Rhoden Inv. Co., Inc. v. Sears, Roebuck & Co.

• Decision Date: 10 September 1973
• Docket Number: Nos. 56762,56883,No. 1,s. 56762,1
• Parties: RHODEN INVESTMENT COMPANY, INC., Plaintiff-Respondent-Appellant, v. SEARS, ROEBUCK AND COMPANY, Defendant-Appellant-Respondent
• Court: Missouri Supreme Court

Page 375

499 S.W.2d 375

RHODEN INVESTMENT COMPANY, INC., Plaintiff-Respondent-Appellant, v. SEARS, ROEBUCK AND COMPANY, Defendant-Appellant-Respondent.

Nos. 56762, 56883.

Supreme Court of Missouri, Division No. 1.

Sept. 10, 1973.

Motion for Rehearing or to Transfer to Court en Banc Denied

Oct. 8, 1973.

Donald W. Giffin, F. Lee Major, III, Kansas City, for appellant Rhoden Investment Company, Inc.; Spencer, Fane, Britt & Browne, Kansas City, of counsel.

Karl F. Schmidt, Larrie C. Hindman, Kansas City, for defendant Sears, Roebuck & Company; Morrison, Hecker, Cozad, Morrison & Curtis, Kansas City, of counsel.

HIGGINS, Commissioner.

Action by Rhoden Investment Company, Inc., for declaratory judgment and rent in which plaintiff was awarded judgment against defendant in sum $13,829.66 representing rentals due plaintiff from defendant in sum $30,897.66, reduced by $17,068 as a 'mitigation factor.' Appellant Rhoden, No. 56883, seeks reversal of the allowance of $17,068 for mitigation, contending it is entitled to judgment in sum $30,897.66; appellant Sears, No. 56762, seeks outright reversal, contending plaintiff should be denied any recovery whatsoever. Heuer v. Ulmer, 264 S.W.2d 895 (Mo.App.1954). (Appeals taken prior to January 1, 1972.)

In 1953 Sears and Rhoden, through its predecessor, Columbia Investment Co. Inc., commenced negotiations with respect to retail store buildings and warehouse facilities in Columbia, Missouri. On October 27, 1953, the parties executed a lease and rider. The lease was 'a Sears printed form' containing some eighteen printed paragraphs, and the demise provision was a typewritten referral to the attached rider. The rider demised premises in Columbia, Boone County, Missouri, described as 'Lots 196, 197, 198, 253, 254, and 255 in Original Town now City, of Columbia, being the entire block bounded by Broadway, First Street, Walnut Street and Second Street * * * together with all buildings and improvements to be located or erected upon all or any part of said premises * * * to be occupied for the sale and storage of general merchandise * * * subject * * * to the zoning laws, building restrictions, regulations and ordinances * * * applicable to the demised premises.'

'Tenant (Sears), in consideration of said demise,' agreed to pay as rental 'for said demised premises,' $2,500 per month plus quarterly percentage rentals, during the 30-year term of the demise beginning upon completion of certain construction, with provisions for increases in rent based upon increases in sales.

Pertinent provisions of the rider follow:

Landlord (Rhoden) agreed to construct and erect improvements and buildings 'upon said demised premises, such work to include the demolition of certain structures now situated thereon and the construction of a retail store building, a service station building, automobile parking facilities * * * all to be done in accordance with plans and specifications furnished by Landlord and approved by Tenant * * *.'

Landlord represented and warranted, E(1), that it would have good title 'to the demised premises * * * and that the same (would) be free and clear of all encumbrances and liens * * *.'

The parties further agreed, F(1), that 'Throughout the term * * * and without payment of any further rentals by Tenant, Landlord shall furnish to Tenant a minimum of Sixty-five Hundred (6,500) square feet of usable warehouse space, but it is mutually understood that Tenant will require additional space in or near * * * Columbia for its use for werehouse purposes in connection with the operation of its retail store upon the premises demised under this lease. Landlord shall furnish, or reimburse Tenant for the 'outside rentals' paid by it for any such additional space * * * so that Tenant will have an additional Sixty-five Hundred (6,500) square feet of usable warehouse space * * * for each * * * ($1,000,000.00) * * * 'annual net sales' * * *. (2) Tenant shall give Landlord written notice of its requirements and Landlord shall have the right within Sixty (60) Days * * * to submit to Tenant a written description and offer of premises which may be used and occupied by Tenant for such purposes. * * * In the event * * * that Landlord does not offer the requested warehouse space * * * and in so far as Tenant is entitled, by virtue of the amount of its 'annual net sales' to be furnished such space by Landlord rent free, Tenant shall have the right * * * to reimburse itself for the rentals paid by it * * * for such additional warehouse space. * * * (4) If Landlord fails to pay or reimburse Tenant for any outside rentals, or whenever Tenant is entitled to reimburse itself for outside rentals, * * * Tenant shall have the right * * * to deduct and retain from the additional rentals, if any, * * * a sum or sums equivalent to the amount of such outside rentals so to be paid or reimbursed.'

