Hendrickson v. Freericks

• Decision Date: 21 November 1980
• Docket Number: Nos. 4292,4565 and 4605,s. 4292
• Citation: Hendrickson v. Freericks, 620 P.2d 205 (Alaska 1980)
• Parties: Joseph J. HENDRICKSON, Appellant, v. Charles FREERICKS, Phyllis Freericks, Sam Jeffcoat, and Andrew J. Hall, Appellees. Phylene JEFFCOAT, Cross-Appellant, v. Joseph J. HENDRICKSON, Cross-Appellee. Joseph J. HENDRICKSON, Appellant, v. Phylene JEFFCOAT, Appellee.
• Court: Alaska Supreme Court

Page 205

620 P.2d 205

Joseph J. HENDRICKSON, Appellant, v. Charles FREERICKS, Phyllis Freericks, Sam Jeffcoat, and Andrew J. Hall, Appellees.

Phylene JEFFCOAT, Cross-Appellant, v. Joseph J. HENDRICKSON, Cross-Appellee.

Joseph J. HENDRICKSON, Appellant, v. Phylene JEFFCOAT, Appellee.

Nos. 4292, 4565 and 4605.

Supreme Court of Alaska.

Nov. 21, 1980.

Opinion on Rehearing March 27, 1981.

Joseph W. Sheehan, Fairbanks, for appellant/cross-appellee Hendrickson.

H. Bixler Whiting, Whiting & Rosie, Fairbanks, for appellees/appellants Freericks, Jeffcoat, & Hall, and cross-appellant Phylene Jeffcoat.

Before RABINOWITZ, C. J., CONNOR, BOOCHEVER, ^* BURKE and MATTHEWS, JJ.

OPINION

BURKE, Justice.

These consolidated appeals arise from a dispute concerning a lease agreement to certain real property located in Fairbanks, Alaska (hereinafter referred to as the Young property).

Andrew Hall and Stanley Young owned adjacent pieces of property in downtown Fairbanks. In the 1940's, the two men entered into a party wall agreement and constructed adjoining office buildings on their respective properties. During the course of construction, Young ran short of money and so they agreed that Hall would complete Young's building. In exchange, Hall received a ten-year lease to Young's property. Seven years later, in 1959, the two agreed to extend the lease for twenty years in exchange for Hall's construction of an addition to Young's building. This twenty-year lease (hereinafter referred to as the Hall-Young Lease), which commenced in February, 1960, and expired in February, 1980, is the subject of this litigation.

In October, 1969, Hall entered into a "Real Estate Management Agreement" (hereinafter referred to as Management Agreement) with Charles and Phyllis Freericks, which effectively assigned his interest in the Hall-Young Lease to them. This agreement was made in conjunction with Hall's sale of his building to the Freericks.

In February, 1975, Young sold his interest in the Young property to Joseph Hendrickson. On May 16, 1975, Hendrickson, through his attorney, wrote to Andrew Hall and Charles Freericks and declared the Hall-Young Lease terminated. Two reasons were given as grounds for termination. The first was that the Management Agreement violated paragraph 13 of the Hall-Young Lease which prohibited assignment of the lease. The second reason given was that Freericks allowed the Young Building to be used as an entryway to a gambling operation in the Hall Building, and such illegal conduct was also in violation of the lease. Five days later, on May 21, 1975, Freericks sold the Hall Building and assigned his interest in the Management Agreement for the Young Building property to Phylene Jeffcoat.

On August 21, 1975, Hendrickson filed a trespass action against Freericks and Sam Jeffcoat ¹ seeking a permanent restraining order from future trespass. On July 13, 1976, the superior court granted summary judgment in favor of Hendrickson, enjoining Sam Jeffcoat from interfering with Hendrickson's interest in the Young Building. The court also declared that Hendrickson was the owner of the property in question. Hendrickson subsequently took over the management and control of the property from Jeffcoat.

On August 31, 1976, Hall, Freericks, and Phylene Jeffcoat (lessees and assignees of the Young property) sued Hendrickson for wrongfully interfering with their leasehold interest. They claimed that both assignments were made with the consent and knowledge of Stanley Young and that Hendrickson took the property subject to those assignments. On September 27, 1976, Hendrickson amended his original complaint for trespass, which had been filed against Sam Jeffcoat and Charles Freericks, to include Phyllis Freericks and Andrew Hall. ²

The trial on Hendrickson's amended complaint was held on August 4, 1978. The trial court ruled in favor of the lessees (Hall, Freericks, and Jeffcoat), finding that Hendrickson lacked standing to sue because the lease agreement was still under the control of Stanley Young and, in the alternative, that even if Hendrickson had standing, Young had waived compliance with the no-assignment clause, thus preventing forfeiture of the lease. As Hendrickson had been in control of the leased property since August, 1976, to the time of trial two years later, the trial judge also held that this violated the Hall-Young Lease and awarded damages, plus costs and attorney's fees, totaling $51,346.85 to Phylene Jeffcoat, for the period the property had been lost to her. Attorneys fees and costs in the amount of $3,150.00 were awarded to the Freericks. Hendrickson appealed.

