Clement v. Young-McShea Amusement Co.

• Decision Date: 18 June 1906
• Citation: 70 N.J.E. 677,67 A. 82
• Parties: CLEMENT et al. v. YOUNG-McSHEA AMUSEMENT CO.
• Court: New Jersey Supreme Court

67 A. 82

70 N.J.E. 677

CLEMENT et al.

v. YOUNG-McSHEA AMUSEMENT CO.

Court of Errors and Appeals of New Jersey.

June 18, 1906.

(Syllabus by the Court.)

Appeal from Court of Chancery.

Action by Mary J. Clement and others against the Young-McShea Amusement Company. Judgment for plaintiffs (60 Atl. 419), and defendant appeals. Reversed and bill dismissed.

From July 1, 1892, until the filing of the present bill, the Young-McShea Amusement Company was the owner of a building fronting on the Board Walk in Atlantic City, and known as "Young's Hotel." That company is a New Jersey corporation having 1500 shares of capital stock, and during the transactions involved in this litigation John L. Young owned about 1440 of those shares and was the treasurer and a director of the company. Messrs. Thompson and Fralinger were the other directors, Mr. Thompson being also the president, and William E. Shackelford, a son-in-law of Young, was the secretary. For a long time Young had controlled the affairs of the company, having unwritten authority to lease its property, and Shackelford had been his manager. Shortly before May 1, 1902, Thomas J. Clement saw Young with regard to obtaining a lease of a portion of the entrance to Young's Hotel as a stand for the sale of orange juice and similar beverages, and he and Young agreed upon the price. Afterwards Shackelford handed to Clement a lease of the proposed stand and its appurtenances, which is now produced by the complainants as the basis of their claim. It reads as follows: "This indenture made the first day of May, A. D. nineteen hundred and two, between John L. Young, of Atlantic City, N. J., party of the first part, and M. J. Clement, of the same place, party of the second part, do grant, demise and to farm let unto the said party of the second part a certain space situate on the south side of entrance to Apartment House, seven feet front on Board Walk by forty feet deep (back to steps), also basement under entrance sixteen feet by forty feet, with the appurtenances. Ten years from July 1, nineteen hundred and two, at the rent or sum of two thousand dollars, to be paid $500 on May 1, $500 on July 1, $500 August 1, and $500 August 15, of each year." Then are inserted provisos and covenants not now important, and finally: "And the said party of the first part do covenant with the said party of the second part, on paying the said rent and performing the covenants aforesaid, shall and may peaceably and quietly have, hold and enjoy the said demised premises for the term aforesaid. In witness whereof the said parties have interchangeably set their hands and seals hereto the day and year first above mentioned. John L. Young, W. E. S., M. J. Clement." M. J. Clement, named as the lessee, is the wife of Thomas J. Clement, and the signature "John L. Young" is in the handwriting of Shackelford, whose initials are added.

At the time the lease was made, Mr. Clement knew that the company was the owner of Young's Hotel, but did not know that the company was a corporation. On July 1, 1902, Mr. and Mrs. Clement, in pursuance of the provisions of the lease, took possession of the demised premises and fitted up the same appropriately for their business at an expense of more than $6,000, and have since up to the present time carried on business therein. They have also regularly paid the rent prescribed to Shackelford, who collected it as Young's agent and deposited it to Young's credit in bank, and Young has annually included it as so much rent collected in his reports to the company on the state of accounts between the company and himself. It does not appear that any counterpart of the lease was ever made, or that any director or officer of the company, except Young and Shackelford, had any notice of its terms; but every one of them knew that the Clements were occupying the premises as tenants. In July, 1904, the company brought an action of ejectment against the Clements, and thereupon they filed the present bill to enjoin the prosecution of that suit and to have the above lease established as binding and obligatory upon the company. After full hearing, the Chancellor decreed that the company should be perpetually enjoined from prosecuting the ejectment suit, that the instrument above set forth was the act of the company, and that the proper officers of the company should forthwith sign, execute, and deliver the same to Mrs. Clement as of May 1, 1902. From this decree, the company appeals.

Thompson & Cole, for appellant. Howard Carrow and Joseph R. Wilson, for appellees.

DIXON, J. (after stating the facts). The written instrument upon which the complainants base their claim was incapable of creating the term of years therein mentioned, either against the company or against Young, the lessor, because of the first section of the statute of frauds (Gen. St. p. 1602), which enacts that: "All leases * * * of * * * any * * * tenements * * * made or created * * * by parol and not put in writing and signed by the parties so making or creating the same, or their agents thereunto lawfully authorized by writing, shall have the force and effect of leases at will only, and shall not either in law or equity be deemed or taken to have any other or greater force or effect, * * * except nevertheless all leases not exceeding the term of three years from the making thereof." The lease was signed by Shackelford, who had only unwritten authority from Young, and no authority whatever from the company. Consequently, as a lease it had, both in law and equity, merely the force and effect of a lease at will. Even if it had been signed by Young himself under his authority from the company, it would have had no greater force against the latter, because the authority was not conferred by writing. But the instrument contains, beside the implied covenant for quiet enjoyment presumed from the word "demise" (1 Wash. R. P. 323), an express covenant of like character, and it may be that such a covenant should be held to be covered by the fifth section of the statute of frauds, as a contract concerning lands, which an agent may lawfully sign without written authority. Assuming this to be so, the covenant would of itself be sufficient evidence of Young's contract, the authority of Shackelford to sign for him being unquestioned; but it would be inadequate against the company, under the decisions in this state, because it nowhere points out the company as one of the...