Meyer v. Warner

In Meyer v. Warner (1968) 104 Ariz. 44 448 P.2d 394, the Arizona Supreme Court considered the following clause in a lease agreement: "The LESSORS give the LESSEES the first refusal to purchase the demised property, should they decide to sell same during the term of this lease ... . They will meet any price and terms of a bonafide offer to lessors to sell." ( Id. at pp. 395-396.) Subsequently, the lessor conveyed an undivided one-half interest in the property to a third party, Mr. and Mrs. Meyer. ( Id. at p. 396.) The lessees received notice of the transfer after the fact, but did not attempt to assert their right under the first refusal clause. ( Id. at p. 397.) Later, upon the death of Mr. Meyer, the original lessor sold his remaining one-half interest to Mrs. Meyer. ( Id. at p. 396.) When the lessees learned of this conveyance, they asserted their right to purchase the property. (Ibid.) The Arizona court held the defense of laches barred specific performance as to the first transfer of an undivided one-half interest to the Meyers. ( Id. at pp. 397-398.) However, the court concluded the sale of the second one-half interest was a sale for purposes of the right of first refusal, even though the transfer had been made as a gesture of friendship. ( Id. at p. 398.)