Mitchell's, Inc. v. Nelms

• Decision Date: 01 May 1970
• Docket Number: No. 17436,17436
• Citation: 454 S.W.2d 809
• Parties: MITCHELL'S, INC., Appellant, v. Mary NELMS, Dick P. Wood and Vernon Gatlin, Trustees of the State of R. C. Nelms, Jr., Deceased, Appellee.
• Court: Texas Court of Appeals

Page 809

454 S.W.2d 809

MITCHELL'S, INC., Appellant, v. Mary NELMS, Dick P. Wood and Vernon Gatlin, Trustees of the State of R. C. Nelms, Jr., Deceased, Appellee.

No. 17436.

Court of Civil Appeals of Texas Dallas.

May 1, 1970.

Rehearing Denied May 29, 1970.

Morris I. Jaffe, Wynne, Jaffe & Tinsley, Dallas, for appellant.

J. Willard Gragg, Gragg & Storey, Dallas, for appellee.

CLAUDE WILLIAMS, Justice.

Mitchell's, Inc. brought this action originally against R. C. Nelms, Jr. to recover damages for alleged breach of a contract entered into between Mitchell's, Inc. and R. C. Nelms, Jr. on December 13, 1960. Following trial before the court without a jury judgment was rendered denying plaintiff any recovery against defendant.

FACTS

The facts were undisputed or stipulated. On July 27, 1948 R. C. Nelms, Jr. was the owner of certain property in the City of Dallas described as Lots 1, 2, 5 and 6 in Block 3/5687 of the Lovers Lane Addition. On that date Nelms, as lessor, leased this property to Mitchell's, Inc., as lessee, for a period of twenty years extending from July, 1948 to August 1, 1968. The monthly rental was $250. The lease provided that lessee had the right to assign the lease without consent of the lessor. On July 27, 1949 this lease was amended to provide that lessee was granted an option to extend the lease for a period of ten years, or until August 1, 1978, at a rental of $500 per month.

A controversy arose between lessor and lessee in which lessor contended that lessee had breached the lease provisions relative to construction of improvements on the premises and a suit was filed styled R. C. Nelms, Jr. v. Mitchell's, Inc. and being No. 37829--B/A in the 14th District Court of Dallas County, Texas. After considerable negotiations this suit was settled and compromised by a written agreement entered into between Nelms and Mitchell's, Inc. on December 13, 1960. The material provisions of the settlement agreement, hereinafter referred to as the '1960 agreement' and which is the basis of this litigation, are summarized as follows:

In Paragraph 1 it is recited that the present tenant, 11 Sorrento, Inc., is guilty of breach of certain terms of its sublease of the premises in question and that an effort will be made by Mitchell's, Inc. to arrange for such sub-tenant to cure the defects and in the event such is done within a definite time limit the 'rental payable to Lessor by Lessee shall be $500.00 per month commencing August 1, 1960 as above set forth.'

Paragraph 2 provided:

'The Base Lease provides that Lessee may lease the premises to other parties. In the event Lessee decides to execute a lease to any other person, firm, or corporation covering all or any part of the leased premises, such new lease must have the written consent of Lessor. Lessor agrees not to unreasonably withhold his consent any any such new lease shall be subject to the terms and conditions of this agreement insofar as Lessee and Lessor are concerned.' (Emphasis supplied.)

In Paragraph 4 it is provided that in the event the present sub-tenant is evicted and a new sublease is made by lessee the rental in the base lease shall be altered to provide that lessor shall receive a minimum monthly rental of $500 per month. Additionally all rental received by lessee over the sum of $1,250 per month shall be divided equally between lessor and lessee. For example, should a sublease provide for payment of $1,500 per month as rental lessee shall be obligated to pay lessor $500 per month plus one-half of the difference between $1,250 and $1,500, or an additional $125 per month.

In Paragraph 6 it is agreed that in the event of cancellation of the lease with 11 Sorrento, Inc. lessee will proceed immediately to obtain a satisfactory sublease of the premises for the mutual benefit of lessor and lessee. It was agreed that in the event a sublease acceptable to both lessor and lessee had not been obtained by September 1, 1961, then the rental due lessor by lessee shall be automatically increased to $500 per month which shall be in force and effect until August 1, 1968, the termination of the primary term of the base lease. It was agreed further that if no sublease is made and lessee exercised his option to extend the base lease for an additional ten years then the rental due lessor for the ten-year period is $1,000 per month and as modified by the formula in Paragraph 4 above.

