UNITED PARCEL SERVICE, INC. vs. CHARLES T. MATSES.

United Parcel Service, Inc., a New York corporation, ("United Parcel") brought this complaint against Charles T. Matses ("Matses") of North Andover in the County of Essex in which it seeks a determination pursuant to the provisions of General Laws, Chapter 231A as to the rights of the parties pursuant to a lease of premises in said North Andover. By an indenture dated November 22, 1966 (Exhibit No. 2), Matses leased to United Parcel for a term of thirteen years approximately 92,560 square feet of land on Charles Street together with the buildings and improvements to be constructed thereon by Matses prior to the commencement of the term. The lease granted the lessee three options to extend for a term of five years each. United Parcel contends that the first option to extend has been validly exercised whereas Matses in his answer and counterclaim argues that United Parcel was in default when it exercised the first option to extend and that accordingly the lease has now terminated. Matses prays for an order that the plaintiff vacate the premises and that the Court determine a fair rental from August 1, 1980.

A trial was held on December 15, 1980 with a view taken by the Court in the presence of counsel on March 25, 1981. At the trial a stenographer was appointed to record the testimony. All exhibits introduced into evidence are incorporated herein by reference for the purpose of any appeal.

On all the evidence I find as follows:

1. Said indenture of lease dated November 22, 1966 (Exhibit No. 2) from Matses, as lessor, to United Parcel, as lessee, was for a term of thirteen years commencing on the commencement date with the lessee having

the right, by giving notice to Lessor at least six (6) months prior to the expiration of the term and prior to the expiration of each extended term, to extend the term of this lease for three (3) additional terms of five (5) years each, upon the same terms and conditions as herein set forth, provided that at the time of such notice and at the expiration of the term in effect at the time of such notice this lease has not been terminated and further provided that Lessee must be in possession of the premises under this lease and not in default of any of its obligations under this lease.

2. By instrument dated August 7, 1967 (Exhibit No. 3) the parties agreed that the term of the lease commenced on August 1, 1967 and would expire on July 31, 1980.

3. A supplementary letter agreement (Exhibit No. 8) was executed by the parties in October of 1977 (Exhibit No. 17) by which it was agreed that the lessee might locate and attach a trailer to the building and was to be allowed to grade and pave areas adjacent thereto. For this privilege the lessee was to pay an additional $500 rent per year in advance for so long as the trailer was so maintained.

4. The first payment of additional rent in the amount of $1,000 ($500 for locus and $500 for another location) was made by check dated November 1, 1977, but the additional rental payments for 1978 and 1979 apparently were overlooked by both the lessor and lessee and were not paid until June of 1980. United Parcel's check no. 643965 drawn on United States National Bank of Oregon in the amount of $2,000 in payment thereof was accepted by Matses and negotiated. The current additionl rental payment was seasonably paid. Copies of the three checks comprise Exhibit No. 1.

5. United Parcel exercised the option to extend granted to it by the lease by letter dated January 17, 1980 (Exhibit No. 4) which admittedly met the surface requirements of the lease.

6. Matses contested the exercise of United Parcel's option by letter dated May 12, 1980 (Exhibit No. 5), purportedly "due to negligence and violation of the lease on the part of United Parcel Service." In this letter Matses incorrectly alleged "an addition was added to the rear of the building without our permission and we did not receive any additional compensation."

7. Matses' letter was followed by one from counsel dated June 20, 1980 (Exhibit No. 6) in which it was claimed that

a) the right to extend was not seasonably exercised (a point now waived),

b) United Parcel had failed to obtain the assent of the lessor to the addition (again an incorrect assertion) or to obtain a building permit for the addition, a supposed violation of Article VII, and

c) there had been extensive damage to the hot­topped areas on the premises.

8. A notice to quit and deliver up the premises dated August 12, 1980 (Exhibit No. 7) was served by constable on United Parcel.

