Kennerly v. B. F. Avery & Sons Plow Co.

300 S.W. 159

• Court: Court of Appeals of Texas
• Decided: November 9, 1927
• Docket: No. 2886. [fn*]
• Status: Published

Opinions

RANDOLPH, J.

This suit was filed by ap-pellee against appellants to recover damages for breach of a rental contract. A jury was waived and trial was had before the court. On hearing the case, the trial court rendered judgment in favor of appellee, and from such judgment appellant (defendant below) has appealed to this court.

Appelle.e entered into a contract in writing with appellants, a joint-stock association, whereby appellants leased to appellee certain premises in Amarillo for a period of three years from August 1,1925, at a monthly rental of $209. At the time this lease was executed, the leased premises were under lien obligations, as shown by the findings of the court, of which appellee had notice. The lien was thereafter foreclosed by the holder, who then required and caused appellee to remove from such premises. On removing from the leased premises, appellee negoti-. ated a lease for another building, for which it contracted to pay rent at the rate of $260 per month, to which it removed, and in which it has continued to carry on its usual and customary business.

The trial court found as a fact that the leased premises, on August 1, 1926 (the date of the eviction), had a market value of $350 a month for the unexpired term of the lease —that is, for the two-year period from July 31, 1926, to July 31, 1928 — and that plaintiff expended the sum of $702.50 in removing its usual stock in trade from the leased premises to ■ its new quarters; that .the appellee did not have any right given it, under the lease contract, to assign, sublet, or sell its lease on the premises from which it was evicted. Upon these facts the trial court concluded, as a matter of law, that the ap-pellee was entitled to recover the difference between the market value of the premises, $350 per month, and the contract price $200, for said two-year period, and the expense of the removal of its stock, and rendered judgment accordingly.

In considering this case on appeal, it has been suggested to the writer that neither the trial court nor this court have jurisdiction of the case, for the reason that the pleadings and proof fail to show a legal eviction of the plaintiff. We will therefore dispose of this question of jurisdiction before proceeding with the decision of the other questions which are presented by assignments of error.

The question of the legality of the eviction pleaded is not raised by any of the assignments of error. On the contrary, plaintiff and defendants have each impliedly admitted the eviction. The rule is that, where suit is brought to foreclose a prior lien on land, which prior lien was in existence, and of which constructive notice was given by the record of such lien to the tenant who afterwards acquired the lease, and the tenant is not made a party to the foreclosure proceedings, such tenant is not bound by the decree rendered or by the subsequent proceedings in such suit. Lockhart v. Ward, 45 Tex. 227; Alford v. Carver, 31 Tex. Civ. App. 607, 72 S. W. 869. In the case of Bateman v. Brown, 297 S. W. 775, this court has held:

“This being an action to foreclose liens given upon the land prior to its lease, and the lessor and the tenant both having been made parties defendant, and the receiver having been appointed and having taken, possession of the property as of tlie date of tlie filing of tlie suit and the issuance of notice, there is presented a case of eviction of the tenant by paramount title, the effect of such eviction being to end the relation of landlord and tenant and terminate the lease.”

; And it then proceeds to state thq reverse of the rule, as follows:

“If the Batemans had not been made parties defendant to this action, the lease would not have terminated by the foreclosure proceedings and decree.”

This holding being correct, and the tenant not being bound by the decree of foreclosure, and such decree, therefore, not in itself furnishing a method of terminating the lease, as against the tenant, was the tenant under any such compulsion, either constructive or actual-, to surrender the premises to Davidson, who is the owner of the paramount title, before it could maintain its claim of damages for eviction?

It is true that, as to the tenant, the questions of paramount title and rig-ht to foreclose, as asserted by Davidson in his foreclosure suit, were not adjudicated. The tenant could, father than surrender the possession on demand of Davidson, have redeemed the premises by paying off the indebtedness evidenced by the prior lien, or else have forced Davidson to sue him and suffer an actual eviction by ouster. Is he required to do either, in order to constitute his surrender an. eviction? In other words, will the tenant, under the circumstances alleged in plaintiff's petition, be required to pay off the obligation which has become a paramount title as against his landlord, or be required to contest such paramount title in a suit which he has forced the owner thereof to bring against him, and thus require that he be judicially evicted before he can be said to have sustained damages by eviction? We think not.

In this case there is no question but that Davidson held a superior outstanding lien, of which plaintiff had constructive notice. In the case against the landlord, this lien had been merged into a judgment of foreclosure, process had been issued, the premises sold, and the lien thereupon had become the paramount title. There is nothing in the evidence to disclose that any other result would have obtained, if the tenant had compelled Davidson to file suit to oust it from possession of the premises. When Davidson demanded that the plaintiff yield the possession to him, such was the condition which confronted the plaintiff. We do not think that the plaintiff was required to go to the cost and expense of contesting in court a title which was" admittedly paramount against its own right, as disclosed by the record, or that it was required of it to pay off and discharge the lien before it had the right to yield to Davidson’s demand and to surrender the possession, but that the surrender thus forced on it was a constructive eviction. If, as appears from the pleadings and the evidence, Davidson was in the position of holding an incontestable lien and had reduced same to judgment against the landlord, and by mesne process he had become the holder and owner of the paramount title, and that the same result would undoubtedly have obtained in a like suit brought by Davidson against plaintiff, c-an it be claimed that the law would require the plaintiff to make such a losing contest and pay the costs thereof before surrendering the premises on Davidson’s demand?

