This is an appeal by Hotel Halcyon Corporation and Thomas J. Peters from orders overruling joint and several general and special demurrers of the above named parties to a bill of complaint exhibited by Miami Real Estate Company against them and H. S. Duncan, J. Salzillo, Miami Land and Fruit Company, Havana-American Steamship Company, H. Curran, Mutual Investment and Savings Company, H. Bowman, C. C. Matlack, J. F. Lofton, J. B. Thomas, George Nackly, Andrew Mangos, Rosa LeForte, Dr. Charles N. Webster and __________ Powers, all being residents and citizens of Miami, Florida.
The litigation involves the property in Miami known as the Hotel Halcyon property and those named as defendants, other than the Hotel Company and T. J. Peters, are tenants of the Hotel Company and occupying different parts of the building and attorning as tenants to that company.
The complainant seeks the specific performance of an alleged contract for a lease to cover a period of ninety-nine years and special relief incident thereto; for an accounting from the Hotel corporation of the rentals received by it or accruing to it since June, 1921; for an injunction restraining the sale or leasing of the property to others, or the sale of any leases that may be held upon any part of it; for the appointment of a receiver and general relief.
The bill alleges that in May, 1921, the Hotel corporation owned the property, that T. J. Peters was president of the corporation and J. W. Wallace its duly authorized agent. That Frederick H. Rand, Jr., was president of the complainant corporation, who acted for it in the matters alleged, and these facts were known to all the parties.
It was alleged that the complainant corporation and the Hotel corporation, through their agents, entered into a contract *Page 172 under which the Hotel corporation agreed to execute to the complainant a ninety-nine year lease of the Hotel property, with appurtenances, tenements and hereditaments thereunto pertaining, from June 1, 1921. That the lease was to be in writing, the consideration therefor to be the payment of certain rentals during the term. That the lease was to contain certain provisions specifically set forth in the bill. They are lettered from (a) to (p) inclusive.
The paragraph lettered (a) deals with the amount of rental to be paid each year during the term of the lease; (b) with the payment of the rental for the first year; (c) with the payment of the annual rent after the first year; (d) with the payment of taxes by the lessee; (e) with the payment of income or other Government tax by the lessee on account of improvements; (f) with the carrying of fire insurance by the lessee; (g) with a provision to be incorporated in the lease securing an option to the complainant at any time within ten years to purchase the property clear of all incumbrances for the sum of $2,000,000.00; (h) with the matter of grace to be allowed on each payment of rent; (i) with the matter of repairs by the lessee and the giving of a bond by it guaranteeing the construction of other buildings of equal value in place of those that might be torn down in alterations and repairs of the property; (j) with the giving of a bond by the lessee before beginning new buildings or improvements to cover liens or other obligations incurred on account of labor or material; (k) with a provision to require new buildings or improvements to be made by the lessee amounting to not less than $100,000 within eighteen months; (l) with a provision to require the lessee to submit plans and specifications of such proposed alterations and to be approved by the lessor before the work should commence; (m) with a provision requiring all policies of insurance and bonds to be given in "old line companies" represented by Newman and Peters; (n) with *Page 173 a provision that the lessor would collect the first $50,000.00 of rent from sundry third persons accruing out of the Hotel property after June 1, 1921, and should hold the same until the lessee should complete improvements to the value of $100,000.00, at which time the lessee should have the privilege of giving a bond in the sum of $50,000.00 guaranteeing the performance of the lease, thereupon the lessor would return $25,000.00 with interest and apply the remaining $25,000.00 as a credit annually, in three equal amounts, upon the first quarterly installment of rent due under the lease during "the next three years thereafter" and the time when such application should be made, and the time during which the bond for $50,000.00 should continue in force; (o) with a provision that the lessor should retain "all right and title to the property" during the term with full right to mortgage or sell the same subject to the rights of the lessee and (p) with a provision that the lessee should assume the lessor's obligations under all leases previously made of the property and in existence on May 26, 1921," (as per list thereof upon said date furnished by the defendant, Hotel Halcyon Corporation, to the complainant herein.)"
The bill alleges that pursuant to the agreement the complainant paid to the "defendant" $15,000.00 on May 26, 1921, on account of the rental of the property under the terms of the proposed lease.
