Summary
In Phillips Petroleum v. Taggart, 271 Wis. 261, 73 N.W.2d 482 (1955) a lessee's conduct in remaining in possession and paying rent as specified in a lease for two and one-half years was "sufficient communication of acceptance" despite the absence of written acceptance as required by the lease.
Summary of this case from T.M. Oil Co. v. BarnesOpinion
November 7, 1955 —
December 6, 1955.
APPEAL from a judgment of the circuit court for La Crosse county: LINCOLN NEPRUD, Circuit Judge. Affirmed.
For the appellant there were briefs by Crosby Esch of La Crosse, attorneys, and Spohn, Ross, Stevens, Lamb Pick of Madison of counsel, and oral argument by William H. Spohn.
For the respondent there was a brief by Hale, Skemp, Nietsch, Hanson Schnurrer of La Crosse, and oral argument by Quincy H. Hale.
Summary judgment. This action was commenced on October 19, 1954, by Phillips Petroleum Company, a Delaware Corporation, plaintiff (hereinafter referred to as the "company"), against Harry Taggart of La Crosse, Wisconsin, defendant, for specific performance of an option to convey to the plaintiff company certain real estate in the city of La Crosse. After issue had been joined, each party moved for a summary judgment. The court by order denied the defendant's motion for summary judgment but granted the motion of the plaintiff. On April 22, 1955, judgment was entered directing specific performance of the option. The defendant Taggart appealed from the judgment.
The complaint alleges in substance that Mr. Taggart on June 26, 1951, by written instrument leased the real estate in question to the company for a period of five years commencing July 1, 1951. Among other provisions, the lease contained an option granting to the company the privilege to purchase the real estate at any time during the term of the lease at a price of $20,000. It was further alleged that on June 22, 1954, the plaintiff exercised the option by giving due notice to Mr. Taggart, but that Taggart refused to comply, and refuses to convey the property. It was averred that such refusal is inequitable, and that the plaintiff has no adequate remedy at law.
Appended to the complaint and made part thereof by reference is a copy of the lease which contains the option. In the complaint there is also assertion that a short-form condensation of the lease was recorded in the office of the register of deeds of La Crosse county on August 15, 1951.
In his answer, the defendant Harry Taggart denied that there is an existing option under which he is bound to convey the real estate to the company. He admitted his refusal to convey. He alleged further that on or about June 26, 1951, he executed instruments (copies of the lease with option) and caused them to be delivered to the company, but that the company never advised him that it had executed the instruments on its own behalf. He asserted that the so-called lease was nothing more than an offer, the acceptance whereof (if it was accepted) was never communicated to him. He conceded that the memorandum form of lease was recorded, but he alleged that the company did not advise him of the recording, and that he did not learn of it until after the date of recording.
As a separate defense Taggart in the answer alleged that if the offer was accepted by the company's execution of the instruments forwarded to it on his behalf, such acceptance was not earlier than July 17, 1951, which was after a reasonable period of time had expired within which it ought to have been accepted.
In his answer Mr. Taggart also asserted that the company had occupied the premises under lease and extension thereof from 1935 to July 1, 1951; that such lease was not extended for a term of years after its expiration on July 1, 1951; and that the option to purchase contained in said lease expired on July 1, 1951.
The answer further alleged that in the negotiations leading up to the offer of rental of the premises, representatives of the company orally agreed to pay to Taggart amounts which would represent any increase in real-estate taxes assessed against the property after 1950; that the assessments were increased; and that the company neglected and refused payment of same on the ground that such promise was not made. Taggart asserted that it was not until he was furnished with a copy of the lease in the form of an exhibit to the complaint, that he recalled that a provision for such tax payment had been written into the lease. In defense, Taggart pleaded want of equity on the company's part in failing to present him with a copy of the lease while denying that an agreement to pay increased assessments had been incorporated in the lease and also for breach of the lease, if it be held that a lease existed, such breach terminating the lease as of the date of the first failure to pay additional taxes.
