Vierra v. Shaffer

VAN DYKE, J.

This is an appeal from a judgment rendered in an action brought for declaratory relief wherein the parties to a lease sought a decree of the court determining their rights and liabilities thereunder in respect of certain matters that were in dispute between them. The lease in question was for a term of five years and the subject matter was a dairy ranch belonging to respondents, lessors. The lessee was in possession of the ranch under an existing lease when the subject lease was made. A dairy was being run by him producing what was then known as Grade B milk. The parties contemplated improvements to be made by the lessors in the dairy plant and equipment so that Grade A milk could be produced. Coincident with the execution of the lease such improvements were made and during the term of the lease Grade A milk was produced. As to the rental the lease contained these provisions:

“As and for the rental of the said premises during the said term, Lessee shall and hereby agrees to deliver, each and every day during and throughout the term hereof, to such creamery or creameries as may be selected by Lessee, in the name of Lessors, and with directions to said creamery or creameries to pay the proceeds thereof directly to Lessors, 25 pounds of Grade A butter fat. Lessee agrees to assign, and this agreement shall constitute an assignment

pro tanto

to Lessors of the dairy products produced upon the premises and the proceeds thereof to the extent of 25 pounds of Grade A butter fat per day. Should Lessee be unable to or fail to produce upon the premises 25 pounds of Grade A butter fat daily, then Lessee shall pay to Lessors an amount equal to the difference between the current market price of 25 pounds of Grade A butter fat, and the quantity thereof actually produced and delivered in the name of Lessors, it being the intent and purpose of this agreement and the understanding of the

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parties that Lessors shall receive as rental for the premises' a daily rental equal to the current market price of 25 pounds of Grade A butter fat delivered to the creamery or creameries selected by Lessee.”

The parties are in agreement that in one respect the lease as written did not properly reflect the intent of the parties. It stated that the lessee should deliver to the creamery each day in the name of the lessors 1 ‘ 25 pounds of Grade A butter fat” and throughout the above quoted portion of the lease it is to be noted that the reference is constantly to “25 pounds of Grade A butter fat.” It is conceded by all that the reference should have been to the delivery of an amount of Grade A milk that contained 25 pounds of butterfat. At all times after the lease went into effect the lessee has delivered to the accepted creamery the required amount of milk containing the necessary amount of butterfat. The issue between the parties as to their rights and obligations under the lease did not arise until when, during the term of the lease, the Agricultural Code was changed so that the existing designations of Grade A and Grade B milk were abandoned and the term “market milk” adopted in lieu of the term “Grade A milk.” What had been Grade B milk was designated as “Industrial milk.” Regulations concerning pricing of market milk set up three classifications within the general designation of market milk and they were called “Class 1,” “Class 2” and “Class 3.” Theoretically, at least, there were gradations of price among these classes. When these statutory and regulatory provisions took effect the parties to the subject lease for some time went along as they had been doing, the price paid by the creamery to the lessors for the “market milk” delivered to the creamery for them by the lessee being arrived at by the creamery by a method which amounted to an average of the theoretical price for each of the three classifications mentioned. The same price was paid to the lessee for the milk he delivered over and above the deliveries necessary to fulfill his obligations to the lessors. But before this action was begun the lessors made a demand upon him which embraced a claim that there was on-his part a duty to pay or cause to be paid to them for their 25 pounds of butterfat per day the so-called “Class 1 price.” Thereupon appellant brought this action herein, The trial court found that the lessors should receive as rental for the dairy “daily a sum of money representing the top or highest price paid by any creamery to which milk from said leased prem