law.	Used to explain the standard for granting summary judgment in this case.
Vassey v. Burch, 301 N.C. 68, 269 S.E.2d 137 (1980)	Burden on moving party to show no genuine issue of material fact.	Supported the procedural framework for summary judgment motions.
Koontz v. City of Winston-Salem, 280 N.C. 513, 186 S.E.2d 897 (1972)	Permissible evidence for summary judgment includes depositions and affidavits.	Validated the types of evidence considered by the trial court.
Ballinger v. Secretary of Revenue, 59 N.C. App. 508, 296 S.E.2d 836 (1982)	Judgment appropriate when law and facts entitle party to relief.	Confirmed appropriateness of summary judgment based on undisputed facts.
Restatement (Second) of Contracts §§ 25, 39, 43, 94 (1981)	Definition of option contracts, counteroffers, revocation of offers, and effect of seals.	Guided court’s analysis of contract formation, revocation, and the legal effect of the seal.
Dobbs v. Trust Co., 205 N.C. 153, 170 S.E. 652 (1933)	An offer must be accepted in its exact terms to form a contract.	Used to determine that Miller’s changes constituted a counteroffer, not acceptance.
Kidd v. Early, 289 N.C. 343, 222 S.E.2d 392 (1976)	Option contract enforceability and irrevocability.	Referenced by plaintiffs to support argument that counteroffer was an option contract.
Honey Properties, Inc. v. Gastonia, 252 N.C. 567, 114 S.E.2d 344 (1960)	Seal imports consideration or takes its place at common law.	Discussed in context of whether the seal made the offer irrevocable.
Cruthis v. Steele, 259 N.C. 701, 131 S.E.2d 344 (1963); Britton v. Gabriel, 2 N.C. App. 213, 162 S.E.2d 686 (1968); Atkinson v. Wilkerson, 10 N.C. App. 643, 179 S.E.2d 872 (1971)	Courts may look behind the seal and require actual consideration for equitable relief.	Supported court’s refusal to treat the seal as conclusive proof of consideration.
Loman-Garrett Supply Co. v. Dudney, 56 N.C. App. 622, 289 S.E.2d 600 (1982)	Seal raises presumption of consideration rebuttable by clear evidence.	Applied to rebut presumption of consideration in this case.
Craig v. Kessing, 36 N.C. App. 389, 244 S.E.2d 721 (1978), aff'd 297 N.C. 32, 253 S.E.2d 264 (1979)	Equitable relief requires actual consideration despite seal; extensive efforts may constitute consideration.	Distinguished from present case due to absence of consideration here.

Court's Reasoning and Analysis

The court analyzed whether the counteroffer from Miller to Normile and Kurniawan created an enforceable option contract. It found that Miller’s modifications to the original offer constituted a counteroffer, not acceptance, consistent with established contract principles requiring acceptance in exact terms.

Although the counteroffer was signed under seal and stated it would remain open until 5:00 p.m. on August 5, 1980, the court emphasized that the seal alone does not guarantee irrevocability without actual consideration. North Carolina law permits courts to look beyond the seal and require consideration, especially in equitable actions such as specific performance.

The record contained no evidence of consideration supporting the option. Normile and Kurniawan’s delay and failure to provide consideration meant the promise to keep the offer open was revocable. Miller’s acceptance of Segal’s separate offer and notification of revocation to Normile and Kurniawan terminated their power to accept the counteroffer.

Therefore, the court held that only Segal had a binding contract with Miller. Normile and Kurniawan’s subsequent signing and delivery of the counteroffer after receiving notice of the sale was insufficient to bind Miller.

Holding and Implications

The court AFFIRMED the trial court’s summary judgment in favor of Lawrence J. Segal and against Michael M. Normile and Wawie Kurniawan.

This decision directly upheld the revocation of the counteroffer to Normile and Kurniawan when Miller accepted a separate offer and notified them accordingly. It confirms that a contract signed under seal is not irrevocable absent consideration and that an option contract requires valid consideration to be enforceable. No new precedent was established; the ruling applied existing contract principles to the undisputed facts, resolving the parties' rights accordingly.

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MICHAEL M. NORMILE AND WAWIE KURNIAWAN v. HAZEL ELIZABETH MILLER LAWRENCE J. SEGAL

Contracts 27 — two offers to purchase property — counteroffer of one offer not considered option Where one set of plaintiffs made an offer to purchase defendant's property which contained a provision that the offer must be accepted before 5:00 p.m. on August 5th, where defendant made several changes in the terms of the sale and signed the seller's acceptance portion of the contract for sale, where the sales agent took the counteroffer to the first set of plaintiffs and the plaintiffs indicated that they would be unable to agree to certain portions of the counteroffer, and where the second plaintiff signed an offer which defendant accepted and which the agent took to the first set of plaintiffs indicating that defendant had revoked the counteroffer, the trial court properly found that by accepting the second plaintiffs offer to convey the property, defendant revoked her original offer to the first set of plaintiffs. The fact that the counteroffer provided that the offer would remain open until 5:00 p.m. and was signed under seal did not make the offer irrevocable as an option.

