text:
    Sidney R. Bernstein et al. v. Ronald J. Nemeyer et al.
    (13823)
    Peters, C. J., Shea, Callahan, Glass and Covello, Js.
    Argued December 6, 1989
    decision released February 13, 1990

      Alan R. Spirer, with whom were Nathan C. Nasser and, on the brief, Karen Spirer, for the appellants (plaintiffs).

      Richard P. Weinstein, for the appellees (defendants).
   Peters, C. J.

The principal issue in this case is whether investors in a speculative real estate venture are entitled to rescission and restitution of their investments upon breach of a “negative cash flow guaranty” contained in their partnership agreement. The plaintiffs brought this action against the defendants Ronald J. Nemeyer and Cheshire Management Company, Inc., who are the general partners of CMC-Southwest Limited Partnership, to recover for the loss of the amounts that the plaintiffs, as limited partners, had contributed to the partnership. The complaint charged the defendants, in three counts, with breach of contract, willful misconduct and violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110b. The defendants filed a number of special defenses, as well as a counterclaim for damages on a theory of indemnification. The trial court, after a hearing, ruled in the defendants’ favor on the complaint, and in the plaintiffs’ favor on the counterclaim. Only the plaintiffs have appealed, and their appeal challenges only the trial court’s decision that they are not entitled to rescission and restitution on their claim of breach of contract. We find no reversible error in the judgment of the trial court.

The trial court found the following facts, which are undisputed. In 1983, the defendants and a group of investors known as the Class A limited partners formed the CMC-Southwest Limited Partnership (the partnership) to purchase and renovate two apartment complexes in Houston, Texas. During the summer of the following year, the defendants solicited the present plaintiffs, the Class B limited partners, to join the partnership. The plaintiffs were seeking an investment that would provide them with a source of capital growth as well as a tax deferral for sums generated by a takeover of the firm where they had been employed.

In their negotiations with the plaintiffs, the defendants described the objectives of the partnership as appreciation in the value of the Houston properties and federal income tax benefits in the form of deductions for the deferral of income. The defendants did not, however, conceal from the plaintiffs the risks of the partnership venture. The plaintiffs were on notice of the depressed state of the Houston real estate market in general. They were also informed of the particular vulnerability of the partnership properties to foreclosure, since the properties were fully leveraged, having been bought entirely with loans secured by mortgages.

In three different documents, which the defendants drafted in August, 1984, in order to procure the plaintiffs’ agreement to participate as limited partners, the defendants undertook to give a so-called negative cash flow guaranty to the partnership at least until December 31,1988. The defendants expressly agreed to lend to the partnership the amount by which operating expenses, debt service and capital expenditures exceeded cash receipts from the normal operations of the partnership. Such loans were to be recoverable either from operating income or from proceeds received upon disposition of the properties, but in the latter event only after all the plaintiffs had been repaid their capital contributions.

Although the plaintiffs invested $1,050,000 in the partnership, the partners’ hopes for appreciation of the Houston properties did not materialize. The defendants lent $3,000,000 to the partnership by virtue of the negative cash flow guaranty but discontinued mortgage payments in November, 1985, in an unsuccessful effort to renegotiate the financial terms of the mortgages. The defendants’ attempt thereafter to find shelter under the bankruptcy laws proved equally unsuccessful. The mortgagees foreclosed on the properties in the summer of 1987. Both the plaintiffs and the defendants lost their entire investments. This lawsuit ensued.

The trial court denied the plaintiffs’ request for rescission and restitution of their $ 1,050,000 investment. The court found that the plaintiffs had bargained for the negative cash flow guaranty and that the defendants’ failure to make mortgage payments in 1985 was a breach of that guaranty. The court determined nonetheless that the plaintiffs could not recover for three reasons: (1) the guaranty was an incidental rather than a central term of the contract as a whole, and the defendants’ nonperformance therefore was not a material breach warranting rescission; (2) the losses suffered by the plaintiffs resulted not from the defendants’ breach but from the continued failure of the Houston real estate market; and (3) despite the defendants’ breach, the plaintiffs had realized the tax benefits that were a central part of their bargain.

The plaintiffs’ appeal challenges these adverse conclusions of the trial court and reasserts a right to rescission and restitution. We agree with the plaintiffs that the defendants’ nonperformance of the negative cash flow guaranty was sufficiently material to the contract that the trial court erred in denying rescission to the plaintiffs on that ground. Because the remedy of restitution consequent to rescission requires a showing of unjust enrichment, however, the judgment of the trial court can be sustained on the alternate ground that the plaintiffs have failed to demonstrate unjust enrichment in this case. See Aetna Casualty & Surety Co. v. Murphy, 206 Conn. 409, 420, 538 A.2d 219 (1988); Favorite v. Miller, 176 Conn. 310, 317, 407 A.2d 974 (1978).

I

We first consider whether the trial court was mistaken in concluding that the plaintiffs were not entitled to rescission because they had failed to prove a material breach of the partnership agreement. This underpinning for the trial court’s judgment cannot be sustained.

The trial court found that the defendants’ breach of the negative cash flow guaranty was an incidental rather than a material breach. This finding was clearly erroneous in light of the evidence and the pleadings in the record as a whole. Practice Book § 4061; Pan-dolphe’s Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221, 435 A.2d 24 (1980). Several of the plaintiffs, as well as the named defendant, testified that the plaintiffs had bargained for the negative cash flow guaranty because of their concern about the quality of the Houston properties and the overall status of the Houston real estate market. There was no testimony that the plaintiffs would have been willing to invest in the partnership in the absence of this guaranty. The various documents detailing the terms of the partnership agreement were all drafted by the defendants, and each contained such a guaranty. The terms of the guaranty differed, in the various documents, only insofar as there was some question about whether the guaranty extended beyond December 31,1988. Since the defendants’ breach occurred in November, 1985, this discrepancy was of minimal importance, and the trial court so found.

It is no answer to this unequivocal factual showing to point to the plaintiffs’ interest in the partnership as a vehicle for tax deferral as well as for capital appreciation. The United States Supreme Court held, in Randall v. Loftsgaarden, 478 U.S. 647, 662-64, 106 S. Ct. 3143, 92 L. Ed. 2d 525 (1986), that the receipt of tax benefits does not per se justify the denial of access to the remedy of rescission, when that remedy is otherwise warranted. Moreover, the prospects for both the tax deferral and the capital appreciation depended upon the partnership’s viability over the long term, and that was precisely the object of the negative cash flow guaranty. There was no testimony to the contrary.

The trial court correctly looked to the multi-factor standards for materiality of breach contained in the Restatement (Second) of Contracts § 241 (1981) but failed to apply those standards correctly. In the circumstances of this case, the most important factors are that the defendants’ breach deprived the plaintiffs of a substantial benefit for which they had clearly bargained and which they had every reason to expect, and that the defendants’ breach was totally incurable, the partnership having lost all control over its Houston properties. That the defendants conducted the affairs of the partnership in good faith does not, on this record, make their breach immaterial or incidental.

II

The conclusion that the defendants’ nonperformance of the negative cash flow guaranty was a material breach of the partnership agreement does not, however, end our inquiry. It follows from an uncured material failure of performance that the other party to the contract is discharged from any further duty to render performances yet to be exchanged. Vesce v. Lee, 185 Conn. 328, 334, 441 A.2d 556 (1981); Silliman Co. v. S. Ippolito & Sons, Inc., 1 Conn. App. 72, 75, 467 A.2d 1249 (1983), cert. denied, 192 Conn. 801, 470 A.2d 1218 (1984); Aiello Construction, Inc. v. Nationwide Tractor Trailer Training & Placement Corporation, 122 R.I. 861, 864-65, 413 A.2d 85 (1980); 2 Restatement (Second), Contracts § 237 (1981). It does not follow that the party so discharged is automatically entitled to restitution rather than to a claim for damages. We must still determine whether, in the circumstances of this case, the trial court correctly rendered judgment in favor of the defendants because the plaintiffs have failed to prove a right to restitution of the payments that they made to the partnership. We conclude that the record sustains the judgment of the trial court on this alternate ground.

