Monaghan v. Barnes

• Decision Date: 28 September 1936
• Docket Number: Civil 3724
• Citation: 48 Ariz. 213,61 P.2d 158
• Parties: ANNA LOU MONAGHAN and ELIZABETH ECKLES, Appellants, v. RUBY C. BARNES, Appellee
• Court: Arizona Supreme Court

61 P.2d 158

48 Ariz. 213

ANNA LOU MONAGHAN and ELIZABETH ECKLES, Appellants, v. RUBY C. BARNES, Appellee

Civil No. 3724

Supreme Court of Arizona

September 28, 1936

APPEAL from a judgment of the Superior Court of the County of Maricopa. J. C. Niles, Judge. Judgment reversed and cause remanded, with instructions.

Mr. E S. Clark and Mr. Neil C. Clark, for Appellants.

Messrs Laney & Laney, for Appellee.

OPINION

LOCKWOOD, C.J.

This is an action brought by Ruby C. Barnes, hereinafter called plaintiff, against Anna Lou Monaghan and Elizabeth Eckles hereinafter called defendants, for a declaratory judgment as to the meaning of a written lease and option and to reform its terms. From the judgment rendered, this appeal was taken.

The uncontradicted facts and the issues of the case are as follows: On June 15, 1934, Anna Lou Monaghan and Elizabeth Eckles were mother and daughter, and were the tenants in common of certain real estate in the city of Phoenix, commonly called the Apache Hotel, each owning as her sole and separate property an undivided one-half interest therein. At the time the lease in question was executed, Mrs. Monaghan was in Phoenix operating the property as a hotel, while Mrs. Eckles was at her home in Glendale, California. Plaintiff, who was then the lessee of the San Carlos Hotel in Phoenix, was in Rochester, Minnesota, the San Carlos property being managed by her husband, J. C. Barnes. Russell Shedd, who was a real estate agent in Phoenix, had approached Mrs. Monaghan in regard to the selling or leasing of the Apache Hotel, and, finding that she was disposed to consider an offer thereon, he, together with Barnes, called on her and discussed the possibility of a lease and option to purchase. Several visits were made at which the matter was discussed, and finally it was agreed that a written contract should be prepared to be submitted to Mrs. Barnes, in Rochester, and Mrs. Eckles, in Glendale, before it was finally ececuted. Barnes thereupon suggested that an attorney by the name of C. T. McKinney be employed to prepare the proposed lease and option, which was agreed to by Mrs. Monaghan, and a lease was so prepared. A copy thereof was delivered to Mrs. Monaghan, and she spent a day or two examining it and analyzing its terms. Barnes also made an extended examination thereof, and, when he was thoroughly satisfied that he understood it, he took two copies of the lease to Mrs. Monaghan and requested her to sign them. She signed for herself alone and agreed to send a copy to Mrs. Eckles in Glendale, while Barnes sent copies to Mrs. Barnes in Rochester. The latter examined the lease and, finding it satisfactory to her, signed and acknowledged it. Mrs. Eckles also carefully read the lease and consulted with her husband respecting its terms, and, finding it satisfactory, also signed a copy. Plaintiff entered into possession of the premises, under the lease, on the 1st day of July, 1934, and is still in possession thereunder.

At the end of the first quarter, rental was due on the premises and Mrs. Monaghan requested payment. Plaintiff answered, alleging that the amount claimed by Mrs. Monaghan was in excess of that provided by the terms of the lease. The parties could not agree on the amount due, and the matter remained in abeyance until the second quarter's rental was due. There still being a dispute as to the amount, defendants employed counsel and notified plaintiff that they considered she had forfeited the lease by failure to pay the rent as therein provided, and demanded possession of the premises, which plaintiff refused to give.

