Case ID: wis_157/html/0412-01.html
Source: Caselaw Access Project
Author: {"author": "Vinje, J. Keewiit, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Green Bay & Mississippi Canal Company, Respondent, vs. Kaukauna Gas, Electric Light & Power Company, Appellant, and another, Respondent. Same, Appellant, vs. Same, Respondents.
    
      May 4 —
    May 21, 1914.
    
    
      Public utilities: Acquirement by city: Liens: Assumption: Liability for unpaid rent: Landlord and tenant: Renewal term: Fixing rental: Arbitration: Accord and satisfaction: Interest on rental not paid when due.
    
    1. A municipality in which is a public utility operating under an indeterminate permit does not, in acquiring the property of such utility pursuant to secs. 1797»!. — 80 et seq., Stats. 1911, render itself liable for unpaid rent on a lease owned by such utility and acquired in the proceedings.
    2. The statute limits the municipality strictly to the acquisition of the property of the public utility, and while this would permit the assumption of valid liens thereon up to the amount of compensation fixed by the railroad commission, other existing obligations must be liquidated by the public utility.
    3. A lease of water for power at a rental of $6 per horse power per annum provided for a renewal for a second term of ten years at a rental to be fixed by arbitration. At the end of the original term no arbitrators were appointed, but the lessee continued for about three years to use the water and pay rent at the old rate, the lessor giving receipts in full for part of the time, and afterward receipts “on account.” Arbitrators were then by agreement appointed “to determine the annual rental which [the lessee] ought in justice to, and shall, pay to [the lessor] for said premises and power, during said renewal period,” specifying the entire ten-year term; and in making the next payment, prior to the award, the lessee stated that it was made subject to the terms of the arbitration agreement and that if the decision should establish a lower rental the lessor would be charged with the excess paid during the period covered by said agreement. Held, that these facts sustained a finding of the court that there was no accord and satisfaction as to the rent accruing prior to the arbitration agreement.
    4. In making their own independent investigation in this case the arbitrators were not guilty of misbehavior, but did only what the parties consented they might do.
    
      ■5. The lease provided in terms that the rent or any part thereof not paid when due should hear interest from the time it became due. The arbitrators found that the lessor was entitled to receive as rent during the renewal period $10 per horse power per annum, payable quarterly in advance according to the terms of the lease. It appearing that both parties were to blame for the delay in having the rental fixed and had proceeded upon the assumption that there would be an equitable accounting and adjustment when it should be fixed, it is held that the lessor was entitled to interest on the unpaid difference in the rent from the dates when it should have been paid bad the rental been fixed at the commencement of the renewal period. Keewin, J., dissents.
    . Appeals from a judgment of the circuit court for Outa-,gamie county: Johw Goodlamd, Circuit Judge.
    
      Modified, ■and affirmed.
    
