Clasen v. Moore Bros. Realty Co.

• Decision Date: 21 February 1967
• Docket Number: Nos. 32395,s. 32395
• Citation: 413 S.W.2d 592
• Parties: Edward W. CLASEN, and Southtown Professional Pharmacy, Inc., a Corporation, Plaintiffs-Appellants-Respondents, v. MOORE BROTHERS REALTY COMPANY, Inc., Defendant-Respondent-Appellant. & 32396.
• Court: Missouri Court of Appeals

Page 592

413 S.W.2d 592

Edward W. CLASEN, and Southtown Professional Pharmacy, Inc. a Corporation, Plaintiffs-Appellants-Respondents, v. MOORE BROTHERS REALTY COMPANY, Inc., Defendant-Respondent-Appellant.

Nos. 32395 & 32396.

St. Louis Court of Appeals, Missouri.

Feb. 21, 1967.

Motions for Rehearing or to Transfer to Supreme Court Denied

March 17, 1967.

Application to Transfer Denied May 8, 1967.

Edward C. Schneider, Harry A. Frank, Milton F. Napier, St. Louis, for plaintiffs-appellants.

Ackerman, Schiller & Schwartz, Clayton, for defendant-respondent.

BRADY, Commissioner.

Cross appeals arising from an action for declaratory judgment as to the rights and duties of the parties to a ten-year lease of certain real estate in the City of St. Louis, Missouri. We will refer to the parties by their general designation in the trial court except that the individual plaintiff will sometimes be referred to by his name and the corporate plaintiff as such. Specifically, plaintiffs seek to avoid the percentage rental called for under the lease and request a declaration that Southtown Professional Pharmacy, Inc. is the lessee. Defendant seeks cancellation of the lease and the payment of certain disputed rentals.

Defendant owns a medical office building called 'St. Louis Hills Medical Center'. It entered into a lease with plaintiff Edward Clasen for space on the ground floor of that building to be used as a drug store. The provisions covering rental, forfeiture for non-payment of rent and for assignment or subletting of the leased premises read as follows: 'For and during the term commencing thirty days after building is ready for occupancy and ending ten years thereafter, at the yearly rental of $6,400.00 payable n monthly installments of $533.33 each, plus 8% of the gross sales of said drug store business over annual gross sales of $80,000.00; rent payable $533.33 on the 1st day of each month and at the end of each twelve month period the gross sales for said 12 months will be determined and the balance of the rent paid within thirty days of the expiration of each twelve month period.' This provision of the lease also provided: 'In computing gross sales under the aforementioned provisions, cost sales to doctors and nurses shall be excluded therefrom.' In referring to 'annual gross sales' in this opinion, that term excludes such cost sales. 'Failure on the part of the Lessee to pay any installment of rent * * * as and when the same becomes due and payable * * * shall at the option of the Lessor cause the forfeiture of this lease.' 'This lease is not assignable, * * * and if this lease is assigned or the premises or any part thereof sublet without the written consent of the Lessor, * * * this lease may by such fact or unauthorized act be cancelled at the option of the Lessor. * * *'

These parties also executed a 'Supplement to Lease' which provides: 'The parties to this lease agree that in no event shall the annual payments hereunder be less than $5.00 per square foot of rental area covered by this lease; however after the expiration of one year from the date of commencement of the term under this lease, the lessee hereunder shall have the option of requesting a review of those provisions hereof dealing with the payment of additional rental amounts over and above the $5.00 per square foot amount, said request to be for the purpose of determining whether or not the 8% of gross sales in excess of $80,000.00 is a hardship on the lessee. In the event said hardship is found to exist by the lessor said 8% payment on gross sales in excess of $80,000.00 shall be reduced to an amount necessary to relieve said hardship but in no event less than 6% on gross sales in excess of $80,000.00.'

