Coney Island Co. v. McIntyre Paxton Co. , 119 C.C.A. 197 ( 1912 )

KNAPPEN, Circuit Judge

(after stating the facts as above).

[1] 1. We find it unnecessary to consider the question of real or apparent authority in plaintiff’s president to make the contract. The agreement was not ultra vires the corporation. The latter has never attempted to repudiate it. On the contrary, it has received and retained substantial benefits under the contract, including the concession of plaintiff’s claimed ownership of one-half the stock, the payment of $2,000 as dividends accrued previous to February 7, 1906,’ and the receipt of annual dividends from the latter year until 1910. Moreover, the corporate action of February 4, 1911, expressly recognized the existence of the contract. Its ratification is thus established. Indianapolis Rolling Mill v. St. Louis, etc., R. Co., 120 U. S. 256, 7 Sup. Ct. 542, 30 L. Ed. 639; Railway Companies v. Keokuk Bridge Co., 131 U. S. 371, 381, 9 Sup. Ct. 770, 33 L. Ed. 157.

[2] 2. Was the agreement, so far as it attempted to give defendant a right to occupy plaintiff’s land, merely a revocable license ? As said in Morrill v. Mackman, 24 Mich. at page 282, 9 Am. Rep. 124:

•‘A license is a permission to do some act or series of acts on tlie land of the licensor without having any permanent interest in it. * * * it is founded on personal confidence, and, therefore, not assignable. * * * It may be given in writing or by parol; it may be with or without consideration; but in either case it is subject to revocation, though constituting a protection to the party acting under it until the revocation takes place. Where nothing beyond a mere license is contemplated, and no interest in the land is proposed to he created, the statute of frauds has no application, and the observance of no formality is important. But there may also be a license where the understanding of the parties has in view a privilege of a less precarious nature. * * * Wherever, in short, the purpose has been to give an interest'in the land, there may bo a license: but there would also be something more than a license, if the proper formalities for the conveyance of the proposed interest have been observed. What that interest shall be called in the law may depend upon the character of the possession, occupancy, or use the promisee is to have, the time it is to continue, and perhaps upon the mode in which the compensation, if any, is to be made therefor.”

See, also, State v. Holmes, 38 N. H. at page 227; Baltimore & H. R. R. Co. v. Algire, 63 Md. 319, 322; De Haro v. United States, 5 Wall. 599, 627, 18 L. Ed. 681; Johnson v. Skillman, 29 Minn. 95, 98, 12 N. W. 149, 43 Am. Rep. 192; Nowlin Lumber Co. v. Wilson, 119 Mich. 406, 410, 78 N. W. 338; Mumford v. Whitney, 15 Wend. (N. Y.) 381, 388, 30 Am. Dec. 60.

We think it a misnomer to call the agreement before us a mere license. As construed below, it was not intended to continue merely at the will of the plaintiff. It recognized an interest in defendant in the qualified use and possession of plaintiff’s land. It was intended to constitute a limitation upon plaintiff’s sole use and possession of its land, so far as inconsistent with defendant’s qualified and concurrent right of possession, and to the extent necessary for the performance of the contract. It was not for an indefinite or permanent term, in a strict sense, but was to continue during a period whose limits were determined1, although as yet uncertain in yeárs. It pertained to the use of personal property, in whose beneficial use plaintiff was directly interested. It provided for action to be done on plaintiff’s land for its benefit, not merely to be derived from its interest in the defendant, but through compensation to be paid directly to plaintiff for right to so operate. The defendant, moreover, as well as the plaintiff, was under express obligation to perform it. Such rights, we think (if effectively conveyed); amount to an interest in the land, as distinguished from a mere license. Stambaugh v. Smith, 23 Ohio St. 584, 591; Ormsby v. Ottman (C. C. A. 8), 85 Fed. 492, 497, 29 C. C. A. 295; 4 Words and Phrases, 3696, and following.

