Moolenaar v. Co-Build Cos.

354 F. Supp. 980 (D.V.I. 1973)

 

RULE:

If a renewal clause neglects to stipulate the rent for the additional term, the court will find that the clause contains an implicit term that the new rent shall be fixed at its reasonable or fair market value. Parol evidence is admissible to explain the implicit term, and to show that the parties intend the rent to be set at the fair market value of the land as if it is subject to certain use restrictions. 

FACTS:

Plaintiff lessee filed a declaratory action against defendant lessor, who purchased land subject to the disputed lease. The lessee sought a declaration of the rights of the parties under the lease and specifically, whether the lease contained a renewal clause and, if so, what was the rent for the renewal term. The lessor insisted that if the renewal clause was valid, the leasehold should have been valued at its highest and best use, which was not agricultural. 

ISSUE:

Was the renewal clause of the lease valid to be calculated at the agricultural rate?

ANSWER:

Yes.

CONCLUSION:

The court entered a judgment in favor of the lessee, which declared that the lease contained a renewal option and the rent for the additional term was calculated at a reasonable rate for agricultural purposes. The court ruled that under 11A V.I. Code Ann. § 2-305, if the price was not settled in a contract for sale, the price was a reasonable price at the time for delivery if nothing was said as to price, or if the price was left to be agreed by the parties and they failed to agree. The lease was valid because it was sufficiently definite in its terms and the performances to be rendered by each party were reasonably certain. The court found that the renewal clause contained an implicit term that the new rent was to be fixed at its reasonable or fair market value. The clause was thus specific enough to be valid and enforceable. Further, parol evidence was admissible to explain the implicit term, and to show that the parties intended the rent to be set at the fair market value of the land as if it were subject to certain use restrictions. The lessee was entitled to have the rent established at its fair value for the land as used for agricultural or animal husbandry purposes only.

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