Ford Motor Co. v. Hotel Woodward Co.

• Decision Date: 24 February 1921
• Docket Number: 45.
• Citation: 271 F. 625
• Parties: FORD MOTOR CO. v. HOTEL WOODWARD CO.
• Court: U.S. Court of Appeals — Second Circuit

271 F. 625

FORD MOTOR CO. v. HOTEL WOODWARD CO.

No. 45.

United States Court of Appeals, Second Circuit.

February 24, 1921

[Copyrighted Material Omitted]

Crisp Randall & Crisp, of New York City (A. Lucking, of Detroit Mich., and James M. Beck and W. Benton Crisp, both of New York City, of counsel), for plaintiff in error.

Holm, Whitlock & Scarff, of New York City (Charles H. Tuttle, of New York City, Stephen C. Baldwin, of Brooklyn, N.Y., and Victor E. Whitlock, of New York City, of counsel), for defendant in error.

Before WARD, HOUGH, and MANTON, Circuit Judges.

WARD Circuit Judge.

This is a writ of error to a judgment entered on the verdict of a jury in favor of the plaintiff in the sum of $600,000. The cause of action is for damages for breach of a contract to give the plaintiff a lease of certain premises to be constructed by the defendant in New York City. The defense is that there never was any meeting of the minds of the parties as to the terms of the proposed lease, and that there was no written memorandum of the contract, if contract there was, as required by the statute of frauds.

The complaint was dismissed on a former trial. Hotel Woodward Co. v. Ford Motor Co., 258 F. 322, 169 C.C.A. 338. The conclusions of law of that appeal became the law of the case. They were: (1) That the statute of frauds of the state of New York, and not of the state of Michigan, applies. (2) That it was for the jury to determine whether there had been a meeting of minds of the parties. (3) That the letter of August 31, 1916, signed by Robertson, the defendant's general attorney, was a sufficient memorandum under the statute, if he was the defendant's 'lawfully authorized agent.' (4) That on the record then before the court there was a question for the jury to say whether the officers of the defendant who authorized Robertson to act in the premises were themselves acting with authority.

We have held in Johnson v. Cadillac Co., 261 F. 878, 8 A.L.R. 1023, that we are not absolutely bound by the conclusions of the court upon a former appeal; but we should depart from the rule only under extraordinary circumstances, and we are not at all disposed to do so in this case.

On the second trial the defendant was allowed to plead section 242 of the Real Property Law (Consol. Laws, c. 50), and it contends that, as it was a part of the contract that the plaintiff was to execute a mortgage to secure payment of the rent, the memorandum of contract is invalid, because not signed by it as well as by the defendant. But the complaint is for breach of contract to make a lease, and we are of opinion that the only statutory requirement applicable is section 259 of the Real Property Law, which reads:

'Sec. 259. A contract for the leasing for a longer period than one year, or for the sale, of any real property, or an interest therein, is void, unless the contract, or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the lessor or grantor, or by his lawfully authorized agent.'

The statute is a rule of evidence. If it be not pleaded, even a contract within its terms can be proved by oral testimony alone.

Matthews v. Matthews, 154 N.Y. 288, 292, 48 N.E. 531. Therefore such a contract is not void, but only voidable, and the word in the statute must be so understood.

Next, it is to be observed that the statute does not require the contract to be in writing, but only a memorandum of it, expressing the consideration, to be signed by the lessor or by his lawfully authorized agent. The letter of August 31, 1916, was as follows:

'Detroit, U.S.A., August 31, 1916.

'Hotel Woodward Company, 55th Street & Broadway, New York City-- Gentlemen: Attention of Mr. Green. Confirming our conversation, will say that draft of lease as discussed is entirely acceptable to us, and same will be prepared immediately for execution. We have consented to the alterations suggested by your attorney, as they do not seem in any manner to have changed the intent of the lease. We leave the question of limitation of assignment of equity as security until lease is signed, but think this can be arranged to your entire satisfaction.