[3] But the validity and effect of the instrument is governed by the laws of Ohio. McCormick v. Sullivant, 10 Wheat, at page 201, 6 L. Ed. 300; DeVaughn v. Hutchinson, 165 U. S. 566, 570, 17 Sup. Ct. 461, 41 L. Ed. 827. The agreement satisfied the Ohio statute of frauds (section 4198, Rev. Stat.; G. C. § 8620), which requires that grants of interests in lands be “by deed or note in writing, signed by the party, etc.” Unless, therefore, the agreement is required to be executed with the formalities demanded by section 4106 of the Revised Statutes (G. C. '§ 8510), it is sufficiently executed. We find nothing in the decisions of the Supreme Court of Ohio opposed to this view. Rodefer v. Railroad Co., 72 Ohio St. 272, 74 N. E. 183, 70 L. R. A. 844, merely determines that a siding or switch track, constructed by the railroad company from the railroad to the manufacturer, at the expense and over the land of the latter, solely for its benefit and for the sole purpose of affording it facilities for receiving and shipping freight, and under a written agreement, silent as to the length of time it is to remain, may not be maintained by the railroad company against the objection of the manufacturer; that agreement, so far as the right of the railroad company is concerned, being held merely a license, revocable at the option of the licensor or his grantee. Fowler v. Delaplain, 79 Ohio St. 279, 87 N. E. 260, 21 L. R. A. (N. S.) 100, decides no proposition of special interest to this case, unless that mere naked acquiescence in the construction of valuable improvements, or the expenditure of money on the faith of the license, will not render it irrevocable. . _

_ The case most relied on by plaintiff is Yeager v. Tuning, 79 Ohio St. 121, 86 N. E. 657, 19 L. R. A. (N. S.) 700, 128 Am. St. Rep. 679, where it was held that:

“A parol agreement by several adjoining landowners to erect and maintain telephone poles on their respective lands, and to contribute equally to the expense of stringing wires thereon, and of operating a telephone line, does not create an easement, but is merely a parol license, and is revocable by any one of such owners, although in reliance thereon the poles have been erected and the line constructed.”

But the agreement there involved was, in fact, entirely oral. Whether plaintiff’s seal is attached to the contract before us does not cleazdy appear from the printed record. In Ohio the distinction between oral and parol contracts seems to have been obliterated by section 4, R. S. (G. C. § 32), which abolishes private seals.

3. Section 4106 of the Revised Statutes of Ohio (section 8510, G. C.) provides that a “deed, mortgage, or lease of any estate or interest in real property, shall be signed by the grantor, mortgagor, or lessor, and such signing shall be acknowledged by the grantor, mortgagor, or lessor” in the presence of two attesting and subscribing witnesses, the signing of the instrument to be acknowledged by the grantor, mortgagor, or lessor before one of certain named officers, who is required to indorse thereon a certificate of such acknowledgment. A lease 'for a term not exceeding three years is excepted from the operation of this, statute. R. S. § 4112; G. C. § 8517. Plaintiff contends that all agreements axithorizing the special use of lands for particular purposes, whether for a definite or an indefinite period of time, and although “executed” and followed by the erection of valuable improvements, confer but a revocable license when not executed in conformity with this statute.

Plaintiff relies upon Wilkins v. Irvine, 33 Ohio St. 138. The action there was by cross-petition for rescission of contract of purchase and for return of purchase money paid, on the ground that tlie agreement referred to constituted an incumbrance. It was decided, as stated in the first syllabus, that:

“A written license, without seal and unacknowledged, to enter upon and inihed water pipes in the land of another, with privilege to enter and repair fliexn. creates no interest in, nor incumbrance upon, the land such as will disable the owner thereof from making a good and sufficient deed conveying a good title thereto.”

Manifestly, the language of the syllabus is not a decision that a contract like that before us amounts only, to a revocable license. The opinion states that:

“From two considerations a majority of the court think a case for a rescission of the contract is not made by the cross-petition.

