Stewart v. Basey

• Decision Date: 30 May 1951
• Docket Number: No. 9967,9967
• Citation: 241 S.W.2d 353
• Parties: STEWART et ux. v. BASEY et al.
• Court: Texas Court of Appeals

Page 353

241 S.W.2d 353

STEWART et ux. v. BASEY et al.

No. 9967.

Court of Civil Appeals of Texas, Austin.

May 30, 1951.

Rehearing Denied July 18, 1951.

E. M. DeGeurin, Austin, for appellants.

Smith & Furr, W. R. Smith, Jr., Austin, for appellees.

GRAY, Justice.

By a written contract appellants leased to appellee three store buildings identified as 1200, 1202 and 1204 South Congress Avenue, in the City of Austin. The lease was for a term of five years beginning January 1, 1949, and ending December 31, 1954, and provided for a monthly rental of $325 per month, payable each month in advance.

Among others, the lease contract contained the following provisions:

'* * * The failure to pay any monthly installment of rental when such installment is due shall terminate this lease at the option of lessors. The failure of lessee to make said payment or payments or the breach of this contract otherwise by him shall render him liable to lessors, as agreed liquidated damages, the sum of One Hundred Fifty (150.00) Dollars per month for each and every month of the unexpired term of this lease which shall become due and payable when the option to terminate this lease is exercised or at the time of the breach of this contract otherwise by lessee if any, and the payment thereof be secured by lien on the property of lessee in said store buildings at said time.

'That the violation of any term of this lease by either party hereto shall terminate the same at the option of the other.'

Appellee went into possession of the store buildings and continued to pay the monthly rentals through October 1949. Some time in September or October 1949, appellee advised appellants he was going to move and, afterwards, did vacate the buildings. After some negotiations between the parties, appellee paid appellants the rental for the month of November 1949, and then told appellants he was going to disregard the contract and would suffer the consequences. Afterwards, the keys to the buildings were delivered to appellants through attorneys.

Appellants sued for the stipulated liquidated damages, and, in the alternative, for actual damages.

Upon a nonjury trial the court rendered judgment for appellants for $38.50 as damages to the buildings caused by the destruction of a partition door, but denied all other relief.

Findings of fact and conclusions of law were filed. Among other findings the trial court found:

'7. Lessee moved from the leased premises during the early part of November 1949; that E. C. Stewart, one of the plaintiffs herein, after he had been advised that the defendant was not going to pay any further rentals other than those for the month of November, permitted the premises to remain in the hands of defendant until on or about December 5, 1949, at which time the plaintiff, E. C. Stewart, demanded the defendant to return the keys to the building to him.

'8. * * * that the entire premises remained vacant from December 1, 1949, until February 15, 1950, on which latter date the plaintiff leased a portion of said premises under a written contract of lease, * * *.

'9. That the lessors, E. C. Stewart and wife, Jennie Eck Stewart, leased the premises known as 1200 and 1202 South Congress Avenue, Austin, Texas, and in addition thereto two four-room apartments and a large iron safe located in said building to the Royal Order of the Eagles, said lease contract beginning on March 1, 1950, and terminating February 28, 1955; * * *.

'11. Lessors have had possession and control of said leased premises to the exclusion of lessee from the time the said keys were delivered to them by said lessee, and as between lessors and lessee the lessors have retained exclusive possession and control of said premises since the date lessors demanded and received the keys from lessee.

'12. Lessors did take exclusive possession and control of said premises upon the delivery of said keys and that lessors have retained exclusive possession and control thereof since that date.

'13. It was the intention of the lessors in demanding the keys of said lessee to take exclusive possession and control of said premises to the exclusion of lessee.

'14. That lessors elected, and did elect, to rescind and terminate said lease contract as per their option to do so contained in said lease contract, and that when lessors released the premises, lessors did so for lessors' own benefit and not for the benefit of lessee.

'15. That said lessee surrendered all of his rights in and to said premises and property to said lessors, and said lessors accepted said leased premises and property with the intention of accepting such surrender of said lessee.

'16. That by the termination of said contract by lessors, it was the intention of lessors that said lessee was to be discharged from any other further liability to said lessors after November 1, 1949, except as per the liquidated damages clause in said lease contract, and for cost of restoring said buildings to their prior conditions less normal wear and tear.

