This case comes to us on petition to transfer from the Appellate Court under Rule 2-23 of this court. See: Square D Company v. O'Neal (1947), 225 Ind. 49, 52, 72 N.E.2d 654.
The facts and the issues presented in this case are substantially as follows:
Appellees brought this action against appellants to recover the possession of certain real estate in the City of Fort Wayne, and for damages for wrongful detention thereof. Trial to the court resulted in judgment
The material facts were stipulated and may be summarized as follows:
On the 26th day of December, 1952, appellees subleased to appellants a portion of the real estate for 33 months from the 1st day of January, 1953, to the 30th day of September, 1955, at a monthly rental of $95.00. The provision of this sub-lease which has caused this litigation is as follows:
This sub-lease was prepared by appellees' rental agent and approved by appellants' attorneys. In 1955 appellants notified appellees of their intention to renew their lease and appellees made demand for possession.
First, it is contended by appellants that although appellees bought the property instead of "negotiating a (new) lease" with the owner Fell, this fact did not vitiate appellants' right to renew their lease with appellees even though their lease made no specific provision regarding the amount of rent to be paid by appellants in event of the purchase of the property by appellees. Appellants contend that because appellees, as sub-lessors, agreed to "give to Lessee an option of an additional term of five years," and agreed to "only charge such increased rental as is charged to them," that appellees thereby obligated themselves to renew the lease with appellants and accept a fair and reasonable rental for the property, even though appellees purchased the property and thereby continued to be in a position to renew such lease for the additional term.
Second, appellants contend that if, under the circumstances here presented, the parties fail to agree as to what constitutes a fair rental the courts can and should determine that value.
A decision regarding appellants' first contention must
In construing these leases, we are at the outset confronted by the fact that the renewal provision of the sub-lease between the parties is expressly made dependent and contingent upon appellees' exercise of their option with the owners of the real estate as authorized in section "(d)" of the primary lease between appellees and Fell. Clearly this provision did not constitute an option in any legal sense for the reason that nothing therein imposed any obligation upon Fell with respect to the property pursuant to an election on the part of the lessees.
We conclude therefore that standing unaided by any extrinsic evidence on the subject, the lease between the parties must be construed as expressly containing no representation as to the rental rate on renewal in event of the purchase of the property by appellees.
Next we consider the question presented by appellants' second contention that where a lessor agrees to renew a lease for a stated period, but states that he "cannot make any representation as to the rental rate" on renewal because of certain contingencies, which contingencies have occurred, the court may construe the agreement to mean that the lessor will renew the lease at such rental as is fair and reasonable and further that where the parties fail or refuse to agree as to what constitutes a fair rental the courts can and should determine that value. In support of this contention appellants cite the case of Edwards v. Tobin et al. (1930), 132 Or. 38, 284 Pac. 562, 563, 68 A.L.R. 152.
Furthermore, appellants' contention that in the absence of an agreement by the parties as to the amount of rental on renewal, the court may determine the fair and reasonable rate, is in direct conflict with the precedent of this court, as announced in the case of Habich v. University Park Bldg. (1912), 177 Ind. 193, 197, 97 N.E. 539. In that case the lease in controversy granted the lessee the privilege of five additional years at a rental to be "agreed upon between the parties." This court decided that the provision made the lease unenforceable. Specifically the court stated:
In the case at bar the parties clearly agreed upon a criterion by which they could ascertain the amount of rental in event appellees should themselves renew their lease with Fell. However, there is nothing in the lease which can, with any reasonable degree of certainty, be
The consideration is an essential element to every contract. In event the amount of consideration to be paid as rent on renewal of a lease is not agreed upon, but is left to further agreement, the lease is unenforceable unless it provides some criterion by which such rent shall be determined,
We recognize that many times inequities result in the business dealings between parties because they fail to protect themselves by contract regarding future contingencies which they may or may not contemplate. Where this failure occurs as a result of omissions or ambiguities in their contract, it can ordinarily be clarified by evidence regarding the true context of their agreement. However, where, as here, their agreement is so indefinite upon an essential element that it cannot be construed with reasonable certainty, and where, as here, it stands alone not clarified by extrinsic evidence which could give it meaning, there is nothing for the court to construe. The court cannot rewrite and then enforce contracts which, to the knowledge of the court, the parties themselves did not enter into.
Judgment is therefore affirmed.
NOTE. — Reported in 147 N.E.2d 227.