DAY, J.
This is a review, granted to defendants Jondex Corporation ("Jondex") and Mega Marts, Incorporated ("Mega Marts"), of an unpublished court of appeals decision which affirmed in part and reversed in part a summary judgment in favor of the defendants by the circuit court for Milwaukee County, Honorable Francis T. Wasielewski, Judge.
This case presents two issues for review, both of which involve a commercial lease agreement between Jondex, the lessee, and Sampson Investments ("Sampson"),
The relevant facts are not in dispute. Sampson, a commercial real estate manager and developer, owns Westlane Shopping Center in West Allis, Wisconsin. Jondex operates warehouse-style supermarkets. Mega Marts also operates warehouse-style supermarkets and leases properties to be used as warehouse-style supermarkets.
Jondex and Sampson entered into a commercial lease agreement on October 15, 1975. Paragraph three of the lease, which is the center of the controversy, provides in part as follows:
The lease also requires Jondex to pay a flat-rate monthly rent and gives Jondex the right to sublet the property without Sampson's consent.
In accordance with this lease, Jondex operated a "Pick `N Save" store and served as the "anchor tenant"
Sampson subsequently sued Jondex and Mega Marts, claiming that: (1) Jondex's stated intention to cease operating a store in the Westlane Shopping Center constitutes a breach and repudiation of the lease agreement; (2) Mega Marts tortiously interfered with the lease agreement to the financial detriment of Sampson; and (3) Jondex and Mega Marts conspired to injure Sampson's business in violation of sec. 134.01, Stats. 1989-90.
Sampson appealed and the court of appeals upheld the dismissal of the conspiracy claim. The court of appeals, however, concluded that paragraph three of the lease required Jondex to continuously operate a retail warehouse store for the term of the lease. Thus, the court of appeals ruled that Jondex breached the lease when it ceased operating the "Pick `N Save" store. Based on the ruling that Jondex breached the lease agreement, the court of appeals also ruled that Sampson could maintain a claim for tortious interference with contract against Mega Marts.
The defendants petitioned for review of the portion of the court of appeals' decision which upheld Sampson's claims for breach of the lease agreement and tortious interference with contract. This court accepted the petition for review. The portion of the court of appeals' decision which upheld the dismissal of the conspiracy claim was not challenged in the petitions for review and is not before this court.
I.
The first issue is whether the court of appeals erred when it concluded that paragraph three of the
When interpreting a contract, "[i]t must be borne in mind that the office of judicial construction is not to make contracts or to reform them, but to determine what the parties contracted to do; not necessarily what they intended to agree to, but what, in a legal sense, they did agree to, as evidenced by the language they saw fit to use." The Wisconsin Marine & Fire Ins. Co. Bank v. Wilken, 95 Wis. 111, 115, 69 N.W. 354 (1897). Furthermore, when interpreting a lease agreement, courts should consider that "[a]lienations of land are, or ought to be, grave and deliberate transactions. Every conveyance should contain `the certainty of the thing granted' to the full extent of the grant. What may be expressed enlarging or restricting the grant in particular cases, should not be left to implication ...." Frank C. Schilling Co. v. Detry, 203 Wis. 109, 116, 233 N.W. 635 (1930).
When interpreting commercial lease agreements, this court has, for well over one hundred years, distinguished
Sampson argues that the cases cited above are not binding precedent because the language of the lease
Sampson argues that this rule of law no longer applies because "much has changed in the world of commercial leasing" since this court established this principle. This court, however, stated that "[c]ourts should be most reluctant to overrule a prior decision that lays down a `rule of property' or a rule that governs commercial transactions." State v. Surma, 263 Wis. 388, 395, 57 N.W.2d 370 (1953). We are especially reluctant to change the rule pertaining to continuous operation clauses, which are rarely found in long term commercial leases because such clauses require the lessee to continue operating a business for a long period of time even if that business is incurring substantial losses.
This rule comports with the statutory prohibition against implying covenants in leases for a term over one year. Section 706.10(6), Stats. 1989-90 states that "... no warranty or covenant shall be implied in any conveyance ..." Section 706.10(6) applies to the present case because a lease for a term over one year is a "conveyance" under the statute. See Sec. 706.01(2)(c) and (3), Stats.
