Brookings Mall, Inc. v. Captain Ahab's, Ltd., 13062

• Citation: 300 N.W.2d 259
• Decision Date: 27 January 1981
• Docket Number: No. 13062,13062
• Parties: BROOKINGS MALL, INC., A Corporation, Plaintiff and Appellee, v. CPT. AHAB'S, LTD., A Corporation, d/b/a Cpt. Ahab's East Indies Cargo Co., Ltd., and d/b/a Iron Creek, Defendant and Appellant.
• Court: Supreme Court of South Dakota

Page 259

300 N.W.2d 259

BROOKINGS MALL, INC., A Corporation, Plaintiff and Appellee, v. CPT. AHAB'S, LTD., A Corporation, d/b/a Cpt. Ahab's East Indies Cargo Co., Ltd., and d/b/a Iron Creek Defendant and Appellant.

No. 13062.

Supreme Court of South Dakota.

Argued Oct. 23, 1980.

Decided Dec. 23, 1980.

Rehearing Denied Jan. 27, 1981.

James E. Kessler of Erickson & Kessler, P.C., Brookings, for plaintiff and appellee.

N. Dean Nasser, Jr., Sioux Falls, for defendant and appellant.

HENDERSON, Justice.

ACTION

Appellant Captain Ahab's Ltd., d/b/a Captain Ahab's East Indies Cargo Co., Ltd. and Iron Creek, appeals from a judgment by the trial court permanently enjoining appellant from engaging in the sale of domestic records or tapes at its store unit located in the Brookings Mall Inc., appellee, in the city of Brookings, South Dakota. Four separate errors, appellant maintains, were committed by the trial court below. We disagree and affirm.

FACTS

On November 25, 1974, appellant and appellee entered into a lease agreement whereby appellant would occupy a store unit located in the Brookings Mall in Brookings, South Dakota. Appellant commenced occupation of the unit on April 26, 1975. The lease expires January 31, 1981. Article V, Section 1 of the lease provides that the leased premises may be used and occupied only for the sale of imported goods, jewelry, water beds, potted plants, and related foreign and domestic items and for no other purpose or purposes without the written consent of the landlord (appellee). At the time the lease negotiations were occurring, there existed an operating CAPTAIN AHAB'S business in Sioux Falls, South Dakota, which was visited by a representative of appellee. The CAPTAIN AHAB'S in Sioux Falls did not sell records or tapes.

Appellant used and occupied the leased premises from April 26, 1975, to January of 1979 in essentially the manner prescribed in Article V, Section 1 of the lease. No trouble over the lease arose during this period of time.

On August 29, 1978, appellant (through Roger F. Ensenbach, its president) informed appellee by letter that it planned to commence a going-out-of-business sale and reopen under the name IRON CREEK on December 1, 1978, at the leased premises. IRON CREEK is a name generally associated with the selling of records and tapes in South Dakota. On September 1, 1978, appellant received written notice from appellee that the selling of records and tapes at its Brookings Mall store unit would be a violation of Article V, Section 1 of the lease agreement, and would not be in the best interests of the shopping center.

Later, in September of 1978, Ensenbach met with Mark D. Norgaard (manager of appellee) at the Brookings Mall. At this meeting, Norgaard stated to Ensenbach that appellant could not sell records or tapes at the Brookings Mall. At trial, Ensenbach testified that, subsequent to Norgaard's initial objection, Norgaard seemed to be acquiescing to the idea of appellant selling records and tapes. According to Ensenbach, Norgaard asked him how many square feet of the store would be used for the selling of records and tapes. Ensenbach testified that after the meeting had concluded, he "felt it was okay for me to have a limited number of records in (the store)." This appears to be a self-serving, unilateral declaration.

Approximately January 1, 1979, appellant began doing business under the name IRON CREEK and began engaging in the retail sale of records and tapes. At this time, appellant began advertising through a local university newspaper and a Brookings radio station that it was in the record and tape business. On January 3, 1979, appellant received written notice from appellee that it would be a violation of its lease to sell records and tapes. Appellant again received written notice from appellee on January 18, 1979, stating that it would be a lease violation to sell records and tapes.

Prior to issuance of a preliminary injunction by the trial court, approximately forty percent of appellant's gross sales came from the sale of records and tapes. These records and tapes were not shown at trial to be imported. On January 31, 1979, appellee commenced its action against appellant seeking to enjoin appellant from violating Article V, Section 1 of the lease agreement regarding the sale of records and tapes at its store unit in the Brookings Mall.

ISSUES

I.

Did the trial court err in holding that Article V, Section 1 of the lease agreement was violated by appellant due to its sale of domestically produced records and tapes?

