Ross v. Smigelski

• Decision Date: 01 April 1969
• Docket Number: No. 67,67
• Citation: 42 Wis.2d 185,166 N.W.2d 243
• Parties: Allan ROSS et al., Respondents, v. Raymond J. SMIGELSKI, Appellant.
• Court: Wisconsin Supreme Court

Page 243

166 N.W.2d 243

42 Wis.2d 185

Allan ROSS et al., Respondents, v. Raymond J. SMIGELSKI, Appellant.

No. 67.

Supreme Court of Wisconsin.

April 1, 1969.

Robert J. Choinski, Hales Corners, Weber, Gerard & Bonk, Racine, for appellant.

Kivett & Kasdorf, Milwaukee, Alan M. Clack, Milwaukee, of counsel, for respondents.

HANLEY, Justice.

The following issues are raised by the defendant:

1. Did the plaintiffs accept the surrender of the premises by relatting them;

2. Where premises have been abandoned by the lessee, may the lessor recover as damages:

a. Rental accruing when the premises are being remodeled;

b. Remodeling expenses incurred in adapting the premises to the requirements of the new lessee; and

c. Reasonable attorney's fees?

3. Was the action of the plaintiffs reasonable?

The plaintiffs also request a review of the judgment. They contend that the trial court arbitrarily reduced the amount allowed for remodeling expenses from $2,509.76 (the amount spent) to $2,200. They further contend that the trial court erred in not awarding $500 for rent lost under Mr. Caturia's original lease. (It is uncontradicted that the premises originally leased by Mr. Caturia were vacant from September 1, 1967, to January 31, 1968, the last day of the trial of this action.) Plaintiffs also contend that the award for attorney's fees was inadequate.

Acceptance of Surrender.

Defendant cites numerous Wisconsin cases to support his statement that a reletting of premises after their abandonment by a lessee constitutes an acceptance by the landlord of a surrender of the premises and a termination of the lease. All of those citations, however, precede the decision of this court in Selts Inv. Co. v. Promoters of Federated Nations of the World, Inc. (1929), 197 Wis. 476, 220 N.W 222, 222 N.W. 812 (on motion for rehearing). In that case the court held for the first time that a landlord had a duty to mitigate damages when a tenant abandoned the premises.

'When the lessor accepted the premises after lessee's default, it did not accept the same as an ultimate surrender so as to release the defendants from further liability, but under authority granted in the lease, pursuant to which the defendants would still be liable for future rents until the end of the term.' Selts Inv. Co. v. Promoters of F.N. of W., Inc., supra, at p. 486, 222 N.W. at p. 814.

Shortly thereafter the court further expanded on the landlord's rights and duties when a tenant abandoned a lease:

'* * * where a tenant vacates or abandons the leased premises before the end of the term, the landlord has a right to elect to accept the surrender and terminate the lease or to enter and take possession for the purpose of mitigating the damages for which the tenant is liable because of his breach of the lease. The election to enter for the purpose of mitigating damages may be evidenced by formal notice or by other proper means constituting such unequivocal act as would amount to an election of remedies in a proper case.

'The mere entry and taking possession of the premises for the purpose of leasing the same does not constitute such an election, because it is an equivocal act--something to be done by the landlord regardless of whether his purpose be to terminate the lease or merely to perform his legal duty to mitigate damages.

'The right to elect which course he will pursue remains with the landlord until he makes his election by taking some step which clearly evidences an intent to make a choice between the two inconsistent remedies that are open to him. * * *' Weinsklar Realty Co. v. Dooley (1930), 200 Wis. 412, 415, 228 N.W. 515, 517, 67 A.R.L. 875.

In this case the plaintiffs gave notice to the defendant, even before they re-entered, that their sole objective was to mitigate damages. Thus the reletting of the premises, if taken alone, was not sufficient to constitute an acceptance of the surrender of the premises.

Rental During Remodeling.

Defendant contends that the remodeling of the leased portion of a building necessarily constitutes such control over the premises as to amount to a retaking of exclusive possession as a matter of law. Consequently, he argues, the remodeling terminates an abandoned lease from the moment it is begun. In support of his position the defendant cites West Concord Milling Co. v. Hosmer (1906), 129 Wis. 8, 13, 107 N.W. 12, 14:

'* * * This court has held that 'if before the expiration of the term the lessee offers to surrender the lease, and the lessor thereupon takes exclusive possession of the premises, this amounts to a surrender and acceptance which terminates the lease.' Kneeland v. Schmidt, 78 Wis. 345, 47 N.W. 438, 11 L.R.A. 498. * * *'

Such a statement is undoubtedly still the law in Wisconsin.