That on the 13th day of May, 1921, the complainant was the owner of a certain lot of land located north of Miami and that it was agreed between the parties that "certain of the monthly installments of first year's rental under said '99-year lease' represented by the ten promissory notes in the sum of $5,000.00 each aforesaid (which were to be placed in escrow in bank with said duly executed '99-year lease' should be liquidated and paid by the lessee in the following manner, to-wit: that the said defendant Hotel *Page 174 Halcyon Corporation, or its president, for it should and would purchase of and from said complainant "the lot referred to," at and for a consideration and purchase price of $103,000.00, to be paid by said defendant or its president, as follows:
$15,000.00 cash,
$45,000.00 by the assumption of certain mortgages then encumbering said property.
$42,500.00 by a credit upon the first year's rental of said '99-year lease,' said credit, it being understood, liquidating and settling the first 8 1/2 monthly installments in the sum of $5,000.00 each, representing by notes aforesaid."
That $1,000.00 had been paid by the "corporation or its president, as a deposit, on account of the purchase of the property." That the complainant has been at all times ready, willing and able to convey the property under the terms of the agreement.
It is then alleged that the contract for the lease is "contained and included in certain written letters, instruments and memoranda passing between complainant lessee, represented by Frederick H. Rand, Jr., and defendant lessor, represented by said Thos. J. Peters, its president, and said J. W. Wallace, its agent in said transaction."
Copies of such letters, instruments and memoranda "constituting said contract and agreement, marked Exhibits 3 to 17, inclusive" are attached to the bill and reference to them is "prayed as if fully set out" in the bill.
It is alleged that no specific time was agreed upon by the parties within which the lease should be executed. That the Hotel corporation was to have prepared and submitted it to the complainant through Frederic H. Rand, Jr., its president, for examination, approval and execution in behalf of the complainant. That it was to bear date and be effective from June 1, 1921. *Page 175
It is also alleged that T. J. Peters should have charge of the leasing of the Hotel Halcyon for the tourist seasons of 1921 and 1922 for the benefit of the complainant, subject to its approval. That throughout the negotiation the defendant knew that Frederic H. Rand, Jr., would soon leave Florida for New York and thence to Europe for a "few months." That between May 27 and June 9, 1921, he was in either Orlando, Florida, or New York City and on the latter date sailed for Europe. That at all times between May 27, 1921, and the date of the filing of the bill, which was December 12, 1921, the address of Mr. Rand was available to the defendant who could have submitted to him by registered mail the "99-year lease."
That on June 29, 1921, the defendant prepared a lease, and forwarded it to Mr. Rand in Paris, France, on June 30, 1921, that it was received by him between July 22 and August 1, 1921. That the draft of the lease was not in accordance with the contract and was rejected by the complainant and duly returned to the defendant corporation with the request that it be redrafted in accordance with the contract. A copy of the lease, so prepared, is attached to the bill as Exhibit "18" and made a part of it.
Paragraph XIV of the bill deals with alleged "Unwarranted Conditions" contained in the draft of the lease which was rejected by the complainant. These alleged unwarranted conditions are set out in the bill under subdivisions of the paragraph XIV and lettered from (a) to (z) inclusive. Two alleged "Omissions" are made the subject of paragraph XV and lettered (a) and (b).
These, or some of them, will be more particularly referred to later in this opinion.
It is alleged that the defendant has refused to execute a lease in conformity with the contract but the complainant has tendered to the defendant the total sum of the first year's rental and defendant has refused to accept the same. *Page 176 That on July 30, 1921, Mr. Peters cabled Mr. Rand at Paris that if the lease was not delivered to Mr. Peters "properly executed by August tenth will withdraw proposition."
There are other allegations concerning matters affording the basis for incidental relief which are unnecessary to mention.
There are forty-seven grounds given in the general demurrer. They may be classified under a few propositions attacking the equity of the bill. First it is asserted that the bill is multifarious and duplicitous and there is a misjoinder of parties.
There is no merit in these propositions. The tenants of the Halcyon corporation, who occupy portions of the premises under leases from that Company, were not necessary parties because their rights are not so connected with the claims of the principal litigants as that no decree affecting the latter could be made without impairing the rights of the former, but they were proper parties because not being interested in the controversy between the immediate litigants their interest in the subject matter can be conveniently settled in the suit. While as to Mr. Peters it is alleged that the defendant corporation, through him, should lease the hotel for the ensuing tourist season for the complainant.
