Washington Sportservice, Inc. v. MJ ULINE COMPANY

• Decision Date: 16 November 1962
• Docket Number: No. 16829.,16829.
• Citation: 313 F.2d 889
• Parties: WASHINGTON SPORTSERVICE, INC., Appellant, v. The M. J. ULINE COMPANY, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

313 F.2d 889 (1962)

WASHINGTON SPORTSERVICE, INC., Appellant, v.The M. J. ULINE COMPANY, Appellee.

No. 16829.

United States Court of Appeals District of Columbia Circuit.

Argued May 7, 1962.

Decided November 16, 1962.

Petition for Rehearing Denied January 25, 1963.

Mr. Harry L. Ryan, Jr., Washington, D. C., for appellant.

Mr. Leonard Braman, Washington, D. C., with whom Messrs. David G. Bress and J. H. Krug, Washington, D. C., were on the brief, for appellee.

Before BAZELON, Chief Judge, and WILBUR K. MILLER and BASTIAN, Circuit Judges.

Petition for Rehearing En Banc Denied En Banc and Petition for Rehearing Before the Division DeniedJanuary 25, 1963.

WILBUR K. MILLER, Circuit Judge.

This case is before us for the second time.On the first appeal, brought by Washington Sportservice, we reversed the judgment of the District Court and remanded for further proceedings consistent with our opinion.¹Then, as we directed it to do, the District Court made a finding on the factual issue which had not been resolved the first time.What to do next became a problem because the trial judge was not sure he understood the further directions of our opinion, and the parties differed as to the scope of the remand and as to what issues were open for adjudication by the District Court.Although he expressed doubt as to the correctness of his course,² the trial judge decided to regard the remand as so general in nature that it left him free to pronounce judgment as he saw fit on all issues originally presented.Accordingly, he did so,³ and then entered judgment for Uline, as had been done before.

Sportservice appeals, arguing that the District Court misinterpreted our former opinion.It contends that the remand was for the determination of one factual issue and that the District Court's determination thereof should have controlled its decision, as all other issues had been decided explicitly or implicitly by this court's opinion and were not open for adjudication after remand.Our question now is whether the judgment appealed from is consistent with our opinion on the first appeal.In considering that question, we think it desirable first to summarize the issues initially submitted to and decided by the District Court and the issues which were presented to this court on the appeal from the first judgment.This will require a brief statement of the proceedings in both courts.

By contract dated November 14, 1941, M. J. Uline Company conveyed to Jacobs Brothers for a term of years the refreshment concession in its indoor sports arena.In 1945, desiring to install extensive new facilities, Jacobs Brothers began negotiations for a longer term.Through an exchange of letters, the parties agreed that the term which was to end June 15, 1947, would be extended one year for each one thousand dollars expended by the lessee in improvements.Pursuant to the agreement, Jacobs Brothers spent nearly $40,000 on the project.On or about September 20, 1946, with Uline's consent, the lease as amended was assigned to Washington Sportservice, which has since operated thereunder.

Uline notified Sportservice that it desired to terminate as of May 19, 1955.When Sportservice challenged its right to do so, Uline filed this suit July 27, 1955, asking the District Court to declare, inter alia,(a) the amended contract unenforceable as indefinite, as lacking in mutuality, and as based upon an inadequate consideration; (b) as an alternative, that the amended contract was good for one year only under § 45-819, D.C.Code(1951),⁴ and that thereafter Sportservice held under a tenancy by sufferance which could be terminated at any time by either party, upon notice.

At the conclusion of the proceedings, the District Court made, among others, the following findings of fact:

"5.Correspondence passed between the parties in July and August of 1945 which altered the agreement of November 14, 1941, in order to provide that the defendant would construct and install a new counter in the arena and, further, that the defendant would, as set out in its letter of July 31, 1945,

"`proceed with such other and improvements and installations of equipment and uniforms as you (the plaintiff) may desire * * * with the understanding that our agreement is renewed and automatically extends itself for such yearly periods as are required to amortize at the rate of $1000 a year the amounts expended by us(the defendant) for such improvements and installations.To amplify, if we(the defendant) expend $2000 our agreement would be considered extended until June 15, 1949, and the same extension procedure is to apply to any similar expenditures that we may make from time to time with data, of course, being submitted to you as you may direct.\'

"6.This modification of the lease agreement of November 14, 1941, is set forth in defendant\'s letter of July 31, 1945, which was accepted by the plaintiff on August 2, 1945.But on August 11, 1945, the parties signed a memorandum on the face of the letter of August 2, 1945, stating `this letter is cancelled out by M. J. Uline and L. M. Jacobs.\'"

"11.The contract was terminated between the parties on June 15, 1951 * * *."

