209 Pa. 87 | Pa. | 1904
Opinion by
The complainants in this case, Kaufmann Brothers, leased certain premises on the southeast corner of Fifth avenue and Smithfield street in the city of Pittsburg, from Sarah L. Hitchcock for a term of years. By the leases, two in number, it was provided in language substantially identical, that the lessees should have the privilege of rerenting at the expiration of the first term, which ended April 1, 1898, for a period of five years more at a rental to be determined by four arbitrators, two selected by each party, with power in case of disagreement to choose an umpire, whose decision should be final and without exception or appeal. It was also stipulated that no such privilege of renewal should be granted unless the lessees gave written notice to the lessor or her heirs of their intention to exercise such privilege for six months prior to April 1, 1898. Also that if the arbitrators and umpire should not agree within two months after their appointment, then others should be chosen in the same manner. Also that if the lessees should occupy the premises for the term of five years from April 1,1898, they should have a further privilege of lease for another period of five years, upon a like six months’ notice, at a rental to be fixed and determined in the same manner. There was no provision in either lease covering the contingency of a failure to agree upon the part of the second set of arbitrators.
The lessees exercised their privilege of renewal for the five years beginning April 1, 1898, and the rental was determined according to the provisions of the leases. Six months prior to April 1, 1903, which was the termination of the first extension of five years, they gave notice of their intention to renew for another period of five years. Arbitrators were named by both sides in accordance with the provisions of the leases, but they failed to agree upon a rental or to select an um
Upon the trial, the court made a full finding of facts, all of them being practically undisputed, and reached the following conclusions of law: 1. That equity has jurisdiction. 2. That there is no sufficient remedy at law. 3. That the landlord and tenant acts of 1772 and 1863 have no application. 4. That an injunction should be granted until further order.
Exceptions were filed to certain of the findings of fact, as being irrelevant and immaterial, and also to the conclusions of law and the opinion of the court. These exceptions were dismissed and a decree was entered directing that an injunction he issued restraining the respondents from interfering with the possession of the plaintiffs until further order of the court, by proceeding under the landlord and tenant acts of 1772 and 1863, or otherwise. The present appeal was then taken by the respondents. The decree of the court below is not assigned for error, but the assignments are confined to the dismissal of the exceptions, to the conclusions of law reached by the court below.
That a court of equity has jurisdiction in a proper case to restrain proceedings under the landlord and tenant acts of 1772 and 1863, was expressly held in Denny v. Fronheiser, 207 Pa. 174. Justice Mitchell there said (p. 177) : “ The jurisdiction of equity to restrain actions at law is too well established to require discussion, and there is nothing in the act of 1772 to give proceedings under it any immunity from such restraint in a proper case.” In that instance it was held that equity would not interfere, not because it is without jurisdiction to
The summary remedy provided under the acts of 1772 and 1868 is not adapted to the determination of intricate and delicate questions of law. As the preseñt chief justice said in the case just cited (p. 179), “The act was passed in the interests of justice to give against tenants who hold over without even color of right after the expiration of their terms, a better remedy than the old, cumbersome, dilatory and expensive one by action of ejectment.” But as Justice Sterrett said in Davis v. Davis, 115 Pa. 261, speaking of the provisions of the act of 1863 (p. 265), “ It also clearly indicates that the legislature in providing a remedy so summary that the person in possession may be ousted therefrom in a few days, intended to further limit the jurisdiction of magistrates and restrict the remedy to plain cases of ordinary tenancy.” And further in the same case (p. 266) he says, “ In view of the fact that the special and summary jurisdiction given to justices of the peace and magistrates by the act of 1863, and supplements, has been so sharply defined by the legislature, and limited to a class of cases that are of easy solution, it would illy become us, even if we had the power to do so, to enlarge its scope so as to embrace cases which the average justice of the peace or city magistrate is incompetent to dispose of.”
In the present case, the appellees contend for the right to hold the premises in dispute, under the covenants in the lease providing for a renewal for five years from April 1, 1903. This raises a somewhat complicated question of law which must be settled before it is possible to determine whether or not the right of possession in the lessees ended with the term which expired March 31, 1903. Had no notice been given by the appellees, six months prior to that date, of their intention to exercise the right of renewal which was expressly granted to them by the original lease, then there would be but a simple question of fact for determination, entirely within the province of the justice and the jury to decide. But it is undisputed that the six months’ notice was given, and the rights of the parties now turn upon questions of law, rather than upon any disputed facts.
W e are clear that under the circumstances of the present
In the second prayer of the bill, the lessees ash that the court shall fix and determine the rental to be paid by the plaintiffs for the premises for the term of five years from April 1, 1903. But it is urged by counsel for the appellants that the court has no jurisdiction to grant this belief, because, as they allege, the leases terminated March 31, 1903, by reason of the failure of the mode provided by the parties for the fixing of the rental.
