Opinion
14920.
SEPTEMBER 6, 1944.
REHEARING DENIED OCTOBER 7, 1944.
Specific performance. Before Judge Davis. DeKalb superior court. April 12, 1944.
B. Hugh Burgess, J. Lon Duckworth, and Scott, Dunaway, Riley Wiggins, for plaintiff.
Tye, Thomson, Tye Edmondson, for defendant.
The part performance provided by the Code, § 20-402 (3), as making an exception to the statute of frauds, contained in section 20-401, must be part performance of the contract; and the doing by either party of some independent act, not a part of the contract, does not become a part performance by reason of the fact that the doer was led so to act by his belief or understanding that the parol contract would be performed by the other party.
ON MOTION FOR REHEARING.
1. It is not every part performance of an oral contract that will take it without the statute of frauds. It is only where there has been such part performance of the contract as would render it a fraud of the party refusing to comply, if the court did not compel a performance.
2. The part performance referred to in the statute is something substantial, and is generally essential to the performance of the contract.
3. "Equity will decree the whole performance of an agreement which is within the statute of frauds, whenever there has been such a part performance as that the whole performance is necessary to prevent a fraud; and the whole performance is necessary to prevent a fraud in a case where the parties have proceeded so far on the faith of the agreement, that they can not be restored to their statu quo nor adequately compensated in damages by avoiding the agreement and leaving them to their action for damages."
No. 14920. SEPTEMBER 6, 1944. REHEARING DENIED OCTOBER 7, 1944.
Hotel Candler Incorporated brought suit against Walter T. Candler for specific performance of an alleged oral contract between the parties in relation to the lease of a parcel of real estate, on which is located the building known as Hotel Candler in the City of Decatur. In addition to an answer, the defendant filed a demurrer on various grounds, the third paragraph of which is as follows: "The allegations of the petition show that the alleged contract was, at best, a parol contract, and therefore not enforceable by specific performance, there being no facts alleged which would take the case out of the general rule with reference to decreeing specific performance of parol contracts having to do with land." On the hearing as to whether a temporary restraining order, theretofore granted, should be continued in force and an injunction issue, the plaintiff having introduced certain evidence which it claims supported the showing of partial performance made by its petition, the defendant moved to rule out this evidence on the ground that it was not such as could be considered in law a part performance of the alleged contract, so as to take the case out of the rule of the statute of frauds. The court granted this motion and excluded the evidence, and this forms the first exception. At the conclusion of the evidence, the court vacated the restraining order theretofore granted, denied the temporary injunction prayed for, and dismissed the action. This forms the basis of the second assignment of error.
At the time the foregoing matters were decided, the court entered an order containing the following extract: "The court is of the opinion that, under the allegations of the petition and the evidence submitted by the plaintiff, no facts were alleged and proved which would authorize the submission of the case to the jury on the issue of such performance on the part of the plaintiff as would take the case out of the statute of frauds; and therefore, as a matter of law, this court holds that the plaintiff's petition fails to make out a case for specific performance." Thus it appears that an injunction was not denied under any discretion on the part of the trial judge, but that, as a matter of law, he decided that the plaintiff's allegations and evidence made no such case as would authorize a finding that the case was taken out of the statute of frauds.