“When a court grants [the remedy of restitution] for breach, the party in breach is required to account for a benefit that has been conferred on him by the injured party. ... In contrast to cases in which the court grants specific performance or awards damages as a remedy for breach, the effort is not to enforce the promise by protecting the injured party’s expectation or reliance interest, but to prevent unjust enrichment of the party in breach by protecting the injured party’s restitution interest. The objective is not to put the injured party in as good a position as he would have been in if the contract had been performed, nor even to put the injured party back in the position he would have been in if the contract had not been made; it is, rather, to put the party in breach back in the position he would have been in if the contract had not been made.” (Emphasis in original.) E. A. Farnsworth, Contracts (1982) § 12.19, p. 905; 1 G. Palmer, The Law of Restitution (1978) § 4.1, p. 369; 3 Restatement (Second), Contracts §§ 344 (c) and 370 (1981); and see Monarch Accounting Supplies, Inc. v. Prezioso, 170 Conn. 659, 665-67, 368 A.2d 6 (1976); Franks v. Lockwood, 146 Conn. 273, 278,150 A.2d 215 (1959). When an injured party seeks an award of money to protect his restitu-tionary interest, any award “may as justice requires be measured by either (a) the reasonable value to the other party of what he received . . . or (b) the extent to which the other party’s property has been increased in value or his other interests advanced.” 3 Restatement (Second), Contracts § 371 (1981).

The principles of the law of restitution demonstrate that the defendants’ nonperformance of the negative cash loan guaranty, although a material breach of the partnership agreement, does not automatically and unconditionally entitle the plaintiffs to recover their investment in the partnership. The award of a restitutionary remedy for breach of contract depends upon a showing of what justice requires in the particular circumstances. Metcalfe v. Talarski, 213 Conn. 145, 153-54, 567 A.2d 1148 (1989); Maruca v. Phillips, 139 Conn. 79, 83, 90 A.2d 159 (1952); Milford Yacht Realty Co. v. Milford Yacht Club, Inc., 136 Conn. 544, 549, 72 A.2d 482 (1950); Caramini v. Tegulias, 121 Conn. 548, 553-54, 186 A. 482 (1936); Kavarco v. T.J.E., Inc., 2 Conn. App. 294, 299-300, 478 A.2d 257 (1984). The decision to award a particular restitutionary remedy thus necessarily rests in the discretion of the court.

In the present litigation, the trial court could reasonably have concluded that the plaintiffs had failed to establish their right to the return of their investments. We have regularly held that it is a condition of rescission and restitution that the plaintiff offer, as nearly as possible, to place the other party in the same situation that existed prior to the execution of the contract. Metcalfe v. Talarski, supra; Duksa v. Middletown, 192 Conn. 191, 197, 472 A.2d 1 (1984); Keyes v. Brown, 155 Conn. 469, 476, 232 A.2d 486 (1967); Kavarco v. T.J.E., Inc., supra, 299. The record in this case is entirely unclear about what efforts the plaintiffs made to tender back their partnership interests to the defendants before bringing this lawsuit. The record likewise contains no finding that the financial condition of the partnership, at the time the plaintiffs learned of the defendants’ breach, was already so impoverished that a res-titutionary tender would have been pointless.

Even more damaging to the plaintiffs’ claim for restitution is the trial court’s affirmative finding that the defendants “suffered a great loss of their own, about three million dollars, in attempting to satisfy their obligations under the contract and, specifically, the guaranty provision.” This unchallenged finding of fact supports the conclusion that the plaintiffs could not have restored the defendants to their position prior to their execution of the partnership agreement. Further, it demonstrates that, despite the defendants’ material breach of the partnership agreement, the defendants’ property interests have not been “increased in value or [their] other interests advanced.” 3 Restatement (Second), Contracts § 371 (b) (1981). In short, the plaintiffs have not proven that the defendants have been unjustly enriched.

There is no error.

In this opinion the other justices concurred.

       In addition to Sidney R. Bernstein, the other plaintiffs are A. Douglas P. Craig, Robert Ableidiner, Fred L. Fomi, B. J. Garet, Charles Gessner, Charles Huebner, Joseph A. Levato, Russell Mallett, Nicholas E. Sinacori, Donald Skelly, Edward D. Toole and Philip Wallaeh. These thirteen men comprise the totality of the Class B Limited Partners in the partnership at issue.

       The plaintiffs have not alleged that the defendants wrongfully induced the plaintiffs’ participation in the partnership, and they have not pursued, on appeal, the claim that the defendants engaged in willful misconduct in their performance of the partnership agreement. At trial, this latter claim was adjudicated in favor of the defendants.

       The three documents in which the defendants made reference to a negative cash flow guaranty were the First Amendment to Limited Partnership Agreement, the letter to the Class B limited partners and the Subscription Agreement.

       Paragraph 9 of the First Amendment to Limited Partnership Agreement provides: “[T]he General Partners agree to loan to the Partnership the amount by which operating expenses (but without deduction for depreciation), debt service and capital expenditures with respect to Partnership property exceed the sum of cash receipts from normal operations of the Partnership (including, without limitation, rent payments under leases of apartments comprising the Property) and capital contributions received by the Partnership.”
      The letter to the Class B limited partners provides in part: “In the event the Partnership experiences negative cash flows at any time during the period ending December 31,1988, CMC will lend to the Partnership funds in an amount equal to such negative cash flows, it being understood and agreed that CMC shall be obligated to make such loans from time to time on a monthly basis during said period.”
      The Subscription Agreement provides in part: “The General Partners have agreed to lend the Partnership an amount equal to negative cash flows experienced from Partnership operations through December 31, 1988.”

       The letter to the Class B partners provides in part: “Each such loan will bear simple interest at the prime rate of interest established, from time to time, by Citibank N.A. and will be payable to CMC out of Partnership operating income (to the extent such income is positive at the time of such repayment) or, if not paid from such operating income, then from the proceeds of the sale, refinancing or other disposition of the Properties (but only after all Partners have been repaid their capital contributions from the proceeds of all sales, refinancings or other Property dispositions). Interest on such loans will only be payable from such sale, refinancing or other Property disposition proceeds.”
      The Subscription Agreement provides in part: “The principal amount of these loans may be repaid from positive cash flows resulting from Partnership operations, although the interest on such loans (calculated at the prime rate established from time to time by Citibank N.A.) will be repaid to the General Partners from funds resulting from the sale or refinancing of the Properties after all of the General and Limited Partners have received from all distributions of funds resulting from sales or refinancings an amount equal to their initial cash contributions to the capital of the Partnership.”

       At trial, the defendants also asserted a defense of impossibility, which the trial court rejected. The defendants have not pressed this claim on appeal.

       Several of the plaintiffs’ testimony directly addressed the centrality of the negative cash flow guaranty to the agreement. These plaintiffs testified as follows:
      Testimony of Fred L. Forni:
      “Q. Mr. Fomi, you were aware, as you just stated to counsel, the properties were operating at a deficit, that they were leveraged, that they could be foreclosed and that they were operating at a high vacancy rate. Were all these factors important to you in negotiating the negative cash flow guaranty?
      “A. Crucially important. That’s what made it so important.”
      Testimony of Nicholas E. Sinacori:
      “Q. Were you aware of the fact that CMC-Southwest Limited Partnership was experiencing severe problems in terms of vacancy after you invested?
      “A. Yes.
      “Q. And you were aware of the fact that this was a turnaround situation so-called or, at least, the .hope and expectation of a turnaround?
      “A. That’s why we required the cash flow guaranty.
      “Q. And the cash flow guaranty was to run through December 31,1988, is that correct?
      “A. That is what we were bargaining for, yes.”
      Testimony of Sidney R. Bernstein:
      “Q. You negotiated with Mr. Nemeyer a five-year negative cash flow guaranty; is that correct?

        “A. Yes.
      “Q. And that was you felt to be an important part of the bargain you were making with Cheshire Management Company?
      “A. Yes.”
      Likewise, the named defendant testified as follows:
      “Q. Did there come a time prior to their investment in CMC-Southwest that there were discussions about a negative cash flow guaranty?
      “A. To my best recollection, they first came up after that gentleman, who has been referred to, had made his trip to Houston to inspect the properties. And I believe I remember [sitting] with him at lunch at the U.S. Industries’ cafeteria. I know we went through the cafeteria line together, and it was clear to me, you know, that he was concerned about the quality of the properties, because they certainly weren’t what we would call top quality or Class A apartment properties. And it was, I believe, as a result of his input they were getting concerned about how much work had to be done on the properties and the overall status of the Houston market itself, and as a result of those efforts there was then much discussion of a negative cash flow guaranty stemming from, I think, that inspection. . . .
      “Q. The fact of the matter is you agreed to the negative cash flow guaranty, and it was your impression that it would last until December 31,1988?
      “A. That’s true.”

       Section 241 of the Restatement (Second) of Contracts provides: “In determining whether a failure to render or to. offer performance is material, the following circumstances are significant:
      “(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
      “(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
      “(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
      “(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;
      “(e) the extent to which the behavior of the party failing to perform or. to offer to perform comports with standards of good faith and fair dealing.”