As we have seen, the original term in both leases expired April 1, 1898, but each provided for similar renewals, one for five years from April 1, 1898, and another for a further term of five years from April 1, 1903; and by another agreement, two additional extensions from that date were provided on both of the above leases, one for five years, and at its expiration, another for four years ; so that extensions are provided for which run, at the option of the lessees, until April 1, 1917. The leases therefore contemplate, in addition to the first term of thirteen years, four extensions in all, three for five years each, and one for four years. The entire contract embraces a period of thirty-two years’ occupancy of the premises by the lessees, if they choose to avail themselves of the rights placed at their disposal by the terms of the agreement. The rental for the first thirteen years was fixed by the parties at the outset. That for the first extension of five years was fixed by arbitration in accordance with the terms of the lease ; and the present dispute grows out of the failure upon the part of the arbitrators to fix the rental for the second period of extension of five years.
The language of the original lease of 1885 is as follows: “ And the said parties of the first part hereby grant unto the said J. Kaufmann & Brothers or their assigns, the privilege of rerenting the premises at the expiration of the first term of thirteen years for a period of five years longer..” It will be noticed that here is a direct and positive grant of the right of renewal. It is not left to be determined by anybody else,
The learned judge of the court of common pleas reached a conclusion which he expressed in his opinion as follows: “ The plaintiffs having exercised their option for a renewal of the leases within the time prescribed, their right to a lease and to keep possession of the premises for a new term of five years, was vested in them regardless of whether the arbitrators fixed the amount of the rent or not. If the right to renewal liad been intended to depend upon the rent being fixed in advance, it. would not only have been the easiest but most natural thing to have said so. It seems clear to us that no such result was even thought of by either party.” We agree with the conclusion thus stated. The lessees were stipulating for what was certainly to them a valuable privilege in providing for a long term made up of successive extensions. Under the contract, that privilege was absolutely secured to them, provided they gave six months’ notice, prior to the expiration of each term,
The arbitrators were appointed, in the language of the lease, “ for the purpose of determining the amount of rent which the said J. Kaufmann & Brothers shall pay per year during the said five years.” The right to a renewal was not in any way before them for consideration. Can it be said that, because the arbitrators failed in their duty, which was to determine the amount of the rental or to agree upon an umpire, whose decision upon that subject should be final and conclusive, the lessees are to be deprived of the privilege of a renewal, which they had taken the pains to secure for themselves by means of carefully drawn stipulations in the contract ?
To the mind of the trial judge, the specifications of the lease for successive renewals at the end of the intermediate periods, appeared to be the substantial part of the contract, and he viewed the manner of fixing the rental, value as merely incidental thereto. In his opinion he thus states his conclusion: “ It is evident that the essence of the contract in the leases was the options for renewals, and that the parties so understood it. This is strengthened by the fact that as the leases were made to terminate (subject to the options) in 1917; and by the following clause of the agreement of 1897, viz: ‘It is desired by the said parties of the second part for the better security for the future of their business interests where the same is at present located to provide for and obtain the right of future options. . . . And the parties of the first part deeming the grant of such options as of advantage to the estate of Sarah L. Hitchcock, .... and .... it being understood that on failure to exercise any of the said options within the time and according to the terms of said leases as aforesaid, the leases terminate with the term in which notice of such option is to be given according to the terms thereof.’ Now, under these somewhat extraordinary conditions, the real' subject-matter of the contract being a right to the renewal of the leases, and fixing of the rent being only secondary, the terms as to rental being in substance and effect that the rent shall be a fair one fixed by an impartial tribunal; for that is all that the clause as to fixing the rent means; has equity jurisdiction? We think it has.” •
After careful consideration of this question, in the light of
Nearly all of the eases cited by the appellants, to sustain their contention that the fixing of the rental value is of the essence of the contract, were proceedings to enforce specific performance of contracts for the sale of land; and in this class of cases it has invariably been held that the price to be paid is an essential element of a contract of sale ; and unless the price has been fixed, the contract is not certain and cannot be enforced. We are not, however, here dealing with a contract for the sale of land, but we are dealing with covenants for the renewal of a lease, and that, too, in a case where the lessees have been in possession of the premises under the lease for more than eighteen years, and have made valuable and extensive improvements upon the property during that time, and have built up a large and extensive business thereupon. During all these years, the lessors have been receiving a rental for the property which was entirely satisfactory. There is a marked distinction between the rule which may equitably be applied to a contract for the sale of land, and that which should govern in an agreement for the renewal of a lease where possession has been enjoj'ed, and improvements made during the first period under a reasonable expectation of benefits to be derived therefrom, during future extensions of the lease at the option of the lessee.
