Homes Oil Realty Co. v. Hechinger Properties Co.

• Decision Date: 14 June 1962
• Docket Number: No. 2954.,2954.
• Parties: HOMES OIL REALTY CO., Inc., a corporation, Appellant, v. HECHINGER PROPERTIES COMPANY, a corporation, Appellee.
• Court: D.C. Court of Appeals

Page 62

182 A.2d 62

HOMES OIL REALTY CO., Inc., a corporation, Appellant, v. HECHINGER PROPERTIES COMPANY, a corporation, Appellee.

No. 2954.

Municipal Court of Appeals for the District of Columbia.

Argued April 2, 1962.

Decided June 14, 1962.

Werner Strupp, Washington, D. C., for appellant.

Gilbert Hahn, Jr., Washington, D. C., with whom Bruce G. Sundlun and Ronald Rosenberg, Washington, D. C., were on the brief, for appellee.

Before HOOD, Chief Judge, QUINN, Associate Judge, and MYERS, Associate Judge of The Municipal Court for the District of Columbia, sitting by designation.

HOOD, Chief Judge.

Appellee, the owner of a gasoline filling station, sued appellant, its tenant, for two months' unpaid rent and for taxes alleged to be due and unpaid. The tenant denied owing the amount of taxes claimed, and, while admitting the rent was unpaid, contended in defense and by counterclaim that the rent should have been adjusted because traffic passing the filling station had been restricted for a period while the bordering roadway was being widened. The trial court found for the owner on its claim and denied the counterclaim. This appeal involves the meaning of two provisions of the lease.

1. THE PROVISION RELATING TO PAYMENT OF TAXES.

The lease states a flat monthly rental, an additional sum of rent for each gallon of gasoline sold in excess of a certain number every month, and then provides:

"TENANT shall pay as additional rent, during the term of this lease, any increase in real estate taxes upon the premises and improvements demised in excess of Three Hundred Thirty-Seven Dollars and Fifty Five Cents ($337.55). TENANT agrees to pay LANDLORD upon the presentation of receipted bills for such taxes a sum equal to the excess over said Three Hundred Thirty Seven Dollars and Fifty Five Cents ($337.55)."

On August 1, 1959, the effective date of the lease, the taxes attributable to these premises totalled $524.40 rather than $337.55. In 1960 and 1961 the taxes chargeable to the property were $547.40. The owner claims the tenant is liable for each of the two years for the difference between the taxes stated in the lease, $337.55, and the actual taxes, $547.40. The tenant admits that the taxes have increased since the signing of the lease, but contends that its liability is limited to such increase, that is, the excess of $547.40 over $524.40.

The owner offered no explanation for the insertion in the lease of the figure $337.55 instead of the then actual taxes. The tenant does not claim that the figure was inserted fraudulently or with intent to deceive. The starting point in ascertaining the meaning of the provision must therefore be in the language of the lease. The meaning of a written agreement "is to be ascertained from the words used, if it can be understood from them. If the language is ambiguous, then the intent of the parties must be ascertained by some other means." Zellan v. Cole, 87 U.S.App.D.C. 9, 183 F.2d 139.

The tenant emphasizes the first sentence of the paragraph which obligates it to pay "any increase" and argues that this obviously refers to a contingency which the parties contemplated could occur in the lifetime of the lease, and that it could have no reference to an increase which had occurred prior to making the lease. The owner emphasizes the second sentence of the paragraph and argues that it plainly bound the tenant to pay all taxes in "excess" of the stated sum. There is an ambiguity between the two sentences and in our opinion it must be resolved in favor of the tenant.

Generally a tenant is not responsible for the taxes on the leased property, but it has become the practice in long-term commercial leases to require the tenant to pay any increase in taxes that may occur, that is, to pay taxes in excess of those paid by the lessor at the time of making the lease. The purpose of such a provision is to provide the owner with a stable return on his investment, and to enable him to predict that return with greater certainty at the inception of the lease term. If the parties intended to employ this provision in its normal function,...