Charlton v. Columbia Real Estate Co.

54 A. 444, 64 N.J. Eq. 631, 19 Dickinson 631, 1903 N.J. Ch. LEXIS 81

• Court: New Jersey Court of Chancery
• Decided: February 21, 1903
• Status: Published

Opinion

Grey, Y. C.

The bill seeks the specific performance of an alleged agreement for the leasing, for ten years, of a lot of land situate in Atlantic City, admittedly owned by the defendant, the Columbia Real Estate Company. The agreement is not alleged, in the bill, to have been in writing. The defence is—first, that no agreement between the parties touching the alleged leasing was ever finally concluded; it is admitted that negotiations were opened and that they had made some progress towards an agreement, but it is denied that any concluded contract was made between the parties; secondly, the defendant insists as the claimed agreement is for a lease for a ten-year term, that it must have been evidenced by a writing, signed by the lessor, or by his lawfully-authorized agent, and that no- such writing has been shown, &d, nor any equitable excuse for its non-production.

The statute of frauds, in its first section, prescribes the effect which shall be given to leases of land for a longer period than three years when they are not put in writing, signed by the parties so making or creating the same, or their agents thereunto lawfully authorized by writing. The phrasing of this clause of the statute is in the words following:

“That all leases, estates, interests oí freehold or term of years, or any uncertain interests of, in to or out of any messuages, lands, tenements or hereditaments, made or created, or hereafter to be made or created, by livery and seisin only, or by parol and not put in writing, and signed by the parties so making or creating the same, or their agents thereunto lawfully authorized by writing, shall have the force and effect of leases or estates at will only, and shall not, either in law or equity, be deemed or taken to have any other or greater force or effect any consideration for making any such parol leases or estates notwithstanding except, nevertheless, all leases not exceeding the term of three years from the making thereof.” Gen. Stat. p. 1602 § 1.

The bill of complaint does not allege that the contract whereby the defendant company “agreed to lease” was in writing. The frame of the bill shows that the agreement that a lease should be given, and the lease itself, were, in the contemplation of the parties, several and distinct transactions. The proofs also show that there were negotiations between the parties preliminary to an intended leasing. These preliminaries are, to an -imperfect extent, evidenced by writings. The following are copies of these preliminary writings:

“Exhibit C 2.

“Agreement made this seventh day of May between Columbia Real Estate Co. of the first part & Mrs. Charlton, of Atlantic City of the second part. AVitnesseth, that the party of the first part will make a lease for ten years of a certain building on. their ground in rear of stores to contain about eighty feet in width by about one hundred- feet in depth with a fourteen foot entrance from boardwalk, to consideration to be a rental of twelve hundred dol. per annum payable yearly in advance, lease to date from .Tune 15th, 1901. The party of the first part to be put to no expense whatever in this matter, and security to be given for the rent.

“Columbia Real Estate Co.,

“AVitnesseth by “By H. G. Bergman, Agt.

“Ida T. Atkinson. ' “S. A. Charlton.”

“Exhibit C 3.

“Received Atlantic City, May 7th, 1901, of Mrs. S. A. Charlton, one hundred dol. on acc. of agreement for lease to be made to Mrs. Charlton, for which details are to be settled on.

“Columbia Real Estate Co.,

“By IT. G. Bergman, Agt.”

These papers were signed and passed at the same time from the defendant’s company’s agent to- the complainant. As they relate to the same transaction, they must be deemed to be parts of one instrument. Exhibit G £ is a memorandum of an agreement for a lease. Exhibit G 8 is a receipt for $100 on account of that agreement.

The effect of these two writings shows, on the face of them, that the parties, in their negotiations, had not, by these writings, yet arrived at any contract, the terms of which had been definitely agreed upon between them. The receipt, in express words, recognizes this in the phrase, referring to the lease, “for which details are to be settled on.” The proof shows that when these memoranda of May 7th were signed, the details of the lease had not yet been finally “settled on,” and were not expressed' in those agreements.- Plans for buildings to be erected by- the lessee, had been submitted and approved, but certain dimensions and angles of the premises which might call for a survey, had not yet been ascertained, and a method of compensating the proposed lessee for her expenditures in improvements, by paying her a price to be fixed by an arbitrator, was yet under discussion, as details of the proposed lease which were j^et to be settled. None of these incidents of the proposed lease were set out in the written memoranda of May 7th.

The two memoranda of May 7th are the only writings signed by or for the defendant company. These instruments themselves, as well as the evidence of the negotiations of the parties as to details to- be settled, show that, when they were created, no .concluded contract had yet been made. No other written papers of any kind was ever “signed by the parties making or creating the same, or by their agents thereunto lawfully authorized in writing,” &e.

A comparison of the contract of lease which the bill seeks to have decreed to be made, with these two- writings, also shows that the complainant is not asking for the making of a lease, the terms of which 'are set forth in these two writings, but for quite a different instrument. The bill of complaint prays that the defendant company may be decreed specifically to perform the agreement therein set forth. The agreement for a lease set forth in the bill contains a number of terms, dealing with matters of substance, which are not in any way referred to in the previous written memoranda.

The bill of complaint demands a lease which shall convey “the use of the doors across the entranceway,” and which shall oblige the defendant company to “purchase all improvements erected on the premises by- the complainant at a price to be fixed by three arbitrators, and that, in the meantime, the said buildings and improvements should stand as security for the rent to become due during the term;” that the complainant should have “the privilege of pajung the rent in cash, or of furnishing security for the same, at her pleasure.”

