Nakdimen v. Atkinson Improvement Co.

Hart, J. (after stating the facts). It is the contention of counsel for appellants that under the terms of the lease contract which is copied in our statement of facts thelease expired ten years after the completion .of the Nakdimen building, which was on the 10th day of September, 1920, and that the lease contained no covenant for renewal. On the other hand, it is the contention of counsel for appellee that the lease contained a covenant for renewal which might be exercised at the end of each succeeding ten-year period. Covenants for renewal are frequently inserted in leases for terms of years, and they add much to the stability of the lessee’s interest, and afford inducement to make permanent improvements. The landlord is not bound to renew without a covenant for the purpose. Covenants for continued renewals are not favored because they tend to create a perpetuity. They are valid, however, when there is an express covenant to that effect. The'general rule is that where the provision is in general terms for a renewal, the lessee is only entitled to a single renewal. A single covenant to renew a lease implies a renewal for the same term and at the same rent. 4 Kent’s Commentaries; Winslow v. Baltimore & Ohio Rd., 188 U. S. 646; Taylor’s Landlord and Tenant, 9 ed., vol. 1, sec. 334; Thaw v. Gaffney (W. Va.), 3 A. L. R. 495; Hoff v. Royal Metal Furniture Co., 103 N. Y. Supp. 371; Tracy v. Albany Exchange Co. (N. Y.), 57 Am. Dec. 538; Western Transp. Co. of Buffalo v. Lansing, 49 N. Y. 499, and Cunningham v. Pattee, 99 Mass. 252. The lease contract under consideration does not contain any express covenant for continued renewals, and the chancellor erred in holding that the lease continued during the life of the buildings specified in the contract. On the other hand, when the lease is read from its four corners in the light of the situation and condition existing at the time of its execution, it is fairly inferable that the parties contemplated a renewal of the lease at the expiration of the period of ten years from the completion of the Nakdimen building. This is shown by the fact that the parties provided for a hoard of arbitrators to fix the rental value after that period of time expired. This indicates that they intended fot the lease to he extended for another term. If they had intended that “the lease should expire after the ten-year period, it would have been a vain and idle thing to have provided a hoard of arbitrators to fix the rent thereafter. This view is strengthened when we consider that the lease provides for the erection and operation of an elevator for the common use of both buildings. Therefore, we hold that, when the language of the lease is considered in its entirety, it was intended by the parties that there should he a renewal of the lease for the period of ten years upon a rental to he fixed by a hoard of arbitrators as provided in the lease. Appellants declared that the lease was terminated by its own terms at the expiration of ten years and refused to comply with its provisions any longer. The court rendered a supplemental decree in which it ordered appellants to restore the operation of the elevator service in the Nakdimen building. The appeal also challenges the correctness of this holding. We think the court erred in directing appellants to continue the elevator service. Chancery courts will not decree the specific performance of contracts requiring continuous acts involving mechanical skill, and judgment or technical knowledge or acts requiring special skill, judgment and discretion. 25 R. C. L., sec. 117, p. 303, case note to 140 Am. St. Repts., p. 62; case note to 68 Am. St. Repts. 760-761. The courts generally recognize that to enforce the specific performance .of such contracts would unreasonably tax the superintendence of the court. In recognition of the principle, this court has held that equity will not decree the specific performance of a contract to build a levee for the reason that there is no reasonable method by which such a decree can be enforced. Leonard v. Bd. Dir. Plum Bayou Levee Dist., 79 Ark. 42. Again in the case of Warmack v. Major Stave Company, 132 Ark. 173, the court refused to direct the specific performance of a contract with an electric light company to supply current for light between itself and a manufacturing company. The running of an elevator requires both mechanical skill and judgment, and we are of the opinion that the contract in question comes within that class of cases which courts of equity will not specifically enforce. If the court should undertake to enforce the contract in the present case, it might involve the frequent necessity of hearing complaints from the appellee, charging the appellants with a breach of duty, or similar complaints from the appellants for a breach of duty on the part of ap-pellee. There would be no limit to the number of times the court might be called on during the life of the lease to say whether the appellants have performed their duties faithfully or efficiently. For the same reason a court of equity in the presént case would not seek to enforce the contract by a mandatory injunction. The performance of the contract would require continuous duties on the part of the appellants involving mechanical skill and care of such a character that the court could not superintend it. Again it is contended by counsel for appellants that the contract is void because it provides for the rent to be fixed by a board of arbitrators, and they invoke the general rule that an agreement to enforce a contract by arbitration will-not be carried out by a court of equity. The presence of an arbitration clause in a contract does not necessarily prevent the court from acting. It is only where the act to be performed by the board of arbitrators is of the essence