Sunshine v. M. R. Mansfield Realty, Inc.

• Decision Date: 06 March 1978
• Docket Number: No. C-1159,C-1159
• Citation: 195 Colo. 95,575 P.2d 847
• Parties: William S. SUNSHINE and Blanche Z. Sunshine, Petitioners, v. M. R. MANSFIELD REALTY, INC., a Colorado Corporation, Respondent.
• Court: Colorado Supreme Court

Page 847

575 P.2d 847

195 Colo. 95

William S. SUNSHINE and Blanche Z. Sunshine, Petitioners, v. M. R. MANSFIELD REALTY, INC., a Colorado Corporation, Respondent.

No. C-1159.

Supreme Court of Colorado, En Banc.

March 6, 1978.

Rehearing Denied March 27, 1978.

Sterling, Simon & Rubner, Roger L. Simon, Denver, for petitioners.

Caskins, Hertzman & Chanzit, Richard M. Chanzit, Denver, for respondent.

ERICKSON, Justice.

We granted certiorari to review M. R. Mansfield Realty, Inc. v. Sunshine, Colo.App., 561 P.2d 342 (1976). We affirm.

William S. and Blanche Z. Sunshine, petitioners, own a parcel of unimproved land in Arapahoe County. On August 24, 1971, they entered into an exclusive listing agreement with M. R. Mansfield Realty, Inc., respondent, in an effort to lease their property. Mansfield Realty subsequently located a potential tenant, Mitchell James, who desired to operate a franchised fast-food restaurant on the Sunshine property. A lease proposal was drafted by the attorney for the Sunshines and signed by James on November 19, 1971. Subsequent negotiations resulted in the execution of a written lease by James and the Sunshines on February 7, 1972. The terms of the lease satisfied the explicit rent and tenancy provisions of the listing agreement. Additionally, the lease contained the following condition:

"GUARANTY

"It is understood and agreed by and between the parties hereto that this lease is conditioned upon the terms and performance of said terms being guaranteed by the Small Business Administration, which guaranty Tenant shall obtain, and Tenant shall submit adequate proof to Lessors of such guaranty."

The parties to the lease also agreed that the Small Business Administration (SBA) need not directly guaranty the lease. The direct guaranty was to be made by a private insurance company with the SBA reinsuring that guaranty.

In August of 1972, James informed the Sunshines that the 80% SBA guaranty would soon be issued. Upon being so informed, the Sunshines insisted that the lease required a 100% SBA guaranty. James, having made substantial expenditures in connection with the lease, then attempted to obtain an additional 20% Guaranty from other sources.

On August 22, 1972, the Sunshines terminated the lease on the ground that "the Small Business Administration would not guarantee the total rent, and due to the fact that said lease was conditioned upon complete guarantee by the Small Business Administration." An SBA guaranty for a business of the type contemplated by the lease in this case, however, cannot be obtained to the extent of 100%. 15 U.S.C. § 636(a)(3).

Mansfield Realty initiated this action, alleging that it had earned its commission under the listing agreement, because the Sunshines had wrongfully terminated the lease. Trial to the court resulted in a judgment in favor of the Sunshines. The trial court held that the guaranty provision in the lease was determinative. As a matter of fact and as a conclusion of law, the trial court declared that the guaranty had not been obtained and could not be obtained. Since the condition had not been satisfied, the trial court held that the Sunshines had the right to declare the lease null and void without incurring liability for a brokerage commission. The court of appeals reversed on the ground that the Sunshines had improperly terminated the lease. We affirm the court of appeals.

Where the record establishes that the parties to a contract originally attached the same meaning to a contractual term, and a disagreement as to the meaning of the term later arises, the trial court's determination of the provision's meaning is a finding of fact which is binding on appellate courts. However, where neither party at the time of the contract was aware that the other attached a different meaning to the contractual provision, the trial court's determination of the provision's meaning is a conclusion of law based upon its interpretation of the document's language. Sentinel Acceptance Corp. v. Colgate, 162 Colo. 64, 424 P.2d 380 (1967); Van Diest v. Towle, 116 Colo. 204, 179 P.2d 984 (1947); Conklin v. Shaw, 67 Colo. 169, 185 P. 661 (1919). In the latter situation, a trial court could find as a matter of fact that there had been a mutual mistake as to the provision's meaning, but it could not determine the meaning of the provision as a matter of fact, since the parties had never attached the same meaning to the provision.

The record...