In conformity with sec. 706.10(6) and this court's pronouncements in Brugman, Henry Rahr's Sons, and Dougan, we examine the lease at issue in the present case for an express provision which clearly requires that Jondex continuously operate a retail warehouse store. We agree with the court of appeals and all of the parties that this lease is not ambiguous. Sampson
We disagree with Sampson and the court of appeals because we find no express provision which clearly requires that Jondex continuously operate a retail warehouse store. First and foremost, we note the absence of any specific language compelling continuous operation. In his treatise titled "Shopping Center and Store Leases," E. Halper advises practitioners as follows:
Paragraph three of the lease at issue in the present case, however, does not state that the premises shall be
Furthermore, paragraph three also contains a list of restrictions on Sampson's activities which apply "so long as Tenant is in occupancy hereunder." This provision could have, but does not state that the restrictions apply for the entire term of the lease. Thus, this language
Sampson points out that the first sentence of paragraph three contains the mandatory word "shall." Furthermore, Sampson reiterates the court of appeals' position that the word "only" modifies the word "used" but not the word "occupied." Thus, Sampson and the court of appeals read the first sentence of paragraph three as requiring that: (1) the premises shall be occupied; and (2) the premises shall be used only for a retail warehouse store. Sampson argues that any other reading of the first sentence would render the word "occupied" superfluous.
Jondex counters by claiming that the term "occupy and use" is a term of art and the word "only" modifies the entire term. Furthermore, Jondex claims that an interpretation of paragraph three as a covenant of continuous operation would render the word "only" superfluous. Although the inclusion of the word "shall" and the inclusion of the word "occupy" strengthen Sampson's argument, this language does not comprise the clear, express statement of intent necessary to mandate continuous operation.
Consideration of the lease's subletting clause supports the defendant's position. Although the court of appeals stated that their conclusion was buttressed by the fact that the subletting provision required Sampson's written consent before Jondex could sublet the premises, Sampson concedes that the court of appeals misread the subletting provision and that the lease gives Jondex the right to sublet the premises without Sampson's consent. We find this right to sublet inconsistent with a continuous operation clause because the operation could be disrupted while the sublessee takes possession and prepares the premises.
Since neither the language of paragraph three, standing alone, nor the lease read as a whole, indicates a clear, express intention to mandate continuous operation of a retail warehouse store, we hold that the court of appeals erred when it read paragraph three as a covenant of continuous operation.
The court of appeals and Sampson maintain that the court of appeals' decision in Century Shopping Center Fund I v. Crivello, 156 Wis.2d 227, 456 N.W.2d 858 (Ct. App. 1990) requires a different result. Although the court of appeals, in Century, required a commercial lessee to continuously operate a retail food market, the lease at issue in Century is distinguishable from the lease at issue in the present case. The lease in Century provided that the premises "shall be used as a retail food market and allied operation." The provision at issue in Century, however, differs from the provision at issue in the present case which contains the word "only." Furthermore, while the commercial lessee in Century was not permitted to sublet the premises without the lessor's written consent, Jondex possesses an unfettered right to sublet which is inconsistent with a continuous operation clause. Additionally, the lease in Century contained a percentage-of-gross-receipts as part of the rent component while the lease at issue in the present case provided for a flat-rate monthly rent.
Although Century is distinguishable from the present case, we also conclude that Century does not accurately state the law. This court's decisions in Brugman, Henry Rahr's Sons, and Dougan established the rule that a commercial lessee cannot be forced to continuously operate a business in the absence of a clear, express provision in the lease requiring continuous operation. The court of appeals' decision in Century, however, did not mention or apply the rule established in Brugman, Henry Rahr's Sons, and Dougan. Since the court of appeals did not follow the precedent set by this court, the decision in Century does not accurately state the law, and to the extent it contradicts the law as expressed herein, it is overruled.
