Stanbalt Realty Co. v. Commercial Credit Corp.

• Decision Date: 06 June 1979
• Docket Number: No. 640,640
• Citation: 401 A.2d 1043,42 Md.App. 538
• Parties: STANBALT REALTY COMPANY v. COMMERCIAL CREDIT CORPORATION.
• Court: Court of Special Appeals of Maryland

Page 538

42 Md.App. 538

401 A.2d 1043

STANBALT REALTY COMPANY v. COMMERCIAL CREDIT CORPORATION.

No. 640.

Court of Special Appeals of Maryland.

June 6, 1979.

Michael Lewis Freilich, Towson, with whom was Philip L. Marcus, Baltimore, on brief, for appellant.

Ward B. Coe, III, Baltimore, with whom were Whiteford, Taylor, Preston, Trimble & Johnston, Baltimore, on brief, for appellee.

Argued before MORTON, MOYLAN and MELVIN, JJ.

MOYLAN, Judge.

The last hope of the appellant, Stanbalt Realty Company (Stanbalt), is the so-called "last antecedent rule" for construing the terms of a contract, to which rule Stanbalt clings with grim tenacity. This rule of construction, never adopted in Maryland, and of only marginal significance in the scattered jurisdictions that have called upon it, is too frail a reed to carry the appellant's burden.

Beginning in February, 1971, the appellee, Commercial Credit Corporation (Commercial Credit), leased the sixth floor of the Standard Oil Building in Baltimore City from Stanbalt's predecessor. The first lease was for two years and this was followed by two additional one-year leases. The penultimate lease was dated December 20, 1974, and extended from May 1, 1975, through April 30, 1976. It contained the following provision:

"This lease extension is cancellable by either party upon ninety (90) days written notice."

During the period of this 1975-1976 lease, Commercial Credit was in the process of consolidating all of its offices into its own building. The operation which was utilizing the leased sixth floor of the Standard Oil Building was scheduled to move into the Commercial Credit Building sometime during 1975. That schedule, however, was not met and it became necessary to extend the lease agreement for another year. Negotiations took place between Robert E. Outman, the manager of building operations for Commercial Credit, and Jerome Sachs, the managing agent of Stanbalt. Outman initially asked to have the lease extended under the same conditions contained in the then existing lease extension with the same cancellation clause. Sachs, on the other hand, informed Outman that he was receiving pressure from his banks and that he could better refinance the building if he could pin down lease terms with no cancellation option. Outman, for his part, refused to agree to a full year without possible cancellation. Sachs and Outman finally agreed to a guarantee of rental payments through the end of the calendar year (December 31, 1976) after which Commercial Credit could terminate under appropriate conditions. It was agreed that Sachs, representing Stanbalt, would draft the lease extension as he had done previously. The lease extension was ultimately signed and it contained the following critical provision which is the nub of the present litigation:

"This lease extension is cancellable by either party upon ninety (90) days written notice on or after January 1, 1977."

During the summer of 1976, Commercial Credit gave 90 days notice to Stanbalt of its intended cancellation. Commercial Credit vacated the premises shortly before January 1, 1977, paying the rent through January 1. No rent was paid for the period from January 1 through April 30, 1977.

Stanbalt filed suit against Commercial Credit in the Court of Common Pleas of Baltimore City for the four months rent, along with interest and attorneys' fees. It also filed a Motion for Summary Judgment. Commercial Credit answered the declaration and motion and submitted an affidavit disputing certain facts asserted in the declaration and contained in Stanbalt's affidavit. Depositions were taken and a hearing was held on the Motion for Summary Judgment. Judge J. Harold Grady denied the motion, proceeded to trial and rendered a verdict in favor of Commercial Credit.

Stanbalt does not here contest the ultimate verdict upon the merits but maintains strenuously that the Motion for Summary Judgment should have been granted in its favor.

The cancellation clause is at least arguably ambiguous. The critical qualifying phrase is "on or after January 1, 1977." The issue is whether this qualifying phrase qualifies the immediately preceding phrase "upon ninety (90) days written notice" or whether it qualifies the anterior preceding phrase "cancellable by either party." The cancellation provision may be construed two different ways:

(1) The term of the lease extension, from May 1, 1976, until April 30, 1977, is cancellable upon 90 days written notice provided that the notice is given on or after January 1, 1977, or (2) Provided that 90 days notice is given, the lease is cancellable on or after January 1, 1977.

All parties are agreed that if the 90 days notice had to be given after January 1, 1977, an effective cancellation never occurred and Stanbalt should have prevailed in recovering the four months of lost rent. If, upon the other hand, the cancellation could occur anytime on or after January 1 (provided only that 90 days written notice had been given theretofore), an effective cancellation did occur and Commercial Credit should have prevailed. The only issue before the court was that of what the cancellation clause meant.

Judge Grady, after reading the two depositions and hearing argument on the Motion for Summary Judgment, concluded that the clause was ambiguous and denied the motion. At the subsequent trial of the case upon the merits, abundant testimony supported his ultimate conclusion in finding the Commercial Credit interpretation to be the one giving effect to the intention of the contracting parties. It is beyond dispute that the cardinal rule for construing ambiguities in contracts is to ascertain and give effect to the intention of the parties. Garfinkle v. Schwartzman, 253 Md. 710, 720, 254 A.2d 667 (1969); Mascaro v. Snelling & Snelling, 250 Md. 215, 229, 243 A.2d 1 (1968); DWS Holdings, Inc. v. Hyde Park Associates, Inc., 33 Md.App. 667, 675, 365 A.2d 554 (1976). This rule is applicable whenever a contract contains an ambiguity, which is an expression capable of more than one meaning or of doubtful meaning. Allen v. Steinberg, 244 Md. 119, 127, 223 A.2d 240 (1966).

Stanbalt does not (and, indeed, could not) question this resolution of the ambiguity upon the merits, once it is accepted that an ambiguity existed. It is rather the contention of Stanbalt that its vaunted "last antecedent rule" should have been invoked by Judge Grady at the summary judgment stage in order to determine that no ambiguity existed that needed to be resolved. Almost by way of Ipse dixit, Stanbalt assigns to the "last antecedent rule" not the role, along with other rules of construction, of resolving an ambiguity in the terms of a contract but the preemptive role of foreclosing the possible ambiguity so that the other rules would never come into play.

Curiously, Stanbalt takes this rather obscure little grammatical usage, that sometimes is dignified with the label "rule" and sometimes is not, and assigns it a seat in the juridical heirarchy somewhere between the Magna Charta and the Statute of Frauds. Its true station is infinitely more modest.

The great professors of contracts, Williston and Corbin, in their respective multi-volume works do not even recognize the existence of any "last antecedent rule." In a merely subsidiary capacity, in the course of broader discussions of the use of grammar to discern the meaning of a contract, this particular grammatical usage is mentioned in passing without benefit of a...