'17. I further find that the plaintiffs and the defendant by their respective attorneys agreed upon the trial of this cause that the difference between the amount of rental payments accruing to the plaintiffs by reason of the leases to the Royal Order of the Eagles and the Austin Neon Advertising Company, and the rental payments which would have accrued under the lease agreement between the plaintiffs and the defendant herein were ascertainable from a mere reading of the respective lessees.'

The conclusions of law of the trial court material here are:

'1. I conclude as a matter of law that under the provisions of the lease contract that upon the failure of the defendant and lessee to pay the rent due for the month of December 1949, the plaintiffs and lessors had the right to terminate said contract, and did terminate such contract, and exercised their option to terminate such contract, by demanding the keys of said lessee, by entering into possession and control of the premises to the exclusion of the lessee.

'2. I conclude as a matter of law that it was the intention of the lessors to release said lessee from any liability to them for future rents, or future damages, after said contract was terminated except insofar as the liquidated damages feature of the contract was applicable.

'3. I conclude as a matter of law that the provision for liquidated damages contained in the lease contract cannot be collected for such provision is a penalty.

'4. I conclude as a matter of law that lessors and plaintiffs having elected to terminate the contract and repossess themselves of the leased premises and are precluded from standing on the contract and collecting rentals or damages for failure to pay rentals thereunder, under the lease contract and the facts in this case.

'5. I conclude as a matter of law that the acts and conduct of lessors amounted to an acceptance of the surrender of the premises by lessee by operation of law.

'6. I conclude as a matter of law that the acts and conduct of said lessors and lessee amounted to an implied agreement to terminate said contract by operation of law, and thereby relieve lessee of further liability thereunder, except for necessary repairs to restore said buildings to their prior condition and except as to liquidated damages provided for in said lease, which liquidated damages cannot be collected as a matter of law.'

By appellants' pleadings they sought a recovery of liquidated damages and had the burden of proving that it was the intention of the parties in making the contract to provide for liquidated damages. Sanders Nursery Co. v. J. C. Engelman, Inc., Tex.Civ.App. 109 S.W.2d 1131, Er. Dis.; J. C. Engelman, Inc., v. Sanders Nursery Co., Tex.Civ.App., 140 S.W.2d 500, 510, Er. Ref.; Linberg v. Finks, 7 Tex.Civ.App. 391, 25 S.W. 789, 791, Er. Ref. And the question is to be determined by the nature of the contract, its terms, the consequences that would arise from its breach and the circumstances of the transaction. Palestine Ice, Fuel & Gin Co. v. Walter Counally & Co., Tex.Civ.App., 148 S.W. 1109, Er. Ref.; Ferguson v. Ferguson, Tex.Civ.App., 110 S.W.2d 1016.

The testimony relating to the making of the lease contract was: the contract itself and the testimony of appellant E. C. Stewart, who testified in person and by deposition taken before the trial. Appellee did not testify and neither did Mrs. Stewart. E. C. Stewart testified that prior to making the contract sued on, appellee had a lease for three years on store buildings 1200 and 1202; that the rental was $175 per month, and that that lease contained a clause providing for liquidated damages at $75 per month, in the event of a breach. This lease was prepared by appellants' attorney who put the liquidated damage clause in it, and 'that was his (the attorney's) idea to put it in there.' That later another store building (1204) was leased to appellee and the contract in question was made, and as to the makign of this contract he said:

'A. The first lease we had with Mr. Basey on the first property, on 1200 and 1202 called for $75.00 a month liquidated damages in event of breach of the contract. In rewriting the contract, we took the matter into consideration and thought it out that it was almost doubling the amount of rental and the premises, so we doubled the amount of the liquidated damage in the contract.

'Q. Did you call that provision, that change to the attention of Mr. Basey? A. I did, yes, sir.

'Q. Before he signed the contract? A. Yes, sir.

'Q. What did he say? A. I don't recall his remarks, but he signed it understanding-we went through it at our office before we ever went to McBee's court, or the Justice of the Peace, to sign it, and told him at the time that was the only change other than the difference in rent price, that had been made in the lease contract and the former one, that they were identical contracts with the exception of the amount of rent and the...