Stepp v. Summey Outdoor Advertising, Inc.

JOHNSON, Judge. The rules bearing on summary judgment have been stated too often to bear repeating. Suffice it to say that summary judgment is proper when there is no genuine issue of material fact and either party is entitled to judgment as a matter of law. Kessing v. National Mortg. Corp., 278 N.C. 523, 180 S.E.2d 823 (1971); Raritan River Steel Co. v. Cherry, Bekaert & Holland, 101 N.C. App. 1, 398 S.E.2d 889 (1990). Defendant contends that the trial court erred in granting summary judgment to plaintiff on his claims for past-due rent and for damages resulting from his inability to use the remainder of the lot due to the presence of the nonconforming sign. We agree. The summary judgments in favor of plaintiff on his first and second cause of action cannot stand at the very least because they are fatally inconsistent: defendant cannot on the one hand be liable for rent on the whole 10,000 square foot lot for the whole period at issue and on the other hand also be liable for damages due to plaintiffs inability to use the remainder of the lot during a portion of that same period. The questions before us are: (1) whether under paragraph 2 of the amendment, defendant is only liable for rent on 2,400 square feet beginning on 7 November 1985, the effective date of the revised ordinance, and (2) if so, whether its refusal to remove the sign or to conform it to the requirements of the City ordinance regarding size makes it liable to plaintiff for damages resulting from that refusal. We conclude that the 7 November 1985 amendment to the ordinance triggered the clause in the amendment to the lease making defendant liable for rent on only 2,400 square feet for the remainder of the lease term. We further conclude that under the terms of the contract, defendant was required to maintain its sign in conformity with the local ordinances so that defendant is liable for damages to plaintiff which derive from its failure to do so. Under the terms of the amended lease, the parties agreed that defendant would lease 10,000 square feet at $3300.00 per year until such time as the “City of Hendersonville Zoning Ordinance is amended so as to allow billboard signs on 2,400 square feet areas” at which time “the lease reverts to 2,400 square feet (at $800.00 per year)[.]” Plaintiff does not challenge défendant’s contention that the 7 November 1985 amendment to the zoning ordinance changed the existing ordinance to allow a building and a sign to [626] co-exist on a 10,000 square foot lot. Plaintiff contends instead that because parties may not contract to commit an unlawful act, the lease must be construed as including the condition that the size of the leased premises would not decrease to 2,400 square feet unless the sign met any condition required by the zoning ordinance for a sign to exist on 2,400 square feet. The evidence suggests that even when it was first constructed, the sign was larger than allowed by the then existing ordinance. The evidence conclusively shows that after the 5 April 1984 amendment to the sign size ordinance, the sign was larger than allowed by the ordinance. Plaintiffs argument, however, is misplaced. The general rule is that an agreement which violates a constitutional statute or municipal ordinance is illegal and void. However, there is also ample authority that the statutory imposition of a penalty, without more, will not invariably avoid a contract which contravenes a statute or ordinance when the agreement or contract is not immoral or criminal in itself. In such cases the Courts may examine the language and purposes of the statute, as well as the effects of avoiding contracts in violation thereof, and restrict the penalty for violation solely to that expressed within the statute itself. (Citations omitted.) Financial Services v. Capitol Funds, 288 N.C. 122, 128, 217 S.E.2d 551, 556 (1975) (violation by seller of ordinance making it a misdemeanor to describe land in deed by reference to subdivision plat which has not been approved and recorded does not render a conveyance of land illegal on ground that seller did not obtain approval of subdivision plat as required by ordinance). In Hines v. Norcott, 176 N.C. 123, 96 S.E. 899 (1918), plaintiff-lessor sued to collect rent on certain commercial buildings under a lease. Defendant contended that the lease was illegal and void because the lessor did not connect the leased buildings to a municipal sewer system in violation of an ordinance which required the hook-up and made it illegal to maintain and use surface and dry privies. The Court held that the violation did not make the lease illegal and unenforceable. The imposition of a penalty for not doing an act which is required to be done may, of itself, render