Case ID: so2d_528/html/0584-01.html
Source: Caselaw Access Project
Author: {"author": "NORRIS, Judge. FRED W. JONES, Jr., Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

WALLER OIL CO., INC., Appellee, v. Loyd T. BROWN, d/b/a the Sound Company, Appellant.
    No. 19315-CA.
    Court of Appeal of Louisiana, Second Circuit.
    May 4, 1988.
    Fish, Montgomery, Robinson & Smith by Charles A. Smith, Minden, for appellant.
    Campbell, Campbell & Johnson by John T. Campbell, Minden, for appellee.
    Before JASPER E. JONES, FRED W. JONES, Jr., SEXTON, NORRIS and LINDSAY, JJ.
   NORRIS, Judge.

This is a suit for breach of a lease contract that was allegedly reconducted. The lessor, Waller Oil Co. Inc., sued the lessee, Loyd T. Brown, d/b/a The Sound Company, for damages due to a fire on the leased premises. Waller alleged that Brown failed to carry fire insurance, in violation of the lease. The case went to jury trial and yielded a verdict that Brown had breached a contractual duty and Waller had sustained damage as a result. Judgment was entered accordingly and Brown appeals, raising three issues:

(1) Whether the doctrine of reconduction applied to the case.
(2) Whether the lessor’s failure to notify the lessee promptly of default in the latter’s obligation to maintain fire insurance estopped the lessor from claiming damages.
(3) Assuming the lease was in effect and the insurance clause had not been waived, was the penalty for lessee’s-breach the cost of the insurance or the amount of the fire loss.

Finding merit in the first argument, we reverse.'

FACTS

In April 1978, Waller Oil Company executed a contract of lease with Brown, covering a portion of a commercial building in Minden. The lease had a term of seven years, from July 1, 1978 to June 30, 1985, at a monthly rental of $500. The lease also contained an option to renew for an additional seven years under the same terms and conditions. The lease further imposed on Brown the duty of procuring and maintaining fire and extended coverage insurance on the premises for its full insurable value during the time of the lease. Waller was obligated to notify Brown promptly and in writing of any default except payment of rent; upon notification, Brown would have 20 days to cure the default, after which Waller was authorized to effect the cure and charge the cost to Brown as part of the rent.

Sometime in June 1985, shortly before the contract was to expire, Brown telephoned Mr. Waller, president of Waller Oil, to inform him specifically that he would not exercise the option to renew. Waller admitted this and testified that it was not in the parties’ best interests for Brown to vacate immediately, as Waller planned to be out of state on business until September. After discussion, both parties agreed that Brown would continue to rent the premises for a term not exceeding three months. Brown asked if he would have to pay a higher rent; Waller said no. They therefore reached a verbal agreement whereby Brown would stay in the store at the same monthly rent he had been paying. No other provisions of the lease were discussed or settled. Three months later, in September, Brown again, telephoned Waller to say he had still not found a new location. Waller had not yet found a new lessee, so they verbally agreed that Brown would stay another month, through October. Once again, nothing was discussed except the term and the rent. On October 28, a fire engulfed the building, causing substantial damage. Brown was not at fault in causing the damage.

Waller learned that Brown was not-carrying fire insurance the day after the fire. An insurance agent testified he could have sold Brown fire insurance on the leased premises for the term of the lease. Waller also presented evidence concerning the cost of repairing the building and his legal expenses. At the time of trial, he had not repaired the building.

Brown testified he was not aware of the fire insurance clause in the original lease contract and that he never maintained the coverage. He also testified about his conversations with Waller in June and September 1985; his testimony was substantially the same as Waller’s. Other witnesses also testified about Brown’s intention not to renew the lease.

As noted, the jury found in response to special interrogatories that Brown had a duty under the lease to provide fire insurance and that Brown’s failure to do so made him liable for the property damage. The court entered judgment in favor of Waller for $16,500 for the cost of repairs, $500 for lost rent and $4,000 for attorney fees. Brown has appealed.

DISCUSSION

Brown’s first argument is that his lease was not reconducted at the end of June 1985. Tacit reconductidn is the continuation of a lease after the expiration of its term by operation of law. LSA-C.C. arts. 2688, 2689. In Ashton Realty Co. v. Prowell, 165 La. 328, 115 So. 579 (1928), the supreme court interpreted the principle of reconduction as follows:

[I]f both parties to the lease remain silent and inactive for the space of one month [one week, under art. 2689] after the expiration of the lease, they shall be presumed to have acquiesced in, and tacitly consented to, a renewal of the lease for another year [another month, under art. 2689], It has no application whatever when either party has clearly announced his intention not to renew the lease on the same terms or for a full year, for the purpose of the law is not to force a contract upon parties unwilling to contract, but merely to establish a rule of evidence, or presumption, as to their intention in the premises. 115 So. at 581.

