Henze v. Shell Oil Co., 53859

• Decision Date: 26 July 1988
• Docket Number: No. 53859,53859
• Citation: 758 S.W.2d 93
• Parties: Fred A. HENZE, and Julius A. Sinnwell, Plaintiffs-Appellants, v. SHELL OIL COMPANY, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 93

758 S.W.2d 93

Fred A. HENZE, and Julius A. Sinnwell, Plaintiffs-Appellants, v. SHELL OIL COMPANY, Defendant-Respondent.

No. 53859.

Missouri Court of Appeals,

Eastern District,

Division Three.

July 26, 1988.

Motion for Rehearing and/or Transfer to Supreme Court Denied

Aug. 31, 1988.

Application to Transfer Denied Oct. 18, 1988.

Harold P. Heitmann, Ellisville, for plaintiffs-appellants.

Coburn, Croft & Putzell, Vincent H. Venker, F. Brett Oberheide, St. Louis, for defendant-respondent.

KAROHL, Presiding Judge.

Plaintiffs filed an unlawful detainer action under the first subdivision of Section 534.030 RSMo 1986. They did so in their capacity as owners and as landlord under a lease agreement. They alleged that defendant Shell, as tenant, willfully, and without force held possession of real estate after termination of the time for which the premises were let. These allegations stated a cause of action under the first subdivision of the statute which does not require allegations or proof of demand. The cause was tried on stipulated facts. The trial was a de novo hearing requested by defendant after a prior judgment in favor of plaintiffs rendered by an Associate Circuit Judge. The trial court entered judgment in favor of defendant by dismissing plaintiffs' unlawful detainer action. The court also entered an order for "counter defendant" which directed plaintiffs "to specifically perform under paragraph No. 9 of defendant's exhibit "A" [the lease] and to convey property in question ... [to Shell]." Plaintiffs appeal both parts of the judgment.

The attempt to order specific performance in the unlawful detainer action must be reversed. First, the scope of Chapter 534 relating to forceable entry and unlawful detainer is narrow. The merits of title "shall in no wise be inquired into, on any complaint which shall be exhibited by virtue of the provisions of this chapter." Section 534.210 RSMo 1986. Second, defendant's attempted counterclaim for specific performance was dismissed by the court before trial. Defendant's claim to equitable relief in the form of specific performance or injunction was not before the court. After the counterclaim was dismissed defendant Shell Oil Company filed a separate suit requesting specific performance relief to enforce option to purchase provisions of the lease. That suit was pending at the time of the present judgment. It is based on a claim by Shell that it exercised an option to purchase the premises granted in the lease. The limited scope of the statutory proceeding for unlawful detainer requires the separate suit. Morris v. Davis, 334 Mo. 411, 66 S.W.2d 883, 889 (1933); Sanders v. Brooks, 238 Mo.App. 485, 183 S.W.2d 353, 358-359 (1944). These cases also teach that the appropriate forum to enjoin or stay the unlawful detainer proceeding is in the separate equitable suit. The record does not disclose whether such relief was requested. That part of the judgment which purports to order specific performance is reversed.

Before we address the merits we interpret the form of the judgment dismissing plaintiffs' complaint to be a judgment on the merits. It represents a finding that upon the facts and the law plaintiffs have shown no right to relief. Section 510.140 RSMo 1986. This conclusion is supported by the record which shows that defendant's pretrial motion to dismiss the complaint was overruled. The grounds of the pretrial motion were: 1) lack of subject matter jurisdiction; and, 2) failure to state a cause of action. Under the circumstances the judgment dismissing the complaint must be the result of a finding that plaintiffs, on the basis of stipulated facts, failed to sustain their burden of proof that defendant was guilty of an unlawful detainer as that term is defined for the first subdivision of Section 534.030 RSMo 1986. For the same reason the judgment does not reach a question of whether plaintiffs are entitled to rent or damages during a holdover period.

"The sole issue in an unlawful detainer action is the immediate right of possession. ... It is generally held that counterclaims are also prohibited in unlawful detainer proceedings, regardless of the subject matter, unless permitted by statute. ... Missouri statutes do not so permit." Leve v. Delph, 710 S.W.2d 389, 391 (Mo.App.1986). In deciding this issue evidence of title has been permitted in an unlawful detainer action for the limited purpose of determining who is entitled to possession. F.A. Sander Real Estate & Inv. Co. v. Warner, 205 S.W.2d 283, 288 (Mo.App.1947).

