Tobey Furniture Co. v. Rowe

Bailey, P. J. By the lease in question the appellee demised the premises' therein described for a term of twenty years, and the rent reserved for the first five years of the term was the fixed sum of $4,000 per annum. It was then covenanted that there should be paid as rent for each of the three remaining periods of five years, a sum equal to six per cent, per annum upon the appraised value of the demised premises, such appraisal to be made not more than sixty nor less than thirty days prior to the commencement of said periods respectively. The manner in which the appraisals were to be made was minutely and circumstantially prescribed. The appraisers were to be competent, judicious and disinterested persons, owning real estate in that division of the city of Chicago in which the demised premises were situated. Each party was to select one appraiser, and give notice to the other of the selection. Provision was made for the appointment of a second appraiser in case of the failure of either party to make a selection. The party first appointing was authorized to fix a time and place for the meeting of the appraisers. In case of disagreement, the first two appointed were to select a third to act with them, and the finding of a majority was to he binding. If no two of the three could agree, the mean between the highest and lowest estimates was to be the appraisal, y/' For the purpose of obtaining the appraisal of the premises / for the last period of five years, the only one now in controversy, the appellee, in apt time, selected an appraiser possessing the necessary qualifications, appointed a time and place for the appraisers to meet, and gave the requisite notice to the lessee; and it is not, and under the evidence we think it can not be, successfully disputed, that she did everything required of her by the terms of the lease in order to have an appraisal duly made. Owing to circumstances for which she was in no way responsible, and over which she had no control, the appraisX ers failed to perform their duty, and no appraisal was made ae- \ cording to the terms of the lease. X "What then are her rights under the covenant in relation to the payment of rent? Are the mere time and mode of making the appraisal so far a matter of the substance of that covenant, that the failure to make the appraisal at that time and in that mode, without fault or negligence on the part,of the appellee, must be held to deprive her of the right to receive as annual rent, six per cent; of the value of the premises? . The doctrine seems to be well supported by authority, that /while a court of equity will not specifically enforce a contract for arbitration by compelling the appointment of arbitrators, í or by compelling them to act when appointed, still, where the Í rights of the parties are made to depend upon an appraisal of property, and the appraisal provided for in the contract has failed without the negligence of the party complaining, courts both of equity and of law will interfere to prevent a failure of justice by hearing evidence and making the appraisement themselves. Hood v. Hartshorn, 100 Mass. 117, was a suit upon a covenant in a lease, by which it was agreed that at the expiration of the term the buildings erected by the lessee on the demised premises should be appraised by three disinterested men, to be chosen, one by the lessor, one by the lessee, and the third by the two thus appointed, and that the lessor should purchase the buildings at the price fixed by such appraisers. Certain persons were appointed appraisers who refused or neglected to act, and the lessor refused to join in the selection of others to act in their stead. It was held that the obligation of the lessor to pay for the building was not entirely dependent upon the making of an appraisal, but that the appraisal was to he regarded as a mere method of ascertaining the price to he paid for them; that while the less$£ ivas bound to do all that was reasonably in his power to procure the stipulated appraisa1, yot if he had done so and failed, he was entitled to recover tbti value of the buildings to be assessed by a jury. Phippen v. Stickney, 3 Metc. 384, was a suit upon an agreement under seal, by which the defendant covenanted to sell and convey to the plaintiff certain lands which he was about to purchase at auction, on such terms as three persons,.specifically designated, should decide to be just and reasonable. But two of the arbitrators named agreed to an award, the third dissenting and refusing to sign it. The defendant having refused for that reason to perform the award, snit was brought to recover a penalty for default, fixed by the agreement, and the court, in sustaining the plaintiff 3s right to recover, say: “ In a case like the present, if it appeal’s that the plaintiff has done all i i his power to procure an award, fixing' the amount to he paid by him, in pursuance of the terms of the contract, we do not think that the act of any one of the persons thus selected as arbitrators, in refusing to concur with his associates1 in fixing the sum to he paid, should operate to divest the rights of the plaintiff arising under the contract.” In Lowe v. Brown, 22 Ohio St. 463, the plaintiff leased certain premises to the assignor of the defendant, for ninety-nine years, from September 5, 1850, renewable forever. For the first twenty years the rent was fixed, but it was covenanted that at the expiration of that period, and of each successive period of twenty years, the premises should be re-valued by three disinterested men to be selected, one by the lessor, one by the lessee, and a third by the two thus chosen, and that the annual rent should be eight per cent, upon such valuation. At the expiration of the first period of twenty years appraisers were appointed, as provided by the lease, two of whom joined in an appraisal in writing, while the third refused to agree