Nakdimen v. Atkinson Improvement Co.

• Decision Date: 04 July 1921
• Docket Number: 83
• Citation: 233 S.W. 694,149 Ark. 448
• Parties: NAKDIMEN v. ATKINSON IMPROVEMENT COMPANY
• Court: Arkansas Supreme Court

233 S.W. 694

149 Ark. 448

NAKDIMEN v. ATKINSON IMPROVEMENT COMPANY

No. 83

Supreme Court of Arkansas

July 4, 1921

Appeal from Sebastian Chancery Court, Fort Smith District; J. V Bourland, Chancellor; reversed.

STATEMENT OF FACTS.

This is a suit in equity by appellee against appellants to enforce the specific performance of a renewal covenant in a lease and also to compel the defendants to submit to an arbitration to fix the rent as provided in the covenant of renewal.

The lease is in writing and is as follows:

"State of Arkansas,

County of Sebastian, ss.

"This instrument witnesseth a contract this day entered into by and between I. H. Nakdimen, hereinafter called the party of the first part, and Atkinson Improvement Company, hereinafter called the party of the second part, which is in the words and figures following, to-wit:

"The party of the first part contemplates the erection of a six-story building upon his lot lying immediately west of and adjacent to the Merchants National Bank building, owned by the party of the second part, on Garrison Avenue, Fort Smith Arkansas; and, for the mutual benefit of said parties of the first and second parts, they have entered into the following agreement and contract:

"For and in consideration of the sum of one dollar each to the other in hand paid, receipt of which is hereby acknowledged and the mutual concessions, covenants and agreements hereinafter set out; the party of the first part is hereby granted the privilege and permission to use, for the period of ten years from the completion of his said building, the lobby and stairway of the Merchants National Bank Building paying as rent and compensation for said privilege and use, to the party of the second part, the sum of twenty-five dollars per month, the said sum to be paid in advance, on the first day of each month during the said ten years; and in order to have such use and privilege said party of the first part is hereby authorized and permitted to cut through the wall of said Merchants National Bank Building, on the first floor, for the purpose of access to his elevator, which is to be so located in his own building as to be accessible from the lobby of the Merchants National Bank Building, and on the second, third, fourth, fifth and sixth floors, he is to cut archways, so as to give direct communication from his building to the said Merchants National Bank Building at the elevators in each, so that the said elevators shall be common to both buildings.

"This work of cutting through said wall shall be done in a skillful and workmanlike manner, so as not to injure or impair said wall or said building, and said openings shall be finished in the same style and material as that used in said Merchants National Bank Building; and all this work shall be done at the expense of the party of the first part.

"It is mutually agreed that at the expiration of said period of ten years, the rental to be paid by the party of the first part to the party of the second part for the concession and privilege herein granted, as herein set out, shall be fixed by a board of arbitrators, three in number, one to be named by each of the parties hereto, and the third to be selected by the two so named by the parties hereto, and that the award of any two of said arbitrators shall be final and conclusive upon the parties hereto.

"And it is further mutually agreed that in cutting through the said wall and making said openings and using the same, party of the first part must do the work and use said opening so as not to increase the rate of fire insurance upon said Merchants National Bank Building, and that if such work and use can not be accomplished without increasing the present rate of fire insurance upon said building then the party of the first part is to pay to the party of the second part said increased rate of insurance; and he hereby obligates himself to pay the same.

"And said party of the first part hereby obligates and binds himself to do, keep and perform all the acts and things herein undertaken by him, and especially to pay the rent herein reserved at the time herein indicated, and the rents named by said board of arbitrators; and to keep said openings so made in the wall of the Merchants National Bank Building in repair during the life of this agreement; and the party of the second part binds and obligates itself to put no hindrance in the way of the exercise of the use of the privilege herein granted to the party of the first part, so long as he, and his heirs and assigns, keep and perform the obligations and agreements herein assumed by him.

