BETTY CARMON
Plaintiff
v
.
Greene County
No. 01 CVD 131
SAMUEL L. CUNNINGHAM
Defendant
Legal Aid of North Carolina, by Elizabeth C. Krabil, for
plaintiff.
Samuel L. Cunningham, pro se.
TIMMONS-GOODSON, Judge.
Betty Carmon (“plaintiff”) appeals from a judgment of the
trial court in favor of Samuel Cunningham (“defendant”). For the
following reasons, we reverse the trial court's decision and
remand.
The evidence presented at trial tends to show the following:
Plaintiff and defendant entered into an Option to Purchase
Agreement (“agreement”) on 4 June 1999 for Lot #9 in Section 2 of
the Red Oak Subdivision in Greene County. The agreement identified
defendant as the seller and plaintiff as the buyer of the property.
The purchase price of the property was $12,500. Since defendant
was the only party to sign the agreement, plaintiff's signaturedoes not appear on the writing. When the agreement was signed,
plaintiff paid $450 in consideration for a thirty-day option to
purchase the property, which was to be applied to the purchase
price. The terms and conditions of the agreement state inter alia
that the option may be renewed with payment of $150 monthly to be
applied to the remaining balance. Plaintiff made the $150 per
month payments while she sought financing for the balance of the
purchase price and shopped for a home to place on the property.
There were several consecutive months in which plaintiff failed to
make timely payments, however, defendant accepted her tardy
payments. While plaintiff was shopping for a home, defendant
notified plaintiff that once she placed a home on the property,
interest would begin to accrue on the purchase money mortgage.
Plaintiff purchased a home and had it placed on the property in
November, 1999. Soon thereafter, defendant provided plaintiff a
handwritten receipt for the most recent payment, which stated the
outstanding balance as well as a charge of $3.96 interest per day.
Plaintiff filed this action seeking declaratory relief from the
imposition of interest on the balance of the purchase price, and
correction of the balance due on the account.
Following a bench trial, the court entered seven findings of
fact as follows:
1 1.
Betty Carmon is a resident of Greene County, North
Carolina.
2 2.
Samuel L. Cunningham is a resident of Greene
County, North Carolina.
3 3.
The dispute between the parties revolves around an
Option to Purchase Agreement.
4 4.
Samuel L. Cunningham's is the only signature that
appears on the Option to Purchase Agreement.
5 5.
Betty Carmon did not sign the Option to Purchase
Agreement, dated June 4, 1999, that was entered
into evidence on May 3, 2002.
6 6.
The Option to Purchase Agreement refers to Betty
Carmon as the Buyer and to Samuel L. Cunningham as
the Seller.
7 7.
The Option to Purchase Agreement describes the real
property being sold and lists the purchase price.
Based on the above findings of fact, the trial court concluded
as a matter of law the following:
1. That the parties are properly before the Court and
that this Court has jurisdiction over the parties
hereto and over the subject matter herein set forth
in the Complaint filed on May 25, 2001.
2. That there must be a writing and that both parties
must sign said writing in order for there to be a
contract for the sale of real property.
The trial court then decreed that “[t]here is no written or
verbal contract between Betty Carmon and Samuel L. Cunningham for
the sale of real property described in the Option to Purchase
Agreement because Betty Carmon did not sign the Option to Purchase
Agreement.” It is from this judgment that plaintiff appeals.
The issues presented on appeal are whether (I) both the buyer
and seller of real property must sign a contract to convey the
property; and (II) a valid option contract existed between
plaintiff and defendant where plaintiff did not sign the Option to
Purchase Agreement. The appellate standard of review of a judgment entered after
a bench trial is “whether there is competent evidence to support
the trial court's findings of fact and whether the findings support
the conclusions of law and ensuing judgment.” Cartin v. Harrison,
151 N.C. App. 697, 699, 567 S.E.2d 174, 176 (2002), review denied,
356 N.C. 434, 572 S.E.2d 428 (2002).
In the case sub judice, neither the findings of fact nor the
conclusions of law support the trial court's decree, which refers
to the agreement as a contract for the sale of real property. We
disagree with this characterization of the agreement. Our review
of the evidence leads this Court to the conclusion that the
agreement is an option contract. Accordingly, before we analyze
plaintiff's assignments of error, we will address the distinction
between a contract and an option contract.
Generally, a contract is an agreement between two or more
persons that they will do or refrain from doing a particular act.
