Holly Stores, Inc. v. Judie

179 F.2d 730, 1950 U.S. App. LEXIS 2264
CourtCourt of Appeals for the Seventh Circuit
DecidedJanuary 30, 1950
Docket9914_1
StatusPublished
Cited by6 cases

This text of 179 F.2d 730 (Holly Stores, Inc. v. Judie) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holly Stores, Inc. v. Judie, 179 F.2d 730, 1950 U.S. App. LEXIS 2264 (7th Cir. 1950).

Opinion

MAJOR, Chief Judge.

This is an appeal from a decree, entered March 31, 1949, in an action for reformation of a real estate lease bearing date of May 29,. 1946, between the plaintiff, Holly Stores, Inc. (hereinafter called Holly), as lessee, and the defendants, James A. Judie and Margaret I. Judie (hereinafter called Judie or Judies), as lessors. The reformation directed was that the figure five hundred forty-two thousand eight hundred fifty-seven dollars and fourteen cents ($542,-857.14) wherever the same appears in said lease be changed to that of six hundred forty-two thousand eight hundred fifty-seven dollars and fourteen cents ($642,857.14).

The sole issue concerns the amount of rent which Holly was obligated to pay to the Judies, and the discrepancy of $100,000 between the figure contained in the lease and that which the court ordered substituted therefor represents the basis for the dispute. In other words, Holly contends that it is liable for a rental calculated on *731 the reformed figure, while Judie contends that it is to he calculated on the figure contained in the lease.

Inasmuch as the controversy relates entirely to rentals, we need be concerned only with portions of the lease relevant to this issue, and we think a clearer picture of the situation may be obtained by setting forth such portions of the lease 'in the beginning. The lease provides:

“To Have and to Hold the premises hereby demised unto the Lessee, its successors and assigns from January 1, 1947 to January 1, 1960 for a total guaranteed rental of Four Hundred Ninety-four Thousand and No/100 ($494,000.00) Dollars, together with Seven (7%) Per Centón Sales (Gross sales less refunds), payable as set forth hereinafter :

“In Consideration of the leasing of said premises to Lessee by the said Lessors, the said Lessee Hereby Contracts and agrees to pay to the said Lessors as the yearly rental for said premises, as follows; to-wit:
“The sum of Thirty-eight Thousand and No/100 ($38,000.00) Dollars, per annum, payable in monthly installments of Three Thousand One Hundred Sixty-six and Two-thirds ($3,166.66%) Dollars, per month, in advance on the first day of each and every month from January 1, 1947 to January 1, 1960; together with seven (7) per cent on Lessee’s sales (gross sales less refunds) on said premises in excess of Five Hundred Forty-two Thousand Eight Hundred Fifty-seven and 14/100 ($542,857.14) Dollars per annum, which excess shall be payable annually as set forth hereinafter ❖ *

Subsequently, the lease sets forth the manner by which Holly is to inform Judie at the end of each year of the amount of its gross sales and “at which time Lessee is to pay Lessors Seven Per Cent (7%) on the amount of Lessee’s sales as shown on said statement in excess of the guaranteed rentals; viz., $542,857.14, as mentioned above.”

The lease provides, “In Addition to the above payments” the lessee agrees to carry insurance in a specifically stated manner “to be kept and maintained in full force during the entire term of this lease at the expense of Lessee,” and that in the event of the failure of the lessee to procure such insurance and “to pay the premium or premiums thereon,” the lessors shall have the right and privilege to procure such insurance and to pay such premium or premiums “which amounts shall be deemed so much additional rent, and shall be due and payable with the next installment of rent due thereafter.” Further, the lease provides that the “Lessee covenants and agrees to pay, in addition to the rents heretofore specified,” all taxes and special assessments assessed or imposed during the term of the lease.

It will be noted that $38,000, the amount of the guaranteed rental, is 7% of $542,-857.14, the figure designated in the lease above and on which Holly is obligated to pay 7% in addition to the guaranteed rental. Holly contends, however, that in accordance with a pre-existing agreement between the parties there should be added to the $38,000 guaranteed rental the amount of $7,000, representing taxes and insurance, which though agreed to be paid by Holly was to be charged to Judie as a basis for calculating the amount of gross sales above which it was obligated to pay 7%. Thus, instead of the figure stated in the lease which at 7% will produce $38,000, it seeks a reformation by changing that figure to $642,857.14, which at 7% will produce $45,-000 ($38,000 guaranteed rental plus $7,000 taxes and insurance).

We are met at the threshold with the contention that the facts and circumstances attendant upon the execution of the lease in suit, together with its plain provisions, are such that a court of equity should refuse to take cognizance. While it may be assumed, from the fact that it decreed reformation, that the court below decided this issue adversely to Judie, we are of the view that its findings of fact, if accepted, are not decisive of this issue. As a basis for a discussion of this issue we think that neither the evidence nor the court’s findings with reference to prior leases or agreements as to negotiations which pre *732 ceded the execution of the lease in suit are controlling.

Holly, a New York corporation with its principal office in New York City, is engaged in retailing women’s ready-to-wear goods. It operates approximately eighty-five stores in the United States. During the relevant period Leo Kossove was its president and Samuel Liebowitz its secretary, and Robert Weiser, residing at South Bend, Indiana, was supervisor of approximately twenty-five stores operated by Holly in the middlewest section of the United States. Both Kossove and Liebowitz were lawyers, the former having been connected with Holly since its formation in 1932 and it's president for more than fifteen years, while the latter had also been connected with Holly for more than fifteen years. Weiser was promoted to vice president of Holly in 1947, and has been continuously employed by it in a supervisory capacity since 1943. He attended law school at Northwestern University for about a year and one-half.

The defendant, James A. Judie, was born in 1865 and was, therefore, 83 years of age at the time of the trial. He, too, was a lawyer but had never engaged in general practice. During most of the past sixty years he has been engaged in real estate, insurance and probate work. The defendant, Margaret I. Judie, is the wife of James A. Judie and had nothing to do with the execution of the lease in suit other than sign it. The lease covered a valuable property in downtown South Bend, Indiana, owned by the Judies. A portion of the property had been leased to Holly by the Judies under two prior leases and had been occupied by Holly in the operation of its South Bend store. The lease in controversy not only covered property which had been included in former leases but additional property adjacent thereto.

Judie prepared two drafts of the lease, the latter of which was executed by the parties. Both drafts contained exactly the same provisions which are now in controversy, that is, those pertaining to rentals. The first draft was delivered to Weiser on May 20, 1946.

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179 F.2d 730, 1950 U.S. App. LEXIS 2264, Counsel Stack Legal Research, https://law.counselstack.com/opinion/holly-stores-inc-v-judie-ca7-1950.