Opinion ID: 2027701
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Heading: Multiple Renewals of the Lease.

Text: Howard claims that the lease does not expressly provide for perpetual renewals and therefore, Schildberg is entitled to only one renewal. We have stated that [a]s a general rule, a general covenant to renew is satisfied by one renewal, unless further renewals are expressly provided for. Potter v. Henry Field Seed Co., 239 Iowa 920, 928-29, 32 N.W.2d 385, 390 (1948). However in a case involving a contract as opposed to a renewal provision of a lease, we held that where the intent of the parties to create a perpetual contract is clear, the contract is enforceable. City of Des Moines v. City of West Des Moines, 239 Iowa 1, 13, 30 N.W.2d 500, 507 (1948). In concluding that the perpetual contract at issue in City of Des Moines was valid, we analogized to perpetual leases noting that while such leases are not favored, they too are enforceable. Id. at 12, 30 N.W.2d at 506. Because perpetual leases are not favored, the intent to create one must appear in clear and unequivocal language. 50 Am. Jur.2d Landlord & Tenant § 1171, at 56 (1970). Courts that have enforced perpetual renewals of a lease have done so only where the perpetual nature of the lease is unmistakable. E.g., Blackmore v. Boardman, 28 Mo. 420, 420 (1859) (lease was renewable for another term of ten years and so on from time to time perpetually at the option of the [lessee]); Dixon v. Rivers, 37 N.C.App. 168, 245 S.E.2d 572, 574 (1978) (perpetual lease created where renewal provision stated that lease shall be renewable every 10 years for so long as [the lessees] desire); cf. City of Des Moines, 239 Iowa at 13, 30 N.W.2d at 506 (enforcing perpetual contract where agreement referred to defendant's perpetual use of the plaintiff's sewer facilities). The requirement that the parties' intent be unmistakable protects property owners from inadvertently leasing away their property forever. Lattimore v. Fisher's Food Shoppe, Inc., 313 N.C. 467, 329 S.E.2d 346, 348-49 (1985); see Farris v. Laurel Explosives, Inc., 797 S.W.2d 487, 490 (Ky.Ct.App. 1990) (lease not perpetual in absence of language that would place an ordinary person on notice). Thus, unless a lease uses language such as perpetual, in perpetuity or forever, [3] courts usually construe the lease as providing for only one renewal. E.g., Womack v. Hyche, 503 So.2d 832, 836 (Ala. 1987); Pults v. City of Springdale, 23 Ark. App. 182, 745 S.W.2d 144, 147 (1988); Lonergan v. Connecticut Food Store, Inc., 168 Conn. 122, 357 A.2d 910, 914 (1975); Krug v. Deering Implement Co., 239 Iowa 157, 164, 30 N.W.2d 729, 732 (1948) (dicta); Kilbourne v. Forester, 464 S.W.2d 770, 773 (Mo.Ct.App. 1970); McCreight v. Girado, 205 Or. 223, 287 P.2d 414, 419 (1955); cf. Farris, 797 S.W.2d at 490 (holding lease void rather than limiting to one renewal); Carolina Cable Network v. Alert Cable TV, Inc., 447 S.E.2d 199, 203 (S.C.1994) (holding contract to be terminable at will). But see Mackie v. Leonard Refineries, Inc., 372 Mich. 104, 125 N.W.2d 482, 484-85 (1963) (finding perpetual lease created by language that the automatic renewal provision of lease shall also be operative upon each and every renewal lease); President & Trustees of Ohio Univ. v. Athens Livestock Sales, 115 Ohio App. 21, 18 O.O.2d 78, 179 N.E.2d 382, 383 (1961) (finding perpetual lease based on language giving tenant right to occupy property on a year to year basis until terminated by the lessee). On the other hand, courts have refused to apply the one-renewal rule where two circumstances exist: (1) the lease clearly provides for multiple renewals and (2) the lease contains a condition, the occurrence of which terminates the right to further renewals. See, e.g., Cain v. Goldking Properties Co., 408 So.2d 1364, 1366 (La.Ct.App.1981) (refusing to limit renewals of a surface lease where lease would terminate when lessee no longer needs the surface location for its oil drilling operations); DeSantis v. Kessler, 83 A.D.2d 766, 443 N.Y.S.2d 485, 486-87 (1981) (one-renewal limitation not applicable because lease provided that ability to renew would terminate upon landlord's sale of the property). Courts have concluded that a lease which will terminate on a specified event, even