90 F. Supp. 943 | Ct. Cl. | 1950
Lead Opinion
delivered the opinion of the court:
This action was instituted to recover damages in the sum of $350,000 for the alleged breach of covenants by the United States to maintain the plaintiff’s premises in good repair and tenantable condition and to restore the premises to the same condition as that existing at the time the defendant entered upon the property, in accordance with the terms of Lease No. NOy (R)-32260, dated January 5, 1943, as amended, and Lease No. NOy (R)-42962, dated July 1,1947.
On January 5, 1943, the plaintiff leased to the United States certain commercial warehouse property located in Brooklyn, New York, which consisted of approximately 17.464 acres of land, 33 buildings having a total of 436,800 square feet of storage space, and two slips. The lease provided that the premises were to be used exclusively for “naval purposes” and ran from January 5, 1943, to June 30, 1944, at an annual rental of $200,000, and was renewable by the United States from year to year upon 60 days’ notice in writing and was subject to cancellation by the defendant upon 30 days’ notice in writing. The United States duly renewed and extended the lease for successive annual periods to and including June 30,1947.
On July 1, 1947, the parties entered into a new lease, designated as NOy (R)-42962 which covered buildings Nos. 1
8. The Government shall have the right, during the existence of this lease, to make alterations, attach fixtures, and erect additions, structures, or signs, in or upon the premises hereby leased * * *; which fixtures, additions, or structures so placed in or upon or attached to the said premises shall be and remain the property of the Government and may be removed therefrom by the Government prior to the termination of this lease, and the Government, if required by the Lessor, shall, before the expiration of this lease or renewal thereof, restore the premises to the same condition as that existing at the time of entering upon the same under this lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the Government has no control, excepted: * * *.
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12. The Government shall maintain the said premises, buildings, equipment, piers, bulkheads, slips, and appurtenances in good repair and tenantable condition during the continuance of this lease.
During 1946 and 1947 the lease of January 5, 1943, was modified on seven separate occasions by formal written agreement of the parties, whereby certain portions of the premises were eliminated from the operation of the lease as of specified dates, and the original rental reduced proportionately. The lease of January 5, 1943, was cancelled by paragraph 4 of the seventh modification which provided as follows:
It is agreed that lease NOy (R) -32260 is hereby can-celled by agreement of the parties as of June 30, 1947.
The buildings varied considerably as to age, type of construction and condition when the defendant took possession in 1943. Ten of the buildings were two-story brick warehouses having concrete first floors and heavy wood plank second floors. Four of the buildings were one-story brick structures with concrete floors. The other buildings were made of corrugated steel or iron and had concrete or wood plank floors except Building No. 20 which was a one-story stucco warehouse. The pavement adjacent to the buildings and throughout the property was macadam, asphalt or concrete.
The premises were used by the United States exclusively for the storage of naval supplies and throughout the period involved in this suit were under jurisdiction of the Supply Department of the New York Naval Shipyard, Brooklyn, New York. During the defendant’s occupancy of the premises, the supply officer made an inspection three or four times weekly for the purpose of observing the general condition of the storage and the condition of the buildings and outside areas and to ascertain whether the property was being kept in a good state of repair. In addition, the storehouse superintendent visited the property every day for two or three hours and accompanied the supply officer on his regular
Defective conditions requiring repairs inside or outside the buildings were reported to the supply officer or were noted by him on his inspection of the property and all minor repairs to the premises were authorized by him and were made by the maintenance crew of his department. Defects of a substantial nature requiring major repairs were reported to the Public Works Department by the supply officer and those repairs were made by that department. In each instance when defects requiring major or minor repairs were reported to or noted by the supply officer, the repairs were made. During the defendant’s occupancy of the plaintiff’s premises, the sum of $100,851.66 was expended by the Public-Works and Supply Departments of the New York Naval Shipyard to improve the property and maintain it in good repair and tenantable condition for naval purposes, covering in part repairs to those portions of the premises not here in controversy, the same having been released as described in Finding 8.
