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(220 P.)

mony of the witness adduced in court, and | of a practice or course of acting. It is in this the great weight of authority holds that the sense that we find it used most frequently in declarations of a party in his own favor are the discussion of the admissibility of evidence deemed self-serving and are not admissible in of 'custom' as bearing upon questions of neghis behalf. With certain exceptions, self-ligence." 17 C. J. 446.

serving declarations whether written or oral, not parts of the res gestæ, are not competent. State v. Anderson, 10 Or. 448; State v. Smith, 43 Or. 109, 110, 71 Pac. 973; Wirth v. Richter, 63 Or. 114, 116, 126 Pac. 987; Service Lbr. Co. v. Sumpter Val. Ry. Co., 67 Or. 63, 80, 135. Pac. 539; Hillsboro Nat. Bank v. Garbarino, 82 Or. 405, 410, 161 Pac. 703; Stanfield v. Arnwine, 102 Or. 289, 202 Pac. 559; 4 Chamberlayne, The Modern Law of Evidence, 2734.

"It is a well-established general rule that a statement of a party, whether oral or written, which is of a self-serving nature, is not admissible in evidence in his favor. * * 22 C. J., § 193, p. 220, and numerous cases cited.

[21, 22] Under the exception to the general rule, the testimony sought to be introduced was not competent.

"Where, however, a witness has been assailed on the ground that his story is a recent fabrication, or that he has some motive for testifying falsely, proof that he gave a similar account of the transaction when the motive did not exist, before the effect of such account could be foreseen, or when motives of interest would have induced a different statement, is admissible; but, in order to bring a case within this rule, it must appear that the conversation occurred soon after the transaction, is consistent with the statements made on oath, and contains such fact or facts pertinent to the issues involved as reasonably furnish to the jury some test of the witness' integrity and accuracy of recollection." 40 Cyc. 2789.

To similar effect see 1 Thompson on Trials, § 574–577.

The exclusion of the testimony was not error. However, the record does show, from the testimony of W. W. Lucius, that Zanello Bros. reported, in a letter, that the price of reinforcing steel included in their bid was raised in the sum of $400, and Exhibit D, being the revised figures on the Labor Temple building, was based upon the report made by the letter. This statement was received into the record over the objections of plaintiff.

[23] Defendants aver error because of the court's overruling their objection to certain testimony given by C. J. Montag relating to custom. Under the pleadings and the condition of the record, the question was not technically proper. Simms v. Sullivan, 100 Or. 487, 198 Pac. 240, 15 A. L. R. 678. "Custom" is thus defined:

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tate is assignable unless power is restrained by terms of lease.

"In its more technical legal sense, a custom Generally a power of assignment is incident is a usage which has obtained the force of law. to lessee's estate unless restrained by the In other words, it is a law established by long terms of the lease, which is a contract creating usage. The word 'custom' is also em- an estate assignable at common law without ployed by the courts in its more popular sense the word "assigns" in the lease.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes 220 P.-11

6. Landlord and tenant ~76(1)—Restrictions | take, or mistake of one party and fraud of the against assignments must be clearly estab- other, a court of equity will generally reform lished and strictly construed. the instrument to make it conform to their actual stipulation.

Restrictions against assignments, being restraints against alienation, are not favored by the courts, which should not insert such a clause in a lease without clear and convincing evidence of a previous definite agreement on the particular point, and will construe it, when found therein, with the utmost strictness.

7. Reformation of instruments

13. Evidence 70-Reformation of instruments 45(1)-Every presumption in favor of correctness of writing; clear and convincing proof of facts alleged in complaint necessary.

Every presumption must be invoked in fa1-State-vor of the correctness of a written instrument. which will not be reformed except on clear and convincing proof of the facts alleged in the complaint.

ments of reasons for desiring lease held insufficient to authorize insertion of provision against assignment or subletting.

A statement by lessees' representative in negotiations for a lease that lessees desired the building for their own business, and expected to improve it by large expenditures, held insufficient to authorize insertion of a provision against assignment or subletting without lessor's written consent, not being part of the consideration for, but merely a statement made as an inducement to lessor to execute, the lease.

