Case Name: THE CITY OF NEW YORK v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1953-07-13
Citations: 125 Ct. Cl. 576
Docket Number: No. 49413
Parties: THE CITY OF NEW YORK v. THE UNITED STATES
Judges: MaddeN, Judge; Whitaker, Judge; Littleton, Judge; and JoNes, Chief Judge, concur.
Reporter: United States Court of Claims Reports
Volume: 125
Pages: 576–585

Head Matter:
THE CITY OF NEW YORK v. THE UNITED STATES
[No. 49413.
Decided July 13, 1953.]
Mr. Nathan Brilliant for the plaintiff. Mr. Denis M. Hurley, Mr. Harry E. O^Donnell, and Mr. Reuben Levy were on the brief.
Mr. Herbert Pittle, with whom was Mr. Assistant Attorney General William Amory Underhill, for the defendant.

Opinion:
Howell, Judge,
delivered the opinion of the court:
On or about July 28, 1942, the defendant leased from the plaintiff 335,747 square feet of cold storage space on four floors in the Bronx Municipal Terminal Market in the City of New York, under a lease which provided that 252,123 square feet on three floors were to be used for "cooler" storage, with temperatures ranging from 20 to 40 degrees Fahrenheit and that 83,624 square feet on one of the floors were to be for "freezer" storage, with temperatures ranging from zero to 20 degrees Fahrenheit. The defendant took possession of the leased premises on August 15, 1942, and "cooler" space was duly furnished on the third, fourth and fifth floors and "freezer" space was provided on the sixth floor.
The rental fixed in the lease was at the rate of $270,000 per annum and was computed at the rate of $1.50 a square foot for "freezer" space, and $1.00 a square foot for "cooler" space, both less 28 percent allowance for aisle space. This difference in rent of 50 cents per square foot was admitted to be fair and reasonable. Although exact computation of the aggregate rental at such rates provided for a total annual rent of $271,813.48, the parties adopted the figure of $270,000.
Defendant thereafter required additional "freezer" storage space, and requested the plaintiff to furnish the same for the 83,772 square feet on the fifth floor of the leased premises, in place of the "cooler" space then being furnished on that floor, as provided in the lease. Such additional "freezer" space was duly furnished by the plaintiff for the periods from January 1,1944, to April 30,1944, and from December 19, 1945, to January 31, 1946 — a total of five months and thirteen days.
The rental difference between "cooler" and "freezer" space for the area so occupied amounted to $13,619.71 for the periods above specified. Upon the refusal of the Government to pay this additional amount, plaintiff instituted this suit for that amount plus interest.
The lease, which had been prepared by the defendant contained the following provisions:
2. The City hereby leases to the Lessee, for general and cold storage warehousing of nonhazardous commodities, that portion of the Bronx Municipal Terminal Market situated at Exterior Street and East 151st Street, Borough of The Bronx, described as follows:
(a) The entire third, fourth, fifth, and sixth floors, which include approximately 335,747 square feet of "cooler and freezer" storage space as hereinafter specified;
3. The City hereby agrees:
(a) That approximately 252,123 square feet on three of the floors specified in.subparagraph (a) of paragraph 2 hereof, shall be maintained as "cooler" storage space at temperatures ranging from twenty to forty degrees F ahrenheit.
(b) That approximately 83,624 square feet on one of the floors specified in subparagraph (a) of paragraph 2 hereof, shall be maintained as "freezer" storage space at temperatures ranging from zero to twenty degrees Fahrenheit.
íjí *1»
5. The City shall, during the term of this lease and any renewal thereof, as a part of the rental consideration :
(a) Operate and maintain the power plant to provide such "cooler and freezer" temperatures in all refrigerated rooms as may be from time to time specified by the Lessee and will upon request by the Lessee, furnish as low temperature as the piping and equipment as now installed in any room will presently produce;
Defendant contends that section 2 (a) of the lease obligated plaintiff to furnish approximately 335,747 square feet of "cooler and freezer" storage space as "hereinafter specified," and that paragraphs 3 (a), 3 (b), and 5 (a) particularized the obligation of 2 (a). Under these provisions, especially 5 (a), the defendant urges that it was within its rights in demanding "freezer" space on "cooler" floors since the plaintiff lessor was obligated to furnish as low temperature as the "piping and equipment as now installed in any room will presently produce." Since no change of equipment was required to produce the lower temperatures on the fifth floor, defendant states that the plaintiff in furnishing the added "freezer" space was doing nothing more than was required under the lease.
Plaintiff says that under the terms of the lease it was not required upon defendant's demand to furnish the more costly "freezer" space on what had originally been designated as "cooler" floors without additional rent. Plaintiff states that this conclusion is particularly apt when it is remembered that the rental value of "freezer" space was concededly higher, and, the rental reserved in the lease agreement was predicated upon the difference in value of the respective spaces.
