National Alfalfa Dehydrating & Milling Co. v. 4010 Washington, Inc., 24899

• Decision Date: 07 October 1968
• Docket Number: No. 24899,24899
• Parties: NATIONAL ALFALFA DEHYDRATING AND MILLING COMPANY, Respondent, v. 4010 WASHINGTON, INC., Appellant.
• Court: Missouri Court of Appeals

Page 757

434 S.W.2d 757

NATIONAL ALFALFA DEHYDRATING AND MILLING COMPANY, Respondent, v. 4010 WASHINGTON, INC., Appellant.

No. 24899.

Kansas City Court of Appeals, Missouri.

Oct. 7, 1968.

Motion for Rehearing and/or Transfer to Supreme Court Denied

Dec. 2, 1968.

Application to Transfer Denied Jan. 13, 1969.

William V. North and Hudson L. McGuire, Jr., Kansas City, for appellant; Brewer & Myers, Kansas City, of counsel.

Albert Thomson and John R. Cleary, Kansas City, for respondent; Linde, Thomson, VanDyke, Fairchild & Langworthy, Kansas City, of counsel.

HOWARD, Presiding Judge.

This is a suit concerning a long-term written lease wherein trial to the court without a jury resulted in a judgment for the landlord in the amount of $4,006.00. The landlord appealed from this judgment claiming that it was entitled to a judgment in the amount of $12,264.00. The tenant did not appeal from the judgment below.

The factual situation is basically undisputed and may be chronologically stated as follows. On January 19, 1960, National Alfalfa Dehydrating and Milling Company (hereinafter called National) leased from 4010 Washington, Inc. (hereinafter referred to as 4010 or landlord) the entire second floor of a building owned by 4010 and located at 4010 Washington Street, Kansas City, Missouri, for a term of five yhears, from April 1, 1960 to March 31, 1965. A gross rental was provided payable at the rate of $750.00 per month for the first 24 months of the term, and $950.00 per month for the last 36 months of the term. Paragraph 25 of this lease gave the lessee an option to extend the lease for an additional 5-year term at the rate of $950.00 per month, plus a cost of living increase. This option to extend was to be exercised by one year's notice given on or before April 1, 1964. National did not exercise this option.

On October 21, 1964, the parties entered into an extension agreement whereby the lease of January 19, 1960 was extended for a period of 3 years, from April 1, 1965 to March 31, 1968. This extension agreement provided for a gross rental payable at the rate of $750.00 per month for the 36 months of the extended term. This extension agreement contained a cancellation clause in paragraph (c) thereof which reads as follows:

'Lessee may cancel this lease as of the last day of any calendar month subsequent to March 31, 1966, provided that Lessor has first been given not less than six months written notice of lessee's intention so to cancel this lease, and that on or before the effective date of such cancellation Lessee has paid to Lessor (in addition to all other sums due to Lessor by Lessee under the terms of this lease prior to said cancellation date) six percent (6%) of the rent which would have been due to Lessor by Lessee for the cancelled portion of the extended term had Lessee not exercised this cancellation privilege.'

Thereafter, on August 17, 1965, National gave notice of cancellation as of February 1, 1966. This notice reads as follows:

'This is to notify you that we will terminate our lease covering office space in the 4010 Building as of February 1, 1966.'

Fourteen days after the giving of the above notice, on August 31, 1965, National executed a lease for space in a new office building in Overland Park, Kansas, owned by one John L. Bear (hereinafter referred to as the Bear Lease). This lease was for a term of 5 years, from February 1, 1966 to January 31, 1971. It covered 4410 square feet of floor space at a rental of $1,470.00 per month plus escalator clause. This lease gave National a credit of $1,200.00 on the second month's rent stated to be in view of the cancellation penalty which National would be required to pay to cancel its lease with 4010 4010 did not respond in any way to the notice of termination received from National under date of August 17, 1965. There was no communication between the two parties and on February 1, 1966, National moved out of its space in the building at 4010 Washington. On February 15, 1966, 4010 gave notice to National that it was 'in default of payment for rent and electric current for the month of February, 1966' and that National had 'wrongfully vacated the premises described in that lease.'

