Halloran v. Jacob Schmidt Brewing Co.

• Decision Date: 08 June 1917
• Docket Number: No. 20282[108].,20282[108].
• Citation: 162 N.W. 1082,137 Minn. 141
• Parties: HALLORAN v. JACOB SCHMIDT BREWING CO. et al.
• Court: Minnesota Supreme Court

137 Minn. 141

162 N.W. 1082

HALLORAN

v.JACOB SCHMIDT BREWING CO. et al.

No. 20282[108].

Supreme Court of Minnesota.

June 8, 1917.

Appeal from District Court, Ramsey County; J. C. Michael, Judge.

Action by M. P. Halloran against the Jacob Schmidt Brewing Company and others. Judgment on the pleadings for the defendants, and from an order denying a new trial, plaintiff appeals. Order reversed.

Syllabus by the Court

A five-year lease for a room in a building at Des Moines, Iowa, stipulating for the payment of monthly rent at that place, contained this guaranty in writing, signed by respondent: ‘We hereby guaranty the payment of this rental as per this lease.’ The lease with guaranty attached was delivered at Des Moines. The guaranty conforms strictly to the statute of frauds of Iowa. It does not conform to our statute in that the consideration is not expressed. It is held:

No distinction should be made in the interpretation of sections 6998 and 6999, Gen. St. 1913, in our statute of frauds, because of the fact that the one reads ‘no action shall be maintained,’ and the other ‘every contract * * * shall be void,’ unless evidenced by a writing, etc.

The guaranty in suit, being executed in the form required by the statute of frauds of the state where made and to be performed, should be enforced by the courts of this state. The instrument being in writing, there is nothing objectionable to its use as evidence under the policy of the laws here.

The lease was not illegal in its inception, for the pleadings disclose that the business of selling liquor at retail could then lawfully be carried on at Des Moines, and the lease provided that the lessees should carry it on according to the requirements of law.

The laws of Iowa did not forbid respondent, a brewing concern, from executing the guaranty in question.

The provision in the lease that the lessees were to use the leased premises ‘for a saloon and for no other purpose,’ when taken with other provisions therein, must be construed as meaning the ordinary liquor saloon or grogshop.

A fair construction of the lease is that the parties provided against the event that, through no fault of the lessees, it might for any cause become unlawful to conduct the liquor business on the premises, and that then the lessees could terminate the lease by giving notice. It was perfectly proper for them so to do, and their agreement should be enforced.

Plaintiff's contention that the word ‘saloon’ should be given a broad meaning in the lease so as to include a place for public entertainment, a dancing hall, or a temperance saloon is not sustained. Cobb, Wheelwright & Dille, of Minneapolis, for appellant.

A. E. Horn, Paul G. Bremer, and Charles Bechhoefer, all of St. Paul, for respondents.

HOLT, J.

This appeal involves the right to recover the rent stipulated in a lease as against the guarantor thereof. The court ordered judgment upon the pleadings in favor of defendant, and plaintiff appeals from the order denying a new trial.

The lease consists of two attached instruments, or parts, both signed by the lessor and lessees. The one is upon the ordinary printed blank for lease; the other, called the addenda, is entirely typewritten, and thereupon, after the signatures of the lessor and lessees, is pasted a typewritten slip reading, ‘We hereby guarantee the payment of this rental as per this lease,’ signed by respondent. In each of the two instruments mentioned the other is referred to and made a part thereof, so that the two constitute but one contract. The lease is dated at the city of Des Moines, Iowa, on September 29, 1914, runs for five years, and covers the storeroom locally known as 517 Mulberry street, in said city, the rent being $3,000 a year to be paid in monthly installments of $250, in advance, at the office of plaintiff in said city of Des Moines. Among the covenants, other than the payment of rent, to be performed by the lessees, are these: To use said premises ‘for a saloon and for no other purpose,’ not to permit any unlawful business to be conducted thereon, to promptly pay the mulct tax, and to save the premises and protect the lessor against loss arising out of the conduct of the business, and to conduct the business orderly. Then follows this paragraph:

