enforcing a provision in a lease stating that "if said premises and the merchandise sold therein are not up to a reasonable standard ... [a designated] committee shall have the right and option, on behalf of the lessor, to declare this contract void"Summary of this case from Caradigm U.S. LLC v. PruittHealth, Inc.
FEBRUARY 5, 1947.
Petition for injunction. Before Judge Hendrix. Fulton Superior Court. October 18, 1946.
W. Paul Carpenter, G. Hall Taylor, Herman Talmadge, Hewlett Dennis, Charles S. Barton, and T. F. Bowden, for plaintiff.
J. C. Savage, J. C. Murphy, J. M. B. Bloodworth, and John E. Feagin, for defendants.
1. Where an individual enters into a lease contract with a municipality for space in an airport to operate a restaurant, a provision in the lease that, in the event the restaurant is not conducted in accordance with prescribed standards, a designated committee of council will have the right, after written notice specifying their complaint, to have a hearing and determine whether the terms of the contract have been violated, and if so, to cancel the same, is not a provision for arbitration as provided under the Code.
2. Such an agreement is not void and unenforceable as being contrary to public policy.
3. Under the terms of such an agreement the committee must act honestly and in good faith, and not arbitrarily and capriciously.
4. The allegations as to slander and libel were not sufficient to authorize the grant of an injunction.
No. 15700. FEBRUARY 5, 1947.
Ted H. Yon filed a petition against the City of Atlanta, its mayor, and certain members of the city council known as the "Airport Committee." It was alleged: That on April 29, 1942, the City of Atlanta entered into a contract leasing to the petitioner a portion of a building at the municipal airport for the purpose of operating a restaurant. The lease covered a period of five years with an option to renew it for an additional five years. He had performed all the covenants of the contract, and intended to exercise his option for a renewal of the lease; had spent approximately $15,000 in equipping said restaurant and interest; the good will of the business had become increasingly valuable; and the right to conduct said business was of the reasonable market value of $75,000. Bona fide offers of stated amounts had been made to the petitioner for a transfer of said lease and the good will.
The petitioner further alleged: That he had approached the mayor and other named defendants and acquainted them with the offers for the transfer of his lease, and requested the right to transfer the lease to one of the parties desiring to purchase. Upon receipt of such information, the defendants discussed the great value of the estate and interest of the petitioner in the lease, and determined and decided to break and terminate said lease, taking the position that any money paid therefor should be received by the City of Atlanta. A majority of said defendants expressed themselves as being in favor of canceling the lease and entering a new one with some other person at a rental in excess of that provided under the petitioner's lease; and they sought the advice of the city attorney as to how to proceed to have it canceled. The city attorney called their attention to paragraph 6 of said lease, stating that it could be terminated as provided therein. This paragraph provided: "That all of said articles and merchandise so sold shall be of good quality, brand, and grade, and any member of the Municipal Parks and Airport Committee of the General Council of the City of Atlanta, or the Airport Manager is hereby granted the right to inspect the condition of the said concession and premises and the grade of merchandise sold therein at any time they may desire; and if said premises and the merchandise sold therein are not up to a reasonable standard for such operation, said Committee shall have the right and option, on behalf of Lessor, to declare this contract void and grant said concession to other parties, provided that before doing so formal written notice of charges setting out the grounds on which it is proposed to cancel this contract, shall be prepared and served upon said Lessee at least ten (10) days before a hearing to be held before said Committee at a time and place specified in said notice; it being agreed that at such hearing the facts shall be gone into and a decree rendered; and the Lessee agrees that the decree of the Municipal Parks and Airport Committee of said charges shall be final; and if said decree is adverse to the Lessee, the said Committee shall have the right and privilege to terminate this contract for and on behalf of the Lessor."
Thereafter, on or about June 8, 1946, the petitioner was served with a written notice from the committee setting forth that, under the provisions of paragraph 6 in the lease, a public hearing would be held by the committee on June 25, 1946, and directing him to show cause why his lease should not be canceled. The notice set forth specified charges to be investigated at said hearing, one being, "You have, to the detriment of employees and patrons at the airport, failed to keep the leased premises clean and sanitary and have failed in the operation of said restaurant consistently to furnish clean and sanitary eating and drinking utensils."
It was alleged that, prior to the meeting of the committee when it was decided to seek to take action to terminate his lease, no complaints had been made to the petitioner of the violation of any of the terms of said lease and no charges had been preferred against him. But the petitioner was informed of the meeting and of the sentiment of the majority of the committee, and the bias, prejudice, and partisanship expressed and exhibited by the majority at said meeting and of their purpose to terminate and abrogate his lease and destroy his property rights therein. Knowing their purpose to cancel and abrogate his lease, the petitioner elected to avail himself of his legal rights, and before the time set for the trial of the charges he gave notice to the City of Atlanta that he would not be bound by paragraph 6 of the lease, which gives the committee the right to declare the lease void, for the reasons: (a) said provisions are wholly executory, and the terms being divisible, the illegal part may be separated from the remainder of the contract; (b) because the provision amounts to ousting the jurisdiction of the courts, and therefore is contrary to public policy; (c) it amounts to giving the lessor the power to terminate the lease through a committee whose members shall act as judge and jury; (d) it is without the right of appeal to any tribunal; (e) if enforced, it would deprive him of due process of law under the Constitution of the United States; (f) because it is unilateral in character and lacking in mutuality.