None of these incidents, imposing obligations upon the defendant company of great importance (some of which are essentially part of the lease), are included within the two writings signed by the defendant’s company’s agent, and above recited. Nowhere, either in pleadings, evidence or argument, is it intimated that the complainant would, in this cause, accept a decree for the making of a lease which did not contain these incidents; on the contrary, it is insisted that the decree shall be for a lease on these terms. We must therefore look elsewhere than to the writings signed by the defendant company to find the terms of the lease which the complainant insists the defendant is bound to make.

These terms are expressed in a prepared draft of a lease, which was never executed by the defendant company, but a copy of which, having been drawn in counterpart, was sent, unsigned, to the complainant, the duplicate being retained by the defendant company. At this stage of the negotiations differences arose between the parties as to security offered for the rent by the complainant. The prepared draft was never signed and delivered by the lessor. The complainant was told that the “negotiations were all off,” and that the defendant’s agent could not sign the lease. The $100 which the complainant had paid was sent back to her.

The complainant offered in evidence the copy of this unsigned draft of a lease.which was sent to her, and it has been marked Exhibit G 1. The complainant (proposed lessee) has signed it, but the defendant (proposed lessor) has not. A cursory examination of this draft of lease affords additional proof that the previous written memoranda of May 7th, 1901, signed by the defendant company, did not express a concluded contract between the parties, and that, after they had been made, there were further negotiations, or, if no further negotiations, yet there were terms of the letting already agreed upon which were not included in the written memoranda, though both parties recognized their essentiality as component parts of the lease. These were the “details to be settled on,” which were referred to* in the memorandum receipt. It is this proposed, but unexecuted, lease which the complainant insists, by her bilj of complaint, was agreed to be given as a lease of the premises in question.

This unexecuted paper contains all the above-recited terms as to the use of doors; and obliging the defendant lessor to purchase improvements at an arbitrated price, and making them, meanwhile, stand as security for the rent, and giving the lessee the privilege of paying the rent in cash, or of furnishing security therefor, at her pleasure.

This unexecuted draft of lease has of itself no efficacy as the concluded agreement of the parties, becauseit was never executed by the lessor. The parties got into a dispute before that was done about the character of the security for the rent, and the proposed lease was declared off, as above -stated.

Nothing in all the proofs shows that there ever was a time when, as to each incident of the proposed contract, the parties, came to be 'of the same mind, and finally- contracted, each with the other, that such a lease should be made.

The court of appeals declared, in the case of Brown v. Brown, 6 Stew. Eq. 650, that, when specific performance is sought, the terms of the contract must have been completely determined and definitely ascertained between the parties. If it be doubtful whether the contract was finally closed, equity will not interfere.

The utmost effect that can be ascribed to the two memoranda of May 7th is, that they amounted to an agreement to enter upon an agreement, upon terms to be afterwards settled between the parties. On the face of the receipt of that date is an express declaration that details of the lease were yet to be settled. Lord Wensleydale, in Ridgway v. Wharton, 6 H. L. Cas. 305, declares such an agreement to- be a contradiction in terms, and that it is absurd to say that one enters into an agreement until the terms of that agreement are settled.

Leaving the effect of the written memoranda of May 7th, which were signed by the defendant company only, all the- proofs show that it was always in the contemplation -and intent of both parties that a written lease of some sort should be executed by the complainant as well as the -defendant which should contain clauses severally binding upon each of them. It was the execution of this instrument, by the signature of both parties, and its delivery, which it was intended should conclude the bargaining. This appears by the fact that the draft of the proposed lease contained various terms not included in the previous written memorandum, but imposing serious obligations upon the parties. These were the details which, when the memorandum of May 7th was made, were yet to be settled on. This draft of lease never was executed and delivered by the lessor. There never was any complete determination and definite ascertainment of the terms of the contract.

A further objection by defendant is that the unexecuted draft of lease is obnoxious to the statute of frauds as a basis for a decree for specific performance such as is here prayed. This draft of lease purports to convey a ten-year term in lands. It is not in writing signed by or for the party making it (the lessor). The statute prescribes that such an agreement, even if finally-concluded bétween the parties, but not expressed in a signed writing, shall have only the force and effect of a lease at will. This the complainant is not willing to accept. She asks that she be decreed to have- a lease for a ten-year term, with all the attending advantages of privilege to -erect improvements, which the defendant company shall be obliged to pay for at an arbitrated price. The statute is a bar to any such decree.

The written memoranda being ambiguous in their phrasing, considerable latitude has been allowed, introducing parol proof as to the attending negotiations of the parties, in order to ascertain what was meant by “details to be settled on.” Little or no proof has been offered showing that the complainant has done anything in part performance of what she claims was a concluded contract, partly in parol. She paid $100, which has been returned to her. She has since tendered or offered the first year’s rental, but this tender was based on the assumption that sh-e had a concluded and binding contract with the defendant. In this she was mistaken, as is above shown. She never entered into possession of the premises, nor made any of the contemplated improvements. She did expend some money to get plans from an architect. Hone of these incidents constitute such a part performance of a contract as entitled the complainant to the favorable consideration of this court by a decree for specific performance. For all loss or inconvenience she may have suffered, she may, if she has any right, be fully and adequately compensated by an action at law for damages.

There is an additional objection which this court ought to consider on this application for relief by specific performance. It appears, in a letter of the complainant’s solicitor, offered in evidence for complainant, that, before this suit was brought, he was notified that the defendant company had rented the premises in dispute to other parties. There’ is other proof containing like suggestion. No such other persons have been brought in as defendants in this cause. It may be that such persons are bona fide holders, without notice of the alleged equity of the complainant, so that a decree in this suit against the defendant company for specific performance may be of no avail against such other parties.

If this condition should appear, this court would refuse specific performance, even if, as against the defendant company, the complainant was shown to' be entitled to it. Johnson v. Hubbell, 2 Stock. 332.

Upon the whole case, the complainant’s bill should be dismissed, with costs.