Sampson Investments by Sampson v. Jondex Corp., s. 91-0297

Decision Date06 January 1993
Docket NumberNos. 91-0297,91-0957,s. 91-0297
Citation499 N.W.2d 177,176 Wis.2d 55
PartiesSAMPSON INVESTMENTS, a Wisconsin partnership, by Bernard J. SAMPSON and Harold Sampson, its general partners, Plaintiffs-Appellants, v. JONDEX CORP., a Wisconsin corporation, and Mega Marts, Inc., a Wisconsin corporation, Defendants-Respondents-Petitioners. . Oral Argument
CourtWisconsin Supreme Court

For the plaintiffs-appellants there was a brief by John A. Busch, David B. Kennedy and Michael, Best & Friedrich, Milwaukee and oral argument by Mr. Busch.

Amicus Curiae brief was filed by Thomas G. Cannon and O'Neil, Cannon & Hollman, S.C., Milwaukee, for Wisconsin Grocers Ass'n and Wisconsin Merchants Federation.

DAY, Justice.

This is a review, granted to defendants Jondex Corporation ("Jondex") and Mega Marts, Incorporated ("Mega Marts"), of an unpublished court of appeals decision which affirmed in part and reversed in part a summary judgment in favor of the defendants by the circuit court for Milwaukee County, Honorable Francis T. Wasielewski, Judge.

This case presents two issues for review, both of which involve a commercial lease agreement between Jondex, the lessee, and Sampson Investments ("Sampson"), the lessor, which states that "[t]he premises shall be occupied and used only for the following purpose or purposes: A 'retail warehouse store' selling articles found in family centers and supermarkets." The first issue is whether the lease requires Jondex to continuously operate a retail warehouse store. We hold that the lease does not require continuous operation. The second issue is whether Sampson can maintain a claim for tortious interference with contract against a third party, Mega Marts, even though Jondex did not breach the lease agreement. We conclude that Sampson cannot maintain such an action.

The relevant facts are not in dispute. Sampson, a commercial real estate manager and developer, owns Westlane Shopping Center in West Allis, Wisconsin. Jondex operates warehouse-style supermarkets. Mega Marts also operates warehouse-style supermarkets and leases properties to be used as warehouse-style supermarkets.

Jondex and Sampson entered into a commercial lease agreement on October 15, 1975. Paragraph three of the lease, which is the center of the controversy, provides in part as follows:

The premises shall be occupied and used only for the following purpose or purposes: A 'retail warehouse store' selling articles found in family centers and supermarkets. Tenant shall have the exclusive right to operate a supermarket in the Shopping Center.... Landlord covenants and agrees that it will not use nor permit any person or entity to use any portion of the Shopping Center for heavy manufacturing or the exclusive sale of health and beauty aids or for any use of tenancy that creates unreasonable levels of (i) noise, (ii) noxious odors, or (iii) overburdening of parking areas in the Shopping Center during the lease term hereof so long as Tenant is in occupancy hereunder.

The lease also requires Jondex to pay a flat-rate monthly rent and gives Jondex the right to sublet the property without Sampson's consent.

In accordance with this lease, Jondex operated a "Pick 'N Save" store and served as the "anchor tenant" 1 in Westlane Shopping Center. In June, 1990, however, Jondex informed Sampson that they planned to cease operating a grocery store in Westlane Shopping Center but would continue to pay the full rent. Additionally, Jondex entered into a commercial lease agreement with Mega Marts to operate a "Pick 'N Save" store approximately two blocks away from Westlane Shopping Center.

Sampson subsequently sued Jondex and Mega Marts, claiming that: (1) Jondex's stated intention to cease operating a store in the Westlane Shopping Center constitutes a breach and repudiation of the lease agreement; (2) Mega Marts tortiously interfered with the lease agreement to the financial detriment of Sampson; and (3) Jondex and Mega Marts conspired to injure Sampson's business in violation of sec. 134.01, Stats. 1989-90 2. The circuit court granted the defendants' motions for summary judgment, dismissed all three claims and also issued a declaratory judgment that Jondex could cease operating a warehouse-style supermarket without breaching the lease. Jondex then closed the "Pick 'N Save" located in Westlane Shopping Center.

Sampson appealed and the court of appeals upheld the dismissal of the conspiracy claim. The court of appeals, however, concluded that paragraph three of the lease required Jondex to continuously operate a retail warehouse store for the term of the lease. Thus, the court of appeals ruled that Jondex breached the lease when it ceased operating the "Pick 'N Save" store. Based on the ruling that Jondex breached the lease agreement, the court of appeals also ruled that Sampson could maintain a claim for tortious interference with contract against Mega Marts.