Defendant urges that paragraph 5 (a) of the lease is couched in plain language and hence requires no judicial construction. This is true, but when placed alongside the other provisions of the lease it creates an ambiguity of sufficient proportion to require construction by the court. When each provision of the lease here pertinent is looked to apart from the whole, one gathers that under 3 (a) and 3 (b) "cooler" space is to be provided on three floors and "freezer" space on only one floor. Paragraph 5 (a) by itself leads one to the conclusion, as the defendant urges, that the plaintiff could be required to provide "freezer" space on all floors or any number thereof.
However, the interpretation which defendant places upon paragraph 5 (a) would render the whole instrument meaningless since at any time upon request plaintiff could have been required to furnish "freezer" space instead of "cooler" space in all the refrigerated rooms embraced within the lease. For example, defendant might have discovered after entering into the lease that it had no need at all for "cooler" space and requested plaintiff to furnish "freezer"space upon the whole of the third, fourth and fifth floors of the leased premises. In the event that the equipment installed in the rooms on those floors was capable of producing such lower temperatures, could the defendant then maintain that it was entitled to receive this more expensive service under the provisions of paragraph 5 (a) of the lease? We think not.
To resolve this apparent ambiguity we look to the intention of the parties which is to be gathered not from a reading of paragraph 5 (a) alone, but from the whole instrument in the light of the circumstances existing at the time of its negotiation. Loftis v. United States, 110 C. Cls. 551, 628 and cases there cited.
When the defendant requested the additional 83,772 square feet of "freezer" space on the fifth floor of the leased premises in place of "cooler" space then being furnished, plaintiff expected to be paid the increased differential accordingly. Defendant now says the plaintiff did not protest against furnishing this freezer space without the additional rent differential at the time defendant first made its request. Plaintiff proceeded to furnish the service without question and included the increased rentals in its monthly bills. Under the lease and the circumstances we think plaintiff proceeded as any reasonable person would have done. The service was requested, duly furnished and plaintiff had a right to believe it would be paid on the basis of the higher rates applicable to "freezer" space.
By the terms of the lease as well as the admission of the parties it was recognized that there was a fair and reasonable differential in rent of 50 cents per square foot of "freezer" space over "cooler" space. A letter from an official of the plaintiff to the Government (Finding 4) clearly discloses that the rental was computed upon the basis of the difference in charges between "freezer" and "cooler" space. Upon this feature of the lease, there was a complete meeting of the minds of the parties. Thus, it is quite apparent that the defendant intended at the time of the execution of the lease to pay for the "freezer" space at the greater rate. In the face of this clear intention, we believe that the ambiguity created by section 5 (a) must be resolved in favor of the plaintiff. So applied, it leads to the conclusion that the low temperature which was to be required under 5 (a) was to be the lowest temperature possible with the then installed equipment within the 20 to 40 degree range on the three designated "cooler" storage floors and within the zero to 20 degree range on the one designated "freezer" storage floor. In view of the clear intention that a price differential was to exist, it would be unreasonable to apply 5 (a) in such a way as to make utterly meaningless this designation of "cooler" and "freezer" storage floors.
Plaintiff is entitled to recover and judgment will be entered in the plaintiff's favor in the sum of $13,619.71. No interest on this amount is allowable. United States v. N. Y. Rayon Importing Co., 329 U. S. 654, 658; 28 U. S. C. (Supp. III) § 2516.
It is so ordered.
MaddeN, Judge; Whitaker, Judge; Littleton, Judge; and JoNes, Chief Judge, concur.
FINDINGS OF FACT
The court makes findings of fact, based upon the stipulation of the parties, the briefs and arguments of counsel, as follows:
1. The plaintiff is a municipal corporation duly organized and existing under and by virtue of the laws of the State of New York.
2. At all times pertinent, the plaintiff was the owner of premises known as the Bronx Municipal Terminal Market in the City of New York.
3. On July 28, 1942, the defendant, acting through the Agricultural Marketing Administration, United States Department of Agriculture, by authority derived from Executive Order 9069, dated February 23,1942, 7 F. E. 1409, issued pursuant to 50 U. S. C. App. § 601-11, entered into a lease with the plaintiff for cold storage space in part of the market. The lease is described as Contract No. DA-ASM-14. The lease was prepared by the defendant and its execution was duly authorized.
4. The lease provided for a term beginning August 15, 1942, and ending June 30, 1943, and provided further that at the option of the United States, the lessee, the lease shall thereafter be automatically renewed from year to year (each renewal for a period of one year) for not more than five renewals. The lease provided also for a rental of $237,338.77 for the first 10y2 months and for a rental of $270,000 per annum for each yearly renewal. The basis for this figure was contained in a letter of June 4, 1942 from the Department of Markets of the City of New York to the Agricultural Marketing Service of the Department of Agriculture which set forth the following:
PEE ANNUM
Cooler storage, 252,123 sq. ft. @ $1.00_$252,123. 00
Freezer storage, 83,624 sq. ft. @ $1.50_ 125, 436.00
377, 559. 00
Less 20% aisle space_ 75,511.80
302, 047.20
The 20% allowance for aisle space was increased to 28% in the lease which reduced the above total figure to $271,843.48 from which the parties adopted the figure of $270,000.00.
