Tastee-Freez Leasing Corp. v. Milwid

• Citation: 365 N.E.2d 1388,173 Ind.App. 675
• Decision Date: 02 August 1977
• Docket Number: TASTEE-FREEZ,No. 3-675A131,3-675A131
• Parties: LEASING CORP., Plaintiff-Appellant, v. Andrew MILWID, Darwin Vanderwall, Defendants-Appellees.
• Court: Court of Appeals of Indiana

Page 1388

365 N.E.2d 1388

173 Ind.App. 675

TASTEE-FREEZ LEASING CORP., Plaintiff-Appellant, v. Andrew MILWID, Darwin Vanderwall, Defendants-Appellees.

No. 3-675A131.

Court of Appeals of Indiana, Third District.

Aug. 2, 1977.

Jacobs & Spahr, Fowler, Thomas W. Munger, Lafayette, for plaintiff-appellant.

George Vann, Barce, Barce & Vann, Kentland, for defendants-appellees.

HOFFMAN, Judge.

Plaintiff-appellant Tastee-Freez Leasing Corporation (Tastee-Freez) filed its complaint against defendants-appellees Andrew Milwid and Darwin Vanderwall (lessees) seeking possession of real estate and damages upon a written lease. Trial to the court resulted in a judgment against Tastee-Freez. The trial court found that Tastee-Freez was not entitled to possession of the leasehold, that lessees were not in default of any of the terms of the lease, that lessees had made overpayments of rent from the inception of the lease, and that therefore lessees were not in default for nonpayment of rent.

The lease provides, in pertinent part, as follows:

"1. Rent and Method of Payment

(a) Lessee shall pay to Lessor, as rent for said demised premises, a minimum annual rent of Seventy-five Hundred and 00/100 Dollars ( $7,500.00 ), payable as follows: Seven Hundred Eighty-One and 25/100 Dollars ( $781.25 ) per month, in advance, during the term of this lease, or an annual rental equal to eight percent (8%) of the annual sales from the leased premises, whichever is greater.

(b) On or before the 10th day following the end of each month, during the term of this lease, Lessee shall pay to Lessor the amount, if any, by which eight percent (8%) of the prior month's sales exceeds the minimum monthly rental, paid in advance, pursuant to paragraph 1(a) hereof.

(c) After the expiration of each lease year, Lessor shall return to Lessee, from payments received pursuant to paragraph 1(b) hereof, the amounts by which the said payments, together with the minimum annual rental paid, pursuant to paragraph 1(a) hereof, exceeds eight percent (8%) of the annual sales. If eight percent (8%) of the annual gross sales is less than the said minimum annual rental, then Lessor shall return to Lessee all of said payments made pursuant to paragraph 1(b) hereof.

(e) . . . Within ten (10) days after the end of each month of the term of the lease, Lessee shall furnish Lessor with a complete statement, signed by Lessee, certifying the amount of sales during the preceding month. With each such statement, Lessee shall pay to Lessor the payment, if any, due hereunder, pursuant to the provisions of paragraph 1(b)."

An examination of paragraph 1(a) of the lease discloses a conflict between the "minimum annual rent" of $7,500 and the monthly rental of $781.25 when computed on a twelve-month basis. If the minimum annual rental is apportioned equally over a twelve-month period, each monthly installment would be $625. On the other hand, if the stated monthly rental is extended over a twelve-month period, the annual rent would be $9,375. Thus, there is an apparent conflict as to the meaning of the lease agreement with respect to the amount of rent due under its provisions.

In resolving disputes as to the meaning of written contracts, courts must first examine the entire contract itself in order to ascertain the intent of the parties as expressed in the language used in the instrument. Evansville-Vanderburgh School Corp. v. Moll (1976), Ind., 344 N.E.2d 831; Fort Wayne Bank Bldg., Inc. v. Bank Bldg. & Eq. Corp. (1974), Ind.App., 309 N.E.2d 464. In order to glean the meaning of a contract, all its provisions must be considered rather than individual words, phrases or paragraphs. And, the court must accept an interpretation which harmonizes the provisions thereof, if that can reasonably be done. Evansville-Vanderburgh School Corp. v. Moll, supra.

"(W)hen the contract and the terms of the entire instrument taken together show conclusively that the wrong word has been used, through inadvertence, it is the duty of the court to interpret the contract according to the manifest intention of the parties, * * *."

Russell v. Merrifield (1892), 131 Ind. 148, at 150, 30 N.E. 957, at 958.

If an examination of the language of the contract has failed to clarify its meaning, resort must be had to the rules of contract construction and the receipt of extrinsic evidence. Evansville-Vanderburgh School Corp. v. Moll, supra. The test for determining whether a contract is ambiguous is whether reasonable men would find the contract subject to more than one interpretation. Bd. of Dir., Ben Davis, etc. v. Cloverleaf Farms, Inc. (1977), Ind.App., 359 N.E. 2d 546 (transfer denied); Myers v. Maris (1975), Ind.App., 326 N.E.2d 577. It is the existence of an ambiguity which requires an examination of evidence of the intent of the parties extrinsic to the contract.

Finally, "where an agreement is so indefinite upon an essential element that it cannot be construed with reasonable certainty, and where it is not clarified by extrinsic circumstances, there is nothing for the court to construe. This simply means that the court cannot re-write and then enforce contracts, which, to the knowledge of the court, the parties themselves did not enter into." Bd. of Dir., Ben Davis, etc. v. Cloverleaf Farms, Inc. supra, at 549 of 359 N.E.2d.

Tastee-Freez contends that a consideration of the entire lease and the amendments thereto shows that the parties contemplated a monthly rental of $781.25. Thus Tastee-Freez concludes that there is no ambiguity but only a mistake which should be disregarded by the trial court.

In support of its contention that the lease contemplates a monthly rental of $781.25, Tastee-Freez first points to the provision for pre-payment of the last month's rent. Such provision reads as follows:

Appellant asserts that this clause specifically identifies the sum of $781.25, as the "minimum monthly rental." Appellant then infers that if the last month's "minimum rental" were $781.25, the minimum rental for the preceding months would likewise be in the same amount.

Tastee-Freez next points to an amendment of the lease which, it contends, shows that the lease intended to provide a ...