Among the court's conclusions of law are these:

"2.The contract of November 14, 1941, as amended in July and August of 1945, is a lease of real property and the tenancy created is an estate from year to year.

"3.Plaintiff terminated the estate from year to year on June 15, 1951, and the tenancy thereafter became an estate by sufferance."

"6.The concession contract of November 14, 1941, as amended, is unenforceable and has been since June 15, 1951.It is indefinite and lacks mutuality from that date."

Consequently, judgment was entered in favor of Uline, providing that "The contract of lease and the modifications thereof * * * is hereby adjudged to have been unenforceable after June 15, 1951."

It is apparent from its conclusions of law that the District Court adjudged the amended contract unenforceable after June 15, 1951, because it had concluded the amended contract had created an estate from year to year which Uline had a right to, and did, terminate as of that date; that is to say, there was thereafter no agreement at all and Sportservice held only by sufferance.

From this judgment Sportservice took the first appeal.It contended that, contrary to the holding of the District Court, it held "an estate for years, not susceptible of unilateral termination where it was not in breach of any term or condition, and as to which no reservation for termination was had in its inception."(Emphasis added.)Uline asserted that, as held by the District Court, the amended contract lacked mutuality, was indefinite, and provided for an estate from year to year which later became a tenancy by sufferance.In the course of its brief, Uline said:

"All parties agreed that the contract of 1941 was a leasehold agreement.The Court below concurred and found that the initial agreement was an estate for years which by its terms expired on June 15, 1947.

"The crux of the litigation is the legal effect of the amendments of July and August, 1945 * * *.

"It is appellee\'s contention that the letter of July 31, 1945, and particularly that portion which permitted Uline to terminate the term of the lease upon the performance by it of a prescribed condition created an estate by sufferance.⁵ * * *"(Emphasis added.)

Thus the parties presented to this court these questions: 1.Did the amended contract lack mutuality?2.Was it so indefinite as to be unenforceable?3.Did it create a tenancy from year to year, which could be, and was, unilaterally terminated by Uline so that thereafter Sportservice held merely by sufferance?4.Or did the amended agreement create a tenancy for a term of years which, in the absence of a breach by Sportservice, could not be terminated by Uline unless it contained an express agreement for such unilateral cancellation?

Confronted with these contentions, this court said at the outset of the first opinion:

"* * * The question now before us is whether the agreement allows a cancellation at the option of the Uline Companybefore the expiration of the term and, if so, under what conditions."(Emphasis added.)

Implicit in this statement of the question, particularly in view of the words we have italicized, is the conclusion of this court that the amended contract did not create a tenancy from year to year, which unquestionably Uline could have cancelled; but that it created a tenancy for a term of years which Uline could cancel before the expiration of the term only if it had a contractual right to do so.That is the reason we stated the question as we did.

This is borne out by the fact that, having noted that one copy of the amendatory letter of July 31, 1945, contained a sentence permitting Uline to terminate the amended agreement, and that another copy of the same letter did not contain that sentence, we said:

"Whether Uline Arena has the right to terminate the refreshment contract on payment of the expenditures by the lessee, less amortization of the installations made by Sportservice, depends, it appears to us, upon whether the termination sentence is in the agreement as finally settled by the parties.No finding of fact was made as to this issue.Consequently we set aside the judgment of the District Court and remand the case for a determination as to the content of the contract under which the Sportservice made the installation. * * *"

Thus far, it seems quite clear that this court had rejected the theories that the amended contract was void for indefiniteness, for lack of mutuality or lack of adequate consideration, or that it created an estate from year to year unilaterally terminable upon notice; that instead we had found it to be a lease for a term of years terminable by Uline only if the right to terminate had been reserved in the amendatory letters; that we remanded solely for the District Court to...