The part of the evidence, above referred to, which it is claimed showed part performance was, in effect, the testimony of Woods, the president and general manager of the hotel, that, in view of the agreement which he testified he had made with the defendant, "he [Woods] at once set about to render said hotel suitable and usable for hotel purposes, and did on the 3d day of February, 1944, order from one Roy K. Pruett, a salesman of the American Disinfectant Company Inc., of Sedalia, Missouri, blockette holders for the bathrooms and toilets in the hotel, and an eight-months' supply of disinfectants and deodorants, costing the plaintiff $9160. Deponent shows that he had been withholding placing this order pending a definite understanding with the defendant, and after the agreement made with the defendant on February 2, 1944, proceeded on February 3, 1944, as above stated, to place this order. Furthermore, deponent shows that, pursuant to the said contract between plaintiff and the defendant, your deponent placed an order on February 3, 1944, with Georgia Duck Cordage Mill for fourteen dozen first-quality sheets at $17.92 per dozen, totaling $250.88, which said order was delivered to Hotel Candler on February 12, 1944. Furthermore, pursuant to said contract and agreement between plaintiff and the defendant, deponent as president and general manager of Hotel Candler purchased bedspreads and materials for dresser scarfs from Rich's Inc., of Atlanta, on or about February 4 or 5, 1944, of the value of $123.31, some of which were delivered immediately and some of which were delivered on February 15, 1944; and on the same date deponent purchased on behalf of Hotel Candler Incorporated from Davison-Paxon Company of Atlanta, bedspreads of the value of $65.83, which were delivered immediately. Deponent further shows that pursuant to the contract and agreement between plaintiff and defendant, deponent, as president and general manager of plaintiff, on or about the 4th or 5th of February, 1944, purchased from Aircraft Apartments Inc. one hundred new chairs for the dining-room of plaintiff, at a total cost of $265. Deponent further says that the plaintiff's liability insurance, compensation insurance and hold-up insurance all expired along about the date of the expiration of the lease contract attached to this affidavit which expired on March 14, 1944; and pursuant to the said agreement between plaintiff and defendant hereinabove referred to, deponent, as president and general manager of the plaintiff, did renew said policies of insurance through D. L. Stokes Company for another year. Deponent shows that said policies of insurance with the envelopes in which they were mailed to your petitioner are attached hereto and made a part of this affidavit and are tendered in evidence herewith. Pursuant to said agreement between the plaintiff and defendant, deponent immediately, on the 3d day of February, 1944, made a contract with J. C. Landers to continue to operate the coffee shop, dining room, and kitchen on said hotel premises for another year and so long as said operation was mutually satisfactory between the parties. Pursuant to the said agreement between plaintiff and defendant with reference to furnishings and replacements and redecoration which was to be done, deponent on February 3, 1944, called Sterchi Furniture Company and Ray Lang Inc., and asked representatives of those concerns to come out and check the hotel for estimated cost of the redecorations and refurnishing and repairs to be done pursuant to said contract and representatives of these two concerns did come out and each made a survey and submitted estimates. Deponent went to Ray Lang Inc. and investigated some new furnishings. All of the things above related took place immediately following the agreement between plaintiff and defendant on February 2, and February 3, 1944, and before deponent learned that the defendant did not intend to carry out said agreement with petitioner. Deponent informed the defendant that the hotel was getting in some new stuff and was getting estimates on the work that was to be done in redecorating, refurnishing, and repairing the furnishings of the hotel under the agreement. Deponent also stated to the defendant that the hotel had renewed its arrangement with J. C. Landers. Deponent shows further that the hotel-room tax on said hotel for the entire twelve-months' period for the year 1944 was paid to the State of Georgia after the plaintiff and defendant entered into said agreement, and deponent also paid the City of Decatur hotel license for the entire year 1944 and said license is not transferable."
There was also evidence from Mrs. T. J. Woods with reference to a conversation which she had with the defendant Candler. She testified as follows: "Based on the fact that we were to have a ten-year lease with the cancellation clause eliminated, Mr. Woods started outlining to Mr. Candler what improvements Mr. Woods would make in the hotel, stating that now he could afford to spend some money and know that he couldn't lose it on sixty-days' notice. Mr. Candler voluntarily suggested that he would pay one-half of the immediate improvements, and from then on the discussion was about what the improvements should be. It was finally agreed between Mr. Candler and Mr. Woods, as deponent did not further participate to any material extent in the conversation, that the immediate improvements to be made were the replacing or repairing of the heating plant, the redecoration of the lobby, the refurnishing or renovation of the furnishings in the lobby, the redecoration of the dining room, the replacing or renovation of guest-room chairs where needed; and, in connection with the making of these immediate improvements, Mr. Candler said that he would completely pay for putting in a new heating plant. It was finally decided, however, that they would consider repairing the present heating plant, and that Hotel Candler Inc. and Mr. Candler would each pay one-half of whatever was done to the heating plant, whether repaired or replaced, together with the other things agreed upon and enumerated. It was during this discussion that the stipulations in the old lease were modified so that in view of the fact that after the immediate improvements were made Hotel Candler Inc. would take care of the interior maintenance and Mr. Candler would take care of the exterior of the building as well as the roof. In the old lease he was merely to take care of the roof."
