Writ of Certiorari Denied December 15, 1941. See 62 S.Ct. 365, 86 L.Ed. ___.
JOHNSEN, Circuit Judge.
Two principal questions are presented for determination: (1) Whether a repudiation of a lease and an abandonment of the premises, accompanied by a default in the payment of an instalment of rent, may constitute a total breach of the contract of lease, under the law of Missouri; and (2), if so, whether, for such a breach of a 99 year lease, having a remaining term of 67 years, the trial court erred in fixing the determinable or predictable period of damages, under the evidence in this case, at ten years. Some minor contentions also are raised by defendant, but we do not regard any of these as controlling, and they will therefore be referred to only briefly and incidentally.
The lease covered a vacant lot located at 1331 Walnut Street, in the city of Kansas City, Missouri. It was made in 1909, for a period of 99 years, between plaintiff's devisor, as owner, and defendant and his brother, as lessees. On the death of the owner, the lessees purchased a one-third interest in the title from one of the devisees. Plaintiff was the devisee of the other two-thirds interest. The lease provided for rent on an annual basis, payable quarterly. Plaintiff's two-thirds share of the rent for the unexpired term was $1,600 per annum. The lessees also were obligated to pay all taxes upon the property for the period of the lease.
The lessees occupied the property and apparently paid the rent and taxes to June 30, 1940. On June 14, 1940, they notified plaintiff in writing of their intention to surrender and abandon his interest in the premises on June 30, 1940. The next quarterly instalment of rent was due on July 1, 1940. Plaintiff promptly replied that a surrender would not be accepted and that he expected to hold the lessees liable for their full term. On June 25th, the lessees repeated their notice of intention to surrender on June 30th. On June 28th, plaintiff again advised the lessees that he would not accept a surrender, which he termed "inexcusable on any ground", and declared that he would enforce his legal rights against them. On June 30th, the lessees posted a notice on the property that they had surrendered and abandoned the premises to plaintiff. On July 3rd, plaintiff made demand for his share of the quarterly rent instalment due July 1st. The lessees denied liability for any further rent, and reasserted that they had surrendered and abandoned the property on June 30th.
On August 2, 1940, plaintiff brought this action against the resident co-lessee as defendant,
The case was tried to the court without a jury. The trial court held that the repudiation constituted a total breach of the contract of lease, and that, under the evidence, damages were determinable or predictable with reasonable certainty for a period of ten years, and that plaintiff was accordingly entitled to recover, by reason of his loss of rent, an amount equal to his share of the lease obligation for a ten year period, less the reasonable rental value of the property during such period, commuted to its present value at four per cent compound interest, and, by reason of the failure to pay taxes, a further sum equal to the taxes which the lessees with reasonable certainty would have been required to pay during such ten year period, similarly commuted to its present value. Judgment was entered against defendant in the total amount of $13,357.52, from which he has appealed generally; and plaintiff has appealed from the refusal of the trial court to fix the determinable or predictable period of damages at more than ten years.
The first and principal question is whether, under the law of Missouri, a repudiation of a lease and an abandonment of the premises, accompanied by a refusal to pay an accrued instalment of rent, can constitute a total breach of the contract of lease. The courts of Missouri do not appear to have passed upon the precise point. The general doctrine of anticipatory breach by repudiation has, however, been clearly recognized in that state.
Defendant argues, however, that, under Mo.Rev.St.1939, § 645,
Some of the English common law judges regarded any recovery on a fixed obligation for the payment of money, whether payable in instalments or not, as a mere recovery of the debt itself, and so sought to adhere to the view that the action had to be in the form of debt, which could only be brought after the entire obligation had become due in accordance with its terms. To them, there could be no breach for failure to pay the debt, until the contract itself made the debt specifically due. Others seemingly recognized a distinction between the rigid action of debt and the more flexible remedy of assumpsit to recover damages for a material breach, based on the value of the whole performance to be rendered. During this pendulum period, some of the judges appear at one time to have held that any default in an instalment payment would justify an action of assumpsit for total breach.
Out of this conflict and confusion, there naturally emerged a gradual crystallization, with qualifications, of the general rule as to total breach of a contract. So far as a contract of lease is concerned, within the purview of Mo.Rev.St.1939, § 645, quoted above, we certainly are not required to say, nor are we able to do so, that it was settled common law in 1607 that there could be no anticipatory repudiation of such a contract. We know that in 1827 the King's Bench recognized an anticipatory repudiation of an agreement to make a lease, as a total breach.
