Wall v. S.E.C. Co., Inc.

• Decision Date: 29 November 1974
• Citation: 528 P.2d 1054,270 Or. 553
• Parties: Verda M. WALL and Eula Fitzgerald, Respondents, v. S.E.C. CO., INC., dba Klamath Forest Estates, Unit #3, Appellant.
• Court: Oregon Supreme Court

Page 1054

528 P.2d 1054

270 Or. 553

Verda M. WALL and Eula Fitzgerald, Respondents, v. S.E.C. CO., INC., dba Klamath Forest Estates, Unit #3, Appellant.

Supreme Court of Oregon.

Argued and Submitted Oct. 7, 1974.

Decided Nov. 29, 1974.

William L. Sisemore, Klamath Falls, argued the cause for appellant. With him on the briefs was William Ganong, Jr., Ganong & Sisemore, Klamath Falls.

Robert Thomas, Klamath Falls, argued the cause for respondents. With him on the brief was Sam A. McKeen, Klamath Falls.

Before O'CONNELL, C.J., and McALLISTER, HOLMAN, TONGUE, HOWELL, SLOPER and LEAVY, JJ.

TONGUE, Justice.

This is an action by a tenant against a landlord for damages for breach of a lease agreement. The case was tried before a jury, which returned a verdict in favor of plaintiff in the sum of $14,113 general damages and $6,250 special damages. Defendant appeals from the resulting judgment. We affirm.

Summary of the facts.

1. Execution of lease--attached 'stipulations.'

Klamath Forest Estates is a real estate subdivision in Klamath County and was being developed by defendant. Defendant advertised in Southern California for the sale of tracts in Klamath Forest Estates and had its sales office near Los Angeles. As part of its plan to develop that area defendant constructed a building on one of its lots for operation as a store.

Plaintiffs had been engaged in the operation of a small business near Los Angeles and were attracted by defendant's advertising. They bought 10 acres 'sight unseen' and then visited the Klamath Forest Estates. During that visit they later inquired about the possibility of leasing defendant's building for operation as a store.

After some delay, during which plaintiffs sold their business and moved to Oregon, they met with Tom White, defendant's manager of the tract, to execute the lease. According to plaintiffs, they had been told by a Mr. Adams, defendant's sales manager in Los Angeles, that 'what Tom White says goes.' White was also referred to as the tract manager of Klamath Forest Estates area in defendant's advertising publications.

Plaintiffs testified that Mr. White presented them with a proposed written lease, which they examined, and that they then told him that they wanted it 'stipulated' that as part of the lease agreement the driveway would be 'cindered' and 'kept free of snow,' so that the 'delivery people' could get in, and that there would be both a 'water hook-up' and 'a septic tank hook-up.'

Plaintiffs also testified that Mr. White 'wrote down' these 'stipulations' on a separate sheet of paper, which was then signed by him, as well as by both plaintiffs, and then attached to the lease. The lease with these 'stipulations' attached was then also signed by the plaintiffs and mailed to defendant's Los Angeles office. According to plaintiff Wall, they were told by Mr. White that these 'stipulations' would be 'typed in at the California office' and that 'when it came back it would have these stipulations in it.'

The written lease was subsequently signed on behalf of defendant by a Mr. Arthur W. Carlsberg. It did not then, however, 'have the attachments (on) it' and defendant's witnesses testified that when it was previously received by its Los Angeles office it had no such 'attachments.' After the return of the lease, the date was changed from October 1 to November 1, 1966, by Tom White and he then 'initialed' that change.

According to plaintiff Wall, plaintiffs asked Mr. White 'many times about those stipulations'; that 'he kept telling me * * * that everything promised would be done'; that she was never given any reason to believe to the contrary; that she would not have 'entered into this business without those stipulations'; and that in reliance upon them plaintiffs 'spent a lot of money stocking that store and put a lot of work in.' Other testimony was also offered by plaintiffs of their many complaints and of the promises by Tom White and by his successors as 'tract manager' that these things would be 'taken care of.'

Plaintiffs also offered evidence that at a meeting with Mr. Richard Carlsberg in August 1968 the water 'hook-up' and the sewer 'hook-up' were discussed and that Mr. Carlsberg then said that he thought that these matters 'had been taken care of.'

The original lease was for a term of one year, with an option to renew for a term of five years. That option was exercised by the plaintiffs. According to plaintiffs, however, they did not do so until after they were assured by Tom White and others that these matters would be taken care of. The lease, as renewed, expired by its terms on November 1, 1972.

