Opinion
16523.
MARCH 16, 1949. REHEARING DENIED MARCH 28, 1949.
Cancellation, etc. Before Judge Almand. Fulton Superior Court. November 16, 1948.
Fine Efurd and Noah J. Stone, for plaintiff.
Robert P. McLarty and John K. Calhoun, for defendant.
"A mere proposition or offer, based on no consideration, though continuing in character, or though stated to be subject to acceptance until a given time, may be withdrawn before actual acceptance or assent thereto by the other party."
No. 16523. MARCH 16, 1949. REHEARING DENIED MARCH 28, 1949.
On October 16, 1945, R. A. C. Realty Company filed its petition against W. O. U. F. Atlanta Realty Corporation, in Fulton Superior Court, seeking to cancel what purported to be a lease on the property referred to as the Cameo Theater Building, at 61 Peachtree Street; said lease being recorded in Deed Book EE, page 632, Clerk's Office, Fulton Superior Court.
It is alleged: On July 18, 1945, Ward Wight, of Ward Wight Realty Company, contacted Ben Massell of the plaintiff company, stating that he, Ward Wight, represented Robert Velaise, of New York, and that Velaise desired to lease the property for a term of years, beginning after the expiration of the present lease. On July 20, 1945, Ward Wight presented a certain lease agreement between the plaintiff and an unnamed corporation as lessee, no name appearing as to who the lessee was. Said lease contract, which was for a period of thirty years, was signed by the plaintiff corporation, delivered to Ward Wight with instructions that it was not to be delivered or released until further advice of the vice-president of the plaintiff corporation. Ward Wight took said lease, and, disregarding the instructions, delivered one of the copies of Velaise, retained the other two copies in his, Wight's, possession, and Velaise, in obtaining the copy from Ward Wight, stated that he desired to allow his attorney to inspect same. On July 26, 1945, the plaintiff delivered to Ward Wight a letter, setting out that no leases were to be delivered and the plaintiff would not lease the premises or enter into any lease agreement with Velaise or any corporation owned or organized by him, and that all negotiations were terminated. The original two copies of the aforementioned lease are in the possession of the plaintiff, and these copies are unsigned by any person as lessee, and the defendant has in its possession the third copy of said lease. On July 27, 1945, three named persons filed an application for a charter in Fulton Superior Court, under the name of the defendant corporation, which charter was granted on July 27, 1945. The defendant, through one of its agents, took the copy of the lease contract referred to, inserted therein as lessee the corporate name, and filed the same in the Clerk's Office, Fulton Superior Court, where it has now been recorded. These acts were done without the authorization of the plaintiff or any of its officers or agents.
At no time has there been any consideration for the execution or delivery of said lease, and the defendant, in filing same and having the lease recorded, places a cloud on the property of the plaintiff. The plaintiff has demanded that the defendant return and surrender the third copy of said lease and demanded a cancellation thereof from the records. To allow said copy of lease to remain uncanceled on the records constitutes a cloud on the title of the plaintiff's property, and it should be surrendered and canceled. The plaintiff is the owner and in possession of the property described, and the instrument sought to be canceled is such as to throw a cloud or suspicion on the plaintiff's title, and said lease may be vexatiously or injuriously used against the plaintiff.
The prayers of the petition were: that the lease contract referred to be surrendered and canceled by the defendant, and upon failure to cancel same, that the court order same canceled by the clerk of the superior court on his records, by appropriate order by the judge of said court; for such other and further relief as the court deems proper; for equitable relief pending final termination of the cause; and for process.
