## Facts

- Landlords leased several gasoline filling stations to Kemp, who operated as Webb Oil Company.
- Kemp was heavily indebted to Penn-O-Tex arising from business and petroleum-product transactions.
- Kemp assigned Penn-O-Tex accounts receivable (including those connected to the stations).
- Penn-O-Tex collected payments connected to the business, paid some debts at Kemp’s direction, and placed an agent in the office to manage business operations.
- While away from home, the landlord received notice that Penn-O-Tex had Kemp’s assets “tied up” and contacted Penn-O-Tex seeking unpaid rent.
- In an initial call, Penn-O-Tex’s agent indicated the affairs were disorganized and suggested rent checks would be sent.
- After the landlord threatened in writing to turn the matter over to an attorney, Penn-O-Tex replied that it was not operating or in possession of the stations and denied responsibility for rent.
- In a later call, Penn-O-Tex’s agent allegedly stated the company would “see that” the landlord received rent and would “take care of it” after consulting the head office.
- Rent was not paid; after returning home, the landlord promptly consulted counsel and sued.
- The landlord later notified Penn-O-Tex that he was reentering and taking possession under the leases due to nonpayment.

## Issues

1. Whether Penn-O-Tex’s alleged assurance to pay rent formed an enforceable contract supported by consideration, based on the landlord’s claimed forbearance or delay in suing.
2. Whether Penn-O-Tex’s collection and managerial involvement made it liable for rent as a party in possession or as an assignee of the leases.

## Decision

- The trial court rejected liability based on possession or lease assignment, but sent the contract theory to the jury.
- The jury found for the landlord on the contract theory.
- The trial court entered judgment notwithstanding the verdict for Penn-O-Tex, concluding no enforceable contract existed.
- The Minnesota Supreme Court affirmed, holding the record did not support a finding of bargained-for consideration.

## Legal Principles

- A promise is enforceable only if supported by consideration arising from a bargain or exchange, rather than an accidental, casual, or gratuitous assurance.
- Forbearance to sue can be consideration, including when shown by circumstantial evidence, but it must be bargained for or requested as part of the exchange.
- An inference of an agreement to forbear cannot rest solely on a creditor’s or landlord’s mere failure to sue immediately.
- A creditor’s involvement in a debtor’s business or collection of receivables does not, without more, make the creditor a tenant, assignee of the lease, or party in possession liable for rent.

## Conclusion

The court held that Penn-O-Tex’s statements about ensuring payment were not enforceable because the landlord’s delay in suing was not shown to be a bargained-for forbearance; without consideration, the alleged promise to pay rent could not support liability.


Baehr v. Penn-O-Tex Oil Corp., 258 Minn. 533, 104 N.W.2d 661 (Minn. 1960)