J. C. Landers testified by affidavit: "Some time during the evening of February 2, 1944, Mr. T. J. Woods informed deponent that he had renewed his lease with Mr. Candler for the Hotel Candler for a period of ten years, and on the following morning, February 3, 1944, Mr. Woods discussed with your deponent some changes in the operation which would be required by Mr. Candler. Mr. Woods informed your deponent that Mr. Candler wanted the partition in the hotel lobby taken out, which would necessitate Mr. Woods taking over the gift shop which is between the coffee shop and the hotel. Deponent shows that after discussing this change deponent and the said T. J. Woods, as president and general manager of Hotel Candler Inc., had agreed that deponent would continue for another year to operate the dining room, kitchen, and coffee shop on the same terms that deponent had been operating for the past fifteen months and thereafter so long as the arrangement was mutually satisfactory. This contract between deponent and said Hotel Candler Inc. was made in good faith on the part of deponent relying upon the fact that the said Hotel Candler Inc. did, in fact, have an agreement with Mr. Candler to lease the hotel for an additional ten years."
R. K. Pruett testified by affidavit: "Personally came Roy K. Pruett, who, being duly sworn, on oath says: that he is a traveling salesman for American Disinfectant Company Inc.; that he was registered at Hotel Candler Inc. in Decatur, Georgia, on February 2, 1944, and sought to sell the hotel some hotel supplies, but Mr. T. J. Woods, the president of said corporation, informed him that his then lease was about to expire and he would not be in position to purchase any further supplies until he had made a new agreement, and he refused to place any order with deponent for such supplies. On February 3, 1944, before deponent checked out of the hotel, he was informed by Mr. T. J. Woods that he had renewed his agreement with Mr. Candler, the defendant in the above-stated case, for the operation of the hotel for a period of ten years, and placed with deponent an order for blockettes and blockette holders and deodorants for the bathrooms and toilets in said hotel in the amount of $91.60 for immediate delivery, and deponent shows that the supplies ordered were sufficient to run said hotel for a period of about eight months."
There was also introduced in evidence several documents, as follows: A policy of owner's, landlord's, and tenant's form of insurance, insured by Glens Falls Indemnity Company, insuring Hotel Candler Incorporated and Walter T. Candler for a period of twelve months, from April 18, 1944, to April 18, 1945, on account of claims for bodily injury occurring on said hotel premises, the cost of which was $90.57, paid by Hotel Candler Incorporated, the policy having been mailed to plaintiff on March 23, 1944; a policy of mercantile-robbery and safe-burglary insurance, issued by General Casualty Company of America to Hotel Candler Incorporated, covering the period from March 8, 1944, to March 8, 1945, costing the plaintiff $10; also a workmen's-compensation policy issued to the plaintiff, covering the period from March 20, 1944, to March 20, 1945, at an estimated premium of $62.20, which was paid by the plaintiff; a duplicate original of the order placed by the plaintiff with American Disinfectant Company, and referred to in the affidavit heretofore quoted; an itemized statement of bedspreads and materials purchased by the plaintiff from Davison-Paxon Company, as hereinbefore shown by affidavit, as well as statements with reference to the aforementioned purchases by plaintiff from Rich's, Georgia Duck Cordage Mill, Sterchi's, and Ray Lang Inc.
There was also shown in evidence an unsigned lease between Walter T. Candler and Hotel Candler Incorporated, which Woods testified contained the agreements and stipulations that Candler had agreed to put into the new lease. Contained therein were certain "Special Stipulations," the one numbered (6) being as follows: "Immediately upon the execution of this lease, lease is hereby authorized to spend whatever in his opinion is reasonably needed to render the building and equipment reasonably usable and suitable for a hotel business; it being understood that lessor is to reimburse lessee for one-half the cost thereof. When said initial expenditures shall have been made and the lessee shall have been reimbursed by the lessor, then thereafter lessee is hereby obligated to maintain the building and equipment in a reasonably usable and suitable condition for hotel purposes except as is otherwise provided in this lease agreement. The immediate improvements contemplated are: the replacing or repairing of the heating plant, the redecoration of the lobby, the refurnishing or renovation of the furnishings in the lobby, the redecoration of the dining room, the replacing or renovation of guest-room chairs where needed."
In addition to the above, there was evidence offered in behalf of the plaintiff tending to show an agreement between the plaintiff and the defendant in line with the allegations of the plaintiff's petition; and also evidence to the contrary in behalf of the defendant.
