Brown v. RepublicBank First National Midland ( 1988 )

WALLACE, Justice.

This is a suit on a lease of commercial office space. H.L. (Sonny) Brown, Jr., subleased office space from First National Bank of Midland, Texas. Following the failure of First National Bank, the Federal Deposit Insurance Corporation took over its assets and then sold those assets to RepublicBank First National Bank, Midland. Brown sent RepublicBank a notice that he was terminating the lease but Re-publicBank refused to assent to the termination. Brown ceased making rental payments and RepublicBank sued. The trial court, sitting without a jury, rendered judgment for RepublicBank. The court of appeals, in an unpublished opinion, affirmed the judgment of the trial court. We reverse the judgment of the court of appeals and render judgment for Brown.

Across the street from the First National was the Brown Building, occupied by Sonny Brown. The building was owned by a trust which Brown established for his children. First National planned to build an office tower and needed the property occupied by the Brown Building. They worked out an agreement whereby Brown would move to the Paragon Building, a new highrise office building in which First National had leased approximately 80,000 square feet, of which Brown was to sublease approximately 7,000 square feet.

First National and Brown executed two contracts. The first contract, referred to as the Termination Agreement, provided for Brown’s termination of his lease of the Brown Building effective when the Bank acquired title to that building from the Brown Children’s Trust. A stated intent of the Termination Agreement was to provide Brown with interim rental space from the time the Bank acquired title to the Brown Building until such time as Brown could occupy adequate permanent office space. The agreement further provided that Brown was to: (1) be paid $100,000 moving and relocation expenses; (2) receive free rent for 18 months; (3) pay only a prorated share of the Bank’s obligation to the building owner as rent for any additional time he might occupy the Paragon Building space; and (4) have the right to terminate such lease at any time upon thirty days’ written notice to the Bank.”

The second contract, the Sublease: (1) described the space to be occupied by Brown in the Paragon Building; (2) provided for 18 months free rent; and (3) provided that Brown should pay only a prorated share of the Bank’s rental for any time he continued to occupy the space subsequent to the 18 month free rental period.

The issues presented are whether Brown’s rights to terminate the lease upon 30 days written notice was impliedly included in the Sublease and if not, whether there was a duty on the part of the Bank to mitigate its damages upon Brown’s ineffective attempt to terminate the lease. Both parties agree that both the Termination Agreement and the Sublease are unambiguous. Interpretation of agreements which are not ambiguous involves questions of law rather than fact. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983); City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex.1968). Brown contends that the Sublease did not revoke the Termination Agreement but that the Termination Agreement continued to be operative after execution of the Sublease. He reasons that where two or more instruments pertain to the same transaction they should be read together even though they might not expressly refer to each other and were not executed at the same time. He finds support for this contention in Board of Insurance Commissioners v. Great Southern Life Insurance Co., 150 Tex. 258, 239 S.W.2d 803 (1951). RepublicBank contends that under Texas law it is not mandatory that where several instruments pertain to the same transaction, they must be read together irrespective of whether they refer to one another, or are executed at the same time. When construing contracts, the intention of the parties is the determining factor. Guadalupe-Bianco River Authority v. Tuttle, 171 S.W.2d 520 (Tex.Civ.App.—San Antonio 1943, writ ref’d w.o.m.). We agree with the trial court that the two contracts are not in conflict.

The intent of the parties is evidenced in the Termination Agreement setting forth the contemplation of both parties that Brown would lease the Paragon Building on a temporary basis. Brown’s uncontra-dicted testimony was that the $100,000 moving and relocation expense paid by the Bank was to cover two moves; one from the Brown Building to the Paragon Building, and the other from the Paragon Building to a permanent location. The Termination Agreement specifically referred to a lease of space in the Paragon Building by Brown, which was accomplished through the Sublease. The Termination Agreement anticipated and provided for an extension of the Sublease until such time as the Bank should complete the planned tower on the site of the Brown Building or until the termination of the Bank’s five year lease of the Paragon Building, provided that Brown leased space in the planned tower.

In view of the above, we conclude that the parties intended for the two contracts to be read together and that Brown’s right of termination upon 30 days’ written notice applied to the Sublease and was a part thereof. Having so held, we need not address the issue of whether the Bank was under a duty to mitigate its damages.

The judgment of the courts below are reversed and judgment is rendered that RepublicBank First National Midland take nothing against H.L. (Sonny) Brown, Jr.

KILGARLIN, J., concurs and SPEARS, GONZALEZ and MAUZY, JJ., join. PHILLIPS, C.J., dissents.