Court Opinion

ID: 9769874
Source: CourtListenerOpinion
Date Created: 2023-08-29 15:05:40.438977+00
Date Added: 2024-06-11T07:31:08.874098
License: Public Domain

GUITTARD, Chief Justice,
dissenting.
I cannot agree that this is a proper case for summary judgment. In my opinion, the record presents fact issues or, at least a question of equitable discretion that could not properly be decided by the trial court on the summary-judgment proof.
The majority opinion approaches this case as if the principal question were whether neglect of the lessee “justifies” equitable relief. Such a statement of the question assumes a negative answer because, of course, the plaintiff’s neglect is never a ground of relief. As I see it, the question is rather whether the lessee’s forgetfulness bars equitable relief, no matter what grounds for such relief may be shown. More precisely, I would state the question as whether, in cases of merely inadvertent failure to comply strictly with the time requirement for giving notice of renewal of a lease, equity will relieve when the delay has been slight, the loss to the lessor small, and when denial of relief would result in such a hardship to the tenant as to make it unconscionable to enforce literally the time requirement as a condition precedent to renewal. Although I recognize that the authorities are divided on this question, I conclude that the better view allows such relief in a proper case, and I believe that this view has been adopted by the Supreme Court of Texas in Jones v. Gibbs, 133 Tex. 627, 130 S.W.2d 265, 272 (1939) and Sirtex Industries, Inc. v. Erigan, 403 S.W.2d 784, 788 (Tex.1966).
I recognize, of course, that time is of the essence in an ordinary option contract in which the optionee pays a relatively small consideration for the optionor’s promise to keep an offer open for a specified period of time. In such a case, the optionee pays his money for time in which to make a decision as to whether he will purchase the property in question, and, if he fails to exercise the option within the time specified, he is in no position to seek equitable relief because he got everything he paid for. On the other hand, if the optionee has paid the major consideration for his purchase of the property, or has made other expenditures in reliance on the option, the time-of-the-essence rule is not so clearly applicable.
This problem was fully considered by the Supreme Court of Texas in Jones v. Gibbs, 133 Tex. 627, 130 S.W.2d 265, 272 (1939). That case involved a timber deed, executed for a substantial initial consideration, allowing the grantee ten years to remove the timber from the land in question, but granting an option to renew from year to year for not more than five additional years on payment of a small rental. Termination was asserted on the ground that a third party to whom the rental was paid was not authorized to receive it for the grantor’s estate. The court mentioned a possible conflict in the evidence as to whether the grantor’s administrator had authorized payment to the third party, but held that this alleged conflict did not present a material fact issue because even if it were assumed that the third party were not authorized to receive it, special circumstances authorized equitable relief from literal enforcement of the condition prescribed by the deed. The court observed that the option was not like the usual option to buy land, since the full agreed value of the timber had been paid, but was more like a lease with option to extend, and that to consider the grantee’s rights terminated would amount to forfeiture of a valuable property right. Accordingly, the court held that the usual requirement of strict compliance with the condition precedent was excused by “overriding equitable rules” in view of circumstances indicating that the error in making the payment was not due to willful or gross negligence, but was a result of an honest mistake, and that the right to take the timber would result in “unconscionable hardship.” In support of this holding, the court cited authorities from other jurisdictions, inelud-*243ing F. B. Fountain Co. v. Stein, 97 Conn. 619, 118 A. 47, 50 (1922), from which the following statement was quoted with approval:
In cases of mere neglect in fulfilling a condition precedent of a lease, which do not fall within accident or mistake, equity will relieve when the delay has been slight, the loss to the lessor small, and when not to grant relief would result in such hardship to the tenant as to make it unconscionable to enforce literally the condition precedent of the lease.
I cannot agree that the Jones opinion is obiter insofar as it says that the party claiming equitable relief need not establish that he was misled by the other party. Although the court said that the grantee had shown that he had not paid the wrong party, that is not the main ground on which the decision rests. The case was expressly decided on the broader ground of equitable relief from unconscionable hardship stated by the Connecticut court in the quotation from F. B. Fountain Co. v. Stein, supra. The court used the expression “honest and justifiable mistake” as contradistinguished from “willful or gross negligence,” thus excluding simple inadvertence as a ground for denying equitable relief.
This express adoption of the Connecticut rule in Jones was reaffirmed in Sirtex Industries, Inc. v. Erigan, 403 S.W.2d 784, 788 (Tex.1966). In Sirtex, likewise, another ground was available for the decision, namely that the obligation to pay was a covenant rather than a condition. Nevertheless, the supreme court rested its decision on both grounds. When our highest court gives two grounds for a decision, both of which are carefully developed and supported by authority, an intermediate court cannot justifiably disregard either of these grounds as obiter. Stanolind Oil & Gas Co. v. Edgar, 98 S.W.2d 222, 223 (Tex.Civ.App.—Austin 1936, writ dism’d); Casparis v. Fidelity Union Casualty Co., 65 S.W.2d 404, 406 (Tex.Civ.App.—Austin 1933, writ ref’d).