But, even if it were possible to point to an express decision by an English court, as of 1607 or that approximate period, holding that there could be no anticipatory repudiation of a contract of lease, this would not be wholly conclusive of the question under the Missouri statute. The Missouri courts have recognized the difficulty of accurately defining the common law of such an early date from the meager precedents that are available, throughout the several courts, and have declared that, in their attempt to ascertain it, they were at liberty to "look to the decisions of other states of the Union as well as to those of the English courts", and, further, that they were not necessarily "required to adhere to the decisions of the English common law courts rendered prior to the Revolution, or subsequently".
The general common law rule as to anticipatory repudiation that has emerged from its evolutionary crystallization,
The Missouri courts have used substantially equivalent language. In Allen v. National Life & Accident Insurance Co., 228 Mo.App. 450, 67 S.W.2d 534, it was said: "* * * where the contract is mutually executory, at least in part, and there are interdependent covenants to be simultaneously performed, a repudiation or renunciation of the contract, on the part of one, covering the entire performance, before the time of performance, is such a breach as gives immediate right of action for the entire damages arising as a result of the breach; but where one party has completely executed his part of the contract and it is executory on the part of the other party only, or where the contract is unilateral or it is bilateral but contains an independent promise, such as a contract with respect to the payment of money at specified times, in case of repudiation a suit may be maintained only for each installment as it becomes due, or, if action is not brought until more than one installment is due, then all that are due may be sued for in one action." Similarly, in Leon v. Barnsdall Zinc Co., 309 Mo. 276, 274 S.W. 699, 703, the court declared: "That doctrine [anticipatory repudiation] * * * applies * * * to contracts which are at least in part mutually executory, where there are interdependent obligations. It cannot be invoked with respect to contracts to pay money at specified times, where one of the parties has completely executed the contract, and it is executory only on the part of the other party."
The Restatement does not purport to except contracts of lease from the operation of the general rule which it sets out, either by its language or in its comments, if they are otherwise within the conditions and qualifications prescribed, nor is there anything in the expressions of the Missouri courts to indicate such an intention. As a matter of sound practicality, and ignoring the spirit of mere legalistic negation and artificial differentiation, there is no reason to attempt to draw a distinction. The rationale underlying the rule as declared in Hochster v. De La Tour, supra, certainly is as fairly applicable to contracts of lease as to other general contracts: "The man who wrongfully renounces a contract into which he has deliberately entered cannot justly complain if he is immediately sued for a compensation in damages by the man whom he has injured: and it seems reasonable to allow an option to the injured party, either to sue immediately, or to wait till the time when the act was to be done, still holding it as prospectively binding for the exercise of this option, which may be advantageous to the innocent party, and cannot be prejudicial to the wrongdoer."
The real sanctity of any contract rests only in the mutual willingness of the parties to perform. Where this willingness ceases to exist, any attempt to prolong or preserve the status between them will usually be unsatisfactory and mechanical. Generally speaking, it is far better in such a situation, for the individuals and for society, that the rights and obligations between them should be promptly and definitely settled, if the injured party so desires, unless there is some provision in the contract that, as a matter of mutual intention, can be said to prevent this from being done. The commercial world has long since learned the desirability of fixing its liabilities and losses as quickly as possible, and the law similarly needs to remind
We hold that, within the conditions and qualifications of the rule applied to general contracts under the Missouri decisions, the doctrine of total breach by anticipatory repudiation is applicable to contracts of lease in that state. This is sufficient to sustain plaintiff's right to sue in the present case. The contract of lease here was in part still executory on the part of plaintiff, since he was obligated by specific and continuing covenants to assure the quiet enjoyment of the premises during the term of the lease, and, also, at all times to defend the title. These covenants were in a sufficient sense interdependent with the lessees' obligation to pay rent, since the payment of rent at any particular time necessarily was conditional on their continued performance. By the provisions of the lease, this obligation of the original lessor was specifically made to devolve upon plaintiff as assignee or devisee.
While the trial court properly disposed of the case on the strict theory of anticipatory repudiation, it might perhaps have adopted a broader applicable theory, which is recognized by the Restatement, by Williston, and by some of the decisions. The original repudiation and abandonment here constituted, of course, purely an anticipatory breach, since there was at the time apparently no default under the contract. When on July 1st, however, the lessees refused to pay the instalment of rent that became due, and still adhered to and repeated their repudiation, there then existed more than a technical anticipatory breach.
The rule applied by the Restatement and by Williston to such a situation is that, except in the case of a unilateral contract, or a bilateral contract that has been wholly performed on one side, for the payment of money instalments or for the performance of other acts, not connected with one another by a condition having reference to more than one of them or otherwise, any breach of a contract is total if it is accompanied by a positive repudiation of the entire contractual obligation.
