Title: Miss. State Dept. of Public Welfare v. Howie

State: mississippi

Issuer: Mississippi Supreme Court

Document:

449 So. 2d 772 (1984) MISSISSIPPI STATE DEPARTMENT OF PUBLIC WELFARE, State Capitol Commission and State of Mississippi v. Homer Lee Howie. No. 54767. Supreme Court of Mississippi. March 14, 1984. Rehearing Denied May 16, 1984. Randall L. Miller, Jimmy G. Dedeaux, William Patterson, Jackson, for appellant. Robert W. King, King & Spencer, Alfred N. Crisler, Crisler & Crisler, Jackson, for appellee. Before PATTERSON, C.J., and HAWKINS and DAN M. LEE, JJ. DAN M. LEE, Justice, for the Court: This is an appeal from the Chancery Court of Hinds County wherein the chancellor found that the appellant, the Mississippi State Department of Public Welfare, was a holdover tenant on certain properties leased to it by the appellee, Homer Lee Howie. The chancellor ruled that by holding over, the Department had extended the lease for a period of one year and that Howie was entitled to rent payments for that period. The chancellor also assessed attorneys fees and a 5% late fee required *773 under the lease. From that decision the State Department of Public Welfare brings this appeal, assigning numerous errors, many of which are repetitious. Because this cause must be reversed, we address only those issues which have some bearing on our decision. On September 30, 1980, Homer Lee Howie filed a bill of complaint in the Chancery Court of Hinds County. Through his bill he charged the State Department of Public Welfare with holding over as a tenant. The bill sought specific performance of a lease renewal and rent in arrears based on the renewal of that lease. The Department of Public Welfare answered this complaint by filing a demurrer on February 10, 1981. At a hearing on this demurrer, the Department argued the defense of sovereign immunity and took the position that it could not be sued on the lease. Following the hearing the chancellor issued an opinion overruling the demurrer and holding that the doctrine of sovereign immunity is not a defense to a claim based on breach of contract. Eventually the parties came to trial at which most of the facts were stipulated to in a document entitled "Undisputed Facts." In essence, those facts are as follows: 1. Homer Lee Howie was the owner of the land and office building in question. 2. On June 18, 1979, Howie and the Department of Public Welfare entered into a lease agreement whereby the Department of Public Welfare agreed to lease office space from Howie. 3. Prior to the execution of the lease agreement the State Capitol Commission had reviewed the lease and authorized the Department of Public Welfare to enter into the agreement. 4. The lease was executed on behalf of the Department of Public Welfare by Jack Byars in his official capacity as Commissioner of the Department. 5. Between May 12, 1980, and June 30, 1980, there was an exchange of correspondence between Howie and Donald B. Roark, the Commissioner of the State Department of Public Welfare who succeeded Jack Byars. Each of these letters appear in the record. The sum and substance of these letters is as follows: 6. The Department of Public Welfare did not vacate the leased premises prior to the end of the term of the lease on June 30, 1980 and continued to use and occupy the leased property until July 31, 1980, at which time the premises were vacated. 7. Between the dates of July 1, 1980 and September 24, 1980, there was a further exchange of correspondence between the parties. The sum and substance of those letters is as follows: 8. At all times between May 12, 1980 and September 4, 1980 Donald Roark was the Commissioner of the State Department of Public Welfare. 9. During the original period of the lease the State of Mississippi paid its rent by vouchers issued in the due course of business. 10. On July 11, 1980, the State of Mississippi issued vouchers numbered 0013906 and 0013903 to Howie. These are the vouchers acknowledged by Howie in his letter dated September 15th. 11. The State of Mississippi also issued vouchers numbered 0081523 and 0091415 which represented pro rata charges for Howie's operation and maintenance of the building, and parking lot and premises allocable to the Department's office space for the month of July, 1980. 12. The Capitol Commission approved on July 8, 1980, the Department continuing to occupy the space it had been occupying in Howie's building after June 30, 1980 and through July 31, 1980 and approved payment of rent for that period. 13. Prior to granting such approval, the Capitol Commission had been furnished copies of all of the correspondence between Roark and Howie up to that point. 14. Howie negotiated with several prospective tenants for a lease of portions of the demised premises but did not make a lease with such prospective tenants. 15. During the period from August 1, 1980 through June 30, 1981, Howie did lease certain portions of the space in his building formerly occupied by the Department who paid rent as follows: Travelers Insurance Co. rented 2,682.5 square feet at a rental of $1,900.10 per month through the month of June, 1981 for a total rent received of $19,001.00. Tennessee Gas rented 612 square feet for a period of December 8, 1980 through June 30, 1981 which generated rents totaling $3,387.10. 