Marvin Drug Co. v. Couch

134 S.W.2d 356

• Court: Court of Appeals of Texas
• Decided: October 14, 1939
• Docket: No. 12763.
• Status: Published

Opinions

Marvin Drug Company, plaintiff in error, was defendant in the trial court and A. B. Couch was plaintiff, and they will be so referred to here for greater clarity. Suit was for the alleged breach of an implied covenant relative to the operation of a drug store on Hillcrest Street, City of University Park, Dallas County, wherein plaintiff was lessor and defendant the lessee. Upon trial and answers of the jury to certain issues, plaintiff was given judgment for damages and attorney's fee in the sum of $2,033.77, which was by defendant duly appealed.

Mr. Couch was owner of the premises in question and had operated a drug business therein for a number of years. On December 12, 1933, he entered into a five-year written lease with defendant for the continued occupancy of the premises as a drug store, the rental consideration being "Five Per Cent (5%) of the gross cash received from sales, and money collected on accounts on business done from the leased premises during the first year of the lease term and Six Per Cent of the said gross cash received for the last four years of said term." Marvin Drug Company began occupying the leased premises on or about the above date and continued there-in until November 6, 1937, when the lease was terminated by mutual agreement. It was plaintiff's contention, as evidenced by his pleading, that there was an implied covenant in the rental contract that defendant would operate the drug store in the usual and customary manner as drug stores were operated in the town and vicinity of University Park; alleging that from the inception of defendant's tenancy — December 12, 1933 — up to January 16, 1937, it operated the premises in such usual and customary manner, the average rental received by plaintiff for the first year being $209 per month. During the second year of the lease, the average monthly rental was $332.48, and during the third year, $340.64 monthly; that beginning January 16, 1937, defendant ceased to operate the store in the usual and customary manner in which drug stores in that vicinity were operated, in that the store was not opened until eight o'clock in the morning and was closed at seven o'clock in the evening; further contending that for a period of time, curb service was not furnished to customers, the stock of merchandise was depleted, and that from January, 1937, up to the cancellation of the lease on November 6, 1937, plaintiff's average monthly rental was $110. Plaintiff further charged that, if the defendant had continued to properly operate the store, he would have received an average monthly rental of $375 per month for the year 1937; and recovery was sought for the difference between the rent actually received and that which plaintiff claims should have been forthcoming had the store been properly operated. Attorney's fee of $250 additional was claimed under the contract provision that "If, on account of breach or default by lessee of any of lessee's obligations hereunder, it shall become necessary for the lessor to employ an attorney to enforce or defend any of lessor's rights or remedies hereunder, then in any such event any reasonable amount incurred by lessor as attorney's fees shall be paid by lessee."

Defenses interposed by lessee, Marvin Drug Company, were, in substance, (1) of no implied covenant in the lease such as was alleged by plaintiff; no knowledge of a custom whereby drug stores in neighborhood districts or in the vicinity of the premises in question were to be opened or closed at any special hour; and that defendant was not obligated under the lease to operate the store in any particular manner; and (2) that during the entire period up to January, 1937, on account of conditions and of the percentage provided for in the lease as rent, defendant could not operate the business at a profit and that it closed the store in the evening and opened it later in the morning to minimize its losses; "That this defendant operated the store from January 1937 until the lease was surrendered in a proper manner, with due regard for proper business conditions, and that although the rental paid to plaintiff was not as large as had been paid in previous years, nevertheless by reason of closing earlier at night and opening later in the morning the defendant's losses were reduced and diminished." Defendant also denied that under any construction of the contract could it be liable for attorney's fees.

The issues submitted to the jury and their answers were:

"No. 1. Do you find from a preponderance of the evidence that during the year 1937 the Marvin Drug Company failed to operate the drug store on Hillcrest and McFarland in the usual and customary manner in which drug stores in such a vicinity are operated? Answer "Yes" or "no". Answer: Yes.

"No. 2. Do you find from a preponderance of the evidence that during the year 1937 the Marvin Drug Company failed to operate the drug store on Hillcrest and McFarland in a manner that would be reasonably expected of a person of ordinary prudence, having regard to the interest of the lessor A. B. Couch, and the lessee, Marvin Drug Company? Answer "yes" or "no". Answer: Yes.

"No. 3. What amount of money, if any, do you find from a preponderance of the evidence would reasonably have been received by A. B. Couch during the year 1937, up to the closing of the drug store in question under the lease from the operation of the drug store in question in a manner usual and customary for the operation of drug stores in such a vicinity? Answer in dollars, if any, and cents, if any. Answer 3,300.00 Three Thousand Three Hundred No/100 Dollars.