The second question for consideration is whether the trial court erred in fixing the determinable or predictable period, for damage purposes, at ten years. We think not. There was competent evidence from which it could be inferred with reasonable certainty or probability that the rental value of the property and the amount of taxes payable under community conditions and locational situation for the next ten years could be expected to remain fairly stable. The rental returns for a long period of years, the taxes assessed against the property for the preceding eight years, community conditions and locational situation, together with the opinions of experts, were all before the court. The parties expressly stipulated that the present reasonable rental value of plaintiff's interest in the property did not exceed $450. In this situation, the question as to the amount of the damages was properly a matter for the judgment of the trial court, under all the evidence, just as it would have been for
It will of course generally be argued in a case of this character, as it is here, that any period of definite forecast or certain predictability attempted to be fixed by the trial court is arbitrary and excessive. But the rule for determining the damages in such a situation is no different than in any other case. The damages are not speculative merely because they cannot be computed with mathematical exactness, if under the evidence they are capable of reasonable approximation. Obviously there is not, nor can there be a fixed, uniform period for which damages should be allowed in every case of total breach of a long term lease, but the period for which the damages can be reasonably forecast or soundly predicted in such a situation must depend upon the circumstances and evidence of the particular case. Thus, in Palmer v. Connecticut Railway & Lighting Co., 311 U.S. 544, 61 S.Ct. 379, 85 L.Ed. 336, damages were allowed in a bankruptcy proceeding, on an unexpired term of 969 years, for an eleven year period, three of which had already passed at the time of trial.
The Missouri courts have recognized that "The rule that damages which are uncertain or contingent cannot be recovered does not embrace an uncertainty as to the value of the benefit or gain to be derived from the performance of the contract, but an uncertainty or contingency as to whether such gain or benefit would be derived at all. It only applies to such damages as are not the certain result of the breach, and not to such as are the certain result, but uncertain in amount."
This is the same test that was applied in Palmer v. Connecticut Railway & Lighting Co., supra, page 561 of 311 U.S., page 385 of 61 S.Ct. 85 L.Ed. 336, where the court said: "Certainty in the fact of damage is essential. Certainty as to the amount goes no further than to require a basis for a reasoned conclusion. The certainty of the evidence as to damages for rejection of a lease depends upon the same tests as in other situations where damages are difficult of proof."
Plaintiff argues on his cross-appeal that, under the testimony of the expert witnesses which he produced, and to which defendant offered no opposing experts, the court should have fixed the predictable damage period at not less than fifteen years. But the trial court was not required to accept at face value the opinion of the expert witnesses as to future rental returns and tax valuations. The weight to be given purely opinion evidence is always a matter for the appraisal and judgment of the trial court or jury, in the light of all the circumstances of the particular situation.
Defendant has argued a number of other contentions, with which we are unable to agree, and which require only a brief discussion. Thus, he contends that his abandonment of the property and his refusal to continue performance of the lease were not an actionable repudiation, but a justifiable surrender. The argument seeks to ground itself on a covenant in the lease, which required the lessees to erect a building upon the property within five years from the commencement of the term, and which further provided that "after the new building shall have been constructed, the personal liability of the lessees hereunder may be terminated by lessees having complied with all the terms and conditions of this lease which at that time lessees shall have agreed to perform, and by the lessees surrendering to the lessor the premises, the improvements thereon and the possession thereof." The building was never erected, but plaintiff failed to bring an action upon the covenant until the statute of limitations had run against the obligation. When he attempted to sue, the court dismissed his action on the ground that it was barred by the statute of limitations.
Defendant argues that this left the situation the same as if the building had actually been erected, and entitled him to make a surrender accordingly. But it would indeed be the sheerest legal fiction
Defendant further argues that plaintiff's actions in the situation amounted to an acceptance of surrender, and so precluded a suit for repudiation. We find nothing in the evidence that compels or merits this construction. Plaintiff, from the start, had notified the lessees that he would not accept a surrender, and had advised them in effect that their inexcusable attempt to abandon the premises and their unjustifiable refusal further to perform the obligations of the lease would be regarded as a repudiation. He had informed defendant, after the abandonment, that he would be willing to work out some arrangement to lease the premises in order to minimize the damages, but that "any such arrangement will, of course, be with full reservation of his rights against you". Such an arrangement was finally agreed upon, for a leasing of the premises to a third party, "without waiver of the respective rights of the parties." There is nothing in any of these actions, or in the institution of a suit for damages in harmony with them, that must or can be held to have consummated a surrender, as a matter of necessary legal implication.
The views herein expressed control defendant's remaining contentions, and there is no need to discuss them further.
The judgment of the trial court should be and is affirmed.