Boyd v. Phillips Petroleum Co. , 418 S.W.2d 736 ( 1966 )

J. M. WOLFINBARGER, Special Commissioner.

On June 13, 1958, the appellants James L. Boyd and his wife, Katie Jo Boyd, executed a lease on a tract of land in Ballard County in favor of appellee Phillips Petroleum Company, and it appears that on the same date a regular long form lease and what is known as a short form contract or lease was entered into, the latter being designated as “S. S. Lease.” It is not clear just why both were executed unless that was just a custom of the appellee in the operation of its business. The short form reads as follows:

The part of the lease noted as paragraph 3 of the main contract is the only part of the contract involved in the contention of the parties hereto and it reads as follows:

“3. To have and to hold the above demised and leased premises, and all rights, privileges and appurtenances thereunto belonging unto second party for a period of 20 years beginning 1st day of September, 1958 and for successive periods of one year thereafter unless and until terminated by first party upon notice in writing given at least ten (10) days before the expiration of any one year period; provided that the second party may terminate this lease at any time by giving first party ten days written notice of decision to so terminate.”

The sole contention between the parties is a different construction placed upon paragraph 3, as above written. The appellant contends that it was the intention of both parties at the time the contract was entered into, that the lease was a lease for twenty years which could not be revoked by either party for a period of twenty years and termination clause was not and could not be effective until the expiration of the 20 year period, after which either party could terminate the lease by giving the other party a written notice for ten days of the party’s intention.

The contention of the appellee, Phillips Petroleum Company, is that the part of paragraph 3, which reads as follows, “Provided that the second party may terminate this lease at any time, by giving first party ten days written notice of decision to so terminate,” gives the appellee a right to terminate the lease at any time from the date of the lease by giving the ten days’ notice. From these two contentions, it could be said that the writing itself could be ambiguous and it would become necessary for a proper construction to be placed on it by the court.

In placing a construction on this lease, we must first consider all the surrounding circumstances as well as the wording of the contract, including the kind of business of the parties and the matter of which construction would be more reasonable and equitable to all parties concerned and it must be remembered that the proof shows that the contract was prepared by the appellee and where one of the parties prepares the contract, the construction of this contract must be construed more strongly against the party who prepared it than the other party who had no part in the preparation.

We think this contract is clearly a lease for twenty (20) years for an agreed consideration, and it would be hard to imagine the appellant entering into a twenty-year contract which is clearly set out, and borrow the sum of $12,000 to build on the property leased and give the lessee, (appellee) a right to cancel that lease as soon as it was executed upon giving ten days’ notice. There can be no reasonable doubt that at the time of the execution of this lease contract, it was intended by both parties that it was a twenty-year lease without a right of either party to terminate it for that length of time and that the termination clause was meant to apply to this lease after the expiration of the twenty years, and that termination clause was to apply to both the lessor and the lessee alike.

This conclusion, we think, is abundantly supported by the case of Aetna Oil Company v. Robertson, Ky., 258 S.W.2d 464.

Therefore, the judgment of the Ballard Circuit Court, granting a summary judgment on motion of the defendant is hereby reversed and the case is remanded to that court for further action not inconsistent with this opinion.