Tull v. Mister Donut Development Corp.

• Decision Date: 22 May 1979
• Citation: 389 N.E.2d 447,7 Mass.App.Ct. 626
• Parties: George M. TULL v. MISTER DONUT DEVELOPMENT CORPORATION et al. 1
• Court: Appeals Court of Massachusetts

Page 447

389 N.E.2d 447

7 Mass.App.Ct. 626

George M. TULL v. MISTER DONUT DEVELOPMENT CORPORATION et al. ¹

Appeals Court of Massachusetts, Norfolk.

Argued April 11, 1979.

Decided May 22, 1979.

Richard J. Levin, Boston, for Mister Donut Development Corp.

George H. Howard, Westwood, for plaintiff.

Before GRANT, PERRETTA and KASS, JJ.

KASS, Justice.

In this case the plaintiff Tull's right to recover depends on whether, when the defendant Mister Donut Development Corporation (Mister Donut) decided not to lease Tull's real estate, the parties were in a state of "imperfect negotiation" or whether their dealings had by that time added up to an offer and acceptance or course of conduct sufficient to bind Mister Donut. We conclude that the negotiations were inchoate and that Mister Donut is entitled to prevail.

We derive the facts of the case from a master's subsidiary findings in a report which the judge adopted and on the basis of which he entered judgment for the plaintiff against Mister Donut and judgment for Mister Donut's parent corporation, Mister Donut of America, Inc. These subsidiary findings are binding upon us unless they are clearly erroneous, mutually inconsistent, contradictory or vitiated in view of the controlling law. Selectmen of Hatfield v. Garvey, 362 Mass. 821, 825, 291 N.E.2d 593 (1973). Michelson v. Aronson, 4 Mass.App. 182, --- ^A, 344 N.E.2d 423 (1976). Mass.R.Civ.P. 53(e)(2), 365 Mass. 820 (1974). We must then take these findings, together with the inferences that ought to be drawn from them, and reach our own ultimate conclusions. Ryan v. Stavros, 348 Mass. 251, 253, 203 N.E.2d 85 (1964). Bridge Enterprises, Inc. v. Futurity Thread Co., 2 Mass.App. 243, 246, 310 N.E.2d 622 (1974). Bills v. Nunno, 4 Mass.App. 279, --- ^B, 346 N.E.2d 718 (1976). To assist us in this regard we have had the benefit of certain exhibits which were incorporated in, and appear to have been appended to, the master's report. Contrast Jones v. Gingras, 3 Mass.App. 393, 395, 331 N.E.2d 819 (1975); Harbor Schools, Inc. v. Board of Appeals of Haverhill, 5 Mass.App. ---, --- n. 4 ^C, 366 N.E.2d 764 (1977).

In June, 1968, Robert T. Piccarelli, identifying himself as a representative of Mister Donut, expressed interest in real estate at 555-563 Washington Street in Quincy, which Tull owned, as the location for a Homer's take out chicken store. ² As Piccarelli outlined the proposed transaction, Tull was to demolish a small structure devoted to retail and residential use, which stood on a portion of the locus, so as to achieve a sufficiently commodious site. On the cleared site, Tull was to erect, to Mister Donut's specifications, a building which he would lease to it. Piccarelli said he would assist Tull in securing mortgage financing for the new building. Further discussions ensued with Mister Donut's development manager and on August 13, 1968, Piccarelli wrote to Tull a letter, the full text of which appears in the margin. ³ Two weeks later, on August 27, 1968, Piccarelli sent to Tull for his approval a form of lease and ancillary documents.

Thus armed, Tull arranged for a conference concerning a construction and permanent loan from the Wollaston Federal Savings and Loan Association (the bank). On October 7, 1968, the bank issued a loan commitment, and the papers, including the proposed lease, were referred to the bank's lawyer for review.

