Annapolis Mall Ltd. Partnership v. Yogurt Tree of Annapolis, Inc.

RODOWSKY, Judge. This case is a summary ejectment action which was removed from the District Court of Maryland to a circuit court by a prayer for jury trial. The principal question is whether the tenant may defend on the ground of mutual mistake in the sense that, had the written lease expressed what the tenant contends to have been the true agreement of the parties, no rent would have been due to the landlord for the period in dispute. For reasons hereinafter set forth, we shall hold that the defense is not available at law, without the written instrument first having been reformed in equity.

Undoubtedly proponents of the merger of law and equity will point to this holding as another marcher in a parade of horribles emanating from the niceties of this state’s present system of modified common law pleading. 1 Appellant, Annapolis Mall Limited Partnership (Annapolis Mall), owns a regional shopping center. Appellee, Yogurt Tree of Annapolis, Inc. (Yogurt Tree), leased approximately 1390 square feet in the shopping center for a term in excess ²⁴⁷ of ten years by a written lease dated May 13, 1981. Article II of that lease, in relevant part, reads: The commencement date, which shall be confirmed by an exchange of letters between Landlord and Tenant shall be the earlier of the following dates: (a) The date upon which Tenant opens for business in the demised premises; or (b) July 1, 1981. Among the various documents which comprise the lease is a twenty-page segment containing printed, general provisions.

These include an integration clause. After making certain improvements to the demised premises, Yogurt Tree opened for business on December 18,1981. On June 14, 1982 Annapolis Mall brought a summary ejectment action in the District Court of Maryland, at Annapolis, pursuant to Md.Code (1974, 1981 Repl.Vol.), § 8-401 of the Real Property Article. 2 Essentially Annapolis Mali’s posi ²⁴⁸ tion was that, beginning July 1, 1981, Yogurt Tree was to pay minimum rent and additional rent, consisting of various shopping center charges. Annapolis Mall sought repossession and also back rent, in an amount later specified to be $17,364.66.

This claim represented the period from July 1, 1981 through January 30, 1982, with one month’s minimum rent, paid in advance, credited to July of 1981. On June 19, 1982 Yogurt Tree filed a prayer for jury trial in the District Court. Jurisdiction was thereby “transferred forthwith” to the Circuit Court for Anne Arundel County. See Md.Code (1974, 1980 Repl.Vol.), § 4-402(e)(2) of the Courts and Judicial Proceedings Article (Courts Article).

In the circuit court the action was placed on the law docket. The first indication on the record that Yogurt Tree claimed that there was a mutual mistake in the commencement date provision of the lease was at trial on November 18, 1982. Theodore Edlow (Edlow), president of Yogurt Tree, testified that he originally began negotiations with Annapolis Mall’s leasing agent in October of 1979. Unwilling to proceed because of his financial situation at the time, Edlow interested his cousin, Melvin Kabik (Kabik), in operating at the subject location.

A form of lease was prepared by Annapolis Mall and furnished to Kabik in October 1980; but Kabick lost interest and never delivered a signed lease to Annapolis Mall. The provision for commencement date in the proposed lease to Kabik in part read that such commencement date shall be contingent upon the Issuance to Tenant of any required use and occupancy permit. If Tenant is unable to secure such permit by commencement date, the commencement date shall be extended until such time as said Use and Occupancy Permit [is] obtained from the appropriate governmental authorities. ²⁴⁹ Then Edlow again became interested in the location. He obtained a copy of the lease proposed to Kabik and read it.

He resumed negotiations with the leasing agent. These concentrated on two aspects of the lease other than the commencement date. After those features were resolved to Edlow’s satisfaction, the landlord prepared the documents. Edlow testified that he made certain that the two, specially discussed features were correctly stated in the papers and that he simply scanned the other provisions of the lease and signed it.

Over objection from the landlord, Edlow testified that the rental agent for Annapolis Mall had assured him that the lease which he would get would be “the same lease as originally negotiated with [Kabik]” with the exception of the two changes. Annapolis Mall unsuccessfully moved for a directed verdict. The jury was instructed on mutual mistake and the case submitted on written, special interrogatories. The first of these asked: “When do you find that payment of the rent commenced, July 1, 1981 or December 18, 1981?” In answer the jury filled in the latter date.

Pursuant to the jurors’ response to another special interrogatory, judgment was entered in favor of Annapolis Mall for $1,406.16. From that judgment Annapolis Mall appealed. We issued the writ of certiorari on our own motion prior to consideration of the case by the Court of Special Appeals. In its brief Annapolis Mall makes three points: 1.

