Palm v. Mortgage Inv. Co. of El Paso, 4696

• Decision Date: 25 January 1950
• Docket Number: No. 4696,4696
• Citation: 229 S.W.2d 869
• Parties: PALM v. MORTGAGE INVESTMENT CO. OF EL PASO.
• Court: Texas Court of Appeals

Page 869

229 S.W.2d 869

PALM v. MORTGAGE INVESTMENT CO. OF EL PASO.

No. 4696.

Court of Civil Appeals of Texas, El Paso.

Jan. 25, 1950.

Rehearing Denied March 1, 1950.

Andress, Lipscomb & Peticolas, El Paso, for appellant.

Burges, Scott, Rasberry & Hulse, El Paso, for appellee.

McGILL, Justice.

The controlling question presented by this appeal is whether certain implied covenants should be incorporated in a written lease of property known as 206 Mills Street in the City of El Paso, by appellee as lessor to appellant as lessee. On May 2, 1941, by written lease of that date appellee leased to appellant that certain building known as 206 Mills Street, El Paso, Texas, for a term to commence on June 15, 1941, and to end on September 15, 1947. The leade contained the following provisions:

'2. The rent of said premises shall be a minimum of Fifteen Thousand And No/100 ($15,000.00) Dollars, payable in the following monthly installments in advance on the fifteenth day of each and every calendar month of said term payable in monthly installments, in advance as follows: $200.00 on or before the 15th day of June, 1941, and a like amount on the corresponding day of each and every month thereafter of said term, plus a yearly sum based on six per cent (6%) of the gross sales as hereinafter provided in Paragraph 21a * * *.

'3. Said premises shall be used only for the purpose of shoe store for retail business and shoe repair shop conducted by Dudley G. Palm and for no other purposes whatsoever.'

'18. The Lessee agrees that in the event it becomes necessary for the Lessor to take legal action to enforce the covenants provided to be performed by the Lessee, under the terms of this lease, or in the event it becomes necessary for the Lessor to take legal action to collect any rent or rents due or to become due under the terms of this lease, that he will pay to the Lessor all costs arising in connection with said action, including reasonable attorney's fees; * * *.'

'21a. The rental for the premises herein leased, for the full term shall be $15,000.00 or a sum equal to 6% of the total gross sales for the period begining June 15, 1941, and terminating September 15, 1947, whichever sum is the greater. It is understood and agreed that an accounting will be made annually, the first accounting to be made for the term from June 15, 1941, to December 31, 1941, and thereafter accountings to be made at the end of each year for the period covering from January 1st to December 31st of each of said years, Except for the last accounting, which shall be made on September 15, 1947, for the period from January 1st, 1947, to and including September 15, 1947. On December 31st of the years 1941 to 1946 inclusive and on Deptember 15, 1947, or within fifteen (15) days after said dates lessee shall furnish lessor with a certified statement showing all gross sales for the preceding period of the term of this lease and if 6% of such gross sales exceed the rental for such term at $200.00 per month, Lessee shall pay to Lessor the excess over and above the rental paid at the rate of $200.00 per month, so that lessor shall receive $200.00 per month, or 6% of the gross sales, whichever sum is the greater. Such annual excess payments shall be due within fifteen (15) days after the termination of the term for which they are due. Lessee further agrees on or before March 15th of each year to furnish Lessor with a copy of each annual income tax return to check the certified account previously delivered lessor, if requested by lessor. Lessor may at its option examine or cause to be examined the books of Lessee, in order to check the certified statement, and the annual income tax return. The failure on the part of lessee to furnish such certified statements, and annual income tax returns, or to allow Lessor to audit lessee's books, or to make such annual excess payments, as they become due, shall be considered a breach of this lease and default in the performance of an obligation imposed on lessee.'

Appellee as plaintiff in the trial court alleged: 'Defendant, in addition to the express covenants of such lease in the light of the circumstances surrounding the dealings of the parties, the subject matter involved and the interest and situation of the parties, impliedly covenanted and bound and obligated himself (1) to so conduct a show store for the mutual benefit of the parties as to produce a rental in excess of the minimum rental; (2) to use his best efforts or, in any event, to use reasonable diligence in operating a shoe store and repair shop to obtain the highest volume of business, to the end that such operation would produce for plaintiff a maximum rental; (3) to continue through the term of such lease to operate in good faith from said premises a retail shoe store and repair shop of the same character previously operated and in the same manner as an operator of ordinary prudence would operate the same with due regard to the interests of both plaintiff and defendant; (4) not to curtail or cut down his previous, usual and customary operations from said premises and (5) to conduct in good faith his retail shoe store and repair shop business from said Mills Street store to the mutual interest of both plaintiff and defendant, exercising his usual and customary business ability.'

Breach of such implied covenants was alleged in that the defendant after plaintiff had advised him that it would desire possession of the leased premises on September 15, 1947, on termination of the lease, acquired a store room at 216 North Stanton Street, El Paso, Texas, with the intention of substantially removing prior to the termination of the lease, and entirely removing at the end thereof his business from the Mills Street store, and on February 19, 1947 that he did establish a store at 216 North Stanton Street and did substantially remove the major portion of his business from the Mills Street store to the Stanton Street store during the unexpired period of the lease. Plaintiff sought to recover 6% of the combined gross sales made from the Mills Street and Stanton Street stores for the period from January 1, 1947, to September 15, 1947, less the sum of $1700 being the minimum $200 per month provided by the lease, which defendant had paid. Defendant denied that any of the implied conditions or covenants alleged by plaintiff were within the contemplation of the parties at the time the lease was made, and alleged that the contract of lease was unambiguous and that the additional terms alleged by plaintiff could not be added to it.

Trial was to the court, and judgment rendered for plaintiff for damages in the sum of $2046.28 with interest from September 15, 1947, amounting to $212.45, and attorneys fees of $500 and costs. Appellant requested the court to file findings of fact and conclusions of law, and in response to such request the court did file elaborate findings and conclusions. We reproduce those findings and conclusions which we deem material:

Findings.

'(3) I find that some months prior to January 1, 1947, plaintiff advised defendant that it desired possession of the leased premises on September 15, 1947, the termination date of the lease, due to the fact that it had rented the premises to Woolworth's. Thereafter, and on or about the 20th day of November, 1946, defendant leased the premises known as and located at 216 North Stanton Street, El Paso, Texas, for the term beginning January 1, 1947, and on or about February 19, 1947 opened a new retail shoe store at said premises known as 216 N. Stanton Street under substantially the same name. I find that from and after January 1, 1947, defendant materially and substantially curtailed his stock of merchandise and his shoe business, and materially and substantially changed his method and manner of doing business in the leased premises located at 206 Mills Street, El Paso, Texas, in that (1) he removed from the Mills Street location $20,527.76 from his stock of shoes and $761.97 from his stock of hosiery and findings between dates of January 1st and February 19, 1947, and thereafter maintained only a small stock of retail shoes ahd repair materials amounting to about $9,000.00 in March, $6,000.00 in April, $5,000.00 in August and $1,500.00 on September 1, 1947; (2) after January 1, 1947, and before February 19, 1947, defendant removed from the Mills Street location to the Stanton Street location nine fitting chairs and one of his cash registers and thereafter maintained only nine fitting chairs and one cash register in the Mills Street location; (3) during January and February, 1947, defendant and his employees were necessarily engaged partly in removing merchandise, rearranging the Mills Steet store and preparing the new store for occupancy, and the store at the Mills Street location was necessarily upset to some extent in rearranging the same and in removing said fitting chairs and other equipment formerly used in the Mills...