B-Lee's Sales Co., Inc. v. Shelton

• Decision Date: 07 April 1977
• Docket Number: No. 53577,No. 2,B-LEE,53577,2
• Citation: B-Lee's Sales Co., Inc. v. Shelton, 234 S.E.2d 702, 141 Ga.App. 870 (Ga. App. 1977)
• Parties: 'S SALES COMPANY, INC. v. E. E. SHELTON, Jr., et al
• Court: Georgia Court of Appeals

Page 702

234 S.E.2d 702

141 Ga.App. 870

B-LEE'S SALES COMPANY, INC. v. E. E. SHELTON, Jr., et al.

No. 53577.

Court of Appeals of Georgia, Division No. 2.

April 7, 1977.

Hurt & Pfeiffer, James W. Hurt, Cordele, for appellant.

Roberts, Roberts & Rainwater, David N. Rainwater, Cordele, for appellees.

QUILLIAN, Presiding Judge.

Plaintiffs filed a complaint for alleged rent due under a written ten year lease for a service station which provided for a monthly rental of $1,500 and asserted defendants were in arrears in the amount of $23,000. Defendants' answer stated the written lease was "orally modified two times" as to the rental amount and by failing to evict defendants and accepting the lesser amounts plaintiffs waived their right to sue for any deficiency and were estopped to hold defendants to the written lease.

The lease was to run from 1 April 1968, and expire on 31 March 1978. In January, 1974, one of the defendants approached one of the plaintiffs concerning lowering the monthly rental amount. All parties agreed that the rent would be reduced to $1,000 per month. Defendants paid, and plaintiffs accepted, payment of $1,000 per month for the year of 1974. In December of 1974 defendants again asked plaintiffs to lower the rent contending they had lost $14,000 during the year. One plaintiff testified that defendants made "a request that we reduce the rent to $500 a month . . . He just said he couldn't pay it." One defendant testified that in response to his request, plaintiff picked up the $500 and said: "Will you please do the best you can."

Plaintiffs denied that an agreement was reached on the second reduction of rental to $500 per month but testified that defendants "paid us $500 per month . . . for five months," from January through May of 1975. In May, 1975, a Mr. Motley informed plaintiffs he had "bought out" the defendants. Thereafter, plaintiffs rented to Mr. Motley at a monthly rental of $750.

Plaintiffs testified they saw their lawyer in September of 1975 and "it was his advice that we go back to the original agreement." This action was filed. The jury awarded plaintiffs $2,500. They bring this appeal. Held :

1. To be legally effective, a lease for a period longer than one year must be in writing as it is within the Statute of Frauds. Code § 20-401(5). As a general rule, a written contract may be modified or changed by subsequent parolagreement between the parties if founded upon consideration. New Amsterdam Casualty Co. v. Thompson, 100 Ga.App. 677, 679, 112 S.E.2d 273. However, a contract which is required by the Statute of Frauds to be in writing can not be modified by a subsequent agreement in parol. Gulf Oil Corp. v. Willcoxon, 211 Ga. 462(1), 86 S.E.2d 507; Smith v. Huckabee Properties, 111 Ga.App. 451(2), 142 S.E.2d 320; Payne v. Robertson, etc., Inc., 133 Ga.App. 502, 211 S.E.2d 440; see also Perry Dev. Corp. v. Colonial Contracting Co., 231 Ga. 666, 668(4), 203 S.E.2d 475. Presiding Justice Lumpkin stated succinctly and clearly in Augusta Southern Rd. Co. v. Smith & Kilby Co., 106 Ga. 864, 867(1), 33 S.E. 28: ". . . if the law required the insurance contract to be written, it would seem to follow, as a matter of course, that any alteration of it must also be in writing . . . the reason being that a contract which the statute of frauds declares must be in writing can not rest partly in writing and partly in parol."

