Leslie Pontiac, Inc. v. Novak, 55101

• Decision Date: 15 November 1972
• Docket Number: No. 55101,55101
• Citation: 202 N.W.2d 114
• Parties: LESLIE PONTIAC, INC., a corporation, et al., Appellees and Cross-Appellants, v. Julius NOVAK, Appellant and Cross-Appellee.
• Court: Iowa Supreme Court

Page 114

202 N.W.2d 114

LESLIE PONTIAC, INC., a corporation, et al., Appellees and Cross-Appellants, v. Julius NOVAK, Appellant and Cross-Appellee.

No. 55101.

Supreme Court of Iowa.

Nov. 15, 1972.

Porter, Heithoff, Pratt & Reilly, Council Bluffs, for appellant and cross-appellee.

Johnson, Stuart, Tinley, Peters & Thorn, Council Bluffs, for appellees and cross-appellants.

Heard before MOORE, C.J., and LeGRAND, UHLENHOPP, HARRIS and McCORMICK, JJ.

McCORMICK, Justice.

This is a landlord-tenant dispute involving rights and obligations at expiration of a written lease. Each appeals from trial court's decree. We modify and affirm the decree as modified on both appeals.

The facts are largely undisputed. Tenant (defendant Julius Novak) leased the Council Bluffs premises involved from landlord (plaintiffs Leslie Pontiac, Inc., Ralph E. Leslie and Maxine C. Leslie) for use by his Pontiac dealership for a two-year period beginning November 11, 1968. Rental was $2600.00 monthly. Tenant covenanted that at lease expiration he would 'quit and surrender the demised premises without notice in a good and substantial state of repair, reasonable wear and tear and damage by fire or the elements or from causes beyond his control, excepted.' Landlord expressly waived 'any right to claim any signs, equipment, and/or fixtures affixed to the realty as real property' and recognized tenant's right to remove them at the lease's end provided that the premises were 'repaired and restored' to their original condition.

During the lease term, tenant with landlord's consent made substantial alterations and improvements to existing buildings on the premises to accommodate his dealership. In addition he added a steel building to the premises for parts storage against landlord's wishes. This building was basically a steel shell set on a concrete slab and had no insulation or utilities. The building and slab cost about $6000.

Tenant did not exercise his option to renew the lease and on October 23, 1970, notified landlord of his intention to quit the premises on November 11, 1970, the date of lease expiration. Tenant began to move certain of the fixtures and improvements from the premises to a new dealership site. Six days before the end of the term, landlord brought an injunctive action to prevent tenant from removing plaintiff's property, tenant's improvements, the steel building, and to require him to restore the premises and reinstall items removed. An Ex parte injunction was issued the same day restraining tenant from removing improvements and the steel building. Tenant did not vacate the premises but kept possession until December 18, 1970, the date of trial. During that period landlord was permitted to come upon the premises when he asked, and tenant was allowed to remove certain agreed items.

Landlord, by amendment to his petition, claimed double rent for the period of holding over.

Evidence at trial showed tenant did not wish to dismantle and remove certain of the improvements and alterations; others he had already removed, but landlord claimed the premises had not in those instances been restored to original condition. For example, in one instance tenant during the term had put an overhead door where there had been a wall. He removed the door and proposed to substitute a used one. In another instance, landlord alleged fluorescent lighting tenant had put in one building was removed but not replaced with landlord's original fixtures. Tenant claimed the injunction interrupted his restoration work. There was some evidence of minor damage to the premises.

In its decree, trial court ordered tenant to place the leased premises in the same condition as existed at the inception of the lease, ordinary wear and tear excepted, and gave tenant the right to remove the steel building he had added to the premises. Landlord was given judgment for $3293.08 with interest at five percent from April 27, 1971, the date of decree as rental at the lease rate for the period of holding over.

TENANT'S APPEAL

Tenant claims trial court erred (1) in ordering restoration of the premises to their original condition and (2) in awarding rent.

I. Landlord acknowledges that the decree provision ordering restoration of the premises to their original condition cannot apply to alterations and improvements placed upon the premises by tenant during the lease term and not removed. The lease gave the tenant the Right to make alterations and improvements and the Option to remove them at its expiration. Only in the event the removal option was exercised with respect to a particular alteration or improvement would that portion of the premises have to be restored to original condition. Where alterations were made and removed, tenant's only obligation was to surrender the premises in a good and substantial state of repair, subject to the exceptions stated in the lease. Where, as here, a lease carries with it the right to adapt the premises to their intended use, the lessee is under no obligation to restore them to original condition at least expiration unless the alterations are removed. See Bentler v. Poulson, 258 Iowa 1008, 141 N.W.2d 551 (1966); Durband v. Noble, 182 Iowa 1271, 166 N.W. 581 (1918); Marks v. Chapman, 135 Iowa 320, 112 N.W. 817 (1907); 51C C.J.S. Landlord and Tenant § 408; 49 Am.Jur.2d Landlord and Tenant § 940.

Trial court may have intended to limit its decree accordingly but, if so, tenant has apparently misunderstood it. We therefore modify the decree to require tenant to restore the premises to their condition at the inception of the lease except where change of condition is due to ordinary wear and tear or alterations and improvements which tenant does not choose to remove....