WHITE v. ORTON INDUSTRIES, INC

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Docket Number

A96A1911.

Attorney(S)

Timothy C. Price, for appellant. James Alexander, pro se.

Judges

Gary Blaylock Andrews

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Smart Summary

Factual and Procedural Background

Duane White leased commercial property from Orton Industries, Inc. under a written lease for a three-year term with an option to renew for an additional three years. The lease required White to make specified improvements to the property in exchange for no rent during the first year. White alleged that during the second year he made additional improvements not specified in the lease as an accommodation to Orton without compensation. After renewing the lease for the second term, White vacated the property before the term expired and ceased paying rent. He claimed this was pursuant to an oral agreement with Orton allowing early termination of the lease and providing for Orton to reimburse him $40,000 for the improvements. White sued Orton to enforce the oral agreement and recover the $40,000. Orton denied the existence of any such oral agreement and moved for summary judgment, asserting the alleged oral modification violated the Statute of Frauds requiring such agreements to be in writing. The trial court granted summary judgment for Orton, finding no part performance sufficient to remove the oral agreement from the Statute of Frauds. White appealed the summary judgment.

Legal Issues Presented

Whether the alleged oral agreement modifying the written lease is enforceable despite the Statute of Frauds requirement that contracts for leases exceeding one year be in writing.
Whether White's alleged part performance of the oral agreement is sufficient to create an exception to the Statute of Frauds and preclude summary judgment.

Arguments of the Parties

Appellant's Arguments

White argued that part performance of the alleged oral agreement, including vacating the property and Orton's continued occupation without demanding rent, removed the agreement from the Statute of Frauds writing requirement.
He claimed the oral agreement allowed early termination of the lease and entitled him to $40,000 reimbursement for improvements made to the property.

Appellee's Arguments

Orton denied the existence of any oral modification to the written lease agreement.
Orton contended that the Statute of Frauds barred enforcement of any oral agreement modifying the lease because it was not in writing.
Orton argued that White's alleged acts did not constitute sufficient part performance to remove the oral agreement from the Statute of Frauds.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Macon-Bibb County Board of Tax Assessors v. Atlantic Southeast Airlines, 262 Ga. 119 (1992)	Application of Statute of Frauds to leases exceeding one year.	Confirmed that OCGA § 13-5-30(5) applies to leases longer than one year, requiring written agreements.
Smith v. Top Dollar Stores, 129 Ga. App. 60 (1973)	Part performance exception to Statute of Frauds requires essential contract performance preventing fraud.	Used to evaluate whether White’s acts constituted part performance sufficient to remove the oral agreement from the Statute of Frauds.
Newton v. Allen, 220 Ga. 681 (1965)	Statute of Frauds requirements for leases.	Supported the statutory interpretation of lease agreements requiring writing.
Johnson v. Ashkouti, 193 Ga. App. 810 (1989)	Oral modification of a written contract barred by Statute of Frauds unless part performance exception applies.	Rejected claim that tenant’s vacating property alone constitutes part performance removing oral agreement from Statute of Frauds.
Hendricks v. Enterprise Financial Corp., 199 Ga. App. 577 (1991)	Part performance must be of an essential element of the contract to remove Statute of Frauds bar.	Supported trial court’s finding that no part performance existed here.
Cooper v. G. E. Constr. Co., 116 Ga. App. 690 (1967)	Part performance exception to Statute of Frauds.	Referenced in discussion of part performance requirements.
Norris v. Downtown LaGrange Dev. Auth., 151 Ga. App. 343 (1979)	Acts relied upon as part performance must tend to prove existence of contract.	Used to reject White’s claimed evidence of part performance.

Court's Reasoning and Analysis

The court began by affirming that the Statute of Frauds, as codified in OCGA § 13-5-30(5), requires leases for terms exceeding one year to be in writing, and that this statutory requirement applies to the case. The court noted that the alleged oral modification to the written lease thus must fall within an exception to the Statute of Frauds to be enforceable.

White relied on the part performance exception under OCGA § 13-5-31(3), arguing that his vacating the property and Orton's subsequent occupation without demanding rent demonstrated part performance sufficient to remove the oral agreement from the Statute of Frauds.

The court rejected this argument by analogizing to Johnson v. Ashkouti, where vacating the property alone was deemed insufficient to prove an oral agreement modifying a written lease. The court emphasized that part performance must be of an essential element of the contract and of such a character that refusing enforcement would result in fraud. White’s acts—vacating the premises and ceasing rent payments—were equally consistent with unilateral abandonment rather than performance of an oral agreement. Additionally, Orton’s occupation without demanding rent did not constitute part performance of an oral contract to pay $40,000 for improvements.

Accordingly, the court found as a matter of law that White failed to show part performance sufficient to invoke the exception to the Statute of Frauds, and therefore the alleged oral agreement was unenforceable.

Holding and Implications

The Court of Appeals of Georgia affirmed the trial court’s grant of summary judgment in favor of Orton Industries, Inc.

This decision directly resolves the dispute by holding that the alleged oral modification to the written lease is barred by the Statute of Frauds and that White’s purported part performance was legally insufficient to overcome this bar. The ruling does not establish new precedent but applies existing principles strictly, reinforcing the necessity of written agreements for long-term leases and the stringent requirements for part performance exceptions.

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WHITE v. ORTON INDUSTRIES, INC.

