Hemenway Co., Inc. v. Sequoia Pac. Realco
| Decision Date | 25 September 1979 |
| Docket Number | No. 16264,16264 |
| Parties | HEMENWAY COMPANY, INC., Appellant, v. SEQUOIA PACIFIC REALCO, Appellee. |
| Court | Texas Court of Appeals |
This suit was brought by Hemenway Company, Inc., appellant, against Sequoia Pacific Realco, appellee, for breach of contract. Appellant, an equipment supplier, sued appellee, landlord of a restaurant premises, for breach of appellee's obligation to require its new tenant, Ollie Otten, to assume a specific equipment lease with appellant.
Appellee built a restaurant building and leased it to Vintage Associates, which was to furnish and operate the restaurant. Appellant leased to Vintage Associates the necessary furniture and equipment to operate the restaurant after appellee had signed a "Landlord's Waiver and Agreement Re Fixtures" (LWA). Clause five of the LWA provided that if Vintage Associates defaults resulting in a termination of the lease appellee agrees to require any proposed new tenant, as a condition of renting, to assume Vintage's equipment lease obligation to appellant.
For financial reasons Vintage closed the restaurant and abandoned the building, at which time some of the furniture and equipment covered by the lease was missing due to theft or breakage. Thereafter, appellee leased the premises to Ollie Otten without requiring Otten to assume Vintage's equipment lease obligation to appellant.
The jury returned findings that (1) the appellee had not breached its contractual obligation; (2) appellant sustained no damages; and (3) appellant waived performance by appellee of any obligation to require its tenant, Ollie Otten, to assume the specific equipment lease. The trial court entered judgment for the appellee and appellant has perfected its appeal to this court.
Appellant attacks the jury findings on both the legal sufficiency and factual sufficiency of the evidence. If the record contained some evidence of probative force in support of the jury verdict then the evidence is legally sufficient. See Flavin v. Flavin, 523 S.W.2d 94, 95 (Tex.Civ.App. Houston (1st Dist.) 1975, no writ). In considering the factual sufficiency of the evidence we consider and weigh all of the evidence in the case and will set aside the verdict and remand the cause for a new trial only if we conclude that the verdict is so against the great weight and preponderance of the evidence that it is manifestly unjust. In re Estate of King, 150 Tex. 662, 664-65, 244 S.W.2d 660, 661 (1951) (per curiam).
Shortly after Vintage Associates closed the restaurant in September of 1976, Ollie Otten contacted appellee and indicated that he was interested in leasing the restaurant. On October 20, 1976, Otten sent a telegram to Sequoia which read: "Agree to your contract proposal for building at 1011 N.E. Loop 410 providing we receive key for building for inspection purposes today and with these agreements as soon as possible." That same day Sequoia contacted Mr. Ralph E. Tozier, the representative of appellant, and told him that it had a prospective tenant for the building whose name was Otten. Mr. Tozier testified as follows:
Q. Did you make any statement to whoever called you about the situation at all?
A. I think I said I would get in touch with Otten.
Q. Did you get in touch with Mr. Otten?
A. I did.
Q. Did you telephone him that day?
A. Yes.
Q. What was your discussion with Mr. Otten?
A. I told Mr. Otten that I would come down and see him the following day if that was convenient.
Q. And was that convenient?
A. It was.
Q. And did you come to San Antonio on October 21?
A. I did.
Q. And what was the nature of your meeting with Mr. Otten on the 21st of October?
A. On the 21st of October I went to Mr. Otten's former place of business on San Pedro. He then took me over to the Yesterday's building. He took out his key and we went inside and took a tour of the building . . . .
Q. All right. At that time had he entered into a lease with Sequoia?
A. To the best of my knowledge, no.
Q. What was your discussion concerning the equipment on your dealing with him at that time?
A. My discussion involved us having a lease which I later forwarded to him.
Q. All right. And did you discuss the terms of the lease with him on that occasion?
A. Basically in general terms.
Q. All right. And on that occasion did you tell him that he would have to assume the lease . . . between Hemenway and Vintage?
A. I did not.
Q. You did not?
A. No.
Q. Did you mention to him that there was a requirement between Hemenway and Sequoia . . . that if he leased that property that he would have to assume the Vintage-Hemenway lease?
A. I did not.
During the October 21 meeting Tozier proposed to Otten a lease of the equipment for 24 payments at $2,250 per month, followed by 96 payments of $2,650 per month plus one-half of one per cent of the net sales of the first $500,000.00 annual net sales and one per cent of all amounts over $500,000.00. In terms of total dollars this sum would be greater than the amount realized from an assumption of the Vintage lease.
After Tozier's visit with Otten in San Antonio he returned to Louisiana, drafted the proposed equipment lease, and forwarded it to Otten under cover of letter dated October 28, 1976, with copy to Sequoia.
On November 1, 1976, Sequoia and Otten entered into a written building lease covering the restaurant building. This lease did not include an assumption of the Vintage-Hemenway equipment lease.
Tozier negotiated with Otten until February of 1977 when it became apparent that Otten was not going to lease the equipment. Prior to this time no mention had been made of the LWA to Otten or to appellee. Appellant filed this lawsuit alleging that appellee had converted the restaurant furniture and equipment, and, in the alternative, had breached the LWA. During the trial appellant took a nonsuit on the conversion count and went to the jury on the breach of contract count.
Appellant's assault on the finding of waiver in favor of appellee is based on the following argument: 1) the contract between appellee and Otten was consummated on October 20, 1976; 2) thus, appellee breached the LWA on that date; 3) there can be no waiver after a breach of contract; 4) therefore, appellant's conduct subsequent to October 20 cannot be considered as a waiver of its rights under the LWA.
In support of its contention that the contract between appellee and Otten became binding on October 20, appellant relies on Otten's mailogram of that date to appellee. The mailogram stated that Otten agreed to Sequoia's proposal with certain conditions. The record, however, does not indicate what the proposal was or whether the...
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