208 Mich. 349 | Mich. | 1919
The facts in this case are undisputed and stipulated. The Park Building Company is, and was for some time before commencement of this action, owner of lot 14 and the north 20 feet of lot 13, section 8, Governor & Judges’ plan of the city of Detroit, and had leased said premises to Edward C. Van Husan for a term of 99 years. It was organized as a corporation for the sole purpose of owning and leasing this property and had no other assets or source of income except the rentals therefrom. On the 23d of February, 1916, Van Husan sub-leased the premises to defendant George P. Yost Fur Company for a term of 91 years and 8 months, beginning April 1, 1916, and Van Husan assigned his sub-lease from defendant to the Park Building Company.
The United States government assessed for the year 1916 an income tax against the Park Building Co. upon the income derived from the annual rental paid to it by the defendant lessee of said property, which was paid. But three-fourths of this income tax, amounting to $99.31, is directly involved here as the lease had been in effect but three-quarters of that year, but succeeding annual assessments are necessarily indirectly involved. The case was commenced in justice’s court to recover the amount of income tax paid by plaintiff and claimed due from defendant under the lease for 1916, whence it was carried to the circuit court of Wayne county by appeal, and plaintiff now appeals from an adverse decision against it in the circuit court-,
The sub-lease of February 23,'1916, from Van Hu
“Taxes: As a further consideration for the leasing and demising, aforesaid, the said party of the second part further covenants, promises and agrees to bear, pay and discharge, in addition to said rent reserved, all rates, taxes, charges for revenue and otherwise, assessments ana levies, general and special, ordinary and extraordinary of every name, nature and kind whatsoever, including water rates, which may be taxed, charged, assessed, levied or imposed upon said premises, and upon any and all buildings and improvements thereon and any personal tax levied or assessed upon said party of the first part, which may be assessed, levied or imposed upon the leasehold estate hereby created and upon the reversionary estate in said premises during the term hereby granted and so long thereafter as said party of the second part, its successors, representatives and assigns, shall occupy said demised premises; the intent hereof being to insure to said party of the first part a net rental hereunder, not chargeable with any burdens by way of taxes, or otherwise, resulting in the diminution of the same.
“And it is further understood, covenanted and agreed by and between the parties hereto, that the said party of the second part shall pay, on execution of this lease, its pro rata, share of the city taxes for*352 1915-1916, and also the State and county taxes for 1915-1916, which may be levied upon said premises. And the party of the second part further covenants and agrees to obtain and deliver to the said party of the first part within thirty (30) days after such taxes shall respectively become due and payable, duplicate tax receipts of all taxes and assessments paid on said premises of every kind and nature whatsoever; and all such taxes and all such receipts shall be paid and made out in the name of the said party of the first part, or his heirs or assigns; and that the said duplicate tax receipts shall be promptly sent by mail to said party of the first part or to such agent or depository as he may designate in writing.”
The lease contains a further provision that the party of the first part may at any time during the term of said lease pay any due and unpaid taxes, assessments, water rates or other charges “upon said premises,” such payments to be a claim against the lessee as additional rent. Upon construction of the above-quoted sections relative to payment of taxes, plaintiff particularly stresses the provision that the intent is “to insure to said party of the first part a net rental hereunder, not chargeable with any burdens by way of taxes, or otherwise, resulting in the diminution of the same,” and urges that in comprehensive explanation of what immediately precedes and follows, this general statement makes plain by fair construction of the tax clause taken in its entirety that the contracting parties to this lease contemplated and agreed the lessee should during the life of the lease pay all income taxes which might be assessed against the lessor on account of rentals received.
It is the contention of defendant that where more than one construction is possible that most favorable to the lessee should prevail, and by fair construction the generalizing words in the tax clause are but explanatory of and confined to such taxes and charges as relate to and may be directly imposed upon the
Pertinent to that inquiry it may be noted that at the time the lease was entered into there was a Federal statute providing for an income tax, though not the same as now in force. The lease nowhere makes any direct reference to a personal income tax. The tax section in detail and with apt phraseology takes cognizance of and requires that the lessee shall pay all taxes upon four estates in the property, directly named as follows: “said premises” — “all buildings and improvements thereon” — “the leasehold estate hereby created” — and “the reversionary estate in said premises during the term hereby granted,” and the lessor with detailed effort to make certain from the beginning prompt payment by the lessee of the taxes so specified, provided in the second paragraph of the tax clause that the second party should forthwith pay its pro rata share, for the balance of that tax year, of the city taxes, and the State and county taxes for 1915-1916, “which may be levied upon said premises.” And within 30 days after said taxes become due obtain and deliver to said first party duplicate tax receipts “of all taxes and assessments paid on said premises of every kind and nature,” to be paid and made out in the name of the first party, his heirs or assigns, with no suggestion indicating an intent that the tenant should pay any portion of the personal income tax which might be assessed or levied against the lessor for 1916 or later.
