Determination of the intent of the contracting parties is to be accomplished by viewing the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.
Defendant was a tenant and built a commercial building on the land. Subtenants operated businesses within the building. Plaintiff was the landlord, who sued the tenant for miscalculating the rent owed to him because part of the lease provided for a division of income between the parties on the basis of net rentals. The trial court determined it would follow the context rule when interpreting contracts. The court reversed and remanded, finding that there were material issues and ambiguity in the lease.
Should a court use the intent of the parties as an aid to interpreting a contract, even when the contract is unambiguous?
The rent due to the landlord under the ground lease was to be calculated with respect to what constitutes "gross rentals" from the subtenants and what may be deducted therefrom to ascertain "net rentals." "Net rentals" was the amount to which a formula set out in the ground lease applied for division of income between the landlord and the tenant. This formula was ambiguous. If, on remand, the trial court found the contract language subject to two constructions, the reasonable construction was to be applied, and any ambiguities could be construed against the plaintiff, who drafted the contract.