Court Opinion

ID: 3490884
Source: CourtListenerOpinion
Date Created: 2016-07-05 21:59:22.067249+00
Date Added: 2024-06-11T14:14:19.301511
License: Public Domain

On November 1, 1931, plaintiff leased by written instrument a vacant lot in the city of Royal Oak to the Oakland County Gas Oil Company, a Michigan corporation. It was provided that the lease was "for a term beginning the first day of November, 1931, and ending the first day of November, 1934, to be used and occupied only for gasoline and oil station and real estate office." For the first two years the rate of rental was fixed at $50 per month and for the third year $75 per month, payable monthly. The lease contained a further provision:
"And at the option of the lessee for a further term of two years, commencing November 1, 1934, and ending November 1, 1936, as follows: * * *
"It is understood and agreed between the parties of the first part and parties of the second part, that should the parties of the first part and the parties of the second part be unable to agree on a fair rental price at the expiration of a three-year term, then each party shall have the right to chose one man and they will decide on the amount of rent to be paid at that time, and the party of the first part and the parties of the second part will be agreeable to the amount of rent to be paid."
Shortly after the execution of the lease, the defendant took possession of the premises and constructed thereon a building. The circuit judge referred to this structure as two buildings one 18 x 20 feet used as a gasoline station; the other attached to it, being about 27 x 30 feet, a portion of which was used as a service station and the balance as a real estate office. The building rested on a substantial concrete foundation and was composed of concrete blocks and stucco, and had cement floors. Since the building was completed defendant has remained in possession. Prior to November 1, 1934, the defendant *Page 455 
company gave notice that it proposed to exercise the option for an additional two years under the lease. An attempt was made to fix the amount of rent to be paid, as provided in the lease, but there was failure to reach an agreement. On the 31st day of December, 1934, plaintiff filed her bill of complaint herein. She alleged that the defendant company was holding possession of the premises without right and that nothwithstanding plaintiff's attempt to agree upon a fair rental value for an extended period of the lease the parties had been unable to agree; and plaintiff further alleged that the lessee threatened to remove from the leased premises the gasoline service station erected thereon, together with the heating plant and other equipment. The relief sought by plaintiff is that she be decreed possession of the premises and in event of a failure of defendants to deliver up possession that a proper writ be issued to place her in possession; that the defendants be restrained from removing the buildings, etc., from the premises; and that in event the court finds that the term of the lease should be extended, the court decree and fix the rental value of the premises.
The defendants answered and after hearing in open court it was decreed that the rent for the extended period should be $100 per month from November 1, 1934, to November 1, 1935, and $125 per month from November 1, 1935, to November 1, 1936; and the injunctive relief sought was granted as to permanent structures and fixtures therein, but with a provision that "gasoline tanks, pumps and other trade fixtures" might be removed by the tenant at the expiration of the lease. The defendants have appealed claiming (1) that the rate of rental fixed by the court is too high and not supported by the evidence, and (2) that the court was in error in *Page 456 
restraining defendants from removing the buildings erected on the premises by the defendant company.
On the first of the above questions a detailed review of the testimony would be of no service. A controverted issue was presented to the court as to the fair rental value. All parties concerned acquiesced in submitting this issue to the court in chancery for determination. See Bird v. Couchois, 214 Mich. 607,612. There was testimony submitted in behalf of the plaintiff which abundantly sustained the finding of the court that a fair rental value for the first of the two years of extension was $100 per month and for the second $125 per month. The decree in that particular must be affirmed.
Appellants' contention that the court was in error in granting the injunctive relief against removal of buildings constructed by the tenant on the leased property is the important issue presented on this appeal. Appellants assert in their brief:
"The buildings and other accessories in the way of heating apparatus, etc., put on the premises by defendant company are commonly called trade fixtures and are the property of defendants and they have the right to remove the same at the expiration of the lease."
Unfortunately the written lease contains no specific provision as to ownership of the buildings at the expiration of the leasehold. But as hereinafter noted the lease does contain some provisions which are at least indicative of what the parties had in mind when the lease was executed. The provision in the lease that the premises were to be used only for a gasoline and oil station and real estate office conclusively indicates that the contracting parties contemplated that suitable buildings were to be erected on the vacant lot. It is agreed that it was *Page 457 
understood that this was to be done by the lessee. But notwithstanding this, the lessee covenanted as follows:
"To observe all reasonable regulations and requirements of underwriters concerning the use and condition of the premises tending to reduce fire hazards and insurance rates."
There was hardly an occasion for such a provision except that the lessor had some sort of interest in the insured property,i. e. in the buildings. Further the lease provided if the premises were damaged by fire so they were partially untenantable "the landlord shall repair the same with all convenient speed, and the obligation of the tenant to pay the monthly rental shall continue in full force provided such repairs shall be completed within forty days."
