Texas Co. v. Peacock, 8277

• Decision Date: 15 February 1956
• Docket Number: No. 8277,8277
• Citation: 293 P.2d 949,77 Idaho 408
• Parties: The TEXAS COMPANY, a Delaware Corporation, Plaintiff-Appellant, v. John J. PEACOCK and Mary K. Peacock, Husband and Wife, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 949

293 P.2d 949

77 Idaho 408

The TEXAS COMPANY, a Delaware Corporation, Plaintiff-Appellant, v. John J. PEACOCK and Mary K. Peacock, Husband and Wife, Defendants-Respondents.

No. 8277.

Supreme Court of Idaho.

Feb. 15, 1956.

Ryan & Ryan, Weiser, for appellant.

Brown & Peacock, Kellogg, Keane & Keane, Wallace, Hawley & Marcus, Boise, for respondents.

SMITH, Justice.

June 1, 1938, respondents leased in writing to appellant's predecessor certain real property as a service station site situate in Weiser, Idaho, for a term of 15 years commencing August 1, 1938, at the agreed rental of $55 a month. Appellant is the assignee of its predecessor.

The lease grants unto lessee an option to purchase the leased property for $4,500 if exercised during the 15th year of the lease.

Appellant, July 29, 1953, before expiration of the lease, and before expiration of its 15th year, observed the requirements contained in said option to purchase. It executed and delivered to respondents its notice of election to exercise said option and deposited with an escrow holder the purchase price of $4,500 with instructions to pay such sum to respondents upon title clearance in exchange for their good and sufficient warranty deed conveying the premises to appellant, all as provided to be performed by the parties upon exercise of the option to purchase.

Respondents refused to execute and deliver their warranty deed. Appellant thereupon, October 27, 1953, brought this action against respondents to require their specific performance. Respondents defended, contending that appellant had voided its option to purchase for the reasons: (1) that upon respondents' execution of a renewal lease, appellant, through its representatives duly authorized, agreed to the renewal lease and accepted the terms thereof; (2) that by reason of a requirement contained in the renewal lease, that respondents remodel the station at their cost, their arranging therefor had caused them to change their financial position to their detriment, which estopped appellant from later exercising the option to purchase. Respondents also cross-complained for damages for appellant's alleged unlawful detainer, and for restitution of the property.

The trial court found that duly authorized representatives of appellant 'approved' and 'agreed upon' a proposed new lease on appellant's behalf. Appellant assigns the same as error, which presents respondents' first contention for determination.

The record shows that appellant offered, through its manager in Idaho and its zone manager in the Weiser area, and said representatives had authority to offer, to respondents, under a renewal lease, $150 monthly rental for the service station if remodeled at respondents' cost of upwards to $10,000. Respondents refused the offer, requesting $185 monthly rental. The parties then negotiated concerning terms for a day and a half. Thereupon appellant's representatives drafted a proposed lease to be submitted to appellant. The proposal, had it been executed, would have required payment by appellant to respondents of $170 monthly rental; also would have required remodeling of the service station at respondents' cost of $9,945, in accordance with certain plans and specifications and a proposed 'Bid & Work Contract' as signed and submitted by a contractor for execution and acceptance in writing by respondents.

February 14, 1953, respondents executed the proposed lease but neither of the aforesaid representatives of appellant either approved or executed the proposal on behalf of appellant, but submitted it to appellant's Butte, Montana, division office. That office, the latter part of March, 1953, suggested that corrections be initialed, but appellant had not at that time approved or executed the instrument. April 24, 1953, appellant's territorial Los Angeles, California, office rejected the proposed lease, stating in effect that it would consider a renewal lease on the basis originally suggested, i. e., $150 monthly rental and with certain remodeling of the service station at respondents' cost. Appellant promptly advised respondents of such rejection within a week, by May 1, 1953.

The proposed lease sets out in most cogent terms the lack of authority in either of appellant's aforesaid representatives to approve and sign, or execute, and therefore to agree to the proposed lease; for such instrument immediately above lessor signature lines contains the following provision:

'(18)--Approval and Signing by Lessee. This agreement, whatever the circumstances, shall not be binding on the lessee unless and until approved and signed in its behalf by an Executive Officer, General Sales Manager, Assistant General Sales Manager, Manager Dealer Sales (Executive Sales Office), Assistant Manager Dealer Sales (Executive Sales Office), Manager Real Estate Division, Territorial Manager (Domestic Sales Department), or Division Manager (Domestic Sales Department).' (Emphasis supplied.)

And below such signature lines, after a space reserved for acknowledgments, appears the following:

'Approved as to: Terms ..... * * *.'

Neither of appellant's said representatives nor anyone in appellant's Butte division office or elsewhere on behalf of appellant, signed the proposed lease in due approval and execution thereof or otherwise. If any such representative possessed the requisite authority to approve and to agree upon the lease on appellant's behalf, then he could and should have signed the instrument in due execution thereof, and approved it over his additional signature, instanter on behalf of appellant, and thereupon delivered to respondents a fully executed draft thereof. Obviously said representatives had no such authority and the warning contained in the paragraph 18 of the instrument could not have misled respondents in believing otherwise. They knew the contents of paragraph 18 by having read and signed the proposal, and said paragraph and the warnings thereof are set out immediately above the signature lines; their knowledge of the contents of said paragraph, and of the lack of authority of said representatives to bind appellant on an executed lease, is additionally shown by the further fact that neither of the representatives executed the proposal on behalf of appellant at the time respondents signed the same, and by respondents' knowledge of the submission of the proposal to appellant by the representatives, in accordance with the mandate of said paragraph.

Further, since neither of appellant's said representatives signed, thereby to duly execute and approve, the proposed lease, in itself shows that neither of them had authority to bind appellant; and lends emphasis to the mandate of the 18th paragraph of said proposal, that whatever the circumstances, the agreement shall not be binding on appellant unless and until approved and signed on its behalf by one of its officers referred to in said paragraph.

The warnings of said paragraph 18, and the fact that appellant's representatives obeyed its mandate and that their obedience thereto was known to respondents, not only shows that said representatives had no actual authority to bind appellant, but that appellant, principal, had not in any wise clothed its representatives, agents, with any apparent authority to enter into the proposed lease on appellant's behalf; nor did said representatives attempt any exercise of apparent authority. Respondents, having actual knowledge of the contents of said paragraph 18 and of such lack of authority of said representatives, could not have been and in fact were not misled.

Under the circumstances shown herein, with the limitations of the agency of appellant's representatives known to respondents, the respondents could not acquire...