Court Opinion

ID: 9663740
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:49:34.236495+00
Date Added: 2024-06-11T18:14:55.831740
License: Public Domain

Levin, P. J.
(dissenting). The lease entered into between the university and the married students contains the following provision:
"The University reserves the right to revise rental rates upward or downward during the term of this lease. In the event of a rent adjustment, the lessee will *192be given a sixty-day notice of the increase prior to implementation.”
It would be surprising to find in an ordinary lease a provision reserving to the landlord the right unilaterally to increase the rent unlimited by an explicit standard, such as the occurrence of an increase in taxes or in the cost of living, or the like.1
This is not, however, an ordinary lease. The landlord is not an ordinary landlord. The landlord is the University of Michigan. The tenants are married students enrolled at the university. What would be extraordinary in an ordinary lease is not at all surprising in this lease. Because of the special relationship between the landlord and its students, students signing the lease could justifiably repose special confidence in the landlord not to take advantage of the absence of an explicit standard.
That special confidence, sought and exacted by the university when it prepared a lease containing such an unusual prerogative, carries with it a duty to exercise the prerogative in a manner within the contemplation of the parties — both parties.
The meaning of this language reserving a right to increase rents should be determined in the light of all the circumstances. In my opinion this language does not authorize a rent increase to defray the cost of an extraordinary, unprecedented, and, insofar as the university was concerned, voluntary expenditure.
*193A lease is a contract as well as a conveyance,2 and ordinary rules of contract interpretation apply.3
Axiomatic among these is the rule that the task of the court is to ascertain the intention of the parties.4
In seeking the intention of the parties, reasonableness is the touchstone of interpretation:
"It is quite possible for two parties to make a valid contract that seems unfair or unreasonable or even absurd to other people. If, however, the words of agreement can be interpreted so that the contract will be fair and reasonable, the court will prefer that interpretation. Although at times the only reasonable interpretation may show that an unreasonable contract has been made, the unreasonableness of the result tends to make some other interpretation a reasonable one.” 3 Corbin on Contracts, § 552, pp 210-211.
"Between two constructions, each probable or possible, one making a contract reasonable and fair, as applied to the subject-matter, and the other unjust and unreasonable, the former is to be preferred.” B Siegel Co v Wayne Circuit Judge, 183 Mich 145, 153 (1914).
"While the intention of the parties, to be deduced from the language employed by them, must control, yet *194the words used should be given a reasonable construction; if possible, one which will not give to one of the parties an unfair or unreasonable advantage over the other.” Blake v Metropolitan Chain Stores, 247 Mich 73, 79 (1929).
See, also, Detroit v A W Kutsche & Co, 309 Mich 700, 709 (1944), and 1 Restatement, Contracts, § 236(a), p 327, to the effect that if fairly possible all clauses of a contract shall be given an "effective and reasonable meaning”. (Emphasis supplied.)
The majority is quite correct in saying that we are not obliged to accept the lessee’s theory of interpretation,5 but, having recognized that a "lease should be given a reasonable construction, if possible, which will not give one party an unreasonable advantage over the other”, we ought to go further and breathe life into those words.
In deciding whether this increase was in accordance with the intent of the parties we should ask —reading the words reserving the right in the light of all the circumstances — whether it is of a kind which ought to have been within the reasonable contemplation of the parties (both parties) at the time the lease was signed:
"It is elementary that a contract must be construed so as to effectuate the intent of the parties when it was made; and, to ascertain the intent of the parties, a contract should be construed in the light of the circumstances existing at the time it was made.” Kunzie v Nibbelink, 199 Mich 308, 314 (1917).
In our perusal of the words reserving the right to increase rents, we should, because of the special relationship that exists between a university and its students, be especially assiduous in looking for *195the true understanding on which the minds of both parties met, objectively determined by reading those words in the context of all the circumstances.
Professor Corbin, with typical perspicacity, wrote:
"The rules of substantive law applicable to a contract may, conceivably, be such that legal effect will be given to neither party’s meaning and intention unless they are identical with those of the other party. It is often said that there must be a 'meeting of the minds.’ If this is true, then the circumstances that surrounded and affected each of the parties are relevant, even though some of these circumstances may have affected one party and not the other. In the process of determining lack of identity in meaning, the meaning given by each party is a separate issue, to be determined in the light of the circumstances surrounding him.
"It is conceivable also that, having identified the person or persons whose meaning and intention are in issue, the best that a judge can do is to put himself so far as possible in the position of that person or persons, knowing their history and experience and their relations with other men and things, and then to determine what his own meaning and intention would have been. To do this requires a lively imagination, full and complete information obtained from the document and extrinsic testimony, and what we shall describe as sound judgment and common sense.
"If the foregoing suggests that it is not the meaning or intention of the party to the contract that is in fact given legal operation, but may be instead the meaning and intention that some imaginary reasonable, prudent, and intelligent man would have had (or, more realistically, the judge on the bench), we are not disposed to deny it. Nevertheless, it is the circumstances that surrounded and could have affected the party to the contract that are relevant to the issue, and not the circumstances that now surround the judge or the circumstances that might have surrounded some imaginary *196reasonable and prudent ghost.” 3 Corbin on Contracts, § 536, pp 33-36.
Although the provision of the lease reserving the right to revise rental rates does not require the university to explain why in a particular instance it chooses to exercise that right, it appears that in practice — the practical construction of the lease — the university regards itself to be under an obligation to attempt to justify an increase in rents. In this case the university attributed the increase to increased costs of operation and to an unmet need which it thought to be compelling, namely, the need of the school district for revenue to defray the cost of educating school-age children of married students residing in university-owned and, therefore, tax-exempt property. The resolution of the Regents authorizing the increase stated in part:
"Resolved, that rents for the University Family Housing for 1970-71 be increased by $11.00 per month, effective August 1, 1970, to cover a $5.00 increase in costs of operations anticipated in 1970-71 and one-third of the payment for school services.”
The letter advising the student tenants of the increase stated in part:
"The new rents effective August 1, 1970 cover not only increases in cost of operations anticipated for next year but also include a sum of $6 per apartment per month as partial payment for school services available to children of University Family Housing residents.”
The majority write that the university acted rationally in requiring married students to make a contribution to the cost of educating the children of some of them.
Why this concern with whether the university *197acted rationally if it can peremptorily "revise rental rates upward”? It is because the university is and ought to be accountable for the manner in which it exercises the reserved right to revise rents upward.
I think we part essentially on the means and standards to be applied in achieving that accountability. In my opinion the issue is justiciable. And the issue is not whether the university acted reasonably — perhaps it did — but whether what it did was within the reasonable contemplation of both parties.
On this record I do not think that married student tenants who, before they signed the lease, read the words reserving the right to increase the rent should have been expected to understand that the university might call on them for an increase in rent to help defray the cost of sending the school-age children of some of them to the Ann Arbor public schools.
Payments of this kind had not theretofore been made by the university. It does not appear that it had been previously suggested, at least in any way which would have alerted the student tenants to this as a reasonable possibility, that the university should make such payments. I would conclude, in the absence of contrary evidence, that the tenants could not reasonably have been expected to contemplate the possibility of an upward revision for a purpose which was unprecedented and not otherwise foreshadowed.
When a tenant moves into an apartment he makes a commitment. It costs money to move in. It costs money to move out. It is time-consuming to move in and to move out, to establish relationships with suppliers, neighbors, and others. Tenants will, therefore, frequently suffer small rent in*198creases rather than go to the trouble of moving out. This provision giving this landlord the right to increase rents must be read with that in mind.
The clause requiring 60 days prior notice of a rent increase does not permit an increase in rent not otherwise authorized under the lease. Even though a student tenant theoretically could have moved out after receiving the 60-day notice, most of them, as a practical matter, had little or no choice but to suffer the $6-a-month increase. Since the lease should be construed to effectuate the meaning within the reasonable contemplation of both landlord and tenant, the landlord may not unilaterally contemplate new meaning by simply giving notice.
If, as I believe, the increase was not authorized by the lease because it was not for a purpose within the reasonable contemplation of both parties, the tenants had a contractual right to the enjoyment of their leasehold under the terms of the lease even though they received 60 days advance notice of the rent increase. The tenants have acted properly in banding together to enforce their contractual right to remain on the premises without payment of the unauthorized rent increase.
"That portion of the field of law that is classified and described as the law of contracts attempts the realization of reasonable expectations that have been induced by the making of a promise.” 1 Corbin on Contracts, § 1, P 2.

