Illinois Cent. Gulf R. Co. v. International Harvester Co.

• Court: Louisiana Supreme Court
• Writing for the Court: DENNIS; MARCUS; MARCUS
• Citation: Illinois Cent. Gulf R. Co. v. International Harvester Co., 368 So.2d 1009 (La. 1979)
• Decision Date: 05 March 1979
• Docket Number: No. 62963,62963
• Parties: ILLINOIS CENTRAL GULF RAILROAD COMPANY v. INTERNATIONAL HARVESTER COMPANY.

Page 1009

368 So.2d 1009

ILLINOIS CENTRAL GULF RAILROAD COMPANY v. INTERNATIONAL HARVESTER COMPANY.

No. 62963.

Supreme Court of Louisiana.

March 5, 1979.

Rehearing Denied April 9, 1979.

Mack E. Barham, Sherry M. Wise, Lemle, Kelleher, Kohlmeyer & Matthews, New Orleans, Saul Litvinoff, La. State University Law Center, Baton Rouge, for plaintiff-applicant.

Max Nathan, Jr., Peter S.Title, Sessions, Fishman, Rosenson, Snellings & Boisfontaine, New Orleans, for defendant-respondent.

DENNIS, Justice. ^*

In this case we are called upon to decide two principal issues: Did the lessor by its silence and acceptance of rentals under the circumstances of this case impliedly consent to a sublease and a modification of the lease clause restricting the tenant's use and occupation of the premises? Should the court, by applying the doctrine of abuse of rights to the facts of this case, refuse to enforce the lessor's right under the lease contract to withhold permission from the lessee to enter a sublease with a third party?

Illinois Central Gulf Railroad Company (Illinois Central) leased two contiguous parcels of land on Poydras Street in New Orleans to International Harvester Company (Harvester) in 1960 and 1961 for the continued operation of a truck sales and service business which it had established on the same site in 1936. The lease contracts provided that the leases would terminate in 1986. Between 1971 and 1975 the Louisiana Superdome was constructed directly across the street from the leased premises. Consequently, the market value of the property subject to the leases increased in value significantly. Harvester constructed a new building on the leased premises in 1972 but moved its sales and service business from the property in 1974.

On January 17, 1975 Harvester requested Illinois Central's permission to sublease the premises 1601 Poydras Corporation for use as a parking garage. Illinois Central refused and counter-proposed that the leases be cancelled. Harvester once again requested permission to sublease but ultimately offered to cancel the leases for a cash payment. Several months later, on August 27, 1975, Harvester subleased the premises to 1601 Poydras Corporation without notice to Illinois Central. ¹ The sublease contract was not recorded until almost nine months after its confection. In September, 1975 Illinois Central's real estate manager learned that a public parking business was being operated on the premises. In October of 1975 the Illinois Central real estate manager wrote Harvester and, without referring to the parking operation, requested a conference for the purpose of reaching an amicable solution without litigation. Harvester replied by letter within a few days tacitly refusing to confer and stating its intention to continue with the leases. Following this exchange of letters there was no communication between the parties for approximately sixteen months during which Illinois Central continued to accept monthly rent payments from Harvester. In March of 1977 one of Illinois Central's officers complained by telephone to Harvester about a problem existing on the leased premises. Harvester responded by letter on April 21, 1977 that because it had been denied consent to sublease it was continuing to operate under the terms and conditions of the lease.

After further discussions and unsuccessful settlement negotiations Illinois Central filed this eviction suit in December, 1977, and deposited in court all rents received after November 23, 1977. Illinois Central alleged that Harvester had violated the lease contracts by subletting the premises without the lessor's written consent and by using the premises for purposes not authorized by the leases. After trial of the summary proceeding, the district court rendered judgment ordering Harvester to vacate the premises, remove all improvements and deliver possession to Illinois Central. The court of appeal reversed the judgment holding that Illinois Central's silence for sixteen months and acceptance of rental payments for twenty-six months after gaining knowledge of the operation of a parking business on the premises constituted a waiver of its rights under the leases to reject the sublease and to restrict the use of the property. Illinois Central Gulf Railroad Company v. International Harvester Company, 360 So.2d 628 (La.App. 4th Cir. 1978). We granted a writ of certiorari to consider the issues of law raised by the court of appeal opinion.

