Crossman v. Fontainebleau Hotel Corp.

• Decision Date: 18 December 1959
• Docket Number: No. 18105.,18105.
• Parties: Florence Lustig CROSSMAN, a/k/a Florence Lustig, Trading and doing business as Florence Lustig, Appellant, v. FONTAINEBLEAU HOTEL CORP., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

273 F.2d 720 (1959)

Florence Lustig CROSSMAN, a/k/a Florence Lustig, Trading and doing business as Florence Lustig, Appellant, v. FONTAINEBLEAU HOTEL CORP., Appellee.

No. 18105.

United States Court of Appeals Fifth Circuit.

December 18, 1959.

COPYRIGHT MATERIAL OMITTED

Robert C. Ward, Miami, Fla., for appellant.

Richard P. Kenney, Miami, Fla., for appellee.

Before RIVES, Chief Judge, and HUTCHESON and WISDOM, Circuit Judges.

WISDOM, Circuit Judge.

The plaintiff-appellant, Florence Lustig Crossman, operates women's dress shops in Miami Beach, Palm Beach, and Bal Harbour, Florida, in New York City, and in other places. The defendant-appellee is the Fontainebleau Hotel Corporation of Miami, Florida. The Fontainebleau Hotel opened for business in December 1954.

Lustig filed suit for a declaratory judgment against Fontainebleau October 19, 1959, in the Southern District of Florida asserting that she was the assignee of a lessee's interest in a lease for shop space in the hotel, and that the lease had a renewal clause. She attached to the complaint a long, unsigned, and unwitnessed writing, said to represent the lease. The complaint seeks to enjoin any unlawful detainer or dispossessory action in the state courts of Florida to oust her from possession of the premises pending a determination of her rights.

Fontainebleau Hotel moved to dismiss on the ground that the lease was not executed in compliance with the Florida Statute of Frauds. In reply, Lustig contends that possession, payment of the rent, and expenditure of $50,000 for improvements take the contract out of the Statute of Frauds. The district court granted the motion to dismiss for failure to state a claim entitling the plaintiff to relief, and Lustig appeals from the order of dismissal.

After suit was instituted, but before the order of dismissal was submitted, the hotel brought a dispossessory proceeding in a Florida court to oust Lustig as a tenant holding over beyond her term. The Florida court determined that the federal order of dismissal was res judicata and ordered Lustig evicted. Lustig then asked for an injunction to stay the execution of the state court judgment.

The matter came before us for oral argument on appellant's application for an injunction to stay the state proceeding. The entire record being before us, however, at the request of the Court, in order to expedite decision of the case on the merits before determining the propriety of the injunction against a state court, counsel for both sides agreed to argue the merits of the appeal from the order of dismissal. The Court is of the view that the judgment should be reversed and the case remanded.

I.

The complaint alleges the following facts.

January, 1955, about a month after the Fontainebleau Hotel opened, Florence Lustig and her husband, Crossman, who was also her manager, were staying at the hotel. They were approached by a Mr. Ben Jaffe, an officer, director, and large stockholder of the hotel, who was handling the leasing of store space in the hotel. Jaffe told Lustig that the lower lobby, where all of the shops were to be located, had not been completed and that the management was anxious to have tenants in promptly; it was the height of the season in Florida. Jaffe, Lustig, and Crossman agreed orally on the terms of a lease. Then, in order to expedite the opening of the shopping area in the Fontainebleau, so that the hotel guests would have the benefit of complete facilities, at Jaffe's request Lustig agreed to move in immediately and to take possession of the premises for the operation of a fine dress shop before formal execution of any lease. Based on the oral agreement and on Jaffe's assurances that all would be satisfactory, Lustig took possession of the premises. Using the hotel's architect and general contractor, she spent $50,000 on fixtures and improvements, a part of which was not removable. To bind the transaction Lustig gave the hotel $5,000 as a good faith deposit, an amount still held by the hotel.

After Lustig commenced construction of the improvements, the hotel presented a lease that allegedly was not in accordance with the original understanding of the parties. Lustig, through her husband, Crossman, and the hotel, through Jaffe, made pencilled corrections in the lease to reflect the original understanding. All of these changes were approved by Jaffe and Crossman. Jaffe then stated that the lease would be redelivered to the hotel's attorneys to be redrafted in accordance with the pencil notations. No redrafted lease was ever submitted to Lustig.