The petition, after setting forth an oral contract, contained, in paragraphs 8 and 9, the following allegations: "Your petitioner shows that, pursuant to the said contract between it and the defendant, petitioner was to immediately spend whatever in the opinion of the petitioner was reasonably necessary to render the building and equipment reasonably suitable and usable for hotel purposes, provided the labor and materials could be obtained, and provided further that the defendant was to reimburse your petitioner one-half of the cost thereof; and when these repairs and improvements had been made, your petitioner was to maintain the hotel and equipment at his own expense, with the exception of certain items specifically agreed to in the contract. The improvements agreed upon between plaintiff and defendant in the contemplation of the parties at the time, as shown by the contract set out hereto in Exhibit B, included the replacing or repairing of the heating plant; redecorating and refinishing or renovating the furnishings in the hotel lobby, redecorating the dining room, and replacing or renovating guest-room chairs where needed. Following said agreement between plaintiff and the defendant, and following the receipt of said letter of February 3, 1944, and following notification by plaintiff to the defendant of the acceptance of the variation in the oral agreement proposed by the defendant in his letter of February 3, 1944, your petitioner immediately set about to comply with the special conditions with reference to the expenditures under the said sixth special stipulation of the contract, and purchased one hundred new dining-room chairs at a total cost of $265; $250 worth of bed linens from Georgia Duck Cordage Mill; about $200 worth of bedspreads from downtown Atlanta merchants; renewed its liability and compensation and hold-up insurance policies on said business for a period of another year; extended its working agreement with J. C. Landers for the operation of the coffee shop, dining room, and kitchen on said hotel premises for a period of time extending within the terms of the lease to begin April 1, 1944; and proceeded to obtain estimates on furnishings and replacements and redecorating provided for in said agreement."
In part one of the plaintiff in error's brief, under the heading "Statement of Facts," is to be found the following: "The one issue, as we understand it, before this court is whether or not there was such part performance of the oral agreement between plaintiff and defendant as would take the case out of the rule of the statute of frauds so as to become the basis of an action for specific performance." On page 2 of the defendant in error's brief may be found the following: "On page 8 of plaintiff's brief it is stated that there is only one issue involved, that is, whether the acts performed by plaintiff took the case out from under the statute of frauds. We admit that was the ground upon which the court decided the case; but we deny that plaintiff ever proved that a full, complete, specific agreement has been completed between the plaintiff and the defendant, and if that point was not established by indubitable evidence, then the judge was right in refusing specific performance, even though the reason is . . different [from the] one . . which the court gave."
To be available as a defense, the statute of frauds must be pleaded. Tift v. Wight, 113 Ga. 681 ( 39 S.E. 503). Where suit is brought to compel specific performance of a parol contract which under the statute must be in writing, and no facts are alleged to bring the case within any of the exceptions to the statute of frauds, a demurrer on that ground raising such a defense is available to the defendant without filing a special plea to that effect. Edwards v. Trustees of the Baptist Church, 147 Ga. 15 ( 92 S.E. 531). In view of the foregoing statements quoted from the briefs, we will not critically examine that part of the defendant's demurrer which is quoted in the foregoing statement of facts, but will treat it as counsel have treated it, to wit, as effectually presenting the defense of the statute of frauds. The evidence which forms the basis of the first exception is set forth in the foregoing statement of facts. If it illustrated or tended to illustrate any part performance of the contract, it was admissible. If it did not, the plaintiff in error has no right to complain. The sole purpose in offering it, we apprehend, was to show part performance of the contract. It was ruled in Graham v. Theis, 47 Ga. 479, that the part performance, making an exception, must be a part performance of the contract, and the doing by either party of some independent act, not a part of the contract, does not become a part performance because the doer was led so to act by his belief that the parol contract would be performed by the other party. To the same effect, see Giradot v. Giradot, 172 Ga. 230 ( 157 S.E. 282), and cit. Under the statute of frauds, contained in our Code, § 20-401, this contract is required to be in writing, since it purports to create the relation of landlord and tenant for a longer time than one year. Byrd v. Piha, 165 Ga. 397 ( 141 S.E. 48). Is it shown that there has been part performance? We pass over for the moment another question, as to whether, even had there been part performance, it was such as to render it a fraud by the party refusing to comply if the court did not compel a performance. We are met at the threshold with the contention raised by the demurrant that the petition shows no part performance of the contract, and the further insistence that the evidence relied on by the plaintiff in error to show part performance falls short of its accomplishment. If both of those positions be maintained, the judgment must be affirmed, without investigating the other question, raised by the pleadings, which the trial judge himself did not consider, to wit, whether, under the showing made, there had been any oral contract.
