Birge v. Toppers Menswear, Inc., 17670

• Decision Date: 01 October 1971
• Docket Number: No. 17670,17670
• Citation: 473 S.W.2d 79
• Parties: William B. BIRGE et al., Appellants, v. TOPPERS MENSWEAR, INC., Appellee.
• Court: Texas Court of Appeals

Page 79

473 S.W.2d 79

William B. BIRGE et al., Appellants, v. TOPPERS MENSWEAR, INC., Appellee.

No. 17670.

Court of Civil Appeals of Texas Dallas.

Oct. 1, 1971.

Rehearing Denied Oct. 29, 1971.

Ralph Elliott, Elliott & Nall, Sherman, for appellants.

Jack G. Kennedy, Kennedy & Minshew, Professional Corp., Sherman, for appellee.

BATEMAN, Justice.

This is a suit for damages by the appellee Toppers Menswear, Inc. against its landlords William B. Birge and Mrs. Katherine B. Collie for alleged breach of a written lease. Appellee recovered judgment upon a jury verdict, and the landlords appeal.

The lease was dated April 1, 1967, and was for a term of five years with three renewal options of five years each given the tenant . The purpose stated was for the operation of a retail men's clothing store. Section 4 provided that the 'lessors agree to keep the roof, foundation and outer walls of the said premises in proper state of repair at their expense, including plate glass, during the period of this lease.' The lessee agreed to maintain the building in all other respects.

The leased premises were on the north side of the courthouse square in Sherman, Texas. There is some confusion in the testimony as to whether these premises constituted a separate building or approximately half of a larger building. For the purposes of this opinion we adopt the latter view and the leased premises will be considered as approximately the east half of the building, the west half being occupied by Zale's Jewelers. The entire building was built at one time, and the two stores were separated by an inside wall. The building was owned by appellants but managed by the Merchants & Planters National Bank of Sherman, as their agent. Adjoining the Zale portion of the building on the west was the Keith Building, occupied by the M. & M. Cafe, and immediately west of that cafe was the Walters-Bitting Building occupied by 'Levine's.'

On the night of January 20, 1970 the Keith Building and part of the Walters-Bitting Building collapsed, damaging the west wall of the Zale portion of appellants' building; and several days later the removal of the rubble and debris caused further damage to it. On the next day, January 21, the Chief Building Inspector of the City of Sherman ordered appellee to close its store until an inspection could be made. Shortly thereafter, appellee reopened for ten days or two weeks. Within a few days the City Manager of Sherman informed Zale's manager and appellee that the building occupied by them was unsafe and that they would have to vacate it immediately. Appellee was never thereafter permitted to reoccupy the building.

In response to the special issues submitted to them, the jury found: (1) that the outer walls of the leased premises were in need of repair; (2) that appellants failed to repair the outer walls, (3) which has caused appellee to be deprived of the occupancy use and enjoyment of the leased premises; (4) that appellee has suffered damages naturally and proximately resulting from such deprivation; (5) that the building in which the premises leased to appellee are located is unsafe in its present condition. The jury (6) did not find from a preponderance of the evidence that the building could not be repaired so as to be made safe without undertaking repairs amounting to substantial reconstruction thereof, or (7) that to repair the building would cost in excess of fifty per cent of its physical value, or (8) that the building has been damaged in excess of fifty per cent of its physical value. Special Issue No. 9 and the answer of the jury thereto were as follows:

'From a preponderance of the evidence what sum of money, if any, do you find would reasonably compensate plaintiff for such damages, if any, that may have been suffered by it as a natural and proximate result of its being deprived of its right to occupy, use and enjoy the leased premises, if you have so found in answering Special Issue No. 3:

Answer separately in dollars and cents, if any, with respect to each of the following elements:

1. The reasonable present cash market value of the lease in question for its unexpired term.

Answer $24,400.00

2. Loss of profits, if any, which plaintiff could reasonably have expected to earn from the continued operation of its business in the leased premises during the unexpired term of the lease in question.

Answer $340,000,000

17 yrs $20,000.00 per yr.'

In its judgment dated October 16, 1970, the trial court found the award of $340,000 for lost profits to be excessive by $157,560,* but rendered judgment for the difference of $182,440 plus the $24,400 found as the reasonable present cash market value of the lease, or a total of $206,840, with interest and costs.

