Court Opinion

ID: 3754611
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:13:30.931437+00
Date Added: 2024-06-11T14:11:49.738053
License: Public Domain

I dissent from the conclusions of the majority as to the interpretation of the repair provision of the lease and the rights and obligations of the parties thereunder.
The evidence, most of it documentary, shows that the defendant occupied the premises from the dates of the several leases, using the first floor as a retail store-room for its meat and merchandising business, and the basement and second and third floors for storage purposes.
In July 1946 defendant asked for an extension of the lease, stating that it contemplated making extensive alterations which would not be justified with the five years remaining under the lease. Nothing was said about repairs in this request. In August, the request for extension was refused. Whereupon, on August 13, 1946, defendant, through its counsel, in a letter concerned primarily with securing a substantial extension of time of occupancy, referred to the repair provision, calling attention to the specific paragraph in the lease providing for repairs and then saying: "When you have examined this we shall be glad to hear further from you as to your disposition if formal demand were made for the making of these repairs."
Thereafter, defendant, on August 29, 1946, gave written notice that the repairs to the second and third floors called for by the lease as exemplified by an architect's drawing attached to the lease and designated as exhibit "A" should be made at once. *Page 30 
On August 30, the plaintiff addressed a letter to the defendant saying they had sent workmen to start the work, but the defendant refused to permit them to begin. On September 13, 1946, the plaintiff informed the defendant that the repairs called for by the lease would require government approval under the United States Civilian Production Administration. After an application was made for leave to do the work and some negotiations had, the Civilian Production Administration refused to allocate materials necessary for these repairs as shown by their letter to the plaintiff dated October 16, 1946.
It was, however, indicated by Civilian Production Administration that some part of the work might be done, but the defendant by letter dated February 7, 1947, said that such limited repairs would not be of any value to the defendant. There is considerable correspondence in the record between October 1946 and February 1947 wherein the defendant continued its demand that the repairs be done, or it would proceed to do them under authority of the lease. On February 27, 1947, the Regional Compliance Director of Civilian Production Administration wrote a letter directly to the defendant in which the defendant was notified in part as follows:
"Accordingly it is our responsibility to caution you that the beginning or carrying on of such activity unless authorized will be construed as a violation of the order."
The Civilian Production Authority's control of the use of building materials for construction and repair work of this kind came to an end on June 27, 1947. However, by this time negotiations had been commenced for the purchase of the building by the defendant. These negotiations continued until August 11, 1948, when the defendant notified the plaintiff that the defendant would not purchase the building because a *Page 31 
lease "By Neisner Bros. creates too many problems to make a purchase by my clients practical." This letter continues: "However, as you know, the lease on the premises to our clients extends to 1950. They would like at this time to consider the possibility of extending their lease if your clients would give this matter their consideration."
During the entire period of negotiations to purchase the property over a period of about a year and a half, not a thing was said about the repairs until after the defendant's letter of August 11, 1948, above quoted in part. Thereafter, on October 30, 1948, the defendant notified the plaintiff by registered mail to begin the repairs. The plaintiff refused to proceed on the ground that the defendant had by its conduct waived the right to enforce the repair provisions of the lease.
On November 20, 1948, the defendant notified the plaintiff that more than 15 days had elapsed since its letter of October 30, 1948, and that the defendant would therefore proceed with the work and charge the cost against the rent thereafter accruing. The defendant then entered into a contract with J. H. Dickson Company to make the repairs which the defendant claimed were to be made, upon notice, under the lease. The contract was dated December 15, 1948, when there was but one year and nine months left for the defendant to occupy the property under the lease.
The contract limited the contractor from doing more than $1,800 worth of work, including cost of materials, in any one month or from issuing purchase orders for materials for more than $600 at one time without the consent of the defendant, the contract being subject to cancellation upon five days notice and the work to be suspended on one day's notice. The work was to be done on the second and third floors separately, that is, the second floor was to be repaired as outlined in 16 items set forth in the contract, each item to be done *Page 32 
in the order set forth in the contract, and, when finished, the same order was to follow in doing the work on the third floor. The contract was made without any regard to economy in accomplishing the repairs or the benefits the defendant would be expected to derive in the greater enjoyment of the use of the premises when improved. In fact, at the rate the work was being done the repairs would, in all probability, not have been completely finished within the remaining time of defendant's occupancy. It is reasonable to conclude that defendant did not expect to enjoy any benefit from the repairs, but that they were being done in this manner to compel plaintiff to extend defendant's lease.
After the negotiations for the sale of the property between the parties was terminated without success, plaintiff entered into an agreement to sell the property to Bryden Michigan Building Company, the sale being concluded October 20, 1949. Defendant was notified to pay rent from that date to the new owner and demand was made for the unpaid rent from December 7, 1948, to the date of the sale. On October 20, 1949, the total of rent unpaid was $16,275.92. During the same period of time the defendant claims to have expended $17,428.50 for repairs.
