Moore v. Johnson Service Co.

• Decision Date: 27 May 1975
• Docket Number: No. 13201,13201
• Citation: 219 S.E.2d 315,158 W.Va. 808
• Court: West Virginia Supreme Court
• Parties: John W. MOORE v. JOHNSON SERVICE COMPANY, a corporation.

Page 315

219 S.E.2d 315

158 W.Va. 808

John W. MOORE v. JOHNSON SERVICE COMPANY, a corporation.

No. 13201.

Supreme Court of Appeals of West Virginia.

May 27, 1975.

Syllabus by the Court

1. In the context of taxation of property and with reference to W.Va.Code 1931, 11--3--1, as amended, 'assessment date' means a particular day upon which ownership and value are to be ascertained for the purposes of allocation of liability for, and future levy of, property taxes.

2. The employment of the words 'full first year's assessment' in a lease covenant allocating property tax liability and the draftsman's omission to correspond the phrase either to general definition or to specific statutory reference creates a patent ambiguity, subject to judicial interpretation.

3. As with other contracts, the language of a lease agreement must be considered and construed as a whole, giving effect, if possible, to all parts of the instrument. Accordingly, specific words or clauses of an agreement are not to be treated as meaningless, or to be discarded, if any reasonable meaning can be given them consistent with the whole contract.

4. An appellate court's review of factfinding determinations made by a trial court in the construction of a contract should respect and sustain such interpretations, unless they are clearly erroneous.

5. As with other contracts, the overriding endeavor in the judicial construction of a lease agreement is to ascertain and give effect to the mutual intent of the signatory parties.

6. Ambiguous or doubtful provisions of a lease agreement should be construed most strongly against the party who prepared the instrument.

7. A mutual covenant contained in a commercial lease agreement, providing for the recovery of reasonable attorneys' fees and expenses of litigation, available to either party who successfully recovers for breach of the lease contract or enforces its provisions, is valid and enforceable in the courts of this State.

W. E. Mohler, Charleston, for appellant.

Albert F. Good, Bibby & Good, Charleston, for appellee.

HADEN, Chief Justice:

This is an appeal and supersedeas by Johnson Service Company, a Wisconsin corporation, awarded by this Court to a final order of the Circuit Court of Kanawha County granting declaratory relief, a money judgment of $880.76 and statutory costs to John W. Moore, a landlord, under a certain lease agreement in which the Company was the tenant. In this Court, Moore cross-assigned error to the ruling of the trial court denying him reasonable attorney fees allowable under certain conditions contained in the lease agreement between the parties.

Moore and the Company entered into a lease dated April 7, 1967. Subsequently, the parties executed two addenda and a 'rider' dated May 12, 1967 in modification of the original agreement, all covering the demise of certain commercial premises to be constructed by Moore, containing 4,052 square feet of floor space and 1,551 square feet of parking space, located in South Charleston, West Virginia. The term of the lease was for ten years, commencing November 15, 1967. The lessee Company prepared the lease instruments.

The controversy which engendered this litigation arose due to the increase in real estate taxes resulting from the increase in assessed value of the demised property coincident with the completion of improvements on the property done to make it suitable for the Company's commercial purposes.

Pursuant to the lease, Moore was to be responsible for the pre-existing real estate tax base, but according to a tax escalation clause contained in the rider agreement, the Company would be responsible for the payment of increased taxes, ascertainable as follows:

'. . . Lessee agrees to pay the Lessor any increase in amount of real property taxes over the full first year's assessment which may be paid by the Lessor for the subsequent years of the lease term.'

Real property taxes on the demised property for the year 1968 amounted to $123.20 and for the following calendar year of 1969 amounted to $1,003.96.

Moore tendered a statement to the Company in an amount of $880.76 for the excess of the 1969 real estate taxes over the 1968 taxes. The Company refused to pay the excess figure and contended that the foregoing tax escalation clause as it referred to the 'full first year's assessment' meant the calendar year 1969 and that the Company's liability for excess taxes, if any, should be computed upon a comparison of the 1970 real estate taxes with the 1969 real estate taxes.