BRASWELL, Judge.

In these consolidated cases separate plaintiffs, each a would-be buyer of real property, sued defendant-owner for specific performance of identical written contracts to sell the same parcel of real estate on Oakland Avenue in Charlotte. When summary judgment was granted in favor of plaintiff Segal and when plaintiffs Normile and Kurniawas's similar motion was denied, Normile and Kurniawan appealed.

The central issue is whether a counteroffer by defendant Miller to Normile and Kurniawan constituted a binding and enforceable option contract to sell land, or whether the counteroffer was revoked by Miller's intervening separate sale to Segal. Miller gave notice of revocation by sale to Normile and Kurniawan prior to their purported acceptance of the counteroffer. The contract contained the word "Seal" after Miller's signature to the counteroffer. No actual consideration for the counteroffer was given.

The undisputed ultimate facts show that on 4 August 1980 defendant Miller was owner of the Oakland Avenue real property and that she listed it for sale with a realtor, Gladys Hawkins. Richard Byer, a real estate broker with the firm Gallery of Homes, showed the property on the same date to plaintiffs Normile and Kurniawan.

On 4 August 1980 Normile and Kurniawan made a written offer to purchase, prepared with the help of Byer, on certain terms and conditions. A provision of the offer was: "9. OFFER CLOSING DATE Time is of the essence, therefore this offer must be accepted on or before 5:00 p.m. Aug. 5th, 1980. A signed copy shall be promptly returned to the purchaser." Other provisions of the contract were: "This offer and the acceptance thereof shall constitute the entire agreement . . . . This offer, when accepted is legally binding. . . ."

The offer was promptly delivered to defendant Miller who made several changes in the terms of the sale, such as, the amount of the binder ($100 to $500), the amount of the down payment ($875 to $1,000), and the term of the purchase money financing (25 years to 20 years). Miller initialed the changes and signed paragraph 10, the seller's acceptance portion of the document. No change was made to the "Time is of the essence" portion of the form contract.

We now turn to the crucial conversation and action of the parties when Byer delivered the counteroffer to Normile at about 8:00 p.m., 4 August 1980. Byer testified through his deposition that Normile "said that he couldn't get the $500.00 because he was waiting on a 2nd mortgage on his house to go through and he mentioned something like he had only begun to negotiate or something like that." Also, Normile said to Byer, "he told me he didn't have the $500.00 and then he told me that he didn't want to go 25 years because he wanted lower payments." Byer knew Normile's interpretation of the contract from that meeting was that he "had the thing off the market and that he had first option on it . . . [and that] nobody else could put an offer in on it and buy it while he had this counteroffer, so he was going to wait awhile before he decided what to do with it." Byer left one pink copy of the counteroffer with Normile. When he departed, Byer considered the counteroffer as having been rejected.

Early in the morning on 5 August 1980, Byer went to the home of Larry Segal who signed an offer containing almost the identical terms of Miller's counteroffer to Normile and Kurniawan. Later that day, Byer took the Segal offer to Gladys Hawkins advising her of the latest development in the negotiations with Normile and Kurniawan. Subsequently, Miller signed Segal's offer.

Around 2:00 p.m. the same day, after delivering Segal's offer to Hawkins, Byer informed Normile, in less than eloquent terms, that Miller had revoked the counteroffer by stating, "you snooze, you lose; the property has been sold." Yet, prior to 5:00 p.m., Normile and Kurniawan initialed Miller's counteroffer and delivered it to the office of the Gallery of Homes along with the required $500.00 binder despite their knowledge that Miller had already sold the property. When Miller refused to convey the property to either party, both prospective buyers filed independent actions seeking specific performance. After the trials were consolidated, each plaintiff made a motion for summary judgment. The trial court denied the motion of Normile and Kurniawan but granted Segal's motion for summary judgment, ordering Miller to specifically perform the contract to convey to Segal.

