Puetz v. Cozmas

• Decision Date: 22 January 1958
• Docket Number: No. 29628,29628
• Citation: 147 N.E.2d 227,237 Ind. 500
• Parties: William PUETZ, William Puetz, Inc., Appellants, v. Nicholas COZMAS, George Stavretis, Appellees.
• Court: Indiana Supreme Court

Page 227

147 N.E.2d 227

237 Ind. 500

William PUETZ, William Puetz, Inc., Appellants, v. Nicholas COZMAS, George Stavretis, Appellees.

No. 29628.

Supreme Court of Indiana.

Jan. 22, 1958.

Hogg & Peters, Richard Snouffer, Fort Wayne, for appellants.

Joseph Christoff, O. E. Fuelber, Fort Wayne, for appellees.

ACHOR, Judge.

This case comes to us on petition to transfer from the Appellate Court under Rule 2-23 of this Court. See Square D Company v. O'Neal, 1947, 225 Ind. 49, 52, 72 N.E.2d 654.

The facts and the issue presented in this case are substantially as follows:

Appellees brought this action against appellants to recover the possession of certain real estate in the City of Fort Wayne, and for damages for wrongful detention thereof. Trial to the court resulted in judgment in favor of appellees for possession and $500 damages. The error assigned here is the overruling of appellants' motion for a new trial. The specifications of that motion are that the decision is not sustained by sufficient evidence and is contrary to law. The material facts were stipulated and may be summarized as follows:

On the 23rd day of January, 1951, one Fred Fell leased to appellees certain real estate in the City of Fort Wayne (a part of which is evolved in this action) for a period of five years from March 1, 1951. Among the provisions of said lease were the following.

'* * * (d) The second parties shall have the first privilege of negotiating a lease of the demised premises at the expiration of the demised term, and if the parties cannot agree upon the terms and conditions of a new lease, the first party shall have the right and privilege of otherwise letting or disposing of the property. It is also agreed that in the event first party elects to sell the demised premises during the term of the within lease that he shall extend to the second parties the privilege of bidding therefore.'

On the 26th day of December 1952, appellees sub-leased to appellants a portion of the real estate for 3o months from the 1st day of January 1953, to the 30th day of September 1955, at a monthly rental of $95. The provision of this sub-lease which has caused this litigation is as follows:

'(33) As a part of the consideration of this lease, Lessors hereby grant and given to Lessee on aption of an additional term of five (5) years from the expiration of the lease herein; provided, however, the Lessors exercise their option with the owners of the real estate herein described. It is understood, however, that lessors cannot make any representations as to the rental rate in the event such option is exercised by themselves and the lessee herein. Lessors represent and warrant that they will only charge such increased rental as to charged to them in the further event that lessee herein exercises his option with lessors herein. In the event that lessee herein desires to exercise the option herein provided for, lessee shall notify lessor in writing by directing a communication on or before March 1, 1955 in the United States Mail to Schaaf & Auer, Inc. * * *'

This sub-lease was prepared by appellees' rental agent and approved by appellants' attorneys. In 1955 appellants notified appellees of their intention to renew their lease and appellees made demand for possession.

First, it is contended by appellants that although appellees bought the property instead of 'negotiating a (new) lease' with the owner fell, this fact did not vitiate appellants' right to renew their lease with appellees even though their lease made no specific provision regarding the amount of rent to be paid by appellants in event of the purchase of the property by appellees. Appellants contend that because appellees, as sub-lessors, agreed to 'give to Lessee an option of an additional term of five years,' and agreed to 'only charge such increased rental as is charged to them,' that appellees thereby obligated themselves to renew the lease with appellants and accept a fair and reasonable rental for the property, even though appellees purchased the property and thereby continued to be in a position to renew such lease for the additional term.

Second, appellants contend that if, under the circumstances here presented, the parties fail to agree as to what constitutes a fair rental the courts can and should determine that value.

A decision regarding appellants' first contention must rest solely upon the construction of the written lease executed between the owner Fell and appellees and the sub-lease executed by appellees and appellants. There is no evidence in the record, extrinsic of said leases, to assist us in determining the fact as to the 'meeting of the minds' between the parties in the controverted area.

In construing these leases, we are at the outset confronted by the fact that the renewal provision of the sub-lease between the parties is expressly made dependent and contingent upon appellees' exercise of their option with the owners of the real estate as authorized in section '(d)' of the primary lease between appellees and Fell. Clearly this provision did not constitute an option in any legal sense for the reason that nothing therein imposed any obligation upon Fell with respect to the property pursuant to an election on the part of the lessees. ¹ At most the provision merely gave appellees a 'first privilege of negotiating a (new) lease,' or of 'bidding' for the purchase of the property, with no subsequent right in appellees to impose an obligation upon Fell at their election. Obviously such a provision contained no basis upon which appellees could ascertain and contract regarding the amount of rental which they would be required to charge for the property in the future, in event they either re-leased the property or bought it from Fell. In event appellees should successfully 'negotiate a (new) lease' for the property they could and did agree as to a criterion by which they would fix the amount of rental on renewal of their lease with appellants. In such eventuality they agreed that they would 'only charge the increased rental as charged to them.' However, in event the owner should 'elect to sell the demised premises' and appellees should exercise their privilege of 'bidding' therefore, as are the facts in the case, appellees could not know the price they would be required to pay for the property nor the costs incidental to such ownership, consequently they...