5. The United States occupied the premises under the lease and renewals from August 15, 1942, until February 1, 1946, on which date the lease was amended.
6. The premises were leased for general and cold storage warehousing of nonhazardous commodities and the portions of the market leased were described in paragraph 2 of the lease as follows:
(a) The entire third, fourth, fifth and sixth floors, which include approximately 335,747 square feet of cooler and freezer storage space as hereinafter specified;
7. By paragraph 3 of the lease, the plaintiff agreed as follows:
(a) That approximately 252,123 square feet on three of the floors specified in subparagraph (a) of paragraph 2 hereof, shall be maintained as cooler storage space at temperatures ranging from twenty to forty degrees Fahrenheit.
(b) That approximately 83,624 square feet on one of the floors specified in subparagraph (a) of paragraph 2 hereof, shall be maintained as freezer storage space at temperatures ranging from zero to twenty degrees Fahrenheit.
8. Paragraph 5 (a) of the lease provided:
The City shall, during the term of this lease and any renewal thereof, as a part of the rental consideration:
(a) Operate and maintain the power plant to provide such cooler and freezer temperatures in all refrigerated rooms as may be from time to time specified by the Lessee and will, upon request by the Lessee, furnish as low temperature as the piping and equipment as now installed in any room will presently produce; .
9. The defendant was in continuous possession of all that part of the premises described in the lease for the full period from January 1,1944, through January 31,1946.
10. The plaintiff did furnish and maintain 252,123 square feet of space on the third, fourth and fifth floors as cooler storage space at temperatures ranging from 20 degrees to 40 degrees Fahrenheit for the entire term of the defendant's occupancy, except that it maintained freezer temperatures on the fifth floor at the request of the defendant for periods hereinafter set forth.
11. Freezer storage space was duly maintained at temperatures ranging from zero to 20 degrees Fahrenheit by the plaintiff for the 83,624 square feet of space on the sixth floor during the entire term of the defendant's occupancy.
12. Paragraph 8 of the lease contemplated that cooler storage space at temperatures ranging from 20 degrees to 40 degrees Fahrenheit only was to have been furnished on the third, fourth and fifth floors of the market.
13. Paragraph 5 (a) of the lease obligated the plaintiff to operate and maintain the power plant and to provide cooler and freezer temperatures in all refrigerated rooms as may be from time to time specified by the lessee and upon the request of the lessee to furnish as low temperature as the piping and equipment as installed in any room would produce.
14. On or about December 18,1943, the defendant requested the plaintiff to provide an additional 88,772 square feet of freezer storage space on the fifth floor instead of the cooler storage space.
15. Freezer storage space was provided by the plaintiff for the defendant for the fifth floor of the market for the periods from January 1,1944, to April 30,1944, and from December 19,1945, to January 31,1946, for a total of five months and thirteen days.
16. The freezer storage space was furnished at the specific instance and request of the defendant.
17. The rental provided in the lease to be paid between January 1, 1944, and January 31, 1946, was at the annual rate of $270,000 for the entire space so leased.
18. The rental provided to be paid was charged for 252,123 square feet of cooler storage space and 83,624 square feet of freezer storage space. As a necessary incident to the use of that space, the lease also provided for the use by the defendant of all of the other space, facilities and services enumerated.
19. The rental was computed by the plaintiff at, and was based upon, the rate of $1.50 per square foot, less 28 percent for aisle space for freezer storage space and $1.00 per square foot, less 28 percent for aisle space for cooler storage space.
20. The fair and reasonable rental value of freezer storage space during the aforementioned period was $1.50 per square foot, less 28 percent for aisle space.
21. The fair and reasonable rental value for 83,772 square feet of freezer storage space for the aforementioned period was $125,658, less 28 percent for aisle space or a net rental of $90,473.76 per annum, or $7,539.48 per month.
22. The fair and reasonable rental value of 83,772 square feet of cooler storage space was $83,772 per annum, less 28 percent for aisle space or a net rental of $60,315.84 per annum, or $5,026.32 per month.
23. The fair and reasonable rental value of freezer storage space was 50 cents per square foot per annum, less 28 percent for aisle space, more than cooler storage space.
24. The fair and reasonable rental value of 83,772 square feet of freezer storage space was $41,886 per annum, less 28 percent for aisle space, more than the rental value of a similar number of feet for cooler storage space, leaving a net annual difference of $30,157.92 per annum, or $2,513.16 per month.
25. The plaintiff furnished freezer storage space for the defendant at its request for a total of five months and thirteen days on the fifth floor of the market.
26. The defendant paid the rental for all space as originally provided for in the lease.
27. The parties agreed that if the defendant is obligated to pay additional rental for the additional freezer storage space furnished on the fifth floor of the market for five months and thirteen days, the amount would be $13,619.71.
CONCLUSION OK LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes that as a matter of law the plaintiff is entitled to recover, and it is therefore adjudged and ordered that it recover of and from the United States thirteen thousand six hundred nineteen dollars and seventy-one cents ($13,619.71).