Northfield Investment Co. v. United Way of America

353 S.E.2d 774, 233 Va. 124, 3 Va. Law Rep. 1980, 1987 Va. LEXIS 177
Supreme Court of Virginia·Decided March 6, 1987·No. Record No. 831953·Published·Cited by 1 cases

Opinion

RUSSELL, J.,

delivered the opinion of the Court.

In this landlord-tenant dispute, the tenant held over after the expiration of the lease, occupying a part of the premises for a part of a month. The landlord sought to recover the contract rent for the entire premises for a full month. The tenant contended that it was liable only for rent prorated for that part of the premises occupied after the expiration of the lease, and prorated for the period of the hold-over occupancy.

In 1980, United Way of America owned a commercial building in Alexandria containing approximately 56,500 square feet of rentable floor space. Planning to erect a larger building across the street and to move into it when completed, United Way sold its original building but leased it back from the purchasers for a period of two years, with an option to extend. The original term of the lease expired June 17, 1982, but was extended by agreement of the parties for two months, to August 17, 1982. During the term, the original purchasers conveyed the property to Northfield Investment Company, Inc., which was United Way’s landlord when the extended lease expired.

[126] Northfield had entered into a management contract with Gates-Hudson & Associates, Inc., during the original term. That contract provided that Harold Miller, an attorney, was Northfield’s representative with “sole approval and execution power of all leases for the property.” The contract further provided that Gates-Hudson had the responsibility to “develop relationships with [prospective tenants], prepare letter proposals, handle on Owner’s behalf lease negotiations, ‘close the deal’ . . . .” All parties, including United Way, had copies of the management contract and were aware of its contents.

United Way, during the original term, had permitted a group called the National Puerto Rican Coalition (NPRC) to occupy a part of the first floor of the building. On August 17, 1982, NPRC occupied 1,980 square feet of space.1

In early August 1982, it became apparent to United Way that its new building would not be completed by August 17. Stephen J. Paulachak, a senior vice-president of United Way, telephoned Robert T. Gates, president of Gates-Hudson, and stated that United Way intended to move its operations and personnel out of Northfield’s building by August 17, but asked if Northfield would consent to NPRC’s continued occupancy of the space it was occupying on the first floor for a two-week period after August 17. Paulachak offered to “pay them a prorata rental for that space.” Paulachak testified that Gates responded that “it was no problem and that they would work with us.”2 In reliance on Gates’ response, and believing that Gates had authority to bind Northfield, Paulachak caused United Way to vacate the building by August 17, but permitted NPRC to remain until August 30.

On August 19, Gates wrote a letter to Paulachak which stated:

[127] As managing agent for Northfield ... I wish to inform you that the continued actual occupancy of a portion of the premises . . . constitutes a holdover of tenancy for an additional month. We hereby accept the holdover of occupancy and the tenancy of United Way of America for one additional month, from August 18, 1982 through September 17, 1982.

Paulachak received this letter on August 20th or 21st and immediately telephoned Gates, reminding him of their earlier conversation concerning prorated rent. Paulachak testified that Gates replied that he “had no authority to grant me that request.” Gates had not yet secured any new tenants for Northfield.

Northfield brought this action to recover $76,156.85 from United Way for rent at the base contract rate for the entire building for the period August 17 - September 17, plus $3,296.98 for an incremental increase based on the Consumer Price Index pursuant to a clause in the lease, together with attorney fees, interest, costs and damages. United Way conceded liability for rent for 1,980 square feet for 13 days, but denied that it was responsible for a month’s rent for the entire building, and counterclaimed for other damages.3

After a bench trial, the court issued a letter opinion granting Northfield judgment for $1,160.25 as prorated rent for 1,980 square feet for 13 days. The court also awarded Northfield judgment for the “CPI” increment and certain damages, and awarded United Way judgment on its counterclaim. We awarded North-field an appeal, in which the sole question is whether the court erred by refusing to award Northfield judgment for a full month’s base rent for the entire building.

During a colloquy with counsel at the end of the trial, the court stated: “I think it was reasonable for [United Way] to assume, not hearing anything by the 17th, to think what they had discussed with Mr. Gates was satisfactory.” The court added, however, “I don’t think he had the actual or apparent authority to grant any extension of the lease without first checking it out with Mr. Miller or some other person that might have been designated by the owner of the premises.” The court’s letter opinion did not base its holding upon an express agreement between the parties [128] with respect to a partial holding over, but rather applied Code § 55-2234 after expressly finding that the holding over “was not due to willfulness, negligence or other avoidable cause.”

We agree with the result reached by the trial court although we reach that result by a different path. The trial court’s findings of fact, where supported by credible evidence, are conclusive on appeal, Payne v. Simmons, 232 Va. 379, 383, 350 S.E.2d 637, 639 (1986), but that effect does not extend to the trial court’s conclusions of law. Id. at 385, 350 S.E.2d at 641.

We therefore accept the finding of fact, implicit in the trial court’s comments quoted above, that when Paulachak asked Gates if United Way might hold over 1,980 square feet for a two week period and pay prorated rent therefor, Gates responded affirmatively and United Way held over in reliance upon Gates’ response. The trial court’s conclusion that Gates lacked actual or apparent authority to bind Northfield to such an acceptance is, however, a conclusion of law based upon interpretation of Gates’ management contract. We draw a different conclusion from the terms of that contract. In authorizing Gates-Hudson to “handle on the Owner’s behalf lease negotiations” and to “ ‘close the deal,’ ” the management contract, in our view, vested Gates-Hudson with actual authority to enter into a binding oral contract on Northfield’s behalf with United Way.

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Northfield Investment Co. v. United Way of America, 353 S.E.2d 774, 233 Va. 124, 3 Va. Law Rep. 1980, 1987 Va. LEXIS 177 (Va. 1987).

353 S.E.2d 774 (Northfield Investment Co. v. United Way of America) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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