To the petition the defendant filed its answer, in which it admitted that it was a corporation, and that the plaintiff owned the property in question. It denied substantially the other allegations of the petition. It alleged: That the plaintiff verbally agreed to lease the Cameo Theater property to a corporation to be formed by Robert Velaise, upon the terms set out in the lease which was recorded; that Velaise was unwilling to proceed with the organization of the defendant corporation or to go to the trouble and expense of transferring $10,485 to Atlanta, which the lease provided should be deposited with the plaintiff, unless the plaintiff would give Velaise, on behalf of the corporation to be organized, a definite time limit in which to organize said corporation and to obtain said funds; that T. C. Erwin, an associate of Ward Wight, went to the vice-president of the plaintiff corporation, with whom the negotiations were being conducted, and stated these requirements of Velaise, and Ben Massell, vice-president of the plaintiff, agreed verbally in behalf of the plaintiff that Robert Velaise and the proposed corporation could have a firm commitment until 3 o' clock p. m., July 27, 1945, within which to sign the lease, which Massell had already signed on July 20, 1945, said lease being in blank and there being no lessee named therein, and with the verbal understanding that it would become a valid and binding lease as soon as the new corporation had executed it and paid to Ward Wight and Company the guaranty provided therein. When this oral agreement was reported to Velaise, he refused to accept the same without something in writing from Massell, and on July 23, 1945, Ward Wight delivered to Velaise a letter, signed by Massell on behalf of the plaintiff corporation, confirming the verbal agreement heretofore made. Upon this letter, Velaise organized the defendant corporation, had transferred to Atlanta funds to comply with the terms of the proposed lease and to pay the expense in connection therewith.
It is further alleged: That Ward Wight was the agent of the plaintiff and not the agent of the defendant; that the defendant offered to sign the two copies of the lease, which are in possession of the plaintiff, but was not permitted to do so; that the corporation was formed on July 27, 1945; that it inserted its name, in the blank space in the copy of the lease which Velaise had, before 3 o'clock p. m. on said date, tendered the deposit to Ward Wight and then to Massell, and offered to each of them any other sum which either of them might consider to be due under the terms of the lease, which tender and offer was refused. It was agreed by the plaintiff and Velaise that when the corporation was organized, its name was to be inserted in the blank space left in the lease for that purpose. After the plaintiff refused to carry out its alleged agreement and to accept the money due and refused to allow the defendant to sign the other copies of the lease, the defendant did fill in its name and record said lease in the Clerk's office of the Fulton Superior Court. However, at 8:31 o'clock that morning, the plaintiff had already filed for record a lease with Cameo Theater Company covering the same property, which lease was for a period of five years and at a like rental, but dated prior to the time within which the defendant was permitted to secure its charter and sign its lease. The signing and recording of the lease with Cameo Theater Company was a violation of the agreement between the plaintiff, the defendant and its incorporators, who had been conducting its negotiations with the plaintiff on behalf of the proposed corporation.
Copies of the lease were set up, and it is alleged that the lease with Cameo Theater Company was dated July 27, 1945, but was executed prior to that date and before any notice was given to the defendant that the plaintiff intended to withdraw its offer. It was further alleged: that on July 26, 1945, Velaise notified Ward Wight, as agent for the plaintiff, that he, Velaise, intended to exercise his option and to sign the lease within the time allowed; that in the negotiations the defendant acted in good faith; and that it will be irreparably damaged if the plaintiff is allowed to violate its agreement and refuse to abide by the lease and to lease the property to the Cameo Theater.
The defendant denies that there was no consideration for the execution, delivery, or recording of the lease contract, and contends that there was a consideration; and denies that its lease was a cloud on the title to the plaintiff's property, and contends that the plaintiff conveyed to it a valid leasehold interest. The defendant alleges the existence of the Cameo Theater Company lease, its recordation, and that Velaise had transferred to the defendant corporation all of his right, title, and interest in and to any and all agreements, oral or written, had with the plaintiff through its vice-president, Ben Massell.
The prayers of the answer as amended are: that Cameo Theater Company be made a party to the suit; that the lease between the plaintiff and the Cameo Theater be declared null and void and canceled; that equitable relief be denied; and that the lease set out as Exhibit B by the parties be held valid and binding upon both parties, in full force and effect, and that the plaintiff be ordered to perform the terms thereof.
This substantially states the contentions of each of these parties as set up in their pleadings. However, on the trial the defendant voluntarily dismissed Cameo Theater Company as a party to the case.
There was no demurrer filed by either of the parties to the pleadings of the other.
