John C. Cutler Association v. De Jay Stores ( 1955 )

CROCKETT, Justice.

Plaintiff appeals from a judgment allowing recovery for rent and damages for abandoning a lease before its term expired, and for attorney’s fees. Plaintiff appeals claiming that additional amounts should have been allowed; defendant responds and cross-appeals, challenging the propriety of awarding any damages whatever.

Plaintiff Cutler is an incorporated family association, and Dejay Stores is a Delaware corporation doing business in Utah. On June 30, 1951, Cutler leased a store at 36 South Main Street, Salt Lake City, to defendant for a rental of 5% of gross sales or a minimum of $400 per month. There is uncertainty as to the term, but it is immaterial here. The parties have assumed it to be for a period of five years.

The Dejay Clothing Store operated for several months but was never sufficiently profitable to require more than the minimum of $400 per month. Dejay was dissatisfied with the location and began looking for a new one. About February 15, 1952, a conference was held between Robert Cantor, Dejay’s local manager, its real estate broker a Mr. Solomon, and plaintiff’s Harold Cutler, concerning the desirability of moving. During this conference the parties were in accord . in assuming, that Dejay would continue to remain bound by the lease and that Cutler would cooperate in obtaining a new tenant. Within the next few months, five different business firms made various proposals to lease the property. With respect to each proposal there was some feature objectionable to the plaintiff and they were all rejected. With this the trial court found no fault.

About March 1, 1952, Dejay moved out of the property, but continued to- pay rent in full to and including the month of June. July 25, it had the constable deliver to Cutler a notice stating that it considered the rejection of offers to lease or sublease the premises a breach; that it returned possession of the property to Cutler and therewith presented the keys.

Despite continued efforts to find a new tenant no permanent one was obtained until May 1953. Cutler’s suit was for rent during the entire period of vacancy. The trial court allowed recovery for only a part of that time. Dejay had already paid for four months of the period of vacancy —March, April, May and June, and the trial court allowed for an additional three months — July, August and September, based upon its determination that there was a surrender and acceptance of the property in September, which terminated the obligation to pay further rent under the lease.

The main issue presented on this appeal is whether the facts and circumstances shown by the evidence are such as to warrant the finding of surrender and acceptance.

Inasmuch as there was no express agreement to abandon the lease, the defendant had the burden of establishing as an affirmative defense such an agreement implied from the conduct of the parties. That this can be done we have recognized. In Willis v. Kronendonk,¹ it was stated:

“ * * * where a tenant abandons the premises, and the landlord unconditionally goes into possession thereof and treats them as though the tenancy had expired, it amounts to a surrender, and the landlord cannot thereafter recover any rent, nor use for damages. If he desires to reserve that right he must recognize the tenants rights in the premises for the unexpired term.”

This does not mean, however, that the landlord cannot enter the premises and exercise the rights of an owner in keeping them safé from damage; nor that he may not do things reasonably necessary in attempting to rent the premises for the purpose of mitigating damages. It is only when he exercises dominion over the premises beyond those purposes and inconsistent with the rights of a tenant whom he seeks to hold for the rental of the premises, that a finding of surrender is justified. That acceptance of the keys and attempting to re-let the premises are not alone sufficient to constitute a surrender and acceptance was recited by this court in the recent case of Belanger v. Rice: ²

“ * * * [Acceptance of the keys might well be merely in order to protect the property and the reletting of the premises might equally logically be for the purpose of mitigating damages in a suit upon the lease.”

Such acts may of course be considered with other circumstances on the question of surrender.

There is some conflict as to the rule of law to be applied in determining whether a reletting will terminate the obligations of a lease.³ In McGrath v. Shalett, 114 Conn. 622, 159 A. 633, 634, it is said:

“ * * * In some states, a relet-ting terminates the lease as a matter of law. A second line of authorities holds that this result follows' unless there is notice to the tenant of the landlord’s refusal to accept the surrender and of his intention to relet. The third school does not set up any arbitrary standard, but holds the question of acceptance to be one of intention and a question of fact.

“Connecticut adheres to the third school, * * *. As indicated above * * * support can be found for any one of the rules referred to. The great weight of authority, however, is in accord with the Connecticut rule. (Citing authorities.)

“Our rule is the rule of common sense. The lessee has, without cause, abandoned the property. * * * He (the lessor) should not be penalized for attempting to minimize the damages nor for attempting to keep his property from deteriorating.”

We believe that the third rule referred to by the Connecticut court, suggesting that there is no arbitrary standard to be invariably applied, best lends itself in doing justice in such controversies, and therefore align ourselves with it.

The question of surrender, being generally one of fact as to what was the intention of the parties, is to be determined from all of attendant circumstances including the conduct and expressions of the parties. The defendant Dejay having prevailed, is entitled to have us view the evidence and every fair inference and intendment arising therefrom in the light most favorable to it. And if when so regarded, there is any substantial evidence, or, as sometimes stated, any reasonable basis in the evidence, to support the finding made by the trial court, it will not be disturbed.

Cutler points to the testimony of the real estate agent as an indication that the parties did not intend to terminate the obligations of the lease. Mr. Solomon testified that, “Mr. Cantor advised Mr. Cutler that they [Dejay] in no way intended to discontinue recognizing their responsibility on the lease and the payments would be made in accordance with the lease.” It is significant to note however, that the conference he referred to took place in February of 1952, before the several prospective tenants were rejected, and before the notice above referred to disclaiming further responsibility, relinquishing possession and delivering the keys to Cutler in July 1952.

