Johnson Farms v. McEnroe

Facts

Plaintiff and Defendants agreed that Defendants would convey approximately 60 acres of farmland to Plaintiff for $9,000 per acre. Defendants, wishing to avoid capital gains taxes, did not want money, but rather, they insisted on taking other “like-kind” property in exchange for their farmland. Plaintiff was able to locate one parcel, which it conveyed to Defendants for about half of their land. The parties then decided to convert their sale contract into an option contract to be exercised by Plaintiff on or before April 1, 1995. This allowed Plaintiff more than a year to locate more like-kind property. However, the search turned up no other properties. Near the deadline to exercise the option, Bert Johnson of Johnson Farms met with Tom McEnroe, the son of Defendants. Bert Johnson told Tom McEnroe that Plaintiff was prepared to pay the money for the remainder of the property and asked if Defendants wanted the money or would extend the option. Tom McEnroe consulted his father an d reported that he did not want the money. Instead, the option would be extended. After April 1, 1995, when the option should have expired, the parties continued to search for suitable land. At that time, assuming that the sale would be completed, Plaintiff expended about $6,500 to have the remaining property platted. Eventually, the relationship between the parties deteriorated when Defendants learned that a new event center would be constructed on land directly to the west of their property. Defendants asked Plaintiff to release some of the remaining land from the agreement so that Defendants could sell it as commercial property, and Plaintiff refused. Defendants then informed Plaintiff that they were no longer interested in completing the transaction. Defendants claim that Plaintiff’s rights expired on April 1, 1995, under the terms of the option.