The evidence and stipulation of facts in this case disclose: The plaintiff, R. A. C. Realty Company, is the owner of what will be referred to as the Cameo Theater Building, located in Atlanta, Georgia; and Ben J. Massell has full and complete authority to represent that company in the making of the lease and the agreements set out in the pleadings as having been made by him on behalf of that company. Robert Velaise went to Ward Wight for the purpose of finding a lease on a theater building. Following negotiations between Velaise and Wight, a lease was prepared by Wight covering the property involved, whereby the owner proposed to lease the same to a corporation to be formed by Velaise for a period of thirty years, beginning in 1950, at the expiration of the existing lease on the property, which lease was signed by the plaintiff in triplicate, and delivered to Wight with instructions from Massell that it was not to be delivered to Velaise until the corporation, which he proposed to organize, had been chartered and organized and had paid the first year's rent of $10,485 in advance, and the name of the lessee corporation inserted in the blank space left for that purpose. Wight, at the solicitation of Velaise, delivered one of the three copies to Velaise in order that he might have his attorney go over the same; and Velaise then stated that he would not go further with the transaction unless he could get a definite commitment for a definite period of time from the lessor to consummate the lease upon his complying with the terms of his agreement as to forming a corporation and paying the first year's rent in advance. Upon this request being conveyed to Massell as representative of the lessor corporation, he on July 23, 1945, delivered to Wight, who in turn delivered to Velaise, the following letter, addressed to Ward Wight Company, Atlanta, Georgia, and signed R. A. C. Realty Company by Ben Massell, Vice-President: "This is your authority to deliver the lease signed by ourselves on property known as the Cameo Theater, Peachtree Street, said lease dated July 20, 1945, if your client will sign this lease, which we have already signed, and deliver to us the amount of advance security as stated in said lease by Friday, July 27, at three o'clock."
The evidence discloses: that, relying upon this letter, Velaise remained in Atlanta at considerable expense to himself for maintenance and lodging, from July 23 to July 28, communicated with his bank and tax adviser in New York, retained counsel to obtain the charter of the defendant corporation, and had the sum of $10,485, to cover the first year's rent, transferred from his home in New York to Atlanta; but when these acts were done, whether before or after the offer to lease was sought to be withdrawn, does not appear; and that the original charter of the defendant corporation was granted between 10 and 11 a. m. on July 27, 1945.
It further appears from the evidence: that on July 26, 1945, about 3 or 4 o'clock in the afternoon, Massell notified Wight that he was withdrawing the offer to lease the property to Velaise or his corporation, and that the deal was off; that although Wight and one Erwin, who was associated with Wight in the previous negotiations, were with Velaise on the night of July 26, they did not at that time communicate this withdrawal by Massell; and that Velaise had no notice thereof until the morning of July 27, although, according to Wight's testimony, he communicated this information to Velaise's attorney on the afternoon of July 26, not being able to get in touch with Velaise; that after receiving this information and before 3 o'clock on July 27, 1945, Velaise and his attorney went to the office of Wight, offered to execute all three copies of the lease contract in behalf of the defendant corporation, Velaise being the president thereof, and tendered to him, and thereafter to Massell as the representative of the plaintiff corporation, $10,485, covering the first year's rent in advance, and demanded delivery of the lease; that this was refused, and thereafter Velaise filled in the name of the defendant corporation and executed in its behalf the one copy of the lease which he had in his possession, and thereafter had the same recorded. It is stipulated that a certified check in the amount of $10,485 signed by the defendant corporation, dated July 27, 1945, and payable to the plaintiff corporation, was tendered on July 27, 1945, and amounted to a continuing tender. The evidence further discloses that the plaintiff executed a lease to the same property for a term of five years, beginning in 1950 at the expiration of the existing lease, to the Cameo Theater, dated, according to the record before this court, July 20, 1945, and filed for record at 8:31 on the morning of July 27, 1945.
The trial court submitted to the jury two questions, and the questions thus submitted and the answers of the jury thereto are as follows: "We, the jury, make our answer and verdict to the following questions propounded by the court:
"`1. Is the plaintiff, R. A. C. Realty Company, entitled to have the lease contract between it and the defendant referred to in the petition surrendered and canceled? Answer "Yes" or "No." Our answer is No.
"`2. If your answer to question Number 1 above is "No," then proceed to answer this question: Is the lease contract from the plaintiff, R. A. C. Realty Company, to the defendant, W. O. U. F. Realty Corporation, valid and binding and the defendant entitled to have its terms performed by the plaintiff? Answer "Yes" or "No."' Our answer is Yes."
