Joseph
Martin, Jr. Delicatessen v. Schumacher
Court
of Appeals of
52
N.Y.2d 105, 436 N.Y.S.2d 247, 417 N.E.2d 541.
Facts: The deli was renting a
storefront. There was a renewal clause
that said that the tenant could renew for five more years at rates “to be
agreed upon”. The tenant wanted to
renew, but didn’t like the landlord’s proposed rent, and so the tenant sued for
specific performance of renewal of the rental at a lower rate. The trial court dismissed the tenant’s
complaint, saying that the renewal clause was too uncertain to enforce. The appellate court reinstated the complaint,
saying that the clause is enforceable if the parties did not intent to
terminate the lease in the event that they couldn’t agree on the amount of
rent. The appellate court certified a
question to the Court of Appeals of
Issue: If a provision in a lease
says that the rent for a renewal period is “to be agreed upon”, is that
provision enforceable?
Rule: A mere “agreement to agree”
is unenforceable.
Analysis: The court finds that the
provision could have been made enforceable with not much more, but it is not
enforceable as it stands. The provision
wouldn’t have to give a specific figure, but it would have to give a way to
come out with a figure that both parties agreed to. The court finds, however, that this
particular provision left no room to resolve its ambiguity.
The
concurring opinion says that even though May Metropolitan Corp. is not
applicable to the present case (which is what the majority says), it could
be applicable to other leases. This
opinion says that it shouldn’t be impossible for a “to be agreed upon”
lease renewal to be enforced, even in light of a certain “course of dealing”
between the parties.
The
dissenting opinion would have affirmed the decision of the appellate court.
Conclusion: The contract is void for
vagueness. The appellate court is
reversed and the judgment of the trial court is reinstated.
Questions
1. A clause without
the “to be agreed upon” language may be interpreted as implicitly agreeing to
continue at the same rent. It doesn’t
seem like such clause means nothing: it seems as though the tenant is being
offered some right. At least it seems
like the landlord cannot offer the storefront to another potential tenant
before negotiating with the present tenant.
2. Here, you’re
putting some limits on what the rent could be.
$1 per month would not be reasonable or fair, and $100,000,000,000,000
per month would not be reasonable or fair.
I guess the question is whether there exists a number for the rent such
that both sides could, in good faith, declare it to be fair and reasonable for
them. During the original period of the
lease, there must exist such a number.