'As soon as the lease is ready we will come on to New York and close up the entire matter of the execution of the lease and the security as agreed. In the meantime you may go ahead with any plans you have in connection with this proposition, so that there will be no delay when the architects' plans are ready. Trusting this will be entirely satisfactory, we are,

'Yours very truly,

Ford Motor Company, 'L. B. Robertson, Gen'l Attorney.'

It was written by the defendant's general attorney, Robertson, in the presence of the plaintiff's president, Green. It refers to a draft of lease then before the writer, which had been prepared by the defendant's attorney, and upon which the plaintiff's attorney had suggested certain emendations in writing. Thus the written draft as amended became a part of the letter, and defendant's general attorney declared it acceptable to the defendant. A memorandum under the statute is not necessarily one paper, but may consist of a series of letters, or telegrams, or written drafts. Ryan v. United States, 136 U.S. 68, at page 83, 10 Sup.Ct. 913, at page 918 (34 L.Ed. 447). Mr. Justice Harlan said:

'Did the papers which passed between the parties, constituting the memorandum of the transaction, contain such a description of the lands in dispute as was sufficient, in connection with extrinsic evidence not contradictory of nor adding to the written description, to meet the requirements of the Michigan statute of frauds? We say 'the papers,' because the principle is well established that a complete contract binding under the statute of frauds may be gathered from letters, writings and telegrams between the parties relating to the subject matter of the contract, and so connected with each other that they may be fairly said to constitute one paper relating to the contract. Beckwith v. Talbot, 95 U.S. 289, 292; Ridgway v. Wharton, 6 H.L.Cas. 238; Coles v. Trecothick, 9 Ves. 234, 250; Cave v. Hastings, 7 Q.B.D. 125, 128; Long v. Millar, 4 C.P.D. 450, 456.'

But it is contended by the defendant that the letter plus the draft of lease shows that the minds of the parties had not met, because of this sentence in the letter:

'We leave the question of limitation of assignment of equity as security until lease is signed, but think this can be arranged to your entire satisfaction.' Quite obviously this sentence needs explanation, and Green and Robertson, who were the parties present when the letter was written by Robertson and delivered to Green, were properly permitted to testify on the point. Both agree that what was referred to was the provision in the draft lease that the mortgage to be given by the plaintiff to secure payment of the rent should cover all its equity 'in the furniture, fixtures, furnishings, etc., placed by it in the building hereby leased. ' Both agree that the lessee wanted this to be altered, because likely to affect its credit in financing its hotel. But the provision was in the draft lease, and had been accepted by the plaintiff, which draft, as amended, was declared acceptable to both parties. Green testified that this was only a suggestion by the plaintiff for the defendant's consideration; but Robertson testified that he told Green that Klingelsmith, the defendant's vice president and treasurer, would not make the lease at this time, and that the letter was written merely to enable Green to go ahead with his plan to finance the hotel. This was a question for the jury (Rankin v. Fidelity Trust Co., 189 U.S. 242, 252, 23 Sup.Ct. 553, 47 L.Ed. 792), and manifestly the jury has adopted Green's story. The fact that subsequent modifications were made in the contract is no evidence that the minds of the parties had not met August 31, 1916, but it is significant that the defendant subsequently agreed to grant what the plaintiff asked.

Judge Augustus N. Hand instructed the jury that they could not give a verdict for the plaintiff unless they found that the defendant had agreed to make the lease, irrespective of the cost of construction, and that the plaintiff had agreed to give security for payment of the rent on its furniture, etc., in the new building. The verdict establishes both of these points in favor of the plaintiff.

The importance of cost of construction is that both parties supposed, at the time the letter of August 31, 1916, was written, and until early in 1917, that the building could be erected for about $700,000, 10 per cent. upon which represented the rent of $70,000. But the lessor subsequently refused to sign the lease, upon the ground that the cost would be nearer $1,250,000. The question of cost, however, was fully covered by the draft lease, which provided that--

'In addition to the sum above provided to be paid (i.e., on the estimated cost of $700,000), if the cost of the building is in excess of $700,000, the lessee will pay to...