Sampson also cites several cases from other jurisdictions. The cases cited, however, imply a covenant of continuous operation. See Tooley's Truck Stop, Inc. v. Chrisanthopouls, 55 N.J. 231, 260 A.2d 845, 849 (1970) ("[w]e readily accept the plaintiff's alternate contention that an obligation to operate the diner ... may properly be implied."); Ingannamorte v. Kings Supermarkets, Inc., 55 N.J. 233, 260 A.2d 841, 844 (1970) ("[t]he lease between the plaintiffs and [the defendant] contained enough on its face to imply an operating mandate ...."); Columbia East Associates v. Bi-Lo, Inc., 299 S.C. 515, 386 S.E.2d 259, 262 (Ct. App. 1989) ("[i]n the absence of an express provision in the contract, the law will imply an agreement...."). In light of Wisconsin's statutory prohibition against implying covenants and this court's precedent requiring an express provision which clearly mandates continuous operation, we conclude
II.
Having held that Jondex did not breach the commercial lease agreement, the next question is may Sampson maintain a claim against Mega Marts for tortious interference with contract.
Section 766 of the Restatement, provides:
We have concluded that the commercial lease agreement between Jondex and Sampson provided Jondex with two alternative means of performance: (1) refrain from using the premises; or (2) use the premises only as a retail warehouse store. Thus, even if Mega Marts induced Jondex to vacate the premises, this conduct does not constitute interference with performance because Mega Marts simply induced Jondex to perform
Sampson correctly notes that this court, in Wisconsin Power & Light Co. v. Gerke, 20 Wis.2d 181, 121 N.W.2d 912 (1963), recognized a cause of action for tortious interference with contract even though there was no breach of the contract. In Gerke, this court, quoting 1 Harper & James, Law of Torts, sec. 6.9, at 499 with approval, stated that "the value of a bargain may be impaired although there is no failure of performance." Id. at 187. Sampson claims that, in the present case, "the value of this bargain to Sampson Investments was to have a fully-leased, operating shopping center where all tenants would benefit and profit by continued high shopper traffic." While Sampson may have hoped for such a value, they had no reasonable expectation of such a value considering that the lease agreement, which sets forth the rights and obligations of the parties, gave Jondex the option to refrain from using the premises. Since the lease agreement, which the parties bargained for, allowed Jondex to refrain from using the premises as long as they continued to pay rent, the value of Sampson's bargain was not impaired.
To hold otherwise would allow Sampson to circumvent the limitations of the lease agreement and expand their rights through a tort claim. Prosser & Keeton on Torts explains that "tort liability may be imposed upon a defendant who intentionally and improperly
By The Court.—The decision of the court of appeals is reversed and the cause remanded to the circuit court for further proceedings consistent with this opinion.
SHIRLEY S. ABRAHAMSON, J. (concurring in part and dissenting in part).
The majority apparently concludes that an action for tortious interference with the performance of a contract is available only when there has been interference with a specific right bargained for under the contract. I believe that this conclusion is an overly narrow interpretation of the legal standard.
The leading Wisconsin case on tortious interference with contract, Wisconsin Power & Light Co. v. Gerke, 20 Wis.2d 181, 187 (1962), does not tie the tort of intentional interference to the violation of any specific right. Gerke affirmed the existence of an action for tortious interference by a party who sought redress "because the performance of his contract was made less profitable." 20 Wis. 2d at 187. The Gerke court relied on
The majority apparently derives its test from Prosser and Keeton on Torts, sec. 129 (1984). The quoted language from Prosser, however, does not support the majority's application. Prosser states that "tort liability may be imposed upon a defendant who intentionally and improperly interferes with the plaintiff's rights under a contract with another person if the interference causes the plaintiff to lose a right under the contract or makes the contract rights more costly or less valuable." Section 129, p. 978 (emphasis added).
I am not saying that an action exists in tort every time a third party makes the performance of a contract more costly. The social interest in protection of the contractual relationship is balanced against the interest in free competition. As the court of appeals for the seventh circuit stated: "In cases where no breach of contract results from the interference, the tort is really a branch of the law of unfair competition, and it is necessary for liability that the alleged tortfeasor have gone beyond the accepted norms of fair competition." Frandsen v. Jensen-Sundquist Agency, Inc., 802 F.2d 941 (7th Cir. 1986) (applying Wisconsin law). See also Harper, James & Gray, The Law of Torts, §6.13 (2d ed. 1986). To be actionable, interference with contract
Because I believe that the majority applies an incorrect legal standard, I dissent from that part of the opinion discussing the action for tortious interference.
I am authorized to state that Justice DONALD W. STEINMETZ joins this opinion.
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