We find the facts to be that in negotiations for the lease defendant, acting through its president Graham, dealt with the plaintiff Clasen who never informed the president that a corporation would occupy the leased premises; that as a rental policy the defendant preferred that the drug store in this medical building be owned by an individual; that for the first year's operation of the drug store the gross sales were less than $80,000.00; that for each of the second, third and fourth years the gross sales were in excess of $80,000.00 but the plaintiffs did not pay any of the percentage rentals called for under the lease; and that defendant made demands for certified public accountant statements concerning the figures of the drug store operation from the plaintiff Clasen but that these were never furnished to defendant. Clasen acknowledged there was no tender of the percentage rentals to the defendant for this four-year period of time. He contended that he was trying to get a 'proper percentage' and had his auditor handle this matter for him. Clasen wanted to go on the 'hardship' basis covered by the 'Supplement to Lease' but failed and refused to give any statements regarding his operations to the defendant until May of 1963. The lease was entered into in May of 1959. In May of 1963 defendant received some notations on a piece of paper from the plaintiff Clasen's auditor. These are not in cogent form and the figures which are in proper form as prepared by Clasen's auditor were not given to Graham until the trial of this case. Clasen's contention was that the percentage rental in the lease should be reduced from eight to six percent because of 'hardship' and he arranged a meeting with Graham to discuss that matter. As a result of that meeting defendant's auditor wrote a letter dated March, 1963, and addressed to Clasen, calling his attention to the percentage rental provisions of the lease and requesting that plaintiffs' auditor send a statement as to gross sales for the previous three years as required by the terms of the lease. Later in that same month Graham wrote to Clasen informing the latter of the defendant's decision to deny his request for a lower rental stating 'It is not our wish to alter the lease in any respect as we are not convinced it results in a hardship in any respect.' The letter closed with the demand that Clasen remit the amount due under the lease. In July of that same year another meeting was held between Graham, Clasen, and the latter's auditor. Again defendant refused to change the lease.

Graham also testified that the first he learned that a corporation was in possession of the drug store and operating it was when he received and read the plaintiffs' petition. There were three exhibits which were identified as checks given by Clasen in payment for the basic monthly rentals called for by the lease. On each of these at the top lefthand corner appear the words 'Southtown Professional Pharmacy' and at the lower righthand corner above Clasen's signature appear the words 'Southtown Professional Pharmacy'. In April of 1964 defendant received a check in payment of the basic monthly rental upon which, immediately above Clasen's signature, appeared the words 'Southtown Professional Pharmacy, Inc.' This was the first check upon which the corporate character of Southtown Professional Pharmacy was ever indicated. Defendant refused this check and it was returned to Clasen together with a letter from defendant's attorneys stating that defendant did not recognize the corporation as the lawful tenant or assignee of Clasen's lease. Since that date defendant has refused acceptance of the basic monthly rental of $533.33 per month since it was tendered by the corporation and these payments were tendered into the court. It is undisputed that Clasen never received any written permission from the defendant to the use, occupancy and possession of the leased premises by Southtown Professional Pharmacy, Inc.

Clasen testified that the plaintiff corporation was formed prior to the time he entered into the lease. It appeared from other evidence and exhibits that he paid for the purchases of equipment and fixtures used to set up the drug store by checks showing that he was an individual doing business as Southtown Professional Pharmacy. There is a sign in the window of the drug store overlooking the parking area and a sign on a vehicle used for delivery purposes by the drug store, both of which read 'Southtown Professional Pharmacy'. These photo exhibits showing such signs were taken by defendant's president after he was served with the petition stating that the premises were being operated by a corporation.

The trial court found for the defendant on plaintiffs' contention as to the percentage rental called for by the lease and awarded a money judgment for $15,882.06 the amount of percentage rental due computed at eight percent of the gross annual sales over $80,000.00 plus interest at six percent of $2,025.77, and the sum of $6,933.33 as monthly basic rental from April 1, 1964 to May 1, 1965, about which there was no dispute.

The decree also specifically provided the trial court '* * * retains jurisdiction to order an accounting therefor by plaintiffs to defendant * * *' for the annual periods covered by the lease after the date of this action when the defendant shows the court the plaintiffs have failed or refused to furnish defendant figures on the gross sales for the year. The trial court found for the plaintiffs on the issue of cancellation of the lease. Its ruling as to plaintiffs' contention that the corporate plaintiff should be named the lessee does not clearly appear. In that portion of its decree refusing cancellation of the lease the trial court referred to the lease between the defendant '* * * and Edward W. Clasen, Lessee * * *' as being in full force and effect. However, in that portion of the decree dealing with the percentage rental due defendant the trial court specifically held that '* * * plaintiffs Edward W. Clasen and Southtown Professional Pharmacy, Inc., a corporation, are obligated to pay to defendant * * *' the rentals due.

In accordance with its contention the percentage rental due was to be computed at six...