Appeal from the Final Decree dated December 22, 1975, of the Court of Common Pleas of Allegheny County, Pennsylvania, Civil Division, at No. 1886 October Term, 1973.
Frank L. Seamans, Pittsburgh, with him Dale Hershey, Pittsburgh, for appellant.
David B. Fawcett, Pittsburgh, with him Charles W. Kenrick, Pittsburgh, for appellee.
Jacobs, Hoffman, Cercone, Price, Van der Voort, and Spaeth, JJ. Watkins, President Judge, absent.
[ 248 Pa. Super. Page 472]
The sole issue presented on this appeal is whether the lower court erred when it ruled that the parties to a 999-year lease by their conduct did not manifest an intent to periodically renegotiate the rentals due under the lease.*fn1 We hold that it did not and affirm the decree of the lower court.
The chancellor below found the following facts. The lease in question was entered into on October 14, 1902, between the Trustees of the First Presbyterian Church of Pittsburgh as lessor and Henry W. Oliver as lessee. It was for a term of 999 years*fn2 and was given in exchange for a cash payment of $150,000, and a $30,000 per annum rental fee. Various other covenants restricted the dimensions and usages of the commercial building which was to be constructed on the leased premises and two adjoining lots which Mr. Oliver owned in fee. Subsequently in 1902, 1903, 1904 and 1910 the parties agreed to permit certain changes in the structure of the building which were forbidden by the 1902 lease. Henry Oliver died on February 8, 1904, and the leasehold interest passed to his estate, then to his heirs in 1914, and then in 1935 to Pittsburgh Business Properties, Inc. (hereinafter referred to as PBP) which in 1955 changed its name to Oliver Tyrone Corporation.
In 1940, PBP was suffering losses on the property. It had continued to pay the $30,000 per year rent to the Trustees between 1902 and 1940. However, since 1938 the building had remained vacant and PBP wished to attract a new tenant, Spear & Co. To successfully conclude the negotiations with Spear & Co., PBP was required to make some $1,000,000 worth of improvements in the building. To meet
[ 248 Pa. Super. Page 473]
these expenses PBP requested and obtained from the appellant a gradual reduction in the rental to $15,000 per annum. In 1940, the dimensions of the leased premises were increased to include property not covered by the 1902 lease, and the rent was set at $30,000 for 1940, $25,000 for 1941, $20,000 for 1942, and $15,000 for 1943. This modification of the rent, by the express terms of the 1940 amendment, was to be in effect during the term of the Spear & Co. lease and renewals and extensions thereof but in no event longer than 50 years from the date thereof. Spear & Co. and PBP entered into a 25 year lease of the building in 1942. In 1951 PBP renegotiated its lease of the building with Spear & Co. The substituted lease was for a period of 21 years (i. e. until December, 1972) and provided for a substantially greater rent by Spear & Co. to PBP. PBP and the Church also agreed to modify the rent upward to $40,000 in 1952 through 1955; $45,000 in 1956 and thereafter " during the term of said new lease with Spear & Company . . . and any renewals and extensions provided for therein." By agreement sale dated November 7, 1961, Oliver Tyrone Corp., the successor in interest to PBP, sold the building on the lease premises to Northwestern Mutual Life Insurance Company (hereinafter referred to as Northwestern) for $2,500,000, subject to the lease with the Church. Simultaneously, Northwestern leased the building back to Oliver Tyrone for 20 years and optional periods of renewal, with rent paid to Northwestern to decrease over the life of the leaseback. As part of the sale of the building to Northwestern, Oliver Tyrone executed an estoppel certificate to Northwestern to the effect that it (Oliver Tyrone) was not in default of the rent. The Church Trustees separately certified that Oliver Tyrone was not in default on the rent. From time to time thereafter during the 1960's appellant trustees considered the termination of the 1951 lease amendment and possible action to preserve the higher rental. However, the Church did not respond in December, 1972, to a written notification by Oliver Tyrone of the impending decline in rent to $30,000. This action to void or reform the lease was begun August 15, 1973.
[ 248 Pa. Super. Page 474]
The Church in effect argues that based upon the rather unusual facts of this case the parties have by their conduct modified the terms of the 1902 lease to anchor the amount of the rent either to Oliver Tyrone's return from the building and/or to general economic conditions,*fn3 thereby substituting a negotiated rent for the fixed rent in the 1902 lease. They thus contend that there exists a legal duty on the part of the appellee to renegotiate the terms of the lease. Appellee contends, however, that these modifications, specifically the 1940 and 1951 amendments to the 1902 lease, were by their express terms, temporary modifications such that upon the expiration of the Spear & Co. sub-lease*fn4 in 1972 the original rental amount of $30,000 once again became operative.*fn5
The resolution of the issue thus presented involves the interpretation to be placed upon the legal and factual history of this case, particularly the wording of the amendments themselves. As the lower court opinion indicates the 1940 amendment reviewed the history of the negotiations and the renovations required for the structure, reiterated the 999-year term and cited the ...