Wilkerson v. Williams
| Decision Date | 17 November 1983 |
| Citation | 667 S.W.2d 72 |
| Parties | W.F. WILKERSON and Richard M. Wilkerson, Plaintiffs-Appellees, v. B.W. WILLIAMS, Roy Crunk and wife, Carolyn Crunk, Defendants-Appellants. |
| Court | Tennessee Court of Appeals |
Robert E. Alderson, William C. Bell, Jackson, for plaintiffs-appellees.
W.W. Lackey, Savannah, for defendants-appellants.
This is a declaratory judgment action filed to obtain a declaration of the rights and obligations of the parties to a real estate lease agreement. From an adverse ruling defendants appeal.
The lease agreement in question is between defendant, B.W. Williams, Trustee, as lessor, and plaintiffs, W.F. Wilkerson and Richard Wilkerson, as lessees. Defendants, Roy Crunk and wife, Carolyn Crunk are the real parties in interest, having previously conveyed the real estate involved to Williams as trustee of a Clifford Trust for the benefit of their children. In keeping with the terminology used in the lease agreement, we will refer to the defendants collectively as Landlord and plaintiffs collectively as Tenant. 1
Landlord owns property used as a grocery store, and Tenant operated a grocery business on the property. Landlord leased the property to the Tenant and the lease agreement contained the following clause which is the subject of this suit:
27. SUBLEASE AND EQUIPMENT. Concurrently herewith, or at any time hereafter, Tenant may sublet the premises to David Kendrick for the Primary Term hereof and may give and grant to the said David Kendrick the same options and right of first refusal as are provided in Section 4 hereof. During the Primary Term of such sublease and any extension thereof, should the said David Kendrick default in any payment owed to The Lewis Grocer Company, and if at the time of such default Tenant refuses to assume said indebtedness and cure such default; and if a third party assumes the sublease to Kendrick or purchases the business operated by Kendrick in the Leased Premises or assumes Kendrick's indebtedness to The Lewis Grocer Company, then the monthly rental by the Tenant to Landlord hereunder shall be increased to $2,000.00 per month.
Simultaneously with the execution of the lease agreement containing Paragraph 27, Tenant did, in fact, sell his grocery business to Kendrick and executed a sublease to Kendrick. The sublease to Kendrick provided that the same rights and obligations in assigning and subletting contained in the original lease would apply to the sublease and in essence the sublease stated that consent by the Tenant to sublease is required, but such consent shall not be unreasonably withheld.
At the time the original lease was executed, both Landlord and Tenant were represented by counsel, although it appears the lease agreement was not drawn by counsel for either party. The lease and sublease were prepared by the attorney for Lewis Grocer Company, a wholesale supplier in Mississippi, who for business purposes was interested in the continuation of a viable business in the premises.
In the fall of 1981, Kendrick had apparently decided that he wanted to sell the business and sublease the grocery property to a third party and requested consent for such a transaction from Tenant. Tenant advised Kendrick that he would agree to the subletting, but in exchange therefor demanded increased monthly rental. Kendrick obtained lawyer Dennis Plunk to represent him, and by letter dated November 2, 1981, Plunk advised Tenant that a rent increase was unjustified because there was no provision for such and that a consent to subleasing could not be withheld without a reasonable basis. In reply to this letter, lawyer Plunk received a letter from lawyer Terry Abernathy on behalf of Tenant dated November 3, 1981, which in part stated: "I am certain that you are aware that the original lease on the involved premises requires an automatic increase in Mr. Wilkerson's monthly rent in the event of a sublease of the nature that is presently proposed, and it certainly seems fair and reasonable that Mr. Wilkerson could likewise expect an increase in the rent that he will be receiving." Subsequent negotiations were carried on between Plunk and Abernathy and then with Abernathy's consent between Plunk and Tenant. Kendrick was proposing to sell his business and lease to a Mr. Clausel and subsequently completed the transaction by agreeing to pay Tenant. Landlord likewise consented to the sublease thinking the rent under the primary lease would be increased $250 per month. Tenant filed this suit for declaratory judgment after Landlord demanded the additional rent.