"No. 4. What amount of money, if any, do you find from a preponderance of the evidence is a reasonable attorney's fee incurred by A. B. Couch for services rendered by his attorney in connection with this suit? Answer in dollars, if any, and cents, if any. Answer $250.00 Two Hundred Fifty no/100 Dollars."

The amount of $1,516.23 actually received by plaintiff as rent during 1937 being deducted from the above jury finding of $3,300, plus the $250 attorney's fee, fixed the judgment of the trial court against defendant in the sum of $2,033.77 as heretofore stated.

Many of defendant's 22 propositions under its assignments of error relate to the same matters of law. In effect, the general questions presented in the briefs for our consideration are (1) whether plaintiff was entitled to maintain the suit on the theory of an implied covenant in the lease; (2) whether there was error in continuing the proceedings with eleven jurors after a finding by the court that one juror had become disabled during the course of the trial; (3) consisting of detailed objections to the submission of jury issues; (4) alleged improper argument of defendant's counsel to the jury.

Paragraph 9 of the lease provided that the stipulated percentage rental should be paid to lessor on the 10th of each month for the preceding month upon the basis of cash register readings of gross cash receipts, and should the lessor at any time be not satisfied with such readings, that he, at his own expense, could audit and check the drug store's books and reports. Plaintiff Couch testified that he had been operating the premises prior to the lease and occupancy by defendant, and that the time of opening was between six-thirty and seven o'clock in the morning, closing at twelve o'clock midnight; that defendant had employed plaintiff as manager of the store for six or seven months under the lease in question and the store continued to be opened and closed at approximately the same hours; that he was then transferred to defendant's Santa Fe Drug Store (down town) where he remained about eighteen months, when his resignation was requested; that after leaving defendant's employ, he observed the daily operation of the Hillcrest store and that same had been opened and closed about the same time as when he was manager thereof, i. e., from between six-thirty and seven A. M. and twelve o'clock midnight; that up to January, 1937, the stock was kept up, with good delivery and curb service, when a sign was put on the front door "We open at eight o'clock and close at seven"; that other changes occurred in a seeming indifference to business and customers, suspension of curb service and reduction of stock. Plaintiff further testified as to rentals and amount of gross cash received from business done at the store during 1936 and 1937, up to the time the lease was canceled. These comparative figures are:

Month 1936 1937 Reduction in Volume

January $6827 $5221 $1600 February 5254 4168 1086 March 4890 3029 1861 April 5557 2632 2925 May 5197 2630 2567 June 5788 2352 3436 July 5447 2028 3419 August 5184 2045 3139 September 4905 1734 3171 October 4827 1965 2862 November 5265 2515 2750

It was the testimony in part of Alfred Beilharz, a realtor and witness for plaintiff, that he had originally negotiated the lease between defendant and plaintiff, taking the deal up first with Z. E. Marvin, Jr., the preliminaries covering a period of two and a half or three months; that he had received a letter from defendant, dated November 24, 1933, the portion admitted in evidence being: "Lessee, under no conditions, will guarantee a minimum rent during the term of this lease. Lessor will be furnished a monthly statement of cash register readings of gross receipts by lessee. If and when, at any time, lessor is not satisfied with readings he may, at his own expense, audit or check our books or reports. * * * I think I have told you before our stores are operated and owned by ourselves and our employees, some of whom have been in our employ for over twenty-five years, which stands to reason that to have been associated with us this length of time honesty stands above all other things, also our record of filling over two millions of prescriptions during the past thirty years places us as to the leading druggist in Dallas. The name Marvin's has always and will always stand for a Real Drug Store. We feel in asking the above that we are entitled to a lease of this nature. I am sure, beyond all doubt, that by putting our name at this corner we will have an excellent business, the fact that we will have to stock this store almost completely, which will take in the neighborhood of $7,000.00 to $8,000.00 of merchandise besides hundreds of dollars of publicity, will also have to be taken into consideration. Also a large part of the Highland Park business from Marvin's will be relayed to and delivered from this store."

