Wilson Management Co. v. Star Distributors Co.

• Decision Date: 16 February 1988
• Citation: 745 S.W.2d 870
• Parties: WILSON MANAGEMENT COMPANY, Appellee, v. STAR DISTRIBUTORS COMPANY, Appellant.
• Court: Tennessee Supreme Court

Page 870

745 S.W.2d 870

WILSON MANAGEMENT COMPANY, Appellee, v. STAR DISTRIBUTORS COMPANY, Appellant.

Supreme Court of Tennessee at Jackson.

Feb. 16, 1988.

J. Alan Hanover, Hanover, Walsh, Jalenak & Blair, Memphis, for appellant.

John D. Horne, The Winchester Law Firm, Memphis, for appellee.

OPINION

FONES, Justice.

Plaintiff-lessor sued defendant-lessee for the rent due for the balance of the term of a written lease, following lessee's abandonment of the premises, and for a reasonable attorney's fee as provided in the lease. This Court's grant of defendant's Rule 11 application was limited to the propriety of the trial judge's award of an attorney's fee of one-third of the rent due, without hearing any proof as to what would be a reasonable fee.

Defendant is a wholesale liquor distributor, and in 1965 leased premises on Manassas Street in Memphis to be used as an office and warehouse. An L & N Railroad spur track immediately joined the premises and the parties entered into a user agreement with the railroad before the term of the lease began. In 1973 the parties entered into a new lease that involved an increase in the size of the premises, an increase in the rent, and a few other changes, but was essentially the same lease agreement as the parties executed in 1965. However, the 1973 lease omitted the reference to the spur track that was contained in the 1965 lease.

In June 1979, the Interstate Commerce Commission granted L & N Railroad's petition to abandon the spur track that served the leased premises, over the objection of plaintiff and defendant. On 6 October 1980, defendant vacated the premises and notified plaintiff that the loss of the spur track made its continued use of the premises impossible and defendant paid no rent after that date.

Plaintiff brought this suit for the rent from 6 October 1980, to the end of the term, 30 June 1983, and for "reasonable attorney's fees" as provided for in paragraph twenty-eight of the written lease agreement.

A non-jury trial was held on 19 December 1985. Three witnesses testified and the transcript of the entire proceedings consists of ninety-seven pages. At the conclusion of the defendant's proof, plaintiff sought to recall one of his witnesses for rebuttal, which the trial judge denied and immediately initiated a colloquy about the issues he wanted the lawyers to address in post-trial briefs. At the end of that discussion and after deadlines for the filing of the briefs were established, the trial proceedings were concluded. No proof was presented on the day of trial with respect to attorney's fees, but prior to calling the first witness plaintiff's attorney stated that plaintiff was suing for damages for the balance of the term to 30 June 1983, plus attorney's fees and prejudgment interest. Plaintiff's brief, filed in accord with the trial judge's direction, concluded as follows:

Wilson respectfully submits that it is entitled to judgment for breach of lease in the amount of $48,217.38, plus prejudgment interest from June 30, 1983, as well as an award of attorney's fees pursuant to the provisions of paragraph twenty-eight of the 1973 lease, in an amount to be determined by separate application, which Wilson respectfully reserves pending a ruling from the court on underlying liability.

In due course the trial judge filed a memorandum opinion wherein he held that plaintiff was entitled to recover "the balance of rent due under the lease and attorney's fees of one-third of the balance due on the rent." Judgment was thereafter entered for the sum of $48,217.38, unpaid rent, plus $16,072.46 attorney's fees. The Court of Appeals affirmed the trial court on all of the issues raised by defendant, including defendant's contentions that no award of attorney's fees should have been made in this case without proof of what would be a reasonable fee, and that the award was excessive. The Court of Appeals reversed the trial judge's denial of prejudgment interest and held that plaintiff was entitled thereto.

Defendant contends that where an award of attorney's fees is predicated upon a contractual provision calling for a "reasonable" fee, the failure to present proof on the question of what would be a reasonable fee constitutes a waiver of any fee and that the trial court's award of a fee based upon a percentage of the rent recovery was error and should be set aside.

Defendant relies upon Cummings & Co. v. Mascari, 55 Tenn.App. 512, 402 S.W.2d 719 (1965) and Nu-Way Ice Cream Mach. Co. v. Pig'N Whistle, 16 Tenn.App. 581, 65 S.W.2d 575 (1933). Nu-Way is the leading case for the principle asserted by defendant. It was a suit upon an installment note in connection with a conditional sales contract. The Court of Appeals dealt with the issue of attorney's fees as follows:

The note sued on provided for the payment of reasonable attorney's fees in the event the note was placed in the hands of an attorney for collection. Complainant did not introduce any evidence to prove what would be a reasonable attorney's fee. The chancellor held that 10 per cent. of the balance due on the note would be reasonable and proper, and decreed accordingly. The assignment of error by appellant on this action of the court presents the question that the chancellor was not authorized to decree any amount for attorney's fees in the absence of proof, since the note did not provide any specific amount, but merely provided for reasonable attorney's fees. We are of the opinion that this assignment of error should be sustained. If the note had provided a specific amount to be allowed and paid as attorney's fees, and the chancellor was of the opinion that that amount was reasonable, proof would have been unnecessary, since the contract showed that the item was the amount agreed...