Is Johnson entitled to purchase the remaining 30-acre parcel for an additional $200,000 in cash?
Problem 1: Johnson agreed to purchase 60 acres of farmland from McEnroe at 410,000 per acre. The land consisted of two parcels of 30 acres each, and the written agreement, signed by both oarties, called for Johnson to pay the purchase price by conveying land of appropriate value (the deal was structured in this manner for tax reasons). The parties quickly identified one appropriate property owned by Rychart and worth $400,00. Johnson acquired the property from Rychart and deeded it over to McEnroe, thus leaving the remaining $200,000 to be paid through acquisition of other property. McEnroe immediately deeded one of his 30-acre parcels, so they agreed to replace the original agreement with an option contract of sorts.
The new written, signed agreement provided the parties one year to find suitable additional property to complete the sale of the second parcels, which the remaining $100,000 unapplied value of the Rychart property treated as partical payment towards the remaining purchase price. If the parties were unable to locate suitable property, then Johnson had the option of tendering the remaining $200,000 in cash on or before April 1. During the year leading up to April 1, Johnson began development of the first parcel, which McEnroe had already conveyed, but did nothing with respect to the second. As April 1 approached, the parties had not yet found suitable property for the exchange, and they orally agreed to extend the option for another 6 months in hopes of finding property, preserving of course Johnson’s right to tender cash if not.
During the period between April 1 and October 1, Johnson continued to develop the first parcel, and also spent $6,500 in platting the second parcel in anticipation of beginning development soon after it was conveyed pursuant to the parties’ agreement. As October 1 approached, the parties remained unable to find suitable property and, in late September, Johnson tendered the remaining $200,00 purchase price. However, McEnroe refused to accept it. When Johnson brought an action for specific performance, demanding conveyance of the second 30-acre parcel, McEnroe asserted the statute of frauds as a defense to enforcement.
Is Johnson entitled to purchase the remaining 30-acre parcel for an additional $200,000 in cash? If not, is he entitled to any other relief?