By reference to that part of the preceding statement of facts wherein is set forth paragraph 6 of what is denominated "special stipulations" in the contract, which the plaintiff says Candler agreed to, it will be seen, first, that the lessee, who is the plaintiff in error, is "immediately upon the execution of this lease authorized to spend" certain amounts for certain things. The complaint of the petitioner is that the lease was never executed. Secondly, the lessee "is hereby authorized to spend whatever in his opinion is reasonably needed to render the building and equipment reasonably usable and suitable for a hotel business." There is no allegation in the petition that the items named in the latter part of paragraph 6 were those which, in the opinion of the lessee, were reasonably needed to render the building and equipment usable and suitable for a hotel business. Lastly, it will be noted further that, in paragraph 6, it is stated that "the immediate improvements contemplated are: the replacing or repairing of the heating plant; the redecorating of the lobby; the refurnishing or renovating of the furniture in the lobby; the redecorating of the dining room; the replacing or renovation of guest-room chairs where needed." The evidence offered, and excluded, did not cover any of these specific items. The plaintiff's purchase of the things set out in paragraph 9 of his petition are not the things mentioned in the clause next-above quoted, and as aforestated, there is no allegation in the petition which would bring them under the first clause of item 6, because there is no allegation that any or all of these specific things were, in the opinion of the lessee, reasonably needed.
In support of the contention of the plaintiff in error that the averments of the petition allege, and the evidence excluded shows, such part performance of the contract as to take the case without the statute, Bryan v. Southwestern Railroad Co., 37 Ga. 26, is relied on. As pointed out in the opinion in Brunswick Grocery Co. v. Lamar, 116 Ga. 1, 7 ( 42 S.E. 366), the petition in the Bryan case alleged acts which indisputably and as matter of law constituted part performance of the contract sued on, not merely independent acts done under the belief that the oral contract would be performed. There, the verbal agreement was to purchase 40,000 crossties at a named price, and it was averred that in pursuance of the contract some 40,000 crossties had already been cut and delivered. Rosser v. Harris, 48 Ga. 512, is also relied on. The oral contract there involved was made in November, 1865, for the rent of a plantation for the year 1866 in consideration of the tenant's paying the taxes on the land for the year last named. In pursuance of the contract, he went into possession and cultivated the place for the year 1866. Afterwards, the heirs of the owner sought to repudiate the contract and to compel the tenant to pay the proved value of the rent of the land. It was held that this could not be done, because, the tenant having gone into possession and cultivated the land, as the two had orally agreed, this was such part performance as to take the contract without the operation of the statute of frauds. Counsel cite a number of other cases along the same line, all of which have been examined. They merely give application to the rule that part performance of the contract, that is, performance of something by one of the contracting parties, which under the terms of the agreement was contracted to be done, may be sufficient to take the case without the statute. The ruling now made in no way infringes upon that rule. The proposition which forms the basis of the present decision is that anything done which is outside the limits of the contract, and which did not enter into the consideration of the agreement between the parties, is insufficient to cause the case to fall within the exceptions to the statute. Compare Brunswick Grocery Co. v. Lamar, supra.
Judgment affirmed. All the Justices concur.
ON MOTION FOR REHEARING.
