Mobil Oil Credit Corp. v. DST Realty, Inc.

• Decision Date: 05 February 1985
• Docket Number: No. WD,WD
• Citation: Mobil Oil Credit Corp. v. DST Realty, Inc., 689 S.W.2d 658 (Mo. App. 1985)
• Court: Missouri Court of Appeals
• Parties: MOBIL OIL CREDIT CORPORATION, Appellant, v. DST REALTY, INC. & Stephen D. Dunn, Respondents, DST REALTY, INC. & Stephen D. Dunn, Respondents-Cross Appellants, v. MOBIL OIL CREDIT CORPORATION, Appellant-Cross Respondent. 35756.

Page 658

689 S.W.2d 658

MOBIL OIL CREDIT CORPORATION, Appellant, v.DST REALTY, INC. & Stephen D. Dunn, Respondents,DST REALTY, INC. & Stephen D. Dunn, Respondents-Cross Appellants, v.MOBIL OIL CREDIT CORPORATION, Appellant-Cross Respondent.

No. WD 35756.

Missouri Court of Appeals Western District.

Feb. 5, 1985.

Motion for Rehearing and/or Transfer to

Supreme Court Overruled and

Denied April 2, 1985.

Application to Transfer Denied

May 29, 1985.

John M. Kilroy, Jr., William E. Quirk, Shughart, Thomson & Kilroy, and Wayne E. Mullins, Mobil Oil Credit Corp., Kansas City, for appellant.

Duane J. Fox, Paul G. Schepers, Burrell, Seigfreid & Bingham, P.C., Kansas City, for respondents.

Before LOWENSTEIN, P.J., and SOMERVILLE and NUGENT, JJ.

LOWENSTEIN, Presiding Judge.

The single issue in this court tried case is, where a commercial lease is silent, which party is to pay for newly discovered latent and substantial repairs, structural in nature, the landlord or the tenant?Inapplicable is the implied warranty of habitability as recognized in King v. Moorehead, 495 S.W.2d 65(Mo.App.1973), as that rule is only applicable to residential property.Detling v. Edelbrock, 671 S.W.2d 265, 270(Mo. banc 1984).

On August 1, 1980 Mobil Oil Credit Corporation(referred to as Mobil or the tenant) entered into a ten-year lease on an entire eight story office building, the lower three floors of which comprise a parking garage.The building is the Centennial Building located in downtown Kansas City.Mobil has used the premises as its national credit card center.In December, 1980 Mobil notified the then landlord and owner the concrete in the garage facility was cracking and spalling.Spalling basically occurs when the steel reinforcing bars over which the concrete is laid, become rusted by water and salt and expand, causing the concrete to pop or spall off the bars.Pursuant to an oral agreement, and so as to maintain a good landlord-tenant relationship, Mobil paid one-half of the $14,625.00 in repairs, although the landlord never claimed Mobil was responsible for the repairs under the terms of the lease.

In June, 1982 the landlord sold its interest and the lease was assigned to D.S.T. Realty, Inc., and Stephen D. Dunn(referred to as Downtown Investors or the landlord).Thereafter, Downtown Investors became aware that the garage was in extensive need of structural repair.Following demand letters in January and February, 1983, Mobil was forced under threat of forfeiture by Downtown Investors to contract to have the repairs performed.The project in question involved jackhammering and replacing 35 to 45 percent of the concrete surface in the garage, and sandblasting away corrosion on existing steel reinforcing bars, plus adding some two tons of new reinforcing bars.The parties stipulated the total cost and expense to the tenant Mobil came to $438,207.66.

Mobil sued Downtown Investors for the total amount, and the trial court decided that the lease was ambiguous, and so looked to the 1980 oral agreement between the original landlord and Mobil.Because the parties split the cost then, the trial court ordered Downtown Investors to pay half the current costs.Both parties appeal.

The lease is to expire in the year 1990, but has a renewal clause for another five years.Rent through 1985 is set at $350,000 a year plus Mobil is to pay an amount equal to taxes and to repay to Downtown Investors the cost of casualty insurance.Paraphrased, the following specific sections of the 38-page lease are pertinent in deciding which side is to pay for part or all the costs:

Section 308--Rent was intended to be on a net basis to the Lessor, "free from any taxes, assessments, expenses, or charges with respect to the Premise."

Section 402--Tenant shall be responsible for all costs of the building operation, building repair, painting, decoration and maintenance, except: (the two exceptions are that the Lessor will pay for roof renovation in excess of $60,000.00 and for exterior building repair in excess of $25,000.00).

Section 403--Lessee agrees to take good care of the premises and shall, at its expense, make all repairs to the premises and the equipment therein necessary to preserve them in good order and condition, ordinary wear and tear excepted.

Section 1105--Modifications.This Lease Agreement may be modified only by written agreement signed by Lessor and Lessee.

The evidence supporting the trial court's findings about the nature of the repairs was: the conditions causing the spalling started prior to Mobil's taking the lease, the repairs demanded by the landlord and made by the tenant constituted, "structural reconstruction of the Centennial Garage" and were "substantial and extraordinary in nature," which with the steel and new concrete added strength to the garage and restored "the integrity of the structure."Neither party knew the extent of the damage when the lease was drawn, and it appears neither the previous owners nor Mobil anticipated the repairs needed when the patching of the cracks was done in December of 1980(where the $14,000 cost was split).

The court concluded Sections 402and403 were silent as to who should pay for substantial structural repairs to the garage, constituting an ambiguity as to which side had the obligation, so under Latimer Motors, Ltd. v. McIntosh Motors, Inc., 512 S.W.2d 875, 880(Mo.App.1974), the contract would be construed as understood and acted upon by the parties.The trial court concluded the 1980 repairs of $14,000 had been shared equally and since those were "substantial" repairs, the present costs of $438,207.66 should be so treated.

There was no substantial evidence to support the conclusion patchwork of 1980 constituted substantial or structural repairs.The enormity of the problem was not apparent in 1980, and this court will not conclude the payment of one half those costs by Mobil to a previous landlord, would obligate the tenant to pay one half, or any of the costs herein encountered.Also, the conclusion that an ambiguity exists cannot be sustained.This misapplication of the law calls for a reversal."Language is ambiguous when it is susceptible of opposite meanings."Latimer, supra, at 880.The issue of ambiguity is one of law, but, "[A] provision is ambiguous only when it is reasonably susceptible of different constructions and not by the fact that the parties do not agree on its construction.The court should not resort to construing an unambiguous provision."Republic National Life v. Missouri State Bank, 661 S.W.2d 803, 808(Mo.App.1983).An ambiguity cannot be created by silence.In Latimer there were two conflicting provisions dealing with destruction by fire.Here, there was no provision for structural repairs for the parking garage.The other portions of the lease defining a "net" lease, or the agreement by Mobil to pay for roof damage cannot be used to create a promise to make the present repairs.Bogan v. Postlewait, 130 Ill.App.2d 729, 265 N.E.2d 195, 197(1970).

Latimer, supra, further points out the law which holds a tenant is not responsible for substantial or structural repairs unless he clearly covenants to do so.Id. at...