Title: Wolin v. Walker

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Wolin v. Walker1992 WY 53830 P.2d 429Case Number: 91-189Decided: 04/28/1992Supreme Court of Wyoming
Michael WOLIN, Special 
Personal Representative of Morris Wolin,

Appellant 
(Defendant),

v.

William H. 
WALKER,

Appellee 
(Plaintiff).

 

Appeal from District 
Court, Laramie County, Edward L. Grant, J.

 

Bernard E. Cole 
and Donald A. Cole of Cole & Cole Law Firm, Cheyenne, for 
appellant.

Charles E. 
Graves of Graves, Santini & Villemez, P.C., Cheyenne, for 
appellee.

 

Before 
URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, 
JJ.

MACY, 
Justice.

[¶1]      Appellant Morris 
Wolin1 appeals from the lower court's 
judgment which ordered him to pay $11,080 to Appellee William Walker for breach 
of a lease and which dismissed his counterclaim for unpaid 
rent.

[¶2]      We modify in 
part, reverse in part, and remand.

[¶3]      Wolin raises the 
following issues:

Did the district court 
err in failing to hold that the Appellee's waiver and conduct constituted an 
effective modification of the lease agreement as to the Appellant[']s continued 
possession of the apartment?

Did the district court 
err in calculating damages for the removal of the underground storage tanks by 
ignoring the lease agreement provision setting forth said 
damages?

Did the district court 
err in failing to award damages to the Appellant for non-payment of rent for the 
months Appellee continued to occupy the leased premises?

[¶4]      Wolin owned what 
was once a Phillips 66 service station located at 601 East 16th Street in 
Cheyenne, Wyoming. He used the property as a part-time residence and as a 
used-car business known as Morris Auto Sales. The property consisted of a 
parking lot and a building. The building contained an office, an upstairs 
apartment, several service bays, and a garage/storage area. On September 15, 
1986, Wolin leased the property to Walker for the purpose of establishing a new 
used-car business known as the Car Corral. The term of the lease extended from 
September 1, 1986, through August 31, 1991. The lease required a $2,000 security 
deposit and a monthly rental payment of $1,200. Wolin excepted the apartment and 
the garage/storage area from the leased premises for a period of one year from 
the date of the lease, or until September 1987.

[¶5]      Walker entered 
the premises in accordance with the lease and began operating his used-car 
business. The relationship between Walker and Wolin was generally amicable. 
Walker facilitated the liquidation of Morris Auto Sales' inventory by allowing 
the leftover cars to remain on the lot until they were sold or disposed of by 
Wolin. Wolin paid Walker a commission for the cars which he sold. Walker also 
accommodated Wolin by accepting installment payments from Wolin's previous 
customers and by helping him to gain entrance into the apartment on several 
occasions when he lost his keys. Wolin, in turn, allowed Walker to use his shop 
tools and covered one-half of the utility bills.

[¶6]      The relationship 
between Walker and Wolin became strained as time progressed. Wolin failed to 
relinquish possession of the apartment and garage/storage area after one year as 
was required by the lease and continued to occupy the premises throughout the 
duration of Walker's tenancy. Wolin also persisted in purchasing used cars and 
offering them for sale from the Car Corral lot. Additionally, Wolin had the 
underground gasoline storage tanks removed from beneath the lot in February 
1989, thereby disrupting Walker's use of the lot for a period of two weeks. 
Walker viewed Wolin's actions as intrusions upon his leasehold interest, and he 
sought a reduction in rent as compensation. When it became apparent that Wolin 
had no intention of honoring his request, Walker began withholding rent to 
offset his alleged damages. Wolin responded by serving Walker with a notice to 
quit for failure to pay rent. Walker complied with the notice to quit and 
vacated the premises on January 30, 1990.

[¶7]      Walker 
subsequently filed a complaint, seeking $35,000 in damages from Wolin for breach 
of the lease. Wolin answered and counterclaimed for unpaid rent and property 
damage. Following a bench trial, the district judge found generally for Walker, 
ordering Wolin to pay a total of $11,080 in damages and dismissing Wolin's 
counterclaim. The damages were composed of $2,000 for the return of the security 
deposit, $2,500 for lost profits during February 1989, and $6,580 (28 x $235) 
for hold-over rent from September 1987 to January 1990. Wolin 
appeals.

[¶8]      Wolin's first 
claim is that the trial court erred in awarding $6,580 to Walker as compensation 
for the twenty-eight months that he occupied the apartment and garage/storage 
area beyond September 1987. Wolin argues that Walker waived his right to 
possession of the apartment and the garage/storage area by allowing him to 
remain on the premises beyond the September 1987 deadline. Wolin contends that 
the waiver effectuated an unwritten modification of the lease which, in essence, 
extended his initial one-year exception of the apartment and the garage/storage 
area from the leasehold premises through January 1990. We 
disagree.