“(1) Ail interest in, or permanent incumbrance upon, land in this state, can only arise from some of the modes provided for or recognized in law. If it exists in this case, the incumbrance was created by a writing without seal and unacknowledged, and unaccompanied by actual possession. The statute (S. & C. § (5458s) provides ‘that when any man * * » shall execute, within this state, any deed, mortgage, or other instrument, by which any lands, tenements, or hereditaments shall be conveyed or otherwise incumbered in law, •such deed, mortgage, or other instrument of writing shall bo signed, sealed, etc., and sucli signing and sealing shall be acknowledged by such grantor or maker in the presence of two witnesses, who shall attest such signing,’ etc.”

The writing there in question was said to be “at most a license to enter upon the land for a specific purpose,” and to create no incum-brance upon or easement in the land. The policy of the statutes was referred to as “requiring that contracts respecting the title to land shall be by deed or other written instrument under seal.” The other consideration was that such instrument was not recorded or recordable ; and as the pipes were hidden from view in the ground, and the licensee without visible open possession of any portion of the land, Wilkins was “an innocent purchaser, and in relation to him there is no such incumbrance of the land as will affect the title Irvine has tendered him.” Not only is the question of statutory execution connected in the opinion with questions of possession and notice, but it is the rule of the Supreme Court of Ohio that the proposition decided is only that stated in the syllabus of the case. We think Wilkins v. Irvine does not decide that, even under the statute then existing, the contract before us created only a revocable license. In Yeager v. Tuning, supra', the syllabus in Wilkins v. Irvine, to .which we have referred, was quoted as stating the law of Ohio. But none of the cases since Wilkins v. Irvine are decisive of the question of statutory construction.

But, assuming that Wilkins v. Irvine does construe the then existing statute as applying to an instrument of the kind we are considering, does it follow that such must be the construction of the present statute? ' It will be observed that the words “or other instrument” and “otherwise incumbered in law,” italicized in the opinion of the court in Wilkins v. Irvine, are not found in the present statute. In absolute legal strictness the words, “a deed, mortgage, or lease, of any estate- or interest in real property,” are broad enough to embrace an instrument conferring rights such as are attempted to be conferred by the agreement in question. But for some reason the Legislature saw 'fit to change the statute, and, in fact, since the decision in Wilkins v. Irvine. It is to be presumed that some reason for the change was in the legislative mind. It surely was not intended to make the statute broader than before. There is much to commend itself in the view that the Legislature intended to narrow the statute, and confine its operation to such instruments as in common parlance would be regarded as deeds, mortgages, or leases, and are usually recorded as such, leaving the statute of frauds as a sufficient protection in other cases.

In plaintiff’s brief the relations of the parties towards the land and the amusement, devices are (with certain irrelevant omissions) thus fairly stated:

“The schemes were in the Coney Island Part, and there was no access to them except through the park. * * * The management of the island charged admission to the park, and reserved the right to say who should and who should not be admitted. The booths, etc., were watched and entered when -occasion required by the Coney Island police. They were used by the defendant but 100 days each year. The remainder of the time they were in the exclusive possession of the plaintiff. During the entire year the plaintiff occupied the spaces underneath the roller coaster structure for piling gravel and by roadway. The electric light globes were furnished by the plaintiff for lighting, and also the electric current and water. In .times of high water, the plaintiff would protect the structures and tie them down with cables. The defendant made no use of the land, and claims no right to make use of the land, for any other than the one particular purpose of running the respective amusement device on each particular spot.”

The instrument before us does not purport to be what is known in common parlance as a deed, a mortgage, or a lease. The term “lease” usually implies an instrument by which the exclusive possession of land is given for a limited period. The term “deed” is usually employed to indicate an unconditional transfer of an interest in land. Eaton v. White, 18 Wis. 543, 545; Nowlin Lumber Co. v. Wilson, 119 Mich. 406, 410, 78 N. W. 338; National Bank v. Tennessee Coal, Iron, etc., Co., 62 Ohio St. 564, 582, 57 N. E. 450; Lynch v. Moser, 72 Conn. 714, 719, 46 Atl. 153; Roberts v. Lynn Ice Co., 187 Mass. 402, 406, 73 N. E. 523. The definition oí a deed as “an instrument in writing, signed, sealed, and delivered,” has no application here, for there is distinct enumeration of deeds, mortgages, and leases. There is in this case no attempt to make an absolute transfer, either of the sole title or sole right of possession, of any interest in the land. Plaintiff's otherwise sole and exclusive right of possession is merely limited by a qualified and concurrent possession shared by defendant with plaintiff for certain purposes and for certain periods.

