Halligan v. Frey

Deemer, J.

Some time prior to July 1, 1908, defendant expended a considerable sum of money in remodeling a building owned by him, in the city of Davenport, and divided the first floor thereof into three rooms, the middle one of which was known as 212 West Fourth street-. Plaintiff was, at that time, engaged in the undertaking business, occupying a building on Harrison street, in said city, belonging to one Ficke. For this latter building he held a lease which expired on July 1, 1908. Some time before the expiration of this lease, defendant proposed to plaintiff that if he (plaintiff) would give up his lease on the Harrison street property and lease 212 West Fourth street, with the basement, he (defendant) would let the same to him for the term of ten years and would make such changes in the premises as would especially fit it for plaintiff’s use and would also put in the necessary furniture and fixtures and charge him for the use of the entire property the sum of $43 per month, payable in advance from the first to the tenth day of every month. Plaintiff accepted the proposition, and defendant made the proposed improvements, costing something like $1,400. Plaintiff moved into the premises on the strength of the agreement and expended something more than $700 in buying additional furniture and fixtures to better adapt it to his use. About the time *187 that plaintiff moved into the property, defendant had prepared, or drew np, a form of written lease, which he submitted to the plaintiff for approval. To this plaintiff objected because of the provisions relating to the place for the payment of the rent, and of a condition against subletting, claiming that these were not in accord with the original agreement. Defendant admitted the objections were good and had the lease rewritten so as to eliminate these provisions and, as rewritten, submitted the same to plaintiff, saying that he would sign the same at any time. Plaintiff signed the lease and, as we have said, moved into the property and paid the agreed rental down to and including May, 1910. Defendant refused to accept the rental for any further time and immediately served notice upon plaintiff to quit. One of these notices was as follows: “To James F. ITalligan: You are hereby notified that the undersigned Charles A. Frey, asks and demands that you vacate and quit the premises known and numbered as 212 "West 4th street, city of Davenport, Iowa, being the premises that you now occupy. You are further notified that„ the tenancy at will now existing between you and the undersigned is terminated and you are required to vacate said premises within thirty days from date unless you are willing to pay the monthly rental of $60.00 per month and enter into a satisfactory lease for said premises. Please vacate said premises or pay rent for the same at the rate of $60.00 per month and enter into a satisfactory lease. Davenport, Iowa, May 2, 1910. [Signed] Charles A. Frey.” Another is a conventional notice of termination of a tenancy and to quit within thirty days from June 8, 1910. And another was a three-day notice to quit, dated the same day, based upon the nonpayment of rent. This action to enjoin defendant from interfering with plaintiff’s possession and from canceling the lease was commenced on June 10, 1910.

Defendant demurred to the petition because the contract was within the statute of frauds, but his demurrer was overruled, and, on issues already stated, the case was tried to the *188 court, resulting in the decree hitherto indicated. It should also be stated that defendant, in justification, pleaded that plaintiff had agreed, as part of the terms of his lease, to hire his carriages and teams of the defendant; that he failed to do so, and for that reason forfeited his rights, if he had any, in and to the premises. Defendant relied almost wholly on the statute of frauds and did not offer any testimony in support of his claim that plaintiff had failed to comply with the terms of the lease. To all the oral testimony offered by plaintiff, in support of his agreement of lease, defendant objected, and he now contends that such testimony was clearly inadmissible' and that nothing transpired to take the ease out of the statute of frauds. Plaintiff insists that the case is not within the statute^ (1) Because of part performance on his part; (2) because defendant is estopped from denying the oral ■ lease; and (3) for the reason that defendant cannot avail himself of the statute; because, to permit him to do so, would allow him to perpetrate a fraud.

1. Landlord and tenant: character of tenancy: evidence: statute of frauds. Plaintiff is presumed, of course, to be a tenant at will (Code, section 2991); but it is proper for him sh°w> by competent testimony, that he is a 't;erLan't f°r years, and, as a rule, no evidence of an ora2 ieage for m0re than one year is admissible (Code, section 4625, par. 4).

Neither taking possession of the property under an oral lease, nor the payment of rent thereunder, will take the case from under the statute. Code, section 4626; Burden v. Sheridan, 36 Iowa, 125 ; Hunt v. Coe, 15 Iowa, 197 ; Recknagle v. Schmaltz, 72 Iowa, 63 ; Powell v. Crampton, 102 Iowa, 364 ; Burden v. Knight, 82 Iowa, 584 ; Thorp v. Bradley, 75 Iowa, 50 . In this respect our statute differs from that of many other states. Butler v. Threlheld, 117 Iowa, 116 .

