Fergen v. Lyons

155 N.W. 935, 162 Wis. 131, 1916 Wisc. LEXIS 115
Wisconsin Supreme Court·Decided January 11, 1916·Published·Cited by 12 cases

Opinions

Maushall, J.

A covenant to renew a lease, if the terms are definitely fixed, or means are provided whereby they may be made certain by construction, is enforceable. This court considered that subject at length in Kollock v. Scribner, 98 Wis. 104, 73 N. W. 776, where the following rules were deduced from the authorities: A covenant to renew a lease calls for a new lease, — not an extension of an old one. An unqualified covenant to renew a lease calls for a new lease for the same period and upon the same terms as the original lease, except the agreement to renew. “When the agreement for a renewal contains language other than that appropriate to a general promise, so that, by resort to the settled rules for construction, the language of the covenant to renew and conditions of the renewal cannot be made certain, then such covenant fails for want of certainty.”

The promise to renew in this case is in language, not strictly appropriate to a general agreement to renew. It is [134] ambiguous. Therefore the question arises whether it can be made certain by settled rules for construction.

One of the best known rules for construction is that it must be presumed parties, in making a contract, intended to use language effectively in all parts of it. Therefore, the instrument should be so construed as, if possible, to carry out such purpose. Jacobs v. Spalding, 71 Wis. 177, 36 N. W. 608; Hicks P. Co. v. Wis. Cent. R. Co. 138 Wis. 584, 120 N. W. 512; Burgess v. Dane Co. 148 Wis. 427, 134 N. W. 841. So if the agreement to give the respondent the first privilege of renting the farm, if not sold at the end of the year, can reasonably be read as an agreement upon the contingency mentioned to give a renewal for another year on the same terms as those of the original lease, that must be preferred to any meaning which would involve fatal uncertainty.

Another well known rule for construction is that a clause of a contract which is ambiguous by itself, must be read in connection with the rest of the instrument so as to clear up the uncertainty, if possible. Chicago, M. & St. P. R. Co. v. H. W. Wright L. Co. 123 Wis. 46, 100 N. W. 1034; Jacobs v. Spalding, supra. Applying that, our attention is attracted to those portions of the lease which indicate that it was contemplated respondent should incur expense which could not be beneficial to him without his carrying on the farm for a second term, and the broad discretion given him in respect to farming the land with reference to a future season. He agreed to do all the work of repairing the fences and was allowed free hand as to seeding the land to grass.

Another rule for construction is that a contract may be read in the light of the circumstances characterizing its making for the purpose of clearing up ambiguities. Within that rule, the allegation of the complaint falls that the rent stipulated in the lease was disproportionate to the advantages of a one-year lease.

The way the parties understood the lease in performance [135] of its terms is another consideration. Respondent prepared sixty-five acres of the plow land for the next year’s work by seeding the same to grass and appellants co-operated with him in the matter. It was argued that this was a trilling matter, hut we do not so regard it. In seeding down the land to grass, respondent may well have been to considerable expense in properly preparing it so as to secure a good catch and put the surface in proper condition for a good hay crop and for advantageously harvesting the same.

Another and very important rule in such cases as this is that, in case of any ambiguity in the provision of a lease in respect to a renewal, the construction should be adopted which will favor the tenant rather than one which will favor the landlord. 24 Cyc. 990, 991.

There is very little use of citing precedents as controlling in a ease of this sort. The principles must govern. Language which would be involved in fatal ambiguity under some circumstances would not under others. A good illustration of that is Holloway v. Schmidt, 67 N. Y. Supp. 169, where a lease for five years contained an agreement that the lessee should have “the first privilege of a renewal” and it was held, in view of the circumstances characterizing the making of the instrument, that “first privilege of a renewal” should be construed to mean that a renewal lease for five years on the same terms as those of the original lease would be made to the lessee, provided the lessor made a lease.

Reading the renewal clause in question in the light of all the terms of the lease, and the circumstances pleaded and which may be proved, characterizing the making of the instrument, and applying thereto the rule that a meaning should be ascribed thereto which will sustain it, if that can reasonably be done, it is considered that such clause is susceptible of being made certain by application thereto of settled rules for construction. Assuming, as we must, that the parties intended to make a binding promise for a renewal of [136] the lease, and, looking to all the circumstances which have heen mentioned, it seems that the renewal clause will reasonably admit of a construction to the effect of a general promise to renew, at the lessee’s option, in case of the farm not. being sold before the end of the first term, and the lessor’s concluding to lease the place for the succeeding year. Such a general promise, subject to'the contingencies mentioned, would call for a new lease for a year on the same terms as the original lease; but without any covenant to again renew. That was the view of the trial court and sustains the decision that the complaint states a good cause of action for specific performance so far as the character of the renewal covenant is concerned.

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Fergen v. Lyons, 155 N.W. 935, 162 Wis. 131, 1916 Wisc. LEXIS 115 (Wis. 1916).

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