The majority opinion cites cases from other jurisdictions supporting the view that “neglect” by the lessee in failing to read his lease or in forgetting the deadline for exercise of an option precludes equitable relief no matter how great the resulting hardship. This very line of authorities was rejected in Jones and also in the Connecticut cases cited in Jones and Sirtex. The Connecticut rule has since been followed in other jurisdictions. In Sy Jack Realty Co. v. Pergament Syosset Corporation, 27 N.Y.2d 449, 318 N.Y.S.2d 720, 267 N.E.2d 462, 463 (1971), the renewal notice was mailed in time, but was not delivered, and actual notice was given a month late, though still about two months before expiration of the lease. The New York Court of Appeals held that equitable relief was proper on “the principle that a tenant should be relieved of its default when its failure to give the requisite timely notice of renewal of its lease — or to perform some other condition precedent to renewal — has neither harmed nor prejudiced the landlord and was not due to bad faith.”
Another New York case applying this principle is George W. Millar & Co. v. Wolf Sales & Service Corp., 65 Misc.2d 585, 318 N.Y.S.2d 24, 25-26 (Civ.Ct. of City of New York, 1971), holding that failure of memory as to the time for renewal did not bar equitable relief. Similarly, equitable relief was granted notwithstanding the lessee’s forgetfulness of the deadline in Sosanie v. Pernetti Holding Corp., 115 N.J.Super. 409, 279 A.2d 904, 908 (1971).
Under these authorities, and also under Jones and Sirtex, as I interpret them, the standard governing the lessee’s conduct is not freedom from “neglect”, but excusable fault as distinguished from bad faith or gross negligence, and forgetfulness is excusable if the delay is not harmful to the lessor. Consequently, the lessee need not show that he was affirmatively misled by any conduct of the lessor or that he was otherwise free from fault.
In my view, the standard of excusable fault is sound. The lessor should not reap an unconscionable advantage from an inadvertent delay that has caused no substantial loss. The notion that a party’s claim to relief should be barred by his own slight *244fault is no longer favored in tort cases, as exemplified by the trend to comparative negligence and disallowance of the defense of contributory negligence in cases of strict liability. See Tex.Rev.Civ.Stat.Ann. art. 2212a (Vernon Supp.1977); Henderson v. Ford Motor Co., 519 S.W.2d 87, 89 (Tex.1975). It is no more appropriate in equity, whose very nature is to afford relief from strict rules of law. The majority opinion goes against this trend in holding not only that slight fault bars equitable relief, but also that simple forgetfulness constitutes inexcusable fault as a matter of law.
If my interpretation of Jones and Sirtex is correct, the summary judgment in this case is erroneous because the question of whether the delay was slight and whether lessee will suffer an unconscionable hardship are fact questions on this record, even though the circumstances are, for the most part, undisputed. Consequently, I would apply the familiar rule that when different fact inferences may be drawn from undisputed evidence, a jury question is presented. Le Master v. Fort Worth Transit Company, 138 Tex. 512, 160 S.W.2d 224, 226 (1942); Commercial Standard Ins. Co. v. Davis, 134 Tex. 487, 137 S.W.2d 1, 2 (1940); Drake v. Walls, 348 S.W.2d 62, 65 (Tex.Civ.App. — Dallas 1961, writ ref’d n. r. e.). Since this is an appeal from a summary judgment, every reasonable doubt must be resolved in favor of the party opposing the motion. Wilcox v. St. Mary’s University, 531 S.W.2d 589, 591 (Tex.1976).
Under these authorities, I conclude that whether the delay of two months was more than slight is a fact issue on this record. “Slight” is a relative term and must be considered with respect to the length of the period remaining and whether the delay caused any inconvenience to lessors. There is evidence indicating that the delay in giving the notice caused no such loss or inconvenience. Thus, the case is like others in which the time when relevant action was taken is undisputed, but the circumstances raise a fact issue as to whether it was taken within a reasonable time. General Acc. Fire & Life Assur. Corp. v. Butler’s Ice Cream Factory, 5 S.W.2d 976, 979 (Tex. Com.App.1928, judgmt. adopted); Sylvester v. Watkins, 538 S.W.2d 827, 831 (Tex.Civ.App.—Amarillo 1976, writ ref’d n. r. e.); Pioneer Casualty Co. v. Blackwell, 383 S.W.2d 216, 219 (Tex.Civ.App.—Waco 1964, writ ref’d n. r. e.).