Mr. Beilharz further stated that several months after the lease was executed, he moved into an upper floor of the building in which the store was located and there maintained an office; that defendant, in the beginning, opened the store around six-thirty A. M., closing around twelve at night until January, 1937, when it started opening about eight o'clock in the morning and closing at seven P. M.; and that he had received the following written notice from defendant:

"January 16, 1937

"To Our Hillcrest Store Customers:

"A check up on our night sales at our Hillcrest store demonstrates the advisability of our closing this store evenings. Beginning today, therefore, our Hillcrest store will close daily at 7:00 o'clock P. M. I hope you will indulge us in this economy and continue to give us your business. Our other stores remain open evenings 'till 12:00 midnight, with the exception of our store in the Santa Fe Building, which store closes at 8:00 o'clock P. M. Appreciating your business and assuring you of our continued effort to merit your support, I am

"Very sincerely,

"Marvin Drug Company

"ZEMSR :K" By: Z. E. Marvin, Sr.

This witness also stated that most suburban drug stores over Dallas opened anywhere from six to seven in the morning, closing around eleven to twelve at night; that the community of University Park had about doubled in population since 1933, but at the time of trial (May, 1938) there had been no increase in the number of drug stores within the corporate limits of said town. Other witnesses for plaintiff testified that similar stores in the vicinity opened around seven A. M. and closed around twelve o'clock at night, and that it was not customary for suburban drug stores to close at seven in the evening.

The writing under consideration carried the usual and customary covenants and matters incident to a five-year contract of lease, except as to payment of rents. As argued by defendant, the instrument is not ambiguous, containing a number of express covenants; for example, with reference to the rents and payment there-of, and plaintiff's right of accounting at his own expense, but nothing explicit is stated regarding the manner of operation by defendant during the term. The implied covenant declared upon is that the lessee "would operate the drug store in the premises in the usual and customary manner in which drug stores in that vicinity were operated." Defendant first contends that said implied obligation is inconsistent with the express provision for rent on a percentage basis, and that plaintiff's trial pleading as to custom was insufficient in specific particulars. Undoubtedly defendant was under some sort of legal duty with respect to operation. Lessee recognized this in its defensive allegations that it performed its lease obligation "with due regard for proper business operations". In ascertaining what the parties to the contract intended as a legal yardstick or standard of operation, we may look to the circumstances surrounding the inception of the lease, the situation of the parties and the subject matter involved, without regard to whether the terms of the instrument are ambiguous; Ryan v. Kent, Tex.Com.App., 36 S.W.2d 1007. Bearing in mind that the lease in suit is silent as to the measure of the "proper" manner in which defendant obligated itself to operate thereunder, it is apparent that an implied covenant existed as to operation; for certainly plaintiff's rental depended upon the amount of business done upon the premises. The law underlying implied covenants must therefore be considered in fixing defendant's duty in this respect. Quite applicable also are the principles announced in numerous cases concerning mineral or land leases where the land owner's rental or royalty is dependent upon the output of the property, following occupancy and development. The rule, we think, appropriate to the instant case, is stated in Freeport Sulphur Co. v. American Sulphur Royalty Co., 117 Tex. 439, 6 S.W.2d 1039, 1041, 60 A.L.R. 890: "The court cannot make contracts for parties, and can declare implied covenants to exist only when there is a satisfactory basis in the express contracts of the parties which makes it necessary to imply certain duties and obligations in order to effect the purposes of the parties in the contracts made. Before a covenant will be implied in the express terms of a contract, and in some cases in view of the customs and practices of the business to which the contract relates, it must appear therefrom that it was so clearly in the contemplation of the parties as that they deemed it unnecessary to express it, and therefore omitted to do so, or that it is necessary to imply such covenant in order to give effect to and effectuate the purpose of the contract as a whole."

See also 13 C.J. p. 558; 15 C.J. p. 1214; 12 Amer.Jur. (Contracts), Sec. 239, pp. 765-769. Defendant's legal duty incident to the implied covenant here involved is set forth in analogous cases found in annstations to Freeport Sulphur Co. v. American Sulphur Royalty Co., supra; 60 A.L.R., pages 903, 904; and the Austin Court, in Cammack v. Rogers, 32 Tex. Civ. App. 125, 74 S.W. 945, 948, upon construing an agricultural lease long ago, observed that: "* * * in a contract for rent, where the landlord is to receive a part of the crop, there is an implied covenant that ordinary care should be exercised by the tenant to cultivate the premises in a farmerlike manner."

Therefore, considering the situation of the parties at the inception of the lease, plaintiffs previous schedule of operation as to hours, the continuance thereof by defendant during the greater part of the term, we conclude it naturally to have been within the contemplation of the parties that the store should be operated as was usual and customary of similar stores in the vicinity; and, as already pointed out, the instrument being silent on the subject, defendant's obligation in this regard will be implied. In fact, defendant's own practical interpretation of the contract through usual and customary operation up to January, 1937, clearly raises the issue as to the measure of its legal duty to operate, just discussed, and as embodied in the court's charge.

