Fenlon v. Jaffee

• Decision Date: 23 June 1977
• Docket Number: No. 1015,1015
• Citation: 553 S.W.2d 422
• Parties: William H. FENLON, Trustee, Appellant, v. Morris JAFFEE, Individually and d/b/a Central Park Mall, Appellee.
• Court: Texas Court of Appeals

Page 422

553 S.W.2d 422

William H. FENLON, Trustee, Appellant, v. Morris JAFFEE, Individually and d/b/a Central Park Mall, Appellee.

No. 1015.

Court of Civil Appeals of Texas, Tyler.

June 23, 1977.

Rehearing Denied July 21, 1977.

Evelyn H. Biery, Bruce Waitz, Law Office of Bruce Waitz, San Antonio, for appellant.

Pat Priest, San Antonio, for appellee.

DUNAGAN, Chief Justice.

This is a conversion suit. Suit was brought by William H. Fenlon, Trustee in Bankruptcy, in the matter of Michel's Parfumes, Inc., Bankrupt, hereinafter called appellant, against Morris Jaffee, individually and doing business as Central Park Mall, hereinafter called appellee. Appellant in his original petition alleged that appellee, as landlord of appellant's predecessor in interest (Michel's Parfumes, Inc., Bankrupt), wrongfully took and converted appellant's "kiosk," a type of structure used as a retail outlet and located in appellee's shopping mall according to a written lease between appellee as landlord and Michel's Parfumes, Inc. as lessee. Appellant sought damages in the amount of $16,000.00, or, in the alternative, sought legal title and possession of the kiosk.

The case was tried before the court without a jury, and judgment was rendered that appellant take nothing by his suit against appellee. The court in its judgment stated certain recitations; otherwise, there were no requests for findings of fact and conclusions of law, and none were filed.

Appellant thereafter timely perfected this appeal, alleging six points of error in his brief. In points of error numbers one and four appellant alleges the court erred in holding that title to the kiosk passed to the appellee because the kiosk was personalty and appellee's acts in taking possession of the kiosk constituted an act of conversion. In points of error numbers two and three appellant alleges the court erred in holding that appellee obtained title to the kiosk by foreclosing a lien and through abandonment by appellant. In his final points of error numbers five and six appellant complains of the court's alleged finding of the value of the kiosk and also complains of the introduction of certain testimony. Appellee presents seven counterpoints contesting each of appellant's points of errors and also argues that no findings of fact or conclusions of law were made.

We affirm.

Pursuant to a written lease executed on October 15, 1970, Michel's Parfumes, Inc. leased from appellee an area known as area 131 in appellee's Central Park Mall located in San Antonio, Texas. Area 131 was retail space being some 20 X 26 feet in size. The lease granted a five year term with two additional five year optional terms. The agreed rental for the initial lease term was $500.00 per month. No rentals were ever paid.

The lease authorized the construction of improvements on area 131. Michel's Parfumes, Inc., lessee, hired O. C. Sinclair, a general contractor, to construct a structure on area 131. The structure, called a "kiosk" in construction parlance, was designed as an outlet for retail sales. Sinclair agreed to build the kiosk on a cost plus twenty percent basis, which ultimately amounted to $19,747.74. Sinclair, with the help of hired subcontractors, finished construction of the kiosk. The kiosk was constructed out of "wood and stucco." The kiosk was affixed to the mall floor by driving concrete nails through lumber comprising the bottom boards of the walls of the kiosk. The kiosk contained, besides its open space for retail operations, two lavatories and several small dressing rooms. The kiosk was fully supplied with plumbing and electrical facilities, with the plumbing and electrical conduits coming up through the floor. The kiosk had a roof which was not attached to the ceiling of the mall. The record indicates that the kiosk was a sturdy and solidly built building and, had it stood on open ground, was capable of withstanding extreme natural forces; that no other kiosk in the mall was of such sturdy construction; and that its strong construction gave it no additional value for the function which it served since it was completely enclosed in the mall.

Sinclair, the contractor, testified that after the kiosk was completed there remained unpaid on the construction price an approximate amount of $1,250.00. A lawsuit resulted between Sinclair and appellee, although the record is not clear in what capacity Sinclair sued appellee. In his original answer, appellee alleged, but at trial failed to offer any proof, that Sinclair's suit was based on mechanic's liens outstanding against the kiosk. At any rate, the suit between Sinclair and appellee resulted in Sinclair recovering $2,500.00 from appellee. Sinclair's testimony indicates that he disbursed the recovery to others but couldn't remember how or to whom the recovery was disbursed. Appellant knew of the lawsuit, as evidence by the bankruptcy schedule of Michel's Parfumes, which stated that the kiosk was "in legal dispute between O. C. Sinclair and Central Park Mall as to ownership."

