Crosby v. The Crescent Oil Company of Minnesota
| Decision Date | 22 June 1934 |
| Docket Number | 29,769 |
| Parties | JOHN CROSBY, JR. AND ANOTHER v. THE CRESCENT OIL COMPANY OF MINNESOTA |
| Court | Minnesota Supreme Court |
Action in the district court for St. Louis county to recover damages for alleged fraudulent representations inducing plaintiffs to waive a clause in a lease of property occupied by them requiring 60 days' notice of cancelation in case of sale of the property. The case was tried before Bert Fesler Judge, and a jury. Plaintiffs recovered a verdict of $3,000. Defendant appealed from an order denying its alternative motion for judgment or a new trial. Reversed with directions to enter judgment for defendant.
Evidence -- parol evidence contradicting writing.
1. The parol evidence rule prohibits proof of a contemporaneous parol agreement in contradiction of the terms which have been included in the writing. Were the law otherwise, the purpose of the rule would be frustrated and made futile.
Fraud -- denial or nonperformance of agreement -- intent.
2. Denial or nonperformance alone is ordinarily insufficient to prove that the promise or agreement was made without intention of performance.
Fraud -- evidence.
3. Evidence in the instant case examined and found insufficient to sustain a verdict for plaintiffs.
Mitchell Gillette, Nye & Harries, William K. Montague, and Dunn & Butchart, for appellant.
Baldwin, Holmes, Mayall 3 Reavill, for respondents.
Appeal from an order denying defendant's motion for judgment notwithstanding the verdict or for a new trial. Plaintiffs were copartners engaged in the business of operating a gasolene service station at Duluth. This action was brought by them against defendant to recover damages for alleged fraudulent representations which induced them to waive a clause in a lease to the property occupied by them requiring 60 days' notice of cancelation. Originally the lease ran from the fee owners to plaintiff Crosby and one Wagner. Prior to the events which took place and which led up to the present difficulty, Wagner assigned his interest to the plaintiff Schwartz.
The defendant was engaged in the distribution of petroleum products at wholesale. In the early part of March, 1932, plaintiffs and defendant entered into negotiations resulting in the execution of a sublease by plaintiffs to defendant of the oil station by the terms of which plaintiffs were to handle the petroleum products distributed by the defendant. This arrangement continued until June 25, 1932. At that time a new deal was made so that plaintiffs were thereafter to operate the station as employes of defendant and to continue until July 31, 1935. One of the provisions in that instrument reads:
"Both parties hereto expressly agree that the foregoing instrument contains the entire contract between the parties hereto and that said parties have made no other agreement written or verbal which modifies, supplements or affects the within instrument except the aforesaid chattel mortgage and note and written lease to the aforesaid premises."
About two weeks after the original agreements were entered into, probably toward the end of March, Mr. Berman, for the defendant, and the plaintiffs had some talk to the effect that if the defendant acquired the fee title to the premises a new agreement would be entered into with plaintiffs whereby the leased premises were to be occupied by the plaintiffs upon different terms than those mentioned in the contract of June 25, 1932. It is this conversation out of which the present action arises.
In the lease running from the owners of the fee to the plaintiffs it was provided that the plaintiffs were to have the use of the leased premises for a period of five years from August 1, 1930. The lease contained a clause which permitted the lessors to terminate the same. A brief quotation from the lease is perhaps of value here:
"It is hereby understood and agreed that in case the within described premises are sold or ground-leased for a long term of years or desired for permanent improvement, the lessors [fee owners] shall have the right to terminate this lease at any time by giving at least two months' written notice of intention to terminate this lease."
If the lease was canceled, under the terms of this agreement, during the first year of its term, the amount to be paid plaintiffs was to be four-fifths of the cost of the improvements; if canceled during the second year, three-fifths; if canceled during the third year, two-fifths; and if terminated during the fourth year, one-fifth of the original cost.
