Santa Fe Hills Golf and Country Club v. Safehi Realty Co., 48536

• Decision Date: 11 September 1961
• Docket Number: No. 2,No. 48536,48536,2
• Citation: 349 S.W.2d 27
• Court: Missouri Supreme Court
• Parties: SANTA FE HILLS GOLF & COUNTRY CLUB, a Corporation, Respondent, v. SAFEHI REALTY COMPANY, a Corporation, appellant

Page 27

349 S.W.2d 27

SANTA FE HILLS GOLF & COUNTRY CLUB, a Corporation, Respondent, v. SAFEHI REALTY COMPANY, a Corporation, appellant.

No. 48536.

Supreme Court of Missouri, Division No. 2.

Sept. 11, 1961.

Thos. J. Conway, Jr., William B. Bundschu, Kansas City, Popham, Thompson, Popham, Trusty & Conway, Kansas City, of counsel, for appellant.

Walter A. Raymond and Kenneth C. West, Kansas City, for respondent.

STORCKMAN, Judge.

The defendant, Safehi Realty Company, is the owner of a 56-acre tract of land located at 8600 Holmes Street in Kansas City which was improved and equipped as a golf and country club. The plaintiff, Santa Fe Hills Golf & Country Club, was in possession of the property under a written lease for a term of ten years expiring on December 31, 1959. The plaintiff claimed, and the defendant denied, that the defendant had made a valid extension of this lease for an additional five-year term. As a result of the controversy, the plaintiff filed this action in two counts, one for a declaratory judgment coupled with a request for injunctive relief, and the other for specific performance. The trial court found the issues in favor of the plaintiff. The defendant filed a motion for new trial which was overruled and in due course the defendant appealed. The plaintiff will sometimes be referred to as the Country Club and the defendant as the Realty Company.

The ten-year lease provided that, in the event the lessee held over after the expiration of the term, such holding over would not be deemed a renewal or extension but should be deemed a month-to-month tenancy at a rental equal to that of the last month. The Country Club remained in possession after december 31, 1959, and for six months continued to pay the rent provided by the lease. In May 1960 the Realty Company served notice of the termination of the tenancy as of June 30, 1960, on the theory that it was from month-to-month. On June 13, 1960, the Country Club filed this action and thereafter on July 11, 1960, the Realty Company filed in magistrate court a complaint in unlawful detainer which was enhoined by the decree in this case. The Realty Company's evidence tended to prove that the reasonable rental of the real estate which accrued from June 30, 1960, to the time of trial was $21,750 in excess of the amount conceded by the Country Club to be due and owing under the lease. Therefor the amount in dispute, exclusive of costs, exceeds the sum of $15,000 and this court has jurisdiction. Art. V, Sec. 3, Constitution of Missouri 1945, V.A.M.S.; Sec. 477.040, RSMo 1959, V.A.M.S.; Merrill v. Davis, 359 Mo. 1191, 225 S.W.2d 763, 764 ; Veal v. City of St. Louis, 365 Mo. 836, 289 S.W.2d 7, 9 .

The trial court made findings of fact and conclusions of law and decreed that there was a valid extension of the written lease for a period of five years and the Realty Company was ordered to abide by the terms and conditions of the lease during that period of time. In general the contentions of the Realty Company on appeal are that the trial court erred in holding that its board of directors had authority to grant the lease extension made by it, in holding that the Realty Company ratified the lease extension, and in holding that it was estopped to deny the validity of the extension.

The testimony at the trial took a wide range and many exhibits were introduced in evidence, including the mainute books of both corporations. It is unnecessary to recount all of the testimony and documentary evidence. Originally the property in question was owned by a fraternal organization and the golf course was used by a clup consisting of members of the organization and associated bodies. The name of Inahove Realty Company, a Missouri corporation organized on March 23, 1935, was changed to Safehi Realty Company on March 28, 1945, at which time the capital stock of the corporation was increased from 20 shares of the par value of $100 each to 600 shares of the par value of $25 each. The Realty Company was the owner of the real estate in question in and after April 1945; it is the only real estate ever owned by the Realty Company. The charter of the corporation authorizes it, among other things, 'To transact and carry on the business of owning, handling, using and dealing in real estate, or any interest therein'; specifically included in the charter is the power to lease real estate. In April 1945 the Realty Company leased the property for a term of five years to the Country Club which is a corporation organized for the purpose of operating a golf and country club. Near the end of the first lease, the parties entered into a new lease for ten years with a termination date of December 31, 1959. During the years 1953 and 1954, the Country Club formulated plans for making extensive improvements on the property at its own expense which would enhance the value of the property. In view of the contemplated improvements which were of a permanent nature, the Country Club sought an extension and other modifications of the then existing ten-year lease.