On March 17, 1947, and May 21, 1947, the plaintiff wrote to the Commandant, Third Naval District, New York, requesting that repairs be made to the leased premises, and on December 10, 1947, in acknowledging the Commandant’s letter of December 1, 1947, giving notice of termination of the lease, the plaintiff made demand for restoration and requested that repairs be undertaken. On January 13, 1948, the plaintiff demanded prompt restoration and repair of the property and particularly the repair of leaders, gutters and roofs. This letter was acknowledged on January 19, 1948, by the assistant to the public works officer who stated:
With respect to the alleged damaged condition of leaders, gutters, and roofs you are advised that the Navy Department does not propose to make any repairs to the premises but, should it be determined that a legal responsibility exists for such repairs to be made, you will be reimbursed for a reasonable cost of making such repairs to the property as are deemed necessary.
Although the plaintiff alleged in its petition that the defendant failed to comply with paragraph 8 of the leases re
The evidence establishes that the defendant subjected the premises to heavy use and that while it had a maintenance and repair policy under which it spent considerable sums, the premises here in issue were not in good and tenantable condition when the second lease was terminated on December 31, 1947. It is found that to put the premises in good repair and tenantable condition for the purposes for which leased, namely, naval purposes, would require an expenditure of $83,319. The plaintiff, however, contends that the covenant hy the defendant to maintain the premises in good repair and tenantable condition renders the defendant liable for the cost of putting the property in such repair and condition for the plaintiff’s purposes or use, namely, the conduct of commercial terminal and warehousing operations involving storage of bagged and perishable foodstuffs such as cocoa, sugar and coffee. To put the property in good repair and tenantable condition for the purposes required in the conduct of the plaintiff’s business would cost $172,321.62. The defendant argues that the covenant in question required the defendant to maintain the premises in good repair for the purposes for which the property was leased and not for the plaintiff’s purposes. That is the principal issue of law here.
Before passing to the above issue, it will be noted that we have reduced the commissioner’s finding of $180,271.62, for repairs meeting the plaintiff’s purposes, by $7,950, the sum he found would be due the plaintiff for restoration of its original electrical system. We think that the plaintiff as a matter of law is not entitled to recover anything for the electrical system. The system which existed on the premises when the defendant first took over the property, though
There remains the plaintiff’s contention that a tenant who has covenanted to keep premises in good repair is under obligation to keep them in such condition as will make them ■conform to ordinances passed while the tenant was in possession, whether those ordinances were applicable to the tenant or not, and that failing to do so it cannot be said in fact or law that the premises were kept in good and tenant-able condition. In a variety of situations courts have exonerated tenants from paying for repairs or modifications called for by municipal or other governing authorities, or of a structural or substantial nature, on the ground that the parties to the particular leases could not be held to have contemplated such unforeseen and drastic contingencies. We
We now consider the basic questions heretofore described, as to whether or not the defendant discharged its obligation to keep the premises in good repair and tenantable condition and, if not, how much and on what theory the plaintiff is entitled to recover on account of the defendant’s default. The plaintiff’s theory would subject the defendant under our findings to the corrected total liability of $172,321.62 and the defendant’s theory of the meaning of the covenant in the leases would impose upon it by our measure a liability to the plaintiff for $33,319. The commissioner has certified to us these two sets of figures, either of which we can accept, depending on the principle of law we feel to be properly applicable. We hold that the plaintiff is entitled to recover in this case the sum of $33,319 for the defendant’s failure to keep the premises in good and tenantable condition for the purposes for which leased.
There is nothing novel about the general tenor of covenants as contained in the leases executed by the parties, calling for restoration of the property in the same condition as when entered upon by the lessee, less reasonable ordinary wear and tear and damages by the elements, and imposing upon the lessee the responsibility to keep the property in good and tenantable condition. The novelty of the case and difficulty of our problem arise from the fact that the record is without evidence on the matter of restoration; indeed, the plaintiff’s counsel not only elected to try his case without proof on that covenant in the lease but stated to us on oral argument that he did not know what the condition of the property was when the leases were made. We must then look to the liability of the defendant under its covenant to keep the property in good and tenantable condition. The mere fact that the record contains no evidence which would instruct us or would impose any liability on the defendant for restoration does
Although the building was new at the beginning of the lease, it was of cheap construction and the lessee, under the covenants in the lease, was not liable for defects arising from the original construction of the building. Conditions must be taken into account and the character of the constructions must be considered * * *. The covenant in question must also be considered with reference to the use the premises were to be put to and the business to be carried on. It was a lease of a moving picture theatre, the use and wear of which is severe and this is a recognized fact, according to the finding of the master * * * (citing cases).