ANDREWS, Chief Judge.

Duane White sued Orton Industries, Inc. (Orton), formerly known as Orton Fluidpower, Inc., to enforce an alleged oral agreement between the parties modifying the parties' written agreement for the lease of commercial property. Orton denied there was any such oral agreement and moved for summary judgment on the basis that the alleged oral agreement violated the Statute of Frauds requirement in OCGA § 13-5-30 that any such agreement be in writing. White responded that part performance of the oral agreement pursuant to OCGA § 13-5-31 (3) removed it from the writing requirement of the Statute of Frauds. The trial court granted Orton's motion for summary judgment concluding that the alleged oral agreement violated the Statute of Frauds and that there was no part performance sufficient to remove it from the operation of the Statute of Frauds. On appeal, White claims the trial court erred in granting summary judgment because a factual issue exits as to whether there was part performance of the oral agreement.

We agree with the trial court that the Statute of Frauds bars enforcement of the alleged oral agreement, and that, as a matter of law, the evidence did not show part performance of the alleged oral agreement sufficient to create an exception to the writing requirement of the Statute of Frauds. Accordingly, we affirm the grant of summary judgment in favor of Orton.

Duane White leased commercial property from Orton under a written lease with a three year term and an option for renewal for an additional three year term. Under the terms of the lease, White paid no rent during the first year in exchange for improvements specified in the lease that he agreed to make to the property. White alleges in his brief that, during the second year of the lease, he made additional improvements to the property not specified in the lease as an accommodation to Orton for which he received no compensation. The lease did not provide for White to make any additional improvements, and we find nothing under oath in the record to support this allegation. After White renewed the written lease for a second three year term, he vacated the property prior to the expiration of the second three year term and ceased paying rent. White claims he vacated the premises pursuant to an oral agreement with Orton providing for early termination of the written lease and for Orton to reimburse him $40,000 for all the improvements he made to the leased property. He brought the present action against Orton seeking to collect $40,000 pursuant to the oral agreement.

It is undisputed that the Statute of Frauds at OCGA § 13-5-30 required that the agreement leasing the property be in writing. Although subsection 13-5-30 (4), which applies to leases passing estates for years, does not apply because the written lease clearly set forth the parties' intention to pass only a usufruct, subsection 13-5-30 (5) does apply because the lease was for a term in excess of one year. Macon-Bibb County Board of Tax Assessors v. Atlantic Southeast Airlines, 262 Ga. 119 ( 414 S.E.2d 635) (1992); Smith v. Top Dollar Stores, 129 Ga. App. 60, 61-62 ( 198 S.E.2d 690) (1973); Newton v. Allen, 220 Ga. 681, 682 ( 141 S.E.2d 417) (1965).

Where the Statute of Frauds requires a contract to be in writing, an alleged oral modification of it is ineffective unless the oral agreement falls within an exception to the operation of the Statute of Frauds. Johnson v. Ashkouti, 193 Ga. App. 810 ( 389 S.E.2d 27) (1989). OCGA § 13-5-31 (3) provides such an exception where there has been part performance of the alleged oral agreement sufficient to remove it from the operation of the Statute of Frauds. Id.; Hendricks v. Enterprise Financial Corp., 199 Ga. App. 577, 579-580 ( 405 S.E.2d 566) (1991); Cooper v. G. E. Constr. Co., 116 Ga. App. 690, 694 ( 158 S.E.2d 305) (1967).

White claims that his own act of vacating the property and ceasing the payment of rent, along with Orton's occupation of the property and its failure to demand that he pay the remaining rent due under the written lease, is evidence of part performance of the alleged oral agreement sufficient to create a question of fact. We disagree. In Johnson, supra, a tenant who vacated the leased premises prior to the expiration of a written lease, responded to the landlord's suit for the remaining rent by claiming that his own act of vacating the premises was sufficient to avoid the operation of the Statute of Frauds because it showed part performance of his oral agreement with the landlord for early termination of the written lease. We rejected this claim holding that "the tenant's mere act of vacating the premises prior to the expiration of the term established by his written lease is no more consistent with his performance of an alleged oral release than with his unilateral abandonment of the premises." Id. at 811 (1). It follows that White's act of vacating the premises and ceasing payment of rent does not tend to prove the existence of the alleged oral agreement. Similarly, even if, as White alleges, Orton occupied the premises after he vacated it, and Orton has not demanded payment of rent due under the written lease, these additional facts are not sufficient to show part performance of an alleged oral agreement to pay White $40,000 for improvements to the property. When part performance of an oral agreement is relied upon to establish an exception to the Statute of Frauds, "`the part performance must be performance of an essential element of the contract sought to be proved, and of a character which would render it a fraud on the plaintiff if the defendant refused to comply.' [Cit.]" Smith, supra at 63. None of the acts relied upon by White as evidence of part performance tend to prove the existence of a contract between the parties to pay White $40,000 for improvements he made to the property. See Norris v. Downtown LaGrange Dev. Auth., 151 Ga. App. 343, 344 ( 259 S.E.2d 729) (1979); Smith, supra at 63.

The trial court did not err by finding, as a matter of law, that there was no part performance sufficient to remove the alleged oral agreement from the operation of the Statute of Frauds. Hendricks, supra; Johnson, supra.

Judgment affirmed. Pope, P.J., and Smith, J., concur.