       Section 237 of the Restatement (Second) of Contracts provides in pertinent part: “[I]t is a condition of each party’s remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time.”

       The plaintiffs have never asserted, and the trial court therefore did not address, any claim for expectancy damages resulting from the breach of contract.

       Section 344 of the Restatement (Second) of Contracts provides in relevant part: “Judicial remedies under the rules stated in this Restatement serve to protect one or more of the following interests of a promissee . . . .
      “(c) his ‘restitution interest,’ which is his interest in having restored to him any benefit that he has conferred on the other party.”
      Section 370 provides: “A party is entitled to restitution under the rules stated in this Restatement only to the extent that he has conferred a benefit on the other party by way of part performance or reliance.”

       Section 371 of the Restatement (Second) of Contracts provides: “If a sum of money is awarded to protect a party’s restitution interest, it may as justice requires be measured by either
      “(a) the reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in the claimant’s position, or
      “(b) the extent to which the other party’s property has been increased in value or his other interests advanced.”

       There was testimony at trial that, in the summer of 1986, at a meeting of two of the plaintiffs with the named defendant, the plaintiffs informally offered to tender the partnership interests of the Class B limited partners to the defendants in return for repayment of the total investments made by those partners. The named defendant, however, testified that the plaintiffs had never offered to sell back their interest to the defendants. The trial court did not resolve this factual disagreement. The plaintiffs did not ask the trial court to make a definitive finding on this issue in the motion for articulation that they filed on other grounds.


source: Caselaw Access Project

author: Peters, C. J.

license: Public Domain

text:
    Texaco Refining and Marketing, Inc. v. Jack Samowitz et al.
    (13833)
    Peters, C. J., Healey, Shea, Glass and Hull, Js.

      Argued January 3
    decision released February 13, 1990

      Walter R. Hampton, Jr., with whom 'were Donald L. Mackie and, on the brief, Lawrence H. Lissitzyn, for the appellants (defendants).

      Jerome A. Mayer, with whom was Kim E. Nolan, for the appellee (plaintiff).
   Peters, C. J.

This appeal concerns the validity, under General Statutes § 47-33a and the common law rule against perpetuities, of an option to purchase real property contained in a long-term commercial lease. The named plaintiff, Texaco Refining and Marketing, Inc., brought an action for specific performance of an option contract against the defendants, Jack Samowitz, Alex Klein, Sheila Klein, Gloria Walkoff and Marilyn Moss, as successors in interest to the lessor of a lease executed and recorded in 1964. The trial court rendered judgment for the plaintiff, and the defendants have appealed. We transferred their appeal here in accordance with Practice Book § 4023. We find no reversible error.

The trial court relied on a stipulation between the parties for its finding of facts. On June 3, 1964, the named plaintiff and Kay Realty Corporation, the predecessor in interest of the defendants,* executed a lease for property in Southington. The term of the leasehold was fifteen years, subject to renewal by the lessee, the plaintiff, for three additional five year periods. The . plaintiff exercised two of these options for renewal.

The provision of the lease at issue in this appeal granted the plaintiff “the exclusive right, at lessee’s option, to purchase the demised premises ... at any time during the term of this lease or an extension or renewal thereof, from and after the 14th year of the initial term for the sum of $125,000.” On August 14, 1987, during the second renewal period under the lease, the plaintiff gave notification, by certified mail, of its exercise of its option to purchase. When the defendants refused to transfer the property, the plaintiff brought this action, on December 30,1987, for a judicial order of specific performance.

The trial court found that the plaintiff had demonstrated that it was ready, willing and able to perform its obligations under the contract, and that the option contained in its lease was supported by consideration. Noting that the terms of the lease had originally been negotiated by two corporations bargaining at arm’s length, the court concluded that the option was enforceable. The court expressly considered and rejected both the statutory and the common law defenses that the defendants reassert in this appeal. Although we do not necessarily subscribe to the trial court’s reasoning, we concur in its judgment on alternate grounds. Bernstein v. Nemeyer, 213 Conn. 665, 669, 570 A.2d 164 (1990); Favorite v. Miller, 176 Conn. 310, 317, 407 A.2d 974 (1978).

I

The defendants base their statutory challenge to the timeliness of the plaintiffs exercise of its option on General Statutes § 47-33a (a). That subsection provides: “No interest in real property existing under an execu-tory agreement for the sale of real property or for the sale of an interest in real property or under an option to purchase real property shall survive longer than one year after the date provided in the agreement for the performance of it or, if the date is not so provided, longer than eighteen months after the date on which the agreement was executed, unless the interest is extended as provided herein or unless action is commenced within the period to enforce the agreement and notice of lis pendens is filed as directed by section 52-325.”

The defendants construe § 47-33a (a) as a statute of limitations under which the plaintiffs option to purchase did not “survive” to December 30,1987, the date when the plaintiff brought its action for specific performance. Their principal argument is that the option to purchase contained in the June 3, 1964 lease provided no date for its exercise. They maintain, therefore, that § 47-33a (a) caused this option to expire in December, 1965, eighteen months after its execution. Alternatively, if some meaning must be assigned to the lease provision postponing the plaintiffs right to exercise its option for fourteen years after the execution of the lease, the defendants contend that, in order to comply with the mandate of § 47-33a (a), the plaintiff would have had to act within eighteen months of June 3, 1978.

The trial court rejected the defendants’ claims, concluding that the lease agreement could be construed to avoid conflict with § 47-33a (a). Since the lease permitted the plaintiff to exercise its option at any time between June 3, 1978, and June 3, 1994, it specified dates for performance that invoked the provision of § 47-33a (a) that allowed an “interest in real property . . . [to] survive •. . . one year after the date provided in the agreement for the performance of it . . . . ” On that theory, the plaintiff was timely in filing its lawsuit on December 30,1987. Any other construction of the lease, the court felt, would raise serious questions about the retroactive application of a 1965 statute to impose limitations on the enforceability of a 1964 agreement. See Enfield Federal Savings & Loan Assn. v. Bissell, 184 Conn. 569, 571, 440 A.2d 220 (1981).

The trial court’s conclusions, and the defendants’ arguments, appear to assume that, in extending § 47-33a (a) to encompass options for the purchase of real property, the legislature intended to regulate the time period in which a lessee may exercise an option contained in a long-term lease. The statute applies to an “interest in real property existing under an execu-tory agreement for the sale of real property or for the sale of an interest in real property or under an option to purchase real property . . . .” The question, with respect to options in leases, is whether the legislature intended broadly to cover any “interest in real property . . . under an option to purchase” or intended more narrowly to cover only an “interest in real property existing under an executory agreement . . . under an option to purchase . . . .’’In other words, does the statute apply broadly as a constraint upon the exercise of an option from the moment that the option provision is incorporated into a lease agreement, or does it apply more narrowly as a constraint only upon the performance of the option once the lessee has exercised its right to convert the option into a binding execu-tory agreement of purchase?

In the absence of useful guidance from the text of § 47-33a (a) or from its legislative history, we must infer the purpose the statute is intended to serve. Quinnipiac Council, Boy Scouts of America, Inc. v. Commission on Human Rights & Opportunities, 204 Conn. 287, 294-95, 528 A.2d 352 (1987). The plaintiff argues that, under the governing principles of statutory construction, the narrower reading of § 47-33a (a) is the more appropriate. We agree. The broader reading of § 47-33a (a) would require a fundamental restructuring of options in long-term leases. Lease agreements could no longer safely authorize a lessee, pursuant to an option clause, to determine whether and when it wished to convert from a leasehold to an ownership interest. Only options of extremely short duration or with specified dates for performance of the underlying contract of sale would continue to be enforceable without periodic renewals dependent upon the continuing consent of the lessor. Although the legislature has the authority to impose draconian consequences on option contracts in commercial leases, we are unpersuaded that § 47-33a (a) manifests such an intention. “The unreasonableness of the result obtained by the acceptance of one possible alternative interpretation of an act is a reason for rejecting that interpretation in favor of another which would provide a result that is . . . reasonable.” Maciejewski v. West Hartford, 194 Conn. 139, 151-52, 480 A.2d 519 (1984); State v. Campbell, 180 Conn. 557, 563, 429 A.2d 960 (1980).

We therefore conclude that § 47-33a (a) had no applicability to the option clause in the plaintiffs lease agreement until August 14, 1987, when the plaintiff exercised its option to purchase. Only the plaintiffs exercise of its option created “an executory agreement for the sale of real property . . . under an option . . . .” Thereafter, § 47-33a (a) allowed the plaintiff eighteen months to enforce this agreement. The commencement of this action on December 30,1987, complied with the statutory period of limitation. The defendants have, accordingly, failed to establish their statutory defense to specific performance.