Based upon this verdict of the jury, the court entered the following decree: "The above-stated case coming on regularly to be heard at this the May term of said court before a jury and before me presiding as judge thereof, and all of the issues of fact having been submitted to the jury, and the jury having found that the plaintiff is not entitled to have the lease contract referred to in its petition and set out in Exhibit B of defendant's answer surrendered and canceled, and the jury having further found that said lease contract from the plaintiff, R. A. C. Realty Company, to the defendant, W. O. U. F. Atlanta Realty Corporation, is valid and binding, and that the defendant, W. O. U. F. Atlanta Realty Corporation, is entitled to have the terms of said lease performed by the plaintiff, R. A. C. Realty Company, it is hereby considered, ordered, and adjudged that the plaintiff is not entitled to have the said lease contract surrendered and canceled, and that said lease contract is valid and binding upon the parties thereto, and the defendant is entitled to have its terms performed by the plaintiff, and the plaintiff, its officers and directors are hereby ordered and directed to perform the terms of said lease contract according to the tenor and effect thereof."
The plaintiff duly presented its motion for new trial, based upon the general grounds and six special grounds, which was overruled by the trial court, and the exceptions here is to that judgment.
We will first discuss the general grounds of the motion for a new trial. There does not appear to be any considerable conflict in the testimony in this case upon what we conceive to be the controlling issues involved. It appears that the plaintiff corporation offered to Velaise to lease the property involved — not to Velaise, but to a corporation to be formed by him — upon the terms and conditions set out in the written lease contract which was prepared and signed by it on July 20, 1945, and delivered by it to Wight to be delivered by him to the corporation when formed and when accepted by it, and upon payment by it of $10,485, covering the first year's rent in advance; and that on July 23, 1945, the plaintiff corporation, by and through its duly authorized vice-president, at the request and upon the insistence of Velaise, delivered a letter to Wight, which he in turn delivered to Velaise, authorizing Wight to deliver the lease signed by the plaintiff if the corporation to be formed by Velaise would sign the lease and pay to the plaintiff the amount of the advance security, as stated in the lease, by Friday, July 27, at 3 o'clock.
It further appears: that Velaise, relying upon the letter, specifying a definite time within which the lease was to be accepted by the corporation to be formed by him, remained in Atlanta at an expense to himself for lodging and maintenance; that he communicated with his tax adviser at his home office in New York with reference to the result in taxation from paying the first year's rent in advance; that he had transferred from New York to Atlanta the funds with which to pay the first year's rent; that he retained counsel to obtain a charter for the proposed corporation; and that this corporation was granted a charter on the morning of July 27, between 10 and 11 o'clock a. m., and that, prior to 3 o'clock on that date, Velaise, in behalf of the defendant corporation, and as its president, offered to execute the lease and pay the first year's rent, as provided therein, both to Wight and to Massell, the vice-president of the plaintiff corporation.
It is undisputed that on July 26, 1945, at about 4 o'clock p. m., and before the defendant corporation was formed, and before any payment of the first year's rent was made or tendered, the plaintiff corporation, through its duly authorized vice-president, notified Wight that the offer to lease to the corporation to be formed by Velaise was withdrawn. The evidence is somewhat in conflict as to when this information was conveyed to Velaise, but we think that it clearly appears that Velaise was so notified on the morning of July 27, and before a charter had been actually granted to the defendant corporation, and before any payment was made or tendered of the first year's rent.
It would thus seem that the controlling question presented is, was the offer or proposition to lease, as evidenced by the written lease and the letter of July 23, fixing the definite time of July 27 at 3 o'clock for acceptance thereof, based upon a consideration so as to constitute it a valid contract to allow the offer or proposition to remain open for acceptance until the time specified and not subject to be withdrawn before that time; or, was it a mere naked, voluntary, or gratuitous offer or proposition, without consideration and subject to be withdrawn at any time before acceptance?
In Prior v. Hilton Dodge Lumber Co., 141 Ga. 117 ( 80 S.E. 559), this court held: "Where for a consideration an option is given, or offer made, which it is agreed shall remain open and subject to acceptance for a specified time, the party who thus grants the right to accept during such specified time can not withdraw the right of the other party to accept or assent within that time. In such a case the right to accept or assent within the specified time is a right fixed by contract. If without consideration a continuing offer is made, although the person making it may state a time within which it may be accepted, there is no binding contract, and he may withdraw the offer before acceptance. The two things should not be confused. In the one case there is a valid contract, based upon a consideration, to allow the offer or proposition to remain open for acceptance until the time specified. In the other case there is a mere offer or proposition, which is not a contract until acceptance. A mere offer or proposition, until accepted, may be withdrawn. If it is accepted before it is withdrawn or terminated, a contract then results. It is no longer unilateral, but becomes mutual, and the mutual promises will furnish sufficient consideration."