This is not to say that a covenant to maintain in good repair and tenantable condition gives license to a lessee arbitrarily to waste the property under guise of the argument that he may not deem repairs as necessary for the purposes for which it was leased. Even in absence of any covenant to maintain at all there is a common law obligation, in the absence of an express provision to the contrary, not to commit voluntary waste. This implied covenant also requires restoration of the premises to the lessor in the same condition as received, reasonable wear and tear excepted. Both ele-
In Mills v. United States, 52 C. Cls. 452, The Federal Government entered into a lease with the plaintiff for the Mills Building in Washington, D. C. The lease provided that the building would be used only for general office purposes, that the lessee would make all repairs to the premises,
We think it is quite possible that the parties to the leases here before us may not have had a meeting of minds as to what was meant by the covenant set forth in paragraph 12 thereof. The defendant may have thought its liability should be limited to the purposes for which leased and put the purpose in the lease for that reason. The plaintiff may have honestly assumed differently. There is, however, no evidence that at the execution of the instruments there was any discussion or confusion about it. If there was no meeting of the minds and we were to hold there was no valid lease, the common law would apply and the same result be achieved. But, it is not necessary for us to reach this question for we think that the pattern of the authorities is sufficiently clear on language and circumstances such as here involved so as to leave no grounds for reasonable doubt as to the proper construction to be placed upon the written language the parties chose to employ.
The plaintiff has contended for sums adequate to restore alleged damage to paving by the defendant, which we do not find supported by the evidence, and for certain sign restorations under paragraph 8 of the leases. On the latter,
Mention should be made of the plaintiff’s theory that one proper measure of its recovery can be reflected by its claim for deferred maintenance which seeks to compel the defendant to restore the premises to 80% of condition new. We hold with the principle that to cast a financial liability of this magnitude upon the tenant by these leases could hardly have been within the contemplation of the parties. Second United Cities Realty Corp. v. Price, 242 N. Y. 120, 124, 151 N. E. 150, 151-2.
Upon a careful evaluation of the facts and authorities, considering as a whole the language of the covenants and what we believe to be the reasonable intention of the parties, the age and class of the premises involved, the uses to which the property was to be put, and all the other circumstances surrounding the case as shown by the record, we conclude that the plaintiff is entitled to recover $33,319.
It is so ordered.
Dissenting Opinion
dissenting.
I am unable to agree with the decision and judgment of the Court. The Government promised in paragraph 12 of the lease to :
maintain the said premises, buildings, equipment, piers, bulkheads, slips and appurtenances in good repair and tenantable condition during the continuance of this lease.
The premises here involved were first leased to the Government by a lease dated January 5,1943, and running to June 30,1944, cancellable by the Government on thirty days’ notice, and renewable by the Government from year to year on sixty days’ notice prior to expiration. It seems to me highly improbable that the parties would, in a lease which bound the lessee for only thirty days, after which time, if the lease was surrendered, the property would be put to its former use as a commercial warehouse, intend that the standard of maintenance of the property would be a standard which might make the property unsuitable for that use. Even if the Government as lessee had been firmly bound for the term of the lease, approximately eighteen months, I would find such an intent highly improbable. In fact, the Government did not surrender its lease on thirty days’ notice, but elected to renew it from year to year, always subject to cancellation. On July 1,1947, a new lease for one year was made covering most of the property here in question. That lease was likewise subject to cancellation and was in fact terminated on December 31, 1947. It contained the same paragraph 12 which I have quoted from the original lease of 1943. The language must have meant the same thing in both leases.
I think, then, that the Government’s obligation under paragraph 12 was to maintain the property in good repair and tenantable condition for use as a commercial warehouse, the use to which it was devoted before the Government’s temporary occupancy, and the use to which both parties expected that it would again be put when that occupancy ceased.
The evidence as to the cost of doing what I think the Government was obliged to do is most unsatisfactory. The plaintiff did not prove the condition of the property at the time it was turned over to the Government.. It was by no means new, and the Government was not obliged to put it in such
' Because of the uncertainty as to the condition of the property at the time it was leased, and a considerable skepticism as to the accuracy of estimates such as those presented by the plaintiff, I would give the plaintiff a judgment for $80,000.00.