In support of the plaintiff company's motion for summary judgment there was presented an affidavit of Q. H. Hale, one of the attorneys for the company, whose personal knowledge of the facts asserted in the affidavit allegedly was based upon documents referred to in the affidavit, and of record in court, and also upon the adverse examination of employees of the company and of the defendant Taggart.
In his affidavit Attorney Hale alleged that the defendant, Taggart, was the owner of the real estate (1322 Winnebago street, La Crosse) in question and that on December 4, 1935, he leased the same to the plaintiff company for ten years from date of the company's erection of filling-station facilities thereon; that the facilities were completed and the term of the lease commenced on July 1, 1936; that the lease included an option permitting extension for an additional five years, or to July 1, 1951; that the lease also included an option which privileged the company to purchase the real estate for $20,000; that an extension of the lease until July 1, 1951, was executed and the option to purchase was retained in the extension agreement; that pursuant to the terms of the lease the company was obligated to pay rentals of $125 per month from July 1, 1936, to July 1, 1946, and paid the same; that in the period July 1, 1946, to July 1, 1951, the rental payments under the extension agreement were $150 per month, which were paid; that prior to July 1, 1951, Taggart consulted with representatives of the company at the Minneapolis office of the company, and orally agreed with the company to a lease of the property for five years commencing July 1, 1951, at a rental of $175 per month; that the proposed lease contained an option in favor of the company for the purchase of the property for $20,000; that the oral agreement was reduced to writing; that the written form of the lease was typed at the Minneapolis office of the company in the form of an original and two carbon copies, which were taken by Taggart to La Crosse, and where Taggart, after consulting his attorney, Fredric Crosby, signed and acknowledged the same; that thereafter Attorney Crosby sent the copies of the lease to the Minneapolis office of the company, from where they were sent to the home office of the company at Bartlesville, Oklahoma, for signature, and where they were duly signed on behalf of the company on July 17, 1951; that the original of the copies was retained by the company at its home office, and the other signed copies were sent to the Minneapolis office of the company; that in the normal course of business, the Minneapolis office of the company would retain one of the carbon copies and send the other to Taggart; that only one copy appears in the files of the Minneapolis office; that there is no copy of letter of transmittal to Taggart of the other copy of the executed lease, and that the company does not know what became of the other copy of the executed lease; that on August 10, 1951, the company sent to Taggart its check for $350 in payment of the rental for the months of July and August, 1951, at $175 per month; that the check was cashed by Taggart; that thereafter each month the company sent to Taggart a check for $175 to cover the rental, and that the checks for the same were cashed by Taggart; that on June 22, 1954, the company executed its option to purchase the real estate by sending a registered-mail letter to Taggart to such effect; that this action was commenced on October 15, 1954, and that on October 20, 1954, the company mailed to Taggart a written notice of the deposit with the clerk of circuit court of La Crosse county of the sum of $20,000, representing the purchase price; that Taggart refused and still refuses to convey the real estate to the company; that the action is brought to compel Taggart to specifically perform the obligations under the option, and to convey the real estate to the company, and that the company is entitled to a deed for the property; that affidavit believes there is no defense to the action.
The affidavit was supplemented with exhibits attached thereto regarding various of the matters set forth in the affidavit.