The lease shows the lessee to be Florence Lustig of New York, Inc., a New York corporation authorized to do business in Florida. The plaintiff is the sole stockholder, a director, and dominant party in that corporation. All of the rights of the corporation in the lease were transferred to her. She has occupied the premises and paid the rent since March 1, 1955, when the shop opened as "Florence Lustig".

July 20, 1958, Lustig notified the lessor in writing of her election to exercise the option to renew the lease. In August 1958 the hotel's attorneys' letter to the corporation denied that there was any option to renew the lease. In July 1959 a letter from the hotel demanded possession of the premises no later than September 1, 1959. In September Lustig wrote the hotel tendering a check for $2,000 for the rent for the first month of the alleged new five-year term. The check was returned. The lessor again demanded possession of the premises, but extended the deadline for removal to October 31, 1959.

The face of the correspondence shows that the hotel addressed its letters to Florence Lustig, Inc. There are, however, references to Florence Lustig individually as the tenant. The record does not disclose how the letters from the lessee to the hotel were signed.

Florence Lustig alleges that she took possession of the leased premises and paid the rent. The shop was operated under her name. Prior to raising the issue of an alleged invalid assignment, as a defense in this case, the hotel had done nothing to indicate disapproval of Florence Lustig as a tenant.

The Florida Statute of Frauds provides:

"No estate or interest of freehold, or for a term of more than one year, or any uncertain interest of, in or out of any messages, lands, tenements or hereditaments shall be created, made, granted, transferred or released in any other manner than by instrument in writing, signed in the presence of two subscribing witnesses by the party creating, making, granting, conveying, transferring or releasing such estate, interest, or term of more than one year * * *." F.S.A. § 689.01

A statute of frauds makes no exception in favor of a plaintiff who has rendered his own performance in part or in full. But by a course of judicial development, it has become established law for equity courts to hold the statute inapplicable when a contracting party has partially performed his share of the bargain. Corbin states the general principle as follows: "Nevertheless, it is established law that, after certain kinds of part performance by a purchaser, the court will specifically enforce the vendor's promise to convey land. * * * Part performance of a contract for the transfer of land does not take the case out of the statute; but it may be of such a character that it will take the statute out of the case. * * * The part performance doctrine applies to a contract for * * * any of the lesser interests in land; and cases are numerous in which it has been applied to oral leases of land, even though they are for so long a period as to be clearly within the one-year clause of the statute as well as within the land clause." 2 Corbin, Contracts § 420 (1950).

The lessee concedes that the writing relied on here does not meet the formal requirements called for in the statute for a valid five-year lease. She contends that possession as lessee for five years, coupled with payment of the rent for that time and expenditures for substantial improvements she made on the premises, take the agreement out of the statute and give her the right to specific performance according to the provable terms of her contract. She contends also that the option to renew for five years set out in the instrument is a valid option enforceable, as are all the other terms of the contract, by a court of equity.

Reed v. Moore, 1926, 91 Fla. 900, 109 So. 86, 88, involved a set of facts similar to those the instant case presents. The lease was for a term of five years with an option to renew for a further term of five years. The lease did not meet the requirements of the Statute of Frauds since it was attested by only one witness. The original lessees executed an assignment of their interest in the lease in compliance with the Statute. The first assignee then assigned to an oil company, which assigned to the appellant Reed. The case, as reported, does not indicate whether the second and third assignments complied with the Statute. The lessor sold the land to the appellee, Moore, who demanded possession of the leased premises. Reed, the lessee, brought an action to enforce the lease on the premises. The court granted relief stating:

"While the lease attested by only one witness was not effectual as an executed conveyance of the term, it was effectual as a contract to lease, and the lessee having possession under the contract may have specific performance; no forfeiture being shown. * * * The assignments to the successive assignees were at least in equity sufficient to pass the interest in the contract to lease, and the grantee, A. B. Moore, took the title subject to the contract to lease and accepted rents from the assignee in possession under the contract to lease; therefore such assignee is entitled to specific performance of the contract against the grantee of the fee-simple title, and is entitled also to appropriate incidental relief. * * *"

In regard to the option to renew,...