There are not several causes of action united in the one bill, unless it may be said that the alleged agreement of the defendant to purchase the complainant's land and apply the price upon the yearly rental of the Hotel property under the lease was a separate transaction and the subject of independent litigation, but that is not wholly true, as that alleged agreement grew out of and was a part of the main controversy and affects only a part of the consideration to be paid by the complainant so that the principal defendants are interested in the same rights so far as that collateral agreement, if it may be called such, is concerned. *Page 177
See Farrell v. Forest Inv. Co.,
Second, as to the remedy, it is contended that an agreement for the execution of a formal lease, which is to be subject to approval by the parties, cannot be specifically enforced. That the remedy is at law against Mr. Peters for the breach of the alleged contract.
This proposition is not sound because it is alleged that there was a written agreement consisting of letters and telegrams exchanged between the parties which complies with the conditions of our statute of frauds. See Sec. 3872, Revised General Statutes, 1920.
Specific performance of a lessee's agreement to take a lease has been decreed in England. See Soames v. Edge, 70 Eng. Rep. (Full Reprint) 588; Shepheard v. Walker, L. R. 20 Eq. Cas. 659; Pym v. Blackburn, 3 Vesey Jr's Rep. 34; Kay v. Johnson, 2 Hem. M. 118, 71 Eng. Rep. (Full Reprint) 406; 16 Rawle C. L. 557.
The contract alleged in the bill is alleged to be contained in several writings. Contracts required to be in writing may be so evidenced. See Howard v. Pensacola A. R. Co.,
As to the agency of Peters and Wallace for the Halcyon corporation and Rand for the complainant the allegations of the bill are specific and clear and for the purposes of the demurrer admitted by the defendants.
As to the prayer for a receiver and an injunction that relief is incidental.
Third, it is contended that the bill affirmatively shows negligence by the complainant in that it was guilty of unreasonable delays in not securing the execution of the lease *Page 178 and offering to perform the conditions on its part to be performed.
We think there is no merit in this contention. The bill alleges that the negotiations occurred between May 13 and 26, 1921, and on the last named date the complainant paid to the defendants $15,000.00 which was the first and only payment to be made on or before the execution of the lease. According to the allegations of the bill the defendant was to prepare the lease which was to contain the terms agreed upon but it has failed to do that, yet the complainant has made written demand upon it to do so and tendered the total sum in advance of the first year's rental and the defendant has refused to accept it. The bill was filed on December 13th of the same year praying for specific performance of the agreement. We do not perceive in this any lack of diligence on the complainant's part to assert its claim.
In Knox v. Spratt,
Fourth, it is contended that the correspondence between the parties constituted only negotiations for an option to lease which was never accepted by the complainant.
This phase of the attack upon the bill is without merit in so far, at least, as it is urged that the correspondence merely shows an offer by the defendant to lease the property, which was not accepted by the complainant. The *Page 179 proposition to lease was undoubtedly accepted by both parties but the particulars of the lease were matters of negotiation. The allegations of the bill are in effect that both complainant and defendant recognized the existence of an agreement for the execution of a lease and pursuant to that agreement the defendant prepared a lease and forwarded it to Mr. Rand for execution by the complainant corporation. The negotiations had passed beyond the stage in which an offer is made by one party but not accepted by the other. The parties had agreed to the execution of a lease and pursuant to such an agreement the complainant had paid a large sum of money to be applied upon the first year's rental, but the trouble is with the particular covenants which the lease was to contain.
The fifth proposition is that the alleged agreement is not sufficiently definite in its terms to be specifically enforced; that the correspondence between the parties attached to the bill as "Exhibits" shows that they had not agreed upon the terms of the lease and that the agreement was nothing more than one to execute a formal lease to contain such terms and conditions as the parties thereafter might approve.
It is undoubtedly true that for an agreement of the kind set up in the bill of complaint to be made the basis of a decree for specific performance it must be certain as to the terms of the intended lease. See Clinan v. Cooke, 15 Eng. Ruling Cases 343; 16 Rawle C. L. 558; Franks v. Hewitt, 56 App. Div. Rep. (N.Y.) 497.
Not only must the parties have agreed to every material matter to be incorporated in the formal lease but the words contained in the letters and memoranda constituting the evidence of such agreement should be so clear and unambiguous that the court may ascertain from them the terms to be included in the formal writing agreed to be executed. See Underhill on Landlord and Tenant, 268; Charlton v. *Page 180 Columbia Real Estate Co., 67 N.J. Eq., 629, 60 Atl. Rep. 192, 69 L. R. A. 394, 3 Ann. Cas. 402.
In other words, the contract must be as certain, definite and full in every essential as to terms and conditions as the proposed formal instrument to be executed. The difference between the two is the interest in the land, called aninteresse termini which the lessee secures by the latter instrument and the character of obligation which each party incurs.
