Paying 2 Years’ Rent for 3 Years Rental? Central Stone Co. v. Warning, 2013 WL 3191815 (Mo. Ct. App., E.D.)

During the term of a long-term lease, the parties chose to enter a new lease.  Appellant’s brief notes:

The parties were two years into a three year written lease for the Oyster Farm when this new lease was created…. The new lease was for 2010 through 2012…. The new lease stated that “The cash rent shall be paid each year in the following method: By April 1 of each year of the contract.” …. Sivill intentionally changed the rent payment due date from December 31, to April 1…. The old lease stated rent was due on December 31. The new lease said the rent was due April 1…. No discussion was held by the parties that rent was due or was not due for year 2010….

Central Stone Company did not receive a lease payment before the May 3, 2010 lease was signed…. Central Stone Company’s position was that the rent was already a month overdue when the lease was signed…. Yet, Central Stone Company management decided not to ask for the rent when the lease was signed…. Central Stone Company did not ask Daniel Warning for rent on the Oyster Farm in 2010. … Nor did Central Stone Company ask Daniel Warning for rent money in 2011, prior to its April 13, 2011 letter terminating the Oyster Farm lease….

Daniel Warning did not plant landlord’s Oyster Farm land in 2010 as this Mississippi bottoms farm was wet.

Daniel Warning made no payment for 2010 rent in 2010….

Appellant’s brief reports the new lease was signed May 3, 2010.  So, should the lessee only have to pay two years’ rent?  That does not seem entirely reasonable, particularly in light of the fact that this was an adjustment to an ongoing lease arrangement.

More after the break …

Interpreting Ambiguous Agreements

OK, so this arrangement is evidently not well-drafted.  A poor way to proceed would be to go about some tedious literal parsing.  American General Corp. v. Continental Airlines Corp. provides a thoughtful expression of how to interpret language:

Despite the existence of separate parts, a contract is to be considered as a whole and its meaning gathered from the entire context, and not from particular words, phrases or clauses, or from detached or isolated portions of the contract. In order to determine the meaning of each part, the entire agreement must be considered. Thus, a “meaning which arises from a particular portion of an agreement cannot control the meaning of the entire agreement where such inference runs counter to the agreement’s overall scheme or plan.

1988 WL 7393, at *4 (Del. Ch. Jan. 26, 1988) (citations omitted) (quoting  E.I. duPont de Nemours & Co., Inc. v. Shell Oil Co., 498 A.2d 1108, 1113 (Del. 1985)).

Another statement:

The meaning of a writing may be distorted where undue force is given to single words or phrases. We read the writing as a whole. We seek to give to each clause its intended purpose in the promotion of the primary and dominant purpose of the contract.

Empire Props. Corp. v. Mfrs. Trust Co., 43 N.E.2d 25, 28 (N.Y. 1942).

Three years of rental for only two equal annual payments would seem unusual, and unexpected.  Some facts, however, seem to support this anomaly.

Not Planting the Land in 2010

One might think that the failure to plant the land in 2010 supports the claim rent was intended not to be due for that year.  The lessor, however, has a reasonably thoughtful counter:

In 2009 under the Prior Lease, Oyster Farm was not farmed due to the fact it was damaged by flood, but Warning still paid Central Stone not only by paying over to Central Stone the government assistance received by Warning, but also by paying from his own funds the difference between the government assistance and the rent due.

2013 WL 3811381, at *4.

This author would hope that, were a court to determine one year’s rent had been eliminated in the course of this extension of a lease arrangement, an intelligent reason why the parties’ would have reached that bargain would be found. One hopes the ultimate determination does not reference some less-than-helpful interpretative bromide.