Fairlawn Plaza Development, Inc. v. Fleming Co., Inc.

• Decision Date: 04 November 1972
• Docket Number: No. 46651,46651
• Citation: 210 Kan. 459,502 P.2d 663
• Parties: , 58 A.L.R.3d 372 FAIRLAWN PLAZA DEVELOPMENT, INC., Appellant, v. The FLEMING CO., INC., Appellee.
• Court: Kansas Supreme Court

Page 663

502 P.2d 663

210 Kan. 459, 58 A.L.R.3d 372

FAIRLAWN PLAZA DEVELOPMENT, INC., Appellant, v. The FLEMING CO., INC., Appellee.

No. 46651.

Supreme Court of Kansas.

Nov. 4, 1972.

Syllabus by the Court

1. Ambiguity in a written instrument does not appear until application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper one.

2. When the terms of a lease are plain and unambiguous the meaning must be determined by its contents alone.

3. In considering a motion for summary judgment the movant's adversary is entitled to the benefit of all reasonable inferences that may be drawn from the facts under consideration. (Following, Rothwell v. Transmeier, 206 Kan. 199, Syl. 3, 477 P.2d 960.)

4. No issue, other than an issue going to the jurisdiction of the court over the subject matter of the litigation, will be considered on appeal unless included in the statement of points in the record on appeal, in accordance with Supreme Court Rule No. 6(d) (205 Kan. xxix.) relating to appellate practice.

5. A motion for relief from a final judgment under K.S.A. 60-260(b) is addressed to the sound discretion of the trial court, and upon appeal its action is reviewable only for abuse of discretion.

6. In a declaratory judgment action, brought to construe a shopping center build and lease agreement providing for rent based on a percentage of the gross sales of lessee's retail food supermarket, the agreement is examined and it is held: The trial court correctly construed the agreement when it found that the portion of baked goods, produced by lessee's sublessee in a bakery on the leased premises, which was sold to affiliate stores of the sublessee was excluded from gross sales by reason of a provision of the lease agreement providing that 'Transfers of merchandise between stores of sub-lessees are not Gross Sales.'

Robert R. Irwin, of Irwin, Irwin & Schowengerdt, Topeka, argued the cause and was on the brief for appellant.

Terry L. Bullock, of Cosgrove, Webb & Oman, Topeka, argued the cause and was on the brief for appellee.

KAUL, Justice.

This is an action for a declaratory judgment to construe the terms of a shopping center 'Build and Lease Agreement.' The lease provides for payment of rents based on a percentage of gross sales of the lessee's supermarket if the percentage amounts to a sum greater than the minimum fixed cash rent agreed upon.

Defendant's sublessee operates a bakery on the premises. The question in the case is whether the portion of the baked goods sold or transferred to affiliated stores of the sublessee are to be included in the term 'gross sale' as defined in the lease.

Plaintiff-lessor appeals from a summary judgment rendered for defendant-lessee.

Both parties filed motions for summary judgment, at which time the trial court had before it the pleadings, affidavits and exhibits from which the facts are gleaned.

The build and lease agreement was executed on September 20, 1960. It declared that:

'. . . (T)he LESSOR desires to construct a building and surrounding area as a part of the FAIRLAWN PLAZA SHOPPING CENTER, said building to be located as approved by the parties hereto . . . and the LESSEE desires to lease said building and surrounding area for the operation of a retail food supermarket.'

Section 2 of the lease agreement reads:

'The LESSOR agrees to cause construction of a building containing approximately 18,561 square feet, together with a parking area and a service area (said building, parking area and service area herein together called the premises), all to be carried on in accordance with the attached plans and specifications.

'This lease shall not become effective until both partis have approved the plans and specifications and have initialed and attached hereto a copy thereof. The LESSOR agrees that at the option of the LESSEE this lease shall become null and void if construction of the premises is not begun on or before December 1, 1960, and if thereafter construction is not completed with all reasonable diligence.' (Emphasis supplied.)

The agreement further provides for a lease term of fifteen years with an option granted to lessee to extend the lease for three additional periods of five years.

Provisions concerning the amount of rent and the payment thereof appear in Section 5 of the lease agreement. In substance it was agreed that lessee should pay an annual rent of $26,727.84 in monthly payments of $2,227.32, or one and one-quarter percent of all gross sales, as defined, in any one calendar month, whichever is greater. This section of the lease was amended by a supplement to the lease executed on July 12, 1965. The supplement provides for an annual fixed rent of $15,000.00, instead of $26,727.84, until lessor had completed construction of an additional 80,000 square feet of building area in the shopping center. After completion of the additional construction the rent provisions originally agreed upon were to become effective.