Similar considerations apply to the matter of unconscionable hardship, since there is evidence of substantial expenditures made and inventory purchased in reliance on renewal of the lease and also evidence of a potential loss of good will built up for lessee’s clothing store at this particular location. At least some hardship is shown, and whether it is great enough to justify equitable relief is a question of fact. The question is similar to the issue of “manifest hardship and injustice” as a basis for lump-sum settlement in workmen’s compensation cases, which, though a matter of opinion rather than of fact, is routinely submitted to the jury if any factual basis for the opinion is shown, American General Ins. Co. v. Ariola, 187 S.W.2d 585, 588 (Tex.Civ.App.—Galveston 1945, writ ref’d); Texas Indemnity Ins. Co. v. Arant, 171 S.W.2d 915, 919 (Tex.Civ.App. — Eastland 1943, writ ref’d).
This conclusion is supported by Xantha-key v. Hayes, 107 Conn. 459, 140 A. 808 (1928), which was cited with approval by our supreme court in Jones v. Gibbs, supra. In Xanthakey, the trial court granted equitable relief on facts not materially different, except possibly in degree, from those shown in' the present record, and the appellate court held that no error was shown. I cannot escape the conclusion that unless the majority is correct in repudiating the Connecticut rule, the evidence in this case should be presented to a jury.
Lessors argue that questions of slight delay and unconscionable hardship are not jury questions, but matters of equitable discretion which the trial judge resolved in their favor, and that this court is bound by his decision because no abuse of discretion is shown. This argument is novel insofar as it suggests that the scope of the trial court’s discretion in a summary-judgment *245case is broader than that of the appellate court. Rule 166-A of the Texas Rules of Civil Procedure authorizes summary judgment only when the summary judgment evidence establishes that “the moving party is entitled to judgment as a matter of law.” The authority of appellate courts to determine matters of law is as broad as that of the trial courts. See Southland Life Ins. Co. v. Egan, 126 Tex. 160, 86 S.W.2d 722, 723 (1935); Ford v. Allen, 526 S,W.2d 643, 644 (Tex.Civ.App.—Austin 1975, no writ). On appeal from a summary judgment, any doubt, which in other cases would be resolved in favor of the judgment, must be resolved against the moving party. Wilcox v. St. Mary’s University, 531 S.W.2d 589, 593 (Tex.1976); Womack v. Allstate Insurance Co., 156 Tex. 467, 296 S.W.2d 233, 235 (1957); Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 931 (1952). These authorities allow the trial court no range of discretion that may be exercised in favor of the moving party without a full trial.
Although the concept of equitable discretion has been recognized in many Texas cases, its scope has never been defined. See Texas Indemnity Ins. Co. v. Arant, 171 S.W .2d 915, 919 (Tex.Civ.App.—Eastland 1943, writ ref’d). Under the English equity practice adopted in most states, there is no right to trial by jury and the equitable discretion of the chancellor includes the power to find facts. See Mathews v. First Citizens Bank, 374 S.W.2d 794, 797 (Tex.Civ.App. — Dallas 1964, writ ref’d n. r. e.). This kind of discretion cannot be properly exercised in Texas if a jury is demanded because, under the blended Texas practice, the right of jury trial extends to fact issues in equitable, as well as legal proceedings. San Jacinto Oil Co. v. Culberson, 100 Tex. 462, 101 S.W. 197, 198, 199 (1907); Ex parte Allison, 99 Tex. 455, 90 S.W. 870, 871 (1906). Accordingly, the equitable discretion of the chancellor to find facts cannot properly be exercised in response to a motion for summary judgment, which is proper only where there is “no genuine issue of material fact,” whether the issue asserted bears on legal or equitable relief.
If there is a range of equitable discretion within the authority of the trial judge apart from his authority to find facts, reviewable only for abuse of discretion, the matters which may be so determined are more nearly analogous to fact inferences to be drawn from the entire record than to conclusions of law resulting from application of established rules to undisputed facts. Consequently, such discretion should not be exercised without development of the evidence at a full trial. It cannot properly be exercised on affidavits and other summary-judgment evidence designed to show that the moving party is entitled to judgment as a matter of law. Summary judgment is proper only when the summary-judgment proof shows that no question of equitable discretion exists. In the present case, even if slight delay and unconscionable hardship are not jury issues, they are at least matters of equitable discretion for the trial court to determine on a complete record and cannot properly be decided in response to a motion for summary judgment. Consequently, this summary judgment cannot be upheld as an exercise of equitable discretion.
Since, for the reasons stated, I do not agree with the majority’s rejection of the Connecticut rule, and I conclude that summary judgment cannot be sustained on any of the grounds asserted by lessors, I must respectfully dissent.
AKIN, Justice.