Story Case

When Mr. and Mrs. Ringer married, they decided to begin the purchase of their own home. Arrangements were made with the "Own-Your-Own-Home" Company whereby they were to move into a newly built house in a suburb and begin paying at the rate of $25 a month. The agreement was a regular lease form, with the exception of the last provision which read that the total purchase price of the property to the tenants was $4,500, payable monthly in $25 installments. When Mr. Ringer had paid $3,000, he was ordered to vacate by the company's agent. Upon his refusal, a suit followed, and the agent introduced in evidence the lease and pointed out that it stated no term at which the lease was to expire, and that such lease could, therefore, be terminated at pleasure of the landlord. The judge assented to this, but asked to hear Mr. Ringer's argument on the meaning of the clause concerning the purchase price at the end of the lease. What will be decided?

Ruling Court Case. Roberts Vs. Davis, Volume 89, Alabama Reports, Page 402

Davis gave to Roberts the following memorandum: "I, L. M. Davis, have this day rented to Sylvester Roberts the southwest fourth of the south fourth of section 16, etc., for the term of ten years, for which he agrees to pay me an annual rent of $50; and if he pays me the above named rent, I agree to make the said Sylvester Roberts a good and sufficient deed to said land, as a free gift." Roberts paid the rent during the term of years as agreed upon, and then demanded a conveyance, which Davis refused to make. Roberts, thereupon, brought this bill, seeking to have Davis compelled to convey the property in question. Davis contended that the instrument created only a lease, and that there was no consideration for the promise to convey, and it was, therefore, unenforcible.

Mr. Justice Clapton said: "The contract purports in terms to be a lease. It is, however, in its essence, a contract for the purchase of land on the installment or part payment plan. A covenant in an agreement of lease, by which the lessor agrees that the lessee shall have the option to purchase at a fixed price on or before the expiration of the term, is supported by a valliable consideration; and it is well settled that parties may contract in reference to land, with the option of treating it as a sale or lease." Judgment was given for Roberts.

Ruling Law. Story Case Answer

Where an owner of land contracts to sell property, and the prospective purchaser goes into possession under the contract, the relation of landlord and tenant is not necessarily thereby created. The purchaser is in possession under his contract to buy. But it may happen, in a given case, that the parties have agreed that the prospective purchaser shall go into possession and be treated as a tenant until the purchase price has been paid. Whether the agreement, in a given case, amounts to this, will, of course, depend upon the intention of the parties.

In the Story Case, the document begins like a lease and the only evidence that the tenant was to become the owner after successive payments amounting to $4,000 were made, is found in the final clause of the lease. This is enough, however, to allow evidence of the real intention of the parties to enter. The decision will, therefore, be for Mr. Ringer.