Was the Contract a License Revocable by Club at Will?
Skaneateles County Club owns property containing boat slips adjacent to Skaneateles Lake. The Club and Olivia Cambs entered into an assignment agreement pursuant to which the Club transferred the use and occupancy rights of one of its boat slips to Cambs. The agreement was executed along with a boat slip payment agreement whereby Cambs contributed $5,000 to fund construction of the boat slips.
Cambs was one of 80 members of the Club who initially agreed to contribute money to the construction costs for the boat slips and who would, in return, be assigned the use and occupancy of a boat slip on the premises. The agreement required Cambs to pay an annual maintenance fee and comply with the Club’s rules and policies. It was undisputed that, at all relevant times, Cambs had complied with those provisions.
Following a small claims dispute over the computation of the annual maintenance fee, the Club elected to terminate the agreement along with Camb’s corresponding right to use and occupy a boat slip on the premises. The Club thereafter commenced an action seeking a declaration that the agreement was a license terminable at will by the Club. Cambs answered and asserted two counterclaims, the first seeking a declaration that the agreement was not terminable at will by the Club, and the second seeking a permanent injunction requiring the Club to provide her with access to the identical boat slip currently assigned to her under the same terms and conditions as set forth in the agreement.
Supreme Court granted the Club’s motion for summary judgment on the complaint and dismissing the counterclaims, declared that the agreement was a license terminable at will by the Club and denied Cambs’ cross- motion for summary judgment on her counterclaims and dismissing the complaint.
Cambs appealed and contended that Supreme Court erred in granting the Club’s motion and in denying her cross-motion. The appeals courts agreed and concluded that the agreement, despite being a license, did not provide the Club with the right to terminate it at will and, under those circumstances, Cambs was entitled on her cross-motion to a declaration in her favor under the first counterclaim and to the injunction sought in the second counterclaim.
A license is a revocable privilege given to one, without interest in the lands of another, to do one or more acts of a temporary nature upon such lands. Generally speaking, licenses are terminable at will. But that does not mean that all licenses must be terminable at will regardless of the language contained in the license agreement. Parties to an agreement are, of course, free to agree otherwise.
The agreement was in writing and must be construed according to well-settled principles of contractual interpretation–by engaging in the process of determining from the words and other objective manifestations of the parties what must be done or forborne by the respective parties in order to conform to the terms of the agreement. In construing a contract the court looks to its language, for a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms.
Contrary to the Club’s contention, the fact that the subject matter of the agreement was a license entitling Cambs to use and occupy a boat slip did not automatically afford the Club a right to terminate the agreement at will. Indeed, the Club’s contention that the terms of the agreement entitled it to terminate the license to use the boat slip at any time and at its sole option was contrary to the reasonable expectations of the parties as expressed in the agreement–and failed to achieve a practical interpretation of the expressions of the parties. Here, the terms of the agreement unambiguously stated that Cambs was required to pay the annual maintenance fee and to comply with the Club’s rules and policies, thereby establishing through implication that the Club may terminate the license only when Cambs failed to comply with those specified terms.
The interpretation of the agreement as permitting the Club to terminate the license at will, despite the provisions governing Cambs’ obligations, rendered those specific provisions nugatory, contrary to the general approach to interpreting contracts.
Additionally, the agreement expressly permitted Cambs to terminate and receive a return of the monies contributed pursuant to the payment agreement, less any monies owed to the Club. The Court agreed with Cambs that the express inclusion of a right of termination for her compelled the conclusion that the exclusion of any corresponding express right for the Club to terminate the agreement was intentional. Thus, the very structure of the agreement established that the license was not terminable at will by the Club.
The Court also noted that the most fundamental canon of contract interpretation, taking precedence over all others, was that primary attention be given to the purpose of the parties in making the contract. A fair and reasonable interpretation, consistent with that purpose, must guide the courts in enforcing the agreement. Here, the appeals court concluded that the Club’s interpretation of the agreement as allowing it to terminate the license at will was unreasonable because it implied that, under such circumstances, the Club would have no obligation to return the monies that Cambs contributed to the construction of the boat slips, which patently undermined the purpose and intent of the parties as memorialized in the agreement.
The judgment of the Supreme Court was reversed. And a judgment was granted in favor of Cambs declaring that the agreement was a license not terminable at the Club’s will.
But two Justices, who dissented, agreed with the majority’s conclusion that the parties’ agreement constituted a license and not a lease, but disagreed with the majority’s further conclusion that the parties’ license was not revocable at will by the Club, the licensor.
Generally, licenses for real property are revocable at will by the licensor. There are limited exceptions to that general rule. For instance, a license may not be revocable at will if the conduct of the licensor makes it inequitable to permit the licensor to revoke it.
Here, according to the dissent, the parties’ agreement was unambiguously a license and therefore must be viewed in light of the general rule whereby a license is terminable at will by the licensor. And the agreement did not unambiguously express an intention on behalf of the parties that the general rule should not apply and there was no basis for determining that any exception to the general rule applied.