King v. Firm

• Decision Date: 15 July 1955
• Docket Number: No. 8201,8201
• Citation: 285 P.2d 1114,3 Utah 2d 419
• Parties: d 419 Raymond S. KING, Plaintiff and Appellant, v. Howard FIRM and Paul J. Cox, Defendants and Respondents.
• Court: Utah Supreme Court

Page 1114

285 P.2d 1114

3 Utah 2d 419

Raymond S. KING, Plaintiff and Appellant, v. Howard FIRM and Paul J. Cox, Defendants and Respondents.

No. 8201.

Supreme Court of Utah.

July 15, 1955.

Rawlings, Wallace, Roberts & Black, Dwight L. King, Salt Lake City, for appellant.

Grover A. Giles, Salt Like City, for respondents.

WADE, Justice.

Raymond S. King, plaintiff and appellant herein, commenced this action for damages for an unlawful eviction from leased business premises and for conversion of personal property. This appeal is from a judgment adverse to him and in favor of defendants and respondents on their counterclaim for rent.

The undisputed facts are that in the summer of 1950, King induced Firm who operated a grocery store in Springdale, Utah, at the mouth of Zion's Canyon to add soft ice cream to the other products he sold. Because of an insufficient water supply in Springdale the operation of the soft ice cream machine was not as satisfactory as it should have been. It was decided thereafter to build and lease to King a separate building across the road from the grocery store on land also owned by Firm and Cox in which to sell soft ice cream and other refreshments. King obtained photographs of the type of building he thought would be suitable and the construction of it was commenced in the spring of 1951 with the supervision and help of King. King also advanced defendants $1,800 secured by a note and mortgage. Although the building was not sufficiently finished for occupancy before July 1, 1951, a lease prepared by King's attorney and dated May 1, 1951, was executed on June 18, 1951. This lease provided that the building was to be used for 'the purpose of conducting a refreshment business, furnishing sandwiches, hot dogs, soft drinks, beer, candy, cigarettes and novelties,' and that the lessors would furnish sufficient water for the operation of lessee's business. The rent for the premises was at the rate of $50 per month payable monthly in advance during the summer months of May to October for each year of the term which was to run for 6 years, or in lieu of that rental the lessee could pay 5% of all gross sales of the business and pay 'on the first day of each and every month during such periods as above stated.' Because the building was not finished and therefore King did not obtain possession of it until the first part of July, Firm agreed that King would only have to pay rent on net profits for the first year of operation. The lease further provided that if the rent should remain unpaid for a period of 20 days after it should become due or if default were made in any of the covenants by lessee it would be lawful for lessors to re-enter and take possession of the premises without notice or legal process. Respondents caused a well to be dug to augment the inadequate water supply furnished by Springdale but this well was abandoned that same year when the water level of the river which supplied it became too low. As a result, although there was enough water supplied to operate a refreshment business there was insufficient to run the soft ice cream machinery and King was forced to install an air cooler for that purpose.

Respondents having failed to make payments as they became due on the $1,800 note and mortgage date September 1, 1951, King inquired of the cause thereof and was informed that the payments could not be made as soon as contracted for and it was arranged to take another note and mortgage in lieu of the first note and mortgage. The new note and mortgage which were signed by the signers of the original note and mortgage but not by Firm's wife, (who refused to sign) Firm having married in the meantime, were signed on March 1, 1952. These were for the face value of $2,146 of which the sum of $346 represented the amount due for costs and equipment for which respondents had promised to pay before they executed the new instruments. Later respondents denied that they had promised to pay for all the items included in that sum but the court found they owed that sum. King testified that friction having developed between King and respondents, Cox requested him to give up the lease, which he refused to do. When Mr. Firm asked King for rent, King responded that their agreement was that the rent would be 5% of the net and there was no net, therefore no rent was due or owing The evidence showed there was a misunderstanding as to what was meant by the first year of operations, whether twelve months beginning from the date Mr. King took possession or the season of May through October as apparently contemplated in the lease. This misunderstanding was resolved in favor of respondents by the court. Respondents and King met on June 16, 1952, to discuss their problems and Cox told King that items had been included in their debt evidenced in the March, 1952, instruments for which respondents did not consider themselves liable and that they wanted an accounting of his business so that they would know how much was due them for rent. King responded that he did not have the books with him at the time and suggested that the debt was past due, whereupon Cox said he would pay it. The parties then figured that with the principal and interest due on the $1800 note and mortgage plus the sum of $25 for attorney's fee for unused papers, (it being conceded the only unused papers were the renewal note and mortgage dated March 1, 1952,) there was owing $1,967.50 which amount was paid to King and he released the note and mortgage of September 1, 1951, i. e., the $1,800 note and mortgage. At the time this payment was made Cox was under the mistaken impression that Mrs. Firm was in possession of the later note and mortgage representing the same debt he paid and some additional items, and he did not know it was in Mr. King's possession until the time of the trial of this case. Mr. King testified he held it for the balance due him and that he considered it at least evidence of such a sum being due him. The court found that the June 16th payment was made on the $2,146 note and mortgage and that there remained a balance owing thereon of $346 which was not yet due.

Kind failed to make any accounting (although he testified he had offered to show Firm the books but Firm had not thought it necessary or to pay any rent and on July 26, 1952, he was served with a notice of termination of the lease for failure to pay the monthly rental reserved therein. On August 19, an accounting and a tender of a check for $100 were made on behalf of King to respondents, which tender was refused and on August 23, during King's absence respondents requested his employee to leave and padlocked the place. When King returned he requested permission to enter the building to remove some personal belongings but was refused. Respondents later operated the business themselves.

King introduced in evidence his account books which showed the gross profits for the period he operated the business during the 1952 season and the court found that he owed $242.25 as rent and granted respondents a judgment for that amount plus interest and a lien on King's property in the building should he fail to pay the judgment and refused to allow King's claim for the amount due him because the court found that it was not due at the time of the trial.

It is King's contention that the evidence cannot sustain the court's finding that the second note and mortgage were valid and subsisting instruments and that the balance of $346 was still owing but not due. He contends the evidence conclusively proves that the sum of $346 was due and owing on an open account and was a proper set-off for any rent which might have been due, and therefore the termination of the lease and his eviction were unlawful and he is entitled to damages and a judgment for conversion of his property.

We agree that the evidence is conclusive that none of the parties to the second note and mortgage considered them to be valid and subsisting instruments. Had they so considered them, King would not have charged respondents the attorney's fee for those instruments because they had been prepared at the request of respondents and had not been used. Had the parties considered that the second note and mortgage, which was never recorded, were valid and subsisting instruments they would not have been described in the release by King of first note and mortgage, the debt of which the later instruments were supposed to have renewed, as 'unused papers.' The fact that the release was of the first note and mortgage and not the second after it was decided to pay off the debt they represented is further evidence of the intent and understanding of all the parties that the second note and mortgage were not valid instruments. The mortgage being unrecorded and there being no question of third parties' rights here, there appears no logical reason why the parties could not mutually agree that those instruments, if valid in the first instance, should be cancelled or rescinded just as they would have been able to do in the case of an ordinary contractual obligation. See 12 Am.Jur., Contracts, Sec. 442, page 1024, where it is stated:

'It is sometimes said that a contract is considered to remain in force until it is rescinded by mutual consent or until the opposite party does some act inconsistent with the duty imposed upon him by the contract, which amounts to an abandonment, or that a contract will be treated as abandoned where the acts of one party inconsistent with its existence, are acquiesced in by the other. * * *'

King by releasing the first...