Francone v. McClay

• Decision Date: 20 May 1955
• Docket Number: NO. 2989.,2989.
• Parties: JOSEPH RICHARD FRANCONE AND MARION FLORENCE FRANCONE v. SAMUEL MCCLAY AND ELIZABETH MCCLAY.
• Court: Hawaii Supreme Court

41 Haw. 72

JOSEPH RICHARD FRANCONE AND MARION FLORENCE FRANCONE

v.SAMUEL MCCLAY AND ELIZABETH MCCLAY.

NO. 2989.

Supreme Court of the Territory of Hawai‘i.

Argued November 4, 1954.

Decided May 20, 1955.

APPEAL FROM CIRCUIT JUDGE FIRST CIRCUIT, HON. C. C. MCGREGOR, JUDGE.

Syllabus by the Court

Where a contract is complete and certain as to the essential and material terms, parts and elements of a lease, specific performance will be granted; but if the contract to lease or the negotiations of the parties affirmatively disclose or indicate that further negotiation of terms and conditions is contemplated, the proposed lease is considered incomplete and incapable of being specifically performed.

A contract to enter into a lease of income-producing apartment property for a term of 65 years is sufficiently definite to be specifically enforced by the lessees of the contract when the contract contains the names of the parties, the description of the premises, the term of years, the annual rental, the payment of taxes, the payment of insurance, the payment of assessments, the payment of any other charges, the payment for furniture, the payment of additional percentage rental, alterations and additions to premises, consent of the lessors on sale of lease, a reservation of an apartment for the lessors for a specific period, and a statement that the lease shall contain “all other usual covenants.”

Equity does not require useless formality. If, therefore, the lessor has repudiated his contract, which repudiation continues to the date for performance, a tender is unnecessary by the lessees who at all times have been ready, willing and able to perform their part of the contract.

Long-term leases of property for hotel, apartment and business sites are not unusual or exceptional in Hawaii and are so common as to make it possible to state what covenants and agreements usually come into and become a part of the lease.

R. L. Dodge ( Heen, Kai, Dodge & Lum with him on the briefs) for respondents-appellants.

D. C. Hamilton (Henshaw, Conroy & Hamilton with him on the brief) for petitioners-appellees.

TOWSE, C. J., STAINBACK, J., AND CIRCUIT JUDGE MCKINLEY IN PLACE OF LE BARON, J., ABSENT.

OPINION OF THE COURT BY STAINBACK, J.

This is an appeal from the decree of the chancellor ordering appellants to specifically perform a written contract to enter into a 65-year term lease with the appellees for certain real property situate at Waikiki, in Honolulu.

The agreement of the parties sought to be specifically enforced is set forth in the bill of complaint and Exhibit “A” attached thereto filed by the appellees. By this contract appellants agreed to lease 7,613 square feet of property in Waikiki with improvements thereon, consisting of two two-story frame buildings and a one-story frame building containing eight furnished and one unfurnished apartments. The contract consisted of a printed form signed by all parties thereto and an attached letter by appellants containing a lease proposal, and a listing contract granting the broker an exclusive authorization to sell and, further, the contract acknowledged receipt of the sum of $1,000 as a deposit on the contract set forth thereunder. The letter of authorization to the broker, after describing the premises by street address and reciting the present annual rental income and estimated operating expenses and net profit, set forth as follows the terms and conditions in eight paragraphs, all of which were made a part of the contract to lease:

“1. Lessee will be given a 65-year lease with an annual net rental of $3,600.00. Lessee to pay all taxes, insurance premium, assessments and any other charges that shall be assessed against the property.

“2. Lessee will be required to pay $5,000.00 for the purchase of the furniture and fixtures which will become the property of the lessee, except dining room table and 6 chairs in 328 upstairs.

“3. The lessee will pay the last year's minimum rental of $3,600.00 in advance, as a deposit to guarantee future payments, and $300.00 on the first of each month throughout the term of the lease. Commission to Broker by lessor.

“4. In the event that the gross rental income from the operation of the premises exceeds $15,000.00 annually, the annual ground rental shall be increased by 5% of the gross annual income over and above the said $15,000.00.

“5. The lessee will be permitted to make reasonable alterations and additions to the premises, subject to lessor's approval.

