Tsakres v. Owens
| Citation | 561 P.2d 1218 |
| Decision Date | 08 April 1977 |
| Docket Number | No. 2937,2937 |
| Parties | Goldie TSAKRES, Appellant, v. William A. OWENS et al., Appellees. |
| Court | Supreme Court of Alaska (US) |
Ernest Z. Rehbock, Anchorage, for appellant.
Richard C. Eckert, Anchorage, for appellees.
Before BOOCHEVER, C. J., RABINOWITZ, CONNOR, ERWIN and BURKE, JJ.
This case presents several allegations of error arising from an action in which the lessor/plaintiff sought declaratory relief and damages for the withholding of possession of real property. The allegations of error all involve the interpretation given a lease which constituted the agreement between the parties concerning the subject property. The trial court ruled in favor of the lessee/defendants. The issues present in this appeal will be addressed after a statement of the facts.
William C. Wester owned a building and lot at 436 'D' Street. He leased out a portion of the building to Tex Powell, who operated a business therein known as the Carriage Inn. Tex Powell died in 1972, leaving the business to his wife Cynthia, who decided she could not run the business and therefore put it up for sale.
Cynthia Powell asked William A. Owens (appellee herein), who was a friend of the Powells, if he wanted to buy the business. Owens asked if there was a current lease on the building, and Mrs. Powell said that it had three-and-one-half years to run; however, she did not have a copy of the lease. Thereafter appellee Owens went into possession.
Woens then asked Wester for a copy of the lease and Wester refused, saying that he was going to build on the property. Thereafter Wester sent Owens an eviction notice. Wester claimed he wanted to use the space for a bar, but this use never occurred.
Mrs. Powell owned restaurant furniture which Owens was interested in buying, but before purchasing it he wanted assurance that he could stay on the property. Upon receiving the eviction notice, Owens told Mrs. Powell that he could not buy the business. Wester then told Owens that he had made a mistake by sending the eviction notice. Owens at that time was ready to move out and told Wester that he could not buy the equipment and furniture with the threat of an eviction notice present.
Thereafter Owens and Wester entered into negotiation for use of the subject property. Owens testified:
Then on the 9th he (Wester) came over and he said his bookkeeper had made a mistake and I wasn't supposed to have received an eviction notice and I told him that I was ready to go and I couldn't stay there. I couldn't buy the furniture and their equipment with an eviction notice. And he said he would give me a lease until May of '73 and I said that's only 4 months, 5 months away and I can't buy this furniture and pay for it over a period of 5 or 10 years with a 4 or 5 months lease. So he-he says, I'll give you a lease until May or until a new building is built and I said, well, I have to have some sort of lease on the new building if you're going to build in May. And he said all right. I'll give you a 5-year with a 5-year option at $1.00 a square foot and I felt that I had a lease for the length of the time it would take me to pay for the furniture. 1
' Professor Joe Fedor' was hired by Wester to draw up a lease agreement. 2 The 'Lease Agreement for Carriage Inn' was executed on January 9, 1973, between William C. Wester and Zula Swanson as the lessors and William Owens, Fern Owens and Glen Dale as lessees. The lease was thereafter recorded.
Glen Dale, a partner of Owens and a signatory of the lease agreement, was present during the negotiations. His understanding was that a lease was made so the business could remain for ten years whether in the old or new building. Owens and Dale proceeded to buy fixtures and furniture from Cynthia Powell for $17,000, with terms for ten years.
Wester's interpretation of the document was different from that of Owens and Dale. Wester had the impression the document would serve Owens to 'stay' so that when construction began on the new building, Owens could exercise an option for lease in the new building. However, Wester testified that the thought of Owens having at that time a 5-year lease in the old building did not cross his mind.
With the lease Owens signed a letter of intent to be used to help Wester obtain financing for the new building. Other potential lessees were also approached and signed letters of intent.
Wester was not able to go through with his building plans, because financing did not work out. His wife Zula Swanson also died, and he 'was involved in closing the estate.' In the process of Wester's closing of Zula Swanson's estate, the subject property was sold to Goldie Tsakres (appellant herein).
John Grames, son of Goldie Tsakres, tried to develop the property for Tsakres but had no success. Grames testified that one of the difficulties to developing the property was the 'cloud' on the title created by the record of 'Carriage Inn Lease.'
Tsakres filed a complaint in superior court for forcible entry and detainer against Owens on September 12, 1974, seeking return of premises known as 436 'D' Street in Anchorage.
By her amended complaint of October 10, 1974, Tsakres asked for declaratory relief and for damages for withholding possession, alleging that a writing executed between her predecessor in title to the land and Owens must be declare void. The subject writing has the following terms:
Appellant Tsakres now raises two allegations of error 3 which require adjudication following the ruling of the court below favoring the defendants. The first of appellant's allegations is: The lease was not ambiguous in the sense of relaxation of the parol evidence rule.
The trial court determined that the agreement was ambiguous 'in that no provision (was) made in the event construction on a new building (did) not begin during the 1973 construction season or if a new building (was) never constructed.' Thereafter it admitted parol evidence in order to aid in the interpretation of the lease.
Appellant Tsakres contends that the court's finding of ambiguity goes to the heart of the legal effect of the lease and not to whether the lease is ambiguous. Rather, Tsakres contends, the document most clearly states that which it covers, and there is present no technically ambiguous language. Appellee Owens alternatively contends that a contract is ambiguous if subject to various interpretations. And therefore 'a contract can certainly be ambiguous if the language indicates some clause or word is apparently missing which would clear things up.'
The threshold question must therefore be, was the admission of parol evidence proper on these facts? This court has repeatedly stated that where a term in a written contract is ambiguous, extrinsic evidence of surrounding circumstances may be admitted to aid in the interpretation of the intent of the parties in order to resolve the ambiguity. 4
The test for determining ambiguity in a contract is whether in light of all the surrounding circumstances the contract is capable of more than one reasonable meaning, 5 for without ambiguity the prerequisite for admissibility of parol evidence is lacking. 6
As we recently stated in Wessells v. State, 562 P.2d 1042 (Alaska, 1977), in order to ascertain the meaning of words and phrases we will follow the principles of contract interpretation set forth in National Bank of Alaska v. J. B. L. & K. of Alaska, Inc., 546 P.2d 579, 584-86 (Alaska 1976). As we noted in Wessells, 562 P.2d at page 1046, this involves a two-step analysis. There we stated:
In the first stage, we will look to both the language of the lease and extrinsic evidence to determine if the wording of the lease is ambiguous. The mere fact that two parties disagree as to the interpretation of a contract term does not create ambiguity. An ambiguity exists only where the disputed terms are reasonably subject to differing interpretations after viewing the contract as a whole and the extrinsic evidence surrounding the disputed terms.
If we determine that the language is ambiguous, we will proceed to the second state of analysis and consider extrinsic evidence to attempt to resolve this ambiguity. (Footnotes omitted)
Thus, it becomes necessary to focus on provisions II and IV of the agreement, and to view these provisions in light of the surrounding circumstances of the documents' formation. These provisions read:
The trial judge in his Memorandum of Decision found in reading the terms of the written lease and hearing the extrinsic evidence surrounding these terms that:
The defendants and Mr. Wester expected to have the relationship of tenant and landlord for five years with the possibility of...
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...evidence, a substantial evidence question, and the admission of the U.S. Tax Court decision with attachments. Relying on Tsakres v. Owens, 561 P.2d 1218 (Alaska 1977), defendants contend that an ambiguity exists in the language of the agreement, claiming it is subject to more than one reaso......