II

The defendants rely on the common law rule against perpetuities as their second argument for the unen-forceability of the plaintiffs option to purchase their property. The rule against perpetuities states that “[n]o interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.” J. Gray, The Rule Against Perpetuities (4th Ed. 1942) p. 191; Connecticut Bank & Trust Co. v. Brody, 174 Conn. 616, 623, 392 A.2d 445 (1978). The defendants maintain that the option in this case did not vest within the time span mandated by the rule. We disagree.

The trial court determined that the option in the lease agreement did not violate the rule against perpetuities by construing the lease agreement as a series of discrete undertakings, first for an initial fourteen year term, and thereafter for each renewal term. Because the option could be exercised only within one of these discrete terms, none of which exceeded twenty-one years in length, the court held that the interest in the option would necessarily vest within the time period specified by the rule against perpetuities.

Whatever might be the merits of the trial court’s construction of the lease agreement, we prefer to consider a more basic question: do options in long-term leases fall within the jurisdiction of the rule against perpetuities? Our precedents indicate that the rule applies to an unrestricted option to purchase real property; Neustadt v. Pearce, 145 Conn. 403, 405, 143 A.2d 437 (1958); H. J. Lewis Oyster Co. v. West, 93 Conn. 518, 530, 107 A. 138 (1919); but not to an option to renew the term of a real property lease. Lonergan v. Connecticut Food Store, Inc., 168 Conn. 122, 124, 357 A.2d 910 (1975). We have not, however, previously considered the relationship between the rule against perpetuities and an option to purchase contained in a long-term commercial lease of real property.

The defendants have offered no reason of policy why we should extend the ambit of the rule against perpetuities to cover an option to purchase contained in a commercial lease. “The underlying and fundamental purpose of the rule is founded on the public policy in favor of free alienability of property and against restricting its marketability over long periods of time by restraints on its alienation.” Connecticut Bank & Trust Co. v. Brody, supra, 624; 4 Restatement, Property (1944) pp. 2129-33. An option coupled with a long-term commercial lease is consistent with these policy objectives because it stimulates improvement of the property and thus renders it more rather than less marketable. 3 L. Simes & A. Smith, The Law of Future Interests (2d Ed. 1956) p. 162. Any extension of the rule against perpetuities would, furthermore, be inconsistent with the legislative adoption of the “second look” doctrine, pursuant to which an interest subject to the rule may be validated, contrary to the common law, by the occurrence of events subsequent to the ere-ation of the interest. See General Statutes § 45-95; Connecticut Bank & Trust Co. v. Brody, supra, 627-28.

We therefore conclude that an option to purchase contained in a commercial lease, at least if the option must be exercised within the leasehold term, is valid without regard to the rule against perpetuities. This position is consistent with the weight of authority in the United States. See, e.g., Dozier v. Troy Drive-in-Theatres, 265 Ala. 93, 101-103, 89 So. 2d 537 (1956); Cambridge Co. v. East Slope Investment Corporation, 700 P.2d 537, 540 (Colo. 1985); Wing, Inc. v. Arnold, 107 So. 2d 765, 768-69 (Fla. App. 1959); St. Regis Paper Co. v. Brown, 247 Ga. 361, 363-64, 276 S.E.2d 24 (1981); Keogh v. Peck, 316 Ill. 318, 333-35, 147 N.E. 266 (1925); Hollander v. Central Metal Co., 109 Md. 131, 157-61, 71 A. 442 (1908); Quarto Mining Co. v. Litman, 42 Ohio St. 2d 73, 78, 326 N.E.2d 676, cert. denied, 423 U.S. 866, 96 S. Ct. 128, 46 L. Ed. 2d 96 (1975); Producers Oil Co. v. Gore, 610 P.2d 772, 775 (Okla. 1980); Hoover v. Ford’s Prairie Coal Co., 145 Wash. 295, 306, 259 P. 1079 (1927); contra First Huntington National Bank v. Gideon-Broh Realty Co., 139 W. Va. 130, 152-53, 79 S.E.2d 675 (1953). The commentators have, for a long time, unanimously supported what has become the majority view. See, e.g., E. Abbot, “Leases and the Rule against Perpetuities,” 27 Yale L.J. 878, 885-89 (1918); 6 American Law of Property (A. Casner ed. 1952) § 24.57; A. Langeluttig, “Options to Purchase and the Rule against Perpetuities,” 17 Va. L. Rev. 461, 464-71 (1931); 5A R. Powell, Real Property (1989) § 771 [2]; 4 Restatement, Property (1944) § 395; 3 L. Simes & A. Smith, supra, p. 162; 4A G. Thompson, Real Property (1979) p. 618. The plaintiffs option in this case was, therefore, enforceable.

There is no error.

In this opinion the other justices concurred.

       During the pendency of this action, the named plaintiff assigned its interest in the underlying lease and this action to Star Enterprise, which was formaUy substituted as the plaintiff on February 24,1989. Because the pleadings in the trial court and the trial court judgment continue to refer to the named plaintiff, we shall do likewise.

       Kay Realty Corporation in 1967 transferred its title to the property by warranty deed to Sam Samowitz and the defendants Alex Klein and Jack Samowitz. In 1969, Sam Samowitz conveyed his interest, by quitclaim deed, to the defendants Jack Samowitz, Gloria Walkoff and Marilyn Moss. In 1980, the defendant Alex Klein conveyed his interest, by quitclaim deed, to the defendants Alex Klein and Sheila Klein. These conveyances were all recorded in the Southington land records. None of the defendants claims to be a good faith purchaser without notice of the plaintiff’s lease.

       During the second renewal term, the parties modified some of the terms of the lease with respect to matters not presently at issue.

       The remainder of General Statutes § 47-33a currently provides: “(b) The interest may be extended only by reexecution of the written agreement or by execution of a new witten agreement, provided the agreement, whether reexecuted or newly executed, shall be recorded as directed by sections 47-10 and 47-17. The period provided by this section shall not otherwise be extended, whether because of death, disability or absence from the state or for any other reason. Upon the expiration of an interest the title to property affected by the interest shall not thereafter be considered unmarketable because of the expired interest.
      “(c) Nothing in this section shall be construed to limit or deny any legal or equitable rights a party may have under the agreement except the right to have the agreement specifically enforced.”
      This version of the statute reflects stylistic changes that were enacted in 1979. See Public Acts 1979, No. 79-602, § 125.

       The defendants also mount a third attack on the plaintiff’s enforcement of its option by reason of an ambiguity in the stipulation of facts about the date on which the plaintiff exercised its option to purchase. Paragraph 9 of the stipulation states that the plaintiff gave notice of its action to the named defendant on November 6,1985, while paragraph 10 refers to a similar notice given to the named defendant as well as to Sam Samowitz and the defendant Alex Klein on August 14,1987. The defendants focus on the earlier date to argue that, even if General Statutes § 47-33a (a) is not triggered until the exercise of an option to purchase, the plaintiffs lawsuit was too late because it was not commenced within eighteen months of November 6, 1985.
      The defendants’ argument founders because of a lack of support, in the record, for its underlying premise of fact. The trial court found that the option had been effectively exercised in 1987, not in 1985. The defendants did not ask the trial court to articulate the basis for its finding of fact. Practice Book § 4051. In this court, the defendants have advanced no argument and made no showing that the trial court’s finding was clearly erroneous. Practice Book § 4061. The defendants therefore cannot prevail on this contention.

       As the court noted, the legislature did not amend General Statutes § 47-33a (a) to include options until 1965. Public Acts, Spec. Sess., Feb., 1965, No. 401.

       Renewal of the option in accordance with General Statutes § 47-33a (b) would require periodic reexecution and rerecordation of the underlying lease. See footnote 4, supra.


author: Arthur H. Healey, J.

text:
    Jacques Rostain v. Hana Rostain
    (13697)
    Healey, Shea, Callahan, Glass and Hull, Js.
    Argued November 9, 1989
    decision released February 13, 1990

      Robert M. Wechsler, with whom, on the brief, was Michael JonBarbarula, for the appellant (defendant).

      Michael A. Meyers, with whom, on the brief, was Patricia C. Reath, for the appellee (plaintiff).
   Arthur H. Healey, J.

This is an appeal from certain orders concerning the judgment by the trial court, Bassick, J., dissolving the parties’ marriage. The defendant wife contends, inter alia, that the trial court erred in (1) finding certain facts concerning the distribution of property, both real and personal, and (2) refusing to award her periodic alimony pursuant to General Statutes § 46b-82.* Because we remand this case for further articulation of the court’s factual findings, we do not need to address the defendant’s other claims of error.