The trial court in stating its conclusions of fact and law held that the repairs contemplated to be done under the lease were such as could have been accomplished in 60 days. An officer of the contractor employed by defendant testified that if no restrictions had been placed on the contractor, the work that was done could have been done in 90 days at the most. Therefore, the court held that, under the lease, the defendant was entitled to a credit of two-thirds of the funds expended for repairs. The court determined this amount to be $11,619.02, which when deducted from the rent due and unpaid with interest due on the rent, *Page 33 
entitled plaintiff to a judgment in the total sum of $5,541.69.
I concur with the majority that the trial court was in error in finding that the lease, in the paragraph dealing with the subject of repairs, provided that defendant was entitled to be repaid only for such of the repairs required to be made upon notification by the lessee were those that could be reasonably completed in 60 days. Exhibit "A," attached to the lease and incorporated within its terms by reference, designated the repairs that were to be made if and when requested by the lessee. The promise of the lessor was that the repairs as designated would be made within 60 days from the date of notice, and work was to begin within 15 days after notice so that if the lessor did not begin the work until the 15th day after notice, only 45 days would remain within which to do the work as contemplated by the agreement. But there can be no doubt that the repairs to be made were those specified in exhibit "A." Failure to complete such repairs within the time specified gave the defendant certain other rights, but there is no doubt as to what repairs were to be made. The court was, therefore, clearly in error in its conclusion.
Four distinct obligations are provided for by the repair provisions of the lease:
1. The repairs to be made when requested by lessee were set out in exhibit "A."
2. If the lessee wanted the repairs made it was to give notice of such demand whereupon the plaintiff had 15 days within which to start the work, it being also provided that the repairs were to be completed 60 days from date of the notice.
3. If the lessor failed to start the work within 15 days or complete it within 60 days from the date of the notice, the lessee could step in and make or complete such repairs. *Page 34 
4. From the time the lessee took over upon lessor's default until the work was done, the rent was to be abated and whatever cost was expended by lessee in making the repairs was to be deducted from rents thereafter payable under the lease. There was to be no personal liability on the part of the lessor for such expenditures by the lessee.
It is clear from the foregoing that the parties were providing for a means by which the lessee could, at its request, require the repair of the property to enhance its usefulness for the defendant's benefit.
The repairs were not to be made as a means of preserving or benefitting the property. The lessee's interest was the sole purpose of this provision of the lease.
It must also be observed that time was of the essence in the performance of the repair provisions. The work was to be completed in 60 days from the date of notice and failure on the part of the lessor to start or finish the work in the agreed time gave the lessee the right to step in and do the work so that it would be promptly done. The lease also provided that from the end of the 60-day period after notice until the work was completed, the rent was to be abated. These provisions show clearly that time was of the essence in making the repairs. It should also be noted that the lessor did not promise to be indebted to and pay the lessee for the money expended by it in case of lessor's default in its promise to make repairs and the lessee should make them as provided by the lease. The provisions of the lease were to the effect that whatever money the lessee expended in making the repairs or to complete them because of lessor's breach was to be deducted from the rentals payable under the lease, so that if the rent was abated until the work was done, there would be no funds out of which the lessee could be paid for its work until the repairs were completed. It is a natural inference *Page 35 
from these provisions that it was the intention and understanding of the parties that the work should be promptly done.
The record gives support to the plaintiff's claim that defendant acted in bad faith in demanding the repairs and in making them upon the claimed default of the lessor when and in the manner in which they were made. It is claimed that the defendant's sole purpose was to try to force the lessor to grant an extension of the lease. Bad faith, however, even if shown in demanding performance of a promise made in a contract is no defense to liability for breach of such promise. The lessor agreed to make the repairs and admittedly refused to do so claiming the right so to do. Whether or not the defendant acted in bad faith and, by this and other conduct, waived the right to the repair provision of the lease, is a question of fact which the court resolved against the plaintiff. It is my conclusion that such holding was against the manifest weight of the evidence.
The question remains as to whether the defendant's conduct in making the repairs comes within the authority of the lease. The contract for repairs was made by the defendant so that by its terms the work would be dragged out over a long period of time, many months beyond which would be reasonably necessary to do the work under all the surrounding circumstances. An examination of the defendant's contract with the construction company showed a studied purpose to expend an amount each month for repairs equal to the rent without giving consideration to the fact that such dilatory process was unduly extending the time in which the rent was abated and also depriving the defendant of any benefit resulting to it from the repairs if and when finished. Not only was the rent abated until the repairs were completed, but thereafter the cost could be deducted from rent then coming due. *Page 36 
If the defendant desired to make the repairs, as he had a right to do upon default by plaintiff, it was his duty to proceed with due diligence, looking to a completion of the work at the earliest reasonable date. This, the defendant did not do.
The plaintiff, however, was in default and the defendant did start the work as it had the right to do, so that the plaintiff's right to rent during the period for which this action is brought must be reduced by the abatement clause for the time within which the defendant could have, in the exercise of due diligence, completed the work that was done within the provisions of exhibit "A."