We have closely examined the evidence in this case. It is abundantly clear that the parties were not “silent and inactive,” such as would activate the presumption of reconduction. Rather, toward the end of the term Brown communicated to his lessor that he would not renew the existing lease. Waller never denied he understood Brown’s intention to terminate the lease. This testimony from the parties themselves shows that both agreed that the old lease would expire. Aware that the written lease would have no effect, they reached an oral agreement as to the basic elements of a new lease: the thing leased and the price. LSA-C.C. arts. 2670, 2683. Later, they reached yet another new agreement. There would be little point in striking these new agreements unless the old one was considered abandoned. Furthermore, the term of the first new agreement was different from that of the typical re-conducted lease. The parties’ stated intent not to be bound by the expired lease, together with their consent to the new leases, undermines the jury’s implicit finding that the old lease was reconducted and that Brown was bound by it. This finding is manifestly erroneous. Arceneaux v. Domingue, 365 So.2d 1330 (La.1978).

Since Ashton Realty, supra, the courts have repeatedly held that evidence of intent not to renew the old lease circumvents the presumption of art. 2689 and renders it inapplicable. Prisock v. Boyd, 199 So.2d 373 (La.App. 2d Cir.1967); Misse v. Dronet, 493 So.2d 271 (La.App. 3d Cir.1986); Metzler v. Rising T Racing Stables, 461 So.2d 1219 (La.App. 1st Cir.1984); Rosedale Rental Inc. v. Fransen, 427 So.2d 620 (La.App. 5th Cir.1983); Eames v. Goodwin, 337 So.2d 909 (La.App. 3d Cir.1976). These cases reiterate that when one party expresses an intent not to renew, tacit recon-duction does not apply.

We are aware of the facts in other cases cited in brief that might arguably distinguish them from the instant case. For instance, in Rosedale Rental Inc. v. Fran-sen, supra, the lessors showed their intent not to reconduct by seeking judicial termination of the lease and eviction of the lessee. Such an expression of intent is strong and persuasive. In Kogos v. Lemann, 285 So.2d 548 (La.App. 4th Cir.1973), writ denied 288 So.2d 648 (La.1974), and Jacobi v. Toomer, 164 So.2d 610 (La.App. 3d Cir.1964), the original lease agreements contained clauses stating that if the lessee retained possession of the leased premises after expiration of the term, then reconduction would not occur. The parties’ stated intent was bound to be upheld. LSA-C.C. art. 1971. In the instant case, the parties’ intent was also clearly stated and admitted at trial. They agreed that the written lease would end on its termination date and not be renewed. LSA-C.C. art. 1906. Their will was expressed just as well by oral agreement as by the instigation of legal process or by written contract. The parties’ subsequent dealings were wholly independent of the lease agreement. The evidence in the instant case will not support the presumption of reconduction.

Becuase there was no reconduction, the parties are bound by the terms of their new agreement. As already noted, they had agreed on a thing and a price. LSA-C. C. art. 2670. Nothing more is necessary to the confection of a valid lease. There was no agreement as to fire insurance coverage. In the absence of such an agreement, the lessee is not liable for the loss. LSA-C.C. art. 2723; Gen’l Acc., Fire & Life Assur. v. Glenn, 261 So.2d 78 (La.App. 3d Cir.1972); Litvinoff, Smith’s Materials on the Louisiana Law of Sales and Leases (1st ed., 1978), 468. Furthermore, silence as to a particular issue in the agreement must be construed against the lessor. Exxon Corp. of Robichaux, 393 So.2d 224 (La.App. 1st Cir.1980), writ denied 397 So.2d 1358 (La.1981). This rule of interpretation would require imposing on the lessor, not the lessee, the burden of carrying fire insurance. Metzler v. Rising T Racing Stables, supra. Brown was not obligated under the new agreement to carry it.

In sum, Brown was not bound by the terms of the written contract, which would have obligated him to carry fire insurance but had admittedly expired. The original contract was not reconducted and the new contract did not impose the obligation on him. For these reasons, the jury’s verdict and the trial court’s judgment are reversed. The plaintiff’s claims are dismissed. Costs of appeal are assessed to appellee, Waller Oil Co. Inc.

REVERSED.

FRED W. JONES, Jr., J., dissents and assigns written reasons.