Issue No. 2, inquiring if defendant had failed to operate the premises in a manner that would be reasonably expected of a person of ordinary prudence, having regard to the interest of lessor and lessee, was undoubtedly proper; the fact question following closely the correct rule announced by Judge Van Devanter (then Circuit Judge), in Brewster v. Lanyon Zinc Co., 8 Cir., 140 F. 801, quoted with approval by Judge Pierson in Freeport Sulphur Co. v. American Sulphur Royalty Co., supra, that "Whatever, in the circumstances, would be reasonably expected of operators of ordinary prudence, having regard to the interests of both lessor and lessee, is what is required."

But defendant contends that it rightfully operated as it did from January, 1937, to December, when the lease was canceled, in order to minimize the losses which defendant had experienced almost from the beginning. The contract contained no provisions permitting lessee to abridge its operations or its legal duty to lessor in event of losses; and performance cannot be excused by the fact that the contract was profitless and expensive; 10 Tex.Jur. (Contracts), Sec. 249; 12 Amer.Jur., Sec. 362, pp. 928-930. The principles and cases relied upon by defendant in support of such contention, from 11 Tex.Law Review, p. 439, are obviously not in point, being altogether with reference to oil and gas leases where the lessee's obligation is limited or discharged by failure of production "in paying quantities".

Defendant next complains of alleged error in discharging a juror on the second day of the trial over its objection; and of continuing the proceedings to a verdict with a jury of eleven men, on the ground that the excused member of the panel was not disabled within the purview of the Constitution and statute. The language of our State Constitution, Art. 5, Sec. 13, Vernon's Ann.St., is similar in tenor to Art. 2204, R.S., which provides that "Pending a trial of a civil case in the district court, where one or more jurors may die or be disabled from sitting, if there be as many as nine of the jurors remaining, those remaining may render and return a verdict; * * *". The peculiar acts and conduct of the juror, indicating mental disability, were not brought to the attention of the court until after his voir dire examination and selection as one of the twelve. While no hearing was had touching the juror's mental condition, after he was sworn in, yet the court made specific findings of fact based upon observation and knowledge, when qualifying defendant's bill of exceptions, concluding therefrom that the juror was "mentally of unsound mind and is disabled from serving on the jury and is therefore excused." The matter of determining whether a juryman in a district court is disabled from further sitting, under the above provisions of the Constitution and statute, is held to be within the sound discretion of the trial court. 41 Tex.Jur. (Trial Civ. Cases), Sec. 110, p. 865. It is immaterial that the juror appeared fully qualified at the time of his acceptance upon the panel. The law is expressly designed to cover any disability discovered or becoming evident "pending the trial". The court's action, based upon the findings in the bill, were plainly within the principles of Houston T. C. Railway Co. v. Waller, 56 Tex. 331; the facts disclosing a present mental disablement on the part of the juror, rather than a mere distress of mind. See also Sunset Wood Co. v. Broadnax, Tex. Civ. App. 136 S.W. 487, writ refused.

Defendant's assignments of alleged improper argument of plaintiff's counsel to the jury are considered to be without merit. Mr. Bowyer, in reading a letter, a portion of which was in evidence, inadvertently read a sentence which had not been admitted. The error being immediately discovered, counsel asked that it be withdrawn. Defendant made no objection at the time and did not request the court to instruct the jury concerning the item. The parts of the letter admitted contained statements similar in substance; thus it cannot be said that such incident was in anywise harmful or prejudicial. By bill of exception No. 4, complaint is made of other statements in argument by counsel for plaintiff, as being wholly without foundation in the record. We think the matters claimed to be erroneous are but inferences that could be properly drawn from portions of admitted testimony. As said by Judge Stokes, in Massie v. City of Floydada (Amarillo), Tex. Civ. App. 112 S.W.2d 243, 247, "* * * a rather wide range is always allowed counsel in their arguments before juries so long as they confine themselves to deductions, discussions, explanations, or interpretations of the testimony and the charge of the court". Similarly, we conclude that no error is shown by the contents of bill of exception No. 5, the argument consisting of inferences and deductions that could fairly be drawn from the record. Moreover, it appeared that upon objection by defendant, the jury was instructed to disregard the particular remarks. The argument, even if deemed improper, was not of such prejudicial nature as that it could not have been cured by the given instruction.

All other assignments and propositions not above singly discussed have been fully considered and are overruled. As a consequence, it is our judgment that this cause should be affirmed.

Affirmed.