F. Rosenberg Elevator Co. v. Goll

• Decision Date: 08 January 1963
• Citation: 18 Wis.2d 355,118 N.W.2d 858
• Parties: F. ROSENBERG ELEVATOR CO., Inc., a Wis. corporation, Appellant, v. F. A. GOLL, Jr., Respondent.
• Court: Wisconsin Supreme Court

Page 858

118 N.W.2d 858

18 Wis.2d 355

F. ROSENBERG ELEVATOR CO., Inc., a Wis. corporation, Appellant, v. F. A. GOLL, Jr., Respondent.

Supreme Court of Wisconsin.

Jan. 8, 1963.

Affeldt & Lichtsinn, Eldred Dede, Milwaukee, for appellant.

Adolph I. Mandelker, Bernstein, Wessel, Weitzen & Lewis, Milwaukee, for respondent.

WILKIE, Justice.

This is a pleading and practice case. The circumstances presented undoubtedly raise issues on which the plaintiff should be entitled to its day in court. The sole issue is whether this is a proper case for declaratory relief under sec. 269.56, Stats. ¹ We are convinced that it is and that the demurrer to plaintiff's complaint therefore should have been overruled.

As stated in the leading case of State ex rel. La Follette v. Dammann (1936), 220 Wis. 17, 21, 264 N.W. 627, 628, 103 A.L.R. 1089, 'By its very terms it [the Uniform Declaratory Judgments Act] is 'declared to be remedial; its purpose is to settle and to afford relief from uncertainty and insecurity with respect to rights, status and other legal relations; and is to be liberally construed and administered.'' (italics ours) In that case the court at page 22, 264 N.W. at page 629, listed the familiar four prerequisites that must be present before a party can ask for a declaratory judgment.

'(1) [T]here must exist a justiciable controversy; that is to say, a controversy in which a claim of right is asserted against one who has an interest in contesting it;

'(2) [T]he controversy must be between persons whose interests are adverse;

'(3) [T]he party seeking declaratory relief must have a legal interest in the controversy, that is to say, a legally protectible interest;

'(4) [T]he issue involved in the controversy must be ripe for judicial determination. Declaratory Judgments, Borchard, pp. 26-57.'

On this appeal we must determine whether the instant complaint meets all four tests and thus withstands the demurrer.

In its complaint the plaintiff is asking for relief in three different respects. It is asking for (1) a declaration by the court of the reasonable rental value of the premises in view of the breach of the construction contract; (2) a return of that part of the rental money it has already paid over the amount that the court determines the monthly rental to be (this demand was indicated more precisely in oral argument and is otherwise contained in plaintiff's general prayer for relief); and (3) a reduction in the option price of the premises, also in view of the breach of the construction contract. No construction or interpretation of the contract terms is asked for. No reformation of any agreement is contemplated. The whole point of asking for declaratory relief is that the plaintiff believes the rental should be reduced and it does not want to work a forfeiture by taking the matter into its own hands by paying a reduced rent. It also wants to know how much the option purchase price should be fairly reduced because of the alleged breach.

The trial court, in sustaining the demurrer, held that:

'The relief prayed for is not within the literal scope set forth in this subsection [referring to sub. (1) of sec. 269.56, Stats.]. A declaration of 'rights, status, and other legal relations' has not been prayed for by the plaintiff. The defendant is not contesting the plaintiff's right to occupy the premises and to use it in a manner conforming to the contract, nor does it deny to the plaintiff the right to exercise any of its options provided in the lease contract. The status of the plaintiff as tenant and optionholder is not in dispute. No issue of legal relations has been raised by the plaintiff's complaint.'

In essence, the trial court held that since the matter of construction or validity of the contract is not in issue, the court cannot grant declaratory relief. With respect to the option price controversy, the court also held that it could not grant declaratory relief. The court stated:

'The complaint fails to state facts sufficient to support a cause of action for declaratory relief for future damages arising out of the breach of contract by the defendant inasmuch as no issue of the construction of the contract is involved. Similarly, the cause of action based upon the breach with respect to the property right in the option to purchase is not a matter of construing the contract. In addition to this objection, there is the further infirmity with respect to the option clause in that it falls within the rule set forth in the Heller Case [Heller v. Shapiro (1932), 208 Wis. 310, 313, 242 N.W. 174 ] that the court cannot act in a mere advisory capacity or take cognizance of questions that may never arise.'

Although from the allegations of the complaint there appears to be no question of construction or validity of a contract or lease involved here, that does not necessarily mean that there are no questions concerning the rights of the parties to be litigated.

While it is true that we have held on many occasions declaratory relief is not available 'upon a state of facts that may or may not arise in the future' ², it is also true that our court has permitted declaratory relief to be invoked where there is an existing state of facts that can properly form the basis for a declaration or adjudication. ³

1. The controversy concerning the alleged reduced rental value resulting from the alleged breach of contract is the proper subject of declaratory relief. The complaint alleges that contrary to the precise plans and specifications the building was built well below grade rather than above as specified. The contention is that this results in a building of substantially lesser rental value. The first question to be determined is whether there has been a breach. The second question to be determined, if there has been a breach, is the amount of the reduced rental. This clearly presents a 'justiciable controversy', involving persons 'whose interests are adverse' and the plaintiff as the tenant-purchaser under this construction-lease-purchase agreement has a 'legally protectible interest', the controversy concerning which is 'ripe for judicial determination.'

Although there is no construction question such as is contemplated by sec. 269.56(1), Stats., the decree sought 'will terminate the controversy or remove an uncertainty' as provided under sec. 269.56(5). ⁴

The alternative to declaratory relief would be to require the lessee either to make payment of rents as provided and then to sue in damages for breach of contract by the lessor or to face a claim for forfeiture or for damages in the event it takes the matter into its own hands and pays the reduced rental value. These are alternatives that the declaratory relief action is designed to make unnecessary. ⁵

2. Where declaratory relief is proper for determining the rights of parties in the controversy concerning alleged reduced rental value, the court should proceed to award any damages that may follow from and be incidental to its declaration of such rights. In the instant case the complaint alleges that the plaintiff has occupied the premises since prior to July 1, 1960, and has been paying the prescribed rental. Although the plaintiff does not specifically ask for damages representing the portion of the past rental payments that will be considered to be in excess in the event that there is a determination that the rental value and payments should be reduced from the prescribed amounts as a result of the alleged breach, the plaintiff on oral argument made it plain that it desired such relief and presumably this is covered by that provision in its overall prayer for relief asking for 'such other and further relief as may in the premises be just and equitable.'

It is not the role of declaratory judgment to take the place of an action for damages. ⁶ But in a proper case for declaratory relief, where the court has entered a decree adjudicating the rights of parties and where the granting of relief in the form of damages may be predicated on that determination of rights, the court making the determination should also make that award of damages. ⁷

The basic purpose of the declaratory relief procedure would be served here by having the incidental award of damages for excessive past rentals paid if the same can be fairly and accurately determined, as it should be, on the basis of the court's determination of rental values.

3. The controversy concerning the alleged reduction in the option price contained in the construction-lease-purchase agreement, which reduction would result from the alleged breach of contract, is the proper subject of declaratory relief. The plaintiff alleges that the option price in the construction-lease-purchase agreement should be reduced by $25,000 because the building value has decreased due to the alleged breach of contract.

We have heretofore held that under declaratory relief a court cannot act 'in a mere advisory capacity or take cognizance of questions that may never arise * * *.' ⁸

But here the option, as alleged, is an interest in real estate ⁹ and the option provisions in the contract express present rights and form an integral part of the whole agreement covering construction of the building and lease and purchase by...