Holiday Inns of America, Inc. v. Peck

• Decision Date: 26 March 1974
• Docket Number: No. 1858,1858
• Citation: 520 P.2d 87
• Parties: HOLIDAY INNS OF AMERICA, INC., a corporation, Appellant, v. Leonard PECK, Appellee.
• Court: Alaska Supreme Court

Page 87

520 P.2d 87

HOLIDAY INNS OF AMERICA, INC., a corporation, Appellant, v. Leonard PECK, Appellee.

No. 1858.

Supreme Court of Alaska.

March 26, 1974.

D. A. Burr and Arden E. Page, Burr, Pease & Kurtz, Anchorage, for appellant.

James K. Tallman, Anchorage, for appellee.

Before RABINOWITZ, Chief Justice, and CONNOR, ERWIN, BOOCHEVER and FITZGERALD, Justices.

OPINION

BOOCHEVER, Justice.

Appellant Holiday Inns suffered a judgment of $51,000 against it in the superior court for damages arising out of an alleged breach of a franchise contract Holiday Inns had made with Leonard Peck for the construction of a Holiday Inn facility in Anchorage. The original franchise contract was entered into in November of 1965, with Peck tendering a deposit of $10,000 and the parties executing a contract in the form of a 'commitment letter'.

The commitment letter contained a condition that Peck begin construction by 6 months from November 10, 1965. After Peck was unable to comply with this condition, a long series of correspondence and negotiations took place between the parties. After extending the construction commencement deadline several times, Holiday Inns advised Peck on October 2, 1967 that either he could have his deposit back (less Holiday Inn's expenses) or Holiday Inns would grant him an extension to January 15, 1968 to enable him to demonstrate that he had secured the necessary long-term financing, ¹ in which case the deadline for commencing construction would be further extended to May 1, 1968.

Peck apparently satisfied Holiday Inns that he had obtained financing, ² and, as a result, he received a new commitment letter dated February 23, 1968 superseding the former agreement. It is this new commitment letter that is the subject of the instant suit.

Peck and two associates (not parties to this suit) signed the February commitment letter on March 4, 1968, and an additional associate signed it on March 6, 1968. John M. Greene, Jr. then signed the letter on behalf of Holiday Inns.

In addition to superseding the former commitment letter, the new commitment letter contained two interlineated conditions. In paragraph 5, dealing with a new construction commencement date, a line was drawn through 'within nine (9) months from the date of this Commitment letter' and the term 'by May 1, 1968' interlineated. In paragraph 6 dealing with a final deadline for the completion of the facility, the term 'within eighteen (18) months from the date of this commitment' is crossed out and the term 'February 1, 1969' interlineated. The interlineations bore only the initials JMG.

Additional correspondence referring to the May 1, 1968 deadline was received from Holiday Inns and acknowledged by Peck. Holiday Inns subsequently advised Peck by a letter dated June 14, 1968 that the commencement deadline would be extended to July 1, 1968 with a completion deadline of April 1, 1969, and requested Peck to make these changes in his commitment letter. Peck did not respond to the request.

On June 20, 1968, Peck advised Holiday Inns that he was unable to secure longterm financing and asked Holiday Inn's assistance in securing it. In a letter dated July 1, 1968, Holiday informed Peck that his request would be denied, and that his commitment letter of February 23, 1968 was null and void under its 'own terms and conditions', since the july 1, 1968 construction commencement date had not been met. The $10,000 was never returned. Peck filed suit for breach of contract on August 6, 1971.

In his complaint, Peck alleged in substance that Holiday Inns breached its agreement to issue a franchise to his associates and himself, and that, as a result, he was entitled to recover out-of-pocket expenses, the reasonable value of time spent on the project, legal and secretarial expenses incurred, and his $10,000 deposit, in a total amount of $63,269.64. In addition, he alleged that he had been deprived of a participating interest in the Holiday Inn worth $500,000. Holiday Inns answered, with a general denial of the material allegations of the complaint and affirmative defenses of failure to state a claim and failure to comply with the conditions set forth in the commitment letter.

During the trial of the case, it became apparent that major issues were whether the alteration in commencement date had been made subsequent to Peck's signing the agreement; and if so, whether it was binding on him.