In a motion for rehearing counsel for the plaintiff in error have earnestly and ably reargued their case, insisting that the acts done were sufficient to take the agreement without the statute of frauds. The entire record, the briefs, and the authorities therein cited, and others as well, have been re-examined. In our opinion the only room for argument arises from the allegation in the petition that, under the stipulation in the lease agreement, the "lessee shall carry also sufficient liability insurance to protect the owner from any liability to any one for injuries of any sort that may happen on the premises for which owner might be liable, and shall furnish lessor with proper certificate of such insurance;" and that the petitioner "renewed its liability and compensation and hold-up insurance policies on said business for a period of another year." On this subject, the proof was that "the plaintiff's liability insurance, compensation insurance, and hold-up insurance all expired . . on March 14, 1944," and "the manager of plaintiff did renew said policies of insurance" for another year. If, in the absence of a special demurrer, the court should construe the latter-quoted words as showing a compliance with the obligation contained in the clause first quoted, and as a part performance of the contract, still, the judgment dismissing the suit was correct. "The part performance referred to in the statute is something substantial and is generally essential to the performance of the contract." Bentley v. Smith, 3 Ga. App. 242 ( 59 S.E. 720). It is not every part performance of the contract that will take it without the statute of frauds. It is only where there has been such part performance as would render it a fraud of the party refusing to comply if the court did not compel a performance. "Specific performance of a contract (if within the power of the party) will be decreed, generally, whenever the damages recoverable at law would not be an adequate compensation for the nonperformance." Code, § 37-801. Section 37-802 declares in part: "The specific performance of a parol contract as to land shall be decreed, if the defendant admits the contract, or if it be so far executed by the party seeking relief, and at the instance or by the inducement of the other party, that if the contract shall be abandoned he can not be restored to his former position."
It is not averred that the owner is insolvent. If he is able to respond in damages for a breach of this covenant, the complainant is not remediless. The mere breach of a covenant, without more, is not a fraud under such circumstances. Where the law requires a contract to be in writing, a court of equity will enforce an agreement otherwise made only where "the parties have so acted upon and by virtue of the contract as that it would be a fraud to permit the defendant to repudiate it." Haisten v. Savannah c. R. Co., 51 Ga. 199; Nowell v. Monroe, 177 Ga. 648, 652 ( 171 S.E. 136); Neely v. Sheppard, 185 Ga. 771, 776 ( 196 S.E. 452). See also Burnett v. Blackmar, 43 Ga. 569.
The owner of certain land and timber entered into a parol contract with another, whereby the latter was to begin immediately to cut the timber at a designated price to be paid therefor. It was held: "The fact that the purchaser of the standing trees in the instant case had expended money in procuring hands whereby to cut and remove the trees, and had purchased an ox with which to move the trees, and had also cut a part of the trees upon the land in question, was not such part performance as took the contract out of the operation of the statute. For, if by the employment of hands and the purchase of the ox, injury was incurred for which the owner of the land is liable, the purchaser could be compensated by damages." Baucom v. Pioneer Land Co., 148 Ga. 633 (2) ( 97 S.E. 671). It would seem that the cutting of the trees was a part performance of the contract, but this court enjoined the purchaser from entering upon the lands and cutting the timber. In doing so, it must have been held that it was not such part performance "as would render it a fraud of the party refusing to comply." So here it must be ruled that, if the securing of liability insurance to protect the owner was a part performance of the contract, it was not such as that the refusal of the owner to comply with the oral contract would render it a fraud on the other party. For that expenditure he can be fully compensated in damages, and where such is the case, he does not need the equitable remedy of specific performance. In Justices of the Inferior Court v. Croft, 18 Ga. 473, it was ruled: "When there is a mere breach of a personal contract . . and it is not shown that irreparable injury will result, unless the contract be specifically performed, a court of equity will not decree such specific performance."
It is only in those instances, where, when land is involved, the agreement was in writing, that it has been held that, if the agreement is full and fair in its terms and capable of being enforced, equity will decree specific performance, whether damages be adequate or not. Forsyth v. McCauley, 48 Ga. 402, 404. As to parol contracts involving land, the governing rule has been laid down as follows: "Equity will decree the whole performance of an agreement which is within the statute of frauds, whenever there has been such a part performance as that the whole performance is necessary to prevent a fraud; and the whole performance is necessary to prevent a fraud in a case where the parties have proceeded so far on the faith of the agreement, that they can not be restored to their statu quo nor adequately compensated in damages by avoiding the agreement and leaving them to their action for damages." Chastain v. Smith, 30 Ga. 96.
So, regardless of whether or not the allegations in the petition, that the contract required the lessee to carry liability insurance to protect the lessor from legal liability, and the further allegation that the complainant renewed its liability, compensation, and hold-up insurance on said business, show that an act was done under the contract, this is not a sufficient reason for a reversal of the trial court in sustaining the demurrer.
Rehearing denied.