Court: Court of Appeals of Oregon; April 28, 1980; Oregon; State Appellate Court
In a forcible entry and detainer action, plaintiffs (lessors) sought to regain possession of property from defendant (commercial tenant) after terminating the lease for non-payment of rent. The trial court ruled in favor of the defendant, stating they had prepaid rent, which entitled them to maintain possession. Plaintiffs appealed, while the defendant cross-appealed for attorney fees. The case centers on a lease agreement from April 1964, which required monthly rent payments in advance, initially set at $550 and later $600, with a provision for lease termination if rent was not paid within 10 days of due date.
Defendant had prepaid $1,800 for the last three months of the original ten-year lease. In February 1975, the lease was extended for another ten years, maintaining the original payment structure but omitting any reference to the $1,800 in the extension. In January 1978, the defendant failed to pay the monthly rent, prompting plaintiffs to terminate the lease. The defendant argued that the $1,800 should be considered prepaid rent applicable to the January 1978 payment, claiming they were not in default. Plaintiffs contended the $1,800 was only for the last three months of the original lease period.
The trial court found insufficient evidence regarding the $1,800 during the extension negotiation and ruled it as prepaid rent, allowing the defendant to invoke a statutory defense against termination. The key issue remained the timing of the $1,800's application, with the ruling indicating that if the defendant had missed any earlier payments, plaintiffs could have terminated the lease. The case highlights the complexities of lease agreements and the implications of prepaid rent within the context of lease extensions.
The extension agreement incorporates the original lease's provisions, which must be interpreted based on the parties' intentions as expressed in the contract language. The agreement's wording is clear, indicating that the advance payment of $1800 from the original lease remains effective despite its absence in the extension agreement. The original lease specified that this amount applied to the rental period of August, September, and October 1975; however, it is reasonable to interpret that this prepaid rent applies to the final three months of the new rental period since rent was already paid for the specified months. Thus, the parties' original intention was preserved. The court concludes that the defendant defaulted on rental payments, granting the plaintiffs immediate possession of the leased premises. The court does not need to address other claims or the defendant's cross-appeal. The ruling is reversed, and ORS 105.120(3) states that serving a notice to quit does not permit an eviction action before the tenant's prepaid rent period expires.
