McCarter v. Uban

• Decision Date: 08 April 1969
• Docket Number: No. 53417,53417
• Citation: 166 N.W.2d 910
• Parties: John McCARTER, Appellee, v. Charles UBAN and Donald E. Olsen, Appellants.
• Court: Iowa Supreme Court

Page 910

166 N.W.2d 910

John McCARTER, Appellee, v. Charles UBAN and Donald E. Olsen, Appellants.

No. 53417.

Supreme Court of Iowa.

April 8, 1969.

Beecher, Buckmaster, Beecher, Holmes & Lindeman, Waterloo, for appellant Charles Uban.

Mershon, Snow & Knock, Cedar Falls, for appellant Donald E. Olsen.

Newman, Redfern, McKinley & Olsen, Cedar Falls, for appellee.

LARSON, Justice.

This suit in equity was commenced when plaintiff, John McCarter, filed a petition in forcible entry against defendants, Charles Uban and Donald E. Olsen, owner and operator respectively of a combination gas station and grocery store in Cedar Falls, Iowa, after serving upon them a three-day notice to quit pursuant to section 648.3 of the Code. Prior thereto plaintiff had served a thirty-day notice to quit on defendant. When defendants did not remove themselves from the property, the matter was tried to the court on June 7, 1968. On July 17, 1968, judgment was entered removing defendants from the premises and placing plaintiff in possession but withholding execution prior to August 1, 1968. On July 29, 1968, defendants appealed.

The record discloses that in the summer months of 1963 plaintiff and defendant Uban were brought together by a third party for the purpose of establishing a service station and grocery store on plaintiff's property and leasing it to defendant Uban. Pursuant to preliminary negotiations, construction of the facility was begun in the late summer of 1963. Plaintiff undertook to build the station and store, and defendant Uban was to provide the necessary materials, equipment and installations to make the premises suitable for their purpose. Plaintiff's investment was approximately $15,000 to $20,000 and defendant Uban's was approximately $9,000. Although there were discussions, negotiations and tentative understandings concerning this matter, no firm agreement as to the terms of their lease was consummated during the grading and construction of the building.

Late in August 1963, the night before the three large gasoline tanks were to be buried and the Uban electrical and dispensing equipment installed, at Uban's insistence these parties met to iron out the last details of their proposed lease. Although there is conflicting evidence as to what was agreed that evening, it is undisputed that they fixed the monthly rental at $267 and Uban was to pay all taxes and insurance and maintain the property, and the trial court found the term of the occupancy was to be ten years. Appellant contends all necessary terms of the lease were discussed and agreed to at that time, but appellee insists no agreement was reached as to the length of occupancy or any other item except as above set out. However, it does appear Uban thereafter buried his tanks, installed his expensive equipment, and on September 22nd began occupation of the premises. It is clear both parties anticipated reducing their agreement to writing, but they disagree as to whether they contemplated further negotiations prior to the execution of the written lease or merely intended that their oral agreement be reduced to writing. It appears that appellee had a written lease prepared and submitted it to appellant in October 1963. Questioning one item of this lease, appellant had a change made and resubmitted it to appellee, who then refused to sign. In any event, no written lease was ever signed by the parties. This dispute was not resolved, but it appears they have carried on their relationship for a period of about four and a half years and, until this suit was commenced, have performed the undisputed portions of the agreement.

Although the trial court found the parties had agreed to a ten-year lease and the consideration due from appellant, it held as a matter of law that no lease was ever consummated between the parties because the parties contemplated further negotiations culminating in a written lease, that no complete oral agreement was reached on the night in question, and that, proper notice having been served, the defendants must surrender possession to plaintiff.

Defendants assign four errors relied upon for reversal. They are, that the trial court erred (1) in finding the notice to quit sufficient on its face, (2) in ruling as a matter of law that the notice of termination served upon defendants was effective to terminate the tenancy, (3) in finding that the defendant Uban was a tenant at will, and (4) in failing to find that plaintiff was estopped to deny the existence of a ten-year lease. Our first consideration will be given the second and third assignments.

