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MILWAUKEE LAND CO. v. BASIN PRODUCE CORP.

June 10, 1975

MILWAUKEE LAND COMPANY, an Iowa Corporation, Plaintiff,
v.
BASIN PRODUCE CORPORATION, a Washington Corporation, Defendant


Neill, Chief Judge.


The opinion of the court was delivered by: NEILL

NEILL, Chief Judge.

 Plaintiff, the landlord, filed this action against Basin Produce Co., the tenant, to recover $100,000.00 *fn1" as compensation for the destruction by fire of the leased premises. The jurisdictional basis of the action is not stated, but it is apparent from the face of the complaint that there is diversity under 28 U.S.C. § 1332. The parties agree that the law of the State of Washington should be applied. The case is now before the Court on cross-motions for Summary Judgment.

 The relevant provisions of the lease are attached as an appendix to this opinion. Defendant contends it is not liable for the damages because paragraph 4 of the lease is not an unconditional covenant to repair. Defendant further asserts that even if it had a duty to rebuild, the fulfillment of plaintiff's duty to rebuild the outer walls was a condition precedent to any liability by defendant. Plaintiff contends that paragraphs 6 and 7 of the lease are unconditional indemnity agreements, that paragraph 4 is an unconditional covenant to repair, and that there is sufficient evidence of negligence to preclude the granting of defendant's Motion for Summary Judgment.

 The Indemnity Agreements

 Paragraph 6 obligates the tenant to protect the premises from claims or liens ". . . arising from . . . anything done . . . by the [lessee] . . ." and binds the tenant to indemnify and save harmless the landlord from such claims or liens. The tenant further agreed to release and indemnify the landlord from claims stemming from the condition of the demised premises, except those attributable to the landlord's failure to make repairs mandated by the lease.

 Paragraph 7 requires the tenant to indemnify and save harmless the landlord from claims resulting from ". . . any act or omission of the lessee, its employees or agents, or in anywise arising out of the operations or business of the [lessee] upon the demises premises . . .".

 When read in conjunction with paragraph 4, which attempts to divide the duties of repair, it is clear that paragraphs 6 and 7 do not involve the duties of the parties to repair. Paragraph 6 discusses the obligations of the parties in relation to claims made by third persons arising from the condition of the premises. Paragraph 7 discusses third person claims arising from actions or failures to act upon the premises. Both paragraphs utilize terms such as "release", "save harmless", and "indemnify" which are commonly employed in agreements that relate to claims made by others, rather than to claims by one party to an agreement against another. Therefore, it is apparent that paragraphs 6 and 7 are concerned only with liabilities of the landlord and tenant with respect to claims made by others and do not relate to duties to repair.

 The Duties to Repair Under Paragraph Four of the Lease

 Although the general rule is that ambiguities in leases are construed in favor of the tenant, e. g. see Puget Investment Co. v. Wenck, 36 Wash.2d 817, 221 P.2d 459 (1950), and in absence of a specific undertaking a tenant is generally held free from liability for destruction of premises by, fires, sans tenant negligence, e. g. see Armstrong v. Maybee, 17 Wash. 24, 48 P. 737 (1897); 49 Am.Jur.2d, Landlord and Tenant § 923, many courts have reached a contrary result in construing covenants to repair. See anno. 45 A.L.R. 12 and 20 A.L.R.2d 1331.

 Washington cases appear to recognize a difference between covenants to repair and covenants to surrender. In Anderson v. Ferguson, 17 Wash.2d 262, 135 P.2d 302 (1943), the Washington Supreme Court stated that an unqualified covenant to repair imposes upon the tenant a duty to rebuild in case of non-negligent destruction of the premises by fire. Nevertheless, the Court found that the covenant in question, which required a return of the premises ". . . in as good order, condition and repair as the reasonable use and wear thereof will permit . . .", did not constitute a general covenant to repair because the covenant did not define any specific obligation of the tenant during the course of their term. In Armstrong v. Maybee, supra, the covenant at issue obligated the tenant to ". . . maintain . . . as good condition and repair . . . and return . . . in as good condition as the same are now . . .". The lease also required the tenant to maintain a night watchman on the premises. The Washington Supreme Court found that the covenant clearly indicated a duty on behalf of the tenant to maintain the premises during the course of the term and was therefore an unconditional covenant to repair. The Court impliedly recognized the difference between the two types of covenants by citing with approval McIntosh v. Lown, 49 Barb. 550 (N.Y.) which distinguished the earlier case of Warner v. Hitchins, 5 Barb. 666 (N.Y.) by finding that the covenant in Warner did not impose a duty upon the tenant during the course of the term.

 Other Washington cases are consistent with the holdings of Armstrong v. Maybee, supra, and Anderson v. Ferguson, supra. In Arnold-Evans Co. v. Hardung, 132 Wash. 426, 232 P. 290 (1925) language requiring the tenant to ". . . maintain and keep . . . in good repair and return . . . in as good condition . . . excepting . . . repairs to the exterior . . ." was held to be a general covenant to repair. In Publishers Building Co. v. Miller, 25 Wash.2d 927, 172 P.2d 489 (1946), the Supreme Court found a covenant that obligated the tenant ". . . at his own expense . . . to keep the premises . . . in good repair . . . [lessee] agrees . . . to quit and surrender the premises in good and clean condition (reasonable wear and fire excepted) . . ." to be a general covenant to repair which made the tenant liable for the replacement cost of a boiler. The Washington State Supreme Court in Puget Investment Co. v. Wenck, supra, recognized that a general ...


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