One of the cases upon which the appellants rely is Milnes v. Gery, 14 Ves. 400. The contract in that case was one for
The appellants also cite the case of Hopkins v. Gilman, 22 Wis. 476. This was the case of a letting, and not a sale, but it seems favorable to the position of the appellees, rather than of the appellants. The lease stipulated that, at the end of the term, the lessor should have the value of the land, independently of the improvements placed upon it by the lessee, determined by the arbitrators to be chosen in a specified way, and that the lease should then be renewed at a percentage of the valuation, or else the improvements taken at a valuation to be fixed by arbitrators. It was held that while the court would not compel "an arbitration, it would restrain the lessor from proceeding at law to dispossess the tenant until the improvements were paid for. And also that a court of equity had power itself to ascertain the value of such improvements, notwithstanding the provisions of the lease as to arbitration. It was there said (p. 481), “ The court having jurisdiction of the cause, should provide and grant any relief consistent with the case made by the complaint and embraced within the issue.”
In Dunnell v. Keteltas, 16 Abb. Pr. 205, the law is stated as follows (p. 211) : “ It is true, indeed, as a general rule, that a court of equity will not decree specific performance of a covenant or ag’reement to appoint arbitrators or appraisers. Where upon a contract for the sale of property, the price is not fixed but is left to be determined by certain persons named in the
In Viany v. Ferran, 5 Abb. Pr. N. S. (N. Y.) 110, it was held, under facts similar to those of the present case, that a court of equity had power to compel the execution of a renewal lease and also to determine the rent to be paid for the new term.
The contention of the appellants that the fixing of the rental is of the essence of the contract, does not seem to be borne out by the authorities. Thus, in Taylor’s Landlord and Tenant, 9th ed. sec. 14, “A stated rent is not essential to the contract; because, from favor, or for a consideration passing to the lessor at the time of its inception, a lease, beneficial in its nature to the lessee, may be made without any reservation of rent.” And several authorities are there cited to sustain the proposition.
In Weaver v. Wood, 9 Pa. 220, Gibson, O. J., held that an agreement for a lease at a fair rent is sufficiently certain to be enforced. And in Mitchell v. Commonwealth, 37 Pa. 187, in the opinion of this court delivered by Thompson, J., an agreement for holding premises rent free was construed to be a lease.
One of the latest cases in which the question here involved was considered is that of Grosvenor v. Flint, 20 R. 1.31,
In answer to the first question we think it is clear that the court has jurisdiction to do, either directly or by its master, what the appraisers or arbitrators could have done under said provision of the lease, if it is shown that the arbitration has in fact failed. And refusal to agree to a third man constitutes such failure: Brock v. Dwelling House Insurance Co., 26 L. R. A. 623; Niagara Fire Insurance Co. v. Bishop, 154 Ill. 9;
The question is also fully discussed, and the authorities bearing upon it are carefully considered by Judge Dillon in Tscheider v. Biddle, 4 Dillon, 55.
The reasoning in Coles v. Peck, 96 Ind. 333, is also helpful in determining the question at issue.
In that case there was a lease providing for the erection of a building with an option to purchase, the price to be determined by arbitrators. The court held that the plaintiff was entitled to equitable relief on a failure of the arbitration. Many American and English cases are cited and commented upon. After referring to the doctrine laid down by Milnes v. Gery, 14 Ves. Jr. 400, that contracts for the sale of land will not be specifically enforced when the purchase price is to be determined by arbitrators and such arbitration has failed, the court says (p. 339): “ The doctrine of that case has, however,
After a careful consideration of all the cases bearing upon the subject which have been brought to our attention, or which we have found, we are satisfied that the authorities well agree that equity will not compel an arbitration, and this upon the very good ground that the courts remain open to the parties, with better provisions for securing justice than are possessed by arbitrators. But that in cases of renewal leases, the weight of authority clearly favors the view that the tenant in such a case has a quasi proprietorship ; a right, lacking merely a valuation ; and that the grossest inequity would be worked, should he lose his right through a failure upon the part of the arbitrators to fix a valuation. While, therefore, a court of equity will not undertake to compel an arbitration, which it cannot control, it will in such case make an appraisement itself, or direct it to be done by its own officer, and will thereafter enforce specific performance of the contract, upon the terms so found.
Under the facts of the present case, the court has complete jurisdiction in equity to fix the amount of the rental to be paid by the lessees, during the extension of five years from April 1, 1903, and to enforce specific performance of the agreement providing for such extension.
The assignments of - error are overruled, and this appeal is dismissed, at the cost of the appellants. The decree of the court below is affirmed, and it is ordered that the record be remitted for further proceedings in accordance with this opinion.
Also reported 37 Atl. Repr. 304.—Reporter.
Also reported 31 N. E. Repr. 1102.
Also reported 6 N. E. Repr. 747.—Reporter.