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At common law, a lessee's covenant to repair property included an obligation to rebuild structures destroyed during the lease term, regardless of the lessee's fault in causing the destruction. A lessee's covenant to return the leased property in the same condition as it was at the time of the letting, often combined with a covenant to repair, also imposed an obligation to rebuild, unless the lessee limited the covenant. This rule arose because, at common law, the landlord conveyed an interest in the land to the tenant, who became the "owner" for the lease term.
Respondent Llewellan K. Jones operated a gas station which he had leased from appellant Amoco Oil Company (Amoco). Amoco had alleged that Jones failed to return the gas station to Amoco in as good condition as when he received it. The gas station had been substantially damaged by a fire. The district court entered a directed verdict for Jones. Amoco had sought review claiming that material fact issues existed regarding the individual's obligation to rebuild or restore leased property under a general repair and delivery covenant.
Did a general repair and delivery covenant obligate a lessee to rebuild property destroyed or substantially damaged by fire where the lessee was not at fault?
The court held that the since Amoco drafted the lease, the lease was to be construed against Amoco. The court held that Amoco did not present any evidence to suggest the parties intended the individual to assume the risk of loss by fire. Rather, the plain language of the lease spoke of the individual's responsibility for "necessary upkeep and repairs," including certain maintenance. The court agreed with the trial court's conclusion that Amoco did not carry its burden to show that the parties intended the individual to rebuild the property in the event of substantial damage or destruction. The trial court did not err in directing a verdict for the individual where the evidence was insufficient to present a fact question regarding the parties' intent.