8. Fraud 12-Mere nonperformance of promise not actionable.

Mere nonperformance of a promise made, or failure to carry out an intention expressed, in the course of negotiations, is not a fraud or evidence of fraud, unless the representations were falsely and fraudulently made with intent to deceive; a representation as to a past fact or present condition being necessary to constitute actionable fraud.

9. Reformation of instruments 21-Lessee held not guilty of fraud in accepting lease without pointing out omission of provision agreed on.

A lessee and its representative, neither of whom was represented by an attorney in negotiations for the lease, which was drawn by lessor's attorney, held not guilty of fraud in accepting and signing it without pointing out omission of a provision which lessor claimed was agreed on.

10. Reformation of instruments

21-Sublet

ting cannot be made basis of reformation of lease on ground of fraud.

The subletting of premises by lessee cannot be made the basis for reformation of the lease on the ground of fraud, by inserting a provision against subletting, especially where it occurred more than two years after the lease was made.

11. Reformation of instruments 45(1) Testimony as to mutual mistake must be clear, and show precisely what was intended

to be inserted.

To obtain reformation by insertion of omitted provisions, testimony as to mutual mistake must be clear, definite, cogent, and unequivocal, and must show precisely what was intended to be inserted.

14. Reformation of instruments 2-Court should consider equitable or inequitable features of clause sought to be inserted.

A suit for reformation is an appeal to an extraordinary power of a court of equity, which should scrutinize a clause sought to be inserted in the writing and consider its equitable or inequitable features.

15. Reformation of instruments 2-Nonassignment clause in long term lease without restriction on lessor's power to withhold consent does not appeal to court's conscience.

A nonassignment clause sought to be inserted in a long term lease with no restriction on lessor's power to withhold consent to a subletting does not appeal to the conscience of a court of equity, especially where subtenant is a responsible concern satisfactory to lessor, who only desires to obtain an increased rental.

16. Reformation of instruments

-Lessor

not suggesting omitted provisions when contract was made cannot do so in suit to reform lease.

Lessor not suggesting or insisting on provisions against assignment and subletting without her written consent when the contract was made cannot do so in a suit to reform the lease; lessee's assent to such provisions being necessary to make them part of the contract.

Department 2.

Appeal from Circuit Court, Multnomah County; T. E. J. Duffy, Judge.

Suit by Eliza C. Dolph against Lennon's, Incorporated, and others. From the decree rendered, the named defendant and others appeal. Reversed, and suit dismissed.

on

The plaintiff, Mrs. Eliza C. Dolph, instituted this suit against the appellants, Lennon's, Incorporated, A. J. Lennon, Chas. F. Berg, and the Sweet Sixteen Company, a corporation, to obtain the reformation of a lease of certain premises situated Broadway street, in the city of Portland, Or. In this lease, which was dated March 10, 1919, the plaintiff, Mrs. Dolph, was lessor, and the appellants, Lennon's, Incorporated, was lessee. Lennon's, Incorporated, subsequently signed the lease to A. J. Lennon and Chas. F. Where a written memorandum fails to con- Berg, its principal stockholders, and Februform to the contract because of mutual mis-ary 11, 1921. Lennon and Berg sublet the For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

12. Reformation of instruments 20-Instru

ment not conforming to contract because of mutual mistake or mistake of one and fraud of other party reformed.

as

(220 P.)

premises to the Sweet Sixteen Company at a considerable rental advance.

At the time the lease was executed the property was yielding a rental of $900 per month. The lease called for a monthly rental of $1,500 per month, and covered a period of 10 years but was not to go into effect, in so far as possession was concerned, until two years after it was executed. The plaintiff sought by her complaint to reform the lease so as to insert (1) a provision limiting the use of the premises to Lennon's, Incorporated, and (2) a provision explicitly denying to the lessee the right to assign or sublet without the written consent of the plaintiff. The trial court rendered a decree refusing to insert the first provision mentioned, in effect, denying relief in so far as the insertion of the clause requiring Lennon's to conduct its own business on the premises was concerned, and reforming the lease so as to prevent an assignment thereof, to the effect that the premises should not be sublet or assigned without the written consent of the plaintiff first had and obtained. After decreeing that the lease should be so reformed the trial court adjudged that the lease as reformed was valid; that the sublease to the Sweet Sixteen Company was valid; and then adjudged that the Sweet Sixteen Company should pay the rental of $2,500 per month fixed by the sublease directly to the original lessor, Mrs. Dolph. Lennon's, Incorporated, A. J. Lennon, and Chas. F. Berg appealed from the de

cree.