[¶9]      Leases are 
contractual in nature. Automatic Gas Distributors, Inc. v. State Bank of 
Green River, 817 P.2d 441, 442 (Wyo. 1991). They are, therefore, governed by 
the tenets of contract law. A basic tenet of contract law is that a written 
agreement, when unambiguous, controls the intent of the parties. Bingham v. 
Boreing, 799 P.2d 284, 285 (Wyo. 1990); True Oil Company v. Sinclair Oil 
Corporation, 771 P.2d 781, 790 (Wyo. 1989). The lease in the instant case 
was unambiguous as it related to the nature and extent of Wolin's right to 
occupy the premises. It provided:

Landlord leases to Tenant 
the North 116' of West 20' of Lot 8, and North 116' of Lots 9, 10, and 11, Block 
424, City of Cheyenne, Wyoming, being a commercial building at 601 E. 16th 
Street, Cheyenne, Wyoming, with the exception that Landlord withholds unto 
himself the apartment and storage area located therein for a period of one year 
from the date of this lease.

(Emphasis 
added.) The lease also provided:

All negotiations, 
considerations, representations and understandings between the parties are 
incorporated herein, and may be modified or altered only by agreement in writing 
between the parties.

[¶10]   Absent the waiver and modification 
asserted by Wolin, the lease entitled Wolin to occupy the apartment and 
garage/storage area only until September 1987, at which time he was to vacate 
the premises and turn complete possession over to Walker. As this was not done, 
we must determine whether a lease with a no-unwritten-modification clause may be 
modified orally or otherwise and, if so, whether the trial court erred in 
determining that the lease was not so modified.

[¶11]   This court has previously 
acknowledged that the parties to a written agreement may orally waive or modify 
their rights under the agreement. Shauers v. Board of County Commissioners of 
County of Sweetwater, 746 P.2d 444, 448 (Wyo. 1987); Huang International, 
Inc. v. Foose Construction Company, 734 P.2d 975, 977-78 (Wyo. 1987). We 
have further indicated that an oral modification of a written agreement may be 
possible even when the agreement contains a no-unwritten-modification clause. 
Shauers, 746 P.2d  at 448 n. 3. The party asserting that a written 
agreement was modified by the subsequent expressions or conduct of the parties 
must prove so by clear and convincing evidence. See Huang International, 
Inc., 734 P.2d 975. The question of whether the alleged modification of the 
written agreement has been proved by the required quantum of evidence is one to 
be decided by the trier of fact. Strate v. Cambridge Telephone Company, Inc., 
118 Idaho 157, 795 P.2d 319, 323 (Ct.App. 1990). We will not reverse the 
decision of the trier of fact unless that decision is clearly erroneous or 
contrary to the great weight of the evidence. O's Gold Seed Company v. United 
Agri-Products Financial Services, Inc., 761 P.2d 673, 676 (Wyo. 
1988).

[¶12]   After hearing arguments, listening 
to witnesses, and examining the evidence, the trial judge determined that the 
parties remained bound by the express terms of their lease. He, therefore, 
ordered Wolin to pay $6,580 for occupancy of the apartment and garage/storage 
area from September 1987 to January 1990. Implicit in the trial judge's findings 
and order was the fact that Wolin failed to prove by clear and convincing 
evidence that the parties waived or modified the terms of their agreement, 
orally or otherwise.

[¶13]   Upon review of the record, we 
cannot say that the trial judge's determination was either clearly erroneous or 
contrary to the great weight of the evidence. The testimony, although 
conflicting, was certainly sufficient to warrant a conclusion that the parties 
did not waive or modify the lease terms. Walker testified that he repeatedly 
requested Wolin to either vacate the premises or, alternatively, reduce his 
rental obligation to compensate for Wolin's continued occupancy of the apartment 
and garage/storage area. Wolin corroborated Walker's testimony to the extent 
that the two men had discussed rent reduction. In light of this testimony, we 
fail to view the fact that Walker helped Wolin, a man in his eighties, in a 
variety of ways as constituting clear and convincing evidence of waiver or 
modification of the lease. The district court did not err in awarding $6,580 to 
Walker for Wolin's occupancy of the apartment and garage/storage area beyond 
September 1987.

[¶14]   We turn now to Wolin's second 
contention. Wolin argues that the trial judge erred in awarding $2,500 in 
damages to Walker for alleged lost profits resulting from the removal of the 
underground gasoline storage tanks. Wolin contends that the lease limited 
Walker's damages to a reduction in rent for the period of time during which the 
premises were untenantable. We agree.

[¶15]   In Article XI, Section 1 of the 
lease, the parties agreed upon the damages which would be available in the event 
unforeseen occurrences or governmental orders interfered with the physical 
possession of the leased premises. Article XI, Section 1 read as 
follows:

If during the lease term, 
said premises are destroyed, injured or damaged by fire, the elements, or other 
cause not the act of negligence of the Tenant, so as to be unfit for occupancy 
or if said premises are condemned, declared unsafe or directed rebuilt by a 
duly constituted governmental body, this lease shall cease and terminate, 
and the Tenant shall have surrendered possession of the premises to the 
Landlord; provided, however, if the injury or damage to, or the condition of the 
premises is such that the Landlord can and does restore the premises or comply 
with the governmental order within sixty (60) days of the happening of such 
event, this lease shall not be terminated, but the rent shall be suspended 
for that portion of the demised premises considered untenantable while such 
condition exists, and any rentals paid in advance and unearned shall be 
refunded.

