Case Title: Song Lee v. Ferguson

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1990-08-24T00:00:00Z

Document:
Song Lee v. Ferguson1990 WY 85795 P.2d 1220Case Number: 89-246Decided: 08/24/1990Supreme Court of Wyoming
SONG LEE, D/B/A TOKYO 
MASSAGE AND KIM B. McCALLUM, D/B/A ANNMA, 

APPELLANTS 
(DEFENDANTS),

v.

FRANCIS FERGUSON, NORMA 
JEAN GRAMLICH AND MARY EISEMAN, 

APPELLEES 
(PLAINTIFFS).

Appeal from the District 
Court, Laramie County, Nicholas G. Kalokathis, J.

Julie Nye 
Tiedeken of McDaniel and Tiedeken, Cheyenne, for 
appellants.

Robert T. 
Moxley, Cheyenne, for appellees.

Before 
CARDINE, C.J., THOMAS, MACY and GOLDEN, JJ., and RAPER, J., 
Retired.

RAPER, Justice, 
Retired.

[¶1]      Appellees sued 
appellant and Kim B. McCallum (not a party to this appeal) for rent allegedly 
due appellees on leases of premises for use as a massage parlor. Appellant's 
five-year lease was dated June 25, 1985. The McCallum lease, dated August 1, 
1986, was made as part of a sale of appellant's business to McCallum. Partial 
summary judgement against McCallum for rent covered by a promissory note to 
appellees was allowed. The trial judge held that the lease, appellees to 
appellant, was not surrendered and appellant was still liable for rent provided 
by such lease, and granted judgment accordingly.

[¶2]      Appellant states 
the issues to be:

     1. Can surrender by 
operation of law occur from acts of the parties alone rather than by an 
"agreement"?

     2. Can a Lessor 
recover deficiencies under a lease agreement when the Lessor has not made a 
demand for payment pursuant to the terms of the lease?

[¶3]      Appellees frame 
the issues as:

1. Can the facts as found 
by the trial court be invoked to reverse the ruling that there was no surrender 
by operation of law?

     2. As a matter of law, 
does the parties' contract, in expressly allowing for mitigation of damages, 
preclude such mitigation from operating as a surrender?

3. Is it too late for the 
appellant to raise a "lack of demand" defense which was not developed in the 
pleadings or at trial?

     4. Can demand be a 
condition precedent, the lack of which defeats a claim for payment of 
money?

[¶4]      Since the formal 
findings of fact set out by the trial judge have a sound basis in the transcript 
of a full-blown trial held in this case, we will adopt them as our outline of 
the facts forming the backdrop of our decision:

     1. The [appellees] are 
a partnership which owns and holds for the purpose of rental certain premises on 
Westland Road in Cheyenne, Wyoming, which consist of office buildings including 
the property involved in this matter, located at 1720 Westland 
Road.

     2. The [appellant] 
Song Lee was a tenant at will for a period of time at 1710 Westland Road, 
another property belonging to the [appellees], and in the months preceding July, 
1985, negotiated with the [appellees'] agent L.M. Cheesbrough, resulting in a 
lease arrangement whereby the premises at 1720 Westland Road were to be leased 
to the [appellant] Song Lee for a five-year period beginning in August of 1985. 
The lease was signed on July 25, 1985.

     3. The [appellees] 
expended some Twenty-Two Thousand Dollars ($22,000.00) in improving the leased 
premises, a substantial portion of which was for improvements to be used in the 
[appellant] Song Lee's massage parlor business, "Tokyo 
Massage."

     4. In the spring of 
1986, trouble between the [appellant] Song Lee and the City of Cheyenne, whereby 
criminal charges were lodged against certain individuals involved in the 
[appellant's] business, resulted in the closure of Tokyo 
Massage.

     5. The [appellant] 
Song Lee subsequently negotiated with the [appellees'] agent L.M. Cheesbrough 
towards a sublease or sale of his business, and the [appellees'] said agent 
indicated by letter that the [appellees] would seek to accommodate 
[appellant].

     6. The [appellant] 
Song Lee on or about June 25, 1986, sold the Tokyo Massage business to the 
defendant [not a party to this appeal] Kim B. McCallum. The bill of sale 
provided that the defendant Kim B. McCallum would "assume full responsibility of 
lease of the building."

     7. On July 28, 1986, 
the [appellees] entered into a five-year lease with Kim B. McCallum, contingent 
upon her receiving a Massage Parlor License from the City of Cheyenne, and 
providing that the lease would terminate September 1, 1986, should the license 
not be granted. By a telephone conversation on said date, the [appellant] Song 
Lee was apprised of the formation of the new lease.

