336 F.2d 230 (10th Cir. 1964), 7708, Texaco, Inc. v. Holsinger

Docket Nº:7708.
Citation:336 F.2d 230
Party Name:TEXACO, INC., a Delaware corporation, Appellant, v. Wilmer M. HOLSINGER and Mary L. Moyer, Appellees.
Case Date:September 01, 1964
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 230

336 F.2d 230 (10th Cir. 1964)

TEXACO, INC., a Delaware corporation, Appellant,


Wilmer M. HOLSINGER and Mary L. Moyer, Appellees.

No. 7708.

United States Court of Appeals, Tenth Circuit.

Sept. 1, 1964

Rehearing Denied Oct. 2, 1964.

Page 231

Leonard O. Thomas, Kansas City, Kan. (Lee E. Weeks, J. D. Lysaught, Richard Millsap, Robert H. Bingham, Ervin G. Johnston, Roger D. Stanton, Kansas City, Kan., Philip R. Wimbish and William E. Lester, Tulsa, Okl., on the brief), for appellant.

Page 232

Robert E. Fabian, Kansas City, Kan. (John E. Blake, Bill E. Fabian and John E. Blake, Jr., Kansas City, Kan., on the brief), for appellees.

Before MURRAH, Chief Judge, and PICKETT and HILL, Circuit Judges.

HILL, Circuit Judge.

This declaratory judgment action was originally commenced in the state district court of Kansas to determine the rights and obligations of the parties under a real estate lease executed on June 10, 1953. The case was removed to the United States District Court for the District of Kansas, where a trial to the court was had and resulted in a judgment adverse to the appellant, Texaco, Inc. It appeals.

The stipulated facts show that, by the terms of the lease in question, the appellees leased a described tract of land, located in Johnson County, Kansas, to the appellant for an initial term of 10 years at an agreed rental of $140 per month. This lease required that Texaco build a modern service station on the premises at a cost of at least $18, 000, and provided that the 10 year term should begin after construction of the station or, in any event, not later than January 1, 1954. In accordance with the contract, Texaco built a service station upon the premises at a cost of $40, 700 and the initial term of the lease commenced on January 1, 1954. These premises have been maintained in good condition by Texaco and it has installed equipment worth $4, 800. Texaco paid the required rent and, except as hereafter discussed, complied with all of the obligations imposed upon it by the lease.

The dispute in this case is over the interpretation to be given to paragraph 12 of the lease, which is entitled 'Option to Extend Term'. Under sub-paragraph (a) of that paragraph, the appellees, as lessors, granted to Texaco, as lessee, the '* * * right and option to extend this lease for six successive periods of five years each at the following rental: One Hundred and Forty Dollars ($140.00) per month, payable monthly in advance. * * *' and Texaco was required to notify the lessees, in writing, of its election to extend the lease at least 60 days prior to the date of termination of the lease. Sub-paragraph (b) provides: 'If at any time during the term of this lease or any extension or renewal provided for herein, lessor shall receive a bona fide offer to lease the demised premises for a term to begin subsequent to the present demised term or such extension or renewal, and the lessor desires to accept such offer, lessor will immediately submit to lessee a written copy of such proposed lease with a full disclosure of the terms and provisions thereof and lessee shall have thirty (30) days after receipt thereof in which to elect to lease said premises upon the same terms and provisions contained in such proposed lease.' The last provision of paragraph 12 is sub-paragraph (c), which states: 'In the event lessee is granted an option to extend under the provisions of paragraph (12)(a), it is agreed that if lessee does not in any instance elect to lease said premises in accordance with the provisions of paragraph (12)(b), such failure shall in no way limit or affect lessee's right and option to extend this lease as provided in paragraph (12)(a).'

In February, 1963, the appellees received a bona fide offer to lease the premises at a monthly rental of $325 and, on February 11, 1963, they notified Texaco of such offer by letter from their attorney. A photostatic copy of the proposed lease was enclosed in the letter and Texaco was requested to advise them within 30 days '*...

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