Court Opinion

ID: 6756072
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:27:10.428057+00
Date Added: 2024-06-11T16:02:26.433722
License: Public Domain

Celebrezze, J.,
concurring in part and dissenting in part.
Because I agree that Texaco validly cancelled its lease, I concur with the majority decision to affirm the Court of Appeals’ judgment in case No. 76-1102. I must, however, dissent from the affirmance of case No. 76-1124.
In ruling on Texaco’s appeal the majority has failed to cite any case or textbook authority for their precipitous conclusion that “[i]t is plain that the two clauses cannot be used jointly.” Rather, it is remarked that “there is testimony in the record to the effect that Clause six was drafted so as to enable * * * [Pecsok] to carry on the service station business after Texaco’s departure.” By this reference to the transcript the majority indicates that it was persuaded by Pecsok’s patently self-serving interpretation of certain language in the lease. According to *267Pecsok, Clause 6 required that before Texaco could share in the appropriation award it must first surrender its service station in toto — “they would walk off, they would turn over the keys and I would have my man or a new lessee continue with the operation of it as a service station.”
In my view, it was error to accord such great weight to Peesok’s subjective view of the lease provisions. Certainly that which a draftsman of an instrument would prefer to have said, or what he thought the instrument provided for, should not be controlling. It is an elementary principle of contract law that the intention of a party that is relevant is the intention manifested by him, rather than any different undisclosed intention. This is so since the expectation and understanding of the other party must also be taken into account.
“It is generally said that the purpose of interpretation is to become aware of the ‘intention of the parties.’ * * * In contracts * * “there are always at least two parties whose intention and understanding must be considered. A contractor whose expressions induce another to understand and to act in reliance on that understanding may be held responsible therefor. In most cases * * * [judges] are more interested in the understanding that is induced than in the meaning that the contractor himself had and intended to convey to the other. This has led very thoughtful and learned judges to say that the intention of the contractor is immaterial and that evidence of his intention — even his own testimony under oath as to what his intention was — will not be received. The other party cannot know what his intention was except so far as he expressed it in a manner understandable by others. Therefore, he can not hold the other party bound in accordance with a meaning unless (1) the other party so understood his expressions, or (2) had reason so to understand them under the existing circumstances (meaning by this that any other understanding would be unreasonable).” 3 Corbin on Contracts, Section 538.
The American Law Institute, through the compilation *268of the Restatement of Contracts 2d, has attempted to aid the courts in the ascertainment of meaning in interpretation of agreements. Section 229 of the Restatement of Contracts 2d (Tent. Drafts Nos. 1-7 [1973]), provides the following standards of preference in interpretation:
“In the interpretation of a promise or agreement or a term thereof, the following standards of preference are generally applicable:
“(a) an interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect;
“(b) express terms are given greater weight than course of performance, course of dealing, and usage of trade, course of performance is given greater weight than course of dealing or usage of trade, and course of dealing is given greater weight than usage of trade;
“(c) specific terms and exact terms are given greater weight than general language;
“(d) separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated.”
It can be seen that the majority interpretation, by giving effect to Pecsok’s subjective intentions, ignores the general principles set out above. Without stating any reasons whatsoever, the majority holds Clauses 4 and 6 to be mutually exclusive, thereby causing a part of the agreement to be ineffective. Rather than give the specific, separately added condemnation provision (Clause 6) greater weight, the majority somehow concludes that Texaco “disabled itself” from seeking compensation under the condemnation clause at precisely the time when it would seem that this specific provision becomes applicable.
Clauses 4 and 6 may quite reasonably be read together, so as to give a lawful and effective meaning to all the terms of the agreement. Under normal circumstances, Texaco would have the right to remove buildings, fixtures, above-ground equipment, underground tanks and other re*269movable property at any time during the term of the lease. Any property not so removed within BO days after termination of the lease would become the property of Pecsok. However, should a part of the premises be condemned for public use, sufficient in Texaco’s judgment to render the remainder unsuitable, Texaco may terminate the lease. In that event [termination due to condemnation] the lease provides that “lessee shall accept as compensation for its interest out of any settlement or award to be made an amount equal to its unamortized book value of all its Improvements and equipment on the premises.” (Emphasis added.)
Obviously, that property which Texaco chose to remove prior to the cancellation of the lease is no longer on the premises. Pursuant to the unambiguous wording of Clause 6, Texaco is entitled to receive, as its share of condemnation award, the unamortized book value of the improvements remaining on the premises, i. e., the service station building itself, the underground tanks, and the asphalt and concrete paving.
I will not expound at length upon the many ludicrous implications of the majority’s interpretation. Suffice to say that it would be most unlikely for the parties to intend upon the continued operation of a service station which is, by the terms of the same lease clause, “unsuitable” for operation. Further, it defies logic to imply that the lessor’s appropriation award should be reduced by the value of removable property (which presumably would not, in any real sense, be “taken” in an appropriation) or, conversely, that the lessee should receive an award for its salvageable property.
For the foregoing reasons, I dissent from the judgment in case No. 76-1124.