Bergstrom v. Sambo's Restaurants, Inc., 81-1973

Citation687 F.2d 1250
Decision Date09 September 1982
Docket NumberNo. 81-1973,81-1973
PartiesBruce BERGSTROM, et al., Appellees, v. SAMBO'S RESTAURANTS, INC., Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Plunkett, Schmitt & Plunkett, Hugh V. Plunkett, III, Austin, Minn., for appellees.

O'Connor & Hannan, Steven J. Timmer, Faegre & Benson, Lawrence C. Brown, John F. Beukema, Steven C. Schroer, Minneapolis, Minn., for appellant Sambo's Restaurants, Inc.

Before HEANEY, ARNOLD and JOHN R. GIBSON, * Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Sambo's Restaurants, Inc., appeals from a final judgment obtained by Bruce and Ruth Bergstrom in the amount of $190,000. A jury found that Sambo's had contracted to convey a lease interest in its restaurant in Austin, Minnesota to the Bergstroms and that the contract was evidenced by a memorandum that complied with the Minnesota statute of frauds. Sambo's contends that any contract between the Bergstroms and Sambo's was barred by the statute of frauds, and that the district court 1 erred in instructing the jury. We affirm.

The Bergstroms had operated a restaurant in Austin, Minnesota for some years and because their lease was expiring desired to obtain another location. Coincidently Sambo's had been considering closing its Austin restaurant for some time because of economic conditions in the area and particular problems encountered in the restaurant's operation. Bergstrom contacted Sambo's corporate headquarters in Santa Barbara, California and shortly thereafter Leonard Scamardo, the eastern Regional Director of Sambo's wholly-owned real estate subsidiary, Restaurant Properties, Inc., contacted the Bergstroms. Scamardo was authorized to negotiate on behalf of Sambo's but the district court found and instructed the jury that he did not have authority from Sambo's to enter into contracts on its behalf.

Scamardo, following several conversations with the Bergstroms, sent them a letter proposal on September 14, 1979 enclosing the master lease on Sambo's Austin property from Kraus-Anderson, Inc., to Sambo's, and an assignment of the lease by Sambo's to Restaurant Properties, Inc. He also enclosed a proposed draft of a sublease agreement which he termed an assignment. The letter outlined the terms, including a rental of $1,700 per month for a five-year term, November 1, 1979 to 1984, with three options to extend for five years at increasing rentals. 2 The Bergstroms consulted with their attorneys and sent a revised agreement to Scamardo. Scamardo reviewed the negotiations with James Lohnas, Sambo's Director of Property Management, to whom he had sent copies of all the correspondence and proposed agreements. Lohnas and Scamardo both testified that Scamardo was authorized to negotiate with the Bergstroms on the basis of a percentage rental of 6% with a minimum rent of no less than $1,400 and a commencement date of November 1, 1979. Lohnas instructed Scamardo, "Don't lose this deal."

On September 26, 1979 Scamardo called the Bergstroms and they agreed to the changes authorized by Lohnas. Scamardo prepared a revised agreement by lining through and interlineating the earlier version. He then wrote a confirming letter to the Bergstroms on September 27, 1979, and enclosed the revised agreement so that the Bergstroms could initial the changes, sign it and return it to him. This the Bergstroms did. When Scamardo received the signed agreement, he forwarded it to Lohnas along with a management recommendation form setting out the essential terms of the sublease agreement.

When Lohnas received the papers from Scamardo, he in turn prepared a management recommendation form outlining the terms of the lease and forwarded it to his superior, Walter Leach, Assistant Treasurer of Sambo's, on October 3, 1979. He recommended the sublease of the Austin facilities to Bergstrom on the same terms and conditions that Scamardo had negotiated and which were set forth in the revised agreement which the Bergstroms signed and returned to Scamardo and which in turn was forwarded to Lohnas. 3

The management recommendation form was signed by Leach and also by the President of Sambo's, Karl Willig, and both dated their signatures November 14, 1979. There was also a blank for the signature of Russell S. Young, Treasurer of Sambo's, but Mr. Young did not sign the memorandum. 4

Lohnas directed a memorandum on November 5, 1979 to John Grant, of Sambo's Legal Department, attaching a copy of the management recommendation and stating, "I realize that this copy is not executed, however, it has been approved and I will forward a signed copy upon my receipt." He informed Grant that it was imperative that the sublease document be drawn within the next three days or the deal might not close.

There was conflicting testimony about occurrences from this point. 5 Scamardo testified that in the first part of November, 1979 Lohnas called him and told him that the sublease had been approved by senior management and asked Scamardo to inform the Bergstroms. Scamardo did so, and told the Bergstroms that Sambo's would send a team to Austin to close the Sambo's restaurant in anticipation of the sublease. Bergstrom had talked with Lohnas earlier in November and Lohnas had told him that the sublease was approved. Shortly after November 15, Bergstrom had a second conversation with Lohnas and was told that Sambo's had been sold and the management changed but that this would not affect the sublease agreement. Lohnas denies these conversations with Scamardo and the Bergstroms.