The trial court held that the Landlord was not entitled to the increased rental payment by construing Paragraph 27 as requiring the occurrence of three conditions to trigger a rent increase. The conditions are (1) a default in payments owed by Kendrick to Lewis Grocer Company, (2) a failure of Tenant to assume the indebtedness and cure the default and (3) any one of the other three conditions set out in Paragraph 27. The trial court stated in its opinion that the clause in the contract was not ambiguous, although extraneous evidence was relied upon by the court to reach the ultimate conclusion. We disagree with the trial court and believe the clause in the contract is ambiguous and therefore extraneous evidence was admissible to facilitate the construction and interpretation thereof.
Since the evidentiary questions raised by the issues of Landlord are intertwined with the issue of whether the evidence preponderates against the finding of the trial court, we will consider the latter issue first, ruling as necessary on the evidentiary issues.
Tenant testified that Paragraph 27 of the primary lease was a subject of negotiations between him and Landlord. He further testified that he did not object to Kendrick subleasing the property to Clausel, but he wanted an increase in rent before consenting to the sublease. He eventually consented to the amount of $250 increase. He admitted that in his negotiations with Kendrick concerning Kendrick's sublease to Clausel and the proposed rental increase, he was represented by attorney Terry Abernathy. Mr. Abernathy as attorney for Tenant wrote a letter to attorney Dennis Plunk representing Kendrick, in which he stated:
I am certain that you are aware that the original lease on the involved premises requires an automatic increase in Mr. Wilkerson's monthly rent in the event of a sublease of the nature that is presently proposed, and it certainly semms [sic] fair and reasonable that Mr. Wilkerson could likewise expect an increase in the rent that he will be receiving.
Tenant states that he did authorize Mr. Abernathy to write a letter, but he denies that he authorized him to make the statement contained in the letter. He asserts that Mr. Abernathy was authorized to negotiate the sublease, but was not authorized to negotiate or make any deal with Landlord. Although the letter from Abernathy was introduced by Tenant in his proof in chief, Mr. Abernathy was called by Tenant as a rebuttal witness. One of the issues presented for review by Landlord is whether it was improper to allow Mr. Abernathy to testify in rebuttal. This matter is one that rests solely within the discretion of the trial court, and we can't determine from the record in this case that there was an abuse of discretion. See Johns v. Caldwell, 601 S.W.2d 37 (Tenn.App.1980). However, it is interesting to note that Abernathy did not rebut the contents of the letter. Primarily the testimony concerned the fact that the letter was not meant for the benefit of Mr. Crunk, the Landlord.
Landlord testified that he had no objection to the proposed sublease by the subtenant Kendrick to Clausel, as long as he got his increase in rent which he felt was provided by the lease agreement. He did not have any conversations with Tenant concerning the increase but his conversations were with Clausel and attorney Plunk representing Kendrick. Landlord asserts the court was in error in excluding the testimony of Landlord as follows:
Q. (by Mr. Lackey) Mr. Crunk, was there any discussion at any time, and I believe you said there was, with respect to a part of paragraph number 27?
A. Yes, sir.
Q. What part?
A. The part that if the property was ever leased or subleased, then my rent would increase.
Q. Was there ever any discussion or ever even any mention of any kind about the primary--the Kendricks should default in the payment, or anything of this nature?
A. No, sir.
Q. (by Mr. Lackey) You said that had never been discussed?
A. Right.
Q. When is the first time you ever became aware of any of that, that particular part of it?
A. The day we met in Mr. Ron Harmon's office.
Q. And it was in the document?
A. Yes, sir.
Q. Mr. Crunk, at whose suggestion was this provision again, I realize this is an offer of proof, if the court please.
The Court: All right.
Q. At whose suggestion was this provision about the $250.00 a month increase put in there?
A. Mr. Richard Wilkerson's.
We feel that the trial court was in error in excluding this testimony as it does appear to be relevant on the question of the intention of the parties.
Although a contract cannot be varied by oral evidence, the course of previous dealings, the circumstances in which the contract was made, and the situation of the parties are matters properly to be looked to by the court in arriving at the intention of the parties to the contract. See Kroger Co. v. Chemical Securities Co., 526 S.W.2d 468 (Tenn.1975); Jeffers v. Hawn, 186 Tenn. 530, 212 S.W.2d 368 (1948).
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