In Paragraph 11 the parties agreed that in order to obtain a satisfactory tenant it would be necessary to give a lease of at least fifty years' duration in order to obtain proper financing to construct a structure on the property for the new tenant. It was specifically agreed that in the event no new tenant is found for the premises in question by September 1, 1961 the provisions of Paragraph 6 of this agreement go into effect. 'In the event no new tenant is found for the premises in question by September 1, 1962, the right to the fifty year or more term provided for herein shall terminate and the provisions of paragraph 6 hereof go into effect with the lease terminating as presently provided in the Base Lease at the end of the primary term or at the end of the option term if the option is duly exercised.'

The remaining portion of the 1960 agreement relates to arbitration of differences. This provision was never implemented.

It is stipulated that no new tenant was obtained for the premises by lessee, Mitchell's, Inc., before September 1, 1961. No new tenant was secured by Mitchell's, Inc. prior to September 1, 1962.

On May 15, 1963 Mitchell's, Inc. entered into an option agreement with one Clark Bass who was attempting to secure a charter for a national bank. The option agreement provided that if the charter for the bank was obtained Mitchell's, Inc. would sublease the premises in question for a primary term of ten years with two option periods of fifteen and twenty-five years, totaling fifty years. The sublease was to provide for a base rental of $1,250 per month during the first five years of the lease and of $1,500 per month during each year thereafter, including the years in the option periods. It was agreed that the lease would further provide for additional rental to be paid contingent upon excess deposit over the sum of $10,000,000. This option agreement was forwarded to attorney for Nelms.

On July 15, 1963 Nelms and his attorney received notice that the national banking charter applied for by Bass had been granted and Bass indicated his willingness to exercise his option to acquire the lease referred to in the option.

On September 12, 1963 Mitchell's, Inc. forwarded to Nelms' attorney a proposed lease with Bass which incorporated the terms of the option agreement referred to above.

On September 18, 1963 Nelms' attorney wrote the attorney for Mitchell's, Inc. and rejected the lease. In his letter Nelms' attorney said: 'Unless a lease providing for very substantially more rental could be obtained, then it would be his desire and election that the property remain under the terms and conditions of the settlement agreement as set forth therein.'

It was stipulated that between the time of the execution of the settlement agreement on December 13, 1960 and until January, 1969 the only lease submitted to Nelms by Mitchell's, Inc. with the request that the same be executed by said Nelms is the one sent Nelms' attorney on September 12, 1963. At no time since December 13, 1960 had Nelms refused to sign a new lease contract as lessor with Mitchell's, Inc. as lessee, and with such lease incorporating the terms of the settlement agreement of December 13, 1960, although Nelms did refuse to sign the lease referred to and tendered on September 12, 1963.

During the trial the appellant offered in evidence two undated and unsigned lease forms concerning International Industries, Inc. and Ralston Purina Company. Mr. Gragg, attorney for Nelms, testified that these were submitted to him in 1968 and 1969 and were never accepted.

On January 31, 1968 Mitchell's, Inc. elected to exercise its option to extend the lease agreement for a ten-year period, as provided in the 1949 amendment to the base lease. In said letter Mitchell's, Inc. said: 'Rental for the ten-year option period shall be based upon the provision concerning same in the December 13, 1960 agreement between Mitchell's, Inc. and R. C. Nelms, Jr.'

R. C. Nelms, Jr., the original defendant in the action, died during the pendency of the suit and his executrix, executors and trustees were substituted, same being Mary Nelms, Dick P. Wood and Vernon Gatlin, as independent executrix, executors and trustees of the estate of R. C. Nelms, Jr., deceased.

Following presentation of the evidence, the trial court rendered judgment denying Mitchell's, Inc. any recovery against Nelms. At the request of Mitchell's, Inc. the trial court made findings of fact and conclusions of law. The trial court found the facts as above outlined and concluded that: 'Nelms did not unreasonably withhold approval of tendered leases, particularly in view of existing contract provisions, and therefore Plaintiff should be denied any recovery.'

Mitchell's, Inc. requested the trial court to prepare and file twenty-three additional findings of fact as well as three additional conclusions of law, all of which were denied by the court.

OPINION

Appellant presents thirteen points of error but concedes in its brief that there are only two principal points to be resolved. Its first contention is that the trial court erred in failing to find and hold that Nelms unreasonably withheld his consent to a...