The parties were first married in 1958. As a result of this marriage, the parties had two children. This marriage was terminated by a Mexican divorce on April 14, 1966. The parties, however, remarried on December 18, 1968. At the time of the parties’ first divorce, they had no assets other than a rent controlled apartment in New York City which had been awarded to the defendant by the Mexican decree.

The plaintiff husband instituted an action to dissolve the second marriage on December 15, 1986. The defendant wife filed a cross complaint seeking a dissolution, alimony, equitable distribution and other relief. The case proceeded to trial on June 14, 1988, and occupied approximately five days. Both parties testified at the trial; On September 14,1988, the trial court, Bassick, J., filed an extensive and complex memorandum of decision that sets forth its findings of fact concerning the parties’ personal and financial status, as well as the court’s orders of property distribution. The court specifically found that neither party was at fault for the breakdown of the marriage and also concluded that no periodic alimony was to be awarded to either party. According to the financial affidavits of the parties, the trial court was presented with crafting its orders in the context of net assets totaling approximately two million dollars. On September 23,1988, the defendant moved to open and vacate the judgment and for reargument. The trial court, Thim, J., denied the defendant’s motion, and from that denial, as well as from the original judgment, the defendant appealed to the Appellate Court. Pursuant to Practice Book § 4023, we transferred the case to this court.

The defendant contends that certain factual findings by the trial court are not supported by the evidence. In particular, the defendant claims that the trial court’s finding that a condominium and dock in Stamford were “inherited, gifted or acquired with inherited funds by the plaintiff” was clearly erroneous. The trial court found that this asset had a value of $300,000. The defendant asserts that only one half of the condominium and dock was purchased with funds inherited by the plaintiff and that the other half was purchased with funds accumulated during their marriage.

General Statutes § 46b-81 confers broad powers upon the trial court in the assignment of property in a dissolution action. It provides in part that the court “may assign to either the husband or wife all or any part of the estate of the other.” General Statutes § 46b-81 (a). Among the factors to be considered in any order entered under § 46b-81 is the “contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates.” General Statutes § 46b-81 (c). Moreover, we have held that the trial court, in a dissolution action, has wide discretion in assigning the property to be transferred. Schmidt v. Schmidt, 180 Conn. 184, 192, 429 A.2d 470 (1980); LaBella v. LaBella, 134 Conn. 312, 317-18, 57 A.2d 627 (1948). In the present case, the trial court found that “[t]he following assets were inherited, gifted or acquired with inherited funds by the plaintiff: Limited partnership interest — 590 West End Avenue, New York City, New York, $160,000.00; Punta Del Este, Uruguay — $65,000.00; Condominium, Stamford, Ct. and dock — $300,000; Cie de Banque, Geneva, Switzerland — $121,835.00; Certain antiques, furnishings and paintings.” The trial court, however, did not articulate any basis in fact for its findings nor did the defendant file a motion for articulation of the trial court’s decision pursuant to Practice Book § 4051. After a careful review of the record, we are uncertain whether the trial court found that the condominium and dock were entirely or partly “inherited, gifted or acquired with inherited funds by the plaintiff.” Depending on how that question is resolved, a further question then arises as to the effect of that finding on the court’s overall property distribution. It is apparent that articulation by the trial court is necessary.

Fairness requires that we set out the considerations, evident to this court from the record, that create that lack of clarity for which we order a further articulation. In doing so, we point out, as we have in the past in domestic relations cases, that we cannot retry the case. See, e.g., Cookson v. Cookson, 201 Conn. 229, 243, 514 A.2d 323 (1986); Kaplan v. Kaplan, 186 Conn. 387, 391, 441 A.2d 629 (1982); Yontef v. Yontef, 185 Conn. 275, 278-79, 440 A.2d 899 (1981); Lucy v. Lucy, 183 Conn. 230, 232-33, 439 A.2d 302 (1981); Koizim v. Koizim, 181 Conn. 492, 498, 435 A.2d 1030 (1980). As the defendant points out, the plaintiff’s own “Claims for Relief” clearly state that only one half of the purchase price of the condominium and dock, i.e., $150,000, was paid with inherited funds. In further support of her claim, the defendant refers to the following evidence: The plaintiff testified that one half of the money paid for the condominium came from a Swiss bank account and the other half came from his account at Chemical Bank in New York; the plaintiff inherited from his father in 1979 a Swiss bank account valued at approximately $220,000; and the account, at its peak, increased to approximately $350,000. The plaintiff further testified, the defendant continues, that he withdrew from that account $65,000 for property in Uruguay, $125,000 for taxes, $150,000 to pay for the condominium, and $5000 for expenses. These withdrawals total $345,000. She maintains that he also testified that he never added any of his own funds to the account. Thus, the defendant claims that the evidence supports a finding that only $150,000 of the purchase price of the Stamford condominium and dock was paid for by the plaintiff with inherited funds.

The defendant further claims that the balance, i.e., $150,000, of “the condominium purchase came from the Chemical account by liquidation of stocks and bonds that were not inherited, but were accumulated during the marriage.” The defendant asserts that evidence that the balance of the funds for the purchase of the Stamford condominium and dock, i.e., $150,000, was accumulated during the marriage is found in the plaintiffs testimony that at the time of the parties’ remarriage in 1968, he had no assets, he earned a large income from 1968 through 1981, he received a large severance payment from his former employer in 1981, and he inherited (besides personal property such as antiques, furnishings and gold coins) only the Swiss bank account from his father. In addition, it should be noted that although the defendant testified at the trial, she offered no testimony that her income in any way contributed to the acquisition of the Stamford condominium and dock.

On the other hand, the plaintiff contends that the defendant misstates the trial court’s finding by claiming that it said that the condominium and dock were acquired “entirely” with funds inherited from his father. The plaintiff asserts, rather, that the court was correct in finding that the condominium and dock were acquired with inherited funds. The plaintiff also points out that he testified that he purchased one half ($150,000) of the condominium with funds from the Swiss bank account inherited from his father. Therefore, the plaintiff contends, since the court did not find, as the defendant maintains, that the condominium and dock were acquired “entirely” with inherited funds, there was no error in this finding.

Alternatively, the plaintiff argues that it would have been reasonable for the court to conclude on the evidence that the property was purchased entirely with inherited funds. His argument proceeds as follows. The plaintiff testified that he transferred his stocks and bonds account from Merrill Lynch to Chemical Securities, a special department of Chemical Bank. The plaintiff asserts that, although there was no testimony introduced concerning the source of funds for the Merrill Lynch account, the trial court could have made a reasonable inference from the evidence presented that it was established with the proceeds from the sale of one half of the plaintiff’s interest in the New York real estate partnership that was inherited from his mother. In 1973, the plaintiff inherited from his mother’s estate an interest in a limited partnership at 590 West End Avenue, New York, New York. In 1979, using funds inherited from his father, the plaintiff purchased an additional interest in the real estate partnership. The plaintiff subsequently sold one half of his interest in 1983, realizing approximately $130,000.

In addition, the plaintiff claims that from 1979 to 1981 he was spending more than he was earning. Therefore, the plaintiff asserts, it would have been reasonable for the court to conclude that the only possible source of funds for the stocks and bonds held in the plaintiffs Merrill Lynch account was either the proceeds from the sale of the West End Avenue property or his retirement fund from Merban Corporation that he withdrew when he left that company in 1981. When he left Merban Corporation, he testified that he received a check from the employee pension trust for $228,614. He further testified that he invested $205,000 of that money in several stock investments that did not include the investments with Merrill Lynch. On the basis of this testimony, the plaintiff asserts that the only reasonable inference that could be drawn was that he funded his Merrill Lynch account with proceeds acquired from the sale of his interest in the West End Avenue partnership that had been inherited.

