Hubbard's Pier & Seafood, Inc. v. Rock Hall Clam & Oyster Co.

Orth, C. J., delivered the opinion of the Court. Whether Hubbard’s Pier and Seafood, Inc. and Albert W. Woodfield (Lessors) or Rock Hall Clam & Oyster Co., Inc., Peter John Markos, Euripedes John Markos, and Evangelos John Markos (Lessees) are entitled to $1605 being held by the Department of Natural Resources of the State of Maryland depends upon the construction given a clause in a lease drafted by Lessors’ attorney and executed on 7 May 1965. 1 The clause, paragraph 3, reads: ⁴³⁹ “It is mutually agreed that any oyster shells resulting from the Lessee’s oyster operation will belong to the Lessor herein, subject, however, to the necessary share legally allowed by law to the Tidewater Fisheries.” The $1605 represents 16,050 bushels of oyster shells sold by Lessees to the State of Maryland at 10 cents a bushel. Lessees sought declaratory relief in the Circuit Court for Kent County. Courts Art. § 3-406.

That court determined that Lessees were entitled to the money and issued an appropriate order on 22 June 1973. Lessors appealed therefrom. Courts Art. § 12-301 and § 12-308 (a) (14). I The premises subject to the lease were carefully delineated: “This lease and the terms thereof shall be confined to the entire first floor and all the equipment contained therein of the building now being utilized as a clam and oyster shucking operation, with the right reserved to the Lessor to enter at all times for inspection and for free and unlimited access to the furnace or other machinery for operation or repairs.

This Lease shall in no way vest in the Lessee any interest in the restaurant building, the second floor over the oyster and clam operations, or any of'the waterfront property, except that the Lessee is hereby granted the privilege of enough room to unload his clam and oyster boats at all times, so long as such loading or unloading does not unreasonably interfere with any business operations of the Lessor. The Lessee is also granted the privilege of using so much of the grounds in the real estate described above as shall be needed for storage of oyster shells or trucking operations, but such space shall be confined to an area designated by the Lessor. It is ⁴⁴⁰ further mutually agreed that the area hereby leased as to ground space shall be mutually and jointly used by both the Lessor and the Lessee, so long as the Lessor’s operations do not conflict nor interfere with the Lessee’s oyster or clam operation. Lessee agrees to remove and dispose of clam shells from the premises as used.” A subsequent clause, paragraph 9, provided: “Lessor agrees to allow Lessee the right to use waterfront property designated by the parties directly behind leased premises.” The permissible use of the demised premises was spelled out: “Lessor agrees to allow Lessee to use leased premises in the business buying, selling, shucking and processing clams and oysters, retail as well as wholesale, and to perform all acts incident to such business.

Lessee agrees not to sell either retail or wholesale for less than Lessor. Lessee reserves right to sell to dealer at own price set by Lessee. A dealer shall not include any fishing party boat or any purchase less than five bushel or equivalent thereof in any lump sum sale. No resale of any clam or oyster shall be allowed on the leased premises.” There were additional express covenants concerning the operation of the business.

Paragraph 6 provided: “The Lessee further agrees that its business operations on the premises shall be restricted solely to clams and oyster, and at no time will it deal in the retail or wholesale trade of fish, crabs or other seafood. It is agreed that the Lessor may also sell oysters and clams, either wholesale or retail, but must purchase from the Lessee any clams to be resold after a 157c mark up to be paid to the Lessee on the price which the Lessee must purchase. It is further agreed that should the Lessee be unable to furnish or supply clams to the Lessor, then the Lessor may buy or obtain clams elsewhere.” ⁴⁴¹ Paragraph 7 prescribed: “It is specifically agreed that the Lessee will not enter into the sale of any gasoline, oil or other fuel to any person, but that as part of the consideration of this Lease it is agreed that the Lessee will encourage and stress that clammers with whom the Lessee deals will purchase gasoline and other supplies from the Lessor and no place else.” For the initial term of the lease the rent was $4800. For any renewal term under the original lease the yearly rent was $5000.

Under the extension agreement the rent was $4000 a year. II Evidence adduced at the trial through the testimony of James J. Marcus, 2 General Manager and Executive Vice President of Rock Hall Clam & Oyster Co., Inc., in behalf of Lessees, and Albert W. Woodfield, President of Hubbard’s Pier and Seafood, Inc., in behalf of Lessors, showed that Lessees conducted their oyster operation on the demised premises (the Sharp Street plant) until sometime in January 1971, during the 1970-1971 oyster season, when the operation was moved to a plant, a short distance away, built by Lessees (the Chesapeake Avenue plant). The practice initially followed under the lease was that the shells were stored on the demised property until picked up by the State which paid Lessors for the shells purchased by it. There came a time, however, when “a town ordinance was passed” prohibiting the storage of oyster shells within the limits of Rock Hall.

Lessors then made arrangements with the County to store the shells on the county dump. The shells resulting from the Lessees’ oyster operation on the demised premises were thereafter loaded by Lessors on Lessors’ trucks by means of Lessors’ conveyor and hauled to the county dump where they were picked up by the State which paid Lessors for the shells purchased. When Lessees moved ⁴⁴² their oyster operation to the Chesapeake Avenue plant the practice changed. Lessees loaded and hauled the shells to the dump.