9. The complaint in the present proceeding was filed on September 29, 1980.

10. At the trial Matses testified to what he denominated breaches of the lessee's duty consisting of an excessive number of signs attached to the building without consent (but not that shown on Exhibits Nos. 15B and 15C to which the lessor does not object), a canopy over a loading dock similarly attached (Exhibit No. 15B), damage to the hardtop (Exhibit Nos. 15D, 16A and 16B), damage to the building from trailer trucks backing into the so­called addition, spalling of the concrte floor within the building allegedly from the salt washed off the trucks, and erection of partitions in the office.

11. At the view the Court observed a break-up of the hardtop on the slope between the leased premises and the adjacent property, the grade of which is higher and the run-off from which may be the cause of some of the hardtop problems, the pitting of the concrete floor within the building, the office partitions and two slight scrapes or gouges on the building which may have been made by a trailer truck in backing up to the so-called addition. The Court also observed a customer bring in and pay for delivery of a parcel. The signs other than that identifying the building are two exterior speed limit signs, a small sign indicating customer parking and another with the legend "customer counter" and the hours beneath it.

12. United Parcel obtained a building permit for the trailer comprising the addition in the summer of 1980. With the removal of the posts holding it in place and the replacement of its tires the trailer can be removed from the premises in a matter of hours.

13. The lease imposes the obligation on the lessee "to keep the interior of said original building, in reasonably good repair...not to make or suffer any strip or waste or damage, overloading or defacing of the demised premises or any building or improvement thereon," and at the expiration of the lease "to quit and yield up said premises, and all repairs, clean and neat and in reasonably tenantable condition."

The lessor correctly does not argue either that use of the word "renew" in exercise of the option or the lease itself requires a new document rather than the simple notice given by United Parcel. It seems clear that the parties contemplated a right to extend, not a renewal, and there is no contention otherwise. See Gibbs Realty and Investment Corp. v. Carvel Stores Realty Corp., 351 Mass. 684 (1967). Ingram v. Sonitrol Security Systems of Worcester, Inc., Mass. App. Ct. (1981). [Note 1] The right of United Parcel to extend the term of the lease is subject to a condition that it not be in default in any of its obligations under the lease. The paragraph on extension quoted above is ambiguous as to whether it is the time of exercise of the option or of the termination of the previous term or both (as is made clear in the case of a lease termination) which governs. In Derman Rug Co. Inc. v. Ruderman, 4 Mass. App. Ct. 437 (1976) it was held that the language there construed required that there be no default at the time of the exercise of the option, and I would so construe the language here under review.

It seems apparent from a study of the correspondence from Matses or his attorneys to United Parcel that a business decision had been made as to the desirability of extending the term of the lease, and its continuance found wanting. The reason first given by Matses for his unwillingness to recognize the extension clearly was erroneous. This may well have constituted a waiver of the other matters which he subsequently argued barred United Parcel from the extension.

Even without waiver the lessor cannot prevail. So far as the permit for the addition is concerned, it is not clear either from the zoning by-law or the lease that one was required. Any failure to pay the additional rent for the trailer was waived by the lessor, and even if it had not been, forfeiture would be a result to be avoided under the circumstances. Weinreb v. Clarke, 361 Mass. 883 (1972). The only conduct of the lessee of which the lessor complains and which is of consequence is the condition of the concrete floor in the building. Matses was aware, however, of the use to be made of the premises by United Parcel, and in this context the spalling of the concrete would appear to be akin to "reasonable wear and tear." The lease does not use this phrase, however, but provides for keeping the building in "reasonably good repair." With the understanding by Matses of the proposed uses of the building the damage to the floor is not of the consequence necessary to bar United Parcel from its contractual rights. While the lease continues in effect, I find and rule that the standard expressed in the lease has been met. It would be pointless to repair or replace the floor while United Parcel continues its operation in the building, but this is not to say the standard might not be different when the premises finally are surrendered.

On all the evidence, therefore, I find and rule that there were no defaults on the part of the lessee in existence at the time the option to extend was exercised which precluded the valid exercise thereof.

The plaintiff has submitted eighteen requests for findings and rulings, and the defendant has made nineteen requests for findings of fact and for thirteen rulings of law. Rather than specifically ruling on these I have set forth herein my own findings of fact and rulings of law.

Judgment accordingly.