## Facts

- A property owner granted a written option to a real estate operator to purchase Los Angeles income property for \$100,000, reciting consideration of \$0.25.
- The option allowed exercise up to June 1, 1905, with a stated privilege of a 30-day extension.
- The option terms called for \$30,000 cash down and the balance payable on or before four years at 4.5% net; the owner agreed to provide title evidence, convey by grant deed, and pay a commission.
- The optionee timely notified the owner that he elected the 30-day extension.
- The next day, the owner declared the agreement terminated and withdrew the property from sale, maintaining the optionee had no purchase right.
- Within the extended period, the optionee notified the owner of his election to purchase and tendered the \$30,000 down payment in lawful money; the owner refused.
- The pleading alleged the optionee was able, willing, and ready to perform and that the property’s value did not exceed the \$100,000 price at relevant times; it further alleged repudiation motivated by a later increase in value.

## Issues

1. Whether the amended complaint stated a cause of action for specific performance of a real-estate option when the option recited nominal consideration.
2. Whether, accepting the pleaded facts as true, the agreement could be “just and reasonable” to the defendant under California Civil Code § 3391.
3. Whether allegations of election to purchase and tender of the down payment, together with readiness and ability to perform, were sufficient at the pleading stage.

## Decision

- The California Supreme Court reversed the judgment entered after a demurrer was sustained to the amended complaint without leave to amend.
- The Court held that, on demurrer, the complaint’s allegations must be taken as true, including allegations of fairness of price, bad-faith repudiation, and readiness and ability to perform.
- The Court concluded the adequacy of consideration for an option and the “just and reasonable” inquiry under § 3391 could not be resolved against the plaintiff as a matter of law on the face of the pleading.

## Legal Principles

- On demurrer, the court accepts well-pleaded factual allegations as true and tests only legal sufficiency.
- The value of an option to purchase specific real estate has no fixed measure and may depend on future conditions; nominal consideration does not necessarily render an option unenforceable as a matter of law at the pleading stage.
- Specific performance may be denied under Civil Code § 3391 if a contract is not “just and reasonable” to the defendant, but this assessment commonly depends on facts such as fairness of the price and circumstances at formation, not later market movement alone.
- Allegations of timely exercise, tender of required payment, and continued ability and willingness to perform can be sufficient to plead entitlement to specific performance.

## Conclusion

The court reinstated the action by holding that the amended complaint adequately pleaded a claim for specific performance of the option; questions about adequacy of consideration and fairness under Civil Code § 3391 required factual development and could not be conclusively determined on demurrer.


Marsh v. Lott, 156 Cal. 643, 105 P. 968 (Cal. 1909)