The record does not indicate when Michel's Parfumes commenced business nor when the kiosk was completed. However, on February 1, 1971 creditors filed an involuntary bankruptcy petition against Michel's Parfumes. Michel's Parfumes was finally adjudicated a bankrupt, and appellant was appointed receiver for the assets of the bankrupt. On October 19, 1971, appellant was discharged as receiver and appointed trustee. Approximately five months later, on March 24, 1972, appellant mailed a letter to the appellee demanding the amount of the bankrupt's investment in the kiosk and thereafter filed suit alleging that appellee had converted the kiosk.

The appellee's conduct relative to this suit began on February 12, 1971, when appellee mailed a letter to Michel's Parfumes stating that appellee intended to terminate the lease due to nonpayment of rent, pursuant to provisions in the lease. The total amount of back rent and expenses due was $2,060.76. Michel's Parfumes had never paid any rentals. The letter gave Michel's Parfumes five days to cure default. The letter was returned to appellee marked "unclaimed" on March 10, 1971. Meanwhile, on February 18, 1971, either appellee or O. C. Sinclair entered the kiosk, changed the locks, and took possession of the kiosk. Thereafter the lawsuit between Sinclair and appellee commenced resulting in a recovery in favor of Sinclair against appellee for approximately $2,500.00 for work done in the construction of the kiosk. It appears from the record that after appellee paid this amount to Sinclair he took possession of the kiosk, although it also appears that appellee to no avail attempted to find a tenant for area 131 pending the Sinclair lawsuit. Up until the time of this suit, the kiosk was intermittently vacant or leased to other tenants. Appellee's manager testified that they tried to sell the kiosk but that they found no one who was willing to buy it. Appellee's manager testified that the kiosk had a value of $5,000.00, and that this was the figure they had unsuccessfully tried to sell it for.

The lease between appellee and Michel's Parfumes provided that appellee was entitled to terminate the lease upon the happening of any one or more specified events. Two of these events were the adjudication of the tenant as a bankrupt and the failure of tenant to cure default in payment of rent. Paragraph 1 of said lease provided:

"Improvements and fixtures placed on the leased premises by the tenant are to be provided and installed at the tenant's expense; and, the tenant shall have the right to erect on the leased premises a kiosk, at his own expense, in accordance with the plans and specifications attached hereto as Exhibit 'C' and made a part hereof. The tenant shall have the right to remove said improvements, fixtures, furnishing, kiosk, and other property erected or installed by him at the end of the lease term or any renewal term or extension, provided that all amounts payable to landlord under the terms of this lease and the then-current lease term have been paid."

As mentioned earlier, appellant, in the capacity as trustee of the bankrupt's estate, made a letter demand on March 22, 1972 to appellant seeking the amount of $16,818.60 representing the investment of Michel's Parfumes, the bankrupt, in the kiosk, which kiosk appellant considered an asset of the corporation. The record indicates that appellee offered the kiosk to appellant but that appellant refused it. Of course, by that time, appellee had already effectively terminated the lease and seized possession of the leased premises. However, at trial appellee still offered to return the kiosk to appellant. Appellant took the position at trial that he was entitled to recover the value of the kiosk and accordingly refused tender of the kiosk.

We shall first consider the legal effect of the lack of findings of fact and conclusions of law in the record. The court rendered its judgment holding that appellant was entitled to take nothing against appellee. The judgment contained the following recitation:

"In the absence of application for trial by jury, the court after presentation of the testimony, evidence, and arguments of counsel, found that the kiosk was not a trade fixture; the fair market value of the kiosk in February of 1971 was $5,000.00; that the presumption of nonforfeiture had been overcome by evidence and the burden of proof reverted then to the Plaintiff; that to sue for money damages instead of the improvements themselves over one year after forfeiture and re-entry on the leasehold would have been inequitable if done by the Lessee and was, therefore, inequitable by the Trustee; that the kiosk became a part of the real estate and title thereto was forfeited on February 18, 1971 upon re-entry by the landlord; and that the Trustee rejected the leasehold interest and abandoned whatever rights the tenants had therein. Based on such finding the Court is of the opinion...