I. Appellants contend the court erred in finding that Uban (hereinafter called the appellant) was a tenant at will whose tenancy could be terminated by a thirty-day notice under section 562.4, Code of 1966. This section provides in part: 'Any person in the possession of real estate, with the assent of the owner, is presumed to be a tenant at will until the contrary is shown, and thirty days notice in writing must be given by either party before he can terminate such a tenancy; * * *.'

This presumption is not conclusive and a person in possession of the premises may show by competent evidence that he is a tenant for years. Halligan v. Frey, 161 Iowa 185, 188, 141 N.W. 944, 945, 49 L.R.A.,N.S., 112. The presumption is one of fact and not of law. Its purpose was to establish the legal status of one in possession with the assent of the owner and provide for termination when there was no evidence of any other agreement as to term. The presumption infers that this was the agreement between the parties. It is not a strong presumption and can be overcome by substantial evidence to the contrary. Sanders v. Sutlive Bros. & Co., 163 Iowa 172, 176, 143 N.W. 492, 495. See also 2 Drake L.Rev. 30.

In civil cases, generally the burden of proof is measured by the test of preponderance of the evidence. Rule 344(f)(6), R.C.P. A different rule is applicable when the relief asked is for specific performance, reformation of written instruments, or the setting aside of written instruments affecting real estate. In these exceptions the proof must be clear, satisfactory and convincing. Rules 344(f)(11) and (12); Snater v. Walters, 250 Iowa 1189, 98 N.W.2d 302, and citations; Brandt v. Schucha, 250 Iowa 679, 96 N.W.2d 179.

It is well settled that an oral contract can be formed prior to the execution of a formal writing where that writing is intended only as a memorial. Davenport v. Peoria Ins. Co., 17 Iowa 276; Hubbard & Spencer v. Hartford Fire Ins. Co., 33 Iowa 325; Culton v. Gilchrist, 92 Iowa 718, 61 N.W. 384; Farmers' Co-op. Soc. of Geneva v. German Ins. Co., 97 Iowa 749, 66 N.W. 878; Ft. Madison v. Moore, 109 Iowa 476, 80 N.W. 527; Gough v. Loomis, 123 Iowa 642, 99 N.W. 295; Gjellefald v. Drainage Dist., 203 Iowa 1144, 212 N.W. 691. See also Patton, Iowa Annotations to the Restatement of the Law of Contracts.

It is appellant's position that a complete oral contract or lease agreement for a term was consummated on the night before his tanks were buried on appellee's premises and that appellee is estopped to deny this tenancy. Of course, to become contractually bound, either orally or by writing, the parties must manifest a mutual, unequivocal assent to the terms of the contract. Hayne v. Cook, 252 Iowa 1012, 1021, 109 N.W.2d 188, 192, and citations; Brandt v. Schucha, supra; Snater v. Walters, supra.

The existence of an agreement or meeting of the minds should not alone be determined from the words used by the parties, but also from the situation and surrounding circumstances and by the inferences which mankind would ordinarily and reasonably draw therefrom. Port Huron Mach. Co. v. Wohlers, 207 Iowa 826, 221 N.W. 843; Klavido v. Melberg, 210 Iowa 306, 313, 227 N.W. 833, 837, and citations; LaFontaine v. Developers & Builders, Inc., Iowa, 156 N.W.2d 651, 655, and citations; Janssen v. North Iowa Conference Pensions, Inc. et al., 166 N.W.2d 901, decided April 8, 1969.

Our review in these equity proceedings is de novo. We give weight to the findings of the trial court, but are not bound by them. Rule 344(f)(7), R.C.P.

With the above rules in mind, we examine this record and must determine for ourselves whether the appellant sustained his burden to overcome the presumption that his...