“6. All furniture in lessor's apartment, except stove, heater and refrigerator to be removed. Also dining room table and 6 chairs.

“7. Lessor will not unreasonably withhold consent to sale of lease to another party.

“8. All other usual covenants will be matter in lease.”

The listing contract to which reference was made was a contract which had been entered into between appellees and the real-estate broker at the time the property was listed with the broker. The $5,000 for certain furniture itemized in the letter, the sum of $3,600 in cash for the last year's rental, and the sum of $300 in cash for the first month's rental were to be paid on or before July 1, 1953. The lease was to be executed on or before July 1, 1953, the date occupancy of the premises was to commence.

On June 21, 1953, appellants advised the real-estate broker by letter that they had decided to refuse to sign the lease at a rental of $300 per month; that they were “Taking advantage of item seven in your contract for lease of my property, have decided to refuse to sign the lease on a $300.00 per month basis.

“We have been getting Three Hundred dollars per month cash out of our places and a free rental, valued at Two Hundred Dollars per month. This we have to have to eat and live.

“We therefor will lease at Five Hundred a month. However, to Mr. Francone, will agree to Four Hundred per month for ten years, and then Five Hundred per month on a fifty-one year lease with an option of fifteen years more at Six Hundred Dollars per month. Furniture sale to stand as agreed upon.”

The appellees, after notification of such refusal, made oral demands upon the respondents-appellants that they reconsider their refusal to enter into the lease as provided by contract and on June 29, 1953, made written demand upon appellants for the execution of the lease, saying that they were ready, able and willing to perform. However, the lessors-appellants continued their refusal to perform to the date of the institution of the suit herein.

Appellants filed a demurrer to the bill upon the ground that it did not state facts sufficient to show the right to the relief prayed for, or to any relief in equity; that the alleged agreement to lease was vague, indefinite, uncertain and incapable of being specifically enforced; that it conclusively appears from the said bill of complaint that the parties to the alleged agreement to lease intended that further negotiations be had with respect to execution, terms, conditions and covenants to be included in the proposed lease; that the terms, covenants and conditions alleged to have been agreed upon by the parties are insufficient to entitle the petitioners to a decree for specific performance as prayed for, and petitioners had failed to perform the conditions precedent to their right to the relief prayed for or to any relief in equity.

The chancellor overruled the demurrer and the appellants elected to stand on the demurrer and a decree pro confesso against appellants was entered.

After the introduction of evidence the chancellor found for appellees upon all allegations of the complaint and granted the prayer of the petitioners. The chancellor in his decision found, among other matters, that the respondents listed the property on June 15, 1953, with Wendell Brooks, a Honolulu broker, for leasing according to the terms set out therein; the property was described by street number, area, and improvements consisting of two two-story buildings and one one-story building; in both the listing agreement and lease proposal the premises are described by both street address and by tax map key number. The chancellor also sets forth the lease proposal as heretofore described. He further found that petitioners and respondents met with the broker on June 20, 1953, and that at this meeting the parties executed the contract, Exhibit “A” in petition heretofore referred to, “wherein Petitioners agreed to lease from Respondents and Respondents agreed to lease to Petitioners subject premises.” The contract stated that the lease was to be for 65 years (modified from 51 years as originally proposed) as per attached listing and letter; that the contract was executed under date of June 20, 1953, by all of the parties thereto; that petitioners paid the sum of $1,000 as a deposit on said contract; that on June 21, 1953, the respondents wrote a letter of like date to their broker advising him that “Taking advantage of item seven in the sale contract,” they had decided they would not execute a lease on a $300 per month basis but would do so for a rental of $500 per month; the chancellor further found that “Item seven in the contract reads ‘That this contract shall be binding if signed by the parties hereto within one (1) day from the date of the initial payment receipt aforementioned. Necessary documents to complete this transaction shall be drawn and duly executed on or before July 1, 1953, unless this time is extended by mutual consent.’ Since the initial payment receipt and contract were both signed concurrently and both are dated June 20, 1953, the foregoing reference to item seven obviously has no force or effect.” Additionally, the chancellor found that oral demands were made upon the respondents by the petitioners for the performance prior to July 1, 1953, the petitioners informing the respondents that petitioners were ready, willing and able to perform the contract as written; that by letter dated June 29, 1953, served upon respond...