We are constrained to liold that the agreement was not within section 4106 of the Revised Statutes. It is to be noted, however, that the judgment is broader than warranted, in that it awards defendant possession in form exclusive.

[4] Does the 1906 agreement unambiguously declare the term of defendant’s tenure thereunder? It was to continue as long as “the present owners continue to hold their stock,” and as long as “the privileges are granted by the Coney Island Company.” McIntyre and Paxton had been, in form, owners of all the stock until the making of the agreement, and Paxton at least claimed they had actually been its owners. On the other hand, the Coney Island Company claimed to own one-half the stock. However, by the settlement agreement, which spoke from its date, all parties became “present owners” of the stock." We think the contract, taken in connection with the circumstances, cannot be in this particular definitely construed, as matter of law, but that the meaning of the phrase “present owners,” as intended by the parties, was for the jury; and for the purpose of aiding in this interpretation the circumstances surrounding the adoption of the phrase and out of which it grew were properly resorted to. Reed v. Insurance Co., 95 U. S. 23, 31, 24 L. Ed. 348. It was proper to receive the testimony of Brooks’ contemporaneous statement to ’ the effect that the arrangement would continue as long as McIntyre and Paxton held their stock. Gilmer v. Stone, 120 U. S. 586, 590, 7 Sup. Ct. 689, 30 L. Ed. 734; Crosley v. Reynolds (C. C. A. 6) 196 Fed. 640.

The clause “as long as the privileges are granted” is also ambiguous: (1) Plaintiff claims the meaning is “as long as these privileges are granted to the McIntyre & Paxton Company,” although the latter is not named in terms: (2) defendant claims it means “as long as [any] privileges are granted out by the Coney Island Company” (for operation by concessioners, as distinguished from direct operation by the Coney Island Company); and there is the intermediate meaning (3) “as long- as these privileges (those then held by or thereafter granted to the McIntyre & Paxton Company) are granted” (to any one, as distinguished from a direct operation by plaintiff).

We think the language of the contract does not fairly permit the second of these constructions, being the one upon which the judgment was based. The provision that defendant “shall own all of the amuse-menit schemes as they were owned previous and run them just as they have in 'the past/! and all the provisions of the contract taken together, satisfy us that “the privileges” referred to in the final clause relate only to the .devices, then being •operated (or which during the term of the contract might come to be operated) by the defendant; and the testimony of Brooks’ statement could not be received to vary in this respect the contract, which was to this extent unambiguous. The judgment as to the time defendant was entitled to retain possession was thus erroneous, as being too broad; and this error also directly affected the .recovery of damages, because of the charge that in determining the value of the structures the length of time the defendant had the right to maintain them should.be considered.

As between the first and third constructions, however, a choice must be made according to the intent of the parties.' Neither construction is inconsistent with a reasonable interpretation of the language used. The evidence, taken together, did not render the ambiguity between the first and third constructions hopeless of solution. This question also was for the jury, and it had the right to whatever aid might be found in Brooks’ statement (if made) that defendant could operate there so long as the Island ran or privileges were granted any one. We cannot say that the alleged assurance may not have been one of the causes inducing the making of .the contract, which was one of settlement and compromise. That this alleged statement or representation was literally inconsistent with the contract, and went beyond the. ambiguity which exists, and so could not have effect to "its full extent, does not prevent its being admissible in solving the ambiguity to the extent we find it exists.

The uncertainty in defendant’s tenure suggests serious difficulties in measuring damages,, if defendant shall recover on another trial... As this subject has. not been discussed by counsel, we content ourselves with this reference. ■ ,

fior the errors pointed out, the judgment of the Circuit Court is reversed, and the cause remanded for a new trial.