Case ID: so2d_274/html/0821-01.html
Source: Caselaw Access Project
Author: {"author": "BOUTALL, Judge. LEMMON, Judge", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charles L. HOLMES v. DAVIS-OGDEN, INC., and Silhouette Figure Form, Inc.
    No. 5274.
    Court of Appeal of Louisiana, Fourth Circuit.
    March 13, 1973.
    Rehearing Denied April 3, 1973.
    Earl B. Gray, Metairie, for defendant-appellant.
    Post & Blaize (Daniel A. Post), Metair-ie, for plaintiff-appellee.
    
      Before LEMMON, STOULIG and BOUTALL, JJ.
   BOUTALL, Judge.

This appeal involves a suit for rental payments and ad valorem taxes allegedly due under a written lease of immovable property.

The evidence consisted entirely of several factual stipulations and the following documents :

1. A lease of the subject property, dated July, 1967, from Charles L. Holmes to Davis-Ogden, Inc. for a term of ten years at the rate of $1,500.00 per month, in which the lessee further agreed to pay ad valo-rem taxes on the improvements.
2. A lease of the same property, dated December 12, 1968, from Holmes to Silhouette Figure Form, Inc. at the rate of $1,600.00 per month, “for a term of ten (10) years commencing on the first day of the calendar month succeeding the date the building addition to be constructed by the LESSEE ... is completely constructed and ready for use by LESSEE’S customers.”
3. An agreement, dated December 12, 1968 (the same day as the Holmes-Silhouette lease), between Holmes and Davis-Ogden to modify the 1967 lease, whereby Davis-Ogden took cognizance of the Silhouette lease and consented to Silhouette’s immediate entry onto the leased premises for the purpose of remodeling and reconstructing the improvements.
The parties further agreed that no rent or other consideration would be due by Silhouette to Davis-Ogden and that the 1967 lease would remain in full force and effect until the Holmes-Silhouette lease commenced in accordance with its terms, at which time the 1967 lease would be terminated and cancelled and the lessee released from further liability.
The agreement further provided:
“In no event shall this release be construed as releasing Davis-Ogden or said individuals for any liabilities which may accrue under said lease agreement dated July 3, 1967, which are attributable to the period prior to the date of cancellation of said lease as hereinabove set fourth.”
4. A letter from Silhouette to Holmes, dated April 23, 1969, agreeing to pay $100.00 per month from January 31, 1969 until the building addition was completed, and obligating itself to commence construction within thirty days, to cause the construction to be prosecuted diligently to completion, and to have the work completed so as to cause full rental under the lease to be payable not later than January 1, 1970.
5. A letter from Silhouette to Davis-Ogden, dated May 5, 1969, stating that construction had started that day, that the construction contract should be finalized that week, and that the contract should be finalized that week, and that the contract would call for completion within 120 days from the issuance of the permit. Stating further that unforeseen delays could hinder completion, Silhouette bound and obligated itself to cause construction to be prosecuted diligently to completion so as to cause full rental under the new lease to be payable by Silhouette not later than January 1, 1970.
6. A letter from Silhouette to Davis-Ogden’s attorney, dated November 11, 1969, commenting on the latter’s October 30, 1969 letter to Holmes (not in evidence).
Silhouette informed the attorney of its May letter to Davis-Ogden, from which no exceptions had -been communicated, and assured the attorney that Silhouette had made every possible effort to push the project to completion. Silhouette reiterated its commitment to assume lease payments by January 1, 1970, regardless of completion.

The following facts were also stipulated:

A. Davis-Ogden paid the rent due through October, 1969.
B. Davis-Ogden did not pay the rent for November or December, 1969, ' nor did it pay the ad valorem taxes for 1969, which were paid by Holmes.
C. Holmes received $100.00 per month from Silhouette from January 31, 1969 through December 31, 1969 and $1,600.00 per month thereafter.
D. Davis-Ogden did not become aware of the $100.00 monthly payments from Silhouette to Holmes until late October, 1969 at which time Davis-Ogden refused to pay any further rent under the 1967 lease.

Holmes sued Davis-Ogden and Silhouette for the November and December rental payments and the 1969 taxes. Davis-Ogden denied liability on the basis that Silhouette orally agreed to but did not commence construction immediately after execution of the December 12, 1968 agreement and did not diligently prosecute the construction to completion within a reasonable time. Davis-Ogden further asserted that Holmes, by accepting the $100.00 payments, acted in concert with Silhouette, condoned its unreasonable delays, and actually became Silhouette’s lessor and war-rantor against eviction. By reconventional demand, Davis-Ogden sought the return of all amounts paid since the modification agreement.

Silhouette’s answer alleged that after the December 12, 1968 agreement, it had diligently commenced work on plans and specifications, secured bids, completed construction and generally fulfilled its obligations under that agreement.

