Sholiton Industries, Inc. v. Royal Arms, Unpublished Decision (6-4-1999)

CourtOhio Court of Appeals
DecidedJune 4, 1999
DocketNos. 17480, 98-01414.
StatusUnpublished

This text of Sholiton Industries, Inc. v. Royal Arms, Unpublished Decision (6-4-1999) (Sholiton Industries, Inc. v. Royal Arms, Unpublished Decision (6-4-1999)) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sholiton Industries, Inc. v. Royal Arms, Unpublished Decision (6-4-1999), (Ohio Ct. App. 1999).

Opinion

Sholiton Industries, Inc., appeals from a judgment of restitution granted in favor of Royal Arms Ltd. in the Montgomery County Court of Common Pleas. The trial court found that Royal Arms had properly given notice canceling a lease agreement at the conclusion of a second five-year term. Sholiton contends that the lease agreement, properly construed, granted them an additional third five year term and that, therefore, the trial court erred by granting judgment in Royal Arms's favor. We agree with the trial court, however, that both parties had the option of ending the lease at the conclusion of the second term. An inconsistency in the agreement created by the operation of three separate clauses had to be resolved by giving the parties the option to terminate the lease rather than by interpreting the lease to run into perpetuity. As a consequence, we affirm the judgment below.

I.
On March 16, 1989, Sholiton and Royal Arms entered into a written lease agreement. According to the terms of the lease, Royal Arms provided three laundry rooms for Sholiton in its apartment complex on Grafton Avenue in Dayton, Ohio, known as Executive House Apartments. Sholiton used those rooms as a place to install its own coin-operated washing and drying machines for use by the tenants of Executive House. As rent, Sholiton paid Royal Arms fifty per cent of its gross profits from the machines every quarter. The lease agreement was based on a standard form drafted by Sholiton with spaces provided to type in various operative terms.

The first lease term began, according to the agreement, when the washing and drying machines were installed. In fact, the machines had already been installed almost one year before the agreement was signed, on April 28, 1988. The lease, therefore, ran from that date forward.

The lease operated in sequential terms of five years. After the first five years, Sholiton held a unilateral option to renew for a second term. After the second term ended, the lease term renewed automatically, unless either party gave notice of its desire to terminate the lease between 120 and 90 days before the lease term expired. The provision in the lease that outlined these terms read as follows:

TO HAVE AND TO HOLD the above described space for a term of five (5) years with an option on the part of lessee for an additional term of five (5) years which shall be automatically renewed for said five year period unless lessee submits notice of other intent to lessor by certified mail not more than 120 days nor less than ninety (90) days prior to the expiration of said term. If lessee exercises his first option said lease shall thereafter be automatically renewed for five (5) year periods unless either party gives not more than 120 days nor less than ninety (90) days notice prior to the expiration of any extension. Initial term provided for herein shall commence upon the installation of the washing and drying machines. Notification of the date of installation be given by lessee to lessor certified mail with return receipt.

Although the first lease term began with the installation of the equipment on April 28, 1988, Sholiton did not give notice of the date of installation as required by this clause until May 4, 1993, over five years later. Nevertheless, both parties accept that the initial lease term began in April, 1998.

Another provision in the lease gave Sholiton an additional five-year term plus a unilateral option to renew for an additional five years if, at any point, both parties agreed that more than fifty per cent of the washing and drying equipment should be replaced. The ten-year period ran from the installation of the new equipment. That provision read as follows:

7) If the parties agree that lessee should replace more than fifty percent of the equipment the lease term shall be renewed for the initial term and any options as provided from the installation date. Notification of the date of installation shall be given by lessee to lessor certified mail with return receipt.

The parties also created an addendum to the lease agreement. According to the addendum, Sholiton agreed to replace all the washers and dryers and to redecorate the laundry rooms every five years from the commencement of the original term. The addendum stated:

A. Sholiton Industries, Inc. agrees that every five years from the commencement date of the original term they will replace all laundry washers and dryers with brand new commercial laundry washers and dryers and re-decorate the laundry rooms in Executive House Apartments. This redecoration shall be approximately the same as was done in 1988 or as shall be mutually agreed to by the parties to the Lease.

On April 5, 1993, Royal Arms sent Sholiton a letter giving notice of its intention to terminate the lease agreement as of July 25, 1993. Sholiton then notified Royal Arms that the first term expired on April 27, 1993. Royal Arms did not further pursue its intention to terminate the lease because, under the agreement, Sholiton held an option to renew the lease for a second five-year term, which it exercised.

On September 3, 1993, Sholiton replaced all of the laundry equipment that it maintained at Executive House. Sholiton gave notice of the installation date by certified mail on March 25, 1998.

On December 29, 1997, Royal Arms gave notice to Sholiton that it intended to terminate the lease as of April 27, 1998. Royal Arms informed Sholiton that it was exercising its option to terminate the lease after the expiration of the second term. Sholiton, however, refused to honor the termination request. According to Sholiton, under paragraph seven of the lease agreement, the installation of the new equipment in September, 1993 began a new five-year term. Because, under paragraph seven, installation renewed the "initial term and any options," Sholiton maintained that the lease term did not expire until September, 1998. It further maintained that its unilateral option to renew the lease after five years was revived and, therefore, Sholiton held the right of possession until at least September, 2003.

On April 21, 1998, Sholiton initiated the instant case by filing a complaint for a declaratory judgment concerning its rights under the lease agreement. Royal Arms filed a counterclaim asking for judgment in forcible entry and detainer and damages. The matter was set for trial before a magistrate on July 10, 1998. On September 4, 1998, the magistrate issued a decision granting Royal Arms a writ of restitution. The magistrate found that Sholiton's performance in accordance with the addendum, installing new washers and dryers, did not trigger the provisions of paragraph seven renewing the initial term and Sholiton's unilateral right to renew. He held that the two provisions were intended to operate separately. Thus, according to the magistrate's construction, Royal Arms had the right to terminate the agreement at the conclusion of the second term.

On July 20, 1998, Sholiton sent Royal Arms a check for $1,253, fifty per cent of the moneys it had collected during the second quarter — April, May, and June, 1998. Royal Arms cashed the check on July 30. On August 19, 1998, Sholiton filed a motion asking the magistrate to consider this new evidence. Sholiton argued that the acceptance waived Royal Arms's notice of eviction. The magistrate overruled the motion in his decision of September 4.

On September 18, 1998, Sholiton filed its objections to the magistrate's report together with a motion for a new trial based on the evidence of the rent payments. On September 28, the trial court denied Sholiton's motion for a new trial.

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Bluebook (online)
Sholiton Industries, Inc. v. Royal Arms, Unpublished Decision (6-4-1999), Counsel Stack Legal Research, https://law.counselstack.com/opinion/sholiton-industries-inc-v-royal-arms-unpublished-decision-6-4-1999-ohioctapp-1999.