Court Opinion

ID: 9545026
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:04:51.597395+00
Date Added: 2024-06-11T15:13:53.896586
License: Public Domain

ON REHEARING
*198Loyal E. McCarthy, Portland, argued the cause for appellant. With him. on the briefs was William C. McCarthy, Portland.
Leo Levenson, Portland, argued the cause for respondent. With bim on the brief was Ernest M. Jachetta, Portland.
Before McAllister, Chief Justice, and Rossman, Perry, Sloan, O’Connell, Denecke and Lusk, Justices.
PERRY, J.
Believing we were in error in the application of ORS 91.090 to the facts of this case and the interpretation placed thereon by our prior opinion, we granted a rehearing.
Having determined now that we were in error, the former opinion is withdrawn and the following is the opinion of the court.
This is an action in tort by a tenant for damages for wrongful eviction.
The plaintiff, a corporation, entered into a lease with the defendant in December, 1956. The lease was for a period of one year, commencing the first day of April, 1957, and terminating on March 31, 1958, and provided that the lessee should pay a monthly rental of $225 per month, “together with the percentages on gross collections hereinafter provided on or before the 1st day of each and every calendar month beginning with the month of April, 1957, and ending with the month of March, 1958.” The percentage rental was 3% on gross collections up to $10,000, plus 1% on the next $5,000, plus one half of 1% on all *199amounts over $15,000 during the preceding calendar month.
The lease also provided for the lessee to keep proper accounts to be made available to the “* * * lessor for auditing during the fore part of each calendar month prior to the 30th day of the month upon which payments are to be made.”
There is no provision in the lease for a forfeiture by reason of the breach of any of the covenants therein, including payment of rent.
The evidence discloses that the plaintiff was not in default as to the payment of the fixed rental of $225 during its occupancy of the premises. The fixed rental of $225 was mailed to the lessor and the lessor called personally for the percentage rental.
On January 20, 1958, the defendant lessor notified the plaintiff by mail that its lease had been terminated by reason of its “failure to account for the percentages on gross collections for the months of November and December * * *.” (Italics ours.) The plaintiff thereupon tendered the percentage rentals for the months of November and December, which tender was refused by the defendant. On January 22, 1958, the defendant leased the premises to a Mr. "Williams who took immediate possession of the leased premises and the plaintiff was thus ousted of possession.
 It is a well-established rule of law that forfeitures are not favored and, in the absence of an agreement for forfeiture or a statute providing therefor, a lessor may not terminate the lease for breach of a covenant. Clanton v. Oregon Kelp-Ore Co., 135 Or 321, 296 P 30; Chesnut v. Master Laboratories, 148 Neb 378, 27 NW2d 541; Reynolds v. Earley, 241 NC 521, 85 SE2d 904; Barnett v. Dooley, 186 Tenn 611, 212 SW2d 598; Chopot v. Foster, 51 Wash2d 406, 318 P2d 976.
*200This rule is applicable and applies with equal force to covenants to pay rent. Estes v. Gatliff, 291 Ky 93, 163 SW2d 273; Hersey Gravel Co. v. Crescent Gravel Co., 261 Mich 488, 246 NW 194; Eurengy v. Equitable Realty Corp., 341 Mo 341, 107 SW2d 68.
The defendant, as authority for his right to terminate plaintiff’s lease, can rely only on OES 91.090, which is as follows:
“The failure of a tenant to pay the rent reserved by the terms of his lease for the period of 10 days, unless a different period is stipulated in the lease, after it becomes due and payable, operates to terminate his tenancy. No notice to quit or pay the rent is required to render the holding of such tenant thereafter wrongful; however, if the landlord, after such default in payment of rent, accepts payment thereof, the lease is reinstated for the full period fixed by its terms, subject to termination by 'Subsequent defaults in payment of rent.”
In defendant’s argument he contended that his was a percentage rental agreement with a minimum payment to be made of $225 per month, and, as stated in defendant’s letter, his contention of default in the payment of rent rests solely on the percentage rental claimed due.
