Corim, Inc. v. Sam Blair Co., Inc.

• Decision Date: 01 August 1986
• Citation: 721 S.W.2d 256
• Parties: CORIM, INC., Plaintiff/Appellee, v. SAM BLAIR COMPANY, INC., d/b/a Blair Management Services, Defendants/Appellants.
• Court: Tennessee Court of Appeals

Page 256

721 S.W.2d 256

CORIM, INC., Plaintiff/Appellee, v. SAM BLAIR COMPANY, INC., d/b/a Blair Management Services,

Defendants/Appellants.

Court of Appeals of Tennessee,

Western Section, at Jackson.

Aug. 1, 1986.

Permission to Appeal Denied by

Supreme Court Nov. 24, 1986.

Michael G. McLaren and George W. Jenkins III, Memphis, Thomason, Hendrix, Harvey, Johnson, Mitchell, Blanchard & Adams for plaintiff/appellee.

Thomas B. Avery and Valerie Futris, Memphis, for defendants/appellants.

BROOKS McLEMORE, Chancellor (Retired), Special Judge.

This is a forcible entry and detainer action originally tried in the General Sessions Court where judgment was entered for plaintiff. The case was appealed to the Circuit Court and tried de novo by the Circuit Judge without the intervention of a jury.

The issues involved are (1) whether a lease was renewed or extended by proper notice, (2) whether strict notice was waived by the actions of the plaintiff-lessor, (3) with respect to notice, whether conduct of plaintiff-lessor constituted ratification, (4) whether plaintiff-lessor is estopped to deny agency of defendant-lessee to accept notice, or (5) whether defendant-lessee is excused from strict compliance of notice requirements because of special circumstances.

The trial judge found against the defendant-lessee on all issues and awarded possession to plaintiff-lessor.

We affirm.

Appellant will be referred to as Blair, Inc. or defendant-lessee. The appellee will be referred to as Corim, Inc. or plaintiff-lessor.

In 1973, Sam B. Blair built the commercial office building, a portion of which is involved in this litigation. Blair leased 93% of the office space to Federal Express Corporation and used the remaining 1215 square feet to house his real estate brokerage firm, Sam Blair Company, Inc., hereafter called Blair, Inc. Blair, Inc. thus became a tenant of Sam Blair under a lease which expired May 14, 1982. The pertinent provision of this lease stated: "Lessee has the options to renew this lease for two (2) additional five (5) year periods provided Lessee advises Lessor in writing six (6) months prior to the expiration of the original term ... All terms and conditions will remain the same during the renewal periods." Thus the first renewal notice was required to be given on or before November 14, 1981.

In 1980, Blair sold the building subject to the existing lease. Although the ownership of this building has subsequently changed several times, Corim, Inc. has always been, and continues to be, in charge of the management of the building.

Independent of the lease, Corim, Inc. and Blair, Inc. entered into a separate Management Contract whereby Blair, Inc. would manage the building. However, under the separate contract, any negotiations for leases and renewals would be conducted or controlled by Blair, Inc. who was required to consult with the owner and obtain the owner's approval. The owner had delegated this duty to Corim, Inc. Each month Blair, Inc. collected rents and sent them to Corim, Inc. after first deducting five percent as its total fee.

Mr. Ben H. Willingham, Jr., president of Corim, Inc., testified that for some time before November 14, 1981, he was aware of the approaching deadline for Blair, Inc. to renew the lease and was anxious to see what Blair, Inc. would do as he was hoping that Blair, Inc. would fail to give the notice to exercise the option since this would be advantageous to Corim, Inc. because of the amount of rent provided in the original lease.

Mr. Sam Blair testified that he too was aware of the deadline and that he had discussed this matter with his secretary of a number of years, Toni Denning. Mr. Blair testified that on November 4, 1982, he dictated a letter to Mrs. Denning, addressed to the Blair Management Service, and signed it in his capacity as president of the defendant-lessee, giving written notice of his intention to renew said lease. Further, Mr. Blair testified that he requested his secretary to send a copy of the notice to Corim, Inc.

