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Contracts Keyed to Knapp
Mel Frank Tool & Supply, Inc. v. Di-Chem Co
Facts
Di-Chem entered into a three-year agreement with Mel Frank to lease a storage and distribution facility. Roughly one year into the lease, the fire chief, for the City of Council Bluffs, inspected the property and informed Di-Chem that it was in violation of a city ordinance prohibiting the storage of hazardous materials. Because Di-Chem was a chemical company, Di-Chem felt the ordinance (which was enacted after the signing of the lease) frustrated its business needs for the facility, and vacated the premises. Mel Frank brought suit for breach of lease and property damage, which Di-Chem answered, asserting several defenses including mutual mistake, illegal contract, failure to mitigate damages, fraud in inducement and impossibility. The court found that Mel Frank could not have known that the chemicals were classified as hazardous, and found for Plaintiff. Defendant appealed.
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