(Emphasis 
added.) The business interruption experienced by Walker in the instant case 
resulted directly from a governmental order. The State determined that the tanks 
were a source of groundwater contamination and required that they be removed. 
The removal of the tanks disrupted Walker's physical possession of the leased 
premises for a two-week period. Therefore, absent some overarching 
consideration, the parties were bound by the terms of their agreement, and 
damages were limited to one-half of a month's rent, or 
$600.

[¶16]   Walker cites several cases which 
interpret the word "casualty" to argue that Article XI, Section 1 is 
inapplicable to the circumstances of this case. He asserts that the term 
"casualty" refers only to sudden mishaps, such as fire, flood, wind, and the 
like, which damage the leased premises. Even if we accept Walker's definition of 
the term "casualty," we fail to see how this would alter our interpretation of 
Article XI, Section 1 of the lease. The term "casualty" is nowhere employed in 
the substantive text of Article XI, Section 1. Article XI, Section 1 liquidated 
the damages recoverable under a broader set of circumstances than is encompassed 
in Walker's definition of the term "casualty." Article XI, Section 1 provided 
that the tenant's obligation to pay rent would be suspended for the period of 
time that the premises were temporarily untenantable due to (1) "fire, the 
elements, or other cause not the act of negligence of the Tenant"; or (2) 
governmental orders. The facts of the instant case fall well within the 
foregoing parameters.

[¶17]   We have recognized that contractual 
provisions which liquidate damages are valid and enforceable, unless the damages 
are punitive in nature or the provisions are contrary to public policy. See 
Jessen v. Jessen, 810 P.2d 987 (Wyo. 1991); Ray v. Electrical Products 
Consolidated, 390 P.2d 607 (Wyo. 1964); and Studer v. Rasmussen, 80 
Wyo. 465, 344 P.2d 990 (1959). See also RESTATEMENT (SECOND) OF PROPERTY 
§ 5.6 (1977). This court determines on a case-by-case basis whether or not a 
provision for liquidated damages is punitive in nature. Marcam Mortgage 
Corporation v. Black, 686 P.2d 575, 580-81 (Wyo. 1984). A liquidated damages 
provision is construed as being punitive in nature when the damages provided 
bear no reasonable relationship to the actual damages sustained. See Walker 
v. Graham, 706 P.2d 278 (Wyo. 1985).

[¶18]   Nothing in the record substantiates 
a claim that Article XI, Section 1 damages were punitive in nature. Although 
argued by Walker on appeal, no evidence was presented to the trial court which 
would justify a conclusion that Wolin knew prior to entering into the lease with 
Walker that the tanks were fouling groundwater and that they had to be removed. 
Article XI, Section 1 appears to be nothing more, or nothing less, than the 
parties' good faith estimation of what would be fair in the event that the 
premises became untenantable under circumstances beyond their control. We see no 
reason why the provision should not be enforced as it is written. Therefore, we 
hold that the district court erred in awarding $2,500 to Walker for lost 
profits. Article XI, Section 1 of the parties' lease limited the damages 
recoverable for removal of the tanks to $600. The district court is hereby 
directed to enter judgment in favor of Walker, and against Wolin, for the 
adjusted amount of $9,180 ($11,080 minus ($2,500 - $600)).

[¶19]   Wolin's final contention is that 
the trial court erred by dismissing his counterclaim for unpaid rent. He argues 
that the trial court acted inconsistently by awarding Walker a reasonable rental 
value of $235 per month through January 1990 while denying his claim for unpaid 
rent covering the same period of time. We agree.

[¶20]   Walker was obligated by the lease 
to pay a monthly rent of $1,200. The undisputed evidence before the trial judge 
was that Walker occupied the leased premises through January 30, 1990, and that 
he failed to pay rent for the months of December 1989 and January 1990. A 
dispute existed at trial, and continues to exist, concerning whether or not 
Walker paid rent for November 1989.

[¶21]   We perceive no reason in law or 
fact which would warrant the trial judge's recognition of Walker's possessory 
interest under the lease for the purpose of assessing rent to Wolin while 
failing to acknowledge Walker's corresponding duty to pay rent to Wolin for the 
leased premises. The district court's judgment dismissing Wolin's counterclaim 
is reversed, with directions that the amount of rent which Walker owes to Wolin, 
once determined, be offset against the $9,180 in damages awarded to 
Walker.

[¶22]   Modified in part, reversed in part, 
and remanded for proceedings consistent with this opinion.

Footnotes

1 Wolin filed 
his notice of appeal on July 15, 1991, and he died on January 7, 1992. Pursuant 
to W.R.A.P. 17.01, the court ordered that Michael Wolin, special personal 
representative of Morris Wolin, be substituted as the appellant.