McCraw v. Llewellyn, 256 N.C. 213, 216, 123 S.E.2d 575, 578 (1962).
The fact that each party assumes legal liability serves as
consideration for the other party, and creates mutuality between
the parties. McCraw, 256 N.C. at 216, 123 S.E.2d at 578. On the
other hand, an option contract is an agreement that binds one party
to perform a certain act for a stipulated price within a designated
time, leaving it to the discretion of the other party to accept it.
Lawing v. Jaynes, 20 N.C. App. 528, 536, 202 S.E.2d 334, 340
(1974), modified by Lawing v. Jaynes, 285 N.C. 418, 206 S.E.2d 162
(1974). So long as an option contract is not exercised, it is aunilateral writing lacking in the mutual elements of a contract.
Lawing, 20 N.C. App. at 536, 202 S.E.2d at 340. Thus, the
distinction between contracts in general and option contracts lies
in the doctrine of mutuality.
We therefore conclude that this agreement is not a contract
for the sale of Lot #9 because it lacks mutuality. The agreement
contains no promise by plaintiff that she will purchase the
property. The only promise in the agreement is made by defendant
which grants plaintiff the exclusive right at a cost of $450 to
purchase the property within thirty days for a price of $12,500,
and that the deadline may be extended at a rate of $150 per month.
Plaintiff is not subject to any legal liability by the language of
this agreement, and for this reason we hold that the agreement was
not a contract for the sale of property.
Furthermore, we conclude that this agreement contains the
essential elements of an option contract. Those elements are: (I)
a present offer to sell property that is described with reasonable
certainty; (II) the offer to sell stipulates a fixed price to be
paid for the property; (III) the offer to sell is made irrevocable
for a stated period of time; and (IV) the offer is a binding
promise on the seller because the buyer gave some consideration in
return for the promise of irrevocability. See generally Kidd v.
Early, 289 N.C. 343, 222 S.E.2d 392 (1976).
The agreement specifically states that “the Seller, for and in
consideration of the sum of $450 to him paid by the Buyer ... does
hereby give unto the Buyer ... the exclusive right and option topurchase [Lot #9],” and that the “option shall be for a period of
30 days ...” This language constitutes a present offer to sell
the property. The agreement also stipulates a fixed price for the
property of $12,500. The agreement makes the offer irrevocable for
thirty days. The agreement constitutes a binding promise on
defendant because plaintiff paid the initial $450 and an additional
$150 per month for the promise of irrevocability. Because each
element of an option contract is present in this agreement, we
conclude that it is indeed an option contract.
We now address plaintiff's assignments of error. Plaintiff
argues that the trial court erred in concluding as a matter of law
that both parties must sign a writing in order for there to be a
contract for the sale of real property. We agree with plaintiff.
For this analysis, we look to the Statute of Frauds
requirements for contracts. The Statute of Frauds was established
to prevent fraud and perjury in cases involving contracts. It
requires certain contracts, including options to purchase land, to
be in writing and signed by the party or parties to be bound by the
contract. See N.C. Gen. Stat. § 22-2 and Craig v. Kessing, 36 N.C.
App. 389, 244 S.E.2d 721 (1978), affirmed by Craig v. Kessing, 297
N.C. 32, 253 S.E.2d 264 (1978) (Applies N.C. Gen. Stat. § 22-2 to
option contracts for the purchase of property). However, the
Statute of Frauds does not require two signatures to constitute an
enforceable contract. When a contract is disputed, the only
signature that the trial court must find on the document is the
signature of the party against whom the contract is being enforced,i.e. the defendant. Lewis v. Murray, 177 N.C. 18, 19-20, 97 S.E.
750, 751 (1919). If the contract is signed by the defendant, it is
sufficient to bind him and legal action can be brought against him
though the plaintiff may not be bound if the Statute of Frauds is
not sufficiently complied with as to her. Id.
In the case sub judice, the fact that plaintiff did not sign
the option contract does not invalidate the agreement. We conclude
that an enforceable contract does exist between plaintiff and
defendant. We therefore reverse the judgment of the trial court
and remand this case for entry of a judgment consistent with this
opinion and for a determination of the principle amount owed by
plaintiff to defendant for the conveyance of Lot #9 and the amount
of interest, if any, due.
Reversed and remanded.
Judges HUDSON and ELMORE concur.
Report per Rule 30(e).
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