Newman v. Hinky Dinky Omaha-Lincoln, Inc.

• Decision Date: 05 August 1988
• Docket Number: OMAHA-LINCOL,No. 86-765,INC,86-765
• Citation: 427 N.W.2d 50,229 Neb. 382
• Parties: Raquel H. NEWMAN, Trustee of the Calvin M. Newman and Raquel H. Newman Charitable Trust, Appellee, v. HINKY DINKY, A Nebraska Corporation, Appellant.
• Court: Nebraska Supreme Court

Page 50

427 N.W.2d 50

229 Neb. 382

Raquel H. NEWMAN, Trustee of the Calvin M. Newman and Raquel H. Newman Charitable Trust, Appellee, v. HINKY DINKY OMAHA-LINCOLN, INC., A Nebraska Corporation, Appellant.

No. 86-765.

Supreme Court of Nebraska.

Aug. 5, 1988.

Syllabus by the Court

1. Summary Judgment. A summary judgment is properly granted when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue concerning any material fact or the ultimate inferences deducible from such fact or facts and that the moving party is entitled to judgment as a matter of law.

2. Summary Judgment: Appeal and Error. In appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.

3. Summary Judgment. On a motion for summary judgment, the question is not how a factual issue is to be decided, but whether any real issue of material fact exists.

4. Leases: Contracts. A lease is construed as any other contract.

5. Leases: Assignments: Where a commercial lease does not expressly permit a lessor to withhold consent to an assignment or subletting and contains an approval clause, such as a provision that there can be no assignment of the lease or subletting without the lessor's prior consent, a lessor may withhold consent only when the lessor has a good faith and reasonable objection to assignment of the lease or subletting, even in the absence of a lease provision that the lessor's consent will not be unreasonably withheld.

Theodore J. Stouffer and Kurt F. Tjaden, of Cassem, Tierney, Adams, Gotch & Douglas, for appellant.

Warren S. Zweiback and Mary Lou Perry, of Zweiback, Flaherty, Betterman & Lamberty, P.C., for appellee.

BOSLAUGH, WHITE, and SHANAHAN, JJ., and THOMPSON and SPRAGUE, District Judges.

SHANAHAN, Justice.

This is a forcible entry and detainer action which resulted in a judgment of restitution of real estate to the plaintiff-lessor, Raquel H. Newman, trustee of the Calvin M. Newman and Raquel H. Newman Charitable Trust (Newman). See Neb.Rev.Stat. §§ 24-568 et seq. (Reissue 1985) (forcible entry and detainer). Hinky Dinky Omaha-Lincoln, Inc. (Hinky Dinky), the occupant and sublessee, appeals, thereby presenting to this court a question of first impression, namely: In the absence of an express lease provision specifically permitting a lessor to withhold consent to an assignment of the lease or subletting, must a lessor have a commercially reasonable objection to the assignment or subletting, when the lease allows assignment or subletting only with the lessor's consent?

Newman is the owner of real estate located in Lincoln, Nebraska. On July 1, 1977, Newman entered into a written lease of the premises with American Community Stores Corporation (ACS), a Texas corporation. The lease refers to Newman as the "Landlord" and ACS as the "Tenant," and calls for payment of fixed rent, with additional rent based on the tenant's gross receipts. ACS operated a chain of Hinky Dinky supermarkets in Nebraska. Section 10.1 of the lease provides: "Tenant may not assign or transfer this Lease voluntarily or by operation of law or sublet the Leased Premises or any portion thereof without the written consent of Landlord first had and obtained."

ACS ceased all operations of its Hinky Dinky grocery store chain on February 16, 1985. Before that date, ACS asked Newman's consent for a proposed lease assignment to Nash Finch Company, and a subsequent sublease by Nash Finch to the appellant, Hinky Dinky. Although brief negotiations ensued concerning ACS' arrangement for the prospective lease assignment and sublease, Newman did not consent to the proposal. Later in February, ACS' lease assignment to Nash Finch and the sublease to Hinky Dinky were executed without Newman's consent.

On March 1, 1985, Newman notified ACS, Nash Finch, and Hinky Dinky, which then occupied the premises, that ACS was in default under the lease as the result of the assignment and subletting without Newman's consent, and on March 4, Newman served a "Notice to Vacate Premises" upon those entities. Newman accepted rental payments from Nash Finch during negotiations to resolve the conflict concerning the propriety and efficacy of the assignment and sublease. When negotiations reached impasse, on August 14, Newman served a "Notice to Quit" on the occupant, Hinky Dinky, and filed a petition for restitution of the premises on August 22, 1985. Whether Newman's acceptance of rent payments constituted a waiver was a matter of dispute by the parties.