It was the plaintiff's contention at trial that the interlineation had been made after he signed the commitment letter, and that he therefore had nine months to commence performance (as the commitment letter originally specified). Accordingly, the commencement date would have been November 23, 1968, not May 1, 1968 as stated in the interlineation, or July 1, 1968 as subsequently extended by Holiday Inns. Holiday Inns' July 1, 1968 declaration that the commitment letter was null and void would therefore have constituted an anticipatory breach of the contract entitling Peck to damages. ³

The jury returned a verdict for Peck in the amount of $51,000. The trial judge had previously denied a motion for a directed verdict. After the jury's decision, he denied a motion for judgment notwithstanding the verdict, and a motion for a new trial.

Holiday Inns contends on appeal, inter alia, that Peck did not substantially comply with the commencement deadline provision of the contract, and that the judge's instructions concerning substantial performance were erroneous. But if the July 1 deadline did not bind Peck, then Holiday Inns would have had no right to repudiate the contract, and Peck would be entitled to damages for anticipatory breach. Thus, only if the July 1 deadline is applicable would it be necessary to reach the issue of substantial performance. At the close of trial the judge submitted the interrogatories to the jury, including the following:

1-Do you, the jury, find that Leonard W. Peck knew of and was bound by any May 1, 1968 deadline for the commencement of the construction prior to any extension thereof?

2-Do, you, the jury, find that Leonard W. Peck knew of, and was bound by an extension or change in the time to commence construction to July 1, 1968?

The jury responded to each in the negative so that the answers to those interrogatories indicate that the jury found that the July 1 date did not apply to Peck on the basis that he either did not know of it, or was not bound by it. If there was no reversible error in that finding, the general verdict consistent with it must be upheld. ⁴ Therefore, our initial inquiry is directed to determining wheher the july 1 deadline was effective.

I THE PROPRIETY OF THE SPECIAL INTERROGATORIES

Although Holiday Inns alleges that it objected to the proposed interrogatories in chambers because of their compound and legal nature, it waived any objections at trial when counsel stated: 'I have no objection to the interrogatories in their present form, Your Honor.'

Civil Rule 51(a) provides in part:

No party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection. Opportunity shall be given to make the objection out of the hearing of the jury, by excusing the jury or hearing objections in chambers. ⁵

This court has consistently held that the purpose of Rule 51(a) is to give the trial judge the opportunity to correct any errors in the instructions. Thus, we have refused to review such alleged errors where there was no specific objection at trial. ⁶ However, we have also recognized that if the alleged error in 'plain error' that is likely to result in a miscarriage of justice, we will consider such error even though not raised below. ⁷

We do not consider this to be an appropriate case to apply the 'plain error' rule. First, there is a distinct difference between failing to make a formal objection as occurred in Malvo v. J. C. Penney and affirmatively stating that there is no objection to the instruction. An affirmative waiver is more likely to mislead the trial judge. Second, we find that the interrogatories, if erroneous, did not result in a 'miscarriage of justice'.

With regard to the compound nature of the interrogatories, although it is true that a judge who tries a case without a jury must make findings of fact that specifically support his conclusions of law, ⁸ there is no comparable rule with respect to juries. Rather, civil Rule 49(c) ⁹ merely allows a judge to submit written interrogatories to the jury and provides that when the answers to the interrogatories are harmonious with the general verdict, 'the court shall direct the entry of the appropriate judgment.' It is only when the answers to the interrogatories are inconsistent with each other or with the general verdict that the verdict may be set aside and a new trial ordered.

The interrogatories asked whether Peck 'knew of' the May 1, 1968 deadline and was 'bound by it' and, similarly, whether he 'knew of' and was 'bound by' the extension of the deadline ot July 1, 1968. Both interrogatories having been answered in the negative, they are subject to the same construction. The questions were phrased in the conjunctive, so that a negative answer could indicate either an absence of knowledge of the respective deadlines or that Peck was not bound by them. Since Peck would have been entitled to recover in either event, the answers are harmonious with the general verdict.

Holiday Inns argues that it was reversible error for the court to suggest to the jury that they make the 'legal' determination that Peck was not 'bound by' the deadline or extension thereof; but the real issue as to whether Peck was 'bound by' the deadline was whether there was an alteration of the contract by Holiday Inns after Peck signed it.

The trial judge told the jury:

You are instructed that any material alteration of a...