Apparently the first recorded activity regarding proposed improvements and a lease beyond December 31, 1959, occurred at the annual meeting of the shareholders of the Realty Company held on January 11, 1954. The minutes of this meeting contain this statement:

'The President and several committee chairmen of the Santa Fe Hills Golf and Country Club then visited the Directors' Meeting, and presented drawings and discussed plans for a remodelling of and addition to the Club-house, which they asked our directors to consider, with a view to having the Safehi Realty Company finance the construction, with a new lease being drawn up to run for approximately sixteen years (ten years beyond the expiration of the present lease), with monthly rental payments being revised upward to take care of the construction expenditure.

'The matter was discussed at considerable length, with the visitors being told that their plans looked very good, but that the Safehi Realty Company would have to borrow the entire amount of funds necessary for such construction, so that all that could be done at this time was to promise that the matter would be given full consideration.'

At a special meeting of the directors of the Realty Company held on February 22, 1954, a resolution was unanimously adopted authorizing Paul L. taylor, president of the company, to write a letter offering the Country Club, among other things, 'a five year extension to the present lease which has six years yet to run.' The directors of the Realty Company and the number of shares owned by each of them during 1954 were: D. A. Johnson, 156 shares; Paul L. Taylor, 150 shares; W. C. Vogt, 30 shares; Paul Baird, 12 shares; and D. A. MacDougall, 6 shares. Thus the five directors together owned 354 shares of the 600 shares outstanding according to the list of shareholders attached to the minutes of the annual shareholders' meeting held on January 11, 1954. Mr. Johnson and Mr. Vogt did not attend the special directors' meeting on February 22, 1954, and the Realty Company pany claims they had no notice of it and that the meeting was therefore not legally constituted.

In response to a letter, evidently written in accordance with the resolution adopted by the Realty Company's directors on February 22, 1954, the president of the Country Club, on March 29, 1954, wrote to Mr. Taylor saying: 'This is to formally acknowledge receipt of your letter of February 23, 1954 wherein the directors of the Safehi Realty Company agreed to an extension in the lease of five (5) years beyond expiration of the present lease in accordance with the terms of the existing lease. We wish to accept this extension; but we believe that the present lease should be modified now to our mutual advantage.' The letter further stated that some of the points that should be clarified in a new lease involved the chattel lien held by the Realty Company on the furniture, fixtures and equipment of the Country Club, a provision covering water line breakage and damage, and a change in the method of paying insurance premiums and taxes. The minutes of a special meeting of the board of governors of the Country Club held on June 24, 1954, recited that the board did not favor extending the lease without these and other modifications specified in the minutes.

There was further correspondence between the parties during 1954 and 1955. In its letter of April 7, 1954, the Realty Company discussed the modifications suggested in the March 29 letter of the Country Club, accepted one and rejected the others, and further stated: 'Regarding the modification of the lease, we feel that the five-year extension was made on the lease, and that it is a very beneficial lease for all concerned.' On September 15, 1954, the Country Club wrote the Realty Company, referred to 'recent conversations', and stated: 'The thought occurs to me that we should either rewrite or amend our lease agreement, in accordance with the various correspondence between Mr. Rhodes and you, commencing March 29, 1954, and my last letter of July 23, 1954. Our attorneys, Mr. Dean Frazier and Mr. Wm. Wade, both of whom are club members, would be glad to assist in this respect if you so desire.' On September 30, 1954, the Country Club again wrote the Realty Company enclosing copies of proposed mailings to members of the County Club regarding the improvement program which included items concerning the grounds and greens, the clubhouse, a new swimming pool and the financing of the program by the members of the club. Further the letter asked for the Realty Company's comments and suggestions on the matters mentioned in the Country Club's letter of September 15. In letters of October 5 and October 19, 1954, the Country Club reported on the progress of the improvement plans and requested a 'firm agreement in writing concerning various terms of the lease agreement'.

On March 21, 1955, Mr. Baird,...