of the contract that the court will refuse to act. In the present case the essence of the contract was the renewal of the lease for another term of ten years, and the fixing of the rental for that period was merely ancillary to the main contract. Where the provision for an appraisal is incidental and subsidiary to the substantive part of the agreement, the party refusing to name an appraiser or arbitrator can not he heard to complain where the court performs or provides for the performance of such service. The court in fixing the reasonable rental value treats the method as a matter of form rather than substance. So it may he said in the present case that the clause of the contract providing for a hoard of. arbitrators to fix the rental value of the premises does not render the contract void as being too indefinite to he enforceable. Mutual Life Ins. Co. of New York v. Stephens (N. Y.), L. R. A. 1917 C, p. 809; Grosvenor v. Flint, (R. I.), 37 Atl. 304; Kaufman v. Liggett (Penn.), 67 L. R. A. 353. In each of the two cases last cited the court held that the fixing of the rental is not of the essence of a contract to renew a lease upon receipt of notice of that effect upon a rental to he fixed by arbitrators to be appointed by the parties. See, also, Castle Creek Water Co. v. Aspen (U. S. Ct. Ct. of Appeals), 8 A. & E. Ann. Cas., p. 660. On the question of the reformation of the lease contract, but little need be said. In Welch v. Welch, 132 Ark. 227, we reviewed the authorities on this question, and held that, while parol evidence is admissible in an action to reform an instrument on the ground of fraud and mistake, the evidence must be clear and convincing to warrant a reformation of the instrument. No useful purpose can be served by stating or discussing the. evidence on this branch of the case. We need only say that it clearly falls short of the requirement of our decisions on the subject, and appellants are not' entitled to reformation. The court fixed the rental value of the premises fór a period of five years, and then provided that the matter might again be taken np by it if the parties refused to arbitrate. There is some confusion in the testimony as to what the rental value of the elevator service should be, and for this reason and the further reason that the decree must be reversed and the cause remanded, the court will be directed to make a further finding on this branch of the case, and each party will be allowed to take additional proof therefor. The result of our views is that there could have been only one renewal of the contract for the period of ten years from the 10th of September, 1920, and no specific performance of that contract could be enforced. The record shows that appellee applied to appellants for a renewal of the lease and for the appointment of a board of arbitrators under the contract to fix the rent. Appellants declined to appoint an arbitrator and to further perform the contract. This constituted a breach of the contract on the part of appellants. Having denied ap-pellee the specific performance of the contract, it was entitled to recover from appellants for the damages suffered on account of the breach of the contract by appellants. The rule is that, chancery having properly assumed jurisdiction of an action, it will determine all issues presented by the pleading and evidence. In other words, when equity takes jurisdiction for one purpose, it takes it for all purposes and will grant complete relief. Upon the remand of the case for the error in granting specific performance of the contract, it will be the duty of the court to settle the damages which resulted to appellee from a breach of the contract, by appellants. Where a tenant is unlawfully evicted from the premises by the landlord, he may recover as damages whatever loss results to him as a direct and natural consequence of the wrongful act of the landlord. Byers v. Moore, 110 Ark. 540. In fixing the damages to be allowed to the appellee for tlie breach of the contract by appellants, it. will be necessary for the court to consider and fix the rental value of the premises. Therefore, for the reasons above stated, the rental value of the premises, fixed by the court, will not be considered as the correct rental value of the premises under the contract, and the court will be directed to make a new finding on that issue, and each party will be allowed to take additional proof thereon and as well on the question of the amount of damages suffered by the breach of the contract. While chancery cases are tried de novo in this court, they are tried on the record made in the court below. Where a decree is reversed and a cause is remanded for further proceedings, and it appears to this court that the testimony upon any branch of the case has not been fully developed, or that the court in making a finding on a particular branch of the case has proceeded upon an erroneous theory, it is within the province of this court to allow the case to be reopened and further testimony to be taken on that point. It will be the duty of the court upon the remand of the present case to fix the amount of damages suffered by appellee by the breach of the contract upon the part of appellants, and, inasmuch as it will be necessary for the court to know the rental value of the premises for the renewal period of ten years in fixing the damages, it will be necessary for the court to fix the rental value for the elevator service for the reason that appellants refused to proceed under the arbitration clause looking to that end, as above stated. The court will allow both sides to take additional testimony on these points if they are so advised. For the errors pointed out in the opinion the decree will be reversed and the cause remanded for further proceedings as indicated in the opinion, and not inconsistent therewith.