FRED W. JONES, Jr., Judge,

dissenting:

Under the reasoning of the majority, the lessor released the lessee from all obligations under the lease (except for payment of rent) simply because the lessee did not choose to remain on the lease premises another seven years. The essence of tacit reconduction is legally presumed continuation of the old agreement under all the same conditions except for duration. The “express intent to the contrary,” which is jurisprudentially required to defeat recon-duction, contemplates more than mere repudiating the original term of duration, as occurred here. Thus, in the absence of any evidence in the record tending to show either party’s desire to be free of any obligations under this lease except for the seven year term, the lessee’s continued occupancy tacitly reconducted the original agreement on a monthly basis.

According to Waller, prior to expiration of the written lease the lessee telephoned the witness and stated that he did not wish to exercise his option to renew the lease because he expected to sell his business in three or four months. Lessor voiced no objection to lessee remaining on the lease premises for that period of time. It was agreed that the lessee would continue occupying the building for three months, through September 1985, at the same rental. No other changes in the lease were discussed. The lessee contacted the lessor again in late September, requesting that he be allowed to remain for an additional month. The lessor agreed.

Defendant Brown testified concerning his lack of knowledge about the insurance clause in the lease and his consequent failure to procure that insurance. His testimony concerning his expressed intent not to renew the lease and remaining on the premises on a monthly basis after the expiration was substantially the same as Waller’s.

After considering the evidence, the jury answered affirmatively to the following interrogatories:

1) Did defendant Loyd T. Brown have a duty under a lease agreement to provide fire insurance on the building owned by plaintiff, Waller Oil Co., Inc.?
2) If so, did the failure of the defendant to provide fire insurance cause defendant to be liable to plaintiff for the damage resulting from the fire?

Tacit reconduction of a lease is a continuation of the lease after the expiration of its term by operation of law. In Louisiana, tacit reconduction requires that the lease has expired, that the lessee remain in possession for more than one week, and that the lessor consent to the lessee remaining in possession or not have given notice to vacate. La.C.C. Art. 2689; 39 Tulane Law Review 798, 813-814; Governor Claiborne Apartments, Inc. v. Attaldo, 256 La. 218, 235 So.2d 574 (1970); Misse v. Dronet, 493 So.2d 271 (La.App. 3d Cir.1986).

The reconducted lease is a continuation of the original lease under the same terms and conditions except that the fixed term or period of duration of the old lease is voided and the reconducted lease is considered to be by the month. Comegys v. Shreveport Kandy Kitchens, 162 La. 103, 110 So. 104 (1926); Weaks Supply v. Werdin, 147 So. 838 (La.App. 2d Cir.1933).

A lease is presumed to be reconducted on a monthly basis if the lessee continues in possession for more than one week beyond the term of the lease. The purpose of this presumption is not to force a contract upon unwilling parties, but merely to establish a rule of evidence, or presumption, as to their intention when a contrary intent has not been expressed. The presumption is inapplicable, however, in the face of a clear intention of the parties to the contrary. Ashton Realty Co. v. Prowell, 165 La. 328, 115 So. 579 (1928); Prisock v. Boyd, 199 So.2d 373 (La.App. 2d Cir.1967); Talambas v. Louisiana State Board of Education, 401 So.2d 1051 (La.App. 3d Cir.1981); Eames v. Goodwin, 337 So.2d 909 (La.App. 3d Cir.1976); Jacobi v. Toomer, 164 So.2d 610 (La.App. 3d Cir.1964); Kogos v. Lemann, 285 So.2d 548 (La.App. 4th Cir.1973), writ refused 288 So.2d 648 (La.1974).

In Kogos v. Lemann, supra, and Jacobi v. Toomer, supra, the leases contained clauses providing that retention of possession of the leased premises by lessee with lessor’s permission beyond the expiration of the term would not reconduct the lease. The courts therefore found that the presumption of reconduction was rendered inoperable by this clearly expressed intention to the contrary.

In several of the cited cases, one of the parties to the lease was seeking to end the contractual relationship altogether after the expiration of the lease. In Prisock v. Boyd, supra, evidence that the landlord did not intend to renew the original lease or create a new lease with the tenant, and that the tenant had notice of this within 30 days of the expiration of the lease, supported a finding that tacit reconduction had not occurred.

Similarly, in Ashton Realty Co. v. Prowell, supra, our Supreme Court found the lessee’s remaining on the premises beyond the expiration of the lease had not recon-ducted the lease where the lessor sued the lessee to obtain possession of the premises after giving him notice to vacate.

Eames v. Goodwin, supra, upon which defendant relies, was an eviction action in which the court held that the predial lease, which had been reconducted twice previously, was not subject to reconduction a third time when the landowner terminated the lease by verbally notifying defendants in advance of expiration that he intended to farm his tract the following year.