An appellate court will not disturb a trial court’s orders in domestic relations cases unless the court has abused its discretion or it is found that it could not reasonably conclude as it did, based on the facts presented. McPhee v. McPhee, 186 Conn. 167, 177, 440 A.2d 274 (1982); Gallo v. Gallo, 184 Conn. 36, 50, 440 A.2d 782 (1981). It is within the province of the trial court to find facts and draw proper inferences from the evidence presented. Solomon v. Aberman, 196 Conn. 359, 378, 493 A.2d 193 (1985). “ ‘ “ ‘On appeal, it is the function of this court to determine whether the decision of the trial court is clearly erroneous. See Practice Book, [§ 4061]. . . . [W]here the factual basis of the court’s decision is challenged wé must determine whether the facts set out in the memorandum of decision are supported by the evidence or whether, in light of the evidence and the pleadings in the whole record, those facts are clearly erroneous.’ (Emphasis added.) Pandolphe’s Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221-22, 435 A.2d 24 (1980).” Cookson v. Cookson, [supra, 242-43].’ . . .” Season-All Industries, Inc. v. R. J. Grosso, Inc., 213 Conn. 486, 498, 569 A.2d 32 (1990). The Supreme Court will not overturn findings of fact made by a trial court reasonably supported by the evidence or based on inferences reasonably drawn from the evidence. See Doyle v. Kulesza, 197 Conn. 101, 105, 495 A.2d 1074 (1985); Solomon v. Aberman, supra. If, however, the factual or legal basis of a trial court’s decision is unclear, ambiguous, incomplete, or the court has failed to state any basis for its decision, this court has the power to remand the case for further articulation of the basis of the trial court’s decision pursuant to Practice Book § 4061. State v. Wilson, 199 Conn. 417, 434-35, 513 A.2d 620 (1986); State v. Lafferty, 191 Conn. 73, 463 A.2d 238 (1983); Kaplan v. Kaplan, 185 Conn. 42, 46, 440 A.2d 252 (1981); Scherr v. Scherr, 183 Conn. 366, 368-69, 439 A.2d 375 (1981); Powers v. Powers, 183 Conn. 124, 125, 438 A.2d 845 (1981). Practice Book § 4061 provides in part: “If the supreme court deems it necessary to the proper disposition of the cause, it may remand the case for a further articulation of the basis of the trial court’s factual findings or decision.”

We have set out certain evidence together with claims of the parties directed to the source of the disputed half of the purchase price, i.e., $150,000 of the Stamford condominium and dock. As we have indicated, the appellate record concerning that matter is such that that issue is not amenable to meaningful appellate review. “It is the duty of the judge who tried the case to set forth the basis of his decision.” Powers v. Powers, supra, 125. “An articulation is appropriate where the trial court’s decision contains some ambiguity or deficiency reasonably susceptible of clarification.” State v. Wilson, supra, 435. The supervision of a case on appeal to this court is in the Supreme Court. State v. Pollitt, 199 Conn. 399, 415, 508 A.2d 1 (1986); State v. Ostroski, 184 Conn. 455, 460, 440 A.2d 166 (1981). For the reasons set out above, we remand this case, sua sponte, for further articulation.

On remand, the trial court, Bassick, J., must answer two questions. First, whether the Stamford condominium and dock were entirely or partly inherited, gifted or acquired with inherited funds by the plaintiff. The trial court must fully set out the factual basis of its answer to this question. Second, having answered the first question as directed, the trial court must then answer the question of what effect, if any, its answer to the first question has on the overall disposition of the real and personal property of the parties as set out in its memorandum of decision. In the event that its answer to the second question is that it has no effect, it should say that. If, however, its answer is that it does have an effect, the trial court should then set out the factual basis for its determination of the nature of that effect. Once the trial court, Bassick, J., has articulated as directed, it should promptly file its findings and conclusions with the clerk of this court for our review. In addition, we want to emphasize that in remanding this case, we intimate no view on the issue to be resolved by the trial court or of any of the defendant’s other claims of error which we may later be called upon to decide.

Accordingly, the case is remanded to the trial court, Bassick, J., for further proceedings in accordance with this opinion.

In this opinion the other justices concurred.

       The defendant contends that the property distribution was tainted by the trial court’s having committed clear error in making the following findings of fact: (1) that neither party was responsible for the breakdown of the marriage; (2) that the plaintiff purchased the Stamford condominium and dock solely with funds inherited from his father; (3) that all of the nonin-herited assets were totally or substantially purchased by the plaintiff from his own funds; and (4) that certain personal property in fact existed or was in the defendant’s possession.

       General Statutes § 46b-82 provides: “(Formerly Sec. 46-52). alimony. At the time of entering the decree, the superior court may order either of the parties to pay alimony to the other, in addition to or in lieu of an award pursuant to section 46b-81. The order may direct that security be given therefor on such terms as the court may deem desirable, including an order to either party to contract with a third party for periodic payments or payments contingent on a life to the other party. In determining whether alimony shall be awarded, and the duration and amount of the award, the court shall hear the witnesses, if any, of each party, except as provided in subsection (a) of section 46b-51, shall consider the length of the. marriage, the causes for the annulment, dissolution of the marriage or legal separation, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate and needs of each of the parties and the award, if any, which the court may make pursuant to section 46b-81, and, in the case of a parent to whom the custody of minor children has been awarded, the desirability of such parent’s securing employment.”

       The defendant’s last claim of error challenges the propriety of Judge Thim’s ruling on the defendant’s motion to open and vacate the judgment and for reargument. Following the trial before Judge Bassick and his memorandum of decision on this matter, Judge Bassick became ill and was absent from the bench for some time. Judge Thim heard and denied the defendant’s motion during that period. The defendant contends that the motion should have been heard by Judge Bassick and that it was improper for another judge to hear and decide such motion where the trial judge’s term of office had not expired and the judge had not retired because of disability and had not died or resigned during the pendency of this case. General Statutes § 51-183 (f). During oral argument before this court, the defendant’s attorney abandoned this issue; therefore, we will not address it.

       General Statutes § 46b-81 provides: “(Formerly Sec. 46-51). assignment of PROPERTY and TRANSFER OF TITLE, (a) At the time of entering a decree annulling or dissolving a marriage or for legal separation pursuant to a complaint under section 46b-45, the superior court may assign to either the husband or wife all or any part of the estate of the other. The court may pass title to real property to either party or to a third person or may order the sale of such real property, without any act by either the husband or the wife, when in the judgment of the court it is the proper mode to carry the decree into effect.
      “(b) A conveyance made pursuant to the decree shall vest title in the purchaser, and shall bind all persons entitled to life estates and remainder interests in the same manner as a sale ordered by the court pursuant to the provisions of section 52-500. When the decree is recorded on the land records in the town where the real property is situated, it shall effect the transfer of the title of such real property as if it were a deed of the party or parties.
      “(c) In fixing the nature and value of the property, if any, to be assigned, the court, after hearing the witnesses, if any, of each party, except as provided in subsection (a) of section 46b-51, shall consider the length of the marriage, the causes for the annulment, dissolution of the marriage or legal separation, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties and the opportunity of each for future acquisition of capital assets and income. The court shall also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates.”

       It is important to note that the plaintiffs financial affidavit filed with the court on June 14, 1988, lists the condominium and dock, valued at $300,000, along with several other assets. In listing the other assets, however, the plaintiff specifically included only his share of the equity, whereas in listing the condominium and dock, he listed the entire value. He listed, for example, a one-half equity interest in the property at Remsenburg, Long Island, New York, valued at $900,000 and a one-half interest in the property in Uruguay, valued at $32,500.
      In addition, the plaintiff purchased the Stamford condominium and dock in October, 1986, which was after the parties had separated in 1984.


text:
    Jane Crilly Schultz, Administratrix (Estate of Andrew G. Schultz) v. Hartford Fire Insurance Company et al.
    (13668)
    Healey, Shea, Glass, Covello and Hull, Js.
    Argued November 2, 1989
    decision released February 13, 1990

      Leo Gold, for the appellant (plaintiff).

      Paul E. Pollock, with whom, on the brief, was Thomas P. Parrino, for the appellee (defendant Hartford Accident and Indemnity Company).
   Arthur H. Healey, J.

The principal issue in this case is whether an endorsement to an owners’, landlords’ and tenants’ liability insurance policy amends or adds to the policy provisions defining insured premises. The trial court, Ryan, J., found the definition of insured premises in the endorsement controlling and interpreted the provision so as to deny the plaintiff relief under the insurance policy. From this judgment, the plaintiff appealed to the Appellate Court. Pursuant to Practice Book § 4023, we transferred the case to this court. We find no error.

The parties stipulated to the following facts. On August 15, 1978, Phyllis G. Olschan transferred title and delivered possession of the premises known as 416 Erskine Road, Stamford (Stamford property), to the plaintiff and her husband. On September 4, 1978, the plaintiffs decedent, Andrew G. Schultz, eight years of age, was severely injured as a result of the detonation of a hand grenade that had been left on the premises. Andrew G. Schultz died about three weeks later as a result of these injuries. The plaintiff was appointed administratrix of the estate of Andrew G. Schultz and instituted an action against Olschan to recover for the bodily injuries suffered by Andrew G. Schultz and his subsequent wrongful death by reason of the negligence of Olschan. On March 13, 1985, the plaintiff obtained a judgment against Olschan in the amount of $100,000 in damages. Olschan, however, failed to pay any part of that judgment.

