Title: Cook v. Hargis

State: colorado

Issuer: Colorado Supreme Court

Document:

435 P.2d 385 (1967) Sanford B. COOK and Raimon E. Cook, Plaintiffs in Error, v. Fred D. HARGIS, also known as F. D. Hargis, Defendant in Error. No. 21560. Supreme Court of Colorado, In Department. December 18, 1967. Rehearing Denied January 8, 1968. *386 Tinsley, Alperstein, Frantz & Plaut, Lakewood, for plaintiffs in error. Roger M. Breyfogle, Canon City, for defendant in error. KELLEY, Justice. The plaintiffs (owners) brought suit against the defendant (tenant) on a claim for unlawful detainer of a retail store building (the property) located in Buena Vista, Chaffee County, Colorado. The court held for the defendant. The plaintiffs are here on a writ of error seeking to reverse the judgment of the trial court. The parties will be referred to as they appeared below, or as landlord and tenant, or by name. *387 The plaintiffs' assignments of error can be summarized as follows: Only such facts as are necessary to discuss the legal issues will be delineated. In 1958 the association became the owner of the property, divided into two parts for rental and occupancy, one part of which was then occupied by the defendant. The other part, commonly referred to as the "Pine Theatre," was vacant and unrented. Sometime prior to June 23, 1961, the defendant entered into rental negotiations with the association. The association was represented in the negotiations by Jacobs, its secretary and managing officer. The negotiations culminated, so far as the trial court was concerned, with Exhibits "A" and "B." The outcome of this appeal must turn on the legal effect of these two exhibits. We, therefore, copy them in their entirety. EXHIBIT "B" "THE SALIDA BUILDING AND LOAN ASSOCIATION "Oldest Building and Loan Association in Colorado Organized in 1886 Salida, Colorado June 23, 1961 The trial court found that: a letter, Exhibit "G," advising that: The court further found that: The court's FINDINGS OF FACT are well documented and supported by the evidence. We are bound by these findings. The trial court, in its CONCLUSIONS OF LAW, stated: "The reference to `The Old Pine Theatre building' in `Exhibit A' is sufficient to describe the property. The proposed formal lease `Exhibit D' uses almost the same words at the top of page two, to-wit: `The Pine Theatre.' The term of the lease is definite and certain. "The case of American Mining Co. v. [Himrod]-Kimball Mines, 124 Colo. 186 [235 P.2d 804] [relied upon by plaintiffs], does not mention Carlson v. Bain Id., but upon careful reading, they are not in conflict. "The American Mining case states that the `Essential elements' of a lease agreement depend in each case upon the facts and circumstances as they reveal the intent of the parties. Further, what the parties intended with regard to further or additional negotiations. "In the case now under consideration the parties certainly intended that the terms of `Exhibit A' be embodied in a formal agreement. However, the defendant with consent of the landlord took possession of the `Pine Theatre Side'. `Exhibit B, does not mention additional negotiations. Some twenty days after `Exhibit A' was approved the landlord sent `Exhibit D' to the defendant and never bothered to find out if it was executed. This does not suggest contemplated additional negotiation. The defendant testified that after the formal lease, `Exhibit D', was delivered to him he was promised that it would be changed to conform to `Exhibit A'. Rent was paid by defendant to the association for a year before the building was sold to present plaintiffs. These facts and circumstances prove the intent to be bound under `Exhibit A'. The defendant had dealt with the association as a tenant for some time prior to discussion of the `Pine Theatre' side. There is nothing in the type of property or business involved here which would create extraordinary lease terms. "It is the conclusion of the Court that the association was bound by the action of Jacobs. It was the testimony of Jacobs that he managed the cooperate property, that defendant had always dealt *390 with him. Further, that he, Jacobs, had talked to some of the association directors about `Exhibit A' and they assented. Jacobs attempted to avoid `Exhibit A', by stating that he did not know it contained an option. Nevertheless, he did approve it. Defendant testified that he talked to five or six directors about the terms of `Exhibit A' and they all assented to it prior to its approval by Jacobs. The plaintiffs testified that all of their negotiations relative to purchase of the property was with Jacobs. "It is the further conclusion of the Court that the present plaintiffs are bound by the terms of `Exhibit A'. Defendant's possession placed them on inquiry. 92 C.J.S. [Vendor and Purchaser], PP 285; 8 Colo. 343; 55 Colo. 287; 109 Colo. 467. The plaintiffs were in contact with defendant many times, but never made inquiry of him as to what rights he claimed in the property. As early as November or December, 1962, the plaintiffs knew that defendant was claiming an option right under `Exhibit A', but they continued to accept rent through March of 1964. The right to the options contained in `Exhibit A' were binding on the association and could not be extinguished by conveyance to third persons where those persons had notice or were upon inquiry." The court with sufficient thoroughness disposed of plaintiffs' assignments of error 1 and 3. However, because the plaintiffs have placed great emphasis on assignment 2, we will amplify the trial court's treatment of that phase of its conclusions of law. The thrust of plaintiffs' argument is that only by the formal action of the board of directors of the association could Jacobs be authorized to enter into a lease with the defendant. Admittedly, there was no formal action on the part of the board. The question, as we view it, is limited to whether, under the facts here, the lease was a valid agreement as between the parties privy to it, i. e., the defendant and the association. This is so because the plaintiffs were put on notice as to whatever possessory rights the defendant might have by virtue of defendant's occupancy of the property. If the lease was good as between the parties to it, the plaintiffs have no better standing to attack the lease than the association would have had prior to transfer of title to the plaintiffs. The facts here warrant the inference that the corporation ratified the lease of its general agent. Consequently, the corporation would be estopped to deny that he lacked authority to enter into the lease. McCoy v. Pastorius, 125 Colo. 574, 246 P.2d 611; Colorado Finance Co. v. Bennett Oil Co., 110 Colo. 1, 129 P.2d 299; Dick v. Petersen, 90 Colo. 83, 6 P.2d 923; Mulford v. Torrey Exploration Co., 45 Colo. 81, 100 P. 596. Also, it seems perfectly clear from the evidence that Jacobs was acting within the apparent scope of his authority both in negotiating for the lease and in executing the "Accepted" copy of Exhibit "A" and Exhibit "B"; therefore, the association is bound by his acts. Commercial Standard Insurance Co. v. Rinn, 100 Colo. 76, 65 P.2d 705. We have examined the authorities on which the trial judge arrived at the law applicable to the facts as he found them. With the addition of those cases which we have cited, they correctly state the law of this state. The assigned errors are without merit. The judgment is affirmed. MOORE, C. J., and DAY and McWILLIAMS, JJ., concur.