A motion for summary judgment is an attempt by a party to avoid the necessity of trial by exposing a fatal weakness in the claim or defense of his opponent. Caldwell v. Deese, 288 N.C. 375. 218 S.E.2d 379 (1975). The moving party has the burden of establishing that there is no genuine issue as to any material fact, entitling him to judgment as a matter of law. Vassey v. Burch, 301 N.C. 68, 269 S.E.2d 137 (1980). This motion requires the movant and the opponent to produce a forecast of the evidence he will present at trial. See 2 McIntosh, N.C. Practice and Procedure 1660.5 (2d ed. Phillips' Supp. 1970). The court may consider evidence consisting of admissions in the pleadings, depositions, answers to interrogatories, affidavits, admissions on file, testimony, and documentary materials. Koontz v. City of Winston-Salem, 280 N.C. 513, 186 S.E.2d 897 (1972). When there is no genuine issue as to any material fact, and when the law applicable to those facts show that a particular party is entitled to relief, the trial court should give judgment accordingly. Ballinger v. Secretary of Revenue, 59 N.C. App. 508, 296 S.E.2d 836 (1982).

To determine which party is entitled to judgment as a matter of law in this case depends on whether an enforceable option contract was formed between Normile and Kurniawan and the property-owner Miller. "An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer." Restatement (Second) of Contracts 25 (1981). If no enforceable option was created, then the summary judgment granted in favor of Segal and against Normile and Kurniawan was proper.

The facts indicate that the first attempt to establish a contractual relationship between the parties was made by Normile and Kurniawan through their offer to purchase Miller's property. To constitute an acceptance, the offer "must be accepted in its exact terms." Dobbs v. Trust Co., 205 N.C. 153, 156, 170 S.E. 652, 653 (1933). By making substantial changes in the offer submitted by Normile and Kurniawan, Miller did not accept their offer but made a counteroffer, substituting a different bargain than that proposed by the original offer. See Restatement (Second) of Contracts 39 (1981). The counteroffer provided that the offer would remain open until 5:00 p.m. on 5 August 1980 and was signed under seal by Miller. Normile and Kurniawan contend that as a result of this language within the contract a binding option was formed, making the offer irrevocable and precluding Miller from selling the property to Segal before the expiration of the stated period. See Kidd v. Early, 289 N.C. 343, 222 S.E.2d 392 (1976). In order to enforce the option, it must have been based on valid consideration. At common law a seal "imports a consideration or takes the place thereof." 17 C.J.S. Contracts 72 (1963). See Honey Properties, Inc. v. Gastonia, 252 N.C. 567, 114 S.E.2d 344 (1960).

The significance of the seal at the present time varies with each jurisdiction. Restatement (Second) of Contracts 94, Topic 3, pp. 255-60 (1981). In North Carolina by judicial decision, the seal as it effects consideration has lost much of its importance. In actions seeking equitable relief, it has always been permissible for the court to look behind the seal and refuse to act unless the seal is supported by actual consideration. Cruthis v. Steele, 259 N.C. 701, 131 S.E.2d 344 (1963); Britton v. Gabriel, 2 N.C. App. 213, 162 S.E.2d 686 (1968); Atkinson v. Wilkerson, 10 N.C. App. 643, 179 S.E.2d 872 (1971). Even in actions traditionally at law, the effect of the seal is not to preclude the court from dealing with the issue of consideration entirely, but the seal merely raises a presumption of consideration which must be rebutted by clear and convincing evidence. Loman-Garrett Supply Company, Inc. v. Dudney, 56 N.C. App. 622, 289 S.E.2d 600 (1982).

In Craig v. Kessing, 36 N.C. App. 389, 244 S.E.2d 721 (1978), aff'd, 297 N.C. 32, 253 S.E.2d 264 (1979), this court faced a similar situation. The plaintiff was seeking specific performance of an option contract which was signed under seal, but appeared to be supported by no other consideration. The court stated that in cases where equitable relief was sought, the court will go back of the seal and will refuse to act unless actual consideration has been given. Id. at 394, 244 S.E.2d at 724. The court ordered specific performance of the option contract, holding that the plaintiff's extensive efforts to obtain a buyer for the property constituted valuable consideration.

Looking behind the seal in the present case, the record is devoid of any evidence that any consideration was given which would have made the offer irrevocable as an option. Since the promise to hold the offer open until 5:00 p.m., 5 August 1980, was not supported by consideration, it could be revoked at any time. "An offeree's power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect." Restatement (Second) of Contracts 43 (1981). By accepting Segal's offer to convey the property, Miller revoked her offer to Normile and Kurniawan. Once they received notice from Byer that the property had been sold, the revocation became effective and their power to accept Miller's counteroffer was terminated. Thus, their subsequent signing of the counteroffer and its delivery to the realtor's office was an insufficient attempt to bind Miller to the contract. We hold that since only Segal entered into a binding contract to purchase from Miller, the trial court properly granted his motion for summary judgment and properly denied the motion made by Normile and Kurniawan.

Affirmed.

Judges ARNOLD and WEBB concur.