In addition to serving the notice just mentioned and delivering the keys to Cutler, and the fact that Cutler placed “For Rent” signs in windows and advertisements in newspapers, none of which, it must be conceded, would by themselves be inconsistent with insistence that Dejay perform under the lease, there are additional circumstances to which the trial court could give consideration in divining the intent of the parties.

. In October, without notice to or obtaining the pel-mission of Dejay Stores Cutler in its own name leased the premises to a political organization for a brief period. It properly proffers the proceeds thereof as a credit to Dejay Stores. Similarly, the preceding month,, that is, September 1952, Cutler without notice to or in any way conferring with Dejay about the matter, allowed an appliance house, -Bradley-Badger, to store furniture on the premises without charge. This continued for approximately 8 months until the latter, through later negotiations, became the permanent tenant •of the premises. Unlike the other acts of the lessor Cutler as hereinabove recited, this action may well have been regarded by the trial court as an exercise of dominion over the premises to the exclusion of the tenant; that it was a use to comport with the desires of the lessor for his own benefit, and inconsistent with recognition of the rights of the tenant whom he now seeks to hold for the rental. It is immaterial whether we as a reviewing court would have found a surrender and acceptance had we been the triers of the facts. The test we apply is whether from the circumstances shown, reasonable minds could so conclude. We are of the opinion and hold that the circumstances here shown, all considered together, are such that we cannot say as a matter of law that there is no substantial evidence to support his finding.'

In addition to the principal issue just treated, there are some subsidiary questions raised on this appeal.

The Cutler Association asserts that it is entitled to be reimbursed for a brokers fee paid in securing a new tenant the following spring. Since we sustain the trial court’s finding that the obligations of the lease were terminated in September, it follows that the brokers’ fee expended thereafter cannot be recovered.

Cutler next contends that since DeJay is a foreign corporation doing business in this State, and having failed to qualify in compliance with Section 16-8-1 and 2, U.C.A.19S3, it is barred from asserting defenses in this action because of section 16-8-3 which reads:

“Any foreign corporation doing business within this state and failing to comply with the provisions of section 16-8-1 and 16-8-2 shall not be entitled to the benefit of the laws of this state relating to corporations, and shall not sue, prosecute or maintain any action, suit, counterclaim, cross complaint or proceeding in any of the courts of this state * * *; and every contract, agreement and transaction whatsoever made or entered into by or on behalf of any such corporation within this state * * * shall be wholly void on behalf of such corporation * * (Emphasis added.)

It is argued that defendant’s acts in serving notice and delivering up the keys to plaintiff, and in employing a real estate broker to procure a tenant for the premises are “transactions” within the meaning of the statute and hence “wholly void” on behalf of the defendant corporation, and that these “transactions” cannot be asserted by defendant so as to in any way defend in this suit. With this proposition we cannot agree. We have heretofore stated that this statute was not intended to prevent noncomplying foreign corporations from de-fénding' suits which are brought against them in this state.⁴ The statute itself only purports to prevent affirmative relief on behalf of the foreigner and we think it would be an unreasonable and perhaps unconstitutional construction for us to interpret the statute so as to prevent the assertion of otherwise legitimate substantive defenses.

Another problem concerns the allowance of damages against Dejay for injury to the premises allegedly caused in moving therefrom. Dejay’s cross appeal challenges the propriety of this award as being unsupported by any evidence. The only evidence in the record concerning such item of damages came from Harold G. Cutter. He testified to certain defacing of the walls by removing fixtures which Dejay had installed. He affirmed that he had received a bid for repairs, and was then asked “What was the extent, the amount of the bid?” An objection was made on the ground that the answer would be hearsay, which the trial court sustained. Whatever may be said as to the character of this evidence, no proper foundation was laid for its admission and the court did not commit error prejudicial to the plaintiff in rejecting it. Notwithstanding the fact that such objection was sustained, the trial court nevertheless allowed Cutler $300 for repairs to the building. In the absence of any evidence as to value, it was not the prerogative of the trial judge to personally appraise the damages and make an award therefor.⁵ Accordingly we are compelled to modify the judgment as to that item.

The final question for consideration ' concerns the contention that the amount of $300 attorney’s fees allowed the plaintiff was inadequate, particularly in view of this appeal, and Cutler now asks us to review this award and either increase it to a proper amount, or remit to have an adequate ffee determined. No evidence was introduced concerning this matter but the parties stipulated at the trial that the court could determine the amount to be awarded. Under such circumstances it is permissible for the trial court, who as a lawyer and judge has special knowledge and experience concerning such matters, to take into consideration his own knowledge and to use his judgment as to the value of such services. But there being no evidence for us to review, it is more difficult to appraise the reasonableness of the judgment than if there had been evidence for comparison with it. Wherefore, unless the award were so grossly disproportionate to the value of services- which must necessarily have been performed as reflected by the record, there would be no basis for disturbing the judgment. With respect to the contention that additional attorney’s fees should be allowed because of the appeal, the answer is found in the fact that the appeal has failed.

The judgment of the trial court is affirmed, except that the item of $300 awarded to the plaintiff for injury to the premises is stricken. Costs to respondent.

McDonough, c. j., and henriod and WORTHEN, JJ., concur.

1 . 58 Utah 592, 200 P. 1025, 1030, 18 A.L.R. 947.

4 . Clawson v. Boston Acme Mines Revelopment Co., 72 Utah 137, 269 P. 147, 59 A.L.R. 1318.

5 . See Weber Basin Water Conservancy District v. Moore, 2 Utah 2d 254, 272 P.2d 176.