The portion of the lease agreement which gives rise to the dispute between the parties is the definition of 'gross sales' which appears in Section 5 as follows:

'The term 'gross sales' as used herein shall include all sales of merchandise from, through, or out of the leased premises, including performance of any service for any customer or patron for compensation by the LESSEE, or by any salesman, saleswoman, or employee, and shall include all sales by every portion and department thereof, and sale by any sublessee, concessionaire, or licensee in said premises for cash or on a charge basis, paid or unpaid, collected or uncollected, and including all business in which orders come by mail, telephone or telegraph, and all business where goods are delivered directly by the supplier to the purchaser (whether or not actually handled by the LESSEE), less credit for returned merchandise, merchandise trade-ins, and credits of a similar nature; and 'gross sales' shall not include sales tax. Transfers of merchandise between stores of sub-lessees are not Gross Sales.' (Emphasis supplied.)

The remainder of the lease agreement deals with insurance responsibility, additions, alterations, damage to the premises, and other matters not pertinent to the dispute in litigation.

Plaintiff-lessor, as agreed, proceeded to and specifications attached. The building and specifications attched. The building encompassed a total of 18,561 square feet of which 2,214 square feet was devoted to a bakery operation.

Three days after the execution of the 'Build and Lease Agreement,' on September 23, 1960, the defendant subleased the premises to Ernest R. Dibble; Paul L. Dibble, and John W. Dibble. On April 3, 1968, the original sublessees assigned all of their interests as sublessees to Dibble Fairlawn, Inc. John W. Dibble is the sole owner of all of the outstanding capital stock of Dibble's Fairlawn, Inc. Since the commencement of the terms of the lease between plaintiff and defendant, the sublessee has operated a retail grocery supermarket on the premises and during such time there were three other Dibble stores which were at all times, following the commencement of the lease term, affiliates and operated in conjunction with the store operated by the sublessee.

Since the commencement of the lease term the sublessee has operated a bakery on the premises in question, and part of the products of the bakery has been delivered to the three affiliated stores and sold at retail therein.

After the lease agreement had been in effect for about six years, plaintiff says it discovered that defendant had not included in gross sales the bakery products delivered to the three affiliated stores. Defendant took the position that the furnishing of bakery goods from the Dibble's Fairlawn Plaza store to the other Dibble stores did not fall within 'gross sales' as used and defined in the 'Build and Lease Agreement.' Whereupon plaintiff filed this declaratory judgment action praying:

'. . . that the Court interpret and construe the Build and Lease Agreement and the Supplement thereto. . . .'

The trial court held that the bakery operation was excluded under the lease provisions defining 'gross sales' because it is a transfer of merchandise between the stores of the sublessee.

On appeal both parties take the position that there are no ambiguities in the lease if the language used therein is given its ordinary meaning. Nevertheless, both parties supply us with citations of the various rules of construction which would be applicable if we were to find ambiguity in our examination of the lease on appeal.

Testing the lease provisions in question, by giving the language used its ordinary meaning, we do not believe the words used can genuinely be understood to have two different meanings. Thus, under familiar applicable rules, ambiguity does not exist. (Stewart v. Preferred Fire Ins. Co., 206 Kan. 247, 477 P.2d 966; Wood v. Hatcher, 199 Kan. 238, 428 P.2d 799; and Simonich, Executrix v. Wilt, 197 Kan. 417, 417 P.2d 139.) It follows that the meaning of the provisions in question must be determined by the contents of the lease agreement alone, and words cannot be written into it which import an intent wholly unexpressed when it was executed. (Williams v. Safeway Stores, Inc., 198 Kan. 331, 424 P.2d 541; and Wood v. Hatcher, supra.)

In its first and principal point of error on appeal, plaintiff contends the summary judgment of the trial court was erroneous because the bakery goods produced and processed in the leased facility and sold to other Dibble stores constituted wholesale sales subject to the rental based on percentage of gross sales and were not transfers of merchandise. Plaintiff argues that the furnishing of bakery products to the other Dibble stores constituted a sale of merchandise from or out of the leased premises or the performance of a service for compensation.

Defendant, lessee, on the...