"It is further agreed that the party of the first part is permitted to remove that part of the east party wall, now used exclusively for his present building, without recompense to the party of the second part, and by setting his new wall back two feet on his own property from the line between his lot and the lot of the party of the second part, he is by this concession, to enjoy the use of the areaway (for light and ventilation), now in use, and the additional two feet of areaway produced by setting his new wall back two feet, and the party of the second part is to also enjoy the privilege of the additional areaway so created.

"It is further agreed that the area walls of both parties to this agreement are to be painted white and enameled.

"In testimony whereof, the parties hereto have set their hands in duplicate; and party of the second part being thereunto authorized by resolution of its board of directors, empowering the president to execute this contract in its name, upon this 10th day of July, 1909.

"I. H. Nakdimen,

"Atkinson Improvement Company

"By W. J. Echols, President."

The lease was duly acknowledged and recorded. Subsequent to the execution of the contract, Nakdimen conveyed a part of his property to the other appellants, and for this reason they were, also, made defendants in the chancery court.

Under the terms of the lease, it extended over a period of ten years from the completion of the building by Nakdimen. Appellee claims that the lease contained a covenant for its perpetual renewal on a rental to be fixed by a board of arbitrators as provided in the lease.

A short time prior to the expiration of the first term for ten years, appellee made demand upon appellants to fix the rental for the next term by a board of arbitrators, as provided in the lease contract. Appellants refused to comply with this clause of the contract and claimed that the lease expired by its own terms at the end of the ten years, which was on the 10th of September, 1920.

Other facts will be stated under appropriate headings in the opinion.

The chancellor found that the lease copied above was a continuous contract and remained in force during the life of the buildings specified in it; that appellee was entitled to compensation from appellants in the nature of an annuity; that the lease calls for the rental value for the use of the elevator, stairway, and lobby to be fixed by a board of arbitrators; that appellants, upon being notified of appellee's desire to arbitrate under the contract, refused to appoint an appraiser or arbitrator; that the reasonable rental value for a period of five years is $ 300 per year, payable in monthly installments of $ 25; that the rental value at $ 25 may be increased on application of appellee for any month during said five-year period by showing more than a designated number of persons occupying the Nakdimen building going in and out of the building; that, owing to the fact that the Nakdimen building had become vacant for a period of three months next ensuing, appellants may abate the monthly payment of $ 25 as rent, by showing the actual number of persons going in or out of the building are less than a designated number; that the court retained jurisdiction of the cause in regard to the rent in order to carry out its decree by appropriate supplemental orders; that the rent fixed by the court for the use of the stairway and lobby expired five years from September 10, 1920; that at the expiration of that period the arbitration clause of the contract will again be in force and then on the failure of either party to select an arbitrator the other may apply to the court to fix the rental.

A decree was entered of record in accordance with the finding of the chancellor. Appellants, who were defendant in the chancery court, have duly prosecuted an appeal from that part of the decree holding that the lease did not expire at the end of ten years. Appellee has been granted a cross-appeal from that part of the decree fixing the rental value of the premises.

Decree reversed and cause remanded.

Warner, Hardin & Warner, and James B. McDonough, for appellants.

The lease or contract terminated at the end of ten years. In construing a contract the court should construe it according to the spirit and intention of the parties. 1 Ark. 325. Where ambiguous, it should be construed against the grantor. 1 Ark. 325; 2 Ark. 491. The law looks to the substance and not to the form of the transaction. 52 Ark. 30. The contract must be construed as a whole. 94 Ark. 461; 53 Ark. 58. In construing a contract the court should ascertain the intention of the parties. 106 Ark. 400; 113 Ark. 174. The situation and relation of the parties will be considered. 105 Ark. 421. The lease might have been extended by the conduct of the parties. 61 Ark. 377; 71 Ark. 251. If the meaning of the contract is doubtful, the circumstances and surroundings and transactions become admissible. 52 Ark. 95; 46 Ark. 122; 55 Ark. 18; 90 Ark. 272; 97 Ark. 522; 90 Ark. 504.

Courts will not construe a contract as perpetual unless they are compelled to do so. Where a contract provides its duration,...