Rhoden constructed the required improvements on the demised premises and Sears accepted and occupied them in 1955.

The lease and rider made no demise with respect to warehouse space. Some months following execution of the lease and rider, Rhoden acquired a tract of land north of the demised premises and secured the zoning necessary to its use as a warehouse site. Rhoden constructed and furnished Sears a 9,600-square-foot Butler warehouse building on this tract. Sears participated in the design of the warehouse building and accepted and occupied it in 1955. Sears continued in occupation of the warehouse until February 1966, when it moved from the warehouse claiming it was not 'usable.' Sears retained possession and continued to occupy the demised premises and the retail buildings and parking lot constructed on the demised premises. Rhoden took the position that the 9600-square-foot Butler building complied with the requirement to furnish 6500 square feet of 'usable warehouse space'; that 'Sears and Roebuck was still the tenant' and 'made no effort to lease it to anyone or to sell it.' Sears began deducting from the rentals due on the demised premises the cost of other warehouse space. The deductions amounted to $27,166.78 plus interest at time of judgment in sum $3,730.88, a total of $30,897.66.

Certain additional facts and chronology are necessary to an understanding of the court's findings and the appellants' assertions:

In connection with the zoning of the warehouse tract in July, 1954, Rhoden covenanted with the City of Columbia to provide a 10-foot setback line. In September, 1954, correspondence passed between the parties respecting the need of 13,000 square feet of warehouse space in the event Sears reached its estimated goal of $2,000,000 annual sales, and the height of the floor of the warehouse.

In April, 1955, Rhoden joined with other landowners in the area in a petition to the city for construction of curbs, gutters, and permanent paving on Walnut Street between the demised premises and the warehouse site to the north. The street was improved by the city later in the year. Sears people were interested in and desired the improvement of Walnut Street.

In 1961 Columbia began enforcing a 1951 ordinance which made it unlawful for any vehicle to stop, stand, or be placed in any street, public thoroughfare, or alley, or across the footway or crossing of any street or thoroughfare so as to obstruct or interfere with the free passage of other vehicles. In this connection, certain commercial trucks could use the warehouse docks without extending into the streets. Long tractor-trailer combinations could not unload at the warehouse dock without extending into the street. Sears made use of certain over-the-road common carriers to stock its warehouse. During the period from 1955 to 1961, such carriers either used shorter tractor-trailer units or, if they used longer units which extended into the street, the authorities tolerated their violation of the ordinance. Prior to construction of the warehouse and its use by Sears, Rhoden had no knowledge of the type vehicles or manner of service it would employ in stocking the warehouse.

Also in 1961 some difficulty arose in connection with an urban renewal project.

During the period 1961--1966, negotiations between the parties and Columbia authorities resulted in abatement of enforcement of the ordinance; however, on January 20, 1966, the Columbia Police Department notified the three carriers that served the warehouse for Sears that no longer could trucks be unloaded unless they could 'back in behind the sidewalk.' The trucking companies then notified Sears their units could no longer make deliveries to the warehouse.

During this same period the parties attempted to settle and compromise the warehouse problem. Long trucks would have been able to continue unloading at the warehouse if the dock were redesigned and rebuilt. The negotiations broke down in dispute over who should pay for the alteration of the dock.

Also during this period, on August 10, 1965, Sears made demand for warehouse space 'under one roof in the total amount of * * * 15,000 square feet and accordingly are giving you (Rhoden) written notice as provided' in the rider.

On February 3, 1966, Sears notified Rhoden that it intended to execute a lease for temporary warehouse space on February 10, 1966, 'unless an acceptable solution is reached before this date.' On February 9, 1966, Sears informed Rhoden it would start vacating the warehouse on February 10, 1966. Rhoden replied it was 'ready, willing and able to attempt to work out something,' and was 'prepared to satisfy each and every obligation of landlord under said lease and insist that you (Sears) honor your obligations.'

On March 14, 1966, Sears informed Rhoden that it had vacated the warehouse as of February 28, 1966. Sears rented temporary warehousing at $400 per month, increased to $500 per month January 1, 1969, all of which it deducted from rentals due Rhoden. Sears also deducted moving expenses of $1,666.78.

The court made the...