Wilko of Nashua, Inc. v. TAP Realty, Inc.

• Decision Date: 31 October 1977
• Docket Number: No. 7610,7610
• Parties: WILKO OF NASHUA, INC., et al. v. TAP REALTY, INC., Star Market Co., Inc. and Star Market Co., Division of Jewel Companies, Inc.
• Court: New Hampshire Supreme Court

Page 798

379 A.2d 798

117 N.H. 843

WILKO OF NASHUA, INC., et al. v. TAP REALTY, INC., Star Market Co., Inc. and Star Market Co., Division of Jewel Companies, Inc.

No. 7610.

Supreme Court of New Hampshire.

Oct. 31, 1977.

McLane, Graf, Greene, Raulerson & Middleton, Arthur A. Greene, Jr., and R. David DePuy, Manchester, for Wilko of Nashua, Inc.

Winer, Lynch, Pillsbury & Howorth, Nashua (Robert W. Pillsbury, Nashua, orally), for Cathay Plaza, Inc.

Normand R. Pelletier, Nashua, by brief and orally, for TAP Realty, Inc.

McDermott, Will & Emery, Chicago, Ill. (Theodore A. Groenke, Chicago, Ill., orally), and Sheehan, Phinney, Bass & Greene, Manchester, for Star Market Co., Inc. and Star Market Co., Division of Jewel Companies, Inc.

DOUGLAS, Justice.

This is an appeal from a series of actions in law and in equity. Plaintiffs Wilko of Nashua, Inc. and Cathay Plaza, Inc. claimed that TAP Realty, Inc. breached certain leases, and that Star Market Co., Inc. and Star Market Co., Division of Jewel Companies, Inc. intentionally interfered with the contractual relationships of TAP, Wilko, and Cathay. All questions of law were reserved and transferred by the Trial Court (Johnson, J.).

TAP originally secured a ground lease in Nashua in 1971, which provided that TAP could sublease without approval of the owners but required written consent before assignment of the lease. Subsequently, Wilko and Cathay entered into leases with TAP. Wilko was to operate a Kentucky Fried Chicken outlet, and Cathay was to operate a Chinese restaurant. Both leases were recorded. TAP and Star then began to negotiate about the possibility of locating a food market in the same tract. Cathay and Wilko agreed with TAP to permit a reasonable delay in going forward with their agreements during the negotiations. However, a binding lease agreement was never reached between Star and TAP.

On May 10, 1972, Lawrence J. Madfis, counsel for Star, and Ted Pelletier, TAP's president, met at Madfis' Brookline, Massachusetts office. Although a proposed sublease was discussed, Star and TAP agreed instead to an assignment of TAP's interest in the ground lease. Star gave Pelletier a check for $6,000 in exchange for a promissory note signed by TAP and Pelletier. The trial court found that Madfis and Pelletier discussed the provisions of the assignment at this meeting, but in the course of negotiation, were not making identical interlineations on their respective copies. Madfis made changes in his own handwriting on two copies of the basic lease, although he testified that he had made changes on only one copy.

The court also found that Madfis materially altered a clause in the assignment that would void the assignment if TAP either paid the promissory note or completed construction of a store for Star. He converted the alternate termination conditions to conjunctive conditions, obligating TAP to complete a store for Star to secure release of the assignment, although a valid lease between Star and TAP, as recited in the assignment, never existed. Madfis accomplished the alteration after Pelletier and he had signed the assignment, without initialing the change or securing Pelletier's knowledge or approval. The court determined that Pelletier, who was experienced in real estate transactions, would not have agreed to such an alteration.

Madfis then recorded the assignment of lease in the Hillsborough County Registry of Deeds. The court determined that the recording of this knowingly and fraudulently altered assignment placed an encumbrance on the title of TAP, such conduct being an intentional interference with the contractual relationships of Wilko, Cathay and TAP. Additionally, the court found that in striking out the "assent" portion of the assignment, which the owners had to sign to validate the assignment, Madfis knew that he was recording a document that failed in its purported purpose to give Star a valid assignment.

TAP attempted to secure a release of the assignment from Star by a written tender of $6,000 through its counsel. The court found that this tender was legal and effective and that Star's refusal to accept payment constituted an intentional interference with the contractual relationships of Wilko, Cathay, and TAP.