to or sign the appraisal. The plaintiff, claiming that the appraisal was invalid on account of the non-concurrence of one of the appraisers, proposed the selection of three others, but the defendant, insisting that the appraisal was valid, refused to do anything further. The plaintiff, thereupon, after the first installment of rent had become due, brought his action to annul the appraisal, and to have the premises valued as a basis for the annual rent for the second term of twenty years, and to recover the amount of rent then due. The court set aside the report of the two appraisers and referred the case to the master, to take testimony and report the value of the premises, which was done, and the master’s report was confirmed and fixed as the basis for the annual rent for the second term of twenty years. The Supremo Court, in refusing the petition of the defendant for an appeal, held, that the appraisal being invalid, the plaintiff was compelled to bring his action to set it aside and to settle, in some manner, the basis upon which to compute the annual .rent; that the refusal of one party to comply with the covenants of the lease could not defeat the other party in the judicial attainment of his rights, and that the mode pursued was in accordance with the practice of courts of equity in like cases, and was, under the circumstances, the best mode of ascertaining the true value of the leasehold, which was the principal matter in controversy. Various other authorities are cited by counsel for the appellee, in which a similar doctrine is laid down, but we need not refer to them at greater length. In the present case the court held that the appraisal pro vided for by the lease was a mere method of determining the value of the demised premises, the value itself being the essential thing; that the time prescribed by the lease for obtaining the appraisal was not made, and was not in fact of the essence of the contract; that the appellee did all that was reasonably required of her to procure an appraisal, but that owing to the fact that the appraisers were carelessly ignorant of the provisions of the lease, as to the time for mating the appraisal, and as the result of accident and mistake on their part, the value of the premises was not determined by them, and that such value might therefore be found by the court. In pursuance of these conclusions the court heard evidence and. found the value of the premises, and decreed that such valuation should be the basis for the computation of rent for th< last five years of the term of the lease. While the case is by no means free from grave and serious difficulties we are inclined to the opinion that the decree was warranted by the evidence and by the rules of law applicable to the case. The main difficulty arises from the last provision of the lease in relation to an appraisal that, ^ If no appraisal shall be made upon which to determine a new or different rental, the rent shall continue the same as was last fixed'.”) Giving to this provision the broadest construction of which it is capable it would apply to every case where for any cause there had been a failure of an appraisal at the time and in the mode prescribed by the lease. But when the whole lease is considered we can not think that any such construction was within the contemplation of the parties. Counsel for the appellant seem to admit that if the appraisal should be defeated by the fraudulent acts and proceedings of one of the parties, or by the misconduct or fraudulent collusion of rhe appraisers with one of the parties to the prejudice of the other, a court of equity might interfere in the interest and for the protection of the party not in fault. We think we may go further and hold that the provision above quoted has no application to any case where the appraisal is defeated by any cause without the. fault or negligence of the complaining party. If we consider attentively the very full and ample provisions for the appointment of appraisers and the making of an appraisement inserted in the lease, it will be seen that every contingency likety to arise to defeat the appraisal ^ after the initial step had been once taken, is carefully, and as it would seem, adequately provided against. It must have been the expectation of the parties that if either set on foot proceedings to determine the value of the premises, such proceedings would inevitably, or at least without any likelihood of failure, result in an appraisal. The miscarriage of the pro. ceedings, then, when once commenced, could not have been within the contemplation of the parties. The provisions /above recited, must have been intended to meet the case of a failure of the parties, either through negligence or choice, to take any steps toward availing themselves of an appraisal. In that case such provision would be highly important, ase without it, no specific amount of rent would be payable by the terms of the lease. If the foregoing construction of said provision- is to be adopted, and we think it is the most reasonable one, it is clear that it does not take the ease out of the rule established by the authorities above cited. The appellee having set on foot proceedings for an appraisal of the property, and having done everything in her power to bring about that result, she ought not to be defeated in her attempts to have the property appraised, and to entitle herself to the rent stipulated for in the case, by the non-feasance or misfeasance of the other party or of the appraisers. Having done her whole duty, her right to receive rent as provided by the covenant in the lease should, in the eyes of a court of equity, be deemed absolute^ and it was the duty of the court to apply the appropriate remedy to secure and effectuate such right. That it has done, and we are of the opinion that its decree was warranted by the law and the facts. The decree will therefore be affirmed. Decree affirmed.