Title: Anderson v. Armour & Company
Citation: 205 Kan. 801, 473 P.2d 84
Docket Number: 45,797
State: Kansas
Issuer: Kansas Supreme Court
Date: July 17, 1970

205 Kan. 801 (1970)
473 P.2d 84
K.T. ANDERSON, RUSS B. ANDERSON, AND ROBERT L. ANDERSON, Appellees,
v.
ARMOUR AND COMPANY, A Corporation, Appellant.
No. 45,797

Supreme Court of Kansas.
Opinion filed July 17, 1970.
Elvin D. Perkins, of Emporia, argued the cause, and Everett E. Steerman and Keith A. Greiner, of Emporia, were with him on the brief for appellant.
George Forbes, of Emporia, argued the cause, and Russ B. Anderson, of Emporia, and Arthur Claussen, of Topeka, were with him on the brief for appellees.
The opinion of the court was delivered by
PRICE, C.J.:
This is an action by lessees against their lessor for damages resulting from the alleged breach of the written lease agreement.
Judgment was for plaintiff lessees, and defendant lessor has appealed.
*802 The decisive question in the case involves the interpretation and enforceability of one provision of the lease.
For a number of years prior to 1963 the Santa Fe Railway was the owner of a 40-acre tract of land just west of Emporia adjacent to its railroad tracks. The south 3 or 4 acres were used by the Santa Fe in its operations. The remainder of the tract was for many years leased by the railroad to plaintiff Andersons and was used by them in their large-scale cattle feeding operations. The improvements and equipment were owned by the Andersons and placed there at their expense.
In June 1963 Santa Fe sold and conveyed to Armour and Company approximately 30 acres of the 40-acre tract for the construction of a packing plant. The Andersons relinquished their lease rights in the 30 acres thus sold, and entered into a written lease with Armour covering the west 13.75 acres of the 30-acre tract bought by Armour from Santa Fe.
This lease from Armour to the Andersons was entered into on June 18, 1963, and was for a term of five years commencing July 1, 1963 and ending June 30, 1968. It provided that either party had the right to terminate the lease at the end of the third or fourth year of the five-year term by giving written notice of intention to terminate not less than 12 months prior to the end of the third or fourth year, as the case may be.
The lease also contained the following provision  the alleged breach of which by Armour resulted in this law suit:
In passing  it is noted the lease further provided that lessees were prohibited from filing it or a copy thereof in the office of register of deeds of Lyon county or in any other public office, and that if the same should be done the entire lease  at the option of lessor  would be null and void and of no further force and effect.
The parties operated under the lease for several years, and neither party exercised the right to terminate.
In the fall of 1967, however, Armour closed down its packing plant, and on November 29, 1967, conveyed by warranty deed the entire 30 acres  including the 13.75 acre tract under lease to the Andersons  to Iowa Beef Packers, Inc.
*803 In violation of the above quoted provision of the lease  Armour admits that it gave no notice to the Andersons of its plan to dispose of the property.
Several months later  on March 25, 1968, Armour wrote to the Andersons and informed them of the conveyance and that the lease in question had been assigned to Iowa, the purchaser.
On October 25, 1968, the Andersons filed this action against Armour. Without detailing the allegations of the petition  the basis of the action was that the tract in question had a unique value to them and that because of Armour's failure to notify them of the proposed sale to Iowa they were deprived of the use of the tract and the opportunity to purchase the same  all to their damage in the amount of $75,000.00.
Armour's answer alleged that the provision of the lease relied on by the Andersons was vague, indefinite, uncertain and unenforceable and therefore of no force and effect, but that if valid and enforceable it was not breached in that it applied only to the 13.75 acre tract and that in fact such tract was not "sold" but rather was "traded" as an essential part of other related property. Damage was denied.
The case was tried by a jury which answered special questions and returned a verdict for plaintiff Andersons in the amount of $25,000.00. Judgment was entered thereon, and defendant Armour has appealed.
As stated  the real question in the case concerns the interpretation and enforceability of the quoted provision of the lease.
Briefly stated  Armour contends the provision is unenforceable because it is vague and uncertain; that it contains no price or formula by which price can be determined; that it is nothing more than an agreement to make a contract and as such is not binding because all of the terms and conditions were not agreed upon and stated therein.
