Rutherford v. MacQueen

Lite, President : This is a suit by an optionee for specific performance of an option to purchase real estate. By contract in writing, dated February 17, 1926, defendant, J. H. MaeQueen, leased to plaintiff, T. C. Rutherford, a brick storebuilding in the town of Pax, Fayette county, for a term of five years, at $50.00 per month, and granted to the lessee the exclusive right to purchase the property at any time within the term of the lease for $3,500, with interest from the date thereof, plus taxes, insurance and necessary expenses of maintenance, with interest, less rents, with interest, paid under the lease. On December 15, 1927, the building, which had been insured in the name and at the expense of the lessor, was materially damaged by fire. Thereafter, he collected under the policies of insurance, $3,712.12, as the estimated cost of repairing the injury. Rutherford testified, in effect, that a week or two after the fire he verbally notified MaeQueen of his election to purchase the property under the terms of the option; that they then agreed the repairs would be made by *354 bim, under tbe supervision of bis father, and, after deducting tbe cost thereof, be would pay to MacQueen tbe balance of tbe purchase price as fixed by tbe option. Tbe repairs were accordingly made by Rutherford at a cost of $2,387.01. Specific performance of the option was decreed. The real question complained of and the only one of which there is just cause for complaint involves tbe ruling of tbe circuit court in bolding that tbe plaintiff is entitled to tbe benefit of $3,500.00 of tbe insurance. The appellant denies tbe right of tbe optionee in an option of real estate to share in money collected under fire insurance on tbe property in tbe name of and paid for by the optionor for fire occurring before tbe exercise of tbe option. Tbe appellee relies upon Williams v. Lilly, 67 Conn. 50, 37 L. R. A. 150, and Peoples Railway Co. v. Spencer, 36 Am. St. Rep. 22, as supporting tbe affirmative. In tbe former case, tbe court held that tbe op-tionee was entitled to money collected under fire insurance on the property for loss occurring before tbe exercise of bis option, because be bad been required to pay the cost of tbe insurance under a lease of tbe premises during which be was permitted to purchase. In tbe latter case, tbe option was incidental to a conveyance of tbe property by tbe optionee to tbe optionor, which tbe court held to be a mortgage. Title ivas, therefore, in tbe optionee at the time of tbe fire. In a note on tbe question in 23 A. L. R. 1225, it is said: “A mere contract of option, for tbe purchase of land, does not, it seems, entitle the bolder of the option to have insurance money collected by the giver applied on tbe purchase price where tbe bolder undertakes to exercise bis option after buildings on tbe premises have been accidentally destroyed.” But it matters little what may be tbe rule in such case. As plaintiff relies upon tbe alleged contract with defendant at tbe time of accepting tbe option, bis rights are governed accordingly. A party relying upon a contract is bound by all its legitimate terms. Richardson v. Hardman, 97 W. Va. 573. A decree will, therefore, be entered by this Court affirming tbe judgment of tbe circuit court in so far as it directs tbe specific performance of the contract and tbe delivery by de *355 fendant to plaintiff of policies of insurance on the property; reversing tbe decree in so far as it gives plaintiff the benefit of the insurance to cover the cost of repairs to the building; and for judgment in favor of defendant against plaintiff in the sum of $1251.44, with interest thereon from the 13th day of November, 1930; the increase in the judgment as here directed to be the difference between the amount of the insurance credited to Rutherford ($3,500.00) and the cost of the repairs amounting to $2,387.01. Affirmed in part and reversed in part, and judgment entered.