Palmer v. Albert, 64803

• Decision Date: 23 September 1981
• Docket Number: No. 64803,64803
• Citation: 310 N.W.2d 169
• Parties: DeRoy PALMER and Donna Palmer, a Partnership d/b/a The Backroom Restaurant, Appellees, v. David ALBERT and James Yanney, a Partnership d/b/a The Badgerow Building, Appellants.
• Court: Iowa Supreme Court

Page 169

310 N.W.2d 169

DeRoy PALMER and Donna Palmer, a Partnership d/b/a The Backroom Restaurant, Appellees, v. David ALBERT and James Yanney, a Partnership d/b/a The Badgerow Building, Appellants.

No. 64803.

Supreme Court of Iowa.

Sept. 23, 1981.

Lawrence D. Kudej of Shull, Marshall & Marks, Sioux City, for appellants.

George T. Qualley and Harry J. Watson of Qualley, Larson & Jones, Sioux City, for appellees.

Considered by REYNOLDSON, C. J., and LeGRAND, McCORMICK, ALLBEE and SCHULTZ, JJ.

LeGRAND, Justice.

This case involves an action by tenants against their landlords for breach of contract. A jury awarded plaintiffs $25,000; defendants appeal, and we affirm.

The defendants, David Albert and James Yanney, were partners in the ownership and management of The Badgerow Building in downtown Sioux City. The plaintiffs, DeRoy Palmer and Donna Palmer, were a husband and wife team which had been engaged as partners in the restaurant business for a number of years. The Badgerow Building is peculiarly shaped in what witnesses described as a reverse "L". The part designated as the tower is twelve stories in height. Extending to the west at the base of the building was a two-story extension, which is referred to in the record as the annex. Except for incidental use of the first floor of the tower, the plaintiffs operated a restaurant known as The Backroom Restaurant exclusively in the annex.

The plaintiffs first leased the annex from defendants in April of 1972. It was already equipped as a restaurant. It soon became apparent the restaurant was too small to operate profitably. The accommodations were enlarged, and on December 1, 1972, plaintiffs entered into a new lease with defendants for a term of five years with an option to renew for an additional five years. Rent was to be renegotiated after November 30, 1975.

The annex part of The Badgerow Building (but not the tower) had been marked for acquisition by the city of Sioux City (hereafter called City) as part of its urban renewal program, a fact known to the defendants but not to the plaintiffs when the 1972 leases were entered into.

In March of 1973 the City notified the parties of its intention to acquire the two-story annex for urban renewal purposes. Thereafter plaintiffs and defendants had several discussions concerning other possible locations in The Badgerow Building for The Backroom Restaurant. Nothing came of these meetings.

On June 5, 1973, defendants conveyed the annex to the City by warranty deed. Because the City was not then ready to go forward with the urban renewal, it leased the annex back to defendants on a month-to-month basis for $100 per month. This arrangement continued until June 13, 1976, and during that time plaintiffs continued to operate the restaurant on a month-to-month basis, paying the same rent as under the December 1, 1972, lease. The City ultimately took possession of the annex on July 12, 1976. The Backroom Restaurant was then forced to close its doors.

This litigation arises over the failure of defendants to provide plaintiffs with new restaurant space on the first floor of The Badgerow Building when the City took over the annex. The case revolves around a meeting on June 26, 1973, at which the following cancellation agreement was signed:

LEASE CANCELLATION

This agreement entered into this 26th day of June, 1973, between David J. Albert & James Yanney, party of the first part and Mr. and Mrs. D. Palmer, d/b/a The Backroom Restaurant, party of the second part, by mutual agreement, (in consideration of $1.00 in hand paid) effective upon date of conveyance of title to the local Public Agency, declare the lease on property known as The Backroom Restaurant, Sioux City, Iowa, dated December 1, 1972, between the parties above mentioned null and void, and all other leases on the above real property that may be in existence between above parties shall become null and void.

The covenants herein shall extend to and be binding upon heirs, executors and administrators of the parties of this lease cancellation.

James M. Yanney

DeRoy T. Palmer David J. Albert

--------------- ---------------

LESSEE LESSOR

Plaintiffs claim this cancellation was only part of the agreement reached at that time. They insist there were also oral terms forming part of that transaction under which defendants were to furnish other and comparable space on the first floor of The Badgerow Building for operation of The Backroom Restaurant.

The petition was in three counts. The first count alleged the parties entered into a "second" contract on June 26, 1973, partly written and partly oral. The written portion was the cancellation already referred to. The oral part consisted of a promise to provide other and comparable space on the first floor of The Badgerow Building for the restaurant when the City took possession of the annex. It is claimed this was to be on the same terms and conditions except for location as contained in the December 1, 1972, lease. The jury found for plaintiffs on this count and returned a verdict for $25,000.

