Morrison v. Herrick

Garnett, J. The appellee, Harry Herrick, commenced to occupy number 115 Madison street, Chicago, in 1876, as a hat store. His brother, Charles K. Herrick, engaged in business with him in 1880 at the same place. The landlord, Edward W. Morrison, executed a lease for the premises annually, the last executed being dated April 8, 1884, and the term ending April 30, 1885, at a rental of1 §3,000 per year. We think the evidence fairly proves that in the summer of 1884 a parol agreement was made between Morrison and appellees, by the terms of which Morrison undertook, on the faith of appellee’s promise to make permanent and valuable improvements on said store, to give them a lease of said store and basements for a term of five years, beginning May 1, 1885. At the time the oral agreement was entered into, appellees were in the actual possession of the premises, engaged in the business of hatters, and have been in such possession and occupation over since. Soon after the agreement was made appellees proceeded, in pursuance thereof, with the knowledge and consent of Morrison, to make valuable and permanent improvements on said store, at a cost of several thousand dollars, lío written lease was delivered by Morrison for the year beginning May 1,1885, nor for the five year term. On the 8th day of July, 1885, he executed to Miner and others, appellants herein, a lease of said store, with other stores adjoining, for a term of five years beginning May 1, 1886, under which the last named lessees now claim, the superior right to possession of the store number 115.

What amounts to part performance of an oral contract for the sale of real estate (or such an interest therein as is specified in the various statutes) so as to shut out the statute of frauds, has been the occasion of no little contention in the courts of this country and England. The doctrines announced at times, have been so extreme as to give rise to the apprehension that nothing would be left of the statute. We may safely say, however, that the ruling idea with the courts has been to prevent the use of the statute in that c’ass of cases, as a moans for the perpetration of fraud. What is often designated as part performance which takes a contract out of the statute, may be as appropriately classified with those cases in which the doctrine of equitable estoppel operates to prevent fraud. That doctrine, certainly, the statute of frauds was nof intended to repeal.

In Roberts on Frauds, 132, it is said: “ There does not seem, Indeed, to be any satisfactory foundation for this doctrine of part performance without the intermixture of fraud, and upon this ground, where an owner has encouraged another to go on with his improvements on the estate under a false expectation of a conveyance, or lease, raised in him by the assurance of the party entitled, it is agreeable to the general course of equitable relief to disappoint the contrivance, by compelling the deceiver to realize the expectation he has created.”

Again, at page 134, he says: “ But these instances of encouragement, either tacit or express, to make improvements, incur expense or exercise acts of dominion, which must turn to the .prejudice of the mistaken party if his expectation is disappointed, are not proper cases of part performance, but of actual fraud, which courts of equity have always been forward to relieve against.” This point is illustrated in Howe v. Hutchinson, 105 Ill. 576 ; McClure v. Otrich et al., 118 Ill. 320 .

• As a head of relief, separate from that of taking possession in pursuance of the contract, Pomeroy, in his work on Contracts, Sec. 126, considers the subject of making valuable and permanent improvements in pursuance of the oral contract, with the knowledge and consent of the vendor, saying, “it is always considered to be the strongest and most unequivocal act of part performance, by which a verbal contract to sell and convey, or to lease, is taken out of the statute. It is very plain that such proceedings satisfy the equitable principle upon which the doctrine of part performance rests much more completely than a mere possession does. If the purchaser has simply taken possession, it might seem possible for him to be restored to his former situation, and to be compensated in damages; but when he has made outlays for valuable and permanent improvements and thus changed the character of the property, it would be in the highest degree unjust for the owner, who has permitted these expenditures and alterations to be made in reliance upon the agreement, to interpose the statute and prevent the completion of his contract, and at the same time retain and enjoy all the benefit of the additional value imparted to the land.” And in the same work, Sec. 124, the author says: “It is also well settled that a tenant’s continued possession and the making by him, in pursuance of stipulations contained in the agreement, of substantial improvements on the land, constitute a part performance of a verbal agreement to grant a renewal of the lease, or, it would seem, of a contract to convey the fee.” See also Fry on Specific Perf., Sec. 585.

A case in point decided by Lord Cottenham, is Mundy v. Joliffe, 5 Myl. & C. 167, where the tenant from year to year, during such tenancy entered into a parol agreement with his landlord for a lease for fourteen years, and in pursuance thereof repaired the building, drained the lands, etc. It was held that there was no doubt these acts constituted a part performance which prevented the application of the statute of frauds.

In Williams v. Evans, L. R. 19 Eq. 547, a tenant in possession made a parol agreement for a new lease for thirty years, and on the faith of such parol agreement sub-let at an increased rent. The sub-tenant made permanent and valuable improvements with the knowledge of the landlord, and with the understanding that he was to have a lease from the original tenant. The court held that when the tenant is in possession and does anything which alters his position for the purpose of carrying out the new verbal contract, the statute of frauds can not be interpose 1 as a bar; that it was of no consequence whether the improvements were made by the tenant or sub-tenant, and there was a decree for specific performance.

The question we now decide was not presented in Wood v. Thornly, 58 Ill. 464 , Padfield v. Padfield, 92 Ill. 198 , or Pickerell v. Morse et al., 97 Ill. 220 .

The appellees being continuously in possession of the premises, are not guilty of laches. Whitsitt v. Trustee, etc., 110 Ill. 126 ; McNamara v. Garrity, 106 Ill. 384 .

The appellants, Miner, Beal & Co., are not bona fide purchasers, having paid no purchase money, (Brown v. Welch, 18 Ill. 343 ,) and the possession of appellees being notice to them. (C., B. & Q. R. R. Co. v. Boyd et al., 118 Ill. 73 .)

We are satisfied the decree on the amended bill is right and works out full justice to all parties.

The demurrer to the cross-bill of Miner, Beal & Co., was properly sustained. Their remedy against Morrison is complete and adequate at law. The appellees have no interest whatever in the controversy between the appellants, and may justly object to being entangled in a litigation not germane to the original bill.

Finding no error in the record, the decree of the Circuit Court is affirmed.

Decree affirmed.