Stern Co. v. Friedman

• Decision Date: 28 January 1925
• Docket Number: No. 81.,81.
• Citation: 201 N.W. 961,229 Mich. 623
• Parties: STERN CO. v. FRIEDMAN.
• Court: Michigan Supreme Court

229 Mich. 623

201 N.W. 961

STERN CO.

v.FRIEDMAN.

No. 81.

Supreme Court of Michigan.

Jan. 28, 1925.

Error to Circuit Court, Kent County; Major L. Dunham, Judge.

Action by the Stern Company against Morris Friedman, surviving partner of Morris Friedman & Co. Judgment for defendant, and plaintiff brings error. Reversed, and new trial granted.

Argued before CLARK, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ. Laurence W. Smith and Jewell, Raymond & Face, all of Grand Rapids, for appellant.

Travis, Merrick, Warner & Johnson, of Grand Rapids, for appellee.

WIEST, J.

The subject of this litigation has been here before. In Stern Co. v. Friedman, 211 Mich. 639, 179 N. W. 366, a bill asking for a declaration of rights, under Act No. 150, Pub. Acts 1919, was dismissed, because the act was unconstitutional.

In Stern Co. v. Friedman, 218 Mich. 258, 187 N. W. 281, a bill for specific performance was dismissed, with leave to proceed for damages on the law side of the court. Pleadings were thereupon amended to accord with an action at law, hearing had in the circuit, and plaintiff held to be without remedy. The case is here by writ of error. A full statement of the facts will be found in the last case above mentioned, and we will restate only so much thereof as will make clear the issue now before us.

Morris Friedman and Joseph Roth, copartners, or which firm defendant is surviving partner, on January 15, 1915, by written lease, rented from Alexander W. Hompe, owner, a certain store building in the city of Grand Rapids, for the term of 5 years, with an option right to renewal as follows:

‘I (Hompe) hereby agree to renew this lease for a further period of five years from the expiration hereof upon the same terms and conditions herein contained, except that the rent, which shall be determined by arbitration at least 6 months before the expiration hereof, shall not be less than $5,000 per year, plus taxes, assessments, and insurance.'

June 10, 1916, Friedman and Roth leased to plaintiff for a term of 3 years and 6 months, all of the building except the ground floor and basement fronting on Ottawa avenue, with an agreement for renewal as follows:

‘It is further agreed that said second party (plaintiff) may at its option renew and extend this lease for a further period of 5 years from the expiration hereof, at a rental to be agreed upon between the parties hereto, or determined by arbitration, but which shall not be less than $5,000 per annum, written notice of its intention to exercise such option to be given not later than January 1, 1919, and upon such notice being given said parties of the first part shall forthwith exercise their option with the owner of said premises for such renewal and extension, and proceed to carry into effect for the benefit of said second party all rights and privileges of renewal to which they are entitled under their lease from the owner of said premises, and, in determining the rental for such additional period, the amount received as rent for the remaining portion of the premises described in the lease between said first parties and the owner, or the fair pro rata rental value thereof, shall be taken into consideration and due allowance made therefor, to said second party.'

Plaintiff went into possession, and in December, 1918, gave notice to defendant of its intention to renew and extend the lease ‘for a further period of 5 years from the expiration thereof, at a rental to be agreed upon as in said lease provided.'

Defendant's option for a renewal of his lease was extended by the owner of the building, and he was informed that the lease would be renewed for 5 years upon the terms of the lease, but he would have to take the whole building. Defendant did not renew his lease with the owner and, of course, did not and could not renew his lease with plaintiff. Thereupon plaintiff rented direct from the owner and had to pay $5,000 per year, plus taxes, assessments, and insurance upon the property, and take the whole building.

The trial judge held the contract too indefinite in its terms and method of fixing the rent for the renewal period to afford relief in damages for breach thereof by defendant. This presents the question of whether a contract in a lease for a renewal thereof at a rental to be agreed upon by the parties or determined by arbitration, is sufficiently definite to be valid. Numerous cases are to be found sustaining contracts of lime import, with the exception that parties thereto agreed to choose arbitrators. We mention a few. Kaufmann v. Liggett, 209 Pa. 87, 58 A. 129,67 L. R. A. 353, 103 Am. St. Rep. 988, where the provision was at a rental to be determined by four arbitrators, two selected by each party, with power in case of disagreement to choose an umpire, whose decision should be final and without exception or appeal. Nakdimen v. Atkinson Imp. Co., 149 Ark. 448, 233 S. W. 694, where the rental was to be fixed by a board of arbitrators, three in number, one to be named by each of the parties, and the third to be selected by the two so named, and the award of any two of said arbitrators to be final and conclusive upon the parties. Wells v. De Leyer, 1 Daly (N. Y.) 39, where the contract stated: Upon a rent to be agreed upon by the lessor and lessee, or, in case of disagreement, by arbitrators, one to be chosen by each, and a third, if necessary, by the arbitrators.

Is it necessary to specify the number of arbitrators and each party to the contract agree to make a selection, and stipulate the award shall be final? We think...