the doing of the same illegal; but still if, upon a fair construction of the statute, it appears to have been the intention of the legislative body to confine the punishment or forfeiture to the penalty pre [627] scribed for a violation of it, that intention will be enforced. And the same may be said as to the prohibition of an act, but it does not follow in either case that the illegal act will vitiate a contract which is connected with it only incidentally because it relates to property affected, in some degree, by the statute or ordinance prohibiting or enjoining the act and annexing a penalty for its violation. Id. at 128, 96 S.E. at 901. We do not believe the legislature intended that a lessee’s construction of a billboard in violation of a billboard size ordinance should have the effect of making the lease, which is connected to the prohibited act only incidentally, illegal and void, nor do we find any basis for plaintiff’s contention that because defendant violated the size ordinance from the very beginning, the lease is valid and enforceable but must be construed as not reverting to 2,400 square feet when the ordinance was amended. We find that the express language of the contract required defendant to conform his sign to the ordinance. The original lease, signed 26 February 1983, contemplated the lease of a 40 foot x 60 foot portion of a larger lot. This agreement provided that lessee could terminate the lease if at any time the erection or maintenance of the sign was prohibited or a building permit could not be obtained. This agreement also provided: “This lease subject to Lessor being able to obtain necessary building permits.” (Our emphasis.) This instrument was later amended to provide for the lease of 10,000 square feet, the whole lot, to revert to 2,400 square feet if the ordinance was amended to allow the existence of a billboard and a building on the remainder of the 10,000 square foot lot. The general rule is that “statutes and ordinances enacted subsequent to the execution of a contract, which add burdens or impair the obligations of the contract, may not be deemed to be a part of the agreement unless the language of the agreement clearly indicates this to have been the intention of the parties.” 17A Am. Jur. 2d Contracts § 382 (1991). We find that the lease clearly indicates the intention of the parties that defendant would conform its sign to the applicable ordinances. We find this because (1) the contract contains a clause which expressly states that the lease is subject to the lessor being able to obtain necessary building permits, (2) when the original instrument which included this clause was signed, it was for the lease of only a portion of a larger lot, (3) the lease was amended [628] to include the whole 10,000 square foot lot only when it was learned that the billboard and a building could not co-exist on the same lot, and (4) the amendment provided for a reduction in area leased and rent due, only when the ordinance prohibiting a sign and a building on the same lot was amended “so as to allow billboard signs on 2,400 square feet.” Construing the lease as not requiring defendant to conform its sign to the various ordinances so that plaintiff “could obtain necessary building permits” would utterly nullify the express clause in the original instrument and would defeat the intent of the parties as revealed by the amendment of the original instrument and their inclusion of the reversion clause in paragraph 2. Our interpretation of the contract leads us to the following conclusion. From the period 1 May 1983 to 7 November 1985, defendant owed (and did in fact pay) rent on 10,000 square feet as per the amended lease. The amendment to the sign size ordinance on 5 April 1984 had no immediate significance to rent payments since defendant was at that time paying rent on the whole 10,000 square foot lot. The 7 November 1985 amendment which allowed the co-existence of a sign and a building on a 10,000 square foot lot triggered the reversion clause in the amended lease so that from this time on defendant owed (and did in fact pay) rent on only 2,400 square feet. Therefore, defendant is not liable for any rent and the granting of summary judgment in favor of plaintiff on his first cause of action is reversed. Beginning 7 November 1985, defendant became liable under the contract for damages due to the presence of its nonconforming sign. However, damages, if any, can only accrue from the time that plaintiff first demanded that Summey remove its sign or conform it. The amount of damages is a jury question. Summary judgment in favor of plaintiff on his second cause of action is affirmed. Affirmed in part, reversed in part and remanded. Chief Judge HEDRICK and Judge WYNN concur.