The Sweet Sixteen Company was satisfied with the decree. Mrs. Dolph was also satisfied, and neither appealed.

The allegations of the complaint which explain the issues, and the gist of which are denied by the answer, are as follows:

"That within a few days prior to March 10, 1919, defendant above named, Lennon's Incorporated, through the above-named defendant, Charles F. Berg, its then vice president, applied to the plaintiff herein for a lease of the premises hereinabove described, and at said time, in order to induce plaintiff to lease said premises to the defendant, Lennon's, Incorporated, promised and agreed with plaintiff that said defendant would use the said premises under said proposed lease for its own purposes exclusively, and promised and agreed to conduct in said premises under said proposed lease, and under its name, 'Lennon's, Incorporated,' the business then carried on by said defendant corporation, in its then place of business on the north side of Morrison street, between Fifth street and Sixth street, in the said city of Portland, but upon a larger and more important scale and the said Charles F. Berg, representing and acting for and on behalf of said defendant corporation as aforesaid, then and there represented that the principal business of said defendant corporation in case of securing said proposed lease, as applied for, was thereafter, and with the commencement of the term of said lease, to be carried on by it in said hereinbefore described premises, owned by plaintiff as aforesaid, and that, to enable it

to carry on and conduct therein the business that it was then carrying on in its said store on Morrison street, it would expend between $35,000 and $40,000 in remodeling said building That, in negotiating for said lease from the plaintiff to said defendant, and in the final consummation thereof, and to induce plaintiff to execute said lease to said defendant, Lennon's Incorporated, said defendant, amongst other things, promised and agreed that said premises should be used exclusively during the term thereof by said defendant, Lennon's, Incorporated, for the purpose of conducting its own would not be sublet under the said lease, and business only, therein, and that said premises that said lease should not be assigned, without the written consent of the plaintiff first had and obtained, and it was thereupon so agreed by and between the plaintiff and said defendant."

so as to make it convenient for its own use.

The lease was drawn by Mrs. Dolph's attorney, and as drafted did not contain either of the clauses claimed to have been agreed upon at the meeting to which the verbal understanding had been reached. There were present at the meeting in question Mrs. Dolph, Mr. Joseph Simon, Mr. Chas. F. Berg, of Lennon's, and one M. A. Newell, a real estate agent.

It was not contended that in the court of verbal negotiations there was any reference whatever to a restriction on assignment for subletting, but it was claimed that such a restriction was inferable from Berg's statement that Lennon's intended to conduct on the premises the business which it was then conducting on Morrison street, in Portland. Mr. Simon stated that he dictated certain special clauses to his stenographer, and then left to her the incorporation of what he termed "boiler plate" provisions, one of which was a restriction against an assignment and subletting without consent; that he failed to notice that this restriction had been omitted as he went over it hastily. He then gave the lease to Mr. Newell, who subsequently returned it signed by Lennon's. Mr. Simon further testified that it was his purpose to have included in the lease the usual restrictions covering the nonassignment and subletting without the written consent of the lessor. On cross-examination Mr. Simon testified as follows:

"Q. Was there any discussion at any time during the conference or was there any meution of assignment or subletting at the time of the conference between Newell, Berg and yourself; was there any reference to assignments and subleases in that conference? A. Not in express language; but the understanding was that the lease should be formulated and based upon the agreement that was entered into. ***

"Q. You never at any time intended to insert, and omitted by negligence of you or any stenographer, any clause affirmatively obligating them to conduct exclusively a certain business on certain premises for a certain period of time, regardless of conditions? You never intended

to dictate that, did you, Senator? A. No; I did not.

The understanding of Mr. Newell, the real estate agent, in regard to the transaction, is indicated by his cross-examination, which is

"Q. Another matter which I wish to ask you, with regard to the dictation of the lease out-in part as follows: side of what you call the 'boiler plate' portion: Did you intend to dictate in that lease as part of the agreement of the parties that Lennon's should improve that building-spend the sum of approximately $35,000 in making it into the store of the character or type of Magnons? A. No; I don't think there is any such provision.