It is said to be often difficult to distinguish between a written lease and a writing which is merely an agreement to make a lease and that the distinction is important since the consequences of the breach of a lease are very different from the consequences of the breach of an agreement to make a lease. See 1 Underhill on Landlord and Tenant, 246.
Now, an agreement for a lease may be made by correspondence but there must exist an intention in the minds of the parties to enter into a contract, "not merely to settle the terms of an agreement into which they propose to enter by a formal writing, after all the particulars are adjusted and by which alone they design to be bound." See Holliday v. Pegram,
In arriving at the intention of the parties it is essential to consider the circumstances as well as the language used by them in their correspondence. The subject of this agreement was one of considerable magnitude not merely regarding the value of the property involved and the amount of the yearly rental, but the duration of the term to be created by the lease. For a period of ninety-nine years the lessee and its successors were to have the possession of the property and pay to the lessor and its successors in title the annual rental. In such an agreement there are always many more matters of detail to be made the subject of contract *Page 181 than are usually involved in an agreement to sell outright.
In the latter case a written memorandum, most meager in detail, will often suffice to constitute the basis for a decree for specific performance. If the matter of parties, consideration and description of property are sufficient that will suffice, because the law infers an agreement to convey a marketable title; but where a formal lease is to be executed not only these details but many others must be definitely settled before the minds of the contracting parties may be said to have met. There are, for instance, the matter of yearly rentals, when and how to be paid, security for payment; taxes of every nature and kind and by whom to be paid; repairs upon buildings, how and when to be made and by whom; new buildings, for what purpose erected and of what materials constructed and money to be expended therefor and approval of plans; insurance in what sums to be taken, for whose benefit and at whose expense; the use to which the buildings and property are to be subjected; provisions covering a breach of any of the covenants and what shall be the effect of any such breach upon the term; the lessee's right to the removal of improvements placed by him upon the premises during the term of the lease; conditions as to waiver of any breach of covenant and provisions as to subletting the premises.
Usually in such a lease these details, and others that may be mentioned, are made the subject of negotiations and are incorporated in the formal document. Each subject is itself a matter to be dealt with in detail and particularized with the accuracy and prudence of which the parties are capable.
In the case at bar these and other matters were the subject of agreement and settlement. There was the matter of furniture contained in the building, its use, insurance and restoration; the payment of the large yearly rental *Page 182 seemed to have been definitely settled with the exception, however, of the complication introduced by the part payment thereof in land to be conveyed by the complainant to the defendant and the assumption by the latter of a large obligation resting upon it in the form of a mortgage.
An examination of the correspondence between these parties impresses me with the conviction that it was their purpose to enter into a formal contract of lease by the terms of which, as ultimately settled and incorporated in the instrument, they would be bound, and by their correspondence to tentatively settle the terms of the agreement into which they proposed to enter in the form of a formal lease.
The proposition to rent for a definite term of years to begin at a certain time and the rental to be paid had been made and accepted, but other essentials were left to settlement by correspondence.
We cannot say from the writings submitted that the parties agreed upon these details.
A decree directing the execution of a lease should not be made unless the court can say with certainty that the terms were definitely and clearly decided upon and agreed to by the parties.
The parties, themselves, have not given the correspondence between them a practical construction by agreeing upon a course of action consistent with the terms of their alleged agreement. The complainant was not let into possession of the premises nor have they seemed to agree upon some of the most essential matters discussed and to be included in the lease.
To justify specific performance, which is not a matter of right in the parties, the contract should be definite and its enforcement practical and equitable. See Maloy v. Boyett,
I do not agree with the proposition of appellee that the main features of the lease having been agreed upon between the parties that, matters incidental thereto, or of minor importance in the estimation of the court, may be ignored or embraced in some covenant or provision of the lease which to the court may be deemed suitable, appropriate or adequate to protect the interests of the lessor.
The subject matter of this lease, as stated, was a property of much magnitude in point of value; the rentals were unusually large and there were many details and complex situations to be fully settled and agreed upon and incorporated in the lease to be executed, and only by which the parties intended to be bound. To vary these details, or substitute the court's ideas upon some apparently minor matter for what the parties agreed upon or left unsettled, is to write a contract for them and then direct its specific performance.
In this view of the case I think that the order overruling the demurrer was erroneous and should be reversed with directions to allow the complainant to amend its bill, if it so desires.
