Development Enterprises, Inc. v. Miyamoto

• Decision Date: 26 November 1969
• Docket Number: No. 3765,3765
• Citation: 461 P.2d 419
• Parties: DEVELOPMENT ENTERPRISES, INC., a Wyoming corporation, Appellant (Plaintiff below), v. William F. MIYAMOTO and Tom Miyamoto, Appellees (Defendants below).
• Court: Wyoming Supreme Court

Page 419

461 P.2d 419

DEVELOPMENT ENTERPRISES, INC., a Wyoming corporation, Appellant (Plaintiff below), v. William F. MIYAMOTO and Tom Miyamoto, Appellees (Defendants below).

No. 3765.

Supreme Court of Wyoming.

Nov. 26, 1969.

John F. Lynch, of Kline, Tilker & Lynch, Cheyenne, for appellant.

Ellen Crowley, Tosh Suyematsu, and Bernard E. Cole, Cheyenne, for appellees.

Before GRAY, C. J., and McINTYRE, PARKER, and McEWAN, JJ.

Mr. Justice McINTYRE delivered the opinion of the court.

Development Enterprises, Inc., has appealed from that part of a judgment entered by the District Court of Laramie County which denied it a money judgment for unpaid rent.

The plaintiff, Development Enterprises, as owner and lessor, entered into a ten-year lease with defendants, William F. Miyamoto and Tom Miyamoto, who were the tenants and lessees. The property leased was a new building constructed by Development Enterprises for occupancy by lessees. The lessees operated a bowling alley business in the building.

The lease provided for an annual rental of $19,500 payable at $1,625 per month. Pursuant to terms of the lease, lessees deposited $11,375 with the lessor as a payment of the monthly rental for the last seven months of the ten-year lease. It was provided, in the event the tenants default in payment of the rental payments, then owner may use said sum for reimbursement of damage for failure to pay said rental.

The bowling alley business in the leased building was not a success, and within three years lessees were falling behind in their rent and in fact had ceased making payments at all. Finally, on November 10, 1964, the lessor obtained a writ of restitution as a result of a forcible entry and detainer action in a justice of the peace court. The tenants claim, and apparently it is not disputed, that the deposit of $11,375 was sufficient to cover all rentals due through the rest of November, 1964, or some 20 days beyond the time when lessor resumed possession of the premises.

The judgment of the trial court appears to be based on a finding that the plaintiff terminated its lease when defendants vacated the property. On appeal, appellant assigns as error that re-entry and taking of possession did not terminate the lease; and that the court erred in finding generally for the defendants on plaintiff's complaint.

Other points argued to us by both appellant and appellees relate to additional defenses which the defendants argued below and still argue on appeal. These defenses question whether the defendants were induced by plaintiff's fraudulent representations to execute the lease; whether the decision of a justice of the peace in a forcible entry and detainer action became res judicata; whether the plaintiff was guilty of laches; and whether plaintiff breached its agreement in the lease relating to construction of a parking area and maintenance of the premises.

Inasmuch as defendants have not appealed, there would be no reason on appeal to consider matters which we have listed as having to do with additional defenses, unless it is first determined that the district court erred in finding that plaintiff terminated the lease; or that the trial court erred in finding generally for the defendants on plaintiff's complaint.

Taking of Possession by Landlord

Counsel for plaintiff-landlord recognizes the rule stated in Casper National Bank v. Curry, 51 Wyo. 284, 65 P.2d 1116, 1118, 110 A.L.R. 360, to the effect that an unqualified taking of possession by a lessor and reletting of the premises, if done pursuant to the tenant's surrender, constitute an acceptance of the surrender and releases the tenant, where there is no provision in the lease in regard thereto.

It is the position of such counsel, however, that the lease in this case contains a provision which controls. The pertinent language of the provision relied on by appellant's counsel is this:

'Should Owner elect to re-enter * * * or should it take possession pursuant to legal proceedings * * * it may either terminate this lease or it may from time to time without terminating this lease * * * relet said premises or any part thereof for such term or terms * * * as Owner in its sole discretion may deem advisable * * *.'

It is essential that we pause at this point to note the provision just quoted gives the landlord an alternative. Such landlord may either (1) terminate the lease, or (2) without terminating the lease it may 'relet' the premises.

