Story Case

Mr. H. Arnold decided to spend the summer and autumn in California, and offered his house and lot for rent in the columns of the daily papers. Mr. Farlow was one of the many to answer the advertisement, and it was with him that Mr. Arnold finally came to an agreement. Mr. Arnold intended to leave on the fourth of April, and said that he might return some time before the first of April of the following year. Mr. Farlow agreed to take the house up to the first of April next, but hoped he could have it longer. Mr. Arnold replied, "Well, perhaps we can arrange it; we will see." The whole matter was settled without any writing. In the morning following this arrangement, Mr. Farlow received a telegram from Mr. Arnold, stating that he had suffered great loss in an investment and would not be able to leave for California. Mr. Farlow had made all preparations to move, and asked Arnold to, at least, reimburse him for this expense. Arnold answered that their agreement was oral, and, therefore, void, and he was under no legal obligation to Mr. Farlow. Was he right in this view?

Ruling Court Case. Hand Vs. Osgood, Volume 107, Michigan Reports, Page 55; Volume 61, American State Reports, Page 312

Osgood was the owner of land; he verbally agreed to lease it to Hand for a period of one year, with the right at the end of the year to rent it for three years longer if he desired. Osgood refused to permit Hand to come into possession of the land under the agreement. Hand then brings this action for damages.

Osgood contends that the agreement was void under the Statute of Frauds, which provides that all leases for a period longer than a year shall be in writing, and since Hand had a lease for one year and a right to continue it for three years longer, the agreement was within the Statute of Frauds.

Mr. Justice Grant said: "It is conceded that, if this was a contract for a longer period than a year, it is void under the Statute of Frauds. The contention of the plaintiff is that the contract may be performed within one year, and is, therefore, good for that period. We think upon principle, that it is within the mischief which the Statute is designed to prevent. The contract contemplates a lease for three years, and, so far as the defendant is concerned, it is absolute. It follows that the agreement is void under the Statute, and cannot, therefore, be made the basis for a recovery for a breach of contract."

Ruling Law. Story Case Answer

At Common Law no writing is necessary to create the relation of landlord and tenant, regardless of the length of term of the tenancy; but by the Statute of Frauds, followed in all states, it was declared that all leases for more than one year should have only the force and effect of a tenancy at will, unless they were reduced to writing and signed by the party sought to be charged thereunder. This statute has been adopted in most American states, though the provisions of the statutes vary greatly in the different states.

Mr. Arnold, of the Story Case, is in error. The oral lease made by the parties was for a period from April 4 to April 1 following, hence less than a year. To be sure, something was said about an extension, but that was left undecided. Mr. Farlow will recover damages from Arnold for breach of the oral lease.