By an amendment, the petitioner further charged: That, since the filing of the petition and the granting of the restraining order, a majority of the defendants had represented to the public orally and through newspapers that the petitioner's restaurant was filthy and unclean and that he was buying and selling an inferior grade of foodstuffs. All of said charges were untrue, but had injured and damaged him, and if allowed to continue would destroy his reputation as a restaurant operator, and the damage being done to his reputation was incapable of accurate computation and should be restrained and enjoined.
The petitioner prayed: (a) that the defendants be restrained from conducting the trial, as provided in section 6 of the lease, notice of which had been served upon him; (b) that process issue; (c) for a rule nisi; (d) that the defendants be permanently enjoined from taking any action pursuant to notice served on him in reference to a trial under paragraph 6 of the lease contract; (e) for general relief; (f) and, by amendment, that the defendants be permanently enjoined from representing to the public orally, through the newspapers, or in writing, that the petitioner's restaurant is filthy and unclean and that he is buying and selling an inferior grade of foodstuffs.
To an order sustaining a general demurrer to the petition the petitioner excepted.
1. The plaintiff in error contends that item 6 in the lease provided for arbitration in the event there was a disagreement between the parties as to the manner of conducting the restaurant. There is nothing in this item that could be construed as an agreement to arbitrate, as it has none of the elements of such a contract and meets none of the legal requirements. Both common law arbitration (Code, § 7-101 et seq.), and statutory arbitration ( § 7-201 et seq.), provide for the submission of the controversy to third parties; while the item here in question specifically provides that the named committee should act "on behalf of the lessor, to declare this contract void and to grant said concession to other parties."
2. It is further insisted that the contract is divisible, that item 6 thereof is void and unenforceable as being contrary to public policy, that it gives one of the parties thereto the arbitrary right to terminate it, and would oust the courts of jurisdiction and leave the lessee without the right of appeal to any tribunal.
Parties laboring under no disabilities may make contracts on their own terms, and in the absence of fraud of fraud or mistake or terms that are illegal or contrary to public policy, they must abide the contract. The fact that it is unwise or disadvantageous to one party furnishes no reason for disregarding it. In Mackenzie v. Minis, 132 Ga. 323 (1) ( 63 S.E. 900, 23 L.R.A. (N.S.) 1083, 16 Ann. Cas. 723), it was held: "Where an employee entered into a written contract with his employer, to continue at least three years if the former proved himself `competent and satisfactory,' and agreed to perform all the duties . . to `the satisfaction' of the latter, he was subject to be discharged if the employer was dissatisfied; and this was not dependent on whether there were reasonable and sufficient grounds for such dissatisfaction." See also 17 C. J. S. 1006, § 495; 32 Am. Jur. 707, § 830. The terms in item 6 of the lease contract here involved are more specific than the mere use of the word "satisfactory;" as here the type of operation of the restaurant that would be satisfactory is set forth and defined to be: "That all of said articles and merchandise so sold shall be of good quality, brand, and grade, . . and if said premises and the merchandise sold therein are not up to a reasonable standard for such operation, said committee shall have the right and option, on behalf of lessor, to declare this contract void." Yon, having entered this contract with the City of Atlanta, in which he agreed that a designated committee of council in charge of the airport would be the judge of whether he operated the restaurant in accordance with the standard provided in the contract, is bound thereby. Nor does it make any difference that since the execution of the contract the name of the committee in charge of the airport has been changed, or that the personnel of the council and committee has changed.
3. The allegations to the effect that members of the committee had already prejudged the question of whether or not the petitioner had violated the terms of the lease, and that, unless the hearing before the committee is enjoined, they would vote so to find and for the cancellation of his lease, do not authorize the court to enjoin the hearing before the committee. The defendants are not attempting to actually dispossess the petitioner, and if and when they should, he has an adequate remedy at law. Whether his lease had terminated by reason of a breach thereof could there be determined. If the committee should find that he had violated the terms of the lease contract, there would be a presumption that he had, as they are public officials and presumed to do their duty; but if it be shown that they have acted arbitrarily, capriciously, and in bad faith, this would overcome that presumption. In a contract of this kind, where a committee representing the lessor is permitted to determine certain facts which would cancel the lease, they must act honestly and in good faith. Mackenzie v. Minis, 132 Ga. 323 (supra); Johnson v. Kahrs, 199 Ga. 365, 367 ( 34 S.E.2d 503); 32 Am. Jur. 709, § 833.
4. The amendment, setting forth allegations in reference to slander and libel, was not sufficient to authorize the grant of an injunction. Irrespective of any other reason why it did not authorize the relief prayed, the allegation that a majority of the defendants had been guilty thereof, without designating them by names, would not be sufficient for the court to enjoin all of the defendants as prayed.
Judgment affirmed. All the Justices concur.