Goodwin v. Upper Crust of Wyoming, Inc.

Decision Date05 March 1981
Docket NumberNos. 5392,5393,s. 5392
PartiesGary GOODWIN and Joan Goodwin, Appellants (Defendants), v. The UPPER CRUST OF WYOMING, INC., a Wyoming corporation, and David Miller, Appellees (Plaintiffs). The UPPER CRUST OF WYOMING, INC., a Wyoming corporation, and David Miller, Appellants (Plaintiffs), v. Gary GOODWIN and Joan Goodwin, Appellees (Defendants).
CourtWyoming Supreme Court

Ernest W. Halle, Cheyenne, signed the brief and appeared in oral argument on behalf of appellants in No. 5392 and appellees in No. 5393.

Richard A. Hennig and C. M. Aron, Laramie, signed the brief on behalf of appellees in No. 5392 and appellants in No. 5393. Hennig appeared in oral argument.

Before ROSE, C. J., and McCLINTOCK, RAPER, THOMAS and ROONEY, JJ.

RAPER, Justice.

This appeal arises from an August 20, 1980, judgment which found that Gary and Joan Goodwin (appellants) had breached a sublease agreement by vacating the leased premises prior to the agreement's expiration and awarded Upper Crust of Wyoming, Inc. and David Miller (appellees) $18,000 in damages and $27.40 in costs. All parties have appealed, and the following issues have been raised:

"1. Whether or not there was a valid sublease between the Appellees and the Appellants because of the failure of the owner of the premises to timely give its approval thereof.

"2. Whether or not, assuming a valid sublease between the parties, there was a constructive eviction because of the failure of the Appellees to obtain timely approval of the sub-lease thereby requiring the Appellants to remain in possession at their peril.

"3. Whether or not, assuming a valid sub-lease between the parties, the Appellees had a duty to mitigate damages after the Appellant(s) vacated the premises.

"4. Whether or not, assuming no valid sub-lease existed between the parties, the Appellants were in possession of the premises on a month to month tenancy or tenancy by sufferance.

"5. Assuming a valid lease between the parties, what is the measure of damages?

"6. Whether or not Appellees were entitled to prejudgment interest.

"7. Whether or not Appellees were entitled to recover their attorney's fees."

We will reverse and remand only for the inclusion of prejudgment interest in the award of damages.

The Mini Dome Mall, a partnership, on January 1, 1977 leased to Harry Taylor, Don Taylor, Frank Taylor, and Frank Lombardi space in the Mini Dome Mall complex located in Laramie. This lease contained a covenant prohibiting any underletting without the consent of the lessors.

On December 9, 1977, lessees entered into a sublease agreement with appellees. In the body of the sublease it was stated that the agreement was "subject to the approval of the Mini Dome Mall." A handwritten note was appended at the end of the agreement. It provided that the agreement was "expressly contingent upon the acceptance by the Mini Dome Mall" of structural changes in the premises. Further, "(i)f the Mini Dome Mall partnership does not approve of said structural changes by ____________ (the date was left blank) then this sub-lease shall be null & void." Mini Dome Mall's approval was forthcoming on January 9, 1978.

On August 1, 1978, appellees then in turn entered into a sublease agreement with appellants for a term of one year. The agreement contained a stipulation that it was subject to the approval of Mini Dome Mall. Appellants had occupied the premises for over two months when they gave notice that they were rescinding the lease offer and would vacate the premises by November 1, 1978. After they had left as noticed, Mini Dome Mall approved the sublease on November 15, 1978.

Written demands for delinquent rental payments were made by appellees on December 4, 1978, and February 13, 1979. Appellants refused to make the payments claiming that the Mini Dome Mall's approval of the agreement was a condition precedent to its enforceability. Since their rescission of the agreement occurred before Mini Dome Mall's approval, appellants asserted they were under no obligation to further perform.

This action was then commenced by appellees on July 31, 1979, seeking all unpaid rentals due under the lease agreement. The case was submitted to the district court judge on stipulations in May of 1980. Judgment was rendered generally for the plaintiffs on August 20, 1980.

The first issue we must address concerns the effect to be given the "subject to" language which appeared in the sublease entered into by the parties. Specifically, we must determine what is the legal effect of the provision making the sublease "subject to the approval of Mini Dome Mall."

