Opinion
April 11, 1967. —
May 9, 1967.
APPEAL from a judgment of the circuit court for Sawyer county: CLARENCE E. RINEHARD, Circuit Judge. Affirmed.
For the appellant there was a brief by Hughes Hughes of New Richmond, attorneys, and Gwin Fetzner of Hudson of counsel, and oral argument by Joseph Hughes and John W. Fetzner.
For the respondent there was a brief by Wilcox Wilcox of Eau Claire, and oral argument by Roy S. Wilcox.
Action by plaintiff Air Power Equipment Corporation against defendant Telemark Company to recover rentals claimed to be due it as lessor under a lease to defendant of certain compressors together with damages for injury to the leased compressors occurring while in defendant's possession.
On or about September 13, 1963, plaintiff and defendant entered into a written contract whereby plaintiff leased to defendant certain specified air compressors to be used by defendant at its ski resort for the purpose of snow-making operations for the 1963-1964 ski season. The contract provided for a minimum rental period from November 21, 1963, to January 21, 1964, at a monthly rental of $4,875. The printed provisions of the form contract under the subheading "Rental Period" were stricken in their entirety. The following was typewritten on the face of the contract:
"Rental Period from Nov. 21, 1963, to January 21, 1964. Lessee to pick up and return compressors to lessors St. Paul warehouse at lessees expense. Pickup to start on Nov. 14."
Although defendant was authorized to pick up and acquire possession of the compressors November 14, 1963, rent was not chargeable until the beginning of the minimum rental period, viz., November 21, 1963.
The contract also provided:
"Rental Charges: — The Lessee Agrees to Pay Rentals As Follows:
"$4875.00 payable with order and covering first (day's) (month's) rental, and $4875.00 per (month) thereafter, all rentals being due monthly in advance and payable at the office of Air Power Equipment Corp. If equipment is returned before end of any month paid for, credit is to be given for unexpired portion of month on a pro rata basis, provided that such period is not included in the minimum period specified. . . ."
Defendant returned to plaintiff some of the compressors on March 11, 1964, and others on March 13, 1964. Defendant paid plaintiff all of the agreed rental due and owing for the minimum rental period ending January 21, 1964, except $657.50, and in addition thereto $1,780 to cover rentals due after January 21, 1964. The sum of $1,780 was computed on the basis of the number of days the compressors were actually used subsequent to January 21, 1964.
Plaintiff instituted suit for the $657.50 rental due for the minimum rental period; for $6,382.50 additional rentals covering the period the compressors were in defendant's possession subsequent to January 21, 1964; and for $6,154.46 damages to the compressors claimed to have been caused by defendant's negligence. Defendant's answer denied any negligence on its part causing damage to the compressors and alleged a modification of the contract with respect to rentals due after January 21, 1964; which modification it was alleged required defendant to pay rent only for the time the compressors were actually used.
Trial was had to the court without a jury. Thereafter the court rendered a memorandum decision and entered findings of fact and conclusions of law. The findings of fact recited that an oral agreement had been entered into between the parties at the close of the minimum rental period on January 21, 1964. The finding with respect to the terms of this oral contract was:
"That said oral agreement provided that the defend could retain said equipment beyond the minimum period and would pay as rent a proration of the monthly rent, being 1/30 of the previously stated monthly charge of $4,875.00, for each day of use."
The court also found that the $1,780 paid by defendant for rental due for the period subsequent to January 21, 1964, fully discharged defendant's liability therefor; and that defendant was liable to plaintiff for $657.50 rent still due for the minimum rental period and for $6,154.46 damages to the compressors, or a total of $6,811.96. Judgment was entered accordingly June 30, 1966, in favor of plaintiff and against defendant for $6,811.96 together with costs and disbursements. Plaintiff has appealed therefrom.
The basis of plaintiff's appeal is that it is entitled to recover rental for the entire period of January 21 to March 13, 1964, and not merely for the time the compressors were actually used during such period. This presents the issue of whether the trial court's finding that a separate verbal agreement had been entered into between the parties covering defendant's liability for rentals accruing after January 21, 1964, is against the great weight and clear preponderance of the evidence. To resolve this issue it is necessary to review the relevant evidence.
