Franciscan Hotel Co. v. Albuquerque Hotel Co.

• Decision Date: 17 June 1933
• Docket Number: No. 3714.,3714.
• Citation: 37 N.M. 456,24 P.2d 718
• Parties: FRANCISCAN HOTEL CO.v.ALBUQUERQUE HOTEL CO.
• Court: New Mexico Supreme Court

37 N.M. 456

24 P.2d 718

FRANCISCAN HOTEL CO.

v.ALBUQUERQUE HOTEL CO.

No. 3714.

Supreme Court of New Mexico.

June 17, 1933.Rehearing Denied Aug. 28, 1933.

Appeal from District Court, Bernalillo County; Numa C. Frenger, Judge.

Action by the Franciscan Hotel Company against the Albuquerque Hotel Company. From the judgment, defendant appeals.

Affirmed.

Lessee's failure to prove that subjective state of mind of majority of members of board of directors of lessor coincided with that of lessee held not fatal to lessee's right to obtain reformation of lease.

Merritt C. Mechem and Bryan G. Johnson, both of Albuquerque, for appellant.

Fred E. Wilson, of Albuquerque, for appellee.

HUDSPETH, Justice.

By a lease of indenture dated April 17, 1923, the site of the Franciscan Hotel, in Albuquerque, was demised to the plaintiff for a period of fifteen years, at a nominal rental for the first eighteen months, at $1,150 per month for the next six months' period, at $1,816 per month for the next three years, etc., payable in advance on the 1st day of each and every month. The lessee covenanted (section 3) to pay, “in addition to such rent reserved, all property taxes, insurance, and other fixed charges” against the property. Paragraphs 3 and 4 of section 3 provide:

“It being further understood and agreed that in the event the sub-lets, and the rental of the ‘Coffee Shop’ at One Hundred and Fifty Dollars ($150.00) per month, do not equal the taxes, insurance and outside building upkeep, the lessor will and does guarantee that it will assume such excess, but upon the further undertaking that settlement of and for such difference between sub-let income, including a rental for the Coffee Shop at One Hundred and Fifty Dollars ($150.00) per month, from and after March 1, 1925 (which rental is included in and made a part of the rental consideration herein stipulated and set out), shall be made at the expiration of each five year period, during the term of this lease.

“It is furthermore agreed that lessee before closing any lease in connection with ‘sub-lets', will advise the President of lessor corporation in writing of terms of rent of such lease, and that lessor shall have the privilege of furnishing any other tenant, for a business not competitive or objectionable, who will pay a higher rental. The term ‘sub-lets' is understood to refer to and include all store rooms fronting on Central Avenue and Sixth Street, other than the room referred to as the ‘Coffee Shop.”’

At the expiration of the first five-year period, on January 1, 1929, it was found that the lessee had expended $20,986.40 for taxes on the premises, $4,583.12 for insurance of the premises, and $848.15 on outside upkeep of the building, thus making its total expenditures $26,417.67. Lessee had collected as rent from sublets, excluding the Coffee Shop, $11,114.25. The total rental for the Coffee Shop for this period, at $150 per month, amounted to $6,900.

Is the lessee, in the first five-year settlement of differences, entitled to $15,303.42, the difference between $26,417.67 and $11,114.25, or should an additional $6,900 be deducted from this difference, thus entitling plaintiff lessee to only $8,303.42? That is the principal question upon which the parties to this proceeding disagree.

In its action for an accounting, plaintiff (lessee) alleged in its first amended complaint that the real agreement between the parties was that the lessee was to pay each month to the lessor $150 per month for the Coffee Shop, and that it was not to credit the lessor with the amount of its rental in the five-year settlement of differences; that, through a mutual mistake of the parties and through the mistake of the scrivener who reduced their actual agreement to writing, section 3 of the lease failed to express the real understanding of the parties. The prayer for relief, which was in the alternative form, was that section 3 be reformed “so as to express the actual agreement had between the parties,” and that an accounting be had, based upon the terms of the contract as reformed, or, in the event that the court should determine that plaintiff was not entitled to reformation, nevertheless that plaintiff be awarded the same amount in an accounting “under the terms of the contract as written.”

The trial court gave judgment for the plaintiff in the amount of $15,303.42, and ordered paragraph 3 of section 3 to be reformed so as to read: “It being further understood and agreed that in the event the sub-lets do not equal the taxes, insurance and outside building upkeep, the lessor will and does guarantee that it will assume such excess, but upon the further understanding that settlement of and for such difference between sub-let income, excluding a rental for the Coffee Shop at one hundred and fifty dollars ($150.00) per month, from and after March 1, 1925 (which rental is included in and made a part of the rental consideration herein stipulated and set out), shall be made at the expiration of each five-year period, during the term of this lease.”

