First Nat. Bank of Mobile v. Duckworth

• Decision Date: 30 January 1987
• Parties: FIRST NATIONAL BANK OF MOBILE, as Trustee under the will of Lua G. Gallalee, deceased; et al. v. Joe B. DUCKWORTH and Everett Hale as trustees of the Professional Center Trust. 84-1363.
• Court: Alabama Supreme Court

Page 709

502 So.2d 709

FIRST NATIONAL BANK OF MOBILE, as Trustee under the will of Lua G. Gallalee, deceased; et al. v. Joe B. DUCKWORTH and Everett Hale as trustees of the Professional Center Trust.

84-1363.

Supreme Court of Alabama.

Jan. 30, 1987.

Robert P. Denniston and Caroline Wells Hinds of Brown, Hudgens, Richardson, Mobile, for appellants.

J. Sydney Cook III of Rosen, Harwood, Cook & Sledge, Tuscaloosa, for appellees.

PER CURIAM.

The First National Bank of Mobile, as Trustee under the will of Lua G. Gallalee, deceased, together with Mrs. Lua Gallalee's son Jack C. Gallalee and daughter Lua G. Martin, as owners of the fee simple title to certain real property on University Boulevard in Tuscaloosa, entered into a 51-year ground lease, dated May 10, 1963, to Ward McFarland, Inc. The plaintiffs in this litigation, Joe B. Duckworth and Everett Hale, as trustees of the Professional Center Trust, succeeded to the interest of the original lessee. The original lessors are parties defendant to this litigation, except that the Bank and Jeppie A. Gallalee, the widow of Jack C. Gallalee, are successors in interest to Mr. Gallalee.

The plaintiffs filed a declaratory judgment action seeking construction of the lease, specifically the method of determining the rent for the 5-year period beginning on May 15, 1983, and for the later rental periods stated in the lease.

Rental payments after the first 20 years of the lease are based upon the following clause in the lease:

"2. The rent for the twenty-first (21st) through the twenty-fifth (25th) years of the lease shall, at the option of the Lessor, be (a) $32,508.90 payable in sixty (60) equal monthly installments of $541.82; or (b) Thirty (30%) percent of the value of the leased premises as determined by an appraisal, as provided below payable in sixty (60) equal monthly installments."

Paragraph 9 of the lease provides for the selection of an appraiser and for rent to be a stated percentage of the value of the leased premises as determined by the appraisal. Paragraph 9 reads as follows:

"Any appraisal as provided in parts (b) of paragraphs numbered 2, 3, 4, 5, 6 and 7 above, shall be made by a reputable appraiser or realtor in Tuscaloosa, at the cost of Lessor. In case of any question as to the qualification of the appraiser chosen by Lessor, Lessor shall submit to Lessee a list of three (3) persons whom Lessor considers qualified, and who are members of the Appraisers Institute or licensed realtors doing business in the City of Tuscaloosa, Alabama, and Lessee shall choose one person from such list, which person so chosen shall make the appraisal mentioned. In such appraisal no buildings on said property are to be considered in arriving at the value of the leased premises, whether said improvements were made by the Lessee or by others, but the appraiser shall consider such matters as paved streets, drainage, and other improvements which are not buildings. Lessee shall be furnished a copy of such appraisal." (R. 137-138).

The parties stipulated to the following facts:

"That a reputable appraiser in Tuscaloosa was selected in the manner provided in said Paragraph 9, to wit, James D. West, MAI, SRPA, and on November 26, 1982, an appraisal was rendered by Mr. West, which stated that the market value of the subject property as of November 23, 1982, was Four Hundred Sixty Two Thousand and No/100 ($462,000.00) Dollars, a copy of said appraisal being attached hereto as Exhibit "D." In rendering his appraisal no buildings or other improvements (except site improvements) were considered in arriving at the value, and the impact or existence of the unexpired terms of the lease itself was not considered. Based upon his valuation, the monthly rent for the twenty-first (21st) through twenty-fifth (25th) years of the Lease would be in the amount of Two Thousand Three Hundred Ten and No/100 ($2,310.00) Dollars."

Since the beginning of the 21st year, all lease payments of $2,310 per month were paid by the plaintiffs under protest.

The case was tried without a jury on a stipulation of facts, certain testimony, and exhibits. The trial court entered a judgment in favor of the plaintiffs. The court found that the term "value of the leased premises" was ambiguous and subject to more than one interpretation. The trial court ordered the defendant lessees to employ an appraiser to determine the value of the leased premises taking into consideration the effect of the lease agreement itself. We reverse.

When evidence is presented to a trial court sitting without a jury, the general rule is that its findings will be presumed correct and will not be disturbed on appeal in the absence of plain and palpable error. However, if the evidence before the trial court is undisputed, as in the present case, this Court must consider the evidence de novo, indulging no presumptions in favor of the trial court's findings. Sasser v. Spartan Foods Systems, Inc., 452 So.2d 475 (Ala.1984).

We agree with the trial court's determination that the lease is ambiguous as to whether the existence of the lease itself is to be considered in arriving at the "value of the leased premises." The lease agreement provides no guidance regarding the method of appraisal to be used, and it does not specifically define the term "leased premises."

An ambiguous contract is to be construed according to the intention of the parties thereto, which is to be gathered from the contract as a whole and by examining the actions of the parties and the subject matter of the contract. Gulf Fishing & Boating Club, Inc. v. Bender, 370 So.2d 1026 (Ala.Civ.App.1979).

The parties in this case stipulated that none of the original contracting parties to the lease was available to...