Liberty Sign Company v. Newsom

426 S.W.2d 210, 11 Tex. Sup. Ct. J. 282, 1968 Tex. LEXIS 332
CourtTexas Supreme Court
DecidedMarch 13, 1968
DocketB-390
StatusPublished
Cited by18 cases

This text of 426 S.W.2d 210 (Liberty Sign Company v. Newsom) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Liberty Sign Company v. Newsom, 426 S.W.2d 210, 11 Tex. Sup. Ct. J. 282, 1968 Tex. LEXIS 332 (Tex. 1968).

Opinion

WALKER, Justice.

This suit was brought by Liberty Sign Company to recover accrued rent, liquidated damages and attorney’s fees alleged to be owing under its advertising display sign rental contract with Lee E. Newsom. The Court of Civil Appeals held that Liberty is not entitled to liquidated damages because: (1) Liberty had breached the lease contract by failing to replace the signs after they were removed by New-som’s assignee; and (2) Liberty, by demanding and accepting payment of accrued rent, had lost its alternative right to terminate the lease and claim liquidated damages. We do not agree with either of these conclusions.

There is no dispute as to any of the basic facts. In September, 1964, Newsom opened a restaurant known as Ginny Lee’s Pancake House in Preston Royal Plaza, a shopping center in Dallas. The interior portion of the building occupied by the restaurant was held by Newsom under lease. The exterior of the building as well as the adjoining parking area was controlled by one Padgett, who owned the shopping center.

On August 14, 1964, Liberty and Newsom executed a written contract under the terms of which Liberty agreed to furnish, install and maintain an advertising display sign on the parking lot of the shopping center for a period of five years and as long thereafter as the parties might elect. New-som paid Liberty $827.22 when the contract was signed and agreed to pay an additional $153.35 plus tax per month “payable in advance for 60 consecutive months, commencing on the day Lessor’s installation of display is completed.”

On September 16, 1964, the contract was amended by a written rider in which Liberty agreed to furnish, install and maintain an additional canopy sign on the roof of the building. Newsom agreed to and did pay an additional initial rental of $357.00, and the monthly rental payment was increased from $153.35 to $191.85 plus tax. Liberty furnished and installed the two signs, making its own arrangements with Pad-gett and obtaining his consent.

The installation was completed the latter part of September, and Newsom paid the installments of rent due October 1 and November 1. He was over a month late in making the December 1 payment, and defaulted in the installments due January 1, February 1 and March 1, 1965. Liberty was satisfied with his credit, however, and did not immediately elect to terminate the lease.

In February, 1965, Newsom sold the restaurant, including his interest in the signs, to the 2538 Corporation, hereinafter referred to as the corporation, which was wholly owned by J. H. Stecker. The written contract of sale obligated the corporation to assume the rental payments to Liberty, and the corporation further agreed not to remove or damage any of the property without the consent of both Newsom and the owner. It was also provided that New-som would have the right to take possession *212 of all properties, rights and interests covered by the contract if the corporation defaulted in the performance of any of its undertakings. Stecker guaranteed performance of the contract by the corporation, hut Liberty did not consent to the assignment.

Stecker changed the restaurant into a steak house, redecorated the premises and began business about February 16, 1965. He considered the signs unsuitable for his new operation and requested Liberty to make certain alterations. They were unable to agree on the cost, and Stecker wrote Liberty demanding that the signs be removed by March 15th. He advised that if Liberty failed to do so he would have the signs removed and delivered to Liberty’s warehouse.

This threat was discussed by the attorneys for Liberty and Newsom. Both Liberty and Newsom objected to the removal of the signs, and each insisted that the other was obligated to protect the signs and should obtain an injunction against Stecker. Neither took legal action of any kind, but Newsom’s attorneys advised Stecker on several occasions that Newsom objected to the removal of the signs. Liberty informed Newsom that it would declare the lease terminated and the liquidated damages due if the signs came down.

On March 21, 1965, Stecker had the signs removed by Lawrence Schell, the owner of Dallas Neon Sign Company, who delivered them • to Liberty. Oliver, who was a vice-president of Liberty, and New-som went to the shopping center while the signs were being taken down. Newsom remained across the street. Oliver took some pictures and then informed one of the workmen that he was employed by Liberty and that the signs belonged to Liberty.

Four days later the attorneys for Liberty wrote Newsom that “since the signs have been removed and Liberty has not received the payments due on the signs for the past three months, it has no alternative but to declare the contract in default and the entire amount due as set forth therein.” The letter included a demand for the payment of the following amounts claimed to be owing under the contract:

Accrued and unpaid rent $575.55
77% of unaccrued rent 7,977.12
2% sales tax 171.05
Total $8,723.72

When the claim was not paid, Liberty instituted the present suit against Newsom, Stecker and the corporation. Newsom prayed for judgment over against the corporation and Stecker, and also filed a third party action against Schell. During the trial Newsom paid the $575.55 accrued rent into the registry of the court. At the conclusion of the evidence, the trial court withdrew the case from the jury and rendered judgment in favor of Liberty and against Newsom, Stecker and the corporation, jointly and severally, for the amount claimed plus $2,750.00 attorney’s fees. The $575.55 paid by Newsom into the registry of the court was credited on the judgment and withdrawn by Liberty. Newsom was given judgment over against Stecker and the corporation, and a take nothing judgment was rendered in favor of Schell. Only Newsom appealed.

The Court of Civil Appeals concluded, for the reasons mentioned above, that Liberty may not recover liquidated damages and is entitled to only the $575.55 accrued rent paid by Newsom into court plus reasonable attorney’s fees. The judgment of the trial court in favor of Schell was accordingly affirmed, but as to the remainder of the case such judgment was reversed and the cause was remanded for a redetermination of the attorney’s fees. 416 S.W.2d 442. We reverse the judgment of the Court of Civil Appeals and affirm that of the trial court.

*213 The relevant provisions of the lease contract are as follows:

“1. Lessor shall, to Lessee’s special order and specifically for Lessee’s use, construct, install and, during the term of this Agreement, maintain for and lease to Lessee an advertising display (s) described in the specifications * * *.
* * * * * *
“5. In the event Display is destroyed or substantially damaged from any cause except deliberate act of Lessee or his agents, Lessor will, upon notification of such damage by Lessee, rebuild Display to conform to its original specifications * * *⅜
⅜ ⅜ ⅜ ⅜ ⅜ ⅜
“DISPLAY RENTAL TERMS AND CONDITIONS

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Bluebook (online)
426 S.W.2d 210, 11 Tex. Sup. Ct. J. 282, 1968 Tex. LEXIS 332, Counsel Stack Legal Research, https://law.counselstack.com/opinion/liberty-sign-company-v-newsom-tex-1968.