In their briefs counsel for the respective parties
In Suter v. Jordan Marsh Co., 225 Mass. 34 (113 N. E. 580), decided September, 1916, the court had under consideration a covenant in a lease by which the lessee agreed to pay “all taxes and assessments whatsoever, except betterment taxes, which may be levied for or in respect of the leased premises, or any part thereof, or upon or in respect of the rent payable hereunder by the lessee, howsoever and to whomsoever assessed.” The court held that such covenant required the lessee to pay a United States income tax imposed upon the rent against the lessor, saying:
“The only payment which the United States had a right to exact under the law was a tax at a specified percentage upon the rent reserved for a stated period of time. That exaction is called in the act of congress a ‘tax.’ It is in its nature a tax. But by the terms of the lease, defendant has obligated itself to pay ‘all taxes and assessments * * * upon or in respect of the rent * * * howsoever and to whomsoever assessed.’ ”
In Codman v. American Piano Co., 229 Mass. 285 (118 N. E. 344), decided January 14, 1918, that court had before it for consideration a lease containing the following:
*355 “And the lessee further covenants and agrees with the lessor to pay punctually within fourteen (14) days from the times when they become due and payable all taxes and assessments whatsoever which may be payable for or in respect of the leased premises during the term thereof, except assessments for betterments hereinafter arranged for.”
Pointing out the distinction that in the Suter Case the covenant not only expressly required the lessee to pay the taxes upon the leased premises but also upon or in respect to the rent payable under'the lease, the court in an interesting discussion of the subject said in part:
“In other words, the agreement of the parties as expressed in the lease is to govern and control their respective rights in view of the language employed. * * * The legal signification (of the covenant last quoted) clearly is that the taxes are those which relate solely to the premises themselves and not to the rent reserved which, when due, is a separate and independent estate. * * * The words used by the parties cannot fairly be extended by us beyond their natural and ordinary meaning, and therefore the defendant cannot be held liable for taxes which the covenant neither by express words nor reasonable implication obliged him to pay.”
In Kimpall v. Cotting, 229 Mass. 541 (118 N. E. 866), decided February 28, 1918, the question again arose over the covenant in a lease providing:
“The lessees covenant and agree to pay and discharge any taxes or excises which during the term may on any assessment day be lawfully levied or assessed to either the lessors or the lessees upon or against the rent payable hereunder for or in respect of the period between such assessment day and the last prior assessment day, or for or in respect of the period between the first of such assessment days and one calendar year prior thereto, whether levied or assessed upon the same as rental or income, but not for any other taxes or excises in respect thereof.”
It is scarcely necessary to note that back of the question of interpretation or construction of the disputed tax clause in the lease no restraining Federal or State laws are involved. While as between the government and the lessor he alone was held accountable- for and obliged to pay his income tax from whatever source derived, as between themselves the contracting parties were at liberty to agree as positively and in as direct terms as they saw fit to adopt that the
It is undisputed that the question involved turns on construction of the concluding sentence in the first paragraph of the tax clause, relative to net rental. Deferring to the combined contentions of counsel for the respective parties it would seem to be susceptible of more than one construction, which, however, each is inclined to deny. Clearly it does not impose upon the lessee in any direct language payment of all taxes levied upon or in respect to the rent howsoever or to whomsoever assessed, as in the Suter Case, nor those levied and assessed upon rent payable, whether as rental or income, as in the Kimball Case. Neither does it in like direct and express terms confine the lessee’s burden to taxes payable for or in respect of the leased premises, as in the Codman Case. Defendant contends such is the manifest meaning of the tax clause as a whole and it should be so construed, while plaintiff argues to the contrary.
We do not think it can be said with certainty that the meaning of the language in controversy is absolutely without ambiguity or the intent so aptly expressed as to be beyond doubt and forbid construction. It is a recognized rule of construction that where more
Were those words unqualified by anything in the lease which preceded or followed them the omnibus language used might more readily yield to plaintiff’s interpretation. But it is a long settled rule of construction, which had become a legal maxim even before the days of Broom, that words of specification draw into the same class any general terms or words presumably super-added to attain the end without further prolixity. In this tax clause the conveyancer was liberally prolix in details and words of specification relative to the kinds of taxes the lessee must pay and upon what imposed, immediately preceding the general terms with which the last sentence in the paragraph concluded; and in a second paragraph, as it were an afterthought, the subject is again treated in added detail with words of specification further defin
“But it is a sensible and. well understood rule of construction that when after an enumeration, the statute employs some general.term to embrace other cases, the other cases must be understood to be cases of the same general character, sort or kind with those named.”