when that event is indefinite, is not perpetual. Haeffner v. Green Fire Brick Co., 76 S.W.2d 122, 126 (Mo.1934) (where renewal of lease was limited by clause so long as paying minerals are found, renewals were not perpetual); Lewis v. State, 207 Mont. 361, 675 P.2d 107, 114 (1984) (lease allowing multiple renewals so long as an active mining operation is being carried on was not a perpetual lease); Hamblen County v. City of Morristown, 584 S.W.2d 673, 677 (Tenn.Ct. App.) (enforcing lease that would run so long as the [newly constructed high school] is used for educational purposes), cert. denied, 584 S.W.2d 673 (1979); see Department of Natural Resources v. Board of Trustees of Westminister Church, 114 Mich.App. 99, 318 N.W.2d 830, 833 (1982) (enforcing lease providing for multiple renewals so long as the property is used as a camp for boys and girls on rationale that the lease created a valid perpetual renewal clause). The underlying rationale of these cases is apparently that the one-renewal limitation is not necessary where the lease itself limits the number of renewals. We need not decide whether the language of the lease involved here evidenced an intent to create a perpetual lease. Even if the trust is correct that it did not, we think the one-renewal rule does not apply because Schildberg's right to additional renewals will end upon the occurrence of a condition specified in the lease. Our reasons for this conclusion follow. In deciding whether Schildberg is entitled to renew the lease more than once, our first task is to examine the lease to decide whether it allows multiple renewals. We think it clearly does. The renewal provision of the lease allows the lessee to renew the lease for additional terms  at the expiration of this Lease or a renewal thereof.  (Emphasis added.) The ability to renew at the end of a renewal term for additional terms shows that the parties contemplated multiple renewals. Becker v. Submarine Oil Co., 55 Cal.App. 698, 204 P. 245, 246 (1921). In addition, the lease allows Schildberg to terminate the lease or any renewal thereof, again suggesting multiple renewals. (Emphasis added.) Having concluded that the lease allows multiple renewals, we must consider whether the contract itself provides for termination of the renewal provision upon the occurrence of an ascertainable event. The lease says that the lessee may renew so long as the limestone or gravel deposit is not exhausted. Thus, renewals are not perpetual because the right to renew automatically terminates when the limestone and gravel are exhausted. Nevertheless, Howard argues that the exhaustion condition is entirely dependent upon the will of the trustees. He claims this condition will never be satisfied because absent permission of the [trustees], which will not be forthcoming under the same terms as existed in the October 1960 lease, Schildberg cannot quarry rock north of the river. Howard concludes, therefore, that the minerals will never be exhausted and therefore, the lease is perpetual. The trust's stated intention not to allow mining north of the river unless Schildberg agrees to new terms and conditions brings to the surface the real reason for this lawsuit. Carlton Howard's son, also one of the co-trustees of the trust, testified that the trust does not object to mining operations on the land north of the river. [4] Its objection is to mining operations at a royalty rate of ten cents per ton. We reject the trust's efforts to extricate itself from the bargain it struck. The trust's voluntary refusal to allow mining north of the river does not transform an enforceable lease into one that can be terminated at the will of the lessor. Where the intent of the parties is clear, we will not, under the guise of interpreting the lease, relieve one party of a bad bargain. [5] The intent here is clear. The lessee had the right under the lease to conduct mining operations until the limestone and gravel were gone, provided it was not in default under other terms of the lease. The lessee had discretion as to whether, when, where and how to conduct its operations with one exception. That exception was the discretion given to the lessor to decide whether mining would be conducted north of the river. We leave the parties with the bargain they made. [6]