Brockton Olympia Realty Co. v. Lee

• Decision Date: 29 March 1929
• Citation: 165 N.E. 873,266 Mass. 550
• Parties: BROCKTON OLYMPIA REALTY CO. v. LEE et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

266 Mass. 550

165 N.E. 873

BROCKTON OLYMPIA REALTY CO.

v.LEE et al.

Supreme Judicial Court of Massachusetts, Bristol.

March 29, 1929.

Appeal from Superior Court, Bristol County; H. P. Williams, Judge.

Suit in equity by the Brockton Olympia Realty Company against Samuel T. Lee and another. From a final decree dismissing the bill, plaintiff appeals. Reversed and remanded, with directions.Lee M. Friedman and P. D. Turner, both or Boston, for appellant.

T. F. O'Brien, of New Bedford, W. Flaherty, of Boston, and S. A. Lee, of New Bedford, for appellees.

CROSBY, J.

This is a suit in equity for the specific performance by the defendants of a written agreement for the purchase of a lease or the sub-leasing of a certain parcel of land with the buildings thereon in the city of Brockton. The defence is that the defendants were induced to sign the agreement by fraud and misrepresentation. The case was referred to a master and thereafter was heard on the defendants' exceptions to the master's report. An interlocutory decree was entered confirming the report and overruling the exceptions, and a final decree was entered dismissing the bill. The case is before this court on the plaintiff's appeal from the final decree.

The evidence not being reported, the findings of fact made by the master must stand unless upon the report they are mutually inconsistent or contradictory and plainly wrong. Ginn v. Almy, 212 Mass. 486 496,99 N. E. 276;Glover v. Waltham Laundry Co., 235 Mass. 330, 334, 127 N. E. 420;Saulnier v. Benfield (Mass.) 163 N. E. 767. The material findings of fact are as follows: Lee and Davis will be referred to as the defendants. In 1917, certain real estate situated in Brockton and owned by the Brockton Society of the New Jerusalem Church, hereinafter referred to as the Church Society, was leased by it to Edward A. Bardol and Edwin J. Dreyfus, and the lease was duly recorded. On July 6, 1920, teh Church Society leased an adjoining parcel of land to the same lessees, by an instrument amending the original lease. This instrument, with a plan attached which referred to the land described in the original lease as lot ‘A’ and the land described in the second instrument as lot ‘B’ was duly recorded.

On December 4, 1920, Bardol and Dreyfus entered into an agreement with the Olympia Theatres, Inc., a corporation owning and operating a chain of motion picture theatres, as a result of which the plaintiff corporation was organized, fifty per cent. of the stock being owned by Bardol and Dreyfus and fifty per cent. by the Olympia Theatres, Inc. By this agreement Bardol and Dreyfus assigned to the plaintiff the church lease. On lots ‘A’ and ‘B’ the plaintiff erected a theatre and a four-story brick building. Shortly after June, 1923, Dreyfus, who was an officer of the plaintiff corporation, made known to one Lider, and attorney, that the leasehold of the plaintiff was for sale and requested him to find a purchaser. Lider, acting as broker for Dreyfus, approached the defendants, who were engaged in the real estate and mortgage business. Lider was a nephew of the defendant Lee, and had previously acted as attorney for both defendants. At the request of Dreyfus one Burbank became a co-broker with Lider, and acted for the plaintiff in an effort to sell the leasehold to the individual defendants. After talking with Lider the defendants became interested in the property and on two or three occasions examined it and made inquiries relative to tenants, rents, expenses of maintenance and other matters. On July 13, 1923, they went to Boston with Lider and met Dreyfus and Burbank. At this meeting Dreyfus said that he and Bardol would sell the lease for $875,000, but that Gordon and Shoolman, officers of the Olympia Theatres, Inc. (which owned fifty per cent. of the leasehold) asked $1,000,000. The defendants and Lider questioned Dreyfus relative to various matters relating to the property. The answers of Dreyfus form part of the grounds of the defence of fraud and misrepresentation. representation. An agreement was drawn, subject to the approval of Gordon and Shoolman, for the sale of the lease for $875,000, the defendants giving a check for $10,000 as a deposit. Subsequently Gordon and Shoolman refused to assent to the agreement, and on July 18, 1923, the defendants' check was returned.

