Shell Petroleum Corporation v. Anderson
| Decision Date | 29 March 1934 |
| Docket Number | 29,794 |
| Citation | 253 N.W. 885,191 Minn. 275 |
| Parties | SHELL PETROLEUM CORPORATION v. CLARENCE P. ANDERSON AND OTHERS |
| Court | Minnesota Supreme Court |
Action of unlawful detainer, brought in the municipal court of Owatonna, and, after judgment for defendants, appealed to the district court for Steele county, where the case was heard before Fred W. Senn, Judge, and a jury. There was a verdict for defendants. Plaintiff appealed from an order denying its alternative motion for judgment or a new trial. Reversed and remanded.
Contract -- fraud inducing execution -- negligence of signer -- effect.
1. Fraudulent representation concerning contents of a written contract inducing a signature thereto ordinarily renders the agreement void rather than voidable. But if the defrauded party is negligent in signing the contract without reading it is voidable only rather than void.
Contract -- fraud inducing execution -- right to disaffirm.
Landlord and tenant -- lease -- fraud -- rescission.
2. The right to disaffirm a contract for fraud is lost where, after discovery of the fraud by the victim, he continues his unquestioning performance of the contract, in this case a lease, for nearly a year.
Thompson Mitchell, Thompson & Young and Sawyer & Lord, for appellant.
Leach & Leach, for respondents.
Action in unlawful detainer commenced in the municipal court of the city of Owatonna and tried de novo on appeal to the district court. After verdict for defendants, plaintiff moved in the alternative for judgment notwithstanding or a new trial and appealed from the order denying the motion.
The involved property consists of a gasolene filling station and its appurtenances in Owatonna. It is owned by defendant Clarence P. Anderson. Its possession and are claimed by plaintiff under a lease of August 1, 1930, from the defendants Anderson. (Defendant Rose J. Anderson is joined because, as wife of Clarence P., she is co-lessor in the lease.) The term of the lease was for five years expiring July 31, 1935. Concurrently plaintiff, under written contract of the same date, entered into and executed as part of the same transaction, employed defendants Clarence P. Anderson and Herbert Freeman (who from now on will be mentioned as though they were the only defendants) "to superintend and operate" the service station for an indeterminate period, the "employment to continue so long" as the employe complied with "the terms and conditions" of the employment contract, but not beyond the term of the lease. The lease and employment contract were considered below to have been parts of the same transaction and so as constituting but one contract. Defendant Anderson in any event became both plaintiff's lessor and its employe. Defendant Freeman became only an employe.
Anderson and Freeman had been operating this filling station, selling plaintiff's products, for some months before March 1, 1930. On that date the Andersons, by a lease similar to the one now in suit, leased the property to plaintiff. The old lease and contract of March 1 are not important except for their evidentiary bearing on the issue of fraud hereinafter considered. Except for dates and rates of commission upon the sale of plaintiff's products, there is no substantial difference between the two pairs of agreements.
By their contract of employment defendants were required to sell only plaintiff's gasolene and other products. A controversy arose in August, 1932, the details of which are not now important except for the fact that the defendants discontinued sale of plaintiff's products and began selling those of a rival manufacturer. That, of course, was a breach of the contract of employment. Plaintiff thereupon demanded possession of the filling station under the lease. Defendants' refusal to vacate brought about this action.
Defendants pleaded, in justification of repudiation of their contract obligation to sell only plaintiff's products, an antecedent breach by plaintiff. That point was ruled against defendants below as a matter of law. In consequence the case went to the jury and defendants prevailed, upon their claim that plaintiff fraudulently induced defendants to sign the lease and contract of August 1, 1930.
The claim is that, on the basis of the original contract and lease of March 1, a new contract and a new lease were agreed upon to begin as of August 1. In the language of the charge:
"It is the claim of the defendants that important matters agreed to in the oral negotiations were omitted from the written contracts; that the agents of the plaintiff knew of such omissions but falsely represented to the defendants that all agreements had been included in the written contracts, and for that reason the defendants claim that these contracts were procured through fraud and misrepresentation and that, therefore, they are not binding and are of no effect."
There has been some confusion in the argument as to whether the important thing so omitted was a "gasolene clause" or a "cancellation clause." Both lease and contract were upon printed forms prepared and currently in use by plaintiff. As far as the printed matter goes, they are identical with the printed forms used for the original contract and lease of March 1, 1930. The documents themselves do not give one the idea that they were carelessly prepared or heedlessly signed. Part of each, on an attached sheet signed by defendants, is an agreement showing the mutual consent of the parties to the cancelation of the earlier contract and lease. Certain pen and ink changes of printed matter are initialed by the defendants.
1. Ordinarily, where a signature of a contract has been procured by fraudulent false representation of its contents the defrauded party is considered as having never assented to its terms and so the supposed contract is void -- not merely voidable. C. Aultman & Co. v. Olson, 34 Minn. 450, 26 N.W. 451. But in such a case, in order to make the agreement void rather than voidable, the signature must be procured without negligence on the part of the defrauded party. Restatement, Contracts, § 475. Illustration 2 under that section is this:
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