"Q. I agree with you, there was not any such provision. Was it your intention to obligate the tenant to do that? A. No; that was one of the inducements Lennon's offered to Mrs. Dolph, to make the lease, but that didn't go in the lease.

"Q. I took down your statement. I want to know if that is correct or not. Mrs. Dolph asked Mr. Berg: 'What do you intend to do with the building?' A. Yes.

"Q. Mr. Berg told her it was their intention to occupy it for Lennon's, Incorporated? A. Yes.

"Q Is that the statement on which you base your conclusion that was her understanding? A. Yes, sir.

"Q. That is as far as you remember, was the language used? A. Yes, sir.

"Q. Was there any discussion about assign

"Q. It was a statement of their intention, ing, or anything of that sort? A. About what? was it not, Senator? A. Yes. "Q. About assignment of the lease? A. No, sir.

"Q. You didn't require them to make any improvement? A. Mrs. Dolph consented certain improvements be made.

"Q. But you did not require them? A. Not in the writing.

"Q. That was in conformity with the verbal agreement? A. Well, the verbal agreement was they were to make improvements. They said they would make improvements to the extent of $35,000 or $40,000.

"Q. I mean, no mistake, the failure to require them to make any improvement? A. No; no mistake about that, because I didn't intend to put that in the lease."

Mrs. Elizabeth C. Dolph testified in part as

"Q. No discussion of that kind? A. No, sir. "Q. Who drew that lease, do you know? A. Senator Simon, I think.

"Q. Whom did Senator Simon represent? A. Sir?

"Q. Whom did he represent? A. Mrs. Dolph."

Roscoe C. Nelson and Martin L. Pipes, both of Portland (Dey, Hampson & Nelson and George A. Pipes, all of Portland, on the brief), for appellants.

Chester V. Dolph and H. J. Bigger, both of Portland, for respondent.

BEAN, J. (after stating the facts as above).

to what took place at the meeting in Mr. Si- In regard to the clause which it was claimed mon's office: That Mr. Berg, of Lennon's, desired to obtain the lease. He said that he in the complaint was omitted from the lease wanted to greatly enlarge their business to the effect that Lennon's, Incorporated, and establish a business as nearly as possible should occupy the premises during the term like Magnon's, of San Francisco; that they its own business, we should first notice that of the lease exclusively for the conduct of wanted the building for their own use. That Mr. Berg said, "Mrs. Dolph, if you will lease the trial court found from the testimony, that your building to us, to Lennon's, we will car- lease, and the plaintiff, being apparently satsuch clause should not be incorporated in the ry on a high-class business there that you isfied with the decree did not appeal; therewill be proud of." She was to pay taxes, in- fore that phase of the matter is out of the surance, and street improvements, and they asked her to let them have it for 10 years.

That at first she demurred to letting the building for 10 years, but afterward consented. That Mr. Berg assured her that he could not possibly take the building for less than 10 years, because he was going to expend something like $35,000 or more in the improvement of the building, making it suitable for their use. That this induced her to give the lease. She testified that nothing was said regarding the rights of Lennon's, Incorporated, to sublet or assign the lease, and that she would not have leased the premises if any such right had to be granted; that she did not know how it happened that the provisions by which Lennon's were to occupy the premises exclusively for their own busi

ness

case.

peal cannot, on appeal by the adverse party, [1] A party who has failed to take an apinsist on a decree more favorable to him than that given in the court below, even though the case is triable de novo in the Supreme Court; Flinn v. Vaughn, 55 Or. 372, 106 Pac. 642; McCoy v. Crossfield, 54 Or. 591, 104 Pac. 423; Goldsmith v. Elwert, 31 Or. 539, 50 Pac. 867, and other cases referred to in

these.

the lease "be, and the same is hereby, re[2] The decree appealed from ordered that formed and corrected to conform to the real agreement of the parties thereto"; then provided for inserting in the lease the following:

"It is further covenanted and agreed by and were left out, and the prohibition between the parties hereto that said party of against assigning and subletting was omit- the second part will not assign this lease, nor ted, and she did not know when she signed without the consent in writing of the party of sublet said premises, nor any part thereof, the lease that those restrictions were the first part had and obtained permitting the omitted.

same."

(220 P.)