Thereafter, and on January 18, 1935, plaintiff commenced this action, alleging that the written contract as it stood did not represent the true terms of the agreement between the parties, but that there had been a mutual mistake, and asking that it be reformed to conform to the alleged oral agreement which she claimed should have been placed therein. She further asked that, if the court declined to reform the instrument, it construe the terms thereof regarding the payment of rent, under its power to make a declaratory judgment. Defendants denied that there was any oral agreement of the nature set up by plaintiff, and further alleged, specifically, that the only agreement of any kind made by either of them was that in the written lease, and that Mrs. Monaghan had no authority to act for Mrs. Eckles in the matter, but that the latter had acted solely for herself. Defendants also cross-complained, setting up the failure of plaintiff to pay the rent prescribed by the lease, and asked for possession of the premises, the unpaid rental up to the action to terminate, and the fair rental value of the premises until possession was given.

The case was tried to the court sitting without a jury, and, at the conclusion of the argument, written request was made by defendants for special findings of fact and conclusions of law by the court. Thereafter the court did file such findings and rendered judgment thereon on the 7th day of October, 1935. After the usual motion for new trial had been made and overruled, this appeal was taken.

There are eighteen assignments of error, several of which contain a number of subdivisions, but we prefer to consider the case on the basis of the propositions of law raised by these assignments and material for its determination. The first question is whether there was sufficient evidence to justify the court in finding that a mutual mistake of fact was made by the parties, so that the contract could and should be reformed to set forth the terms upon which they did agree. It is unquestioned that Mrs. Monaghan and Mrs. Eckles were tenants in common of the real estate involved herein, and it is also admitted that they were partners in the operation of the Apache Hotel. But, as such tenants in common, neither one could make a lease binding the entire premises without the consent and approval of the other, much less grant an option of purchase thereof. 62 C.J. 536 and 544 and notes. Since it is an admitted fact that Mrs. Eckles never directly participated in any of the negotiations which led up to the signing of the written lease, but at all times was in Glendale, and that all of the negotiations were carried on by Mrs. Monaghan individually, it is necessary for plaintiff, in order to establish that the true agreement was not embodied in the written one by mutual mistake, to show, first, that Mrs. Monaghan did agree to terms different from those expressed in the written instrument, and, second, either that she was legally authorized by Mrs. Eckles to make such an agreement, or else that Mrs. Eckles, after the oral agreement was made and with full knowledge of its terms, ratified it in a manner approved by law, or was estopped from denying its execution. Since the contract is one involving the leasing of real estate for a longer term than one year and for its sale, no action could be maintained by plaintiff so as to bind Mrs. Eckles, unless Mrs. Monaghan was duly authorized in writing by Mrs. Eckles to make the agreement. Subdivision 6, § 1521, Rev. Code 1928. It is admitted by counsel for plaintiff in their brief there is no evidence Mrs. Monaghan had such written authority. She could not, therefore, make a contract binding Mrs. Eckles' interest in the property. It is true that she might, as counsel say, enter into negotiations for the lease and sale of the property, and, if she notified Mrs. Eckles of the terms of the proposed lease and sale and Mrs. Eckles, with full knowledge thereof, executed the written instrument, the latter would be bound by the agreement actually made by Mrs. Monaghan. In the present case, however, both Mrs. Eckles and Mrs. Monaghan deny that the former, before she signed the lease, had any knowledge of any terms except those expressly set forth in the lease, and there is no evidence to the contrary. True, counsel for plaintiff argue, it is extremely probable that Mrs. Monaghan did Communicate to Mrs. Eckles the oral agreement (which parenthetically the former denied ever having made), but probability cannot take the place of evidence on a disputed point. Such being the case, we think there is no basis for a reformation of the instrument on the ground of mutual mistake, for in such a case it must appear affirmatively that the parties did, as a matter of fact, agree to terms which were not set forth in the instrument as executed. 23 R.C.L. 327, and cases cited. Since there is no evidence that the necessary parties agreed to terms different from those set forth, the court was without authority to reform the contract to express an agrement which was never made.

It is contended, however, that, even admitting this to be true Mrs. Eckles afterwards ratified the oral agreement made by her mother. Ratification of the unauthorized act of an agent requires that the principal, with full knowledge of the unauthorized act, approved it. We can find no evidence in the record that this was done. Mrs. Eckless testified that she never knew of plaintiff's contentions until after the demand had been made for the payment of the rent according to the terms of the written lease, and that at all times thereafter she insisted on a...