The plaintiff thereafter brought an action, pursuant to General Statutes § 38-175, in two counts against the Hartford Fire Insurance Company and the Hartford Accident and Indemnity Company to collect the unpaid judgment. In count one of the complaint, the plaintiff alleged, inter alia, that Olschan had in effect on the day of the accident a liability insurance policy, number 31 RA 607453, issued by the Hartford Fire Insurance Company. In count two, the plaintiff alleged that Olschan had in effect on the day of the accident an insurance policy, number 31 OLT 195229, issued by the Hartford Accident and Indemnity Company. The defendants denied these allegations and pleaded, by way of special defenses as to count one, that policy number 31 RA 607453 was cancelled prior to the accident involving Andrew Schultz. As to the second count, they denied that policy number 31 OLT 195229 extended coverage to the Stamford property as “insured premises.” As to both counts, they denied that they had in effect a policy covering the Stamford property on the day of the accident. Prior to trial, however, the parties stipulated that the only policy in effect at the time of the accident was policy number 31 OUT 195229 issued by the Hartford Accident and Indemnity Company.

No evidence was presented to the trial court. The trial court held that endorsement L-3038-2 to the policy defining the insured premises designated 1141 Fair-field Beach Road, Fairfield (Fairfield beach property), as the insured premises and not the Stamford property. The trial court stated that the parties’ true intentions to insure only the Fairfield beach property were evident. The trial court found that the endorsement listed a one family dwelling as the “designated premises,” and that that endorsement applied only to the Fairfield beach property. Moreover, the trial court stated that “[a]n interpretation that the alienated premises clause encompasses all premises ever alienated by [Olschan] individually, or by Lillian Goldman individually, or by both [Olschan] and Lillian Goldman jointly, would be [an] unreasonable interpretation of [the alienated premises] clause.” The court concluded that the policy covered only the Fairfield beach property.

On appeal, the plaintiff contends that the trial court erred in concluding that (1) the defendant’s policy did not extend coverage to the Stamford premises recently alienated by its insured, and (2) notwithstanding the designation of “alienated premises” as “insured premises” within the defendant’s policy, it would be unreasonable to provide such coverage. Because we find that the endorsement amends the provision defining insured premises in the policy, we do not need to decide the plaintiff’s second claim of error.

At the time of Andrew G. Schultz’s accident, Olschan and Goldman, as named insureds, had in effect an insurance policy entitled “Owners’, Landlords’ and Tenants’ Liability Insurance.” The focus of the plaintiffs claim is on the “Additional Definition” provision in the policy and the endorsement that both contain a definition of “insured premises.” The policy when issued provided, inter alia, the following:

“IV. ADDITIONAL DEFINITION
“When used in reference to this insurance (including endorsements forming a part of the policy): ‘insured premises’ means (1) the premises designated in the declarations, (2) premises alienated by the named insured (other than premises constructed for sale by the named insured), if possession has been relinquished to others, and (3) premises as to which the named insured acquires ownership or control and reports his intention to insure such premises under this policy and no other within 30 days after such acquisition; and includes the ways immediately adjoining such premises on land.” (Emphasis in original.)

The endorsement states in part: “It is agreed that the insurance applies to the insured premises, subject to the following additional provisions:

“1. The definition of ‘insured premises’ is amended to read as follows: ‘insured premises’ means the premises described below or designated in the policy as subject to this endorsement, including the ways immediately adjoining and including garages and stables incidental thereto, gardens incidental thereto on land not owned by the named insured, and individual or family cemetery plots or burial vaults.” (Emphasis in original.)

The plaintiff contends that the trial court erred in applying the definition of insured premises in the endorsement rather than the definition in the insurance policy as originally issued. The plaintiff argues that the trial court either overlooked or ignored the policy provision requiring that the “Additional Definition” provision defining insured premises still be given effect even when there were endorsements forming a part of the policy. The introductory clause to the “Additional Definition” provision, the plaintiff maintains, makes it clear that endorsements forming a part of the policy could never alter or delete from coverage those premises included within the “Additional Definition” provision. The introductory language, to which the plaintiff refers in this context, provides: “When used in reference to this insurance (including endorsements forming a part of the policy): ‘insured premises’ means . . . . ” Had the defendant company desired to reserve the right to alter coverage, the plaintiff contends, it would have used the words “excluding endorsements” rather than “including endorsements” in this introductory language.

An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract and enforced in accordance with the real intent of the parties as expressed in the language employed in the policy. Izzo v. Colonial Penn Ins. Co., 203 Conn. 305, 309, 524 A.2d 641 (1987); Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 512-13, 442 A.2d 920 (1982); Gottesman v. Aetna Ins. Co., 177 Conn. 631, 634, 418 A.2d 944 (1979). If the “insurance coverage is defined in terms that are ambiguous, such ambiguity is, in accordance with standard rules of construction, resolved against the insurance company. ‘Where the terms of the policy are of doubtful meaning, the construction most favorable to the insured will be adopted.’ LaBonte v. Federal Mutual Ins. Co., 159 Conn. 252, 256, 268 A.2d 663 (1970); see also Griswold v. Union Labor Life Ins. Co., [supra]; Simses v. North America Co. for Life & Health Ins., 175 Conn. 77, 84-85, 394 A.2d 710 (1978).” Beach v. Middlesex Mutual Assurance Co., 205 Conn. 246, 250, 532 A.2d 1297 (1987). If, however, the words in the policy “are plain and unambiguous the established rules for the construction of contracts apply, the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning, and courts cannot indulge in a forced construction ignoring provisions or so distorting them as to accord a meaning other than that evidently intended by the parties.” Plainville v. Travelers Indemnity Co., 178 Conn. 664, 675, 425 A.2d 131 (1979). “A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity, and words do not become ambiguous simply because lawyers or laymen contend for different meanings.” Downs v. National Casualty Co., 146 Conn. 490, 494-95, 152 A.2d 316 (1959). We find the language in the introductory clause to the “Additional Definition” provision unambiguous.

We construe the introductory clause of the “Additional Definition” provision to be clear evidence of the parties’ intent to include within the definition of insured premises any endorsement forming a part of the policy. The word “endorsement” has been defined as meaning “a provision added to an insurance contract altering its scope or application that takes precedence over printed portions in conflict therewith.” Webster’s Third New International Dictionary; see Commercial Standard Ins. v. General Trucking, 423 So. 2d 168, 170 (Ala. 1982). “Endorsement” has also been defined generally to mean “[a] written or printed form attached to the policy which alters provisions of the contract.” T. Green, Glossary of Insurance Terms (1980). “Alter” has been defined to mean “to cause to become different in some particular characteristic [by adding, deleting or amending] without changing into something else.” Webster’s Third New International Dictionary. The word “alter” is synonymous with “change.” Id. Therefore, any endorsement that may add, delete or amend the definition of insured premises is to be considered in determining whether the Stamford property is covered within the policy as an “insured premises.” Thus, contrary to the plaintiff’s contentions, we find the introductory language to be evidence of the parties’ intent to reserve the right to add, delete or amend coverage under the insurance policy.

If we construe the introductory language as urged by the plaintiff, we would need to disregard the express terms of the endorsement. The endorsement specifically states: “This endorsement forms a part of Policy No. 31OLT195229.” In construing an insurance policy, the court must not ignore or disregard any provision that can be reconciled with other parts of the policy nor should a court interpret a single provision or sentence in a policy and attach to it a greater significance than is intended by the whole terms of a policy. See Downs v. National Casualty Co., supra, 494-95; Commercial Standard Ins. v. General Trucking, supra. It is clear that the parties intended to include any endorsement as part of the policy, specifically the endorsement that is the subject of this appeal, when referring to the definition of “insured premises.” Therefore, we conclude that the trial court did not err in its consideration of the endorsement notwithstanding the language of the introductory clause of the “Additional Definition” provision.

In the alternative, the plaintiff argues that if the endorsement is to be included as forming a part of the policy, then it should be interpreted as relating back and including the “Additional Definition” provision defining insured premises. The plaintiff argues that the trial court misinterpreted the definition of “insured premises” in the endorsement as covering only the Fairfield beach property. The endorsement defines insured premises to include “the premises described below or designated in the policy as subject to this endorsement . . . .” The plaintiff argues that this definition refers to two distinct types of premises. The first type is “the premises described below” which refers to the Fairfield beach property. The second type of premises, she claims, are those premises “designated in the policy as subject to this endorsement.” The plaintiff asserts that the only premises subject to an endorsement are those premises described in the “Additional Definition” provision of the policy which appears on an earlier page entitled, in part, “Coverage for Designated Premises.” The plaintiff also argues that the use, in the endorsement, of the words “additional provisions” preceding the definition of “insured premises” suggests an intent on the part of the defendant company to add to the definition of “insured premises” as already defined in the policy. The defendant, on the other hand, argues that the endorsement deletes any reference to an alienated premises clause and limits the designation of insured premises to the Fairfield beach property.

