Jennings v. First Nat. Bk. of K.C.

• Decision Date: 26 May 1930
• Docket Number: No. 16939.,16939.
• Citation: 30 S.W.2d 1049
• Parties: J. ALLIE JENNINGS ET AL., APPELLANTS, v. THE FIRST NATIONAL BANK OF KANSAS CITY, RESPONDENT.
• Court: Missouri Court of Appeals

30 S.W.2d 1049

J. ALLIE JENNINGS ET AL., APPELLANTS, v. THE FIRST NATIONAL BANK OF KANSAS CITY, RESPONDENT.

No. 16939.

Kansas City Court of Appeals. Missouri.

May 26, 1930.

Appeal from Circuit Court of Jackson County. — Hon. Darius A. Brown, Judge.

AFFIRMED.

John F. Cell for appellants.

Ryland, Stinson, Mag & Thomson and Edward M. Cox for respondent.

BARNETT, C.

This action was tried in response to a bill of interpleader to determine the right to $2500 which had been deposited with the First National Bank of Kansas City, Missouri. J. Allie Jennings and Charles E. Jennings, her husband, brought suit against the bank to recover this amount, whereupon the bank filed a bill of interpleader wherein it is alleged that the plaintiffs, J. Allie Jennings and Charles E. Jennings, executed a lease dated April 30, 1929, whereby they leased to William T. Moreman certain real estate in Kansas City, Missouri, for a term of five years beginning May 20, 1929, with a right to an extension thereof for an additional term of five years, and for a monthly rental of $500 per month for the first 24 months and $550 per month for the balance of the term; that the contract provided that the lessee should deposit $2500 in cash with the bank to be held and paid on the last five month's rent of the leased property as it became due until the sum was exhausted, and that the deposit should become due and payable to the lessors three days after any due rent day that rent was unpaid; otherwise, the deposit should be applied to the payment of rent for the last five months of the term to be paid at the rate of $500 per month in advance by the bank. The bill prayed that the lessors and the lessee be required to interplead, and that the bank be allowed to bring the deposit into court "which the defendant hereby offers to do" and that the bank receive a reasonable allowance for its appearance. William T. Moreman entered his voluntary appearance and the plaintiffs and the defendant William T. Moreman filed a stipulation which is as follows:

"Notice is hereby waived of the intention of The First National Bank of Kansas City to file an answer in the nature of a bill of interpleader herein, and consent therefor is hereby given. Parties hereto, to-wit: Plaintiffs and William T. Moreman waive jury and agree cause be determined by the court."

Defendant Moreman filed an answer setting up his claim to the deposit and the plaintiffs filed an answer to the bill of interpleader by which they made claim thereto. No question arises upon the sufficiency of the pleadings and the answers are therefore omitted from this statement.

The evidence shows that the plaintiffs executed a lease to defendant Moreman as alleged in the bill of interpleader. The lease was introduced in evidence and contained the following provisions:

"Party of the second part agrees to deposit in escrow for five years from May 20, 1929, with First National Bank, Kansas City, Missouri, to be held by them, with a copy of this lease to apply on the last five months' rent of this five year period, Twenty-five Hundred Dollars ($2500) in cash or Twenty-seven Hundred Dollars. ($2700) worth of United States Liberty Bonds, the excess amount of bonds to allow for deflation, and it is to be expressly understood that the amount of money to be collected on these bonds shall in no event exceed $2500, as the intention of the deposit of this amount of bonds, namely $2700 is merely to secure the escrow agreement of $2500 in cash, to be held by the bank and paid on the rental of these buildings to the parties of the first part monthly as the monthly rent becomes due, until the sum is exhausted pro rata, and any excess over $2500 in cash derived from escrow fund in bank after payment of $2500 shall have been made to parties of the first part, shall be turned over and returned to party of the second part, to terminate at the end of this five year period, cost of the escrow to be paid by party of the second part; all interest on money or bonds deposited in escrow shall go to the party of the second part whenever such interest is due and payable. All money in escrow is to become due and payable to parties of the first part three days after any due rent date, that rent is unpaid, but in no event to be more than $2500 in cash, unless otherwise agreed upon by all parties."