When it became apparent that the parties were unable to agree on the meaning of the clause in relation to the real estate taxes levied, Moore instituted a civil action against the Company seeking a declaration of the parties' rights under the tax escalation clause in the lease agreement, seeking a money judgment for 'the excess 1969 real estate taxes' and also seeking a recovery for reasonable attorney fees as provided under the terms of the lease, as follows:

'6. Parties Mutually Covenant

'3. In the event that either party hereto shall be successful in enforcing against the other any remedy, legal or equitable, for a breach of any of the provisions of this lease, there shall be included in the judgment or decree the reasonable expense and attorneys' fees of the successful party.'

Upon these facts, the trial court made certain findings of facts and conclusions of law, and ruled in favor of Moore that the Company was (1) liable to Moore for that part of the real estate taxes paid by Moore, or to be payable by Moore, exceeding the sum of $123.20 for the years 1969 through and including the calendar year 1976 and on a 5/6 pro rata basis for that part of the real estate taxes payable by Moore for the calendar year 1977 exceeding the sum of $123.20; (2) granted the plaintiff's request for a monetary judgment in the sum of $880.76 for the excess 1969 calendar year property taxes over those paid in the calendar year 1968; and (3) statutory costs of the civil action. The trial court also ruled in favor of the Company and held that Moore was not entitled to reasonable attorney fees as provided for in the lease because such were not items of recovery permitted under the law of this jurisdiction.

Two legal issues are presented for resolution: First, whether the trial court was correct in its interpretation of the lease and its determination that the 'full first year's assessment' referred to the first calendar year after the commencement of the lease term. Secondly, whether public policy permits recovery of reasonable attorney fees upon contingencies provided for by consenting parties to a written lease agreement.

The first issue encompasses three assignments of error: first, that the trial court erred in finding that the phrase 'full first year's assessment' had no established legal meaning and was 'patently ambiguous'; second, that the trial court erred in attempting to construe the questioned phrase in light of the words employed in the context of the whole instrument; and third, that the trial court erred in holding that the questioned phrase was intended to refer to the next ensuing tax year, rather than 'meaning what it clearly said.'

Individually, the words comprising the phrase 'full first year's assessment' convey reasonably definitive thoughts. In their combined form, however, the same words create considerable confusion. The modifiers--'full first year's'--are words of common usage which, separately or collectively, require little or no explanation to discern their intended meaning. Similarly, the word 'assessment', when used in the parlance of property taxation, ordinarily imparts a well-defined meaning. See, 84 C.J.S. Taxation § 391 (1954). The composite phrase here presented does not explain itself without resort to construction.

Although variously defined, 'assessment', in its technical sense, generally refers to 'The listing and valuation of property for the purpose of proportioning a tax upon it, either according to value alone or in proportion to benefit received.' Black's Law Dictionary, 4th Ed. (1951) at 150. As recognized in Breckenridge v. County School Board, 146 Va. 1, 135 S.E. 693 (1926):

'An assessment consists in listing the property and putting a value thereon to which the rate fixed by the levy is to be applied.' Id. at 695.

Accord, Sussex County v. Jarratt, 129 Va. 672, 106 S.E. 384 (1921); Hilliard on Taxation (1875) at 291.

In George S. Hazelwood Company v. Pitsenbarger, Assessor, 149 W.Va. 485, 141 S.E.2d 314 (1965), decided after the 1961 amendment of W.Va.Code 1931, 11--3--1 changed the assessment date for non-utility property, it was held:

'. . . (Property) may acquire a tax situs and be assessed on any day fixed by the Legislature; and the tax is determined thereby, even though the property is removed from the state before the tax is due or even before it has actually been assessed.' Part Syllabus point 2., Id.

'All property in West Virginia is assessed annually on the first day of July against the owner of the property at that time, but the personal property must be located in the state each year at the time it is assessed.' Syllabus point 5., Id.

Thus, in this State, all non-utility property is 'assessed' as of one particular day, the first day of July, even though the actual mechanics of the assessment procedure are likely to occur subsequent to that date.

The statute itself, W.Va.Code 1931, 11--3--1, as amended, furnishes further illustration of the technical significance of the term 'assessment.' It provides that all property shall be assessed annually at its true and actual value 'as of' the first day of July. It does not require, as counsel for appellant contends, that property be assessed 'on' that day.

The resulting distinction is apparent and material; the 'assessment' date, in the technical sense, constitutes a fixed reference to a particular day upon which ownership and value are to be ascertained...