Thus, the question presented is which agreement, or agreements, provides the basis for an action for parties to a lease contract required to be in writing, but presumably rescinded or modified by subsequent parol agreement, acted upon by one party and accepted by the other party? If the original written contract cannot be modified by the subsequent parol agreement (Gulf Oil Corp. v. Willcoxon, 211 Ga. 462(1), 86 S.E.2d 507, supra), is the written agreement abrogated, abandoned, nullified, or was there a novation? We find it unnecessary to reach this issue.

Our Code, § 20-116, provides: "Where parties, in the course of the execution of a contract, depart from its terms and pay or receive money under such departure, before either can recover for failure to pursue the letter of the agreement, reasonable notice must be given the other of intention to rely on the exact terms of the agreement. Until such notice, the departure is a quasi new agreement." Verner v. McLarty, 213 Ga. 472, 475(1), 99 S.E.2d 890; Empire Mortgage, etc., Co. v. Dunaway, 223 Ga. 443, 445, 156 S.E.2d 41.

There was a substantial departure from the rental terms of the written contract and an agreement to accept the lesser amount. This agreement was followed for one year. In fact, the plaintiffs never gave notice to defendants they intended to return to the exact terms of the written contract until after they had re-let the demised premises to a new tenant probably in September after defendants departed in May. This court held in Scott v. Ryder Truck Lines, 120 Ga.App. 819, 822, 172 S.E.2d 365, 368: ". . . oral modifications as to those matters in a contract required by the Statute of Frauds to be in writing are ineffective . . . unless the contract as so modified has been acted on or performed by one of the parties." Cf. Planters Cotton-Oil Co. v. Bell, 54 Ga.App. 433(1), 188 S.E. 41.

One reason for performance of an oral modification to a written contract being an exception to the general rule is that "part performance will satisfy the requisites both of mutuality and of the Statute of Frauds." Cooper v. G. E. Const. Co., 116 Ga.App. 690, 694, 158 S.E.2d 305. See also Code § 20-402(2) and (3). Another reason is that plaintiff having accepted the benefits arising under the contract after being notified of an anticipated breach, and not having given notice of his intention to rely on its exact terms, but having continued to accept the benefits thereunder, may not recover for such alleged breach or failure to perform fully the complete terms of the original agreement. Cf. Eaves v. Georgian Co., 47 Ga.App. 37(4), 169 S.E. 519; Southern Savings Bank v. Dickey, 58 Ga.App. 718, 199 S.E. 546. Acceptance of such benefits after notice of an alleged breach will constitute a waiver of the breach. Cartwright v. Bartholomew, 83 Ga.App. 503, 507(b), 64 S.E.2d 323; see also Ga. UCC § 109A-2-209(4) (Ga.L.1962, pp. 156, 180).

Subsequent performance by the parties is sufficient consideration to support what Code § 20-116 calls "a quasi new agreement." New Amsterdam Casualty Co. v. Thompson, 100 Ga.App. 677, 679, 112 S.E.2d 273, supra; Blanton v. Moseley, 133 Ga.App. 144(4), 210 S.E.2d 368; 72 Am.Jur.2d 795, Statute of Frauds, § 278. Although the attempt at modification of the original written contract may not satisfy the Statute of Frauds, where as here, a modification of the written contract has been agreed to by all parties, performed by one and accepted by the other, there is a waiver of the provisions of the original contract as to rental amount. Eaves v. Georgian Co., 47 Ga.App. 37(4), 169 S.E. 519, supra; Cartwright v. Bartholomew, 83 Ga.App. 503, 507, 64 S.E.2d 323, supra; Scott v. Ryder Truck Lines, 120 Ga.App. 819, 822, 172 S.E.2d 365, supra. Accordingly, plaintiff may not enforce that provision of the written contract relating to rental amount.

2. Where there was an oral agreement to pay a monthly rental of $1,000, and one party tenders $500 per month and requests a reduction in the monthly rental, and the other party accepts the tender and states essentially: "Do the best you...