Under date of March 22, 1966, the attorney for National wrote a letter to the attorney for 4010 which referred to two previous telephone conversations between the two attorneys and asked 'how the matter should be handled.' In response to this letter, the attorney for 4010 wrote to the attorney for National on April 15, 1966, stating 'We do not think it appropriate for us to suggest that National handle the situation any differently from following the terms of its lease.'

Under date of April 18, 1966, the attorney for National replied to the last mentioned letter. It made reference to the notice of termination given by National on August 17, 1965, and then said:

'Your corporation apparently had another tenant at the same or a better rental, and your corporation was more than agreeable to this termination, since National heard nothing from it.

'We would like to work the matter out with you and hope you will permit us to do it.'

The attorney for 4010 responded by a letter dated April 21, 1966, which denied that 4010 had another tenant and was agreeable to the termination, and said in part:

'Under the terms of the Extension Agreement, National presently is clearly obligated for rent and current through April, 1966. There is not now and never has been anything to work out about that obligation. 4010 Washington, Inc. reminded National of its rental obligations in its letter of February 15, 1966, and we again called National's lease obligations to your attention in our letter to you dated April 15, 1966. Since these obligations have remained in default notwithstanding our correspondence, 4010 Washington, Inc. has given notice to National, dated this date, and a copy of that notice is enclosed.'

On the same date, April 21, 1966, 4010 gave notice to National that it had breached its lease and the extension agreement thereof by failing to pay rent for the months of February, March and April, 1966, and by permitting the leased premises to remain unoccupied. The notice then declared that 4010 elected to cancel the lease under paragraph 14 thereof and to hold National for the rent and other charges for the balance of the term or until the space was rented to others.

On April 27, 1966, National filed suit for declaratory judgment in the circuit court of Jackson County, Missouri, stating that it of Jackson County, Missouri, stating that it had elected to terminate the lease as of February 1, 1966 and that 4010 did not object or otherwise reply to the notice of cancellation and alleging that 4010 was therefore estopped to deny the effectiveness of the notice of cancellation and praying for a declaration that National was not indebted to 4010 under the lease in any amount in excess of the cancellation penalty of $1,125.00.

The trial court concluded that the notice of termination dated August 17, 1965, which purported to terminate the lease as of February 1, 1966, 'was sufficient to effectually cancel the lease at the first allowable time, which was April 30, 1966'; that by failing to object, 4010 'waived its right to claim that such vacation of the premises was a breach of the lease'; that by reason of the letters of February 15 and April 21, 1966, 4010 indicated that it was holding National liable for rent for the balance of the lease and that therefore National was not obligated to tender rent for the months of February, March and April, plus the six per cent penalty in order to effectuate the cancellation of the lease as of April 30, 1966. The court concluded that the lease was cancelled as of April 30, 1966, and that National owed rent for the months of February, March and April only, plus the 6% cancellation penalty plus interest, and gave judgment on this basis in the amount of $4,006.00 to 4010.

Paragraph 14 of the lease, under which 4010 now claims, reads as follows:

'If default shall be made in the payment of rent, or if Lessee shall default in any other covenant or condition of this lease, then, if Lessee shall continue in default of rent after fifteen (15) days' notice, in writing, by Lessor to Lessee specifying the rent due, or shall continue in default of any other covenant or condition of this lease after thirty (30) days' notice, in writing, by Lessor to Lessee of the existence of such default or, if more than thirty (30) days are required to correct with reasonable diligence the matters complained of in said notice, Lessee shall fail within said period to commence the same and thereafter prosecute the same to completion with reasonable diligence, Lessor shall, at its election, have the right to cancel this lease and have immediate possession of the demised premises, without waiving or relinquishing any claim for rent or damages then due, and Lessee shall remain liable as hereinafter provided. In such event Lessor, without prejudice to any other right or remedy which it may have hereunder or by law, may re-enter the demised premises either by force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the demised premises by appropriate suit, action or proceeding, and remove their effects and hold the demised premises as if this lease had not been made. Notwithstanding such termination, and during the full period which would otherwise have constituted the balance of the term of this lease, Lessee shall continue liable for the performance of all of the covenants of Lessee under this lease including Lessee's covenant to pay the full amount of rent reserved hereunder, and Lessor at its option may rent the demised premises for a term, or terms, which may be less than, or exceed the period which would otherwise have been the balance of the term hereof, in which event or events Lessor shall apply any monies collected FIRST to...