The defendants petitioned for review of the portion of the court of appeals' decision which upheld Sampson's claims for breach of the lease agreement and tortious interference with contract. This court accepted the petition for review. The portion of the court of appeals' decision which upheld the dismissal of the conspiracy claim was not challenged in the petitions for review and is not before this court.

I.

The first issue is whether the court of appeals erred when it concluded that paragraph three of the lease requires Jondex to continuously operate a retail warehouse store. The defendants argue that paragraph three of the lease is a restrictive use clause rather than a continuous occupancy clause. While the defendants concede that Jondex must operate a retail warehouse store if they choose to use the premises, they take the position that Jondex can vacate the premises and leave the store empty as long as they continue to pay rent. Thus, the defendants assert that Jondex, provided they continue to pay rent, possesses two options under the lease: (1) refrain from using the premises; or (2) use the premises as a retail warehouse store. We agree with the defendants and therefore reverse the court of appeals.

When interpreting a contract, "[i]t must be borne in mind that the office of judicial construction is not to make contracts or to reform them, but to determine what the parties contracted to do; not necessarily what they intended to agree to, but what, in a legal sense, they did agree to, as evidenced by the language they saw fit to use." The Wisconsin Marine & Fire Ins. Co. Bank v. Wilken, 95 Wis. 111, 115, 69 N.W. 354 (1897). Furthermore, when interpreting a lease agreement, courts should consider that "[a]lienations of land are, or ought to be, grave and deliberate transactions. Every conveyance should contain 'the certainty of the thing granted' to the full extent of the grant. What may be expressed enlarging or restricting the grant in particular cases, should not be left to implication...." Frank C. Schilling Co. v. Detry, 203 Wis. 109, 116, 233 N.W. 635 (1930).

When interpreting commercial lease agreements, this court has, for well over one hundred years, distinguished between continuous use clauses and restrictive use clauses. See Brugman v. Noyes, 6 Wis. 1 (1857); Henry Rahr's Sons Co. v. Buckley, 159 Wis. 589, 150 N.W. 994 (1915); Dougan v. H.J. Grell Co., 174 Wis. 17, 182 N.W. 350 (1921). In Brugman, this court held that a lease which stated that the premises were "to be used as cabinet warerooms" did not require the lessee to continuously use the premises as cabinet warerooms. Brugman, 6 Wis. at 14. In Henry Rahr's Sons Co., this court held that a lease provision which stated that "the premises were to be used for the purpose of hotel and saloon and bathing grounds" was merely a limitation of uses and not a covenant of continuous operation. Henry Rahr's Sons Co., 159 Wis. at 594, 150 N.W. 994. In Dougan, this court held that a lease provision which stated that "said premises to be used only for the purpose of manufacturing butter and cheese" was a restrictive use provision and did not require the lessees to continuously use the premises to manufacture butter and cheese. Dougan, 174 Wis. at 23, 182 N.W. 350. This court explained that:

[i]t is plain, however, that such language cannot be properly construed to imply an undertaking or obligation on the part of said lessees or their successors in interest that there should be continuously kept up for a period of ninety-nine years such butter and cheese industry. It can amount to no more at the most than to prevent the lessees from using the premises for some other than that purpose, but does not impose upon them the much greater liability and obligation of continuously carrying on the specified industry. Id.

Sampson argues that the cases cited above are not binding precedent because the language of the lease provision at issue in the present case can be distinguished from the language at issue in Brugman, Henry Rahr's Sons Co. and Dougan. Although the language at issue in the present case is not identical to the language used in Brugman, Henry Rahr's Sons Co. or Dougan, these cases apply to the present case because they established the rule that commercial lessees do not have to continuously operate a business in the absence of a lease provision which expressly requires continuous operation. See Rapids Associates v. Shopko Store, Inc., 96 Wis.2d 516, 518, 292 N.W.2d 668 (Ct.App.1980).

Sampson argues that this rule of law no longer applies because "much has changed in the world of commercial leasing" since this court established this principle. This court, however, stated that "[c]ourts should be most reluctant to overrule a prior decision that lays down a 'rule of property' or a rule that governs commercial transactions." State v. Surma, 263 Wis. 388, 395, 57 N.W.2d 370 (1953). We are especially reluctant to change the rule pertaining to continuous operation clauses, which are...

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