Very clearly then it became a question of fact in this case for the trier of fact to determine which the landlord did-whether it terminated the lease, or whether it re-let the premises without terminating the lease. Our review of the testimony and record convinces us there was substantial evidence from which the trial court could conclude, as it apparently did conclude, that plaintiff elected to and did in fact terminate the lease when it took possession.

In arriving at this conclusion, we are aware that the lease specifies no re-entry or taking of possession by the owner shall be construed as an election on the owner's part to terminate the lease, unless a written notice of such intention is given to the tenant. There is no evidence of such a written notice, and therefore the trial court was not entitled to infer that plaintiff had elected to terminate the lease merely from the fact that plaintiff had dispossessed defendants.

This does not, however, foreclose the possibility of the court inferring an election on the owner's part to terminate the lease from entirely different acts, statements and omissions indulged in by the owner.

Appellant relies on Yates v. Reid, 36 Cal.2d 383, 224 P.2d 8, 9, as authority for its argument. The opinion in that case will serve to point up the distinction we seek to make.

In Yates the court said the retaking of possession by the plaintiff as landlord and his reletting of the premises were entirely consistent with the rights of the tenant under the lease. We adopt the same statement for the case we are dealing with. In our case likewise, the retaking of possession and reletting of the premises (if they were relet) would be consistent with the terms of the lease and would not denote a termination.

At this point we have a difference, however. In Yates the court was able to say the plaintiff 'did no more' than exercise the rights accorded to him; and therefore his conduct did not result in a surrender of the lease by operation of law.

In the case we are concerned with, Development Enterprises 'did more' than exercise those rights accorded to it in the event of an election to keep its lease alive. Hence, there needed to be a determination by the trial court whether, in addition to its re-entry and taking of possession, the owner expressly agreed (orally or in writing) to terminate its lease; or whether the owner's agreement to terminate the lease was to be implied from acts and circumstances of the parties separate and independent of the act of re-entry and taking of possession.

An agreement to terminate a lease need not be express but may be implied from the conduct and language of the parties and it is not necessary that such agreement be evidenced by a writing signed by the parties. Barber v. Smythe, 59 Wyo. 468, 143 P.2d 565, 568; Rodgers v. Saunders, 144 Mont. 424, 396 P.2d 817, 818; Gordon v. Consolidated Sun Ray, Inc., 195 Kan. 341, 404 P.2d 949, 953; Phillips v. Maxey, 195 Okl. 418, 158 P.2d 344, 345.

It was stated in Belanger v. Rice, 2 Utah 2d 250, 272 P.2d 173, 174, a surrender of a lease by operation of law results from acts which imply mutual consent 'independent of the expressed intention of the parties.' Such result was said to be by way of estoppel.

Whether in any given case there has been a termination of lease by mutual agreement, express or implied, is primarily a question of fact to be determined by the trial court from the whole transaction. Wiese v. Steinauer, 201 Cal.App.2d 651, 656, 20 Cal.Rptr. 295; Rognier v. Harnett, 45 Cal.App.2d 570, 114 P.2d 654, 656; Phillips v. Maxey, 195 Okl. 418, 158 P.2d 344, 345.

Concerning the question of whether there was an agreement, express or implied, between Development Enterprises and the Miyamotos for termination of their lease, we will review some of those things reflected in the evidence which could have persuaded the trial court that plaintiff elected to and did in fact terminate its lease. In making this review, we shall be very careful to see that no reliance is made on the fact that the owner re-entered and took possession of the premises-that, it had a right to do in order to preserve the property and mitigate damages.

Evidence of Election

First. According to the provisions of the lease which we have previously quoted, the alternatives which the owner had upon re-entering or taking possession of the premises were either to terminate the lease or to 'relet' the premises without terminating the lease. As far as the written lease is concerned, owner did not have the privilege of occupying and using the premises itself without terminating the lease.

Robert Buenger, vice president of Development Enterprises, testified for plaintiff at the trial. On direct examination plaintiff's attorney referred to the date of November 10, 1964, which was the date plaintiff dispossessed defendants, and stated the company had to make a decision what it was going to do. Buenger was then asked what transpired with respect to this choice. His answer was:

'Well, we determined to try to keep the bowling alley going, see if we couldn't lease to someone else or sell to someone else. At the time we talked with two different people I think were interested in taking the thing over and we didn't want to lose them.'

Inasmuch as the lease of the Miyamotos would have approximately seven years to run, if not terminated, it would not seem likely that plaintiff would sell the property without first terminating such lease. Let us, however, examine...