E.J. Baehr (plaintiff) leased several gas stations to Kemp. Kemp assigned his accounts receivable from the gas stations to Penn-O-Tex Oil Corporation (Penn-O-Tex Oil) (defendant), which then began managing the finances of the gas stations. On December 28, 1955, Kemp informed Baehr that Penn-O-Tex Oil controlled Kemp’s assets. Baehr, who was out of town at the time, thereafter wrote to Penn-O-Tex Oil to demand rent and implied he would sue. In a subsequent phone conversation, Penn-O-Tex Oil told Baehr it would pay him the rent owed. The rent was not paid as promised. In April or May 1956, Baehr returned from out of town and promptly consulted a lawyer. On July 10, 1956, Baehr brought suit against Penn-O-Tex Oil for unpaid rents on grounds that Penn-O-Tex Oil had contracted to pay Baehr rent. Although the jury found in favor of Baehr, the district court granted Penn-O-Tex Oil’s judgment notwithstanding the verdict. Baehr appealed.