A careful examination of the statement of facts reveals at least some evidence to support the jury's findings in response to Special Issues Nos. 1 through 8. Appellants' expert witnesses told of the extreme old age of the building, the antiquated foundation, the 'leached out' mortar between the bricks, the poor composition of the bricks, the separation of some of the walls, and expressed the opinion that the entire building should be demolished. They did admit, however, that it could be repaired, but at great cost. Appellee's expert witness testified that in his opinion the Zale portion was unsafe and should be razed, but that appellee's portion suffered no damage requiring substantial reconstruction and could be repaired and made safely usable at a cost of approximately $25,000.

The City Council adopted numerous ordinances in the period from April 13, 1970 to July 13, 1970, at first authorizing the Chief Building Inspector, on recommendation of the City's consulting engineer, to direct abatement, demolition or other action, and later modifying the Inspector's order of demolition, and finally ordering that the unsafe condition and hazard shall be 'abated' within sixty days.

The building did not comply with the City's building code in effect at the time in question. This code required that if the repair of a building would cost more than 50 per cent of its then physical value the building should be made to conform to the requirements of the code for new buildings. It being undisputed that this building could not be repaired to so comply, the question was whether it could be so repaired as to make it safely usable at a cost of less than 50 per cent of its then physical value.

Under date of June 8, 1970, while this suit was pending, appellee's attorneys wrote appellants' attorneys that appellee had elected to exercise all three options to renew the lease, extending it seventeen more years.

By their first four points of error on appeal, appellants complain of the submission of the damage issue (No. 9) on the grounds (1) that recovery of lost profits plus the reasonable cash value of the lease would result in a double recovery; (2) that since only Net profits could be recovered, and the evidence thereof was insufficient, the court erred in submitting the issue; (3) that since the evidence of appellee's damage consisted of speculative conjectures projected over a period of seventeen years in the future, and was thus insufficient, the court erred in submitting the issue; and (4) that since appellee is required by law to mitigate its damages the court erred in submitting Special Issue No. 9 over appellants' objections that they were denied this right of mitigation by the wording of the issue confining the inquiry to 'the leased premises.' Appellants objected to Special Issue No. 9, insofar as loss of profits is concerned, 'for the reason that any such loss of profits would necessarily be based on speculation and conjecture'; also because the loss of profits is limited to the business in the leased premises during the unexpired term of the lease and does not 'allow the jury to consider future business, which might be done by plaintiff, which if it made a profit, would as a matter of law mitigate its damages.'

Generally, the correct measure of damages which a tenant is entitled to recover of a landlord who has breached his covenant to repair is 'the difference between the market rental value of the leasehold for the unexpired term of the lease and reserved rentals stipulated therein.' Langham's Estate v. Levy, 198 S.W.2d 747, 756 (Tex.Civ.App., Beaumont 1946, writ ref'd n.r.e.); 51C C.J.S. Landlord & Tenant § 247(2), p. 644, citing Rainwater v. McGrew, 181 S.W.2d 103 (Tex.Civ.App., Waco 1944, writ ref'd w.o.m.).

Damages for loss of anticipated profits may be recovered in such a case if contemplated by the parties. 35 Tex.Jur.2d, Landlord and Tenant, § 90, p. 582; Midkiff v. Benson, 235 S.W. 292, 294 (Tex.Civ.App., El Paso 1921, no writ); Oscar v. Sackville, 253 S.W. 651, 653 (Tex.Civ.App., Austin 1923, writ ref'd).

However, as contended under appellants' first point of error, the tenant cannot recover lost profits and the market value of his lease also, for such would allow him a double recovery. As stated in Oscar v. Sackville,supra:

'To permit a recovery for the loss of profits, and also an additional recovery for the difference in the rental value of the premises, in the condition they were and in the condition they should have been if the heating plant had been adequate, would allow a double recovery, since appellant would be made whole under her contract when she recovered the loss of profits to her business, without regard to the rental value of the leased premises.'

See also 52 C.J.S. Landlord & Tenant § 461(4)b, p. 341; and Weiss v. Mitchell, 58 S.W.2d 165, 166 (Tex.Civ.App., Dallas 1933, writ dism'd).

The first point of error is sustained.

Appellants contend under Point No. 3 that the evidence offered in support of the second element of Special Issue No. 9 consisted of speculative conjectures projected over a period of seventeen years in the future and was thus legally insufficient to support the submission of the issue on lost profits...