In opposition to the plaintiff company's motion for summary judgment and in support of his own motion, the defendant Harry Taggart presented an affidavit wherein in substance he asserted that he was the owner of the property at all times since 1935; that under a written lease dated December 4, 1935, he rented the property to the company on condition that it erect a filling station before the lease became effective; that the filling station was constructed and the lease became effective July 1, 1936; that the term of the lease was for ten years with extension privilege of five additional years, and that the company enjoyed possession of the premises for the entire fifteen-year period; that on or about May 22, 1951, the affiant received a letter by registered mail that the plaintiff was exercising its option to purchase the property; that thereafter he conferred with his attorney, Fredric W. Crosby, who communicated with the company on May 31, 1951, to the effect that Taggart refused to sell the property for the reason that the company had breached the lease and the options therein; that following the exchange of letters affiant personally conferred with representatives of the company at its Minneapolis office where he requested that the monthly rentals in a new lease be increased over what had been previously paid, and that the company pay any increase of the real-estate taxes; that the company's representative advised him that although the company was unwilling to incorporate the provision respecting payment of increase of taxes in the new written lease, it would agree orally to pay the same; that a memorandum of lease was prepared by the company together with a short-form leasing agreement, all of which were presented to affiant, but which he would not then sign, he desiring to have his attorney first approve of same; that thereafter he submitted the forms to his attorney, signed them, and that the attorney on June 26, 1951, forwarded them to the Minneapolis office of the company with a letter directing attention to the Wisconsin recording requirement which provides that the names of signators be typed or printed underneath written signatures before an instrument may be accepted for recording, and suggested compliance "when the execution of the lease is completed;" that in said letter Attorney Crosby also stated "We would be pleased to receive our copy when the same is completed;" that on information and belief the Minneapolis office of the company forwarded the leases to the company's home office in Oklahoma; that thereafter the affiant heard nothing from the company in the matter until early in October, 1951, when (in so far as he is able to determine from his records) he received drafts for $850 drawn on the company which purported to cover the rent for June, 1951, in the amount of $150 and for each of the months July, August, September, and October, 1951, at $175 per month; that ". . . affiant knew that no lease would be binding upon the plaintiff [company] unless such lease had been signed by him [affiant] and accepted by signature by the proper officers of the plaintiff;" "that . . . affiant was not entirely pleased with the terms and conditions of the suggested leasing form as submitted under date of June 26, 1951, especially the option terms thereof, and that he had been more or less bludgeoned into making the offer of the June 26th lease by the threat of the plaintiff to invoke the option clauses in the earlier lease;" "that he was familiar with month-to-month leases, having rented property both as a landlord and a tenant under such circumstances, and that he concluded that if the plaintiff wished to continue its tenancy on a month-to-month basis, it would be satisfactory with him, and that he owed no duty or obligation nor was he anxious to urge the Phillips Petroleum Company to accept his offered lease."
Harry Taggart in his affidavit also referred to negotiations between the company and himself in the period 1946 to 1951 with reference to enlarging the station and acquiring adjacent property, which arrangement, however, was not consummated; that he received rentals from the company until the summer of 1953; that there was further conversation between a representative of the company and himself regarding acquisition of adjacent land and the enlarging of the filling station; that there were substantial increases of real-estate taxes for the years 1950 to 1953, inclusive; that the company owes him $150 for three pumps removed from the premises; that the land has appreciated in value since 1935, and that the company has subleased the premises for $300 per month; that in May, 1954, in Minneapolis he advised a representative of the company that the taxes had been increased, and that he demanded payment therefor pursuant to the verbal agreement; that he was told that no such agreement had been made, and that the company would not pay the same; that upon his return from Minneapolis he conferred with Attorney Crosby and discovered that neither he nor the attorney had ever received a copy of the lease; that thereafter affiant learned that the short-form lease had been recorded, but that said form contained no information as to the terms and conditions of the alleged lease; that at no prior time had he or his attorney been informed that the leasing offer submitted by mail on June 26, 1951, had been accepted by the company; that on or about June 22, 1954, he received by registered mail a notice from the company purporting to exercise the option to purchase as contained in the lease offer of June 26, 1951, and wherein request was made for conveyance of title; that affiant refused to comply and that the present action resulted; that upon advice of counsel he believes that the pending action has no merit.
Appended to the above affidavit are various exhibits consisting of documents and letters referred to therein.
