Werry v. Phillips Petroleum Co.
| Decision Date | 25 September 1975 |
| Docket Number | No. 11790,11790 |
| Citation | 540 P.2d 792,97 Idaho 130 |
| Parties | Dora M. WERRY, Plaintiff-Respondent, v. PHILLIPS PETROLEUM COMPANY, a Foreign Corporation, Defendant-Appellant. |
| Court | Idaho Supreme Court |
Thomas Nelson, of Parry Robertson, Daly & Larson, Twin Falls, for defendant-appellant.
Paul M. Beeks, of Smith & Beeks, Twin Falls, for plaintiff-respondent.
Respondent Dora M. Werry brought this action for breach of a long term lease contract against appellant Phillips Petroleum Company, hereinafter Phillips. Werry's complaint alleged that Phillips had breached the lease agreement by, among other things, failing to deliver up the leased premises at the expiration of the term with a functioning radiant heating system as Werry alleged the agreements with Phillips required. Phillips denied that the agreements between the parties imposed any such obligation. The trial court submitted the matter to a jury which returned a verdict against Phillips in the amount of $20,000. Phillips has appealed.
In the fall of 1958, Dora M. Werry began negotiation with representatives of Phillips Petroleum Company for the lease of certain real property she owned which was located in the business district of Ketchum on U.S. Highway 93. An old service station was located on the property. It was contemplated under the lease that Phillips would replace it with a modern one. A form lease agreement, prepared on September 10, 1958, and signed by Werry as lessor on October 14, 1958, was submitted to Phillips. The form was furnished by Phillips and a clause therein stated that the lease would not be binding on Phillips until signed on its behalf by one of several named officials of the company. It is uncertain when Phillips accepted the lease offer, but a letter dated March 3, 1959, from Phillips indicates that the head office had then only recently approved the transaction.
The printed lease from was apparently prepared by Phillips for use in the numerous transactions of this nature in which it engages in its nationwide service station business. The term of the lease was for fifteen years with two five year renewal options. The rental for the primary term was $100.00 per month; in the event Phillips exercised its option to extend, the rent would be at the rate of $400.00 per month for both option terms. By the terms of the lease Phillips was granted the right to erect a service station on the premises, to construct any additional buildings and improvements it desired and to alter or remove any improvements it had made. At the expiration of the lease, all improvements then affixed to the realty would revert to Werry.
After the lease offer was submitted, further discussions took place between Werry and Phillips concerning plans for the proposed new service station. In November, 1958, Mrs. Werry's son Russell, who handled his mother's business affairs, went to Phillips' Salt Lake City main offices to negotiate with H. E. LaBelle, Marketing Assistant for the Salt Lake City Division. Russell Werry requested that the station be heated by a radiant hot water system. The hot water for this system would be supplied by a Ketchum company which piped water from nearby natural hot springs into town. Installation of radiant heating pipes in the buildings and driveways would heat the buildings and melt the snow which fell on the driveways, thereby eliminating the need for expensive snow removal. This radiant heating method was used in various enterprises and private homes in the Ketchum area. Testimony indicated that such a system was less costly than other heating methods, required very little upkeep and, if properly installed and maintained, would last upwards of thirty years.
In a letter dated February 10, 1959, Dora Werry made a subsequent offer to Phillips stating that she would allow free rent in the first year of the first five year option if Phillips would install the radiant heating system when it constructed the new service station. This offer was appearently accepted because on March 3, 1959, LaBelle, on behalf of Phillips, sent to Werry the following letter:
'We shall have our Engineer call on you soon after receiving the Title Insurance to discuss the details of this construction with you.
Plaintiff's Exhibit 'B'.
Phillips constructed the service station, including the radiant heating system. However, the evidence indicates that when concrete was being poured for the driveways, hot water was not run through the system. Thus, when hot water was later run through the pipes they expanded and, because the co-efficient of expansion of the pipes was different from that of the concrete, this eventually caused cracking in the concrete and the pipes, and a leaky system resulted. By the early 1970's, as the term of the lease was expiring, the system had become inoperable because of the numerous leaks due to the creacking of the concrete and the pipes. Sometime in the spring or summer of 1973, Phillips terminated its contract with the hot water company. Phillips did not exercise its option to renew the lease at the end of the primary term, and the property then reverted to Werry. At the end of the term the radiant heating system was valueless and could not be made functional without removing all of the concrete and piping in it and laying a new system. In addition, the evidence indicated that the water company was operating at capacity and it was no longer possible to obtain water from the natural hot springs.
Werry brought suit on the lease contract, alleging inter alia at Phillips breached the contract by its failure to deliver an operable radiant heating system at the expiration of the lease. The jury returned a verdict of $20,000 for Werry. Phillips has appealed from the judgment entered on the verdict.
Phillips alleges these assignments of error. First, the trial court erred in submitting the construction of the lease to the jury, but should have ruled as a matter of law that the lease did not require Phillips to deliver a functioning radiant heating system at the expiration of the term. Secondly, Phillips contends that even if the issue of construction was properly a matter for the jury, Phillips argues the judgment below should be reversed because of erroneous and misleading instructions to the jury. Finally, Phillips claims the trial court abused its discretion when it failed to grant its motion for a continuance on the ground of the unavailability of an important witness. We will deal with these claim in order.
The trial court determined that the agreement between the parties was embodied in four documents: the original lease agreement, plaintiff's exhibit 'A', dated September 10, 1958; the letter dated February 10, 1959, from respondent Werry to Phillips, defendant's exhibit 1; the letter dated March 3, 1959, from Phillips to Werry, plaintiff's exhibit 'B', the provisions of which are set out above; and a letter of May 26, 1959, from Phillips to Werry, plaintiff's exhibit 'C'. While Phillips has objected to instruction number 4 which describes the subsequent letters as 'expand(ing)' the original lease agreement, there is no question but what the agreement between the parties is incorporated in all of the documents, not just the lease agreement. Phillips, in its reply brief, acknowledges as much by its statement at page 5:
'In the exchange of letters, appellant accepted the duty to install a radiant heating system.' (Emphasis in original).
The original lease agreement made no provision for the radiant heating. All of the references to the radiant heating are in the subsequent letters, defendant's exhibit 1 and plaintiff's exhibit 'B'.
Central to appellant's first argument is its claim that the contract is clear and unambiguous and its interpretation is thus a matter of law for the court, citing Parks v. City of Pocatello, 91 Idaho 241, 419 P.2d 683 (1966); Minidoka Co., etc. v. Krieger, 88 Idaho 395, 399 P.2d 962 (1965). Since there is no language in these writings defining a duty to deliver a functioning radiant heating system, Phillips argues, the court should have directed a verdict in its favor.
We agree that nowhere in the contract is such a duty expressly spelled out, but we do not agree that the trial court erred in finding an ambiguity in the documents and giving the matter of construction to the jury. Instruction number 9, on Construction of Lease and Intent...
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