‘(19) It is hereby mutually understood and agreed by the parties hereto that in the event that the Legislature of the state of Iowa should change or amend the laws of the state in such a way as to render it legally impossible for the party of the second part to conduct the business of selling liquors upon said premises, or should the district court or the Supreme Court of Iowa by adverse decision upon the case now pending in the district court of Polk county, Iowa, involving the validity of the saloon consent petition, nullify said petition and hold the same insufficient under the law, and should the party of the second part and other liquor dealers in the city of Des Moines fail, upon proper efforts being made, to procure a new consent petition bearing a sufficient number of the names of electors of the city to entitle the maintenance of mulct saloons in the city Des Moines, then and upon a happening of either of the events herein specified the party of the second part may terminate this lease by serving written notice upon the party of the first part of the intention so to do, specifying the grounds upon which said action is taken in said notice, and from and after the expiration of ninety (90) days from the date of the service of said notice this lease shall be canceled and of no further force and effect, provided the said party of the second part has fully paid all of the rent due under the terms of this lease, including the period of 90 days from and after the service of said notice, and in addition thereto has paid all mulct tax standing against said premises by reason of the conducting of the business of the party of the second part in said premises from the lien or effect of any injunction issued against the said premises by reason of the business of the party of the second part as conducted therein.’

The complaint alleged the making of the lease and guaranty, the failure of the lessees to pay any part of the rent due for the period from February 1, 1915, to May 1, 1916, and asked judgment against them and respondent, the guarantor, for the amount. The separate answer of respondent admitted the execution of the lease and guaranty as set out. It then alleged as a first defense that the guaranty was executed in consideration of the promise of the lessees to buy from respondent all the beer to be sold on the premises, and that such agreement is illegal under the laws of Iowa and vitiates the guaranty. The second defense was based on the so-called ‘Mulct Tax Law’ of Iowa, alleging that when the lease was made the parties believed that there had been a compliance with the provisions of said law so that saloons could be lawfully operated in the city of Des Moines, but that ‘on or about February 15, 1915, the city council refused to give its consent to the operation of mulct saloons in said city from and after the 15th of February, 1915,’ and also that on February 23, 1915, in the district court of the proper county it was adjudged that the statement of general consent under which saloons in the city had been operated was insufficient, and that, since the lease provides that the room rented should be used for saloon and for no other purpose, the term ended when it became impossible to lawfully carry on that business in the premises. The Iowa statutes applicable to carrying on the sale of intoxicants were also set out. The reply denied the first defense, admitted the statutes as pleaded, also the withdrawal of consent by the city council and the adjudication of the district court as alleged. Defendant moved for judgment on the pleadings, but pending a decision the parties, by consent, adduced their evidence, and plaintiff then asked leave to amend the complaint to conform to the proof. The amended complaint in substance alleged that plaintiff refused to lease to defendants unless at the same time, and as a part of the transaction, respondent guaranteed the rent, and thereupon respondent and the lessor and lessees signed and delivered the guaranty and lease at Des Moines, Iowa. It also set forth the Iowa statute of frauds, providing that no evidence of a contract of guaranty is ‘competent, unless it be in writing and signed by the party charged or his authorized agent.’ The court permitted the amendment to the extent of pleading the statute, but denied it in the other respect. It is not perceived why the court should not have allowed the complaint to be amended as asked unless the disallowed portions were deemed immaterial. The matter, however, rested largely in the discretion of the trial court, and we need not consider whether there was here an abuse of that discretion or whether the refused amendment was in any event material; for we have come to the conclusion that there must be a new trial on other grounds. In passing it may be said that appellant's proposition that respondent by signing the guaranty, and thus giving the lessees opportunity to take and occupy the premises, is estopped from questioning the validity of the instrument, does not appeal to us as sound law.

[1] We consider the pleadings, as amended in the particular stated, and therefrom the lease appears clearly to be an Iowa contract, there executed, leasing premises situate in that state, the rent there payable. The guaranty, also there made, must likewise be considered an Iowa contract to be there performed. It also appears, or must be so considered in determining the motion for judgment on the pleadings, that the guaranty is executed in strict conformity to the Iowa statute of frauds, it being in writing subscribed by the party charged. As a general rule, a contract entered into with all the formalities required to make it valid in ...