The court ordered TAP to comply with the terms of its lease with Wilko, to credit Wilko with $320.84 on its future rental payments and to give additional credit on rents due for the $2,500 deposit. TAP was also ordered to pay Cathay $19,200, the amount received in prepaid rent. Star was ordered to pay to Wilko the following damages: $186,666.67 for lost profits from April 10, 1972, to October 31, 1973; $40,833.31 for lost profits from November 1, 1973, to June 1, 1974; $500 for a deposit to Image Buildings; and attorneys' fees in connection with the litigation. TAP was to receive from Star $22,807.14 for losses at the Broad Street Plaza from July, 1972 through December, 1973, $623 for expenses of rubbish removal, $8,682 for interest at 6% on loans, and attorneys' fees. Star's counterclaim against TAP for $6,000 was granted. Finally, Star was ordered to pay Cathay $50,000 for lost profits, $5,000 for an additional deposit, $1,500 for attorneys' fees in connection with negotiating the proposed lease, and attorneys' fees in connection with the litigation. We sustain all rulings of the trial court with the exception of its award of interest at the rate of 6% on the damages suffered by TAP on loans. The prevailing rate of interest of TAP's notes was eight and one-half percent, the amount awarded should be $12,400. Additionally, we sustain Wilko's exception to the trial court's granting of Star's motion for post-trial discovery.

Star argues that the court's determination that Star was guilty of fraud and illegal interference with the contracts of TAP, Wilko and Cathay was incorrect as a matter of law, because the change in the language of the assignment was not material. Madfis admitted that the change in language would have required TAP to build a store for Star and pay $6,000, rather than simply to pay the money, to void the assignment. Although general terms of a contract may be limited by words that state the views and objectives of the parties, Colebrook Water Company v. Parsons, 88 N.H. 217, 186 A. 14 (1936) (per curiam); Woods v. Nashua Mfg. Co., 5 N.H. 467, 473 (1831), when two clear, unambiguous, alternative clauses conflict, earlier general introductory language does not control. Kogod v. Stanley Co., 88 U.S.App.D.C. 112, 186 F.2d 763, 765 (1950); Williams v. Barkley, 165 N.Y. 48, 57, 58 N.E. 765, 767 (1900); Thomas v. Dancer, 264 P.2d 714, 717-18 (Okl.1953). Madfis' unilateral alteration of an executed document, which changed alternative termination clauses to conjunctive termination clauses, was clearly material. A "physical alteration of the terms of a written contract is material with respect to a party thereto if his rights or other legal relations with the party making the alteration . . . would, under such a contract as the altered one, be different from those created by the contract before the alteration." 6 A. Corbin, Contracts § 1317, at 301 (1962).

Star further argues that its recording of the altered document was proper, because it had a legally enforceable interest in the property. However, all parties agreed that Star never reached a binding lease agreement or other contract with TAP. Star recorded the altered assignment knowing that the original ground lessors had not consented to the assignment, that no lease had been entered into between TAP and Star and that the recorded document constituted an encumbrance on TAP's title. Star knew that Wilko and Cathay had prior recorded leases with TAP, and that the recording of the altered assignment would make TAP's borrowing money to satisfy its leases with Wilko and Cathay difficult.

The court found that Madfis' conduct on behalf of Star constituted an intentional interference with the contractual rights of TAP, Wilko, and Cathay. Star had the burden of proof to show its privilege to justify the recording of the altered assignment. Morra v. Hill, 103 N.H. 492, 494, 175 A.2d 824, 826 (1961). The court's finding that Star never acquired an option to lease the premises from TAP was amply supported by the evidence. Furthermore, the court was free to disbelieve any evidence tending to show a privileged occasion. Id., 175 A.2d at 826.

Star was unable to establish a justification for its recording of the altered document, and thus was protecting no right or privilege by its recording. See Russell v. Croteau, 98 N.H. 68, 70, 94 A.2d 376, 377-78 (1953). The trial court specifically found that Star's actions were intentional and malicious. There is considerable evidence supporting this finding in the record. Star's recording of the altered assignment constituted a slander of title motivated by malice. "Malice, within the meaning of this rule, is an intention to vex, injure, or annoy. As a basis for the recovery of actual damages . . . it means only that the act is deliberate conduct . . . ." 50 Am.Jur.2d Libel and Slander § 544, at 1063 (1970). The question of malice was for the trier of fact. Frankfort Oil Co. v. Snakard, 279 F.2d 436, 443 (10th Cir.), cert. denied, 364 U.S. 920, 81 S.Ct. 283, 5 L.Ed.2d 259 (1960).

Star contends that the court incorrectly implied fraud from the circumstances without clear and convincing proof. "Fraud is never to be presumed, but must be established by clear and convincing proof (Lampesis v. Comolli, 101 N.H. 279, 140 A.2d 561) and the circumstances must indicate with reasonable clarity that fraud was practiced." Hoyt v. Horst, 105 N.H. 380, 390, 201 A.2d 118, 125 (1964). Fraud cannot be implied from doubtful circumstances. Sheris v. Thompson, 111 N.H. 328, 331-32, 295 A.2d 268, 271 (1971). The court considered various factors in reaching its finding of fraud, including Madfis' material alteration of the assignment without...