Prior to the time of the making of the agreements mentioned plaintiffs had operated their filling station as agents for other oil companies. It is the claim of plaintiffs that defendant was interested in procuring this location for the purpose of enlarging its trade facilities and that this was the motivating cause for bringing about the change of plaintiffs' former employment to defendant's service. Plaintiffs had an investment in the leased premises of about $2,500 in the way of buildings and permanent equipment. Under the terms of their lease with the fee owners their future tenure or occupation of the premises was somewhat uncertain and precarious. As stated, towards the end of March, 1932, plaintiff Crosby approached Mr. Berman, representing defendant, on the subject of the defendant acquiring the fee. As this is the foundation for the present action, a rather complete quotation of the testimony may be of value:
Q. "Now, after you had entered into your first agreement with the Crescent Oil Company, did you have any talk with any of the officers of the company in regard to the purchase of the property by the Crescent Oil Company?
A. "Yes, sir. It was just a couple of weeks after we entered into the agreement of March 7.
Q. "And with whom did you have that talk?
A. "Mr. Berman.
Q. "Who was it that first suggested that the Crescent Oil Company might buy this property?
A. "I suggested it.
Q. "To whom did you make that suggestion?
A. "Mr. Berman.
Q. "Why was it that you brought up the matter of buying the property or the Crescent Oil Company's buying the property?
A. "Well, because we had considerable investments there, and they had quite an investment there in pumps and tanks and so forth, and there was a clause in our lease, 60 days' cancelation in case of sale, and someone else might have the property, and in that case we would be out.
Q. "You had in mind, then, in bringing up the matter of the possible purchase of this property, the cancelation of the lease that you had with the fee owners of this property?
A. "Yes.
Q. "Your understanding of that provision was that it provided for a cancelation of your lease upon 60 days' notice in case the fee owners sold the property to someone else?
A. "Yes.
Q. "And it occurred to you that if the Crescent Oil Company should buy the property that would protect your interests and also that of the Crescent Oil Company?
A. "Yes, sir.
Q. "Now, in connection with the conversation which you had with Mr. Berman about buying the property, did you have any conversation with Mr. Berman as to what arrangements he would make with you and Mr. Schwartz if he did buy the property?
A. "Yes, sir.
Q. "And will you state what that conversation was?
A. "Well, I asked him what sort of a deal they would make with us in case they bought the property and our station, because then they would have the entire investment.
Q. "Did Mr. Berman tell you what kind of a deal he would make with you if he bought the property?
A. "Yes, he did.
Q. "What did he tell you?
A. "He said the profits would be about half a cent less on the gasolene, and our rent would be about five per cent of his investment."
Immediately after this conversation plaintiff Crosby testified that he introduced Berman to one or more of the fee owners. Nothing definite came of this, however, until August 16, 1932, at which time plaintiffs executed a waiver of the 60-day notice provided for in their lease with the fee owners. Defendant had, prior to the execution of the waiver just referred to, secured an option from the fee owners for the purchase of the premises. The waiver was executed at the request of Miss LeDuc, one of the owners, who informed plaintiff Crosby that the defendant would not buy the property unless such release or waiver was secured. Plaintiffs claim that they knew nothing about the option at the time this waiver was signed. On the date of the execution of this instrument the owners of the fee, the plaintiffs, and perhaps also Mr. Berman were at the office of the attorneys. The instrument had been prepared by them and was ready for signature. Plaintiffs claim that they would not sign the waiver if the defendant company failed to buy the premises; in other words, their claim is that they would not execute this release if the fee owners were to convey the property to any other grantee than the defendant. Mr. Crosby claims that he asked Berman if he was sure that they, the plaintiffs, were to stay at the station. Berman assured him that they would. With this understanding, so plaintiffs claim, the waiver was signed and left with the attorneys, who agreed to keep the instrument in their possession and if defendant did not purchase the premises the instrument was to be destroyed; otherwise it was to be effective. On September 21, 1932, the plaintiffs, including also Mr. Wagner, one of the original lessees, executed a further instrument (exhibit F), which reads:
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