Since August 3, 1978, Phylene Jeffcoat has been in control of the disputed property. On March 5, 1979, Hendrickson filed a forcible entry and detainer action against Jeffcoat for her alleged failure to pay rent due on the Young property. Jeffcoat filed a motion to dismiss the action, alleging that Hendrickson lacked standing to sue for the rental payments in light of the earlier trial court decision. The motion to dismiss was granted on the grounds of res judicata. Again, Hendrickson appealed and Phylene Jeffcoat cross-appealed, claiming that the trial court improperly calculated her damages.

I. HENRICKSON'S RIGHT TO SUE

The first question to be resolved is whether Joseph Hendrickson had standing to maintain a trespass action against lessees Hall, Freericks, and Jeffcoat. The trial court ruled that he did not. We disagree.

Resolution of this issue turns upon interpretation of language contained in the warranty deed conveying ownership of the Young Building and property to Hendrickson. After the description of the property being conveyed, the deed contained the following language:

Subject to and excepting from grantor's covenants: (1) reservations in U.S. Patent; (2) party wall agreement entered into between Stanley E. Young and Andrew J. Hall and Ann M. Hall recorded in Miscellaneous Records, Volume 14, Page 135; and (3) lease entered into September 28, 1959 by Stanley E. Young as lessor and Andrew J. Hall, as lessee, recorded in lease records, Volume 14, Page 176, expiring February 1, 1980. (Emphasis added.)

The lessees argued and the trial court agreed that the "subject to and excepting from" language meant that the right to enforce the terms of the lease remained with Young, and was never transferred to Hendrickson. Therefore, despite the sale of the property to him, Hendrickson had no power to enforce the lease.

The words "subject to" are frequently used in conveyances and have historically been interpreted as meaning "subordinate to," "subservient to," "limited by," or "charged with." Renner v. Crisman, 80 S.D. 532, 127 N.W.2d 717, 721 (1964). ³ When used in a deed these words are generally regarded as terms of qualification, not contract. They serve to put a purchaser on notice that he is receiving less than a fee simple. There is nothing in their use which connotes a reservation or retention of property rights. Id., 127 N.W.2d at 721 (citation omitted).

Although there are a few cases interpreting this phrase as reserving an interest in the grantor, i. e., not including that interest as part of the conveyance, these cases are exceptions to the general rule. They generally involve facts, in addition to the "subject to" clause, which indicate that the intention of the parties was to retain an interest in the property, or exclude it from the conveyance. For example, a number of cases interpreting these words as creating a reservation of rights in the grantor involve the reservation of an easement or subsoil rights to minerals. Kelley v. Haas, 262 S.W.2d 687 (Ky.1953); Dagrosa v. Calabro, 105 N.Y.S.2d 178 (N.Y.Sup.1951).

The phrase "excepting from," on the other hand, has generally been interpreted to mean "reserving." As used in a deed, most courts have interpreted the terms "reserving" and "excepting" to mean that the grantor retains some estate or right in the subject of the grant. Northwestern Public Service Co. v. Chicago & N. W. Railway Co., 84 S.D. 271, 170 N.W.2d 351, 354 (1969) (citation omitted).

Despite these differences in case law definitions, however, the primary factor considered by the courts in determining how these phrases are to be interpreted in the individual situation is the intent of the parties. Shilts v. Young, 567 P.2d 769, 773 (Alaska 1977). In the instant case, it is evident that it was Young's intention to pass all rights to Hendrickson. In his affidavit, Young stated:

It was my intent on execution of said warranty deed that I was conveying all my right, title and interest to said real estate, including my interest as lessor under the terms of that certain lease designated at (sic) the Hall-Young lease dated September 28, 1958. Upon completion of the execution of said warranty deed of February 5, 1975, I claimed no further interest to the said premises nor the lease executed between myself and Mr. Hall dated September 28, 1959.

Since this statement of Young was against his interest it sheds considerable light on the intent of the parties. Therefore, we conclude that the words "subject to and excepting from" as gleaned from the expressed intent of the parties in this case should be interpreted not as a reservation of a right of control in Young, but merely as words of qualification to put Hendrickson on notice that he would be taking the Young property subject to the Hall-Young Lease.

The trial court's decision on this issue also seems inconsistent with the statutory requirements for warranty deeds prescribed by AS 34.15.030(b). ⁴ In order to comply with the statute, it was necessary for Young to qualify his warranties. This was done through the "subject to and excepting from" language quoted previously.

Furthermore, it would appear to contravene sound public policy to say that Hendrickson lacked standing to enforce compliance with the lease terms, for such a holding would allow the lessees to wreak havoc...