    On the 1st day of October, 1901, the plaintiff leased to the Kaukauna Electric Light Company water equal to 100 horse ,power until October 1, 1907, at an annual rental of $600, payable quarterly in advance on the first days of January, April, July, and October in each year, with a provision that if rent was not paid when due it should hear interest at six .per cent, from that time till paid. The lease gave the lessor ■a first lien upon all buildings then or theretofore erected upon •certain lands where the lessee was to use the water. It also .provided for an option on the part of the lessee to renew the lease for eighty years from and after the 1st day of October, 1907, “in terms of ten years each, the rent for each succeeding ten years, if the parties are unable to agree, to be fixed •by arbitration, each party selecting one competent, disinterested, and impartial arbitrator, and if they are unable to ■agree, those two selecting a third like arbitrator, the written •decision of which three arbitrators, or any two of them, shall be binding upon the parties as to the amount of rental to be paid by the lessee to the lessor during the ensuing term of ten years.’’ Subsequently the Kaukauna Electric Light Company, with the consent of the lessor, assigned the lease to the defendant Kauhauna, Gas, Klectric Light & Power Company, hereinafter called the Kauhauna Company. The latter exercised its option to renew the lease for ten years from October 1, 1901, but the parties failed to agree upon the rental and failed to appoint arbitrators. In 1911 the city of Kauhauna began proceedings to acquire the property of the Kauhauna Company under the provisions of sec. 1797m — 80, Stats., and on or about January 1, 1912, took over its property. In the meantime the Kauhauna Company paid the plaintiff $600' per annum in quarterly payments as rqntal. In 1910 the parties entered into an arbitration agreement, each selecting an arbitrator, the two so selected, if unable to agree, to select a third, which they did, submitting to them “to determine, as arbitrators between said parties, the annual rent which the Kauhauna Gas, Electric Light & Power Company ought in justice to, and shall, pay to the Green Bay & Mississippi Canal Company as rent for said premises and power during said renewal period, to, wit, from the 1st day of October, 1907, to the 1st day of October, 1917.” The arbitrators did not meet till February, 1912, and the city of Kauhauna was also represented in the arbitration proceedings. The arbitrators found that plaintiff was entitleij. to-receive as rent during the renewal period the sum of $10 per horse power per annum, payable quarterly in advance according to the terms of the lease. Plaintiff brought an ac4tion to recover from the Kauhauna Company the difference between $6 per annum per horse power and $10 per annum per horse power from October 1, 1907, to January 1, 1912, with interest at six per cent, from the date when payment should have been made, and to foreclose its lien on the buildings located upon the lands mentioned. The court entered judgment in favor of plaintiff for the amount of principal due and interest from date of award, but not for interest from time quarterly payments were due, directed that execution issue against the defendant Kauhauna Company, and in case it is returned unsatisfied that the buildings be sold to satisfy tbe lien. Tbe defendant Kauhauna Company appealed from tbe judgment entered against it, and tbe plaintiff appealed because interest was not allowed from tbe time quarterly payments became due.
    Eor tbe defendant Kauhauna Cas, Electric Light & Power ■Company as appellant there were briefs by Nath. Pereles & Sons, attorneys, and Daniel W. Sullivan, of counsel, and oral argument by Mr. Sullivan.
    
    They contended, inter alia, ■that tbe city bad been substituted as lessee before tbe rent in question accrued, tbe award not baying been made until after tbe assignment; that an assignee is liable for all rent .accruing or payable during bis tenancy; and that there can he no apportionment of such rent; citing, among other authorities, Commercial PL. Co. v. Brill, 123 Wis. 638, 101 N. W. 1101; 18 Am. & Eng. Ency. of Law (2d ed.) 278, 361; 24 Oyc. 1169, 1176, 1177, 1180, 1370, 1371; 3 Elliott, Contracts, § 1867; Bowen v. PLashell, 53 Minn. 480, 55 N. W. •629; West Concord M. Co. v.-PLosmer, 129 Wis. 8, 107 N. W. 12; Jones, Land! & T. §§ 661, 667; M’Creesh v. Qeough, 7 Irish Rep. (Com. Law) 236; Sherman v. Cobh, 16 R. I. 82, 12 Atl. 232; PLegan M. Co. v. Cooh’s Adm’r, 22 Ky. L. Rep. 427, 57 S. W. 929; 1 Tiffany, Landl. & T. §§ 176, 181; Anderson v. Bobbins, 82 Me. 422, 19 Atl. 910, 8 L. R. A. 568; Marshall v. Moseley, 21 N. Y. 280; Dona-hoe v. Rich, 2 Ind. App. 540, 28 N. E. 1001; Logan v. Anderson, 2 Doug. 101; Smith v. Niver, 2 Barb. 180; Boyd v. Core, 143 Wis. 531, 128 N. W. 68; Kneeland v. Schmidt, 78 .Wis. 345, 47 N. W. 438; Martineau v. Steele, 14 Wis. 295; New Yorh v. Ketchum, 67 How. Pr. 161; Martin v. Martin, 7 Md. 368; Trash v. Graham, 47 Minn, 571, 50 1ST. W. 917; Graves v. Porter, 11 Barb. 592.
    Eor said defendant company as respondent there was a brief by Nath. Pereles & Sons, attorneys,' and Alex. L. Strouse, of counsel, and oral argument by Mr. Strouse.
    
    
      They argued that until the award the amount of rent due was unliquidated and could not have been approximately ascertained by the party chargeable with its payment, hence interest was not recoverable. Lay cock v. Parker, 103 Wis. 161, 79 1ST. W. 327; J. I. Oase P. Works v. Niles & 8. Go. 107 Wis. 9, 82 ET. W. 568; Remington v. E. R. Go. 109 Wis. 154, 84 ET. W. 898, 85 ET. W. 321; Ehrlich v. Brucker, 121 Wis. 495, 99 ET. W. 213; Lowe v. Ring, 123 Wis. 370, 101 ET. W. 698; 8haw v. Gilbert, 111 Wis. 165, 86 ET. W. 188; People ex rel. Cranford Go. v. Willcox, 207 ET. Y. 743, 101 ET. E. 174; Burke v. Sidra Bay Go. 116 Wis. 137, 92 ET. W. 568.
    Eor the plaintiff as appellant and respondent there were briefs by Hooper & Hooper, and oral argument by Moses Hooper.
    
