Jones Store Co. v. Dean

• Decision Date: 01 February 1932
• Docket Number: No. 9114.,9114.
• Parties: JONES STORE CO. v. DEAN et al.
• Court: U.S. Court of Appeals — Eighth Circuit

56 F.2d 110 (1932)

JONES STORE CO. v. DEAN et al.^*

No. 9114.

Circuit Court of Appeals, Eighth Circuit.

February 1, 1932.

Arthur Miller and Charles W. German, both of Kansas City, Mo. (Maurice H. Winger, Leland Hazard, German, Hull & German, and Winger, Reeder, Barker, Gumbiner & Hazard, all of Kansas City, Mo., on the brief), for appellant.

Samuel W. Sawyer, of Kansas City, Mo. (Richard S. Righter, of Kansas City, Mo., on the brief), for appellees.

Before STONE and GARDNER, Circuit Judges, and MARTINEAU, District Judge.

MARTINEAU, District Judge.

The Jones Store Company, a Delaware corporation, being a resident and citizen of that state, and doing business in Kansas City, Mo., brought this suit in equity in the District Court of the United States for the Western Division of the Western District of Missouri, against the defendants, being residents and citizens, some of the state of Kansas and some of the state of Illinois, to reform an instrument to modify a written lease on property in Kansas City, Mo., and to impress upon the defendants an estoppel against claiming such modification. The instrument sought to be reformed, and against which estoppel was claimed, increased defendants' rentals for the period of the lease approximately $155,000. Jurisdiction was based on diversity of citizenship, and venue in the district in which the suit was brought upon the alleged existence of a cloud or incumbrance on the title to a leasehold estate in property in that district, which cloud or incumbrance it was sought by the suit to remove.

The defendants filed a motion to dismiss on the ground that, while diversity of citizenship existed, neither the plaintiff nor any of the defendants were residents of the Western district of Missouri, and that the suit could not be properly construed into one to remove a cloud or encumbrance on property in that district.

The court held that the suit was one to remove a cloud or incumbrance upon property in the district where the suit was brought, and since the requisite diversity of citizenship existed could be maintained as a local suit in that district, notwithstanding none of the parties lived there. The defendants then answered denying the merits of plaintiff's bill, both as to modification and as to estoppel, and also asked judgment by way of counterclaim for the increased rent alleged to have accrued under the lease up to the time of filing the suit. After a hearing on the merits, plaintiff's bill was dismissed and defendants were given judgment on their counterclaim. Plaintiff now on appeal asks for a reversal of the decree, and that the case be dismissed by this court because the venue did not properly lie in the Western district of Missouri where it brought its suit. It seeks now to take advantage of defendants' objection to the venue. Defendants have not appealed, either from the decree or from the order denying their motion to dismiss on the ground that the venue was not properly laid. They ask that the decree as rendered be sustained. For convenience the parties will be referred to here as they appeared in the court below.

For many years prior to July 31, 1919, the Jones Store Company operated a large department store, located on the southeast corner of Twelfth and Main streets, occupying four buildings in a row, extending south from Twelfth street on the east side of Main street in Kansas City, Mo. The lands upon which these buildings are situated may be designated as parcels 1, 2, 3, and 4. The Jones Store Company held them under lease which expired January 1, 1925. Frances M. Dean owned parcels 1 and 4. O. H. Dean, the divorced husband of Frances M. Dean, controlled 2 and 3.

In the early part of 1919 plaintiff sought to renew its lease upon the four parcels of land upon which its store was located. It did not at that time renew its lease upon the parcels controlled by O. H. Dean, but on July 31, 1919, it entered into a lease with Frances M. Dean covering her two buildings, the lease to become effective January 1, 1925, and to expire December 31, 1955. The rental upon parcel 4 involved in this litigation, and designated as 1215-1217 Main street, was to be $9,000 per year, payable in equal monthly instalments of $750 each, with a covenant on the part of the Jones Store Company to erect thereon at its own expense, within five years from the first of January, 1925, a new building, costing not less than $50,000.

O. H. Dean, who at that time was refusing to negotiate a new lease upon his properties, criticized the one that his former wife was making and said that she did not have sense enough to properly protect her interest. To protect her from this criticism, at the time the lease was executed, plaintiff and Frances M. Dean entered into a separate contract as follows (omitting formal parts): "Now, in consideration of the execution of the said lease, said, the Jones Store Company, agrees that if at any time during the term of said lease it shall rent either the premises known as 1209 and 1211 Main Street, or the premises known as 1213 and 1215 Main street, in Kansas City, Missouri, or both of them, (properties controlled by O. H. Dean), paying an excess of nine thousand dollars per year for either, then the rent of the building 1215 and 1217 Main Street, in Kansas City, Missouri, covered by said first described leasehold, shall be correspondingly increased, so that said Frances M. Dean, her heirs and assigns, shall at all times receive an equal sum for the rent of the premises 1215 and 1217 Main Street, Kansas City, Missouri, as paid for either of the other two buildings above described."

In the latter part of 1924, plaintiff again entered into negotiations for a lease of the O. H. Dean properties. The terms upon which these properties could be leased were found to be different from the terms of the Frances M. Dean lease on parcel four. A higher rental would have to be paid for the O. H. Dean properties, but plaintiff would not be required to construct a new building. Recognizing that there might be a difference as to the construction of the separate written contract entered into at the time the Frances M. Dean lease was executed, plaintiff conferred with Frances M. Dean's attorney and authorized agent before executing the lease with O. H. Dean. She then agreed that, in the event the plaintiff made a lease for the O. H. Dean properties, she would do one of two things: First, retain her then existing lease with the lower rental, but with the obligation of the plaintiff to erect upon her property a new building; or, second, abandon her then existing lease and take a lease to conform in all respects to the O. H. Dean lease. This election was to be made after plaintiff had executed its lease with O. H. Dean and had submitted a copy of it to her.

Relying upon this promise, plaintiff shortly thereafter, in the early part of January, 1925, executed a lease with O. H. Dean, in which it agreed to pay for each of his parcels a rental in excess of that which was to be paid to Frances M. Dean, but was not required to construct a new building, unless an option in the contract was exercised. A copy of the lease was sent to Frances M. Dean the latter part of January, 1925. No notice of an election as to which of the two leases she would take was given to the Jones Store Company. She later accepted rent under the lease of July 31, 1919, at the rate of $750 per month for the month of February. Later, on February 25, 1925, Frances M. Dean gave the property in question to her son, Mason L. Dean, one-half individually and one-half in trust for her daughter and the daughter's two minor children, in consideration of love and affection, and by way of gift, reserving to herself an annuity of $9,000 from each of the deeds. Concurrently Frances M. Dean assigned to Mason L. Dean, individually and as trustee, her rights in the separate agreement of July 31, 1919, with full power to agree with the lessee upon any modification of the lease, provided the amount of rental then payable was not reduced. Mason L. Dean did not notify the Jones Store Company of an election under the assignment to him, but accepted the rent for the month of March, 1925. The four grantees named in Frances M. Dean's conveyances are the defendants in this suit. She herself is not a party to it.

Defendants now insist that they are entitled to the increased rental provided in the O. H. Dean lease, also to a new building, which has now been constructed, costing in excess of $150,000. Plaintiff insists that defendants are entitled only to the rental provided for in the lease of July 31, 1919, and to the newly...