Following the sale of Sambo's, the new management refused to go forward with the transaction and the Bergstroms filed suit shortly thereafter.

I.

Sambo's claims that the district court erred in failing to hold as a matter of law that any contract between the Bergstroms and Sambo's is barred by the Minnesota statute of frauds. The sole ground urged is that the written memorandum evidencing the contract was not delivered to the Bergstroms, and this fact is undisputed. The district court submitted the statute of frauds issue to the jury 6 and, after the verdict was returned, ruled as a matter of law that there had been compliance with the statute of frauds. After judgment was entered, defendant moved for judgment notwithstanding the verdict on the ground that there was not sufficient evidence to permit the jury to find that the contract complied with the statute of frauds. The district judge denied this motion. 7

The Minnesota statute of frauds, Minn.Stat. § 513.05, provides as follows:

Every contract for the leasing for a longer period than one year ... of any lands ... shall be void unless the contract, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party by whom the lease or sale is to be made....

As is apparent, this statute differs from many in that it does not require the signature of "the party to be charged" but only that of the party by whom the lease is to be made. Beyond the language of the statute the Minnesota courts have created additional requirements, particularly with respect to the obligations of a vendee or lessee.

A recent decision of the Minnesota Supreme Court dealing with the statute of frauds is Schwinn v. Griffith, 303 N.W.2d 258 (Minn.1981). Schwinn, as conservator of an estate, authorized an auctioneer to conduct a sale. Following the successful purchase at the sale by Griffith, the auctioneer prepared a memorandum on behalf of both the buyer and seller. Schwinn held that the auctioneer accepted delivery of the memorandum on behalf of the purchaser, Griffith. In rejecting Schwinn's argument that the statute would be satisfied by a vendor's signature alone, the court stated, "The better approach is for us to follow the cases that require the vendee to accept delivery of the writing." Id. at 262. The court further explained the undesirability of allowing only the vendor's signature to create an enforceable agreement and to bind an unwitting vendee with the following passage from 2 Corbin on Contracts § 397 (1950):

(T)he courts have tried to prevent this result by requiring some sort of "mutuality." They have held that a memorandum signed by himself does not enable the vendor to enforce the contract unless the memorandum so signed has been delivered to the purchaser or otherwise accepted by him as a correct memorandum of agreement. (Emphasis added.)

As support for this passage from Corbin, Schwinn cites National Bank of Kentucky v. Louisville Trust Co., 67 F.2d 97 (6th Cir. 1933), cert. denied 291 U.S. 665, 54 S.Ct. 440, 78 L.Ed. 1056 (1934), and 4 Williston on Contracts § 586 (1961). Sambo's argues that Louisville requires delivery of the memorandum to the lessee. Louisville holds that there was a memorandum delivered to and accepted by the vendee, but further explains the acceptance and delivery requirement as follows:

(W)e are impressed with the fact that from very early times, at least in actions brought by the vendor against the vendee, some act of acceptance of the writing has been required before the vendee may be held.

67 F.2d at 105.

4 Williston on Contracts § 586 states, "(I)t would generally, if not universally, be necessary that the purchaser should have indicated his assent to the writing either by accepting it or otherwise." (Emphasis added.)

At least the language in Gregory Co. v. Shapiro, 125 Minn. 81, 145 N.W. 791, 793 (1914), demonstrates, in the earlier cases, the significance of the acceptance by the vendee.

Other Minnesota cases dealing with the statute of frauds recognize that the memorandum evidencing the contract may consist of letters if they are internally connected by references, express or otherwise, so as to show on their face that they related to the same subject matter. Doyle v. Wohlrabe, 243 Minn. 107, 66 N.W.2d 757 (1954). Doyle further states that the basic purpose of the statute of frauds "is only to provide reasonable...

To continue reading

Request your trial
12 cases
  • McLinn, Matter of, 82-3644
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 7, 1984
    ...1982. Court of Appeals gives great weight to conclusions of local district judge on questions of state law.--Bergstrom v. Sambo's Restaurants, Inc., 687 F.2d 1250. C.A.Minn. 1982. Court of Appeals accords great weight to conclusions of local trial judge on questions of state law.--Sperry Co......
  • The Courtland Co. v. Union Carbide Corp.
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • July 1, 2022
    ... THE COURTLAND COMPANY, INC., Plaintiff, v. UNION CARBIDE CORPORATION, Defendant. ......
  • Easley v. Empire Inc., 84-1305
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • April 24, 1985
    ...Furthermore, we ordinarily defer to the decision of an experienced district judge on a question of state law. Bergstrom v. Sambo's Restaurants, 687 F.2d 1250, 1255 (8th Cir.1982). Empire also argues that there was insufficient evidence that it "did a wrongful act intentionally or without ju......
  • Jackson v. Prudential Ins. Co. of America, 83-1773
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • July 3, 1984
    ...where there are differing decisions, we should give great weight to the decision of the district court. Bergstrom v. Sambo's Restaurants, Inc., 687 F.2d 1250, 1255 (8th Cir.1982). I share the district court's observation that it probably would not have decided this case the same way that th......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT