Crossman v. Fontainebleau Hotel Corp.

273 F.2d 720 (5th Cir. 1959)

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Nature of the Case

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Facts

P operates women's dress shops in Miami Beach, Palm Beach, and Bal Harbour, Florida, in New York City, and in other places. The Fontainebleau Hotel (D) opened for business in December 1954. In January 1955, about a month after D opened, Florence Lustig and her husband, P who was also her manager, were staying at the hotel. They were approached by Ben Jaffe, an officer, director, and large stockholder of the hotel, who was handling the leasing of store space in the hotel. Jaffe told Lustig that management was anxious to have tenants in the shopping spaces that had not yet been finished. Jaffe, Lustig, and P agreed orally on the terms of a lease. At Jaffe's request, Lustig agreed to move in immediately and to take possession of the premises for the operation of a fine dress shop before the formal execution of any lease. Lustig took possession of the premises. Spent $50,000 on fixtures and improvements, a part of which was not removable. To bind the transaction Lustig gave D $5,000 as a good faith deposit, an amount still held by D. After Lustig commenced construction of the improvements, D presented a lease that was not in accordance with the original understanding of the parties. P, and the hotel, through Jaffe, made penciled corrections in the lease to reflect the original understanding. All of these changes were approved by Jaffe and P. Jaffe then stated that the lease would be redelivered to the hotel's attorneys to be redrafted in accordance with the pencil notations. No redrafted lease was ever submitted to Lustig. P has occupied the premises and paid the rent since March 1, 1955, when the shop opened as 'Florence Lustig'. On July 20, 1958, Lustig notified D in writing of her election to exercise the option to renew the lease. D denied that there was any option to renew the lease. On July 1959 a letter from the hotel demanded possession of the premises no later than September 1, 1959. In September Lustig wrote the hotel tendering a check for $2,000 for the rent for the first month of the alleged new five-year term. The check was returned. D again demanded possession of the premises but extended the deadline for removal to October 31, 1959. P sued D seeking a declaration on the terms of the lease. D moved to dismiss claiming the lease was invalid under the statute of frauds. P claimed the statute was inapplicable under the facts. The court found for D and P appealed.