In Clanton v. Oregon Kelp-Ore Co., supra, a lease was executed for the primary purpose of maintaining a sanitarium. The lease provided that the rent to be paid was 5% of the gross receipts from the operation of the baths and $75 per ton for kelp ore mined on the premises. In construing section 5-209, Oregon Code 1930, the language of which was identical with OES 91.090, we held (135 Or 321, 332) that since “* * * there is no fixed liquidated sum reserved * * *, [i]t would require computation.” And this fact takes it out of the ambit of the statute.
*201There is no evidence in the present case, other than the subsequent fact of tender by the plaintiff and acceptance by the defendant of the check for the percentage rent of November and December, that the rent for those months had been computed, audited and agreed upon, and, therefore, was a liquidated sum at the time the plaintiff was ousted from possession.
Since the statute did not apply to the unliquidated percentage rental, and there was no provision in the lease for termination, the trial court correctly found there was no lawful basis for the plaintiff’s eviction by the defendant.
On the rehearing granted, the defendant again contends that there was insufficient evidence offered to sustain the trial court’s judgment of $15,000 as general damages.
A re-examination of this contention leads us to agree with the defendant’s contention. We misinterpreted the profit and loss audit introduced by the plaintiff as being on a monthly basis whereas the profits and losses were actually determined quarterly.
The trial court based his determination of damages on his finding set out as follows:
“That plaintiff sustained (1) loss of supplies and equipment, (2) expenses incurred for taking inventory and moving property elsewhere, (3) loss of credit standing with customers, suppliers and creditors, (4) loss of goodwill and business standing amongst customers, competitors, creditors and suppliers, (5) loss in opportunity for steady growth.
“That based on the foregoing, plaintiff is entitled to judgment in the amount of $15,000; that plaintiff’s claim for punitive damages were not proved.”
*202In determining damages for a landlord’s wrongful eviction that deprives the tenant of the nse of the property, the standard measure is the difference between the reasonable rental value of the premises and the rent reserved. Warren et ux v. Parsons et ux, 224 Or 605, 356 P2d 953; Buck v. Mueller, 221 Or 271, 351 P2d 61.
In addition thereto, the tenant may be compensated for such actual damages as are both natural and probable as a direct consequence of the eviction. Buck v. Mueller, supra.
Also, a tenant is entitled to recover the reasonable anticipated profits from his business, if any, from the date of eviction to the date when the lease by its own terms expires. Everson v. Albert, 261 Mich 182, 246 NW 88; Kenney v. Braun, 113 Neb 12, 201 NW 641; Walgreen Co. v. Walton, 16 Tenn App 213, 64 SW2d 44.
As to 'the finding (1), “loss of supplies and equipment,” there is no evidence that the defendant converted the property claimed to have been lost, or is there any evidence that the defendant in anywise interfered with the plaintiff’s removal of 'this property from the premises.
As to the finding (2), “expenses incurred for taking inventory and moving elsewhere,” there is evidence that the expense of moving precipitately instead of at the end of the lease, some two months and a few days later, was in the neighborhood of $1,200.
We must assume that the trial court’s findings (3), (4) and (5) refer to and cover the loss of profits for the period from the date of eviction to the termination of the lease, as provided therein, March 31, 1958.
*203Since the lease expired by its own terms March 31, 1958, and plaintiff had already determined not to renew the lease, it could hardly be contended that these losses, as stated, were either within the contemplation of the parties at the time of the execution of the lease or were a natural and probable result arising from the eviction.
Also, it is well established that the loss of future profits must not be uncertain and speculative. Buck v. Mueller, supra; Stubblefield v. Montgomery Ward & Co., 163 Or 432, 96 P2d 774, 98 P2d 14, 125 ALR 1228.
“Past profits may be shown if they reflect the operation of an established business.” Buck v. Mueller, supra, 221 Or 271, 283.
In the matter before us, the only evidence from which future profits can with reasonable certainty be ascertained is the record of past operations found in the consolidated balance sheet offered by the plaintiff. An examination of this on a monthly basis of profits made discloses they will not and could not support the judgment entered even with the inclusion of nominal damages and the cost of moving.
The judgment is, therefore, reversed and remanded for the determination of damages.