No issue is raised that a verbal modification of the original contract of lease is void under the statute of frauds. Such original contract was not within the statute of frauds and therefore could be modified by a subsequent oral agreement of the parties. Gutknecht v. C. A. Lawton Co. (1939), 231 Wis. 413, 417, 285 N.W. 411; 2 Restatement, Contracts, p. 768, sec. 407; 4 Williston, Contracts (3d ed.), p. 200, et seq., sec. 591; 17 Am.Jur. 2d, Contracts, pp. 936, 937, sec. 466.
Anthony Wise, defendant's president, testified: On or about January 21, 1964, "just prior to the close of the minimum contract period" he phoned Curtiss Anderson, plaintiff's president, who had approved the original contract on plaintiff's behalf. The purpose of the call was to discuss rental of the machines beyond the minimum rental period. Anderson agreed that defendant could retain the compressors, that payment would be based on "actual use," and that defendant "would not be charged for the time [it] did not use them." "He [Anderson] said that we might as well keep them up there rather than to have them in his motor pool, there might be some use for us and if down there there wouldn't be any use for them." Defendant did in fact use the compressors for two extended periods beyond the minimum contract period which use totaled fifteen days. At the end of each period of use, Wise phoned Anderson to inform him the compressors had been shut down.
Anderson's testimony had been taken before trial by deposition, which deposition was read into the record during trial. Anderson's testimony was as follows: He had authority to enter into binding contracts on behalf of plaintiff. No subsequent verbal or written agreements were entered into between the parties that changed the original written contract dated September 13, 1963. The latter part of January, 1964, he had a telephone conversation with Wise. Wise asked if he could continue to rent the compressors and Anderson answered "Yes." Wise again called Anderson at the very end of January or the first part of February and said he had used the compressors an additional seven days. Anderson then invoiced defendant for 7/30 of a month's rent and payment was made of the invoice. Anderson did not remember whether Wise was subsequently invoiced for any other use, but defendant was invoiced for the original two months' rent.
Anderson was shown three invoices dated February 24, 1964, for 7/30 of a month's rent from February 16 to February 24, 1964, each invoice covering different compressors whereupon he stated that the original had been sent to defendant. Anderson was in error when he testified that the invoices for the rental of the compressors from January 23 to January 31, 1964, were on the basis of 7/30 of the monthly rental because the invoices disclose that defendant was billed 8/30 of the monthly rental for that period. The subsequent set of invoices for the period of February 16 to February 23, 1964, were on the basis of 7/30 of the monthly rental.
We deem it highly significant that, although defendant retained possession of the compressors, forty-nine to fifty-one days beyond the minimum rental period, it was only billed by plaintiff for the two separate periods totaling fifteen days. Manifestly plaintiff's conduct is consistent with Wise's testimony that the parties entered into an oral agreement, which agreement modified their original written agreement to the extent that rental of the compressors was thereafter to be based upon actual use.
If in fact plaintiff did not by its conduct, or otherwise, assent to an oral modification of the written rental agreement it is difficult to see, as the trial court observed, why defendant was billed only for days of use after January 21, 1964. Furthermore, the conduct of plaintiff in invoicing is in itself evidence of plaintiff's assent to the modification as testified to by Wise.
Mitchell v. Rende (1947), 225 Minn. 145, 30 N.W.2d 27; Dwyer v. Illinois Oil Co. (1934), 190 Minn. 616, 252 N.W. 837; 4 Williston, Contracts (3d ed.), p. 210, sec. 592.
On the basis of this record, the finding of the trial court that the parties entered into an oral agreement subsequent to their written agreement, which oral agreement provided for rental based on use is not against the great weight and clear preponderance of the evidence.
Finally, plaintiff contends that the trial court should have excluded evidence of the alleged oral agreement between the parties subsequent to their written contract because of the "parol-evidence rule." This is not a point well taken. The parol-evidence rule operates only to render inoperative understandings and negotiations which precede or are contemporaneous with an integrated written contract, which evidence varies or contradicts the writing.
See 3 Corbin, Contracts, p. 357, et seq., secs. 573, 574; Grismore, Contracts (Murray ed. 1965), p. 146, et seq., sec. 94.
"The parol-evidence rule, which precludes the introduction of evidence to vary the effect of a written instrument, has no application to agreements subsequent to the execution of the written contract." By the Court. — Judgment affirmed.
Simpson, Contracts (hornbook series, 2d ed.), p. 186, sec. 92.