16. Howie has not filed a claim for his damages with the Mississippi State Auditor under § 7-7-33 of the Miss. Code Ann. (1972). The only testimony offered at trial was that of Charles E. Hughes, an attorney at law. Mr. Hughes testified that he had been in a commercial practice since 1964 *776 and had reviewed the file of the immediate action. He stated that he thought that a contingent fee of one-third of any sum collected was a reasonable fee. Mr. Hughes acknowledged that he had no knowledge of the amount of time Howie's attorney had spent in preparation of the litigation. Hughes also testified that a contingent fee was not the only reasonable manner of billing in an action such as this. Following the taking of all of the evidence the chancellor issued an opinion finding that the State Department of Public Welfare had renewed the expired lease by operation of law as a result of its holding over. The chancellor rendered a judgment in favor of Howie in the amount of $103,623.50, together with a 5% late charge provided for under the lease and interest from the due date of such rents. The chancellor also awarded attorneys fees in the amount of $20,000. The threshold question of this appeal is whether the chancellor erred in failing to hold that the State Department of Public Welfare was immune from suit under the doctrine of sovereign immunity. The Department argues that as a governmental agency it is immune from legal liability. This question was originally presented in the form of a demurrer to Howie's bill of complaint. In a hearing on that demurrer the chancellor ruled that the doctrine of sovereign immunity does not apply where one is "seeking to exercise a property right that had its genesis in a solemn contract." Recently, in Pruett v. City of Rosedale, 421 So. 2d 1046 (Miss. 1982), this Court prospectively abolished the doctrine of sovereign immunity. The Pruett decision is applicable to the case sub judice only in a very limited fashion. First, Pruett was a tort action based on negligence. Second, the Pruett decision expressly held that the abolition of sovereign immunity was relevant only to those claims, demands, actions or causes of action that accrue on or after July 1, 1984. Therefore, Pruett is helpful only in that it indicates that this Court looks upon the doctrine of sovereign immunity with disfavor. A case more directly on point, though not precisely, is Cig Contractors v. Mississippi State Building Commission, 399 So. 2d 1352 (Miss. 1981). In that case, Cig filed suit against the Mississippi State Building Commission seeking damages which were alleged to have resulted from the Commission's breach of contract. The contract called for Cig to construct a portion of the chemistry building at University of Mississippi. Cig was responsible for the concrete, masonry, and general contracting work on the project. The suit claimed that the Building Commission had breached its duty to test and inspect the soil and that such breach required Cig to remove and reconstruct portions of work they had already completed. The Building Commission asserted that it was not subject to suit because of sovereign immunity. In addressing this claim, reference was first made to Chapter 280 of the Laws of 1956 which set forth the powers granted to the State Building Commission. Among those powers are the authority "To contract and to be contracted with and to sue and be sued." The modern version of this code section is § 31-11-53 Miss. Code Ann. (1972). It is important to note that in the statute which establishes the State Capitol Commission the express authority to sue and be sued is lacking. See § 29-5-1 Miss. Code Ann. (1972) in effect at the time of the lease agreement relevant to this appeal, and § 29-5-2 Miss. Code Ann. (Supp. 1983), the revised section. Although there was statutory authority for holding that the State Building Commission was not protected by the doctrine of sovereign immunity, the opinion went further and indicated that the result was not likely to have been different absent such statutory authority: 399 So. 2d at 1355. Based on the authority of Cig, the general law of contracts and common sense, we now hold that when the legislature authorizes the state's entry into a contract the state necessarily waives its immunity from suit for breach of that contract. Therefore, the doctrine of sovereign immunity does not protect the State Department of Public Welfare from being held liable on its contract and the chancellor's opinion in this regard was correct. We next address whether the chancellor was correct in finding that by holding over, the Department of Public Welfare had renewed the expired lease. Essentially the question here is whether § 89-7-25 Miss. Code Ann. (1972), is the exclusive remedy available to a landlord whose tenant is holding over. That section provides as follows: In all candor we acknowledge that our previous opinions on this subject have been somewhat less than consistent. In an effort to remedy those