The law does not require a useless thing to be done before affording relief. “To constitute an eviction, it is not necessary that there should be a manual or physical expulsion or exclusion from the demised premises or any part thereof.” 36 C. J. 262.

The general rule is that there can be no constructive, eviction, unless the tenant abandons the premises on account of the acts or circumstances claimed to operate as an eviction. 36 C. J. 263. “It is not necessary that the tenant should be forcibly ejected or dispossessed of the demised premises by process of law, but he may peaceably yield possession to the person who has the superior title or who has been adjudged to be entitled to the possession, and treat himself as having been evicted. However, an eviction does not arise by a voluntary surrender of possession or a mere assertion of a superior title. The person to whom the tenant yields possession must have a good title and a present right of entry, and tenant must act in good faith and without fraud or collusion.” 36 C. J. 272.

In the case of Basin Park Hotel Association v. Arkansas Co., 151 Ark. 322, 330, 236 S. W. 275-277, the Supreme Court of Arkansas says:

“It would have been a vain and useless thing, for the lessees to have waited for the process of the court to put them off the premises, when the mortgagee had a valid decree of foreclosure in which it was recited that the purchaser at the sale should take',the premises free of the lease. It is true that the mortgagee had the option to continue the lease, and offered to allow the lessees to remain there a few days after the sale. The mortgagee, however, refused to allow the lessees to remain during the term of the lease, unless they waived their claim against the lessor for damages and paid it the rent. Under the decree, the mortgagee had the right to expel the lessees from the premises, and its action was equivalent to a threat to do so. The threat to turn out the tenant, unless he promised to pay the rent to the mortgagee and waive his claim for damages, amounted' to a complete ouster or eviction. Smith v. Shepard, 15 Pick. (Mass.) 147, 25 Am. Dec. 432.”

It is true that in the above case the tenant had been made a party to the foreclosure' proceedings and all that vas lacking to enforce the judgment was the issuance of process. But we can see no difference in principle between that case and the case at bar. In this case, Davidson had asserted his rights as against the landlord, reduced them to judgment, and became possessed of the paramount title. So far as the pleadings and evidence show, the appellee had no defense to. any action Davidson might have brought against it for the possession. Why, then, should it have been required to refuse Davidson’s demand, and to continue in possession until ousted by legal process, in which it must have incurred the costs of court?

The threat to oust the tenant, made by the holder of the paramount title, unless the tenant entered into a new contract with him, has been held to be an actual and complete eviction. Smith v. Shepard, 15 Pick. (Mass.) 147, 25 Am. Dec. 432. We 'therefore hold that the petition states a legal cause of action in showing surrender . of its premises upon demand of the owner of the paramount title, under the conditions pleaded.

We will now consider the propositions and assignments, as presented on this appeal. The appellant’s first and second propositions present the controlling questions in the case. They are as follows:

“(1) Where a lessee, holding under an un-assignable lease, sues for the breach thereof by the lessor, the lessee’s measure of damages is not the difference between the contract price and the market value of a lease on the leased premises, but the difference between the contract price and the value of the leased premises to the lessee.

“(2) The lessee, upon the breach of the lease contract by the lessor, is under the duty of mit-igatingi its damages, and, where the lessee is shown to have done so, the lessor is entitled to the benefit thereof.”

Where a party has been damaged, compensation is the end of the law. It is also a rule that the party suffering the damage is required to take all reasonable precautions to minimize his damages. But the first question for our consideration, some damage being shown, is: What is the measure to be applied in ascertaining the amount of the recovery?

The lease in controversy was not assignable ; hence, as far as the appellee was concerned, it had not and could not have a market value, for appellee could not sell or assign the lease. The question of compensation, as applied to the damages suffered by appellee, cannot, therefore, be fixed by any measure of market value of the right by which appellee held the premises, but must be measured by the value of the use of the premises to the appellee.

As an element of its damage, appellee was entitled to recover the rent expense of premises suitable to the transaction of its business and the expense of removing to the new location; but such expenses must be shown to have been reasonable and necessary. 17 C. J. p. 914, § 201. Upon its removal from the premises from which it had been evicted, appellee entered into a contract for the rental of another building, for which it agreed to pay $260 per month, $60 per month more than it had contracted to pay for the premises from which it had been evicted. As far as the trial court’s findings show, it had suffered no other loss or damage, except in the expense of the removal to the new premises. It is true that the trial court found that the new premises “are not so safe nor so desirable for the purpose of plaintiff’s business as the quarters which it had under lease from defendant”; but there is no finding of specific damage to entitle appellee to a recovery for that reason.