We review a court tried case on stipulated facts. We are guided by Rule 73.01(c)(1) and review both the law and the evidence as in suits of an equitable nature. Because the facts are stipulated no deference regarding credibility of witnesses is required by Rule 73.01(c)(2). The operative facts under this standard of review and the unlawful detainer statute are as follows.

Plaintiffs occupy the position of owners and lessors of 611 Gravois, Fenton, St. Louis County, Missouri. They entered into a fifteen year lease of the premises to defendant Shell. The initial term began on March 23, 1961. The lease granted Shell options to extend the lease for two additional five year terms. If Shell failed to "exercise its then-current option to extend, the term [was] automatically extended from year to year, on the same covenants and conditions as herein provided, unless and until either Lessor or Shell [terminated the] lease at the end of the original term or the then-current extension period or any subsequent year, by giving the other at least thirty (30) day's notice." Both five year options were duly exercised by Shell, thereby extending the lease until March 31, 1986. On March 10, 1986, an agent of Shell notified both plaintiffs by letters that it was exercising the Purchase Option in Article 9 of the lease, "to purchase the premises for $65,000 on the terms, provided in Article 11."

Article 11 of the lease required lessor, within twenty days after notice of exercise of any purchase option, to obtain at their expense and submit evidence of title for examination by Shell. Shell's letters exercising the option designated a title company as escrow agent for the transaction. Shell requested lessors to deposit with the escrow agent the warranty deed together with evidence of title.

On March 28, 1986, counsel for lessors advised Shell that lessors were under no legal obligation to sell the property pursuant to the claimed option. On April 22, 1986, counsel for lessors advised Shell by letter that the option provided for in the lease violated the rule against perpetuities on the authority of Restatement of Property, Section 395 comment b and Simes and Smith, Future Interests (2d Ed.), Section 1244, p. 162. The lease was executed on a form provided by Shell. According to the provisions of the lease Shell's tenancy could extend on a year to year tenancy for an unspecified and indefinite number of years. That was permitted if Shell failed to exercise extension options. The option to purchase was viable any time during the original term or any extension thereof "or any tenancy thereafter." Accordingly, lessors determined that the purchase option was void and unenforceable because the original lease did not provide for the title to vest within the appropriate time period. The stipulated facts recite that the lease contains certain provisions regarding tenancy, a purchase option, holdover tenancies and the nature, duration and transfer thereof. However, "[t]he parties disagree as to the effect of such provisions on the right to possession of the premises after March 31, 1986." The stipulation contains a provision that Shell was "ready, willing and able to purchase the property." The validity of the option is one of the issues to be decided in the equitable suit filed by Shell.

During the dispute Shell tendered rent payments for the month of April, 1986. The rent payments under the lease were $385.19 per month. The check was returned. It also tendered payment for the month of May, 1986. It too was returned. Because of the refusal of plaintiff to accept payments Shell made no further tenders, but placed [rent] monies in escrow until the present time. The parties agreed that the fair market rental value of the property for the period April 1, 1986 to the date of submission of the stipulation was $2500 per month.

It was stipulated that plaintiffs gave no written notice to Shell objecting to a holdover. Under the first subdivision of Section 534.030 no notice to quit is required. Plaintiff Fred A. Henze "testifies he gave such notice orally to defendant." Defendant offered, over plaintiff's objection, documents relating to exercise of the option of purchase and plaintiffs' responses. The objection was that these documents were not relevant or material to any issues in the unlawful detainer action. Except for the effect of these documents, "there is no evidence the plaintiffs consented to Shell holding over after March 31, 1986." The parties agreed the court could rule on the admissibility of the exhibits and decide the case upon the stipulation and exhibits determined by the court to be admissible.

On appeal plaintiffs claim the court erred in dismissing the complaint because the affidavit and complaint in unlawful detainer stated a cause of action. We have disposed of this issue by finding that the dismissal was on the merits. The pretrial ruling determined the complaint stated a cause of action.

Plaintiffs also claim the court erred in granting an order of specific performance. We have disposed of this issue by reversing that order as being unauthorized and not being properly before the court.

Plaintiffs also claim the court erred if it found notice of termination of tenancy was required. Where the relationship of the parties was that of landlord and tenant and the term of tenancy has expired according to the agreement of the parties no notice is...