Marcus said this was done entirely with Lessees’ equipment except for a period of four days when their truck was broken. During that period Lessors’ truck was used, for which Lessees paid Lessors a daily rental of $5. Woodfield said that during January 1971 Lessors’ conveyor was used to load the truck because Lessees’ conveyor was too short for the job. In any event, Lessors continued to receive the proceeds of the sale to the State of the shells resulting from Lessees’ oyster operation during the 1970-1971 season.

Marcus explained why Lessees made no claim to them: “Because we had piled them all in the same pile that we had piled the ’70 oyster shells in and we just left them all together. * * * Because they were all stored at the County Dump and they were all in one pile and there was no way we could separate them, so we just let them go.” Lessees, however, expected to obtain the proceeds from the sale of the shells to the State for the 1971-1972 season. Marcus said that all the Lessees’ oyster operation during that season was conducted at their Chesapeake Avenue plant, and he first learned that Lessors were claiming the proceeds of the sale of the shells when he called the Department of Natural Resources in July or August 1972 and was so informed. 3 The issue was joined. Lessees claimed that Lessors were entitled only to those oyster shells which resulted from Lessees’ operation conducted on the demised premises. Lessors contended that they were entitled to the oyster shells which resulted from Lessees’ oyster operation no matter where conducted, whether on the demised premises or any other place in Rock Hall, or Kent County, or the State of Maryland, or any other state.

Ill The basic law is clear. “Maryland contract law is to the effect that where a contract is plain as to its meaning, there is no room for construction and it must be presumed that ⁴⁴³ the parties meant what they expressed.” Kermisch v. Savings Bank of Baltimore, 266 Md. 557, 559-560 . 4 The Court of Appeals follows the general rule: “The standard of interpretation of an integration, except where it produces an ambiguous result, or is excluded by a rule of law establishing a definite meaning, is the meaning that would be attached to the integration by a reasonably intelligent person acquainted with all operative usages and knowing all the circumstances prior to and contemporaneous with the making of the integration, other than oral statements by the parties of what they intended it to mean.” Weber v. Crown Central Petroleum Corporation, 214 Md. 115, 120 , quoting Restatement, Contracts, § 230. It quoted, at 121, with approval 3 Williston, Contracts (Rev. ed.), § 613, p. 1763: “It is often said that direct evidence of intention is admissible in case of equivocation * * *. But it should be observed that it is not primarily the intention of the parties which the court is seeking, but the meaning of the words at the time and place when they were used. The fact that the parties intended their words to bear a certain meaning would be immaterial were it not for the fact that the words either normally or locally might properly bear such meaning, and this is the basis of the rule in regard to equivocation.” 5 IV The crux of the case is whether, under the mutual agreement set out in paragraph 3 of the lease, only those oyster shells which result from Lessees’ oyster operation on the demised premises belong to Lessors, or whether Lessors ⁴⁴⁴ are entitled to the oyster shells resulting from any oyster operation of Lessees no matter where conducted. 6 The words of the lease and extension agreement, even when read in the light of the surrounding circumstances, cannot fairly be said to have a double meaning.

We see no equivocation. Therefore, we must look to the words of the written documents, presuming that the parties meant what they expressed. 7 ⁴⁴⁵ The court below found: “[I]t is quite obvious that the lease comprehended nothing beyond the immediate facility.” We agree. We are led to this conclusion from the words used throughout the lease. We think it patent that they concern only the leased premises and the conduct of the Lessees and Lessors with regard thereto.

In the delineation of the premises covered by the lease the privilege granted Lessees of enough room on the waterfront to unload their clam and oyster boats clearly referred only to clams and oysters for the operation conducted on the premises. The provisions for Lessee to use “so much of the grounds in the real estate described above as shall be needed for storage of oyster shells or trucking operations”, patently contemplated no more than the operation on the premises. So also with Lessees’ agreement “to remove and dispose of clam shells from the premises as used.” The lease spelled out the permissible use of the premises as “the business of buying, selling, shucking and processing clams and oysters, retail as well as wholesale, and to perform all acts incident to such business,” that is the business conducted on the premises. The agreement by Lessees immediately following that agreement of Lessors as to the use of the premises, that they agree not to sell either retail or wholesale for less than Lessors, with a reservation by Lessee to sell to a dealer “at own price set by Lessee,” with “no resale of any clam or oyster” being “allowed on the leased premises,” patently referred only to the oyster and clam operation with respect ⁴⁴⁶ to the premises.

The agreement that Lessors “may also sell oysters and clams, either wholesale or retail (they being adjacent competitors), but must purchase from the Lessee any clams to be resold after a 15% mark up to be paid to the Lessee on the price which the Lessee must purchase,” led the court below to ask categorically in its opinion and order: “Could this mean that the [Lessors] would be bound to buy all their clams from the [Lessees] irrespective of where or how many outlets the [Lessors] might choose to have? ” It is equally apparent that the specific agreement of paragraph 7 of the lease that Lessees would not sell gasoline, oil or other fuel to any person, and their agreement to “encourage and stress” that clammers with whom they deal “will purchase gasoline and other supplies from the Lessor and no place else” related only to Lessees’ operation on the leased premises and did not contemplate their business conducted elsewhere, for example, in Massachusetts. The court below found, as we find, “innumerable instances where the lease could only be applicable to this particular demise and no other.” The short of it is, we think it plain that when Lessors and Lessees mutually agreed that any oyster shells resulting from Lessees’ oyster operation “will belong” to Lessors, they contemplated only the Lessees’ oyster operation conducted on the demised premises. This conclusion, however, does hot