In Rosedale Rental, Inc. v. Fransen, 427 So.2d 620 (La.App. 5th Cir.1983), another eviction suit, the continued occupancy of the premises by the lessee was held not to constitute reconduction since the lessor had obtained a judgment terminating the lease and ordering the lessee evicted. He failed to enforce the judgment, however, and a new monthly lease was created when he allowed the lessee to remain for two and one half years.

Divincenti v. Redondo, 486 So.2d 959 (La.App. 1st Cir.1986) is another case in which the court concluded the lease was not continued through reconduction when the lessee remained in possession after expiration. There, the parties had unsuccessfully attempted to negotiate a new lease during the final month of the primary term. The negotiations involved terms which were substantially different from those in the original lease. This was also an eviction action, and although there was no formal demand to vacate, the court found the negotiations to be clear evidence of an intent not to continue the lease under the same terms.

Furthermore, in Misse v. Dronet, supra, the third circuit affirmed the trial court’s determination that a month to month continuation of the prior agreement constituted reconduction. Significantly, special note was taken of the fact that the same rent was paid during the “hold-over” period as had been paid under the original agreement. In contrast, see Maxwell, Inc. v. Mack Trucks, Inc., 172 So.2d 297 (La.App. 4th Cir.1965), writ refused, 247 La. 717, 174 So.2d 131 (1974), where, after the expiration of a written lease, the owner and lessee of the premises agreed orally to a short extension on different terms (different rental and portion of premises subject to lease was changed) and acted under such agreement. The court there found that the lessee had not remained in possession after the expiration of the term within the meaning of the lease, and thus reconduction had not occurred.

The lessee in Talambas v. Louisiana State Board of Education, supra, was not in actual possession of the leased premises beyond the expiration date of the lease. In that case, the Louisiana State Board of Education entered into a series of agreements with plaintiff to lease a meat processing facility in which to conduct vocational training for meat cutting. The meat cutting course lasted six months, and at the end of each term the school closed. As each new class was organized, a new lease was signed.

On the final day of the last lease contracted by the parties, the instructor told the lessor that he would not return as an instructor, but that he thought a new instructor would arrive for the next class. This instructor locked the doors of the building before leaving and kept the keys. Furniture and equipment belonging to the school were left in the building. When a new instructor did not arrive after some time, the lessor began trying to find out if the lessee planned to sign a new lease, so that if not, he could rent to another. The lessor allowed the building to remain unused for some 36 months, after which he filed an action for damages for loss of use and deterioration of the building.

The third circuit reversed the lower court’s finding that the lease had been tacitly reconducted by defendant’s continued possession of the premises after the lease expired. Agreeing with the lower court’s determination that the lessee had remained in possession after the lease expired, the court held that the evidence did not support the presumption that the parties had intended the lease to continue month to month for 36 months, in view of the fact that the longest period of time previously elapsing between leases was 20 days, and defendant had not paid any rent after the expiration of the last six month lease.

In contrast to these cases, a finding of reconduction in the present cause does not operate to force a contract on anyone, as both parties obviously desired that the contractual relationship continue on a monthly basis after the expiration of the term. The record is devoid of any evidence supporting an intention on the part of either party to change any terms of the written lease except for the 7 year term.

Moreover, in Garner v. Perrin, 403 So.2d 814 (La.App. 2d Cir.1981), this court held that a written lease continued (was reconducted) on a month to month basis where the record did not support a conclusion that the lessor opposed possession of the leased premises by the tenant during the week after the lease expired.

In light of this jurisprudence, it appears that where a fixed-term lease expires and the lessee without opposition continues to occupy the premises for more than a week, and there is no evidence of an intent by either party to change any provision of the lease other than its duration, the lease is réconducted. Consequently, I would hold that the lease in this case was reconducted or continued with its same conditions, except for the term.

For these reasons, I respectfully dissent. 
      
      . Brown testified he wanted to take the premises only until he could find a new location, but ultimately their understanding was for three months.
     
      
      . Art. 2688. Reconduction of lease of predial estate by continued possession after expiration of term
      If, after the lease of a predial estate has expired, the farmer should still continue to possess the same during one month without any step having been taken, either by the lessor or by a new lessee, to cause him to deliver up the possession of the estate, the former lease shall continue subject to the same clauses and conditions which it contained; but it shall continue only for the year next following the expiration of the lease.
      Art. 2689. Reconduction of lease of house or room by continued possession after expiration of term
      If the tenant either of a house or of a room should continue in possession for a week after his lease has expired, without any opposition being made thereto by the lessor, the lease shall be presumed to have been continued, and he can not be compelled to deliver up the house or room without having received the legal notice or warning directed by article 2686.