Orme v. Atlas Gas & Oil Co.

• Decision Date: 24 March 1944
• Docket Number: No. 33629.,33629.
• Citation: 217 Minn. 27,13 N.W.2d 757
• Parties: ORME v. ATLAS GAS & OIL CO.
• Court: Minnesota Supreme Court

13 N.W.2d 757

217 Minn. 27

ORME v. ATLAS GAS & OIL CO.

No. 33629.

Supreme Court of Minnesota.

March 24, 1944.

Appeal from District Court, Ramsey County; Gustavus Loevinger, Judge.

Action by Henry L. Orme, executor of the last will of Emeline L. Orme, deceased, against Atlas Gas & Oil Company to recover rent under a written lease. From an order sustaining plaintiff's demurrer to the answer, defendant appeals.

Reversed.

Jackson & Yackel, of St. Paul, for appellant.

Paul D. Schriber, of St. Paul, for respondent.

PETERSON, Justice.

This is an action to recover $160 rent alleged to be due for the months of March and April 1943, under a written lease for a five-year term executed on December 1, 1940, by plaintiff as lessor and defendant as lessee.

The lease provides that the lessee's "principal business" upon the premises was "the operation and maintenance of a gasoline filling and greasing station." The lessee covenanted that it would not use or permit the premises to be used in violation of any law, ordinance, or regulation of the United States, the state of Minnesota, or a municipal subdivision of the state of Minnesota having jurisdiction thereof. There was no provision in the lease expressly restricting the lessee's use of the premises exclusively to the one mentioned or for the forfeiture of the lease by the lessee in case of breach of covenant or condition, except for the nonpayment of rent. The lessor covenanted that he would not directly or indirectly erect, maintain, or operate a filling station within 300 feet of the leased premises or erect any structure obstructing the front view thereof.

The lease contains a clause giving the lessee an optional right to terminate it, which reads:

"If, during the term of this lease, or any renewal or extension thereof, the use of said premises for an oil and/or gasoline filling station be prevented, suspended or limited by any zoning statute or ordinance, or any other Municipal or Governmental action, law or regulation; or the use of said premises be affected or impaired by the widening, altering, or improving of any streets fronting or adjoining said premises; or should the State or Federal Government reroute any State or Federal highway now adjacent to the premises leased, then lessee may cancel this lease by giving thirty (30) days' written notice to lessor."

The answer sets up as a defense that the defendant exercised its option as lessee to terminate the lease and that by notice in writing given on February 25, 1943, it duly terminated the same as of March 31, 1943, upon the grounds that the use of said premises for an oil "and/or" gasoline filling station was prevented, suspended, and limited by governmental action, law, and regulation of the United States Government under acts of Congress¹ and regulations adopted pursuant thereto. These were: First, regulations of the Petroleum Administration for War² prohibiting the retail sale of petroleum products on credit and the delivery of motor fuel to motorists during more than 12 hours a day or 72 hours a week,³ which were subject to certain exceptions which are not important here; and, second, regulations of the Office of Price Administration⁴ prohibiting the sale of petroleum and kindred products, rubber tires and tubes, and automobile parts and accessories, except to holders of coupons and certificates authorizing such purchases, and then only in such quantities as may be permitted by administrative regulation. Defendant claimed, and there is no dispute concerning the fact, that the rationing regulations mentioned entirely prevented and suspended its business while it was required to keep its filling station closed and very substantially reduced the volume of the business transacted at the filling station at other times.

The lessee tendered to the lessor the rent due for the month of March, which the lessor refused to accept.

Plaintiff demurred to the answer. The demurrer was sustained, and defendant appeals from the order sustaining the demurrer.

In a memorandum made a part of the order, the court below stated that it construed the lease as providing that defendant had the right of termination only for a subsequently enacted or adopted law, ordinance, or regulation directly affecting the physical use of the premises and not one regulating the business transacted thereon apart from its location, and that the regulations in question relate to the business apart from its location and are not regulations of the physical use of the premises where the business was transacted, and held that the use of the premises for an oil or gasoline filling station was not prevented, suspended, or limited by governmental action, law, or regulation.

1. The question whether the wartime statutes and regulations of the federal government prevented, suspended, or limited the lessee's use of the premises for a filling station within the meaning of the clause giving the lessee an option to terminate the lease depends on the meaning of the clause.