Here again the provision of the lease quite decidedly indicates plaintiff's ownership of the buildings. Otherwise why should she undertake to repair in case of damage by fire? Also it is provided in the lease that in the event condemnation proceedings were commenced and prosecuted with the result that the tenant was totally or partially evicted, "this lease shall be void." This also indicates a lack of lessee's ownership of the buildings which in all probability would be affected by such condemnation proceedings. Another provision of the lease of like import may be noted. The lessee covenanted:
"To keep the premises, including the equipment and fixtures of every kind and nature, during the term in as good repair and at the expiration thereof yield and deliver up the same in like condition as when taken, reasonable wear thereof and damage by the elements excepted."
Since there could scarcely be damage by the elements to the vacant lot it is a fair inference that the *Page 458 
above provision for delivering up possession applied to the buildings erected on the lot, and it is therefore indicative of ownership in the lessor. In this connection see Mayor, etc., ofNew York v. Hamilton Fire Ins. Co., 23 N.Y. Super. Ct. (10 Bosw.) 537, 546.
Notwithstanding the noted provisions of the lease may have been embodied in a printed form used, nonetheless such provisions must be held to constitute terms and conditions of the lease and, therefore, are pertinent in determining the rights of the respective parties. In this case, under the terms of the lease itself, notwithstanding it does not contain a specific undertaking that the lessee was to erect a building, as was provided in the following case, the language of a New York court seems applicable. It was there said:
"We think the future ownership of the building was in the contemplation of the parties at the time of its execution, and that, at the expiration of the term the plaintiffs became the owners of the super-structure erected in pursuance of the condition of the lease, a compliance with which alone rendered it operative in favor of the grantee." Mayor, etc., of New York
v. Brooklyn Fire Ins. Co., 41 Barb. (N.Y.) 231, 234.
In a decision of the New Jersey equity court arising from a similar situation as between lessor and lessee it was said:
"The lease, neither by express words nor by implication, reserves a right to the lessees to remove the building; and its silence in that regard would seem to render it almost as certain that the parties intended that no such right should exist as it is that they intended that the lessees, after paying the rent reserved by the lease, should have no right to reclaim the money. * * * *Page 459 
"Besides, I think the covenant defining what the lessees should surrender on the expiration of their term, and in what state and condition the demised premises should then be, furnishes very cogent evidence of the intention of the parties in respect to the building." Deane v. Hutchinson, 40 N.J. Eq. 83,87 (2 A. 292, 295).
With much propriety it is stressed in appellants' brief that the rule of law, under which as between vendors and vendees or mortgagors and mortgagees structures which are firmly attached to the land pass with title to the land, is much less rigidly applied to rights of landlords and tenants. Appellants quote the following:
"The general rule respecting fixtures unquestionably is that whatever is once annexed to the freehold becomes part of it, and passes with the land. This rule obtains as between grantor and grantee, mortgagor and mortgagee, and persons sustaining certain other relations to each other. I Washburn on Real Property (4th Ed.), § 7. But there is an exception to the rule, which is probably as old as the rule itself, and which is applied as between landlord and tenant, to articles affixed by the latter to the premises for the purpose of carrying on the business for which the premises were leased. Such articles are denominated trade fixtures, and are removable by the tenant. (Citing several cases including Conrad v. Saginaw Mining Co.,54 Mich. 249 [52 Am. Rep. 817]). And it does not matter much how firmly the articles may be attached to the land. In WigginsFerry Co. v. Railway Co., 142 U.S. 396, 416 (12 Sup. Ct. 188) the court said: 'Whatever is affixed to the land by the lessee for the purpose of trade, whether it be made of brick or wood, is removable at the end of the term. Indeed, it is difficult to conceive that any fixture, however solid, permanent, and closely attached to the realty, placed there for the sole purpose of trade, may not be removed at the end of the *Page 460 
term.' The articles in question here were placed upon the mining premises for the purpose of carrying on the business for which the lease was taken, — that is, for the purpose of working the mine. It was by means of them that the operations which the lease authorized were to be conducted. They were, therefore, trade fixtures. That they were intended merely to facilitate the work in which the lessees proposed to engage under the provisions of their lease, and that it was not theirintention to incorporate them into the realty, appears to us to be clearly evident from the facts." Updegraff v. Lesem, 15 Col. App. 297, 305 (62 P. 342).
The pivotal point in the instant case is this: Should the buildings erected by the lessee be held to be in the nature of trade fixtures and because thereof appellants held to have a right to remove them? We think not. In the absence of express controlling agreements relative to such rights, the courts, especially in border line cases, are constantly endeavoring to ascertain and give effect to the intent of the parties. In a case involving a small one-story building, without cellar or foundation except posts, this court, inquiring into the intent of the parties, said:
"It cannot be supposed that Parmenter, holding from month to month under a lease resting in parol, intended that the building he erected should become realty. He testified, and, if he had not, the inference would be unavoidable, that the building was a chattel and his property. The man who purchased it attorned to his landlord. There is no evidence here of hisintention to abandon the building to the landlord or to the owner of the land." Higginbotham v. Phillips, 192 Mich. 49.