2. Operation of store--difficulties with driveway, water and septic tank 'hook-ups.'

Plaintiffs began operation of the store on November 15, 1966. They offered evidence to show that the business grew steadily, as shown by its monthly gross sales, until August 1968, after which the business steadily declined.

In 1968 a lot adjacent to the store was sold and it was then discovered that a portion of the driveway to the store passed over this lot. In August 1968 the purchaser of that lot 'closed off' the driveway for a week. Defendant then put in a new driveway to the store, but apparently it was steep and narrow and was not surfaced with either cinders or gravel. There was also evidence that this new driveway had 'boulders' and 'stumps' in it and became 'rutted.' As a result, according to plaintiffs' testimony, delivery trucks 'couldn't get up,' and there was no place for them to park 'below.' It also appears that customers' cars had considerable difficulty with the new driveway during the winter of 1968--69 beginning with rain in August and September, which caused the new driveway to become so slick and muddy as to become impassable.

Meanwhile, according to further testimony offered by the plaintiffs, no water or sewer 'hook-up' had been made and the well from which plaintiffs hauled their water had become polluted by a septic tank. In October 1968 the health authorities notified plaintiffs that they must either close the store or secure a water supply 'of a safe and sanitary quality.'

According to testimony offered by the plaintiffs, defendant ignored further complaints and put a lock on the pumphouse door in February 1969 after which plaintiffs closed down the store and moved out at the end of that month. Plaintiff Fitzgerald testified that:

'A. Well, the water well had been completely shut up, nobody could get in or out and our business had dropped off so until it wasn't paying us to keep open, to even keep a heater running to keep the produce from freezing and I saw no future at that rate keeping it open.'

Much of the testimony offered by plaintiffs was denied by defendant. Because of the verdict by the jury in favor of the plaintiffs, however, the testimony offered by them must be accepted as true for the purposes of this appeal. Krause v. Eugene Dodge, Inc., 265 Or. 486, 490, 509 P.2d 1199 (1973).

Defendant's motions for a nonsuit and directed verdict were properly denied.

1. Plaintiffs' evidence relating to the 'stipulations' attached to the lease did not violate the parol evidence rule or the statute of frauds.

Defendant assigns as error the denial of its motions for nonsuit and directed verdict and in support of that assignment contends that plaintiffs' testimony relating to the agreed 'stipulations' which were attached to the written lease at the time that it was signed by the plaintiffs 'violated the parol evidence rule.' ¹

According to testimony offered by the plaintiffs, these oral 'stipulations' were 'reduced to writing,' signed by them and by Mr. White, as a representative of defendant, and attached to the lease prior to plaintiffs' signing of the lease. As such, these 'stipulations' were part of the written agreement between the parties at that time. Even if the sheet of paper with these 'stipulations' was later detached, so as not to be a part of the written lease agreement when it was signed by Mr. Carlsberg, the offer of such testimony does not violate the parol evidence rule. This is so not only because, for the purposes of ORS 41.740, according to that testimony, 'the terms of (the) agreement (had) been reduced to writing,' but also because most, if not all, of the subject matter of the 'stipulations' did not contradict the terms of the lease and were admissible as 'collateral agreements,' even if not reduced to writing. See Thorne v. Edwards, 147 Or. 443, 454--455, 34 P.2d 640 (1934). ² Whether or not plaintiffs' testimony was true was a question for the trial.

In support of the same assignment of error defendant also contends that the statute of frauds was violated because the written lease made no reference to any of the 'stipulations' claimed by plaintiffs. Again, however, according to plaintiffs' testimony, there was a separate sheet of paper setting forth these 'stipulations,' signed by or on behalf of both parties, and attached to the formal lease so as to become a part of it when it was also signed by the plaintiffs. Whether or not Mr. White had authority to sign that agreement is a separate problem, as discussed below. In addition, the evidence offered by plaintiffs of the part performance by them of their obligations under the lease agreement (which included these 'stipulations,' according to their testimony), as well as the evidence of plaintiffs' reliance upon the terms of these 'stipulations,' in support of the allegations of estoppel in plaintiffs' complaint, was sufficient in our opinion to take this case out of the requirements of the Statute of Frauds. See Stevens v. Good Samaritan Hosp., 264 Or. 200, 504 P.2d 749 (1972); and Howland v. Iron Fireman Mfg. Co., 188 Or. 230, 317, 321, 213 P.2d 177, 215 P.2d 380 (1949). See also, 2 Corbin on Contracts 464, § 425 (1950). Again, whether or not plaintiffs' evidence was true was a question for the jury.

Defendant also contends that there can be no subsequent...