Philipsborn v. Hutzler Bros.

Urner, J., delivered the opinion of the Court. The appellees are the owners of a lot of ground in Baltimore improved with a store building of which "the appellants are lessees. The agreement of lease under which the appellants occupy the property provided that the tenancy should begin upon the completion of a new building to be constructed by the lessor upon the lot, in accordance with certain specifications, and should continue for the term of fourteen years and nine months. It was agreed that the rent to be paid should be $9,000 annually for the first ten years of the term, if the cost of the building' should not exceed $30,000, otherwise the annual rent should be increased to the extent- of ten per cent, of the excess cost of construction.

For the remaining four years and nine months of the term it was stipulated that rent should be paid at the rate of $2,000 a year more than was payable during the preceding period. There was a provision in reference to the payment of taxes, as follows: “If, after the new building has been assessed for taxes, the assessed value of the land and premises is increased by the Appeal Tax Court of Baltimore City during the term of the said lease, the parties of the second part shall and will thereafter so long as they remain as tenants of said premises, pay the taxes on the amount of such increase.” ³³⁹ The "building was completed, aud the tenancy commenced, on April 5, 1914. The pre-existing assessment of the property for the purposes of taxation amounted to $46,200 for the land and $5,000 for the improvements. Shortly after the completion of the building, whose total cost was $86,600, the property was re-assessed by the Appeal Tax Court of Baltimore City at a valuation of $60,000 for the improvements and $69,913 for the land.

The assessment of the land was thus increased $23,713, and of the improvements $55,000, the increase as a whole being $78,713. As a-result of this re-assessment the taxes levied on the property for the year 1915 were $1,739.17 in excess of the sum which would have been chargeable on the basis; of the previous valuation. The appellee, as owner, paid the taxes in full, but asserts that the appellants, as lessees, are liable for the taxes to the extent of the increase just noted, and the pending suit was brought to enforce that claim. A demurrer to the declaration having been overruled, pleas were filed by the defendant lessees, in the first of which it is averred that the increase of assessment, on account of which the taxes sued for were levied, was not made after the new building was assessed for taxes, as contemplated by the lease; and in a second and a third plea the same theory is "separately advanced in regard to the increases in the assessments of the building and land respectively.

The pleas were held insufficient on demurrer, and the defendants declining to plead over, judgment was entered in favor of the plaintiff for $1,817.43, being the amount of taxes claimed, with interest. The decision of the case depends entirely upon the construction of the covenant we have quoted from the lease, requiring the lessees, under the conditions and to the extent described, to pay the taxes levied on account of an increase ■of assessment. According to the lessor’s interpretation of the provision, it means that if, when the new building has been assessed for taxes, it appears that the assessment of the land and premises has been increased, the lessees shall pay the taxes on the ³⁴⁰ added valuation. The theory of the suit, therefore, is that the lessees assumed liability for the taxes in so far as they might become larger in amount as a result of the initial assessment of the building by the Appeal Tax Court.

We have been unable to conclude that such an intention is disclosed by the terms of the agreement, which distinctly provides that if, after the1 new building has been assessed for taxes, the assessed value of the land and premises is increased during the term, the lessees shall thereafter pay the taxes on the amount of such increase. This indicates clearly, as it seems to us, that the assessment of the new building was not to be considered as being included in the basis of the lessees’ liability for taxes under the agreement. There could have been no doubt in the minds of the parties that the property would be re-assessed after the old building had been replaced by one of much greater cost, and it was certain also that the valuation of the improvements for the purposes of taxation would be largely augmented. If, therefore, it had been