The instrument as reformed by the decree other words constituting a contract. If we of the trial court contains no covenant either change the phraseology it must mean the that the premises should be used exclusively same thing as the original language. The by Lennon's, Incorporated, for the purpose new language inserted in the written instruof conducting its own business only, or for the ment by the decree is radically different from conducting of the business formerly conduct- the original. It is not susceptible of the ed at Morrison street. The decree is a ju- same meaning as the original language used dicial determination against the plaintiff that by the parties in the negotiations and was no such terms were a part of the original not so understood by both of them. Therecontract. fore there is no basis for the decree, because there is no evidence supporting the finding that an agreement was made that the lease should not be assigned and the premises should not be sublet without the written consent of the lessor.

[3] The only question that remains is whether or not the testimony warrants the finding that the contracting parties to the lease agreed that the premises should not be sublet or the lease assigned without the written consent of the plaintiff first had and obtained. It goes without saying that a written instrument can only be reformed so as to conform to the agreement made by the parties. The function of the written instrument is to record the agreement which the parties executing the same have made. If it was an oversight in not making any agreement as to subletting the premises or assigning the lease, then there could have been no mistake or oversight in omitting the insertion of such a clause in the written lease. The scrivener who drew the lease would not be expected to insert therein a stipulation that in fact had not been made by the parties. Neither is the court authorized to reform the instrument and insert therein any stipulation or agreement that was not in the minds of the parties at the time they made the contract.

[4] We fail to find in the record any testimony to support the finding or decree of the trial court that the nonassignment clause and clause restricting the subletting of the premises was a part of the real agreement of the parties to the lease. There were four persons present at the negotiations when the verbal contract was consummated and the terms thereof fixed, Mrs. Dolph, Mr. Simon, Mr. Newell, and Mr. Berg. All of these witnesses agree that the subject of assignment and subletting was not even mentioned at that time by either of the parties or any one else.

The reason for the opinion of the trial court seems to have been that the agreement alleged, to the effect that the premises were to be used by Lennon's, Incorporated, for its business only, and to conduct such a business as was conducted at Morrison street, is equivalent to an agreement not to assign or sublet the premises without the written consent of the plaintiff. If, the defendant Lennon's, Incorporated, did not agree as a part of the contract to occupy its premises for its business only or to conduct its business therein as conducted at Morrison street, it cannot be said that they agreed to something claimed to be equivalent, namely, not to assign or sublet the premises. We should not translate words used in the negotiations which were not a term of the contract into

According to the facts in the case as delineated by the testimony, if the clause relating to the nonassignment of the lease and the restriction as to the subletting of the premises had been inserted in the lease by the draftsman, then it would have amounted to no more than a proposal on the part of the lessor, and would have required the acceptance of the lessee to consummate the agreement. This, of course, would have been accomplished by the execution of the lease with Whether the lessor and such an insertion. the lessee could have come to an agreement as to a restriction in regard to subletting if they had endeavored to do so, is in doubt. Mrs. Dolph testified that she would not have signed the lease if she had understood that there were no restrictions in regard to a sublease. On the other hand, Mr. Berg, the vice president and representative of Lennon's, the lessee, testified that he would not have signed the lease containing the covenant that the lease should not be assigned nor the premises sublet without the written consent of the lessor unless there had been a further provision that such consent should not be arbitrarily withheld. So that it appears that the oversight was a failure of the parties to come to an agreement or understanding in regard to the covenant inserted by the decree, rather than in a mistake in making the written memorandum show what the parties had agreed to.

[5] As a general rule, the power of assignment is incident to the estate of a lessee, unless it is restrained by the terms of the lease. Though a lease is necessarily a contract, yet it is a contract which creates an estate, and by the common law an estate is assignable, and the power to assign exists without the word "assigns" in the lease. It has been held that under an agreement for a lease the lessor is not, without an express stipulation, entitled to a covenant restraining alienation without the lessor's consent as a proper and usual covenant. 16 R. C. L. 828, § 323; Church v. Brown, 15 Ves. Jr. 258, 10 Rev. Rep. 74, 15 Eng. Rul. Cas. 688; Hampshire v. Wickens, 7 Ch. Div. 555, 47 L. J. Ch. 243, 38 L. T. N. S. 408, 26 W. R. 491, 15 Eng. Rul. Cas. 699.

[6] Restrictions against assignments being

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