Intermodal Transportation Systems, Inc. v. Hucks Piggyback Service, Inc.

MORRIS, Judge.

Both parties now concede that there was a letter to defendant offering the privilege of purchasing the leased equipment for $1,000 at the end of the term of the lease. Although in its reply, plaintiff denied that Robinson was acting for it, in the stipulation of facts submitted by plaintiff and signed by its counsel, it was admitted that the statement was authorized by Palmer Bayer, the then president of plaintiff who had the authority to enter into contracts on behalf of plaintiff. Plaintiff contends, however, that the letter was, in legal effect, a mere promise unenforceable because not supported by consideration; was not a part of the lease; and even if the letter was supported by consideration, the new agreement constituted a novation because it was supported by consideration. Plaintiff contends that defendant received benefits in that it obtained the right to continue in possession of the equipment and at reduced rental and was relieved of any obligation to pay the $1,000. On the other hand, the extension of the lease constituted a detriment to plaintiff in that it gave up its right to obtain possession of the equipment at the end of the original lease.

To us, the questions involved here cannot be so simply disposed of as plaintiff would have us believe. Hucks says that he signed the lease agreement because of the promise that he could purchase the equipment at the end of the term, having read and relied upon the letter before signing the lease. Bayer says the terms of the letter were not included in the lease because that would have changed the lease into a purchase agreement. But he testified that the purchase option was “in fact a part of the overall lease agreement,” was a factor in determining the rent, and although not to be included in the lease, was to be included in the rental calculations which were part of the lease. Plaintiff takes the position that the Robinson letter was not intended to be a part of the lease. Bayer also testified that the transaction was quite a profitable one for plaintiff, that it was a unique transaction for the plaintiff and that it was entered into primarily because Southern Railway wanted Hucks to have the equipment, Hucks being the contractor in Charlotte for Southern in performing services at their piggyback yard where trailers and containers were placed on and taken off flat cars. Intermodal normally did not lease the powered equipment covered by the lease with defendant, but normally handled trailers and containers for use in marine services without an engine.

It appears first that there is a genuine issue of fact as to whether the Robinson letter was intended by the parties to be in fact a part of the lease transaction.

In Trucking Co. v. Dowless, 249 N.C. 346, 106 S.E. 2d 510 (1959), the parties executed a trip lease agreement. The signatures of the parties appeared on page 3. On page 4 there appeared an indemnity clause under which plaintiff claimed the right of indemnity. Between the signatures on page 3 and the indemnity clause, there appeared receipts for equipment to be signed by plaintiff only. At the beginning of page 4, there appeared blanks for information with respect to the driver and his helper, including a doctor’s certificate as to their physical condition. The pleadings and evidence raised the question of whether the indemnity clause was a part of the lease. The Court held it should be decided on the basis of the intentions of the parties and was a question for the jury, and not to be answered as a matter of law.

If not a part of the lease transaction, then there exists a genuine issue of fact as to whether it was supported by consideration.

If the Robinson letter was indeed a valid binding obligation on the part of plaintiff, was the extension agreement supported by consideration sufficient to support a novation?

“It is the general rule that in absence of fraud or other invalidating circumstances, the surrender of a disputed or doubtful right or claim is a sufficient consideration for an agreement compromising or settling the claim," or for an executory contract. As a general rule, however, the relinquishment of a claim that is without merit or foundation in law or equity, or in fact, is not sufficient consideration for a contract. Therefore, the relinquishment of an invalid claim is ordinarily insufficient consideration for a promise. Where, however, the claimant has an honest and reasonable belief in the validity of an invalid claim, the relinquishment of such claim is sufficient consideration to support a promise.” 17 Am. Jur. 2d, Contracts, § 111, pp. 457-458.

Defendant’s material presented on motion for summary judgment indicates that at the end of the original lease, plaintiff was advised that defendant wished to exercise the option to purchase, but plaintiff refused. Plaintiff’s material indicates that it was not then aware of any such option. Bayer’s testimony was that he left a file on the transaction containing a written memorandum when he left plaintiff’s employ. Plaintiff says it gave up a valid claim to possession of the equipment. If the Robinson letter was binding, the claim was invalid. There is at least a question of fact as to whether plaintiff’s belief in the validity of the claim was an honest and reasonable belief.

For the reasons stated, it is our opinion that this litigation was too early removed from the consideration of the jury.

Reversed.

Judges Vaughn and Clark concur.