The lease not being assignable by the appellee, the market value thereof could not have been within the contemplation of the parties at the time of the execution of the contract. But the lessor was charged with full knowledge of the value of. the use of the premises to appellee. In the case of Jonas v. Noel, 98 Tenn. 440, 39 S. W. 724, 36 L. R. A. 862, the Supreme Court of Tennessee holds that the measure of damages for breach of rental contract for business prem-' ises is the difference between the contract price and the value of the property in question, as between vendee and vendor; but, as to the measure of damages between lessee and lessor, that court quotes from Sedgwick on Damages, as follows:

“Wherever the measure of damages involves the question of value, however much the market may be resorted to, to determine what the value is, this resort is had, not as a conclusive test, but to aid in getting at that real value to which the plaintiff is entitled.”

That court further says:

“But the purpose of the law is to give the party complaining as near complete compensation for the loss of his bargain as possible; that is, to place him in as good a position as he would have been in, if he had obtained what he had bargained for, so- that, if the thing contracted for had been dealt in, in the market, a reference to the market price will ordinarily show what it will cost to- indemnify the plaintiff against loss. * * * Mr. Sutherland, in his work on Damages (volume 2, § 864), says: ‘The difference between the rent to be paid and the actual’ value of the premises at the time’ of the lessor’s breach ‘is the natural and approximate damage’ sustained by the lessee, and ‘this is ordinarily measured by the amount the lessee would be compelled to pay for other premises equally well adapted to his business.’ * * * With regard to those subjects of contract which are freely dealt in, and which command ready buyers in the marts of trade, there is- usually no harm done in referring to the market to fix the standard of value; but, even in- such cases, this is not the final or ‘conclusive test of value.’ 1 Sedg. Damages, § 245. But, where the article or thing in question is so unusual in its character as that there is little or no demand for it, its value must be ascertained in some other way, and from such elements as are attainable. Id. § 495. In such cases it is evident that to refer to the market as the sole standard of value may work serious injury to the party complaining’.”

The contract of lease in question not being assignable, it appears to us that the same rule would apply as applies in other cases where there is no market, by reason of the “matters or things contracted for have not been bought or sold in the market, so as to have established a ‘market value.’ ”

The general rule is, where there does not appear to have been á willful wrong, or gross negligence, remuneration is restricted to.the immediate consequences of the breach. De La Zerda v. Korn, 25 Tex. Supp. 188.

Where property has no rental value, evidence of the actual value 'of its use to the lessee is permissible. Hipwell v. National Surety Co., 130 Iowa, 656, 105 N. W. 318. Where a regular and established business is injured, interrupted, or destroyed, the measure of damages is the diminution in value of the business resulting in the loss of profits, together with such reasonable expenses as were the natural result of the breach of the contract. 17 C. J. p. 914, § 200.

In an action for damages occasioned by a breach of contract, the probable profits to be earned under the contract may be recovered. Rogers v. McGuffey, 96 Tex. 565, 74 S. W. 754. Where the loss of profits can be shown with reasonable certainty, they are recoverable. Walter Box Co. v. Blackburn (Tex. Civ. App.) 157 S. W. 220.

The rule that damages, which are uncertain or contingent, cannot be recovered, does not embrace an uncertainty as to the value of the benefit or gain to be derived from the performance of the contract, but an uncertainty or contingency as to whether such gain or benefit would be derived at all. Wakeman v. Mfg. Co., 101 N. Y. 205, 4 N. E. 264, 54 Am. Rep. 676.

In this case it appears that the appellee had an established business, and had conducted it for at least a year in the premises from which it was evicted; hence it had a clear basis upon which to predicate its damages. If there was any loss occasioned to its business, as a part of the compensation’ to which it was entitled by appellant’s breach of the contract, it was entitled to recover same when properly pleaded. Appellee’s pleading is based solely upon the theory of its right to recover the difference •between the contract price of the lease and the market value of the lease for the unexpired term.

As to the recovery for the expenses incident to moving its stock of merchandise, the appellee having pleaded same properly as special damages, and the trial court having found same to be correct, it was entitled to recover such damages as being within the contemplation of the parties to the contract.

It is clear that’ appellee was required to minimize its damages for the breach of the contract, and that it can only recover such damages which it could not have reasonably prevented. Lamar v. Hildreth (Tex. Civ. App.) 209 S. W. 167, 171; Jones v. George, 61 Tex. 345, 362, 48 Am. Rep. 280.

We therefore hold that appellee was' not entitled to recover the difference between the contract rent and the market value of the lease, but that the measure of damages appellee was entitled to have applied in the case at bar is such special damages as may have been occasioned it and 'which were within the contemplation of the parties at the time of the signing of the contract; that coming within the meaning of the term “special damages” are losses of profits in its established business, excess rentals paid by it above the rentals named in the contract of lease of the premises from which it was evicted, and expenses of transferring its business to its new location, all of such items being within, the contemplation of the parties at the time of the signing of the lease contract.

For the errors indicated, the trial court’s judgment is reversed and remanded for a new trial.