Testimony directed to proving mutual mistake concerning a term of the lease was not admissible; 2. In an action of summary ejectment inquiry is limited to whether rent was due according to the terms of the lease and, if so, whether it was paid; and 3. “The court erred in allowing the issue of mutual mistake to go to the jury since it is in the nature of equitable relief and was not allowable in an action at law.” Yogurt Tree does not directly join issue on each of the points raised by the landlord; rather, the tenant in substance presents the following arguments: ²⁵⁰ 1. Because Annapolis Mall neither objected to the use of special interrogatories nor excepted to the instructions to the jury, it has failed to preserve for appellate review the question of whether a mutual mistake was properly presented to the jury; 2. There was legally sufficient evidence to support a finding of mutual mistake under the law relating to that doctrine; and 3.

Mutual mistake may be asserted as a defense to the instant action. (1) The threshold issue is whether Annapolis Mall has lost the right to appellate review of the claimed error. In this connection Yogurt Tree attempts to redefine the landlord’s position to one objecting to jury consideration of the mutual mistake issue. If properly viewed in that light, lack of objection by Annapolis Mall to the use of special interrogatories and the absence of any exception to instructions concerning mutual mistake would take on significance.

However, Annapolis Mali’s point is much broader. It is that mutual mistake may not be shown at all in an action of summary ejectment. This position has been sufficiently preserved. In the course of the trial, the earliest effort by Yogurt Tree to elicit evidence tending to prove mutual mistake occurred on cross-examination of the witness called by Annapolis Mall to prove nonpayment of rent.

When that cross-examination began to move into negotiations before execution of the May 18, 1981 lease, counsel for Annapolis Mall requested a conference at the bench. In the course of an extended colloquy the landlord took the position that evidence relating to prior negotiations would not be admissible for two reasons: (1) Summary ejectment actions were by statute limited to consideration of whether rent was due and unpaid; and (2) proof of negotiations preceding the written lease were barred by the parol evidence rule. At the conclusion of all of the evidence Annapolis Mall moved for a ²⁵¹ directed verdict “on the basis that there has been no evidence whatsoever presented by the defendant to rebut the presumption that is given to the plaintiff in presenting the case, that the rent is due [and] owing.” While the reason given in support of the motion is not articulated with clarity, it sufficiently embraced the landlord’s position, more fully expressed earlier in the trial, that the issues in summary ejectment are very limited so that a defense of mutual mistake in the terms of a written lease may not be presented in such an action. 3 (2) In admitting testimony from Edlow, the only object of which was to show that the written lease did not evidence the true agreement of the parties, the trial court erred. Edlow sought to show that rent was to start when Yogurt Tree opened for business while the written lease unambiguously fixes the commencement date at the earlier of July 1, 1981 or the date upon which Yogurt Tree opened for business.

Edlow’s testimony violates the parol evidence rule. It was legally incompetent, in this action, to prove that the agreement was contrary to that clearly expressed in the writing. [I]n the absence of duress, fraud, or mistake, parol evidence of conversations before or at the time of the execution of a contract must be excluded. Of course, the existence of a separate oral agreement as to any matter on which a written contract is silent, and which is not inconsistent with its terms, may be proved by parol, if under the circumstances of the case it may be properly inferred that the parties did not intend the written contract to be a complete and final statement of the whole ²⁵² transaction between them. [Freeman v. Stanbern Construction Co., 205 Md. 71, 77-78 , 106 A.2d 50, 54 (1954).] And see Housing Authority of College Park v. Macro, 275 Md. 281 , 340 A.2d 216 (1975); Markoff v. Kreiner, 180 Md. 150 , 23 A.2d 19 (1941). Among the decisions in this Court rejecting attempts in actions at law to vary by parol the terms of integrated written leases are Kikas v. Baltimore County, 200 Md. 360 , 89 A.2d 625 (1952); Bank v. Hurst Estate, 187 Md. 333 , 50 A.2d 133 (1946); Phoenix Pad Manufacturing Co. v. Roth, 127 Md. 540 , 96 A. 762 (1916).

However, the rule is otherwise in an action in equity to reform the written instrument because of mutual mistake. Such a case was Hoffman v. Chapman, 182 Md. 208 , 34 A.2d 438 (1943). There we said: It is a settled principle that a court of equity will reform a written instrument to make it conform to the real intention of the parties, when the evidence is so clear, strong and convincing as to leave no reasonable doubt that a mutual mistake was made in the instrument contrary to their agreement, [citations omitted.] It is a general rule of the common law that parol evidence is inadmissible to vary or contradict the terms of a written instrument, [citations omitted.] But equity refuses to enforce this rule whenever it is alleged that fraud, accident or mistake occurred in the making of the instrument, and will admit parol evidence to reform the instrument, even though it is within the Statute of Frauds, [citations omitted.] [Id. at 210, 34 A.2d at 439 .] The only basis on which Yogurt Tree contends that Ed-low’s evidence was admissible over the objection of Annapolis Mall is that it tended to prove mutual