Does the evidence in this case show that there was a consideration so as to constitute a valid contract on the part of the plaintiff to allow the offer or proposition to remain open for acceptance until the time specified in the letter of July 23? It is not insisted by the defendant that any benefit accrued or flowed to the plaintiff by reason of the making of this offer such as would constitute a consideration therefor; but it is insisted that the acts herein before enumerated on the part of Velaise constituted an injury or damage to him, and thereby supplied a valid consideration, which would constitute the commitment to keep the offer open until a definite time a valid contract that could not be withdrawn until after the expiration of the time therein specified.
Code § 20-302 provides: "A consideration is valid if any benefit accrues to him who makes the promise, or any injury to him who receives the promise." As early as Tompkins v. Philips, 12 Ga. 52, this court held: "1. Any benefit accruing to him who makes the promise, or any loss, trouble, or disadvantage undergone by, or charge imposed upon, him to whom it is made, is sufficient consideration, in the eye of the law, to sustain an assumpsit. 2. Damages or trouble to the promisee, as well as benefit to the promisor, is a sufficient consideration to support a promise." See also Lanier v. Council, 179 Ga. 568 ( 176 S.E. 614).
But can Velaise be held to be the "one who received the promise," or the "promisee" within the meaning of the principle of law above stated? The record in this case discloses that all of the parties were dealing with each other with the full understanding that Velaise was not to lease the property as an individual, but that he was to form a corporation, and for that reason the name of the lessee was left blank in the written lease signed by the plaintiff. Under such circumstances, we do not think that Velaise could be held to be the "promisee" or the "one who received the promise," and that, therefore, the things which he did, even though an injury or damage to him, could not be a valid consideration of the promise to lease to a corporation which was yet to be formed; nor could his acts and doings be said to be the acts and doings of a corporation which had not yet come into existence at the time they were performed, for a corporation can not act until it attains a corporate entity by acquiring a charter and organizing thereunder. Before its charter was granted and before it was organized thereunder it could do not corporate act. Rau v. Union Paper Mill Co., 95 Ga. 208 ( 22 S.E. 146). And no act of an incorporator performed before a charter is even applied for could be considered the act of the corporation or binding upon it, or as having been performed in its behalf. Meeks v. Seawell, 198 Ga. 817 ( 33 S.E.2d 150); Meinhard, Schaul Co. v. Bedingfield Mercantile Co., 4 Ga. App. 176, 178 ( 61 S.E. 34). Had the corporation been chartered and organized, and had it performed the acts shown to have been done by Velaise, and had it thus sustained an injury or damage by reason of the offer to lease on the part of the plaintiff, then we think that a valid consideration, so as to constitute the offer a contract not subject to be withdrawn prior to the fixed date for its termination, would have resulted, but such is not this case. Under the facts as shown by the evidence here, this case falls within the second principle announced in Prior v. Hilton Dodge Lumber Co., 141 Ga. 117 ( 80 S.E. 559), that "a mere proposition or offer, based on no consideration, though continuing in character, or though stated to be subject to acceptance until a given time, may be withdrawn before actual acceptance or assent thereto by the other party." There is no dispute in the evidence in this case that the offer to lease on the part of the plaintiff was withdrawn before even the defendant corporation, the promisee in the offer, came into existence; and to attempt to accept the offer after it was thus withdrawn, and after it did not obtain a charter, was of no avail. The evidence demanded a verdict for the plaintiff, setting aside and canceling the lease contract, which is admitted to have been executed and recorded by the defendant after the withdrawal by the plaintiff of the gratuitous offer to lease; and the defendant is not entitled to have the contract specifically performed. Code, § 37-804. The trial court erred in overruling the general grounds of the motion for a new trial.
Under this view of the case, it is not necessary to pass upon the special grounds of the motion for new trial, dealing with objections to the admission of evidence, and based upon the failure of the trial court to charge certain principles of law alleged to have been applicable to the plaintiff's contentions.
Judgment reversed. All the Justices concur. Bell, J., concurs specially.