The court must interpret the insurance contract as a whole with all relevant provisions considered together. Downs v. National Casualty Co., supra, 495; see also Beckenstein v. Potter & Carrier, Inc., 191 Conn. 120, 134, 464 A.2d 6 (1983). “The insurance contract includes the printed form policy, declarations therein, and any endorsements thereto. ... In construing an endorsement to an insurance policy, the endorsement and policy must be read together, and the policy remains in full force and effect except as altered by the words of the endorsement; conversely the endorsement modifies, to [the] extent of the endorsement, the terms and conditions of the original insurance contract. . . . If any irreconcilable conflict exists between provisions of the policy and provisions of an endorsement, then the latter must control.” 13A J. Appleman, Insurance Law and Practice § 7537; see St. Paul Fire & Marine Ins. v. United States Fire Ins. Co., 655 F.2d 521, 524 (3d Cir. 1981); Horace Mann Ins. Co. v. Independent School District, 355 N.W.2d 413, 418 (Minn. 1984); Ins. Co. v. West Plains Air, 637 S.W.2d 444, 447 (Mo. App. 1982); Mutual Life Ins. Co. v. Daddy$ Money, Inc., 646 S.W.2d 255, 259 (Tex. App. 1982); 1 G. Couch, Insurance (2d Ed.) § 436. The provision in the endorsement defining insured premises states: “The definition of ‘insured premises’ is amended to read as follows: ‘insured premises’ means the premises described below or designated in the policy as subject to this endorsement . . . .” (Emphasis added.) The plaintiff, in making her claim, does not refer to the clause preceding the definition of “insured premises” in the endorsement which purports to amend the “Additional Definition” provision defining “insured premises” in the policy, nor does the plaintiff offer any reasonable rationale why we should disregard that particular language. To accept the plaintiffs interpretation of the endorsement as relating back and including the “Additional Definition” provision of the policy it would be necessary to disregard completely the clause preceding the definition of “insured premises,” specifically the natural and ordinary meaning of the word “amended.” “Every provision is to be given effect, if possible, and no word or clause eliminated as meaningless, or disregarded as inoperative, if any reasonable meaning consistent with the other parts of the policy can be given to it.” Downs v. National Casualty Co., supra, 495. We have interpreted the word “amendment” in reference to a statutory amendment as “effectpng] a change in the existing law.” Waterbury Petroleum Products, Inc. v. Canaan Oil & Fuel Co., 193 Conn. 208, 232, 477 A.2d 988 (1984); State v. Kozlowski, 199 Conn. 667, 676, 509 A.2d 20 (1986). The ordinary definition of the word “amend” is “to change or alter in any way, especially in phraseology.” Webster’s Third New International Dictionary. We find the clause preceding the definition of “insured premises” in the endorsement as evidence of the parties’ intent to have the definition of “insured premises” in the endorsement supersede the definition in the “Additional Definition” portion of the policy.

The plaintiff, however, contends that the phrase immediately preceding the amendment clause should control our interpretation of the endorsement. That phrase states: “It is agreed that the insurance applies to the insured premises, subject to the following additional provisions.” (Emphasis added.) The “additional provisions” language in that phrase, the plaintiff maintains, suggests that the definition of “insured premises” includes the “Additional Definition” provision in the policy.

The words “additional provisions” in the phrase immediately preceding the amendment clause in the endorsement is general introductory language that applies to all four provisions appearing in the endorsement. There are two provisions within the endorsement that use language that indicates an express intent not to add to the provisions in the policy. The first provision is the subject of this appeal; the second provision specifically states with respect to operations at the insured premises: “Exclusion (p) is deleted.” If we were to interpret this introductory language of the endorsement, i.e., “additional provisions,” to mean that each provision is to be added to the policy provision, then a question arises as to how we interpret the provision stating “Exclusion (p) is deleted” and “[t]he definition of ‘insured premises’ is amended.” The plaintiff does not offer a reasonable legal basis for disregarding the specific language we refer to in either of these provisions and for relying solely on the general introductory language of the endorsement. Therefore, we conclude that the trial court did not err in its application of the definition of “insured premises” in the endorsement, thereby denying the plaintiff relief.

There is no error.

In this opinion the other justices concurred.

       General Statutes § 38-175 provides: “liability of insurer under liability policy. Each insurance company which issues a policy to any person, firm or corporation, insuring against loss or damage on account of the bodily injury or death by accident of any person, or damage to the property of any person, for which loss or damage such person, firm or corporation is legally responsible, shall, whenever a loss occurs under such policy, become absolutely liable, and the payment of such loss shall not depend upon the satisfaction by the assured of a final judgment against him for loss, damage or death occasioned by such casualty. No such contract of insurance shall be cancelled or annulled by any agreement between the insurance company and the assured after the assured has become resposible for such loss or damage, and any such cancellation or annulment shall be void. Upon the recovery of a final judgment against any person, firm or corporation by any person, including administrators or executors, for loss or damage on account of bodily injury or death or damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment is not satisfied within thirty days after the date when it was rendered, such judgment creditor shall be subrogated to all the rights of the defendant and shall have a right of action against the insurer to the same extent that the defendant in such action could have enforced his claim against such insurer had such defendant paid such judgment.”

       Although the named insureds, on the Hartford Accident and Indemnity Company policy No. 31 OLT 195229, were Lillian Goldman and Phyllis G. Olschan, the plaintiff brought suit on this policy against only Olschan.

       Endorsement L-3038-2 provides in part:
      “This endorsement modifies such insurance as is afforded by the provisions of the policy relating to the following:
      OWNERS’, LANDLORDS’ AND TENANTS’ LIABILITY INSURANCE
      It is agreed that the insurance applies to the insured premises, subject to the following additional provisions:
      1. The definition of ‘insured premises’ is amended to read as follows: ‘insured premises’ means the premises described below or designated in the policy as subject to this endorsement, including the ways immediately adjoining and including garages and stables incidental thereto, gardens incidental thereto on land not owned by the named insured, and individual or family cemetery plots or burial vaults.
      2. With respect to operations at such premises,
      (a) the insurance applies to bodily injury or property damage arising out of the structural alterations which involve changing the size of or moving buildings or other structures, new construction or demolition operations performed by or on behalf of the named insured, unless such alterations, construction or demolition operations are for the purpose of changing the use of the insured premises to other than exclusive use as a one or two family dwelling;
      (b) Exclusion (p) is deleted.
      3. If the named insured is an individual, the ‘Persons Insured’ provision includes, if residents of the named, insured’s household, the named insured’s spouse and the relatives of either the named insured or such spouse under the age of twenty-one.
      4. The insurance does not apply to bodily injury or property damage:

      (a) arising out of the ownership, maintenance or use, or any operations necessary or incidental thereto, of any portion of the insured premises on which a trade, profession or business is conducted or which is designed or held for such purposes, provided incidental office, professional, private school or studio occupancy of the premises, the renting of accommodations at the premises to not more than two roomers or boarders and the renting or holding for rental at the premises of not more than three car spaces or stalls shall not be considered a business;
      (b) due to the rendering of or failure to render any professional service;
      (c) caused by any dog owned by the insured while such dog is away from the insured premises;

      (d) arising out of the use of bicycles by or on behalf of the insured for trade, professional or business purpose.” (Emphasis in original.)

       One court was faced with the problem of construing a contract where the issue was whether one paragraph had the effect of simply changing the similar wording of another paragraph or, rather, whether it deleted the second paragraph entirely by substituting the first paragraph in its place. Missouri Research Laboratories, Inc. v. Bell Aircraft Corporation, 161 F. Sup. 871, 874 (W.D.N.Y. 1957). In that case, the court defined the word “amended” as meaning “[t]o change or alter in any way, especially in phraseology” and “delete” as meaning “[t]o erase.” In the case before us, “[i]t is presumed [as did the Missouri Research Laboratories, Inc. court] that the contracting parties used words of definite meaning.” Id.

       The plaintiff also argues that other provisions within the policy refer to and incorporate the alienated premise clause in the definition of insured premises in the policy. In particular, the plaintiff points to the policy territory provision, the provision appearing at the bottom of the declarations page and an exclusion provision referring to alienated premises. We are unpersuaded, however, by the plaintiffs argument particularly because the provisions the plaintiff points to relate to the definition of “insured premises” as it was before the endorsement became effective, which, as stated above, amended that definition.