In support of the defendant Taggart's motion there was also presented the affidavit of Attorney Fredric W. Crosby which in the main substantiated the statements contained in Mr. Taggart's affidavit in relation to Attorney Crosby's representation of Taggart in the matter.
Also presented in support of the plaintiff's motion was an affidavit of M. I. Lynne, one of its employees, wherein there was denial that $850 was sent to Taggart in October, 1951. Affiant stated that under the lease of June 26, 1951, a check dated August 13, 1951, for $350 had been sent to Taggart in payment of rent for June and July, 1951, and that thereafter checks were sent to him in amount of $175 monthly to cover the current monthly rent to date. Affiant stated that no demand had ever been presented by Taggart to the company for additional taxes, rentals, or for money due for pumps. Affiant further stated that in the adverse examination one of the attorneys for the company made formal offer to Taggart to pay to him any amount due for increased taxes or for any other amount called for in the lease, but that Taggart refused to accept any such payment. Affiant also alleged that in 1953 the company expended in excess of $1,950 for painting the premises and installing new gasoline pumps.
There are no substantial issues of fact under the pleadings and the affidavits presented in connection with the motions for summary judgment.
The entry of summary judgment is proper where the issues presented on the motion for such judgment are legal rather than factual. Des Jardin v. Greenfield (1952), 262 Wis. 43, 50, 53 N.W.2d 784.
It is the appellant's contention that the trial court erred in granting the plaintiff's motion for summary judgment and in denying the defendant's application for such judgment. Appellant's position is based principally on grounds that there was no contract between the parties sufficient to satisfy the statute of frauds, and that the defendant is not estopped from asserting the nonexistence of a binding agreement.
The respondent company maintains that the pleadings and affidavits irrefutably indicate the existence of a binding written contract between the parties, and that summary judgment directing specific performance of the option to convey the land, was proper.
It is undisputed that the written lease in question was signed by Mr. Taggart in triplicate on June 26, 1951, at which time he also signed in triplicate a short-form condensation of the lease. The six signed documents were sent on Taggart's behalf to the Minneapolis office of the company from where they were forwarded to the company's home office in Oklahoma, and at which latter place they were signed by company officers on July 17, 1951. Neither Taggart nor his attorney received a copy of the lease from the company after the company officers had signed it. The short form of the lease was recorded in the office of the register of deeds of La Crosse county on August 15, 1951. Although the company did not advise Taggart of the recording of the lease, he learned of the recording subsequently. For two and one-half years after the commencement of the term of the lease Taggart accepted rentals from the company monthly at the rate specified in the written lease, the amount of which was greater than that provided in the earlier written lease.
Harry Taggart maintains that the transmittal to the company of the forms of lease signed by him constituted only an offer to lease on the terms and conditions therein stated; that the offer could not ripen into contract until accepted by the company and until notice of such acceptance was communicated to him; that to satisfy the statute of frauds, acceptance was required to be in writing; that no notice of acceptance in writing was given to him.
With respect to his contention that he is not estopped from asserting the nonexistence of a binding agreement, Taggart maintains that only a valid oral lease for periodic tenancy existed; that the possession of the premises by the company and the acceptance of rent by him is consistent with the terms of the oral lease, and may not be regarded as sufficient part performance of a written lease so as to justify a decree of specific performance; and that being entitled to the rents under the oral contract, there can be neither estoppel in pais or quasi estoppel.
That the parties had not intended an oral lease is clear from their acts in causing their agreements arrived at in Minneapolis shortly before July 1, 1951, to be then and there reduced to writing; and when Mr. Taggart took with him to La Crosse for the scrutiny of his attorney, the forms (copies of the written lease) which had been prepared, and which he subsequently signed and caused to be forwarded to the company. Paragraph 18 of the written lease specifically provides:
"This instrument incorporates all of the obligations of the parties hereunder and there are no oral agreements or understandings between the parties concerning the property covered by this lease agreement."