On the other hand  the contention of lessees (plaintiff Andersons) can best be stated by quoting from their brief:
The foregoing theory as to the distinction between an "option" and a "right of pre-emption" is supported by numerous authorities, and we believe is sound. Barling v. Horn, 296 S.W.2d 94 (Missouri, 1956) was an action for specific performance of a clause in a lease whereby the lessees were to have the first opportunity to purchase the premises if the lessors decided to sell prior to the expiration of the lease. The lessors sold the property to a third party. It was held that the clause gave lessees a right of pre-emption, was supported by consideration, and that lessees should have been given an opportunity to purchase the property under the same terms and conditions as it was sold. Headnote 4 of the case reads:
To the same effect is Weintz v. Bumgarner, 150 Mont. 306, 434 P.2d 712 (1967) in which it was held that a provision in a lease that the owner agreed to give the tenant written notice of specific intention to sell and to permit tenant to have ten days in which to arrange purchase of the premises was not void for vagueness or uncertainty, but meant that at such time as the owner formed an intention to sell on specific terms and conditions he was required to give the tenant written notice of such intention and give tenant ten days in which to arrange purchase of the property on the same terms and conditions, and thereafter if the tenant did not arrange such purchase with the owner, the owner was free to sell the property to another person subject to the existing lease. Paragraphs 2 and 3 of the syllabus read:
Tinkler v. Devine, 159 Kan. 308, 154 P.2d 119, involved the enforceability of a lease provision similar to the one before us. It was held:
Application of what has been said to the provision here in question is clear. It gave the lessees (Andersons) a pre-emptive right of purchase, and, when Armour decided to sell, such right ripened into an enforceable contract right of the Andersons to purchase, and the trial court was correct in so concluding. Absent a substantial question of material fact, the interpretation of a contract becomes a matter for the court (McAfee v. City of Garnett, 205 Kan. 269, syl. 6, 469 P.2d 295).
Other matters urged by Armour require but brief discussion.
For example, it is contended that the clause in question was not breached because a larger tract  the entire 30 acres  was disposed of,  and further  its transaction with Iowa was a "trade or exchange" of property rather than a "sale" in the strict sense of the word.
Both contentions are completely untenable. While it is true the clause in the lease had reference only to the 13.75 acres leased to the Andersons  it was Armour who prepared the lease and if it was intended that the provision not apply in the event Armour desired to sell more than just that tract  the clause could have so provided. And, while it also is true that the deal between Armour *806 and Iowa involved an exchange of properties together with cash  the deed from Armour recited "bargain, sell and convey". Further, as far as the Andersons were concerned  the 13.75 acres were effectively "sold" and placed beyond their reach  regardless of the details of the transaction between Armour and Iowa.
What has been said disposes of any question as to the trial court's refusal to give Armour's requested instruction No. 1, and the objection to a portion of the court's instruction No. 3. The remainder of that instruction was substantially identical to Armour's requested instruction No. 2 which was given 
Having requested the instruction  Armour may not now be heard to complain.
In answer to special questions the jury found the value without improvements to be $55,000.00 and with improvements to be $80,000.00, and returned a general verdict for plaintiff Andersons for the difference  $25,000.00.
Finally, it is contended there was no substantial evidence to establish any damage suffered by the Andersons. The testimony as to the large amount of expensive equipment placed on the tract for use in feeding several thousand head of cattle will not be detailed. It is sufficient to state the plaintiffs' evidence as to value of the tract with the improvements ranged from $125,000.00 to $150,000.00 and without the improvements from $55,000.00 to $68,750.00. Had they been given the opportunity to buy the tract they would have been required to pay the value of it without improvements  which they already owned. Therefore, it follows their damages were limited to the value of the tract with the improvements as compared to its value without the improvements  and this was the measure of damages stated by Armour in its requested instruction No. 2. The verdict was well within the evidence.
*807 Other points have been noted, but need not be discussed. Running all through this case is the fact that Armour simply breached the lease provision in question.
We find nothing in the record approaching reversible error and the judgment is affirmed.
SCHROEDER, J., dissenting.