Smith v. House of Kenton Corporation

BRITT, Judge. The theory of plaintiff’s action is that the defendant breached a contract to execute a lease. That the judgment was predicated on that theory is indicated by the following conclusion of law: “3. That the written offer of the plaintiff dated July 15, 1970, when accepted by the defendant corporation on July 16, 1970, became a contract to execute a lease and as such is enforceable to the same extent as if the parties had entered into a written lease agreement containing the terms of the said contract to execute a lease.” The question then arises, was the letter dated 15 July 1970 sufficient to constitute a binding contract to execute a lease? We answer in the negative. Our research fails to disclose any precedent in this jurisdiction which is directly in point; however, we find in opinions of our Supreme Court numerous statements of principles which we think are applicable to the case at bar. In Young v. Sweet, 266 N.C. 623, 625, 146 S.E. 2d 669 (1966), we find: “An offer to enter into a contract in the future must, to be binding, specify all of the essential and material terms and leave nothing to be agreed upon as a result of future negotiations. Thompson-McLean, Inc. v. Campbell, 261 N.C. 310, *443 314, 134 S.E. 2d 671; Wade v. Lutterloh, 196 N.C. 116, 120, 144 S.E. 694; Croom v. Lumber Co., 182 N.C. 217, 220, 108 S.E. 735; Edmondson v. Fort, 75 N.C. 404.” Accord, Boyce v. McMahan, 22 N.C. App. 254, 206 S.E. 2d 496 (1974), aff'd, No. 50 (N.C., filed 10 October 1974). In Dodds v. Trust Co., 205 N.C. 153, 156, 170 S.E. 652 (1933), the court said: “In the formation of a contract an offer and an acceptance are essential elements; they constitute the agreement of the parties. The offer must be communicated, must be complete, and must be accepted in its exact terms. Gravel Co. v. Casualty Co., 191 N.C., [sic] 313; Rucker v. Sanders, 182 N.C., [sic] 609. Mutuality of agreement is indispensable ; the parties must assent to the same thing in the same sense, idem re et sensu, and their minds must meet as to all the terms. Croom v. Lumber Co., 182 N.C., [sic] 217.” Quoted with approval in Yeager v. Dobbins, 252 N.C. 824, 828, 114 S.E. 2d 820 (1960). In 3 G. Thompson, Real Property § 1063, at 238 (J. Grimes repl. 1959) [hereinafter Thompson], we find: “In order to constitute a binding agreement to execute a lease, such agreement must be certain as to the terms of the future lease. A few points of mutual agreement are essential to a valid agreement to lease: First, the minds of the parties must have met as to the property to be included in the lease; second, the terms of the lease should be agreed upon; third, the parties should agree upon the rental; and fourth, the time and manner of payment of rent should be stated....” (Emphasis added.) In the case at bar, the agreement relied on by plaintiff did not specify all of the essential and material terms of the lease to be executed and left much to be agreed upon by future negotiations. The offer was not complete and the minds of the parties did not meet as to all essential terms. The agreement failed to provide for one of the specifics referred to by Thompson, namely, the time and manner of payment of rent. The necessity for this provision with respect to rent is obvious. Whether the rent was payable monthly, quarterly, semiannually, annually, or all at one time, and whether it was payable in advance, at the end of a period or otherwise, presented a major question that finds no answer in the agreement. It might be argued that the provision of “$400.00 per month” sufficiently implied that a monthly *444 payment of rent was contemplated by the parties. The question then arises, was the rent payable in advance, in the middle of the month, or at the end of the month? A clear indication that the minds of the parties did not meet on this question is the provision in the formal lease proposed by plaintiff that defendant pay the first and last months’ rent at the beginning of the five-year period. We think there is a further reason why plaintiff was not entitled to recover. Assuming, arguendo, that the 15 July 1970 letter was sufficient to constitute a binding contract to execute a lease, plaintiff failed to show that he tendered a lease conforming to the contract. In 51C C.J.S. Landlord and Tenant § 200, at 516, we find: “In an action for damages brought by the proposed lessor, general rules as to the pleadings and evidence are applicable. Plaintiff has the burden of proving those facts which go to make up his cause of action, for example, that the lease tendered conformed to the contract,...” In 51C ,C.J.S. Landlord and Tenant § 196(4), at 509, we find: “A proffered lease must comply with the terms of the agreement. If the agreement does not specify the covenants to be contained in the lease, or if it expressly provides therefor, the lease should contain only the usual covenants and provisions.” We quote further from said section, at 510: “Usual Covenants and Provisions'. If the agreement does not specify the covenants to be contained in the lease, it should contain only the usual covenants and provisions. . . . Thus a covenant by the lessee to insure has been held usual. “On the other hand, the following covenants have been held to be unusual: Covenants against assignments or under-letting without the consent of the lessor; a covenant for the payment of rent in advance; ...” The formal lease submitted by plaintiff to defendant in the case at bar reveals a number of provisions not mentioned in the letter; we point out several of them. In addition to requiring payment of the last month’s rent at the beginning of the term, it limits the lessee’s right to sublet or assign without written consent of the lessor. It requires that lessee shall “ . . . maintain and keep in good order and repair all heating, air conditioning, *445 electrical and plumbing equipment located in the demised premises. ...” It further provides that lessee will purchase and maintain, at its expense, a public liability insurance policy in the amount of $50,000 coverage for any one accident and $100,000 for any one accident involving more than one person, which policy or policies of insurance will show as named assured the lessee and the lessor as their interests may appear. For the reasons stated, the judgment appealed from is Reversed. Judges Campbell and Vaughn concur.