Appellants concede that the general rule is that a sublessee cannot assert as a defense in an action based upon the sublease the fact that the sublease violates a covenant against underletting in the original lease. However, they argue that the rule is different when the sublease itself specifically provides that it is subject to the original lessor's approval, as it did here. In such circumstances, appellants contend that the required approval operates as a condition precedent, i. e. the contract is executory and nonbinding until the original lessor's approval is actually forthcoming.

Wyoming does not have any case law squarely on point. However, the rule is firmly established, here, that a contract, free from ambiguity on its face, can be interpreted as a matter of law. It is only when doubt arises from the contract itself as to what the parties meant that there exists a question of intent which the trier of fact must resolve. Madison v. Marlatt, Wyo.1980, 619 P.2d 708, 714.

Here the sublease provision may be read two ways. It states:

"AND WHEREAS, the parties hereto desire that Lessees sub-lease and Lessors lease said business, subject to the approval of the Mini Dome Mall and subject to the terms and conditions of said lease agreement and sub-lease agreement, except as modified by this agreement."

It is reasonable to interpret this language as creating either (1) a condition precedent i. e. Mini Dome Mall's approval had to occur before performance was due under the lease or, (2) a condition subsequent i. e. Mini Dome Mall's rejection of the sublease would have relieved the parties of any of their obligations still remaining due under the agreement. Johnston v. Landucci, 1942, 21 Cal.2d 63, 130 P.2d 405, 408, 148 A.L.R. 1355.

Whether a provision of a contract or deed is "(a) condition precedent or subsequent is not a question of phrase or form but of the intention of the parties." Atlantic Pacific Oil Co. of Montana v. Gas Development Co., 1937, 105 Mont. 1, 69 P.2d 750, 755. As indicated earlier, questions of intent must be resolved by the trier of fact. On appeal we must accept the trier's findings of fact as long as there exists a rational basis in the evidence for the conclusion. Fortin v. State, Wyo.1981, 622 P.2d 418. Here the trial judge found generally for the appellees. Of necessity that means he found the sublease provision was a condition subsequent. We cannot conclude that the evidence of the parties' conduct does not support the district judge's determination that the parties intended the "subject to" clause to be a condition subsequent. Therefore, we must uphold his decision that a valid sublease existed between the parties which could only have been legitimately terminated by Mini Dome Mall, the owner of the premises.

Next, appellant claims that even if the sublease was binding, there was a constructive eviction because of the failure of the appellees to obtain Mini Dome Mall's approval of the agreement within a reasonable time. When presented with a constructive eviction claim, the following passage from Seaboard Realty Co. v. Fuller, 1900, 33 Misc. 109, 67 N.Y.S. 146, 147 was quoted approvingly in Mileski v. Kerby, 1941, 57 Wyo. 109, 113 P.2d 950, 953:

" 'To constitute a constructive eviction, there must be an intentional and injurious interference by the landlord, which deprives a tenant of the beneficial enjoyment of the demised premises, or materially impairs such beneficial enjoyment. An eviction depends upon the materiality of the deprivation. If trifling, and producing no substantial discomfort or serious inconvenience, it will be disregarded, and will not afford cause for the termination of the relation of landlord and tenant. * * *' "

The court in Mileski, supra, also noted:

"In Meeker v. Spalsbury, 66 N.J.L. (60) 63, 48 A. (1026) 1027, in a careful opinion by Justice Collins, quoting from other authorities therein cited, it is said:

" 'That eviction must be "not a mere trespass, but something of a grave and permanent character done by the landlord with the intention of depriving the tenant of the enjoyment of the demised premises", and * * * more fully and accurately defined as, "an act of a permanent character done by the landlord in order to deprive, and which had the effect of depriving, the tenant of the use of the thing demised, or of a part of it." ' "

In Scott v. Prazma, Wyo.1976, 555 P.2d 571, 86 A.L.R.3d 338, this court again considered the doctrine of constructive eviction. There it acknowledged that:

"Constructive eviction involves the surrender of possession by the lessee on justifiable grounds rather than a deprivation of actual occupancy by direct action of the landlord. Grounds must amount to a substantial interference with possession or enjoyment. * * *" 555 P.2d at 579.

It also elaborated upon the notion of "intentional interference":

"There is some language in Mileski v. Kerby, supra, indicating that there must be an intent on the part of the landlord to deprive the tenant of the enjoyment and use of the premises before there can be a constructive eviction. That does not mean there must be an actual subjective intention in the mind of the landlord. It may be inferred from the character of the lessor's acts if their natural and probable consequences are such as to deprive the lessee of the use...

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