Leases, like other writings, should be construed so as to give effect to the intention of the parties as manifested by the words used. A lease is to be construed as a whole. The process of construction involves consideration of the subject matter, surrounding circumstances, the objects and purposes to be accomplished, and the natural meaning of the language used in the lease. Commercial Union Assur. Co., Ltd., v. Foley Bros., 141 Minn. 258, 169 N.W. 793. Great weight should be given to the intention of the parties regarding the purpose of the lease. Conservative Realty Co. v. St. Louis Brg. Ass'n, 133 Mo.App. 261, 113 S.W. 229.

The declared purpose of the lease here is the operation and maintenance by the lessee of a gasoline filling and greasing station upon the leased premises. The lessee's use was to be protected by the lessor's covenants not to erect a filling station within 300 feet of the leased premises and not to erect any structure obstructing the front view thereof. The lessee's option to terminate the lease was for its protection against the contingency of governmental action interfering with its beneficial use of the premises. Parties to a lease may agree that if by reason of governmental action the lessee is prevented from using the premises for the purposes which they contemplated, the lessee shall have the option to terminate the lease, surrender the premises, and be relieved of future liability for rent. Halloran v. Jacob Schmidt Brg. Co., 137 Minn. 141, 162 N.W. 1082, L.R.A. 1917E, 777; Hooper v. Mueller, 158 Mich. 595, 123 N.W. 24, 133 Am.St.Rep. 399.

"Use" of premises by a lessee under a lease for the operation and conduct of a certain business thereon is nothing more than transacting such business. In cases involving a lessee's right to terminate a lease of premises for operating a saloon thereon, the lawful selling of liquor has been held to be the use contemplated. Halloran v. Jacob Schmidt Brg. Co. and Hooper v. Mueller, supra; Conservative Realty Co. v. St. Louis Brg. Ass'n, 133 Mo.App. 261, 113 S.W. 229.

It has been held in numerous cases involving complete frustration of the purposes of a lease by wartime regulations of the kind here in question that the use of the premises is the transaction of business thereon by making sales of merchandise, and that such use is frustrated where the sales cannot be made either because they are prohibited or the lessee is unable to procure merchandise to sell. Lloyd v. Murphy, Cal.App., 142 P.2d 939; Colonial Operating Corp. v. Hannan Sales & Service, Inc., 265 App.Div. 411, 39 N.Y.S.2d 217 (Id. below, 178 Misc. 885, 36 N.Y.S.2d 745; Id. 178 Misc. 879, 34 N.Y.S.2d 116); Port Chester Central Corp. v. Leibert, 179 Misc. 839, 39 N.Y.S.2d 41; Byrnes v. Balcom, 265 App.Div. 268, 38 N.Y.S.2d 801 (wherein the court pointed out that the regulations simply restricted, as distinguished from wholly prohibiting, the lessee's use of the premises); Canrock Realty Corp. v. Vim Electric Co., Inc., 179 Misc. 391, 37 N.Y.S.2d 139. As employed in the lease in the instant case, use of the premises consisted of selling the products and furnishing the services in the ordinary course of operating and maintaining a filling station. If that use was prevented, suspended, or limited it was a ground for the lessee's exercise of the option to terminate the lease.

"Limit" means to circumscribe, bound, restrict, confine within limits. See 37 C.J., Limit, p. 664. As used here, the word "limited" implies a restriction on the amount of business the lessee could transact in the operation and maintenance of the filling station. "Prevent" means to stop, preclude, frustrate, prohibit. 49 C.J., Prevent, p. 1343. "Prevented" involves a complete stoppage of business. Rowe v. Atlas Oil Co., 147 La. 37, 84 So. 485. "Suspend" means to cease or to cause to cease temporarily. As used in the lease, "suspended" means a temporary cessation of business. The answer shows that during 12 hours of each day and 96 hours of each week business was totally prevented and suspended and that during other times it was very substantially reduced in volume as a result of the regulations.

The language used in the lease to specify the means by which the lessee's use may be prevented, suspended, or limited as grounds for exercising the option is sweeping and general and comprehends in unlimited degree such diverse things as directly relate to and attach to the leased premises and others which are independent of and can have no connection therewith, but all of which in substantial degree affect the lessee's right and ability to transact the business constituting the use to be made of the premises.

The means enumerated are any zoning statute or ordinance; municipal or governmental action, law, or regulation; widening, altering, or improving a street fronting or adjacent to the premises; and rerouting of any state or federal highway "now" adjacent to the premises. A zoning stat...