Opinion
Tarter, Tarter & Tiedt, James E. Tarter, Jon R. Sell, Colorado Springs, for plaintiffs-appellants.
Geddes, Sparks & MacDougall, P.C., Kenneth Sparks, Colorado Springs, for defendant-appellee.
ENOCH, Judge.
Paul and Jeannie Kipp, plaintiffs, appeal from a judgment in favor of defendant General Growth Properties in an action seeking rescission of a shopping center lease. We affirm.
Plaintiffs own and operate florist shops in Colorado Springs, Colorado. In 1971, Mr. Kipp telephoned defendant at its home office in Des Moines, Iowa, to inquire about renting space in a new shopping center in Colorado Springs owned by defendant. Following this telephone call, Mr. Bergeron and Mr. Cekuta, representatives of defendant, met with Mr. Kipp in Colorado Springs to discuss his requirements. At a subsequent meeting, Mr. Cekuta presented to Mr. Kipp a form-type letter of intent which stated that exclusive uses would not be granted. According to Mr. Kipp's testimony, he told Cekuta he wanted an exclusive lease. Cekuta allegedly replied that, because of difficulties with the Federal Trade Commission, an exclusive lease could not be granted in writing, but he assured Kipp that space would not be rented to another florist. Kipp then executed the letter of intent. A proposed lease, which did not contain an exclusive use clause, was mailed to Kipp from Des Moines.
After receiving the proposed lease, Kipp hired an attorney to draft an addendum to the lease providing that defendant would not rent space in the shopping center to other florist shops. The lease and addendum executed by Mr. Kipp were mailed to Mr. Stanley Richards, president of defendant, in Des Moines. The addendum, unexecuted by lessor, was returned to Ceketa, who personally delivered it to Kipp. According to Kipp, Cekuta told him that the addendum could not be accepted, but reiterated that a lease would not be given to another florist. Shortly thereafter, Kipp received a letter from Mr. Richards stating that the addendum could not be accepted and requesting Mrs. Kipp's signature on the lease. Mrs. Kipp then executed the lease, which was returned to Richards.
In 1973, Kipp learned that defendant had rented space in the shopping center to a competing florist. He brought this suit, alleging that defendant was bound by an oral exclusive use agreement, and that the oral agreement had been breached. Prior to trial, plaintiffs elected to pursue a rescission remedy.
The trial court found that the oral representations of defendant's agents related expressly to matters included within the written lease, were the subject of negotiations between the parties, and therefore, as a matter of law, were merged into the written agreement. In addition, the court held that plaintiffs' reliance on any oral representations was not justified in light of Mr. Richard's written rejection of plaintiffs' proposed addendum.
On appeal plaintiffs contend that the court erred in holding that the oral representations did not constitute an independent collateral agreement. They also raise issues relating to the apparent authority of defendant's agents to enter into agreements that are binding on defendant. We need not discuss the agency issue since, even if the agents did have the power to obligate defendant, the oral agreement had no legal effect.
The parol evidence rule, which is a substantive rule of contract law as well as a rule of evidence, denies binding effect to prior to contemporaneous oral agreements relating to the subject matter of an integrated writing. Restatement of Contracts s 237; See Creek v. Lebo Investment Co., 85 Colo. 357, 276 P. 329. However, an oral agreement is not superseded or invalidated by a subsequent integrated writing if the oral agreement (1) is not inconsistent with the terms of the integrated contract and (2) is 'such an agreement as might naturally be made as a separate agreement by parties situated as were the parties to the written contract.' Restatement of Contracts s 240; Stevens v. Vail Associations, Inc., 28 Colo.App. 344, 472 P.2d 729.
The lease executed by the parties contains no terms which expressly prohibit exclusive uses. Therefore, the oral agreement asserted by plaintiffs is not inconsistent with the writing. However, an exclusive use provision in a shopping center lease is clearly a matter which is customarily embodied in the written lease. Such a clause is an important element in the relationship between the parties and has significant commercial ramifications for both lessor and lessee. Mr. Kipp's actions indicate that he understood that an exclusive use provision should be contained in the written lease. He submitted a proposed addendum to that effect, which was rejected in writing by the president of defendant. After receiving the rejection, Kipp did not seek an explanation of that action, nor did he make any further attempt to negotiate written approval of an exclusive use provision. He did, however, complete the execution of the lease and take possession of the premises. Under these circumstances, the trial court was correct in holding that the alleged contemporaneous oral agreement had no binding effect on defendant.
Judgment affirmed.
SILVERSTEIN, C.J., and COYTE, J., concur.