Nelmar, Inc. v. A.G. Rushlight & Co., 182 Or. 516, 187 P.2d 668 (Or.
, 1947)
182 Or. 516
187 P.2d 668
NELMAR, INCORPORATED
v.
A.G. RUSHLIGHT & COMPANY
Supreme Court of Oregon.
Argued December 16, 1947.
Reversed and dismissed December 23,
1947.
Rehearing denied January 20, 1948.
Landlord and tenant Specific
performance Oral lease Realty
Any oral lease of realty resulting from
negotiations for written lease must conform
to terms demanded by lessor in negotiations
concerning written lease, including guaranty
of rent by principal stockholder of lessee
corporation, and lessee was not entitled to
specific performance thereof, where principal
stockholder, having sold interest in lessee
corporation, refused to guarantee payment of
rent.
See note, 88 A.L.R. 1380.
32 Am. Jur. 50.
51 C.J.S., Landlord and Tenant, 211.
Appeal from Circuit Court, Multnomah
County.
DAVID R. VANDENBERG, Judge.
Lloyd V. Weiser, of Portland (with C.C.
Hall, of Portland, on brief), for appellant.
John C. Veatch, of Portland (Veatch &
Bradshaw, of Portland, on brief), for
respondent.
Before ROSSMAN, Chief Justice, and
KELLY, BAILEY, HAY and WINSLOW,
Justices.
This is a suit for specific performance of
an alleged oral lease of certain real property
and to restrain the defendant as the alleged
lessor, from recovering possession of the
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premises. From a decree in favor of plaintiff,
defendant appeals.
REVERSED AND DISMISSED.
KELLY, J.
Both the plaintiff and the defendant are
corporations. At the inception of the
negotiations between
[182 Or. 517]
these parties, Mr. Edward S. Marnon and Mr.
Roy S. Nelson were the plaintiff's principal
stockholders. These negotiations began
during the latter part of June and the first of
July, 1945, and had to do with the terms and
conditions of a prospective lease of real
property upon which, at the beginning of such
negotiations, there was merely a partially
enclosed structure which could not serve the
purpose for which plaintiff sought to lease it.
Later, the building was improved to the
extent that on or about the first of October,
1945, plaintiff took possession and ever since
then has occupied the same.
During the negotiations at all times
defendant insisted that no lease would be
made by it to plaintiff corporation, unless
either a cash deposit equal to four months
rental should be made by plaintiff, or Mr. Roy
S. Nelson and Mr. Edward S. Marnon would
sign the same as lessees, or execute a
guaranty that the prescribed rental would be
paid by plaintiff to defendant.
No such deposit has been made or
tendered. In fact, the testimony discloses that
the suggestion of making such deposit was
abandoned and reliance was mutually placed
upon the guaranty to be made by Mr. Nelson.
It is true the plaintiff, in its reply, denied
defendant's allegation in this regard, but
there is no dispute in the testimony in that
regard.
 Nelmar, Inc. v. A.G. Rushlight & Co., 182 Or. 516, 187 P.2d 668 (Or., 1947)

On the 10th of October, 1946, Mr. Nelson Mr. Nelson's part rendering that compliance
sold his interest in the plaintiff corporation. impossible of performance.

Mr. W.A. Rushlight, president of For these reasons, the decree of the
defendant corporation, testified that the circuit court is reversed, and this suit is
execution of a lease to plaintiff of the dismissed.
premises in suit was necessarily deferred until
the cost of completing the building thereon
could be determined, because it was agreed
that, if

[182 Or. 518]

the cost thereof should exceed $14,000.00,

the rental to be paid by plaintiff would be
proportionally in excess of $275.00 per
month; otherwise, such rental would be only
$275.00.

Thereafter, according to his

uncontradicted testimony, Mr. Rushlight
talked with Mr. Nelson and Mr. Nelson then
said that he, Nelson, had sold out his interest
in the plaintiff company and that he would
not guarantee the payment of rental for the
possession and occupancy by plaintiff of the
premises in suit.

This is not a case calling for the

construction of the terms of a written lease.
Here, we are called upon to determine
whether there was an oral lease by defendant
corporation to plaintiff corporation of the
premises in suit for a term of five years and
whether plaintiff has complied with the terms
of such oral lease in so far as such compliance
on plaintiff's part was required during the
time which has elapsed since such terms were
agreed upon.

The only conceivable oral lease would be

one conformable to the terms demanded by
defendant in the negotiations between the
parties concerning the proposed written
lease. It is therefore apparent that with regard
to securing the guaranty of Mr. Nelson, there
was no compliance by plaintiff prior to the
institution of this suit, but a direct refusal on

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