Lider and Burbank continued negotiations with the defendants. Between July 18 and August 8 the defendants went to Boston and saw Gordon and there was conversation relative to the terms of the church lease, the terms of the sub-leases on the property, the rents paid by tenants, and the cost of maintenance, and certain figures prepared by the clerk of the plaintiff were given to the defendants. Another meeting was had on August 8, 1923, at which the defendants, Lider, Dreyfus, Burbank and Shoolman were present, and a memorandum was drawn by Lider stating that the lease was to be sold to the defendants for $887,500. The plaintiff's attorney examined the memorandum and expressed dissatisfaction with it, whereupon it was agreed that he should draft a final agreement and submit a copy to Lider. On August 11, Lider wrote him that the defendants would like to see the church lease. In his reply of August 13, the plaintiff's attorney enclosed a draft of the agreement he had prepared; this draft referred to the original lease, giving the book and page where it was recorded in the registry of deeds.

At another meeting held in Boston, on August 16, to which the sub-leases of the stores and offices in the building, a statement showing the annual rentals under the leases, and the church lease were brought by a representative of the plaintiff, there was a long discussion, the sub-leases were examined, and the defendants pointed out to Dreyfus that the terms of the sub-leases were different from certain statements previously made by him. He admitted that he had been mistaken and said he would allow for the mistakes by reducing his share of the purchase price $2,500; and Lider and Burbank agreed that they would allow the defendants $3,000 out of their commission by reason of such mistake. The master found that the defendants were satisfied with the allowance of $5,500 and that the discrepancies were of no consequence thereafter.

Before the meeting of August 16 the defendants asked many questions concerning the terms of the church lease; at that meeting the church lease was available for the defendants to examine it if they so desired. No question was raised by them or by the plaintiff concerning conditions respecting lot ‘B’ as set forth in this lease. At the meeting Lider read the church lease and discussed it with the defendants; the latter stated they would like to have their attorney examine the draft agreement prepared by the plaintiff's attorney and, thereupon, Shoolman said if the defendants did not sign at once the agreement would not be carried out. After further discussion with Lider the defendants signed the agreement. This agreement is the basis of the present bill.

On August 18, Lider wrote the plaintiff's attorney to prepare the necessary papers as soon as possible and that ‘The buyers intend to have Boston counsel to check up the agreements to be drawn.’ On August 29, he wrote Dreyfus that the defendants were ready to take over the property, and he requested Dreyfus to send all leases to tenants and assignment of the lease and mortgage to be signed by them, so that the papers could be examined by their attorney. Thereafter the plaintiff prepared a bill of sale, a sub-lease of the premises to the defendants, and a note and mortgage to be executed by the defendants. After the meeting of August 16, the defendants employed one O'Brien, an attorney, to examine the papers relative to the transfer of the property, and afterwards, at a meeting in Boston between the defendants and representatives of the plaintiff, this attorney stated that the rentals and terms of the sub-leases differed from what had previously been represented. It was explained that to rectify this mistake $5,500 had been allowed the defendants; after this explanation no further objection was made. O'Brien then stated that paragraph six of the amendment of the church lease provided that if the lessor sold lot ‘C’ (the lot adjoining lot ‘B’) within twenty-five years from April 1, 1920, ‘the lessees will pay to the lessor the same amount per square foot for the lot described in lot B * * * as the lessor received per square foot for its land in said lot C * * * and * * * during the balance of said lease and the balance of the term * * * the lessees shall pay to the lessor no rent for the land described in said lot B, but shall pay all taxes and other charges as provided in Section 3 of said lease’; that this paragraph was highly prejudicial to the defendants, and that the plaintiff's representatives had told the defendants that the sole rental of the property was five per cent. of the assessed valuation determined over a period of ten years and that such a statement, without disclosing the terms of paragrpah six of the amendment, amounted to fraud and misrepresentation by the plaintiff. The representatives of the plaintiff replied that they presumed the defendants were familiar with the terms of the church lease before signing the agreement. Thereafter, on October 4, 1923, O'Brien wrote the plaintiff's attorney that unless the plaintiff could get the Church Society to eliminate the clause relative to lot ‘B,’ the defendants would refuse to carry out the agreement; that such refusal was because of the misrepresentation of the plaintiff as to this clause.

I.

The master found that until this suit was brought the only fraud and misrepresentation alleged by the defendants related to lot ‘B.’

[2][3] The contract expressly provided that ‘The party of the first part hereby agrees to assign all its right, title and interest in and to a certain lease dated February 26, 1917 for ninety-nine...