The second count was based on fraud and misrepresentation. This was submitted to the jury and resulted in a verdict for defendants. The third count alleging negligence in the negotiations between the parties was dismissed by the trial court. The second and third counts are not involved in this appeal.

Defendants appeal from the judgment for $25,000 and appeal, too, from the jury's denial of their counterclaim for unpaid rent and utility charges in the amount of $1,028.41.

Both sides agree plaintiffs were operating a successful restaurant in the building. They wanted to stay; defendants wanted them to stay. When the City announced plans to take the annex, it became necessary for plaintiffs to look for new accommodations. They went, naturally enough, to defendants, who, they say, promised to find other space on the first floor of The Badgerow Building. Defendants say they promised only to try to provide a new location on the first floor of the building. Defendants assert they did try, albeit unsuccessfully. They insist they did everything they promised to do.

In order to succeed, plaintiffs had to prove a contract entered into on June 26, 1973, as alleged in the petition and as submitted to the jury. On appeal, the parties sometimes refer to the June 26th agreement as an oral modification of the 1972 lease and sometimes as a separate contract. We find neither pleading nor proof to support the modification theory. We therefore limit our inquiry to the issue of whether defendants breached a separate contract.

The principal defense relied on is the general rule that a contract which is vague, indefinite and uncertain cannot be enforced. The parties do not quarrel over this principle, only on its application to this case.

In Davis v. Davis, 261 Iowa 992, 1001, 156 N.W.2d 870, 876 (1968), we said:

A court cannot enforce a contract unless it can determine what it is. In order to be binding, an agreement must be definite and certain as to its terms to enable the court to give it an exact meaning.

A similar statement appears in 1 A. Corbin, Contracts § 95 at 394 (1963):

A court cannot enforce a contract unless it can determine what it is. It is not enough that the parties think that they have made a contract; they must have expressed their intention in a manner that is capable of understanding. It is not even enough that they have actually agreed, if their expressions, when interpreted in the light of accompanying factors and circumstances, are not such that the court can determine what the terms of that agreement are. Vagueness of expression, indefiniteness, and uncertainty as to any of the essential terms of an agreement have often been held to prevent the creation of an enforceable contract.

See 1 S. Williston, A Treatise on the Law of Contracts § 37 (3d ed. W. Jaeger 1957).

We have a number of cases supporting the principle that a contract must be definite and certain in order to be given legal effect. Davis v. Davis, 261 Iowa 992, 1001, 161 N.W.2d 870, 876 (1968); Lewis v. Minnesota Mut. Life Ins. Co., 240 Iowa 1249, 1258, 37 N.W.2d 316, 321 (1949); Gould v. Gunn, 161 Iowa 155, 164, 140 N.W. 380, 384 (1913); Faulkner v. Des Moines Drug Co., 117 Iowa 120, 122, 90 N.W. 585, 586 (1902). However, this rule should not be carried to extreme lengths nor should it be used to defeat the intent of the parties. J. Murray, Contracts § 27 (2d rev. ed. 1974); 17 Am.Jur.2d Contracts § 75 (1964). Vagueness, indefiniteness, and uncertainty are matters of degree. Davis, 261 Iowa at 1001, 156 N.W.2d at 876. Each case must be decided on its own particular circumstances.

In Wickham & Burton Coal Co. v. Farmers Lumber Co., 189 Iowa 1183, 1185, 179 N.W. 417, 418 (1920), this appears: "(W)hatsoever is ascertainable with reasonable effort is sufficiently certain to be enforced..." In Severson v. Elberson Elevator, Inc., 250 N.W.2d 417, 420 (Iowa 1977), we said: "(Contract) terms are sufficiently definite if the court can determine with reasonable certainty the duty of each party and the conditions relative to performance." Restatement (Second) of Contracts § 32(2) (Tent. drafts Nos. 1-7) (1973) states the rule this way: "The terms of a contract are reasonably certain if they provide a basis for determining existence of a breach and for giving an appropriate remedy."

Courts are reluctant to hold a contract unenforceable for uncertainty and they bend every effort to avoid such a result. Williston, supra, at 110-11. Nevertheless courts cannot make a contract when there is none. Gould v. Gunn, 161 Iowa 155, 164, 140 N.W. 380, 384 (1913).

We turn now to the task of deciding if the evidence in the case now before us measures up to the minimum requirements of certainty necessary to reach a binding agreement.

The facts necessary to create the relationship of landlord and tenant were set out in McCarter v. Uban, 166 N.W.2d 910, 914 (Iowa 1969)...