After a hearing on Newman's motion for summary judgment, the district court ruled that there was no genuine issue of material fact whether Newman, as lessor, properly withheld consent to the assignment and sublease because, as a matter of law, a landlord may withhold consent for any reason. Citing B & R Oil Company v. Ray's Mobile Homes, 139 Vt. 122, 422 A.2d 1267 (1980), the district court stated that "the landlord may withhold consent for whatever reason the landlord deems proper.... There is not a genuine issue of fact as to this point." However, the court found that a factual issue existed on the question whether Newman had waived her rights under the lease by accepting rent payments, knowing that, without Newman's consent, ACS had assigned the lease to Nash Finch, which sublet to Hinky Dinky. Consequently, after granting summary judgment to Newman on the issue of the lessor's consent, the court proceeded to try the question of waiver. See Neb.Rev.Stat. § 25-1333 (Reissue 1985) (summary judgment; case not fully adjudicated on motion). After trial, the district court held that Newman's acceptance of rent payments was not a waiver under the lease, and then granted Newman a judgment for restitution of the premises.

Hinky Dinky argues that the district court erred in (1) granting Newman a partial summary judgment by holding that a lessor may withhold consent to an assignment for any reason, and (2) finding that Newman's acceptance of rent after the alleged breach of lease had occurred was not a waiver.

A summary judgment is properly granted when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue concerning any material fact or the ultimate inferences deducible from such fact or facts and that the moving party is entitled to judgment as a matter of law. [Citations omitted.] In appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. [Citation omitted.]

Union Pacific RR. Co. v. Kaiser Ag. Chem. Co., 229 Neb. 160, 162-63, 425 N.W.2d 872, 875 (1988). See, also, Neb.Rev.Stat. § 25-1332 (Reissue 1985). On a motion for summary judgment, the question is not how a factual issue is to be decided, but whether any real issue of material fact exists. Guenther v. Allgire, 228 Neb. 425, 422 N.W.2d 782 (1988); Janssen v. Trennepohl, 228 Neb. 6, 421 N.W.2d 4 (1988).

Partial summary judgment for Newman is correct only if, as a matter of law, Newman was entitled to withhold consent to an assignment and sublease for any reason, that is, Newman had an absolute right to withhold consent. However, if Newman could withhold consent only on the basis of a reasonable objection, a factual issue concerning reasonableness precluded a summary judgment on the lessor's right to withhold consent to the assignment and sublease in the case at hand.

Hinky Dinky does not contend that Newman's consent to an assignment or sublease was unnecessary, but suggests that a lessor cannot unreasonably withhold consent. On the other hand, Newman suggests that, according to the language of the lease, a lessor has an absolute right to withhold consent to a lease assignment or subletting, however unreasonable or arbitrary the lessor's refusal might be.

Newman calls our attention to Moritz v. S & H Shopping Centers, Inc., 197 Neb. 206, 247 N.W.2d 454 (1976), which involved a lessor's forcible entry and detainer action pursuant to a lease requiring that the lessee pay real estate taxes for the premises and protect against a mechanic's lien for improvements constructed on the leased property. Under the lease, cancellation of the lease on account of the lessee's default would not affect any sublessee. In resisting the lessor's action as the result of nonpayment of real estate taxes and proceedings to foreclose a mechanic's lien for construction on the leased premises, the defendant-tenant contended that the lessee's subtenants were necessary parties to the action. In rejecting the lessee's contention, this court concluded that the lessor had not consented to the sublease, notwithstanding a lease provision requiring such consent, and, therefore, the lessee had not transferred rights to the sublessees so as to make the sublessees necessary parties in the lawsuit. Consequently, Moritz, supra, does not dispose of the question whether a lessor's withholding consent to an assignment of a commercial lease or a sublease of the leased premises is an absolute right or must be based on a reasonable ground for the withheld consent.

A lease is to be construed as any other contract. Omaha Country Club v. Dworak, 186 Neb. 336, 183 N.W.2d 264 (1971). The proper construction of a written contract is generally a question of law to be determined by the courts. Dockendorf v. Orner, 206 Neb. 456, 293 N.W.2d 395 (1980).

Chadd v. Midwest Franchise Corp., 226 Neb. 502, 506, 412 N.W.2d 453, 457 (1987).

Newman relies on B & R Oil Company v. Ray's Mobile Homes, 139 Vt. 122, 422 A.2d 1267 (1980), in which the Vermont Supreme Court, construing lease language identical to the consent requirement in Newman's...