Pulsifer v. Walker

Citation159 A. 426
CourtSupreme Court of New Hampshire
Decision Date01 March 1932
PartiesPULSIFER et al. v. WALKER et al.

Transferred from Superior Court, Grafton County; Young, Judge.

Action by F. Ernest Pulsifer and another against Chester G. Walker and another, wherein certain findings were made, to which defendants excepted, and other questions were transferred without ruling.

Judgment for plaintiffs.

Petition under chapter 86 of the Laws of 1929 for a declaratory judgment defining the rights of the parties under a renewal clause in a lease. There was a trial by the court, and the following facts were found.

Upon May 22, 1926, the plaintiffs leased to the defendants a store in the Pulsifer block, so called, in Lebanon, for a term of five years at a rental of $100 per month. The lease contained the following clause: "And it is further agreed between the parties that the lessees, upon giving notice in writing to the lessors, at least thirty (30) days prior to the date of expiration of the term aforesaid, (providing said lease has been satisfactory to the said lessors) may be given an option of renewal of this lease."

The defendants in their answer asserted that the words "providing said lease has been satisfactory to the said lessors" were inserted in the lease without their knowledge or consent, and prayed that the lease be reformed by striking out this clause. In support of this position the defendants testified that the above clause did not appear in a preliminary draft of the lease which was submitted to them for examination and in which two changes were made at their request and that they signed the lease in question without reading it. The court found, however, that "the probabilities are that the option of renewal clause was in the original draft in the same language as appears in the document as signed, but in the event that it was not, there was no fraud." To these findings the defendants excepted.

The defendants seasonably gave the plaintiffs written notice of their desire to renew the lease in accordance with the foregoing provisions. The plaintiffs declined to give the defendants a renewal for the reason that the lease had not been satisfactory to them. They find no fault with the conduct of the defendants as lessees. Their dissatisfaction arises "because the taxes on the property have been practically doubled, and an opportunity has presented itself to lease the entire first floor of said block to one tenant, who will pay a substantial increase in rent for a longer period and make important material improvements in the premises."

The questions (1) "Whether the plaintiffs have the legal right to determine whether the lease has been satisfactory to them or not, and, if so, (2) whether the reasons they offer why it has been unsatisfactory are legal reasons," were transferred without ruling.

The court further found that: "If they have the legal right to deny the defendants 'an option of renewal' because of the increased overhead caused by the raising of the taxes and because of the advantages to them in their proposed new lease, it is not unreasonable for them to do so." To these findings and rulings the defendants excepted.

The defendants also excepted to the admission of certain evidence offered by the plaintiffs as hereinafter stated. Other facts appear in the opinion.

The foregoing exceptions were transferred by Young, J.

McLane, Davis & Carleton and R. W. Davis, all of Manchester, for plaintiffs.

Fred P. Carr, of Lebanon, and Robert W. Upton and Lawrence I. Duncan, both of Concord, for defendants.

BRANCH, J.

I. The petition in this ease is properly brought under the Declaratory Judgments Act (Laws 1929, c. 86). The plaintiffs' claim of "a present right to lease said premises at the expiration of said present lease" and the adverse claim of the defendants that they are entitled to a renewal of the present lease exemplify one of the normal situations which the act was designed to cover. The effect of the statute in this case is "to enable the normal defendant to institute the proceedings." Faulkner v. City of Keene, 85 N. H. 147, 155, 155 A. 195, 200.

II. The defendants assert that the plaintiffs have no "legal right to determine whether the lease has been satisfactory to them or not" for two reasons, which, logically, should be stated and considered in the following order: (1) Because the words "providing said lease has been satisfactory to the said lessor" ought not to be in the lease at all and should be stricken out; (2) because the above clause, if properly in the lease, is illegal and void.

