Kozy Theatre Company v. Love
| Decision Date | 04 February 1921 |
| Citation | 191 Ky. 595 |
| Parties | Kozy Theatre Company, et al. v. Love, et al. |
| Court | Kentucky Court of Appeals |
Appeal from McCracken Circuit Court.
BRADSHAW & McDONALD for appellants.
HENDRICK & BURNS for appellees.
The Palmer Hotel Company, a Kentucky corporation, owns its hotel property in Paducah and the adjacent building known in this record as the Kentucky Theatre.
On July 1, 1918, the hotel company by written contract leased the Kentucky Theatre "for the period of one year from July 1, 1918, with the privilege to the lessees to renew this lease at the expiration thereof under like terms for a period of one year from July 1, 1919, and a like privilege to renew for one year from July 1, 1920, and a like privilege to renew for one year from July 1, 1921," to the six appellants, Kozy Theatre Company, Arcade Theatre Company, Lawrence Dallam, Leo F. Keiler, Rodney C. Davis and R. R. Kirkland. It was stipulated that the lessees were to pay to the lessor $1,800.00 a year rental, "payable at the rate of $150.00 per month during the period of this lease or any renewals thereof;" and "at the expiration of this lease, . . . no notice to quit shall be necessary and the lessor shall have the right to enter and take possession."
Appellants took possession, paid the rent for the first year as due, and on June 14, 1919, caused to be written and delivered to Mr. J. C. Utterback, secretary, treasurer and general manager of the hotel company, the following letter:
Upon receipt of the above letter Mr. Utterback told Mr. Davis, who was himself one of the lessees and also president and general manager of the Kozy Theatre Company, that "it is all right and agreeable to us." Mr. Utterback informed the other officers and directors of the notice and his consent to a continuance of the lease for another year and they informally approved of his action but no new lease was executed nor was any formal action taken with reference thereto by the hotel company.
The lessees through Mr. Davis paid to Mr. Utterback, who accepted same for the hotel company, rent at $150.00 per month for July and August, 1919; and each month thereafter during the year ending July 1, 1920, paid the same amount to appellant, Quincy B. Love, to whom and one Green the hotel company on August 8, 1919, leased both the hotel and Kentucky Theatre buildings for a term of fifteen years. Love having acquired Green's rights under their lease in April, 1920, assigned to appellee Rehkopf all of his rights to the Kentucky Theatre. Love and Rehkopf then notified appellants that they could not retain the theatre after July 1, 1920. Appellants however gave Love and Rehkopf written notice before July 1, 1920, that they intended to exercise their option to renew their lease for another year and tendered to them for execution renewal lease for another year with the same renewal privileges for subsequent years and upon the same terms and conditions as contained in their original lease of July 1, 1918. Love and Rehkopf refused to execute the new lease or accept tendered rentals and on July 2, 1920, filed this forcible detainer proceeding against appellants.
This appeal is from the judgment of restitution entered in the circuit court upon a trial before the court without a jury of the traverse of a like judgment upon the inquisition before the justice of the peace who issued the warrant.
This court uniformly has recognized a technical distinction between a covenant to renew and a covenant to extend a lease, but has been just as consistent in holding that whether the privilege is to renew or extend depends upon the intention of the parties as shown by the entire lease and their interpretation thereof before the controversy arose, and that the mere fact it is called a privilege to renew is not conclusive. Illustrative cases are Brown v. Samuels, 24 Ky. L. R. 1216, 70 S. W. 1047; Ky. Lumber Co. v. Newall & Co., 32 Ky. L. R. 396, 105 S. W. 972; Grant v. Collins, 157 Ky. 36, 162 S. W. 539; Miller v. Albany Lodge, 168 Ky. 755, 182 S. W. 936; Mullins v. Nordlow, 170 Ky. 169, 185 S. W. 825; Gault v. Carpenter, 187 Ky. 25, 218 S. W. 254; Hurt v. McCord, 179 Ky. 1, 200 S. W. 2. See also Elliott on Contracts, section 4556.
The true rule to be gathered from these authorities as well as upon principle is that such a covenant in a lease, like any other, will be construed according to its terms if these are certain, but if there is any doubt of what was meant by what was said in the lease the actions of the parties before a controversy arose may be examined to ascertain their own interpretation of its meaning, since they better than anybody else knew what they meant by what they said. But in this connection it must be borne in mind as was well said in Ky. Lumber Co. v. Newall, supra, that: "The word renew etymologically contemplates something more than passivity in suffering a state to continue as it was, but it is not so much a question of what the term strictly means, as what did the parties to the writing mean to express in its use."
And that its meaning when used in a lease in connection with a privilege for an additional term is rarely ever free from doubt and usually must be explained by some other clause in the lease or by extraneous evidence, or both, is attested by the frequency with which the question is litigated and the lack of harmony in the decisions from different courts in attempting to construe its meaning and effect when so used. But as said in Grant v. Collins, supra, after reviewing numerous authorities: "The apparent conflict in the cases as will thus be seen turns rather on the differences in the facts than on a different conception of the law." And the facts upon which nearly all of the cases turn will be found on examination to be additional clauses in the leases or the acts of the parties which explain what they meant by "a privilege to renew."
Just what legal import ought to be ascribed to the word renew in this connection in the absence of explanatory facts, is really the question upon which the courts disagree. Some hold it requires the execution of a new lease, which however may be waived; others that there is no distinction between a privilege to renew or extend, while still other courts, among which is our own, take a middle ground. Our court has gone no farther in an effort to define the term when so used than to hold as in the Newall case that it means "something more than passivity" and as in Miller v. Albany Lodge, supra, that by its use "some positive act on the part of the parties, or notice by the tenant is required."
Nor need we now attempt a definition, which manifestly would be difficult, since an additional clause in this lease and the acts of the parties explain what they meant by its use sufficiently for the purpose of this case.
The additional clause which we have heretofore quoted, as in the Grant-Collins case upon which appellees so confidently rely, makes it clear a simple holding over and payment of rent beyond the first period was insufficient to satisfy the terms of the lease, but there the analogy between the two cases ends.
In the case at bar the lessees, or rather some of them, gave timely notice of their desire and intention to "renew" or as they expressed it to continue the lease and Mr. Utterback, the general manager of the lessor corporation, not only gave express verbal assent thereto but thereafter accepted the stipulated rent with the approval of all of the directors and stockholders who knew that same was being paid by the lessees in the exercise of their contract right of renewal.
This certainly was no simple holding over by sufferance under the statute as in the Grant-Collins case. It was not so understood by either party; but was very clearly the performance of what each party not only believed but actually agreed to be a "renewal" or continuance of the original contract and therefore their interpretation thereof, hence upon authority of all of the Kentucky cases and most others we must so construe it, unless as contended by appellees, (1) the notice was without force or effect because not signed by all the lessees; or (2) the assent by Utterback to a renewal and his actions thereafter are not binding upon the lessor or its assigns because (a) not in writing, and (b) it was not approved at a formal meeting of the board of directors.
(1) There are cases such as Buchanan v. Whitman, 151 N. Y. 253, and James v. Pope, 19 N. Y. App. 324, cited by appellees and with which we do not disagree, to the effect that a landlord is entitled to hold all of the original lessees to a renewal or extension, and that some having retired from the business those remaining can not enforce the privilege for an additional term. But that rule has no application here since all of the original lessees continued as such and the notice...
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