Gearin v. Rothchild Bros.

170 P. 923, 88 Or. 403, 1918 Ore. LEXIS 45

• Court: Oregon Supreme Court
• Decided: February 19, 1918
• Status: Published

Opinions

BENSON, J.

1. There is no question of fact presented for our consideration. It is conceded that every part of the contract has been fully complied with up to the time when defendant defaulted in payment of rent for the months of March and April, 1916, and this default is admitted. The defendant relies solely upon the provisions of Section 19 of the lease, above quoted, as a protection against any action for the recovery of accrued rent. The substance of defendant’s argument is tliat the clause referred to and relied upon by it was the expression of a distinct agreement between the parties that after the erection of the building at a cost of $85,000, that structure should serve as liquidated damages for any default upon the part of the lessee other than a failure to insure against loss by fire and that plaintiff’s only remedy for a breach of covenant is to take the necessary steps to accomplish an eviction. Upon the other hand, plaintiff urges that Section 19 is to be construed with Section 21 which, after providing in the usual form for forfeiture and re-entry by the lessor, concludes thus:

“Without being taken or deemed guilty in any manner of trespass, and without prejudice to any remedies which might otherwise be used for arrears of rent, or preceding breach of covenant.”

It is contended that these clauses may readily- be harmonized so as to give effect to both. The general rule governing courts in the construction of written instruments is quite clearly expressed in a modern textbook in this language:

“In order to ascertain the true meaning of the parties to an indenture or other agreement, the construction will be upon the whole thereof, and not upon disconnected parts of it. Although the immediate object of inquiry be an isolated clause, the whole context must be considered, in order to carry out the intention of the parties. Covenants are then to be construed according to the obvious intention of the parties as collected from the whole context of the instrument containing them, and according to the reasonable sense of the words”: 1 McAdam, Landlord and Tenant, 392.

Having this rule in mind, and the further obligation to give effect as far as possible to every clause of the' contract, we observe that if defendant’s interpretation of Section 19 is adopted, a situation is presented wherein the lessee may be permitted to retain and enjoy the possession of the property for an indefinite term without any compensation to the landlord or any redress other than the recovery of possession at the conclusion of a possibly long continued litigation. It is hardly conceivable that the parties had any such possibility or purpose in mind when the lease was executed. In Dyer v. Wightman, 66 Pa. St. 425, Mr. Justice Sharswood remarks that

“It is incontrovertible that nothing but a surrender, a release or an eviction can, in whole or in part, absolve the tenant from the obligation of his covenant to pay the rent.”

This statement is amply justified by numerous authorities and appears to be fundamental. A contract which is designed to disregard a doctrine so well established should be expressed in language so clear and unmistakable as to leave no doubt of its meaning. The clause in controversy appears to be unusual, since counsel have not called our attention to anything like it in the authorities and our own investigation has disclosed nothing of a similar character in the reported cases. While forfeiture clauses in leases are uniformly construed to be provisions for the benefit of the landlord, Section 19 of this agreement was manifestly inserted in the interest of the tenant, and it seems clear to us that when read in connection with Section 21, it provides that after the building is erected and insured against loss by fire the lessee may surrender the lease, restore the property to the landlord and be exempt from any liability except arrears of rent or preceding breach of covenant. The answer does not plead a surrender or eviction and there is no evidence of such facts in the record. The clause relied upon does not constitute a release from the obligation to pay arrears of rent and the judgment is therefore affirmed.

Affirmed. Rehearing Denied.

Mr. Chief Justice McBride, Mr. Justice Harris and Mr. Justice Burnett concur.