Kroger Company v. J. Weingarten, Inc.

380 S.W.2d 145, 1964 Tex. App. LEXIS 2588
CourtCourt of Appeals of Texas
DecidedApril 9, 1964
Docket14322
StatusPublished
Cited by12 cases

This text of 380 S.W.2d 145 (Kroger Company v. J. Weingarten, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kroger Company v. J. Weingarten, Inc., 380 S.W.2d 145, 1964 Tex. App. LEXIS 2588 (Tex. Ct. App. 1964).

Opinions

WERLEIN, Justice.

This suit was brought by appellee, J. Weingarten, Inc., the lessee and operator of a super-market in Oak Forest Addition to the City of Houston, herein referred to as Weingarten, against appellant, The Kroger Company, referred to as Kroger, to enjoin Kroger from constructing and operating a competing super-market on a tract of land within Oak Forest Addition about one mile from Weingarten’s store, in violation of certain restrictive covenants. The trial court, without a jury, rendered judgment enjoining Kroger for the duration of the [147]*147Weingarten lease from constructing and operating a super-market on the tract in question. Appellant has appealed from such judgment, contending that the restrictions made the sole basis of the court’s injunction, violated the anti-trust laws of Texas.

A brief summary of the evidence will be of assistance in determining whether or not the court erred in prohibiting the construction and operation of a competing supermarket within two miles of Weingarten’s store in violation of the restrictions. In 1946, Frank W. Sharp, herein referred to as Sharp, a real estate developer, with Mr. Douglas McGregor and Mr. Ben Taub, planned a residential subdivision with adequate community center facilities, the subdivision being known as “Oak Forest Addition.” In connection with such development plans, Oak Forest Corporation was formed. In 1950 Sharp withdrew from the corporation, and took in lieu of his 40% stock interest therein 40% of the unimproved land then owned by said corporation. With the land thus acquired, Sharp continued his activities in the Oak Forest area. Part of the undeveloped land acquired by Sharp in lieu of his stock in said corporation was later developed into the Oak Forest Shopping Center, in which Sharp had a divided 40% interest. He then created Oak Forest Realty Corporation, referred to as Realty Corporation, which he solely owned. 20% of the proposed shopping center tract was in the name of the newly formed Realty Corporation and the remaining 20%, the southeast corner, was in Sharp’s name individually. Sharp commenced development of a part of the shopping center land acquired by his Realty Corporation, and built a super-market and leased the same to Minimax Food Chain. He also developed the remainder of the Realty Corporation tract.

In the summer of 1954 Taub and Mc-Gregor approached Sharp with a proposal that he buy the remaining 60% of the Oak Forest Corporation and its lands. In order to do so, it was necessary for Sharp to put together enough sales and leases to finance the purchase. In such connection he approached Weingarten and negotiations were begun in the latter part of 1954, and a tentative agreement between Sharp and appel-lee was outlined on December 6, 1954 in a letter of intent between Weingarten and Sharp’s wholly owned Realty Corporation.

Weingarten decided that the proposed location for its super-market would be suitable only if the number of food stores in the area could, in some way, be limited. It felt that it was necessary for its protection to havé restrictions covering a circular area having a two mile radius extending from the leased premises. According to the testimony of Mr. Bernard Weingarten, the subject of restrictions was discussed from the very beginning. In said original letter of intent it was provided that “ * * * the Lessor will agree not to lease space to other food markets, other than one already existing, within a radius of two miles of the subject property.” At the trial it was estimated that the two mile circle covers approximately 13 square miles and contains approximately 40,000 people.

Before any lease was executed Sharp became concerned about his health, and wanted to make arrangements that would protect his two daughters, Elizabeth Lucille Sharp, now Mrs. Hooten, and Mrs. Frances Sharp Haden, if anything happened to him. As a result of a meeting with his attorney, two irrevocable trusts, one for each daughter and each in the sum of $1,000.00 with Bank of The Southwest, herein referred to as Bank, as trustee, and Oak Forest Center Corporation, herein referred to as Center Corporation, were created by Sharp. The trusts were executed on February 28, 1955, and the charter for Oak Forest Center Corporation was issued March 1, 1955. The capital of Center Corporation was only $2,-000.00, and all of its stock was held by the Bank as trustee for said two trusts. The cost of the property which Oak Forest Corporation by its stockholders and directors, McGregor and Taub, agreed to sell and did sell to Center Corporation, was $1,000,080.-00. Center Corporation, as part of the pur[148]*148chase price, executed its note in the sum of $794,000.00, secured by a deed of trust on the property purchased. In order to effectuate the transaction, it was necessary for Sharp to guarantee payment of the note. Additionally, Sharp negotiated a note on behalf of Center Corporation from the trustee Bank in the amount of $110,-000.00, and loaned the corporation approximately $40,000.00. Mrs. Sharp loaned the corporation an additional $18,000.00.

After Oak Forest Corporation conveyed all of its property to Center Corporation by deed dated March S, 1955, Center Corporation on August 19, 1955 leased to Wein-garten for a period of 25 years, with an option for two 10-year extensions, the property in Block 26, Oak Forest Addition, Section III, located at 43rd Street and Oak Forest Drive, being the property in the community center where Weingarten operates its super-market. This base lease, containing some 25 pages, which was executed only by Center Corporation and Weingarten, was never filed for record, but a memorandum thereof or short form lease, also dated August 19, 1955, which was executed by said lessor and lessee, was duly filed for record on September 14, 1955. A separate restrictive agreement of the same date, which was executed not only by Center Corporation but also by Sharp and Realty Corporation, was also filed for record on September 14, 1955.

Appellant contends that the trial court erred in granting the injunction because the combined agreement of Center Corporation, Weingarten, Sharp and Realty Corporation creating the restrictions and prohibiting the construction of a competing super-market within two miles of Wein-garten’s store is void and unenforceable. Appellant also complains of the court’s findings in its judgment to the effect that Sharp had a property interest in Center Corporation and the Kroger tract and that Center Corporation and Realty Corporation were alter-egos of Sharp incapable of conspiracy under the anti-trust laws of Texas, because there is no evidence supporting such findings. Appellant further asserts that there is insufficient evidence to support the finding that Sharp and Realty Corporation executed the restrictions agreement to protect a property interest of Sharp in Center Corporation; and that the restrictive covenants in question are as a matter of law unreasonable as to time and area.

Appellee takes the position that the restrictions contained in the base lease are valid and enforceable and not in violation of the anti-trust laws of Texas since such lease and also the recorded memorandum thereof were executed only by Center Corporation and Weingarten, and applied only to the land owned by Center Corporation. It cites the case of Schnitzer v. Southwest Shoe Corporation, Tex.Sup.1963, 364 S.W.2d 373, for the proposition that a lessor may validly agree to restrict other property owned by it in order to induce a lessee to enter into a lease.

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Kroger Company v. J. Weingarten, Inc.
380 S.W.2d 145 (Court of Appeals of Texas, 1964)

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Bluebook (online)
380 S.W.2d 145, 1964 Tex. App. LEXIS 2588, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kroger-company-v-j-weingarten-inc-texapp-1964.