Opinion
March 5, 1958 —
April 8, 1958.
APPEAL from a judgment of the circuit court for La Crosse county: LINCOLN NEPRUD, Circuit Judge. Affirmed.
For the appellants there were briefs by Bosshard Arneson and Ray A. Sundet, all of La Crosse, for S H, Inc., and by Robert J. Jenkins of La Crosse, for Edward H. Langhofer, and oral argument by Mr. Sundet and Mr. Jenkins.
For the respondent there was a brief by Bunge, Coleman, Moen Meyer of La Crosse, and oral argument by John S. Coleman.
Action by the plaintiff lessor against the defendant lessee for a declaratory judgment determining the rights of the parties under a written lease. On motion of the defendant, Edward H. Langhofer, a sublessee of the defendant, was impleaded.
On September 15, 1955, a written lease was executed by the plaintiff and the defendant whereby the plaintiff leased to the defendant certain real estate in the city of La Crosse. The portion of the lease in controversy is paragraph numbered 2 thereof, which reads as follows:
"Lessee agrees to pay the sum of twenty-five thousand two hundred dollars ($25,200) unto lessor as rental for said premises during said term in monthly instalments of seven hundred ($700) dollars, payable on the 15th day of each month beginning on the 15th day of September, 1955, to September 15, 1956; thereafter during the term of this lease rentals will be subject to revision, it being understood that any increase in rental will be conditioned upon sales and earnings of lessee and increased expenses of lessor.
"Six months before the expiration of this lease the lessee shall have the privilege of extending the lease for an additional period of three (3) years, upon such terms and conditions as the lessor and lessee may agree upon, lessee to notify in writing the lessor, of lessee's intention to exercise this option. Lessee has examined and knows the conditions of said property and acknowledges that no representation as to the condition and state of repair thereof have been made by lessor prior to or at the execution of this lease."
Thereafter and on the 15th day of October, 1955, the defendant leased a portion of said premises to the impleaded defendant by a written lease that in general embraced the terms of the lease between the lessor and the lessee. The sublease was approved by the plaintiff.
On February 26, 1957, the lessee by letter notified the plaintiff that it was exercising the option contained in the lease to extend the same for an additional three years, or until September 15, 1961. Thereafter this action was commenced.
The amended complaint set out two causes of action. By stipulation the first cause of action was stricken from the complaint. By the second cause of action the plaintiff sought a declaratory judgment determining that the option clause above quoted is so vague and uncertain as to be unenforceable by the defendant or by the impleaded defendant against the plaintiff and that the court determine that the plaintiff is entitled to possession of the leased premises on September 15, 1958. Thereafter the plaintiff moved for summary judgment, supporting its application with affidavits. The motion was opposed by the defendant and the impleaded defendant, who filed counteraffidavits. On September 16, 1957, a judgment was entered determining that the option agreement was so vague and uncertain as to be unenforceable and that the defendant and the impleaded defendant vacate the leased premises on or before the 15th day of September, 1958. The defendant and the impleaded defendant appealed from said judgment.
In a memorandum decision the trial court determined that there were no material issues of fact to be tried and that the case was governed by the decisions of this court in Ratcliff v. Aspros, 254 Wis. 126, 35 N.W.2d 217, and Leider v. Schmidt, 260 Wis. 273, 50 N.W.2d 233. The appellants claim that this case can be distinguished from the cases relied on by the trial court in that there was no ambiguity in the leases there considered and that therefore the rental could not be determined by the introduction of parol evidence, whereas in the present case they claim the rental can be ascertained as directed by the wording of the lease, although resort must be had to parol evidence to find the exact and complete method of computing it. They claim there is a further distinction between the cases in that the Ratcliff and Leider Cases did not involve so drastic a remedy as summary judgment. The appellants contend that their answers and affidavits raised material issues of fact that can only be determined at a trial. They cite the language of paragraph numbered 2 wherein it states that rentals will be subject to revision and that any increase in rental will be conditioned upon sales and earnings of the lessee and increased expenses of the lessor. It is their contention that this language provides standards and procedures for determining the rent during the extended period of the lease, that these standards and procedures were discussed by the parties prior to and at the time of the signing of the lease, and upon the trial they could show by parol evidence that it was the intention of the parties that the term continue for six years after the date of the lease upon the same terms and conditions except for a possible adjustment of the rent as provided therein.
We cannot agree that the language referred to prescribes standards and procedures even to determine increased rent. It refers to both sales and earnings of the lessee without stating which is to govern or what percentage thereof is to govern. The same is true as to reference to increased expenses of the lessor. A lessor's expenses are many and varied. In addition thereto the option provision states that the extended period is to be "upon such terms and conditions as the lessor and lessee may agree upon." "Terms and conditions" include many things in addition to rent.
The appellants contend that the language of the lease is ambiguous in that it is susceptible of more than one interpretation and that they should be permitted to introduce parol evidence to show what was in the minds of the parties at the time of making the contract. They cite several definitions of the word "ambiguous" and cases illustrative thereof. We can assume that the contract is ambiguous, but it does not follow that the ambiguity is such as to justify resort to parol evidence for the purpose of construing the language therein. In the name of construction, courts cannot insert what has been omitted or rewrite a contract made by the parties. We are not confronted here with a mere ambiguity but with an absence of essential provisions. To construe the extension provision would require a reformation of the contract or the making of a new one. It is presumed that after the parties negotiate the terms of a contract the negotiations are merged therein when written and signed.
In a few states the courts do give some effect to extension agreements such as appears in the lease in question and supply the missing terms and conditions by applying what they call "the rule of reason." The majority of states, however, hold that a lease must specify the terms and conditions of the renewal or extension so that the court may determine what has been agreed upon from the language therein, and if it falls short it is not enforceable. At the time of the decision in the Ratcliff Case this court gave careful consideration to the two rules and decided to adopt the majority rule. The two rules were again considered at the time the Leider Case was decided and the decision was to follow our prior determination and follow the rule announced in the Ratcliff Case.
The appellants take issue with a statement in the trial court's memorandum decision wherein it stated that both the lease and sublease were drawn by the attorneys for the defendant. The record shows a dispute on that point. However, we deem that to be immaterial, even though drawn by the plaintiff and subject to the rule that it be construed most strongly against the party drawing it. The sublease contained an extension agreement similar to that contained in the lease between the plaintiff and the defendant. However, the following clause was added:
. . . it is specifically understood and agreed that in the event the Batavian National Bank will not extend the lease now existing between it and the S H, Inc., on the premises hereinbefore described, then said extension between the S H, Inc., as lessor and Edward H. Langhofer as lessee is void."
The term of the sublease was from October 15, 1955, to the 14th day of September, 1958. The extension agreement covered an additional three years after that date. From the language used it is clear that both of the appellants understood the plaintiff would not have to, and might not, extend the lease from September 15, 1958, to September 15, 1961. We must hold, therefore, that the provision for extension of the lease is too indefinite and uncertain to be enforceable, and is void.
By the Court. — Judgment affirmed.