    They argued, among other things, that the assignment of a lease by the lessee and the talcing of rent from the assignee by the lessor does not release the lessee unless the lessor accepts the assignee and releases the lessee. Bailey v. Wells, 8 Wis. 141, 157, 158; Lovejoy v. McCarty, 94 Wis. 341, 344, 68 ET. W. 1003 ; Martineau v. Steele, 14 Wis. 295;. Wineman v. Phillips, 93 Mich. 223, 228, 231, 53 ET. W. 168; Rees v. Lowy, 57 Minn. 381, 383, 384, 59 ET. W. 310. It was error to disallow interest from the dates when quarterly payments had been earned. Laycock v. Parker, 103 Wis. 161, 79 ET. W. 327; West v. M., L. S. & W. R. Go. 56 Wis. 318, 323, 324, 14 ET. W. 292; Crescent M. Go. v. Wasatch M. Go. 151 U. S. 317, 14 Sup. Ot. 348; Forrer v. Coff-man, 23 'Grat. 871.
   Vinje, J.

Several questions arise upon the appeal of the-defendant Kaukauna Company, the main one being whether it or the city of Kaukauna is liable to plaintiff for the unpaid rental of $4 per annum per horse power from October 1,. 1907, to January 1, 1912, being the difference between $6, the amount paid during this time by the defendant Kau- Jcauna Company, and $10, the amount found, to he due by the arbitrators. The Kaukauna Company contends that since the city had succeeded to its rights and had taken oyer its property at the time the arbitrators made their award, and had become the lessee of the lease, it became liable to plaintiff for the amount of the award; that liability did not accrue till the award was made August 14, 1912. It further contends that no liability exists against it because at the time the rent accrued it was not a party to the lease and it could not be enforced against it. A long argument with numerous citations of authorities is made on the liability of substituted lessees and as to the effect of assignment of leases upon the right of the lessor to recover against the assignee. In the view of the court this argument and these authorities do not reach the question here presented, which is substantially this: Does a municipality, in acquiring a public utility subject to the provisions of secs. 1797m — 80 et seq., Stats. 1911, render itself liable for unpaid rent on a lease owned by the utility and acquired in the proceedings ? . When the defendant Kau-kauna Company received an indeterminate permit it thereby agreed that the city of Kaukauna might acquire its property subject to the provisions of the Public Utility Law. That law, however, authorizes the municipality to acquire nothing but the property of the public utility. It does not authorize it to acquire the corporation itself or its obligations or to incur any indebtedness on account of any liability of the corporation. The statute limits the municipality strictly to the acquisition of the property of the public utility, and such was the scheme consented to by the Kaukauna Company when it received its indeterminate permit. It cannot now be heard to say that in acquiring such property the city also assumed an obligation to pay for rental of power used by it long before the city took over its plant. In acquiring such property the municipality must take it subject to any valid liens thereon up to the amount of compensation fixed by the railroad commission; but it does not assume a liability for any indebtedness arising out of tbe use of power furnished tbe public utility before it acquires tbe' plant. Sucb indebtedness must be liquidated by tbe public utility.

Erom October 1, 1901, to January 1, 1910, receipts in full were given by tbe plaintiff wben quarterly payments were made. Afterwards receipts “on account” were given. Tbe trial court found there bad been no accord and satisfaction and that tbe intent of both parties was that tbe payments of $6 per annum per horse power were on account, and if a larger sum was fixed by tbe arbitrators tbe Kaukauna Comr pcuny would pay tbe additional amount, and if a smaller sum tbe plaintiff would refund tbe difference. There is abundant testimony to support this finding. Tbe arbitration agreement dated November 14, 1910, was “to determine . . . tbe annual rent which tbe Kaukauna Gas, Electric Light & Power Company ought in justice to, and shall, pay to tbe Green Bay & Mississippi Ganal Company as rent for said premises and power during said renewal period, to wit, from tbe 1st day of October, 1907, to tbe 1st day of October, 1917.” December 11, 1911, tbe president of tbe Kaukauna Company wrote tbe plaintiff:

“Tbe rental payment by our company of $124 each month is made to you under tbe terms of - tbe arbitration agreement. If tbe arbitrators’ decision will be for a larger rental than $6 per horse power per annum, our company will be charged with tbe additional amount, and if tbe decision will establish a lower rental, your company will be charged with tbe excess paid during tbe period covered in tbe arbitration agreement.”