inconsistencies this opinion is intended to be dispositive on the issue. The common law rule which Howie asserts and upon which the chancellor relied is expressed in the case of Tonkel v. Riteman, 163 Miss. 216, 141 So. 344 (1932): 163 Miss. at 219, 141 So. at 344. It is important to note that when Tonkel was decided the statutory predecessor to § 89-7-25 was in effect, although that decision failed to mention it. See Code of 1930 § 2225. Six years later in Tepper Bros. v. Buttross, 178 Miss. 659, 174 So. 556 (1937), this Court again addressed the remedy available to a landlord whose tenant was holding over. In Tepper Bros. the appellants filed eviction proceedings against the appellee in the Mayor's Court in Canton. In that action they obtained a judgment of the property in statutory double rent. The appellee appealed to the circuit court and the appellants filed notice that they would demand double rent under § 2225. Judgment was rendered awarding the appellants possession of the property and $600 as double rent for the period of time the premises *778 were occupied after the expiration of this lease. While that action was proceeding, the appellants filed another declaration in circuit court seeking $2500 in actual damages (of which $360 was for rent) and $5,000 in punitive damages. After paying the judgment in the first cause the appellee pled estoppel and res judicata to the second suit. The appellants demurred to those pleadings and the demurrer was overruled. Upon those facts this Court held that the landlord may not recover both the double rent provided under § 2225 and damages in a separate action: 178 Miss. at 664, 174 So. at 556. More recently, in Crechale and Polles, Inc. v. Smith, 295 So. 2d 275 (Miss. 1974), this Court indicated that it recognized the continued validity of the common law remedy of imposing a renewal of a lease on a holdover tenant but declined to apply the remedy in that case because of the landlord's actions which had amounted to an election to pursue another remedy. Therefore, our opinions have been a yes you can, no you can't, yes you can, response to this issue. We now hold that § 89-7-25 was intended by the legislature to provide the sole action for damages as the result of a tenant's holdover.[1] The common law rule has been abrogated once and for all and may no longer be used to impose the renewal of an expired lease. Obviously we must reverse the chancellor's decision as it relates to this issue. If Howie was not entitled to assert the renewed lease as the basis for his damages as we have held he may not, the question then arises what damages, if any, is he entitled to? To resolve this question we again refer to the case of Crechale and Polles, Inc. v. Smith, supra. In that case Crechale and Polles leased certain property to the Smiths. The lease was for a term of five years and expired on February 6, 1969. Near the end of the term of the lease Smith was informed that the building he intended to move to would not be complete until a month or two after the lease with Crechale and Polles expired. Smith attempted to arrange a month to month lease with Crechale and Polles so that he could remain in the building until his new premises were completed. On February 6, Crechale wrote to Smith notifying him that he was to quit and vacate the premises at midnight that day. On March 3rd Crechale accepted a rent check for the month of February. On April 19th Crechale's attorney wrote Smith that Crechale was electing to treat the holdover as a renewal of the lease. Upon those facts we held: 295 So. 2d at 278. In the instant case we see an almost identical factual situation. Howie wrote to Roark on June 5th and demanded that the premises be surrendered at the expiration of the lease. Howie never elected to pursue this remedy by having the Department evicted. Instead, he accepted vouchers dated July 11th for payment of the July rent. Howie's failure to pursue the remedy of eviction created a month to month tenancy when he accepted the state's payment of the July rent. Having created a month to month tenancy by the acceptance of the July rent Howie was entitled to nothing further. Under the law he could have had the Department *779 evicted and sued for double rent but he chose not to do this. Therefore, Howie was entitled to no relief whatsoever, having been paid all he was due for the July tenancy. Of course, because we have held that the lease contract was not renewed and Howie was not entitled to any relief, the chancellor's decision awarding attorneys fees and a late charge to Howie is also reversed. We have thoroughly examined the other assignments of error and find no merit in them. Therefore, based on all of the foregoing, we hereby reverse and set aside the judgment awarded to Homer Lee Howie and render this cause. REVERSED AND RENDERED. PATTERSON, C.J., WALKER and ROY NOBLE LEE, P.JJ., and HAWKINS, PRATHER, ROBERTSON and SULLIVAN, JJ., concur. BOWLING, J., not participating. [1] Of course, § 89-7-25 is the exclusive remedy to a landlord only insofar as money damages. The landlord is still free to evict a holdover tenant under § 89-7-27 Miss. Code Ann. (1972).