From this judgment and decree of reformation, lessor appellant prosecutes an appeal to this court.

[1][2][3][4][5][6] We shall first consider appellant's contention that the trial court erred in sustaining plaintiff's demurrer to the first defense contained in defendant's original answer.

In its first defense defendant alleged that, in a former suit between the same parties involving the same lease, plaintiff had, as a first cause of action stated in its complaint, declared upon the lease as it is written and had demanded an accounting thereunder; as a second cause of action, plaintiff had alleged a mutual mistake in reducing the agreement of leasing to writing and had prayed for a reformation of section 3 of the lease and an accounting under the lease as reformed; that in said former suit plaintiff had, on defendant's motion, been ordered to elect on which cause of action it would proceed, and had elected to proceed under the lease as written; that subsequently, and before defendant had answered, plaintiff had voluntarily dismissed said suit and begun the present action. To this defense plaintiff demurred, and the trial court sustained the demurrer.

It is appellant's contention that the plaintiff, in signifying its intention, when ordered to elect between the two causes of action set out in its complaint, to proceed upon the first cause of action, made a deliberate and conclusive election of remedies which bars it from seeking, in the present suit, a reformation of the lease. This contention we think to be without merit.

The doctrine of election of remedies, which is based upon principles of estoppel, is thus concisely stated in Henderson Tire & Rubber Co. v. Gregory (C. C. A.) 16 F.(2d) 589, 593, 49 A. L. R. 1510, to be as follows: “The doctrine stated in its simplest form means that, if a party has two inconsistent existing remedies on his cause of action and makes choice of one, he is precluded from thereafter pursuing the other.”

It is generally held that the bringing of an action at law upon a contract, which action does not proceed to a final determination upon the merits, is no bar to a subsequent suit to reform the contract and recover upon the contract as reformed. In Hillerich v. Franklin Ins. Co., 111 Ky. 255, 63 S. W. 592, 593, it was said: “The question, and the sole question is, whether the mere assertion of a claim upon the ground that it is covered and included in a contract as written is so inconsistent with a claim that the contract be so reformed as to include and cover such relief as to make it a conclusive election of the remedy, and bar the plaintiff of any right to seek relief upon the ground of mistake in the drawing of the written contract. We think the weight of authority is against the conclusiveness of the election.” See also, Segerstrom v. Holland Piano Mf'g. Co., 155 Minn. 50, 192 N. W. 191; Silber v. Gale, 38 Ohio App. 248, 175 N. E. 886; Spurr v. Home Insurance Co., 40 Minn. 424, 42 N. W. 206; Taylor v. Glens Falls Insurance Co., 44 Fla. 273, 32 So. 887; note, 49 A. L. R. 1514, and cases therein cited.

We see no reason, in principle or of policy, for giving greater finality to plaintiff's involuntary election to proceed upon the contract as written than is ordinarily given to the bringing in the first instance of an action upon a contract as written.

Our Code (Comp. St. 1929, § 105-406) permits the joinder of several causes of action in a complaint, both legal and equitable. Porter v. Alamocitos Land & Livestock Co., 32 N. M. 344, 256 P. 179. And, under our practice, when a plaintiff is in doubt as to his relief, he has the right to set forth his claim in several counts so as to meet the facts which are established on the trial. Ross v. Carr, 15 N. M. 17, 103 P. 307. In the case at bar, plaintiff could not be certain, in advance of trial, just what form the proof would take, and therefore what was the proper theory of relief. On the theory that the contract as written was not clear and unambiguous on its face, and that extrinsic evidence was admissible to explain the ambiguity, the court might, in the light of such extrinsic evidence, construe the written contract as plaintiff contends the actual agreement of the parties to have been. But, if the contract as written should, in the opinion of the court, be unambiguous and incapable of such construction, and if the proof should demonstrate that a mutual mistake had been made in reducing the actual agreement of the parties to writing, plaintiff's remedy would be reformation of the written contract under which an accounting was sought. The two counts were properly joined, and plaintiff should not have been required to elect, in advance of trial, upon which count it would proceed. However, our Code does not give an appeal from an order to elect (section 105-2502, New Mexico Statutes, 1929 Compilation); and the overruling and sustaining of a...