Mrs. Denning testified that she did not send the notice that day. She testified that she was sending other material to Corim, Inc. so she waited until the next day and then sent a copy of the renewal letter with some other material. The November 5 cover letter contains no evidence on its face that the letter of renewal was being sent to Corim, Inc., together with material identified in the letter, nor does the November 4 renewal letter from Sam Blair Company, Inc. addressed to Blair Management Services, indicate that a copy was sent to Corim, Inc.

Jack Wardlaw, administrative officer of Corim, Inc. in Savannah, Georgia, testified that he received and reviewed all incoming mail and did receive the monthly reports and checks mentioned and included in the November 5 letter from Blair, Inc.'s office, and that the renewal letter of November 4 was not in that packet of materials. He further testified that he too was aware that the deadline was approaching and when no notice was received he and Willingham "just let it go at that, because he felt that Sam wasn't going to renew his lease."

In early February 1982, Mr. Ben Willingham, Jr. testified that while engaged in a telephone conversation with Sam Blair concerning the Federal Express lease, he mentioned that notice of renewal had never been received, to which Mr. Blair replied, "that doesn't matter, does it?" Mr. Willingham's response was "We'll see." On February 7, 1982, Corim, Inc. received a letter from Blair, Inc. with which a copy of the November 4, 1981 notice of renewal was enclosed and the letter stated that another copy had previously been sent to Corim, Inc. on November 5, 1981.

Until May 12, 1982 neither party addressed the other regarding this matter. On May 12, 1982, Blair, Inc. received notice from Corim, Inc. that its continued tenancy on the premises would be regarded as a tenancy at will.

The trial court held that the burden of proving the notice was properly given was on the lessee, Blair, Inc., and noted that the proof was in considerable conflict as to whether the envelope mailed on November 5, 1981, actually contained the November 4th notice of renewal. The trial court found that Blair, Inc. had failed to prove by preponderance of the credible evidence that the defendant included a copy of the notice in the envelope mailed on his behalf on November 5, 1981. The court noted that any presumption in law that a mailed notice to Corim, Inc. was received was inapplicable to the case as there was a failure of proof to show that the notice was actually sent.

This case having been tried by the court without the intervention of a jury, our review on appeal is de novo upon the record in the trial court, and all findings of fact in the court below come to us with a presumption of correctness. Absent an error of law, unless the evidence preponderates against these findings, we must affirm. Rule 13(d), Tennessee Rules Appellate Procedure. The findings of the trial court as to the credibility of witnesses should be accorded great weight.

The evidence does not preponderate against the finding of the trial court on the foregoing issue and there is no real evidence that compels a contrary conclusion as to this finding of fact by the trial court.

Blair, Inc. contends that Blair Management was agent of Corim, Inc. and that on November 4, 1981, when Blair, acting as President of Blair, Inc., dictated the notice of exercise of the option, and signed same and then placed the notice in the appropriate Blair Management Services file, that this constituted the delivery of notice required by the terms of the lease, i.e., he may give himself binding notice as the agent of Corim, Inc.

The trial court found Blair, Inc.'s interest as a tenant was antagonistic to his interest as an agent of Corim, Inc. in that if the lease was not renewed Corim, Inc. could re-let the premises with a 30% increase in rent, while if renewed, Blair, Inc. would continue to operate in the building for a cost lower than the then existing market and therefore rejected this contention relying upon the case of Federal Kemper Insurance Company v. Preston, 520 F.Supp. 24 (E.D.Tenn.1981). We agree with the finding of fact and the conclusion of law reached by the trial court.

Ordinarily notice to the agent is notice to the principal, however, this is not so where the agent's interest is adverse to the principal. In Heard v. Miles, 32 Tenn.App. 410, 420, 222 S.W.2d 848, this Court in discussing an agent's duty not to act as adverse party stated:

Perhaps as clear and succinct a statement of the basic general law on the subject as can be found anywhere was written by Chancellor Cooper in Tynes v. Grimstead, 1 Tenn. Ch. 508, at page 510, as follows: "No principle is better settled, or founded upon a sounder basis of positive law or legal ethics, than that which declares that whoever undertakes to act for another, in any matter, shall not, in the same matter act for himself, and this without respect to the fact whether the party has or has not made a profit by the act. Equity disallows the measure upon general principles, without reference to advantages or unfairness."

In the same case the Court adopted the statement from Pomeroy's Equity Jurisprudence that:

In any contract of purchase or sale with the principal, or other transaction by which the agent...