The leases between Illinois Central and Harvester, in pertinent part, provide:

"It is further agreed by the Lessee, that said premises shall be used and occupied exclusively as a site for (a motor truck sales and service station and warehouse) ² (a storage space). ³

" * * *

"It is further agreed by the Lessee, not to underlet said premises, or any part thereof, or assign this Lease, without the written consent of the Lessor, first had and obtained."

The contract further provided that, upon the lessee's default in keeping any agreement, the lessor would have the right to terminate the lease.

Implied Consent to Modify Leases

It is uncontroverted that Harvester did not obtain written or express consent before subletting the premises and converting it to a parking garage. The court of appeal, however, found that Illinois Central, by its silence and inaction, had impliedly assented to the sublease and altered use of the premises. The intermediate court's treatment of the issue raises the question of whether a lessor's mere silence in the face of proposals and actions contrary to the lease contract by his lessee constitutes assent to the modification of the contract.

Every contract or modification of a previously concluded agreement requires the concurrence of the consent of the parties. La.C.C. arts. 1766, 1779(2), 1798. Consent results from a free and deliberate exercise of the will of each party where the intent has been mutually communicated or implied, La.C.C. art. 1819, and accepted by the party to whom a proposal is made. La.C.C. arts. 1798, 1800.

Consent may be given either expressly or by implication, La.C.C. arts. 1780, 1811, but the cases in which consent is implied are particularly determined by law. La.C.C. art. 1781. According to the civil code, consent may be implied in the following instances ". . . when it is manifested by actions, even by silence or by inaction, in cases in which they can from the circumstances be supposed to mean, or by legal presumption are directed to be considered as evidence of an assent." La.C.C. art. 1811.

" * * *

"(W)hen (actions without words) are done under circumstances that naturally imply a consent to such contract. . . . " La.C.C. art. 1816. See also, La.C.C. art. 1817.

Thus, except in those instances in which the statutory law creates a legal presumption, the mere silence of an offeree should not, in principle, be considered as involving acceptance on his part. His consent can result from silence, however, when combined with other facts or acts so as to imply or indicate his consent unequivocally. 1 Civil Law Translations Aubry & Rau, Obligations, § 343, p. 307 (1965). See, Governor Claiborne Apartments, Inc. v. Attaldo, 256 La. 218, 235 So.2d 574 (1970). In cases where the law does not expressly create a legal presumption of consent from certain facts, it is left to the discretion of the judge to determine if consent is to be implied from the particular circumstances of the case. La.C.C. art. 1818; Pooler Bldg. Mats. Inc. v. Hogan, 244 So.2d 62 (La.App. 1st Cir. 1971).

The civil code and statutes do not provide that any legal presumption of consent shall arise from a lessor's silence and acceptance of rent. Compare, e. g., La.C.C. arts. 2295, 2688-89, 2933, 3145-46. Accordingly, the question to be resolved in this part of the case is essentially factual, i. e., whether the judge exercised sound discretion in determining that Illinois Central's consent to a modification of the lease contract was not unequivocally implied from its silence and inaction under the particular circumstances of the instant case. In his brief dictated reasons for judgment the trial judge found that there had been no showing of consent to the sublease and that Illinois Central's objections and attempts at amicable settlement negated its consent to allow the premises to be used as a parking garage.

We agree with the trial judge's conclusions. There is no showing that Illinois Central unequivocally consented to modify the leases so as to permit a sublease to 1601 Poydras Corporation or to allow the operation of a parking garage on the premises. On the contrary, Illinois Central declined Harvester's proposal for such an amendment of the leases and offered instead to cancel the leases. Harvester's requests for Illinois Central's permission, followed by Harvester's alternative offer to cancel the leases for a cash payment, show that the will of the parties had not united on a modification of the leases. The acceptance of rentals and delay in filing eviction proceedings by the railroad company were not necessarily inconsistent with an intent to enforce the leases as written. Although disputed, there is evidence of record that Illinois Central had no definite knowledge until shortly before filing suit that Harvester had entered a sublease. The fact that Illinois Central, like Harvester, was a large corporation headquartered in Chicago, with extensive national real estate holdings tends to indicate that its delay was due to lack of information and inattention rather than its assent to a modification of the leases. Illinois Central presented testimony from its officers that there was never an intention to accept any modification of the contracts permitting a sublease to 1601 Poydras Corporation or the operation of a parking business on the premises. They attributed the railroad company's lengthy delay and silence to a combination of factors including changes in corporate management, the...