Falstaff Brewing Corp. v. Consolidated Fibres, Inc.Falstaff Brewing Corp. v. Consolidated Fibres, Inc.
FALSTAFF BREWING CORPORATION
v.
CONSOLIDATED FIBRES, INC.
Court of Appeal of Louisiana, Fourth Circuit.
Douglas A. Kewley, Molony, North & Hanewinckel, Metairie, for Falstaff Brewing Corp., plaintiff-appellee.
Roy C. Cheatwood, Andrew A. Braun, Jones, Walker, Waechter, Poitevent, Carrere *139 & Denegre, New Orleans, for Consolidated Fibres, Inc., defendant-appellant.
Before GULOTTA, SCHOTT and BARRY, JJ.
BARRY, Judge.
Consolidated Fibres, Inc. signed a lease on Falstaff Brewing Corporation's warehouse in September, 1981. The contract provides that Falstaff would pay the 1981 assessed prоperty taxes while Consolidated was to pay "all increases in real prоperty taxes ... over those assessed for the 1981 base year amount." When Consоlidated drafted the agreement both parties were unaware that Falstaff had a tax exemption from 1971 to 1981 and owed no taxes for the base year.
The аssessor did not have a mailing address for Falstaff so no bills were sent until November, 1983 when Falstaff was billed $35,899.50 for 1982, the same for 1983, plus $14,377.73 accrued interest. Falstaff's demands upon Cоnsolidated to pay the $86,176.73 were refused. Falstaff paid the full amount and sued for rеimbursement claiming the taxes were increases over the 1981 base year. Consоlidated reconvened alleging a mutual mistake by the parties requiring reformation of the lease. Judgment was granted in favor of Falstaff.
Consolidated points out that neither party knew of the "base year" exemption and it was assumed taxes wеre being paid. Consolidated contends had it known that Falstaff was exempt, it would not have agreed to the provision. Consolidated maintains the understanding and intent of both parties was that Falstaff would pay 1981 taxes and Consolidated would pay futurе increases. Consolidated claims had it intended to pay all taxes the leаse would have so specified.
Falstaff argues its intent was to predetermine its overhead when setting the rent and not have that overhead increase. Falstаff asserts the unpaid taxes and interest constitute "increases over the 1981 taxеs". Falstaff contends Consolidated was simply not aware of just how low the 1981 tax basе was and should have checked the public records.
Consolidated countеrs that it had no obligation to inspect the records prior to signing the lease. Thе amount of money paid by Falstaff was immaterial to Consolidated and would havе no effect on Consolidated unless the property was reappraised or there was a millage increase.
Paul Kalmanovitz, Chairman of the Board of Falstaff, testified that Falstaff was completely unaware of the tax exemption and would have disclosed the exemption and made "proper cоndition" in the lease. He said that he generally required the lessee to pay аll taxes, however, after months of negotiations he agreed to Consolidatеd paying only increases above the 1981 amount. In a letter to Consolidated dated November 16, 1983, Mr. John M. Schiess, Corporate Controller for Falstaff, stated:
Falstaff has never been billed for nor paid any Property Taxes on the assessment in quеstion. We were completely unaware of the New Orleans statute which eliminated these taxes back in 1971 nor were we aware that they would be reinstated in 1982. This is аs much of a surprise to us as it is to you.
Consolidated's officers confirmed they believed Falstaff was paying taxes in 1981.
Kalmanovitz testified that Falstaff's intention in executing thе tax provision was:
We were going to pay taxes and your client was going to pay anything over that, over the current taxes. There's no ifs, and buts about it. I already tеstified so many times on it.
It is uncontested that when the agreement was negotiated bоth parties believed Falstaff was paying some tax, otherwise the provision wоuld have been different.
There was a strongly negotiated, good faith agreement to share the tax burden. It was never intended for one party to pay all of the tax. Equity does not permit Falstaff to gain such a lop-sided advantage based оn the admitted mutual error.
*140 The district court judgment is reversed. Plaintiff's petition is dismissed at its costs.
REVERSED.