There is additional evidence in support of tbe court’s finding, but that here set out establishes beyond question that tbe parties did not regard tbe payments made as an accord and satisfaction.

We have carefully examined tbe evidence as to tbe alleged misbehavior of the arbitrators, and from such examination we are satisfied the conrt properly found that there was none. In making their independent investigation the arbitrators did nothing more than the parties consented they might do.

Upon the plaintiff’s appeal the question of whether it is entitled to interest upon the amount unpaid only from the time of the award, as the court adjudged, or from the time the quarterly payments should have been paid, is raised. The court found that plaintiff was not entitled to any interest on any of the instalments of rent till after the award of the arbitrators was made and forwarded to the parties. The lease provides, both as to the first period up to October 1, 1901, and for renewal periods, that the rent should become due and payable quarterly in advance, and that “in case said rent, or any part thereof, shall not be paid as and when the same become due and payable, the same shall bear and draw interest from the time it becomes due, till paid, at the rate of six per cent, per annum.” This provision of the lease, taken in connection with the arbitration, and the letter of the defendant Kaukauna Company above referred to, as well as the general conduct of the parties as shown by the evidence, quite clearly indicates that though the annual rental was not fixed in' amount until the award of the arbitrators was made, yet it was contemplated that, when fixed, an equitable accounting according to the terms of the lease would be made; that the delay in fixing the amount of rent should not operate to the disadvantage of either party, but that the settlement made would place each party in the same position it would have been in had the amount of rent been seasonably fixed and paid according to the terms of the lease. Both parties were to blame for the delay in having the amount of rent fixed. Each no doubt felt that an accounting at any time based upon the terms of the lease would not prejudice any one, and hence the long delay. The defendant Kaukauna Company has had the use of the money which it should have paid quarterly in advance and which the lease provides should draw interest at six per cent, if not so paid. There is nothing in the terms of the award to militate against the idea that interest should date from the time when the payments should have been made had the rent been fixed, for it says that the Kaulcauna Company and the city of Kaulcauna ought, respectively, for the period for which each is liable, in justice, to pay to the Creen Bay & Mississippi Canal Company as rent the sum of $10 per horse power per annum, payable quarterly according to the condition of the lease.

It is elementary that, in the absence of contract or of conduct evincing a contrary intent, interest is not chargeable upon an unliquidated claim. But parties may by agreement provide for interest on unliquidated amounts. They did so in this case by providing that any unpaid balance of quarterly rent should draw interest. The defendant Kaulcauna Company has had the use of this money. It was always within its power to demand and secure a determination of the amount of rental to be paid quarterly. Its failure to do so ought not to discharge it from the obligation to pay the interest provided for in the lease. In Laycock v. Parker, 103 Wis. 161, 181, 79 N. W. 327, the court says: “The rule of course is that the debtor should pay interest from the time when he ought to have paid the debt. That time may be fixed by agreement.” True, it was equally within the power of the plaintiff to demand and secure a determination of the amount of rental. But both parties neglected to do so. Both parties were aware of the conditions of the lease and must have understood that an award or agreement as to amount of rental when made would relate back and apply to the whole renewal period and put parties in the same situation, substantially, that they would have been in had the rental been fixed at the commencement of the renewal period. To do that, interest on unpaid balances of rent should be allowed plaintiff from the time they should have been paid had the amount of rent been fixed in advance. Tbe court, therefore, erred in allowing interest only from tbe time of tbe award. Tbe difference in sucb allowance from wbat should have been allowed is tbe sum of $598. This sum will be added to tbe judgment as of tbe date thereof, and as so modified tbe judgment is affirmed.

By the Court. — Judgment affirmed as modified. Tbe defendant will take nothing on its appeal.

Keewiit, J.

(dissenting). On plaintiff’s appeal I think tbe judgment should be affirmed.