The crucial question presented is whether the written lease is void for failure of the lessee to have communicated to the lessor its acceptance of the written lease.
Taggart's signing of the lease and the delivery of the signed copies to the company constituted an offer to lease the premises upon the terms and conditions stated. Acceptance was essential before the offered lease could become binding. Taggart does not deny that the lease was signed by the company. Such signing constituted an acceptance. Taggart maintains, however, that since the acceptance was not communicated to him, the written lease never became operative. He argues that the portions of the lease within the purview of the statute of frauds are void because of the failure of the company to have advised him of the acceptance. His position is that since he received no knowledge from the company of its acceptance until July 22, 1954, he cannot be charged with knowledge of it. He urges that since the written lease never became effective, the company held possession under an arrangement not set down in written form, in other words under an oral lease, and that although the option to purchase was within the statute of frauds and not enforceable, nevertheless it did not affect the valid covenants of occupancy and rent paying. In support of his position Taggart relies principally on Helmholz v. Greene (1921), 173 Wis. 306, 181 N.W. 221, and Wisconsin M. P. Co. v. Rusk Mfg. Co. (1922), 177 Wis. 155, 189 N.W. 138, in both of which cases it was ruled that one may not sign a memorandum of acceptance, hold it in his possession, and at his option treat it as the closing of a contract, or not do so. However, it is also the rule that where the offer of a landlord is neither accepted nor declined in terms, but the tenant proceeds to occupy and use the premises, such action on the part of the tenant will be construed as an acceptance of the terms of the lease previously offered. 51 C. J. S., Landlord and Tenant, p. 812, sec. 208 b.
In Pick Foundry, Inc., v. General Door Mfg. Co. (1952), 262 Wis. 311, 55 N.W.2d 407, the lessor forwarded copies of the written lease to the lessee who made material alteration therein and returned them to the lessor. The court determined that such action constituted a rejection by the lessee of the lessor's offer and that such action resulted in a counteroffer, and that the conduct of the lessor in retaining and immediately cashing a check for $700 which was inclosed with the counteroffer was an unequivocal tender of the first month's rent under the lease, and was an acceptance of the counteroffer. In its opinion the court in that case quoted with approval from 31 C. J. S., Estoppel, p. 347, sec. 109:
"Where one having the right to accept or reject a transaction takes and retains benefits thereunder, he ratifies the transaction, is bound by it, and cannot avoid its obligation or effect by taking a position inconsistent therewith."
In M. Samuels Co. v. Zorbas (1931), 182 Minn. 345, 234 N.W. 468, it was held that an acceptance of a counteroffer in a lease need not be made by express condition, nor is it presumed, but that it may be implied in fact from circumstances. There too, a change had been made in the counteroffer which the court held to be binding in view of the retention of possession of the premises.
There may be acceptance by estoppel. In Morris F. Fox Co. v. Lisman (1932), 208 Wis. 1, 13, 237 N.W. 267, 240 N.W. 809, 242 N.W. 679, it was said:
". . . if the conduct of the offeree is such as to lead the offeror to believe that the offer has been accepted, there may be an acceptance by estoppel. 1 Page, Contracts, sec. 161."
One cannot accept the benefits of a contract over a long period of time and then successfully contend that the contract is not binding. The following rules are applicable:
"One of the most familiar applications of the rule relating to the acceptance of benefits arises in the case of contracts. It has been repeatedly held that a person by the acceptance of benefits may be estopped from questioning the existence, validity, and effect of a contract. This rule has been applied where the objection was made . . .; that the contract was not delivered." 21 C. J., Estoppel, p. 1209, sec. 211.
"But `the doctrine of equitable estoppel is frequently applied to transactions in which it is found that it would be unconscionable to permit a person to maintain a position inconsistent with one in which he has acquiesced or of which he has accepted any benefit.'" Baierl v. Riesenecker (1930), 201 Wis. 454, 461, 227 N.W. 9, 230 N.W. 605.