II.

Did the trial court err in holding that appellee's refusal to consent to appellant's sale of domestically produced records and tapes was not unlawful?

III.

Did the trial court err in holding that Article V, Section 1 of the lease agreement does not constitute an unreasonable restraint of trade?

IV.

Did the trial court err in holding that a permanent injunction was a necessary and proper remedy under the facts involved?

Our holding is in the negative on all four issues and our rationale is discussed below.

DECISION

I.

Appellant contends that the trial court erred in holding that the sale of domestic records and tapes did not constitute the sale of "related and foreign and domestic items," as provided in Article V, Section 1 of the lease agreement. Article V, Section 1 of the lease states in pertinent part:

The leased premises may be used and occupied only for sale of imported goods, jewelry, water beds, potted plants and related foreign and domestic items (subject always to the provisions of Section 2 of this Article V) and for no other purpose or purposes without the written consent of LANDLORD.

Under the doctrines of 'ejusdem genesis' and 'noscitur a sociis,' the general words "related foreign and domestic items" do not entail domestic records and tapes when defined in context of the specifically enumerated items preceding it. Appellant does not contend that this interpretation is necessarily erroneous. Appellant does argue, however, that a parol contemporaneous agreement between the parties placed a construction on the lease which caused appellant to reasonably believe that it could sell records and tapes. Such a construction, contends appellant, should be found to be binding on the parties to the lease. In Huffman v. Shevlin, 76 S.D. 84, 89, 72 N.W.2d 852, 855 (1955), we stated:

The primary rule in the construction of contracts is that the court must, if possible, ascertain and give effect to the mutual intention of the parties.... If the intention of the parties is not clear from the writing, then it is necessary and proper for the court to consider all the circumstances surrounding the execution of the writing and the subsequent acts of the parties.

We expressed in Jensen v. Pure Plant Ford Int., Ltd., 274 N.W.2d 261, 263-264 (S.D.1976), that:

Parol or extrinsic evidence may not be admitted to vary the terms of a written instrument or to add to or detract from the writing. When the writing is uncertain or ambiguous, however, such evidence is admissible to explain the instrument. Christiansen v. Strand, 81 S.D. 187, 132 N.W.2d 386 (1965). "In other words, evidence is resorted to where the ambiguity may be dispelled to show what they meant by what they said, but not to show that the parties meant something other than what they said." Id. at 193, 132 N.W.2d at 389. "A contract is ambiguous when, after application of pertinent rules of interpretation to the face of the instrument, a genuine uncertainty exists as to which of two or more meanings is the proper one." Boyer v. Iowa High School Athletic Association, 260 Iowa 1061, 1069, 152 N.W.2d 293, 298 (1967). And see Piechowski v. Case, 255 N.W.2d 72 (S.D.1977). Whether the language of a contract is ambiguous is ordinarily a question of law for the court. Employers Liability Assur. Corp. v. Morse, 261 Minn. 259, 111 N.W.2d 620 (1961).

Neither party objected to the admission of parol evidence at trial regarding the lease. This evidence was received to determine a proper construction of the lease. Appellant contends that there was an understanding between Ensenbach and Grootwassink (appellee's leasing agent when the lease was negotiated) that appellant would, or could, sell records and tapes. Ensenbach's interpretation stemmed from the fact that, immediately prior to the lease being signed, Grootwassink toured appellant's three stores located in Sioux Falls, one of which (operating under the name of IRON CREEK) sold records and tapes. SDCL 53-8-5, however, states: "The execution of a contract in writing, whether the law requires it to be written or not, supersedes all the oral negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument." Appellant is attempting to modify the lease by its belief in the existence of an oral understanding. We will not permit it to do so. The trial court found that appellee never consented to the sale of records and tapes by appellant. Such a finding is not clearly erroneous under the state of the record. SDCL 15-6-52(a); Drake v. Sample, 279 N.W.2d 685 (S.D.1979); Cunningham v. Yankton Clinic, P.A., 262 N.W.2d 508 (S.D.1978).

Upon review of the evidence presented to the trial court in conjunction with appellant's contentions, we hold that the trial court did not err in holding that the sale of records and tapes by appellant did not constitute a sale of "related foreign and domestic items."

II.

Appellant argues in the alternative that the trial court erred in ruling that appellee's refusal to consent to appellant's sale of records and tapes was lawful.

Article XIX of the lease states that the "LANDLORD agrees that whenever under this lease provision is made for TENANT securing the written consent of LANDLORD, such written consent shall not be unreasonably withheld." Appellant maintains that no good reason exists to preclude it from selling records and tapes at the Brookings...