     8. The [appellees'] 
agent L.M. Cheesbrough sent a letter to Song Lee dated July 28, 1986, explaining 
that the agreement did not release Lee from his obligation but that payments 
received from McCallum would reduce Lee's obligation. Lee claimed he never 
received this letter.

     9. The defendant 
McCallum received a Massage Parlor License on or about September 29, 1986, and 
continued in the premises as a month-to-month lessee until December 18, 
1986.

     10. The [appellant] 
Song Lee did not receive notice of McCallum's arrearages in rent payment which 
occurred in September and October of 1986.

     11. The management of 
the [appellees'] rentals had in the fall of 1986 been taken over by Dr. John 
Gramlich, who wrote an undated letter early in 1987 - in the [appellant] Song 
Lee's November 16, 1988 Memorandum in Opposition to [Appellees'] Motion for 
Summary Judgment, the letter was given the date of Janu[a]ry 7, 1987 - stating 
to Lee that McCallum's default "causes the lease to be your responsibility 
again."

     12. The Song Lee 
lease, at paragraph 14, gives the [appellees] the right to relet in mitigation 
of damages without terminating the lease, and provides that the [appellant] Song 
Lee will pay any deficiency.

     13. The [appellees] 
have mitigated their damages by leases of the premises to Inberg-Miller 
Engineers, Wyoming Centennial Marketing Association and Action Refrigeration, 
such that through the date of trial, [appellees] are damaged in the amount of 
$26,882.50.

     14. At the present 
rate of mitigation of damages, the damages which will accrue through August of 
1990 will total $5,116.00. 

[¶5]      It appears to us 
that the strength of appellees' case lies in the terms of appellant's lease with 
appellees. Section 14 of the lease provides for appellant's continuing 
obligation to abide by the terms of the lease in the event appellant lessee 
should abandon or vacate the premises:

14. Vacating During 
Term:

     Except as provided in 
paragraphs 10, 15 and 19 if Lessee shall abandon or vacate the leased premises 
before the end of the term of this lease, or shall suffer the rent to be in 
arrears, Lessor may at its option and without notice enter said premises, remove 
any signs and property of Lessee therefrom, and enter the leased premises or any 
part thereof as it may see fit without such retaking, voiding or terminating 
this lease, and for the purpose of reletting, Lessor is authorized to make any 
repairs or changes in or to the leased premises, at the expense of Lessee, 
(which will be payable to Lessor upon demand), as may be necessary or desirable 
for the purpose of such reletting, and if a sum shall not be paid from such 
reletting to equal the monthly rental reserved and stipulated herein to be paid 
by Lessee, Lessee will pay such deficiency each month upon demand 
therefor.

[¶6]      This provision of 
the lease as found by the district judge does give the appellees the right to 
relet in mitigation of damages without termination of the lease and provides 
that appellant will pay any deficiency. Appellant was advised by letter by 
appellees that the McCallum lease would not release appellant from his 
obligation. While appellant denies receiving the letter, it makes no difference 
because appellant is bound by the lease terms, not a letter which appellees were 
not obligated to send.

[¶7]      The importance of 
the lease provision between appellant and appellees is set out in Casper 
National Bank v. Curry, 51 Wyo. 284, 65 P.2d 1116, 1118 (1937) to the effect 
that an unqualified taking of possession and reletting of the premises, if done 
pursuant to the tenant's surrender, constitute an acceptance of surrender and 
release the tenant where there is no provision in the lease in regard thereto. 
That ruling in Curry is approved in Development Enterprises, Inc. v. Miyamoto, 
461 P.2d 419 (Wyo. 1969). There being a provision in the lease for payment of 
any deficiency by the lessee/appellant upon reletting, appellees did not 
surrender.

[¶8]      Appellant's 
second issue that it was a condition precedent that a monthly demand by 
registered mail for rent following the lease to Mrs. McCallum be made upon 
appellant by appellees before appellees could recover from appellant was never 
presented to the district court in any form by pleadings, briefs or 
argument.

[¶9]      While there was 
evidence that no such notices had been sent to appellant, it was presented only 
with respect to the issue as to whether there had been surrender by appellees of 
appellant's lease of the premises. As explained by the trial judge in his oral 
findings at the close of the trial, "This case presents to the Court one issue 
as far as I can see, and that is whether or not the lease was 
surrendered."

[¶10]   The district judge pointed out 
that, if there had been an intent to surrender, notices of deficiency would have 
been sent to the tenant (Mrs. McCallum), but were not. This court, as a 
principle of jurisprudence, does not consider issues not first presented to the 
trial court. Greaser v. Williams, 703 P.2d 327 (Wyo. 1985); Scott v. Fagan, 684 P.2d 805 (Wyo. 1984).

[¶11]   Affirmed.