The defendant's answer claims no right against the plaintiff for the money expended for repairs or that there was any rent money due against which the cost of repairs could be set off. The answer provides:
"* * * that because of the plaintiff's failure to commence said repairs within said period, defendant on or about the first day of December, 1948, commenced the repairs specified in ex. `A' attached to the aforesaid lease; that the defendant continued said repairs from said time through October 20, 1949 and paid the cost of said repairs to the extent of eight hundred and eighty dollars ($880) for each of the months for the period commencing December 8, 1948 and through October 20, 1949.
"Defendant further says that by reason of the provisions of the aforesaid lease of May 28, 1937, the rental to plaintiff was by the agreement of the plaintiff abated during the period commencing December 8, 1948 through October 20, 1949 and that by reason thereof, defendant has been fully discharged of its obligation to pay any amounts to plaintiff under the aforesaid lease of April 15, 1935, from December 8, 1948 through October 20, 1949."
The same allegation is found in the answer to the *Page 37 
second cause of action as to the abatement of the rent under the lease of May 28, 1937.
It is to be seen therefore that the defendant's defense is based entirely on the right to abate the rent until the repairs were finished. No claim is made, or could be, that the amount expended should be set off against the rent as it accrued during the time the work was in progress, because the defendant's pleading alleged that during the period under consideration, all rent was abated.
The majority opinion expresses the view that there is no ambiguity in the repair provision of the lease which in part provides that the lessor "* * * will commence said repairs within fifteen days after receipt from the lessee of written demand so to do and will complete said repairs within sixty (60) days after receipt of such written demand, and further agrees that if said repairs are not begun within such fifteen day period, lessee may make such repairs, or, if commenced and not finished within the period hereinbefore specified, may complete the same and deduct the cost thereof from the rentals payable hereunder and under the other leases hereinbefore mentioned,and the lessor further agrees that all such rentals shall beabated for the period that such repairs shall remain incompletedafter the expiration of sixty (60) days after receipt of saidwritten demand," followed by certain exceptions, here not important. The question must be stated as follows. Having undertaken to make repairs, can the lessor drag them out over a long period of time, thus abating the rent for longer than would be necessary in the exercise of due diligence through such dilatory tactics? Certainly such an interpretation of the above-quoted repair provision would bring about a result that could not have been contemplated by the parties when the lease was executed.
The lessee, having undertaken the repairs, owed the *Page 38 
duty to proceed with them or such of the repairs as were wanted within the repair provision with due dispatch and in as economic a manner as would be reasonably possible. The defendant owed the duty not to cause the rent to be abated longer than was reasonably necessary. This the defendant did not do as is evidenced both by the allegations of the answer where an abatement of rent is claimed for 11 months (the defendant's own witness testified the work that was done could have been done at the most in three months) and the terms of the contract between the defendant and its contractor employed to make the repairs.
The manner in which the defendant proceeded with the work was not in compliance with the repair provision of the lease. It is evident, however, that the defendant did start the repairs as it was its right to do so that the rent was abated for the period of time beginning 60 days after notice to the plaintiff until sufficient time had elapsed from the date of notice to, in the exercise of reasonable diligence, complete the work agreed upon or so much of the work as defendant desired. The amount of the rent thus abated must be credited against the total amount due. It must also follow that the reasonable cost of whatever work was done within that period during which the rent was rightfully abated must be deducted from the rent accruing after such period had come to an end.
One other question seems clearly presented by the pleadings and that is the question of whether the defendant's dilatory contract for making the repairs, seeking as it did only to cancel the rent as it came due, does not require an entirely different measure of damages because of the plaintiff's breach than was applied by the court or is suggested by the foregoing opinion.
As heretofore stated, the repairs called for by the lease were to be, if made, for the benefit of the lessee. It must be presumed that when made the lessee would *Page 39 
have a more profitable use of the property. Whether they were made depended entirely upon the lessee. If no request was served on the lessor there was no duty on plaintiff's part to make them.
It would be a reasonable deduction in considering the defendant's contract with the J. H. Dickson Company, that the defendant did not intend to derive any benefit from the repairs being made in the dilatory fashion provided by that agreement and that the sole purpose of compelling the work to be done was to force an extension of the lease. Delaying the request for repairs until almost the very end of the lease and then contracting for the making of the repairs in such a way as to destroy any possibility of benefiting the defendant, and at the same time compelling the plaintiff to expend a large sum of rent money for repairs which it may prefer not to have made at the very end of the lease, puts a heavy burden on the plaintiff with no benefit whatever to the defendant. Under such circumstances, if the facts are found to be as just stated, the defendant would owe the duty of mitigating the damages.
Williston, in his work on Sales (Vol. 3 [Rev. Ed.], 265, Section 588), states the rule as follows:
"If the plaintiff by taking one line of conduct may secure such advantage as the contract entitles him to at less expense to the defendant than if another course is pursued, the plaintiff should be allowed only damages based on the former course."
On the evidence, as disclosed by the bill of exceptions, the question of the rule of damages to be applied to the plaintiff's default should have been given consideration by the trial court.
For the foregoing reasons, the judgment should be reversed and the cause remanded for further proceedings according to law. *Page 40