2. same: statute of frauds. Again, the written memorandum of agreement, or lease, must be siSned b7 the Party to be charged, jg not enough that it be signed by the plaintiff alone. Steel v. Fife, 48 Iowa, 99 .

*189 But the statute was intended to prevent perjury and fraud, and cannot be used as an instrument whereby to perpetrate a fraud. And this rule is peculiarly applicable to equitable actions, such as this. Burden v. Sheridan, 36 Iowa, 125 ; Newis v. Topfer, 121 Iowa, 433; Gregory v. Bowlsby, 115 Iowa, 327 ; Id., 126 Iowa, 588 ; Acker v. Priest, 92 Iowa, 610 . The authorities from other states are uniform on this proposition. See Morrison v. Herrick, 27 Ill. App. 339 ; Hodges v. Howard, 5 R. I. 149; Eaton v. Whitaker, 18 Conn. 222 ( 44 Am. Dec. 586 ); Glass v. Hulbert, 102 Mass. 24 ( 3 Am. Rep. 418 ); Anderson v. Hubble, 93 Ind. 570 ( 47 Am. Rep. 394 ); Equitable Co. v. Baltimore Co., 63 Md. 285 ; Walker v. Bruce, 44 Colo. 109 ( 97 Pac. 250 ); Seymour v. Oelrichs, 156 Cal. 782 ( 106 Pac. 88 , 134 Am. St. Rep. 154 ); Jones, Landlord & Tenant, section 160.

The rule is thus summarized by Pomeroy, in his work on Equity Jurisprudence (sections 921, 1293, and 1294):

The statute of frauds was enacted for the purpose of preventing fraud and cannot be made an instrument of shielding, protecting, or aiding the parties who rely upon it in the perpetration of the fraud or the consummation of a fraudulent scheme. This proposition is the basis of many forms of equitable relief as in cases of verbal agreements for the sale of land, reformation, and enforcement of agreements which are imperfect through fraud or mistake.

Where any agreement is made verbally which the statute requires should be in writing or the execution of a written agreement is prevented through the fraud of one party and the other party is induced to accept and rely upon the verbal agreement as binding and valid, a court of equity will not permit a fraudulent party to set up the statute of frauds as a defense, but will enforce the contract against him although ft is merely verbal.

When equity seems to depart from and disregard the statute and especially in its enforcement of verbal contracts for the sale of lands, which have been part performed, it is only invoking the aid of the most salutary principles for the purpbse of carrying out the ultimate object of the statute, as the primary object of the statute is to prevent frauds, mis *190 takes, or perjuries, by substituting written for oral evidence in the most important class of contracts.

Courts of equity have established the principles which they apply in various circumstances that it shall not be used as an instrument for the accomplishment of fraudulent purposes. Designed to prevent fraud, it shall not be permitted to work fraud. This principle lies at the basis of the doctrine concerning part performance, but is also enforced wherever it is necessary to securé equitable results.

There is a form of contract peculiar to equity which is created by representations made by one party and acts done by the other party upon the faith of such representations. Where an absolute unconditional representation of something to be done in the future is made by one person in order to accomplish a particular purpose, and the person to whom it is made relying on it does the act by which the intended result is obtained and purpose accomplished, a contract is thereby concluded between the parties.

3. Same: parol lease: statute of frauds: equitable relief. Of course, the mere denial of an oral agreement or a refusal to perform will not be sufficient to prove fraud. McClain v. McClain, 57 Iowa, 167 ; Gregory v. Bowlsby, supra. But where a promise is made, such as is shown in this case, and on the strength thereof plaintiff surrenders another lease, goes to the expense of moving and places valuable improvements upon the property which are designed for that property alone, and is finally presented with a written lease, drawn by the defendant covering the agreement as originally made which lease he signs on his part and pays rent thereunder for ten months, and then is threatened with removal unless he consents to an advance in the rental to $60 per month, it is perfectly plain that defendant is attempting to use the statute of frauds as an instrument whereby to perpetrate a fraud upon the lessee and equity will give such lessee protection. If it did not, it would be a humiliating confession that a court of chancery is helpless and incapable of affording relief where the law is deficient, and is unable to prevent fraud and deception. Other cases in support of the rules *191 here announced will be found in tbe citations in Gregory v. Bowlsby, supra. See, also, Browne on Statute of Frauds (4th J3d.) sections 448, 448-a, 448-b, 450, 457-a, and cases cited.

The general doctrine upon which the rule is based is founded upon estoppel. All the elements thereof are present here, and we think the trial court was clearly correct in overruling the demurrer and in rendering the decree as prayed.— Affirmed.