"Scales, gasoline tank, and pump, installed by the owner of the realty with the intention that they become part thereoff became fixtures and were subject *Page 461 
to the mortgage subsequently executed thereon." Tyler v.Hayward (syllabus), 235 Mich. 674.
See, also, Conrad v. Saginaw Mining Co., 54 Mich. 249 (52 Am.Rep. 817); Updegraff v. Lesem, supra; and In re Shelar, 21 Fed. (2d) 136. In this latter case the court said:
"Mere attachment to real estate is no longer the criterion; the parties here are in agreement that it is not necessary that there should be a specific contract with reference to the right of removal of a trade fixture, and that the question must be determined by the intention of the parties. * * * The tests were: * * *
"(3) The intention of the party making the annexation, to be inferred from the nature of the article affixed, the relation and situation of the party making the annexation."
The authority last above quoted is applicable to the instant case. Here the parties not only indicated their intention by the above quoted portions of the lease, but we think it is also indicated by the character of the buildings erected by the lessee, including the type of foundation, the materials used in and the method of construction; and that these as well as other circumstances disclosed quite conclusively negative any intent other than that the buildings were to be considered permanent fixtures upon the land and, therefore, a part of the real property rather than trade fixtures removable at the option of the tenant. This being true it is of little importance whether the buildings could be removed without material injury to the realty. Tyler v. Hayward, supra. In this connection it is worthy of notice that the fair inference from the record is that the character and construction of the buildings in the instant case indicate that they would in all probability *Page 462 
be of very little value for removal or wrecking purposes, but obviously they are of substantial value when left intact on the land. Also as bearing upon the intent of the parties we quote from the testimony of defendant Levy, the president and active manager of the Oakland County Gas  Oil Company:
"Q. Then the company claims ownership to the improvements and will remove them, the buildings and everything they have placed there, at the end of the term?
"A. I don't know whether they will or not, I couldn't tell you."
In view of the express provisions of the lease, and of the intent of the parties as disclosed by the record, appellants' contention that the buildings should be held to be in the nature of trade fixtures and, therefore, removable at the option of the lessee cannot be sustained. In arriving at this conclusion we have not overlooked the fact that among other authorities cited in support of appellants' contention the following decisions of this court are included: Kerr v.Kingsbury, 39 Mich. 150 (33 Am. Rep. 362); Osborn v. Potter,101 Mich. 300, and Hayward v. School District No. 9, of theTownship of Hope, 139 Mich. 539. Neither of the first two cases just above cited lends support to appellants' contention because in each of them the lease expressly provided that the tenant might at the expiration of his lease remove buildings erected by him. Also decision in the Hayward Case, which involved the removal of a school house erected on leased land, is easily distinguished. There the lessee school district erected a frame school house for its particular purpose, which was an activity in which the landlord by no stretch of imagination could engage. The inference *Page 463 
of the right and intention of the tenant to remove the building at the expiration of the leasehold was plainly disclosed by the facts and circumstances of the case.
While lessee's manager testified that he was told by plaintiff, "I could build anything I wanted to and take them off," this testimony was specifically denied by plaintiff. In a case of this character the written agreements of parties and their conduct are more persuasive than oral testimony given by an interested party. The testimony before us in this case convincingly establishes the fair rental value of this property as being at least $125 per month. There is credible testimony tending to show the reasonable monthly rental value is $150. But during the first two years under this lease the rent was fixed at only $50 per month, for the third year at $75 per month, and for the fourth year, as determined by the court, at $100 per month. Hence it fairly appears that during the occupancy this lessee has paid less than the fair rental value by at least $2,700. The reasonable inference is that this is off-set by the understanding and intention of the parties that the building in question was to remain on the land at the expiration of the lease.
The manager of the lessee corporation selected the blank form upon which the lease was prepared. He filled in the terms of the lease and, as thus prepared, it was signed by plaintiff. In the instant case we ought not to ignore the rule so many times stated by this court that the terms of a written instrument should be most strongly construed against the party who prepared it. I do not understand that a court is justified in ignoring the printed portion of a contract merely because a form is used and in part the contract is embodied in the printed form and in part in handwriting or typewriting. The contention that *Page 464 
the parties intended the lessee should have a right to remove the building from this property cannot be sustained unless we ignore the part of this contract requiring the lessee to carry insurance for the protection of the lessor, requiring the lessor to repair for the benefit of the lessee in case of damage by fire during the leasehold period, requiring the tenant to keep the premises in good repair and to yield possession, etc., and the further provision that in case of condemnation the lease shall become "void" without any provision that the tenant should share in such an award. This record sustains the trial judge's order enjoining appellants from removing the building from the premises.
The rights of defendants, other than the Oakland County Gas Oil Company, are controlled by the legal aspects of the case hereinbefore considered and, therefore, there is no occasion for outlining in detail the character and extent of the interests of such other defendants. The decree entered in the circuit court should be affirmed, with costs to appellee.
FEAD and BUSHNELL, JJ., concurred with NORTH, C.J.