 "The fact that one of the parties reserves the power of fixing or varying the price or other performance is not fatal if the exercise of this power is subject to prescribed or implied limitations, as that the variation must be in proportion to some objectively determined base or must be reasonable.” 1 Corbin on Contracts, § 98, pp 438-439. Cf. Allen v Michigan Bell Telephone Co, 18 Mich App 632 (1969).

 Compare 3 Thompson, Real Property, § 1110, p 377: "The law of landlord and tenant is sadly confused by the fact that the legal concept is a hermaphrodite, a combination of property and contract”. See, also, Lesar, Landlord & Tenant, § 3.11, p 202.

 Contractual principles apply in the interpretation and construction of those aspects of the lease which are properly a matter of contract law. In various other aspects a lease must be construed according to the law of property. 3 Thompson on Real Property, § 1114, p 390. We are here concerned with the proper construction of a single covenant to which the peculiarities of property law are not applicable.

 3 Corbin on Contracts, § 536, p 33; 4 Williston, Contracts (3d ed), § 601, p 303.
"But if no property rule intervenes, the general rule for interpretation of covenants in a lease is to expound them so as to give effect to the actual intention of the parties as collected from the entire context. ” 3 Thompson on Real Property, § 1114, p 390. (Emphasis supplied.)

 Compare McComb v McComb, 9 Mich App 70, 75 (1967).