The trial court rendered judgment in favor of Holmes and against Davis-Ogden, further dismissing the suit as to Silhouette. Davis-Ogden appealed. The judgment as to Silhouette is now final, and the issues on appeal are only between Holmes and Davis-Ogden.

This controversy arose because neither the Holmes-Silhouette lease nor the modification agreement on the same date between Holmes and Davis-Ogden stipulated a fixed time by which Silhouette’s construction was to be completed. Apparently, both Holmes and Davis-Ogden became dissatisfied with Silhouette’s progress (or lack of progress), and this led to Silhouette’s letters on April 23 and May 5, setting a self-imposed deadline of January 1, 1970 for completion of construction. Davis-Ogden offered no objection to this deadline and continued paying rent for six months thereafter until it discovered Silhouette’s supplemental payments to Holmes (which in effect made Davis-Ogden the only party to the 1967 lease sustaining any loss from delays in completion of construction).

Davis-Ogden’s original obligation to pay rent for the entire ten year term of the lease was modified by the subsequent agreement, which (when read with the Holmes-Silhouette lease of which it took cognizance) expressly provided that the existing lease remained in effect until the Silhouette lease commenced after construction was completed. Construction was not completed until after January 1, 1970.

Davis-Ogden has not proved that any delay in completion was occasioned through any fault or willful conduct on Holmes’s part, nor has it advanced any theory under which Holmes would be liable for Silhouette’s failure to diligently perform the renovation within a reasonable time. Additionally there is no evidence showing what caused the delay in completion or, except for passage of time alone, that the delay might be unreasonable. Holmes is therefore entitled under the express terms of the agreement to collect the rent and taxes demanded. Since there was no third party demand against Silhouette, the question of whether Davis-Ogden had a cause of action for damages against that party is not before us.

The judgment is affirmed.

Affirmed.

LEMMON, J., dissented with written reasons attached.

LEMMON, Judge

(dissenting).

When Davis-Ogden and Holmes entered into the modification agreement, they provided for an earlier termination of the existing lease and intended to definitely set this termination at some fixed point in time. Instead of using a calendar date, they chose to fix the point in time by relation to an event which each expected to take place in due course. They did not refer to the event for the purpose of stipulating that the existing lease would terminate only if the event occurred, but rather for the purpose of fixing the termination date at the time the parties expected the event to occur. Stated otherwise, the parties referred to the event (anticipated to occur in due course) for the purpose of fixing the term of the contract and not for the purpose of imposing a condition into the contract.

Davis-Ogden and Holmes did not intend that the existing lease would terminate conditional upon the happening of an event, but rather intended that the existing lease would terminate at the time of the happening, which neither party then doubted would occur in due course.

Technically, the stipulated event was not “in the course of nature, certain.” However, since Davis-Ogden bargained for an earlier termination date and in return surrendered its right to use the premises, the parties certainly intended that the event would occur within a reasonable time. It is unreasonable to construe the intention of the parties to be that Davis-Ogden forfeited its right of occupancy for the remainder of its lease on the hope that the stipulated event would occur, particularly since it had absolutely no control over the occurrence of that event. I therefore believe that the modification agreement should be interpreted to provide (1) that the existing lease would terminate when (and not if) construction was completed AND (2) THAT THE CONSTRUCTION WOULD BE COMPLETED WITHIN A REASONABLE TIME. Of course, since the passage of a reasonable time is “in the course of nature, certain,” the event would constitute a term and not a condition of the contract.

This court in Warren Refrigerator Co. v. Cavallino, 218 So.2d 621 (La.App., 4th Cir. 1969), allowed a serious injustice by refusing to recognize that the parties obviously intended the stipulated event would occur within a reasonable time. Cavallino purchased refrigeration equipment necessary to reopen his supermarket, which had been damaged by fire. Because of his poor cash position, he bargained for and was granted a term for payment related to the reopening of the store, the first payment being due 30 days after reopening. Hurrican Betsy delayed the reopening, which took place within a reasonable time after the storm. In holding that the reopening was a condition of the contract, this court followed the literal wording of the Code but distorted the obvious intention of the parties. Certainly, the parties never intended that Cavallino would be obliged to pay for the equipment only if his store reopened. They used this event (which both assumed would occur within a reasonable time) to set the time for the first payment, intending that if the store never reopened, the first payment would nevertheless be due 30 days after what would have been a reasonable time for the reopening. The court in that case should have determined a reasonable time and set the due date of the first payment 30 days thereafter.

In the present case I believe the court should determine the point in time at which the stipulated event (completion of construction) would reasonably have occurred in due course and fix this point as the modified termination date intended by the parties. 
      
      . C.C. art. 2048 defines term as follows:
      “The time given or limited for the performance of an obligation, is called its term.”
      O.C. art. 2049 distinguishes condition from term:
      “A term may not only consist of a determinate lapse of time, but also of an event, provided that event be in the course of nature, certain; if it be uncertain, it forms a condition.”