At about this time Tull took steps to empty of its tenants the building he would have to demolish. Once emptied, the building was vandalized, suffered a fire and had to be torn down. Tull has waived any claim for damage to the property and pursues damages equal to lost net rental income from the lease he expected to make with Mister Donut.

Counsel for the bank reviewed the documents and modified the lease which Mister Donut had submitted in at least two material respects: (1) he deleted a clause which would have allowed the tenant to terminate the lease if it could not obtain certain public approvals; and (2) he altered a clause which would have permitted the tenant to terminate the lease on thirty days' notice (provided that the tenant should reimburse the landlord for the cost of unamortized improvements) so that the tenant could not terminate the lease until the fifth year had expired. The bank's counsel also insisted that Mister Donut's parent, Mister Donut of America, Inc., guarantee the tenant's obligation under the lease. Tull signed the lease as modified and returned it to the bank's counsel, who, in turn, sent the counter draft to Mister Donut for approval and counter signature. Although the record is murky on the point, we infer that the bank's lawyer included with the counter draft a request for the guarantee of the parent corporation. Mister Donut never signed the lease, despite an assurance from its development manager some time in early November that this would be done, and notified Tull a few months later (in January, 1969) that it was no longer interested in the transaction.

Tull fastens on the initial written summary of the proposed transaction which Piccarelli sent to him on August 13th as constituting a memorandum signed by the party to be bound which was sufficiently detailed to support a contract. G.L. c. 259, § 1. Sands v. Arruda, 359 Mass. 591, 596, 270 N.E.2d 826 (1971). Bridge Enterprises, Inc. v. Futurity Thread Co., 2 Mass.App.Ct at 246-247, 310 N.E.2d 622. Compare Des Brisay v. Foss, 264 Mass. 102, 162 N.E. 4 (1928). Neither the language of the document nor its context lends comfort to the plaintiff's position. Piccarelli's letter begins by saying that he is describing the "rudiments of our deal" and concludes with an expression of hope "that in the very near future preliminaries will be completed," thus signifying that details of the transaction were yet to be resolved and would be incorporated in documents yet to be drawn. Normally the fact that parties contemplate the execution of final written documents justifies a strong inference that the parties do not intend to be bound by earlier negotiations or agreements until the final terms are settled. Rosenfield v. United States Trust Co., 290 Mass. 210, 216, 195 N.E. 323 (1935). Wasserman v. Roach, 336 Mass. 564, 568, 146 N.E.2d 909 (1958). Taken in context, a reasonably informed participant in a commercial venture would realize that the August 13th letter was not adequate to govern the rights and obligations of the parties for a period that might run for forty years. The inclusion with Piccarelli's letter of a printed form of lease, with no blanks filled in, underscores that it was intended by him to serve as an agenda for further discussion. Not the least of the unresolved topics were the financing of the improvements and the timing of construction. With final terms still to be hammered out, the parties could not be bound. Geo. W. Wilcox, Inc. v. Shell Eastern Petroleum Prod., Inc., 283 Mass. 383, 387, 390, 186 N.E. 562 (1933). Rosenfield v. United States Trust Co., 290 Mass. at 217, 195 N.E. 323. Saxon Theatre Corp. v. Sage, 347 Mass. 662, 666, 200 N.E.2d 241 (1964). Blair v. Cifrino, 355 Mass. 706, 709-710, 247 N.E.2d 373 (1969).

What Piccarelli sent to Tull two weeks later, the draft of a lease and ancillary documents, could, indeed, be taken as an offer. It was an offer which Tull, however, was not able to accept since it contained provisions which failed to satisfy the requirements of his bank. As returned to Mister Donut, the documents were revised in more than trifling detail and stood as a counter offer. Champlin v. Jackson, 317 Mass. 461, 463, 58 N.E.2d 757 (1945). Peretz v. Watson, 3 Mass.App.Ct. 727, 728 (1975). The insistence upon a guarantee of the lease by the parent, although this request hardly could have surprised Mister Donut, added another significant element of counter offer....