Limestone Realty Co. v. Town & Country Fine Furniture & Carpeting, Inc.

• Decision Date: 22 July 1969
• Citation: 256 A.2d 676
• Parties: LIMESTONE REALTY CO., a Delaware corporation, Plaintiff, v. TOWN AND COUNTRY FINE FURNITURE & CARPETING, INC., a Delaware corporation, Goldsborough Company, a Delaware corporation, and Emmett S. Hickman Co., a Delaware corporation, Defendants.
• Court: Court of Chancery of Delaware

Page 676

256 A.2d 676

LIMESTONE REALTY CO., a Delaware corporation, Plaintiff, v. TOWN AND COUNTRY FINE FURNITURE & CARPETING, INC., a Delaware corporation, Goldsborough Company, a Delaware corporation, and Emmett S Hickman Co., a Delaware corporation, Defendants.

Court of Chancery of Delaware, New Castle County.

July 22, 1969.

Edward B. Maxwell 2nd, of Young, Conaway, Stargatt & Taylor, Wilmington, for plaintiff.

Andrew B. Kirkpatrick, Jr., and Walter L. Pepperman, II, of Morris, Nichols, Arsht & Tunnell, Wilmington, for defendant Town and Country Fine Furniture & Carpeting, Inc.

Rodman Ward, Jr., of Prickett, Ward, Burt & Sanders, Wilmington, for defendant Goldsborough Company.

Robert W. Wakefield, of Walker, Miller & Wakefield, Wilmington, for defendant Emmett S. Hickman Co.

SHORT, Vice Chancellor:

In this action plaintiff, Limestone Realty Co. (Limestone) seeks recission of a written agreement purporting to release Town and Country Fine Furniture & Carpeting, Inc. (Town) from its obligations under a lease. In the alternative, Limestone seeks damages against Goldsborough Company (Goldsborough) and Emmett S. Hickman Co. (Hickman), real estate agents, resulting from their unauthorized transmission of the release to Town. These defendants have cross-claimed against each other and against Town. Town, Goldsborough and Limestone have moved for summary judgment. This is the decision on those motions.

These are the facts: On August 30, 1962 Town entered into a lease with Limestone for the rental of a building at 4528 Kirkwood Highway, Wilmington, for a term of years ending on August 31, 1969. The lease was negotiated by Hickman which, according to agreement with Limestone, was entitled to commissions on rentals for the full term of the lease. In 1966 Town, having decided to construct its own building, began to look for someone to take over as tenant of the leased premises. On July 6. 1967 Town moved from the 4528 location to its new store at 4507 Kirkwood Highway. At or about that time Town placed a 'For Rent' sign on the leased premises directing interested persons to call at its new location. Shortly thereafter a representative of Goldsborough, in the company of Albert Lehman, president of Town, showed the 4528 premises to a prospective tenant named Hampton Sales Company. On July 26, 1967 a representative of Goldsborough wrote Town proposing to release Town from the obligations under its lease 'provided that the landlord and the new tenant, Hampton Sales Company, Inc. can agree upon the terms of a satisfactory lease,' and provided further that Town would agree to certain stated conditions. No agreement resulted from this offer. On or about August 31, 1967 Town received from Goldsborough an unexecuted form of agreement which provided that Town's lease was to be canceled as of October 1, 1967 'provided that Limestone Realty Co. has entered into a Lease satisfactory to it with another tenant on or before October 1, 1967.' This document also provided for Town's agreement to pay Hickman rental commissions for the balance of the term and for Town to transfer its sign located on the leased premises to any new tenant. Shortly after receipt of this document Goldsborough notified Town that the contemplated lease with Hampton had fallen through.

On September 19, 1967 Harry Tingle, an officer of Hickman, forwarded, under covering letter, to Town the form of release which is here involved. ¹ The document bore the ink signatures of the president and secretary of Limestone and the seal of that corporation. It recited that Town's lease was canceled 'as of August 15, 1967' and that Town should have no further obligations under the lease except to pay Hickman the rental commissions for the balance of the term and that Town should transfer 'without consideration to the new tenant, COLFAX APPLIANCE CO., INC. its sign presently located on the premises.' ² On September 20, 1967 Town received Tingle's letter and the agreement of release. Lehman immediately went to his attorney's office and there signed the agreement on behalf of Town. He thereafter called Tingle and advised him that the proposal in Tingle's covering letter to discount the commission was satisfactory and that he was ready and willing to make out a check for the amount of the discounted commission. At the same time, however, Lehman advised Tingle that since the agreement released Town as of August 15, 1967 Town was entitled to a refund totaling $1462.50 for one and one-half months rent. Lehman advised Tingle that he would exchange his check for Limestone's check for the refund. Tingle replied that he would call Lehman back when he could get in touch with Limestone. On September 21, 1967 Tingle called Town and advised it that the 'deal was off.' Town has not paid Hickman the commissions called for by the release nor transferred the sign to Colfax or to any new tenant.

It is clear from the depositions that at the time the release was sent to and received by Town both Goldsborough and Hickman believed that a new tenant had been found. Town also assumed such to be the fact. That the belief was contrary to fact is clear. Accordingly, Limestone, Goldsborough and Hickman argue that there was a mutual mistake of material fact giving rise to a right to rescission. Town argues that the mistake, if any, was the unilateral mistake of Limestone in negligently placing the release in the hands of Goldsborough. Hickman also contends that Lehman's acceptance of the offer of the release was conditioned upon Limestone's refunding of rent and, therefore, constituted a counter-offer which was not accepted by Limestone. Since I am satisfied that Limestone is entitled to the relief sought under settled principles of agency and contract law it is unnecessary to consider these contentions.

Town argues that it relied on apparent authority in Hickman to deliver the release. Assuming that Limestone's acts and...