The case of Hawkins v. Railroad Co., 17 Mich. 57, which involved the construction of a contract, is there cited. Justice Campbell, writing the opinion in the Hawkins Case, said:
“The rule is usually applicable, that where no intention to the contrary appears, general words used after specific terms are to be confined to things ejusdem generis with the things previously specified.”
Counsel for plaintiff contend the intention of the parties that the concluding words of the paragraph should not be qualified by what went before, and they should be regarded as “a new, separate and distinct idea,” is made evident by the fact that a semicolon is inserted between what precedes and the general concluding clause. While not prepared to discuss the subtle principles of punctuation to any degree of nicety, we note it stated in the Century dictionary that the semicolon, mentioned as “a Latin delicacy which the obtuse English typographer resisted,” is a punctuation point “used to mark the division of a sentence somewhat more independent than that marked by a comma,” and it may be stated as a matter of common knowledge that the full stop or end of a completed sentence is marked in printing or writing by a period. Whatever distinction there may be between a comma and a semicolon, it remains that the concluding words
Plaintiff further contends that even if we accept the narrow and strained construction defendant urges, limiting the general language to meaning rentals should not be diminished by any kind of tax assessed upon the premises, nevertheless a tax upon rent payable is a direct tax, and in effect a tax upon the premises from which the rent is derived; and if, as must be conceded, the lessee is holden for all taxes on the leased premises he is necessarily required to pay the income tax on the rent payable. In support of this proposition counsel cite and argue from the somewhat celebrated case of Pollock v. Trust Co., 157 U. S. 429 (15 Sup. Ct. Rep. 673), reported on rehearing in 158 U. S. 601 (15 Sup. Ct. Rep. 912), in which the Federal income tax of 1894 was held unconstitutional by a bare majority of the court. The reported case with its rehearing, consisting of some 340 printed pages, is an extremely interesting and instructive promulgation of legal thought, learning and debate, in which however the justices who sat in the case were scarcely more successful in agreeing among themselves than were the attorneys who argued it. It is there said in the majority opinion:
“An annual tax upon the annual value or annual user of real estate appears to us the same in substance as an annual tax on the real estate, which would be paid out of the rent or income.”
This was said in a lengthy discussion of whether an income tax on rentals was á direct tax within the meaning of the Federal Constitution and therefore invalid because not levied in accordance with the constitutional rule of apportionment. On the rehearing it was said of this holding:
“The question thus limited was whether such taxation was direct or not, in the meaning of the Consti*361 tution, * * * that a tax upon the realty and a tax upon the receipts therefrom were alike direct.”
We are not impressed that these views, limited in application to the constitutionality of the income tax apportionment, are of controlling significance here. The court was only considering the distinction between direct and indirect taxes in its relation to the case decided without reference to its bearing upon, or application to, other and different cases. Whether direct or indirect, the lessor’s income tax as applied to this leased property is not a tax “levied upon said premises,” or on any of the four estates named in the lease, but is in its process of levy and assessment a direct personal tax against him, inseparable from him and his annual income, beginning and ending with him. The Pollock Case was cited and unsuccessfully insisted upon as controlling in the Codman Case. The court there aptly offered the postulate that:
“In construing the covenant it is plain that taxation upon real estate means one thing, and taxation upon income means another.”
Without extending this opinion to further review that case, it may be said we regard its discussion of the question persuasive and well in point here.
The tone and tenor of this contract throughout is directed with careful description to the leased premises, the taxes thereon and rental therefor which the lessee must pay during the long life of the lease extending into succeeding generations. To that end and extent the intent of the parties is made plain to a certainty by clear expression with appropriate names and descriptive terms, which by recognized rule of construction limit general words and terms super-added to the same general character or kind as the things previously specified. They contain no suggestion that in addition to all taxes on the premises and
In the reflected light of the matters dealt with in detail with descriptive terms and the context surrounding the generalizing language under consideration, we are constrained to agree with the following conclusion of the trial court:
“In addition to the foregoing, it is also my conclusion that it cannot be held that the minds of the contracting parties met upon the proposition that the lessee should pay the landlord’s income tax.”
The judgment is affirmed.