1. The findings of the court dispose of the defendants' claim that they are entitled to have the lease reformed by striking out the above-quoted proviso. The only testimony produced by the defendants to sustain this claim tended to show that the language in question did not appear in the first draft of the lease, from which the court was asked to infer that it was fraudulently inserted in the final draft by the plaintiffs' attorney who prepared it The court, however, reached a contrary conclusion and found that "the probabilities are that the option of renewal clause was in the original draft as appears in the document as signed." In legal effect this is equivalent to a definite finding that the proviso was in the original draft. Moffie v. Slawsby, 77 N. H. 555, 556, 94 A. 193; Goddard v. Brown Co., 82 N. H. 225, 230, 131 A. 601. If the reference to "the probabilities" implies some doubt, the language of the court "also contains the assertion that the doubt is not serious enough to affect the result. Not affecting the result, its suggestion helps no one." Moflie v. Slawsby, supra.

The argument of the plaintiffs that this finding was unsupported by the evidence does not require extended notice. We need only say that an examination of the record shows that the testimony on this point was conflicting, and that the statements of the defendants themselves on the witness stand were by no means unequivocal. Under these circumstances the conclusion of the trial court cannot be revised here, and it follows that the defendants' prayer for reformation of the lease was properly denied.

2. The contention of the defendants that the proviso in question is illegal and void is equally without merit. It is true that some early cases indicated a feeling on the part of some courts that contracts providing that one party must perform to the satisfaction of the other before becoming entitled to compensation were for some reason objectionable. One reason suggested for this conclusion was that in such a situation there was no mutuality of obligation. Thus in Folliard v. Wallace, 2 Johns. (N. Y.) 395, Chancellor Kent, writing in 1807, said: "If the defendant were left at liberty to judge for himself when he was satisfied, it would totally destroy the obligation, and the agreement would be absolutely void." The fallacy of this idea was soon perceived, however, and it no longer causes any difficulty. A promise is none the less a promise because the obligation which it creates is somewhat attenuated by conditions attached to it.

"Parties to a contract may lawfully stipulate that performance by one of them shall be to the satisfaction of the other. The obligation of a contract is not destroyed because it contains such a provision, as Chancellor Kent seems to have believed." Burch, J., in Holingsworth v. Colthurst, 78 Kan. 455, 96 P. 851, 18 L. R. A. (N. S.) 741, 130 Am. St. Rep. 382.

Another suggestion, which seems to have been peculiar to this jurisdiction, was that a stipulation for performance by one party to the satisfaction of the other was unenforceable because it would result in making the latter the judge of his own case. This idea first made its appearance in the case of Smith v. Railroad, 36 N. H. 458, 490, which was decided in 1858, and it received casual mention in the later cases of Janvrin v. Town of Exeter, 48 N. H. 83, 85, 86, 2 Am. Rep. 185, and Boston & M. R. R. v. Railroad, 83 N. H. 312, 314, 142 A. 118. None of these cases rests upon the above-stated proposition as a ground for decision, and the notion that a proviso like the one before us involves the principle stated in the maxim, "Aliquis non debet esse judex in propria causa quia non potest esse judex et pars," today seems as fantastic as the Latin itself. See Broom's Legal Maxims, 117. In so far as the language of these cases gives countenance to that idea, they involve a misapprehension of the scope and meaning of the maxim and are not to be followed.

There is nothing illegal about the clause in question. "It is quite permissible for parties to enter into such contracts; and where the approval or satisfaction of the party is made a condition precedent to the right to receive compensation, or the contract price, for the article to be delivered, the court has no right or power to dispense with the condition." Baltimore, etc., Co. v. Brydon, 65 Md. 198, 611, 3 A. 306, 9 A. 126, 127, 57 Am. Rep. 318. "We know of no reason of public policy which prevents parties from contracting that the decision of one or the other shall be conclusive." Campbell, etc., Co. v. Thorp (C. C.) 36 F. 414, 417, 1 L. R. A. 645.

From the foregoing discussion it follows that the first question transferred by the trial court must be answered in the affirmative.

III. There...

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