"As a general rule, by accepting benefits a person may be estopped from questioning the existence, validity, and effect of a contract. A party will not be allowed to assume the inconsistent position of affirming a contract in part by accepting or claiming its benefits, and disaffirming it in part by repudiating or avoiding its obligations, or burdens." 31 C. J. S., Estoppel, p. 350, sec. 110.
"Generally speaking, a party will not be permitted to occupy inconsistent positions or to take a position in regard to a matter which is directly contrary to, or inconsistent with, one previously assumed by him, at least where he had, or was chargeable with, full knowledge of the facts and another will be prejudiced by his action." 19 Am. Jur., Estoppel, p. 650, sec. 50.
Under the circumstances here it appears that Mr. Taggart knew or ought to have known that the company accepted his offer when, for two and one-half years after the commencement of the lease, the company remained in possession of the premises and forwarded monthly rental remittances to him at the rate specified in the new lease (in amount which represented an increase over the monthly rentals of the prior written lease) and which rental remittances he retained. By this conduct there was sufficient communication to Taggart of the company's acceptance of the written lease. He was estopped from asserting that said lease in its entirety was not binding upon him.
It is proper for a court to apply the doctrine of equitable estoppel on a motion for summary judgment. In Virkshus v. Virkshus (1947), 250 Wis. 90, 96, 26 N.W.2d 156, where judgment of foreclosure of a mortgage was entered on a motion for summary judgment, the court said:
"Dominic was estopped from asserting rights against the mortgagee under this deed because his rights under it were expressly made subject to the mortgage, and he was estopped from asserting rights in the face of the deed to Rozalia because that deed as above shown was executed in fraud of his creditors."
The appellant challenged the validity of the respondent's affidavits presented in connection with its motion for summary judgment. It is contended that the affidavits do not appear to have been based on personal knowledge of the facts as required by sec. 270.635(2), Stats. The affidavit of M. I. Lynne appears to be based on personal knowledge of the facts contained therein. The affidavit of Attorney Hale is based on personal knowledge derived from the written instruments referred to, the admissions in the answer, and the admissions of persons at their adverse examinations. The material portions of Attorney Hale's affidavit are not controverted, but in fact are substantiated by statements in the affidavits presented on behalf of appellant.
In Commerce Ins. Co. v. Merrill Gas Co. (1955), ante, p. 159, 72 N.W.2d 771, it was indicated that an attorney's affidavit based on knowledge of statements adduced at an adverse examination was proper in connection with a motion for summary judgment. In the instant situation the knowledge by Attorney Hale of matters set forth in his affidavit and based on statements of witnesses at adverse examinations, admissions contained in the answer, and content of instruments of record, was sufficient to satisfy the requirements of personal knowledge as provided in sec. 270.635(2), Stats. Appellant's contention in this regard
Appellant also contends that the failure of the respondent to have paid the increase of taxes for the three years of the written lease bars this action for specific performance. The written lease provides that there shall be no forfeiture of it for nonpayment of rent or part thereof unless the lessor shall have notified the lessee of the default, and payment shall not have been made within twenty days after such notice. The payment of the increase in. taxes was a part of the rental. The provision for payment of the increased taxes was inserted in the written lease at the instance of Taggart. At the time referred to in his affidavit, when he inquired about the payment for such increase and was advised that no such obligation existed, he was charged with knowledge of the existence of the provision in the lease relating to payment of increased taxes. At no time before this litigation was commenced did Taggart advise the lessee in writing of any claimed default with respect to the payment of taxes. When the respondent company was informed of the default after the commencement of the action, an offer was made on its behalf to remit an amount equal to the tax increase, which the appellant refused to accept. The claim of a breach of the lease under these circumstances manifestly has no merit.
There were no substantial issues of fact in the cause. The issues of law were correctly determined.
By the Court. — Judgment affirmed.