"It is agreed that money in escrow in the First National Bank shall be applicable to the rent for the last five months of this lease and shall be paid monthly at rate of $500 per month in advance out of this fund by the bank, and receipt therefor given the bank by parties of the first part.

Party of the second part will heat building and purchase all fuel and will furnish heat to the store above described in building occupied at present as a grocery store for rental to be agreed upon by party holding lease on grocery store and party of the second part."

"It is understood and agreed by all parties to this lease and agreement that in the event of non-payment of rent on any rent due date, or three days thereafter, and the right to forfeit this lease shall then become operative under the terms of this lease the money or monies in escrow shall become due and payable as a whole, but in no event to be more than $2500 in cash, and that shall end with this forfeiture and collection of this money or monies, in escrow all liability of the party of the second part to the parties of the first part, or any of their representatives, agents or assigns, for any rent due on the property described in this lease, and it is expressly understood in view of this clause calling for cash forfeiture in the event of non-payment of rent that no action will be instituted by parties of the first part in any court of law or by any agent or lessee or any other person or persons related to or acting for parties of the first part. Parties of the first part agree to give twenty (20) days for removal of all physical property and machinery of the party of the second part after such forfeiture shall have been made and effected should such action transpire, and party of the second part agrees to remove all machines and physical property installed by him or his agents within twenty (20) days after any forfeiture such as described shall have been effected, and his lease terminates. It is understood that should this non-payment of rent and subsequent forfeiture ever be effected that the lease shall automatically become immediately void and party of the second part shall not be liable for further rent monies on this lease."

The lease provided that for the last five months' rent the lessee should pay $50 a month in order to complete the payment of $550 per month, in view of the fact that the deposit was to be applied at the rate of $500 a month. The leased property was a garage, and it was recited that parties of the first part included their good will in the lease. Moreman paid the rent for two months and then abandoned the premises and surrendered the keys to the plaintiffs who declared a forfeiture of the lease and made a written demand on the bank for the deposit, which demand was refused. The bill of interpleader was signed by Edward M. Cox as attorney for the bank. He was an officer of the bank and had formerly been a lawyer in the offices of Ryland, Boys, Stinson, Mag and Thomson, who usually acted as attorneys for the bank, and who represented the defendant Moreman in this case. It appeared that the bill of interpleader and the stipulation for waiver of trial by jury was prepared by Mr. Thomson, and Mr. Cox testified that he knew nothing about the controversy except what Mr. Thomson told him. However, the evidence further shows that Mr. Thomson, acting for Moreman, and the attorney for the plaintiffs agreed that the dispute should be adjudicated under a bill of interpleader; that Mr. Thomson presented a proposed bill of interpleader to the attorney for the plaintiffs and asked if he would waive time for filing the bill and thereupon they agreed upon the stipulation which we have set out. There is no intimation that the attorneys for Moreman had any agreement with Mr. Cox for any interest in the attorney's fee allowed by the court or that any part thereof was by them ever received. The court entered a decree by which the attorney for the bank was allowed a fee of $100 and Moreman, the lessee, recovered the balance of the deposit from the bank and by which the costs were taxed against the plaintiffs. A motion for new trial was filed and overruled and plaintiffs have appealed.

OPINION.

Appellant contends that the $2500 deposit, though it was intended to secure the performance of the covenant to pay rent for the last five months of the term, was also a sum to be paid in lieu of performance of the contract; that the amount was reasonable, regard being had to the length of the term and the total rent contracted to be paid and the other covenants to be performed by the lessee, including a covenant to furnish heat, and therefore the plaintiffs were entitled to the deposit as liquidated damages. It is claimed that the damages were uncertain and the contract provided that there should be no recovery of actual damages and that therefore the provision for the forfeiture of the deposit was in no sense penal. We agree that $2500 is not, prima facie, an unreasonable amount as liquidated damages for a failure to pay rent in the sum of $31,800. Furthermore, the use of the words "forfeiture," "forfeit and pay," "penalty" and words of like character does not conclusively establish that the sum so designated is a penalty rather than liquidated damages. [17 C.J. 938-40.] Respondents rely upon the case of Von Schleinitz v. North Hotel Co., 23 S.W. (2d) 64, but it is not controlling. In that case our Supreme Court held that upon abandonment of leased premises by the tenant the landlord has an election either to permit the premises to remain vacant until the end of the term and then sue...