'Under these facts we are of the view that having taken possession in an unqualified manner and not for the limited purpose of mitigating damages by reletting the premises plaintiff terminated her right to any rent * * *.' Richter v. Fassett (1948), 253 Wis. 101, 103, 33 N.W.2d 230, 231. (Emphasis supplied.) See also, Galvin v. Lovell (1950), 257 Wis. 82, 42 N.W.2d 456.

Altering a place of business for a new tenant is not, in itself, an unequivocal act which shows that a landlord has accepted the abandoning tenant's surrender of the premises. This is especially true when, as here, the landlord specifically stated to the abandoning tenant prior to the re-entry that the alteration was being done in order to mitigate damages.

When a landlord re-enters abandoned premises in order to to alter or remodel those premises for a prospective tenant (whose rental payments will mitigate damages), the possession exercised by the landlords, without more, does not constitute an acceptance of the abandoned premises. The abandoning tenant is still responsible for the rent.

Remodeling Expenses.

Defendant argues that, as a matter of law, a landlord may not recover remodeling or alteration expenses where premises have been abandoned unless the lease specifically provides for those damages. There was no specific provision in this lease which permitted the recovery of alteration expenses in the case of default. ²

Although it has never been specifically decided by this court, it seems that a landlord has the same duty to mitigate damages as any other party to a contract in case of a default. The cases which discuss the type of damages available where leased premises are abandoned are relatively few. When damages are discussed at all, the usual rule is that:

'* * * Plaintiff's loss, if any, was the difference between what she received from defendant prior to his default and what she would have received had defendant held the premises and paid rent for one year, minus, of course, any sums received by plaintiff upon a reletting to mitigate damages.' Richter v. Fassett, supra, at p. 104, 33 N.W.2d at p. 232.

It seems that the landlord's obligation to mitigate damages exists free and clear of any clause permitting a relatting of the premises in the lease. That specific question has never been decided by this court. However, most of the leases considered by this court contained a clause which permitted a reletting of the premises at the option of the landlord. This court held in Selts Inv. Co. v. Promoters of F. N. of W. (on motion for rehearing), supra, that a landlord had an obligation to mitigate damages even though the lease provision made such action optional.

When contracts other than leases are breached, the injured party always has a duty to mitigate damages.

'One injured by the wrongful or negligent act of another may recover, as part of his damages, expenses incurred in the exercise of reasonable diligence to prevent or to minimize the damage caused by the wrongful act of the defendant. Thus, in the case of a breach of contract, expenditures actually made by the nondefaulting party as a reasonable effort to minimize the losses may be recovered as a part of his damages. * * *' 22 Am.Jur.2d, Damages, pp. 238, 239 sec. 169.

The court should also consider the rule of damages applicable when a landlord fails to deliver up some premises to a tenant who has signed a lease. '* * * In any case of a breach of contract the party injured should use reasonable diligence, and make all reasonable effort, to reduce to a minimum the damages resulting from such breach. The necessary expenses incurred by him in so doing may be recovered in an action for such breach. * * * Under this rule, when the plaintiff was informed that the defendant could not give him possession of the store as he had covenanted to do * * * it became his duty to use all reasonable efforts to procure another suitable place in which to carry on his business, if the damages which otherwise would result from the breach of the defendant's covenant would be thereby diminished. * * *' Poposkey v. Munkwitz (1887), 68 Wis. 322, 331, 332, 32 N.W. 35, 39.

The right to recover expenses incurred in mitigating damages does not arise from any provision actually in the lease or implied to be in the lease. It arises as a result of the duty to mitigate damages which likewise is independent of the lease.

We hold that a landlord is entitled to recover reasonable remodeling or alteration expenses which are actually incurred in mitigating the damages which result when a tenant abandons his lease.

Reasonable Attorney's Fees.

The lease in this case provides that the lessee

'* * * covenants and agrees to pay and discharge all reasonable costs, attorney's fees and expenses that shall be made and incurred by the Lessor in enforcing the covenants and agreements of this lease.' (Emphasis supplied.)

Defendant argues that there is no covenant in the lease which entitles the landlord to anything other than back rent. Thus the attorney's...