McCreight v. Girardo

• Decision Date: 02 March 1955
• Citation: 280 P.2d 408,205 Or. 223
• Parties: William C. McCREIGHT and Evelyn Rees McCreight, husband and wife, Appellants, v. John P. GIRARDO, Respondent.
• Court: Oregon Supreme Court

Page 408

280 P.2d 408

205 Or. 223

William C. McCREIGHT and Evelyn Rees McCreight, husband and wife, Appellants, v. John P. GIRARDO, Respondent.

Supreme Court of Oregon, Department 2.

Argued and Submitted Feb. 16, 1955.

March 2, 1955.

Edwin J. Welsh, Portland, argued the cause, Jack M. McLaughlin and McCarty, Dickson & Swindells, Portland, on the brief, for appellants.

Richard F. Deich, Portland, argued the cause, Bryson & Deich, Portland, on the brief, for respondent.

Before WARNER, C. J., and LUSK, BRAND and LATOURETTE, JJ.

LATOURETTE, Justice.

Declaratory judgment proceeding to construe a lease.

On March 10, 1950, Clarence Gibbs leased the premises upon which there is a gasoline filling station to defendant John Girardo. On January 10, 1951, Gibbs sold the property to plaintiffs. The lease was for a period of one year at a rental of $250 a month, payable monthly in advance on the 10th day of each calendar month. The controversy revolves around the following clauses of the lease:

'Lessee shall have the option of renewal of this lease, on the same rental basis and on the same terms, from year to year, for a like period of one year.

'* * *

'The Lessee shall have an option to purchase the above described premises during the term of this lease or renewal thereof, for the purchase price of Twenty Six Thousand Dollars ($26,000.00), upon terms which will be mutually agreed upon by the parties hereto at the time of said purchase. It being understood that Lessee will be given credit on said purchase price of the amount of $100.00 per month for each month of rental paid to Lessor during the life of this lease or any renewal thereof.

'Lessee agrees to purchase from Lessor all machinery, equipment and inventory of merchandise now on hand and situated upon the premises, at a price to be mutually agreed upon (approximately $2,500.00) and will make a cash down payment on said purchase price in the amount of $500.00 at the time of execution of this agreement. 'The contract balance due and owing to Wiggins & Co. for equipment, in the amount of approximately $650.00, shall be paid by Lessee at the rate of $50.00 per month plus accrued interest on the unpaid balance at 6 per cent per annum, until paid.'

Plaintiffs contend that under the provisions of the lease defendant is entitled to only one renewal of said lease for a period of one year and that the purchase clause is too indefinite to be enforceable, whereas defendant claims that the lease may be renewel for successive terms of one year each and that the purchase clause is definite and certain. The trial court took the defendant's view. Plaintiffs appeal.

It is a well-recognized rule that perpetual leases are not favored and that a perpetual renewal clause will not be upheld unless the renewal provision be clear and unambiguous. 51 C.J.S., Landlord and Tenant, § 61, p. 606; 32 Am.Jur. 813, Landlord and Tenant, § 968.

Plaintiffs contend that if defendant's theory is adopted, the clause 'from year to year' would create a perpetual renewal in conflict with the above-established rule. If these words stood alone in the lease plaintiffs' position might be tenable. However, we must look to the entire lease to determine the intent of the parties. Texas Co. v. Butler, 198 Or. 368, 376, 256 P.2d 259. That the lease is not in perpetuity is evidenced by the purchase clause of the lease which gives the defendant the option to buy the premises for $26,000, defendant to be given credit of $100 a month from the rental on the purchase price. This forecloses the idea that the lease is in perpetuity...