ANDREWS & KNOWLES PRODUCE COMPANY, Inc.
v.
Buck CURRIN, Hank Currin, Jack Calhoun, and Tom Smothers, Trading as Big Four Warehouse.
No. 321.
Supreme Court of North Carolina.
November 23, 1955.*230 J. Faison Thomson & Son, Goldsboro, I. R. Williams, Dunn, and Franklin Dupree, Angier, for defendants, appellants.
Taylor, Allen & Warren, Goldsboro, for plaintiff, appellee.
BOBBITT, Justice.
The location and dimensions of the leased floor space were identified and fixed when enclosed by plaintiff in the Fall of 1950 and made available for the storage of sweet potatoes as contemplated and actually used by plaintiff for such purpose during the 1950 and 1951 seasons. True, as contended, defendants had the right to use the space for the sale of tobacco from the beginning of the season, in any year, up to October 15th. The lease so provides. But defendants had no right to dismantle plaintiff's enclosed storage space and take possession of this space for the storage of sweet potatoes. It is noted that this space was not used for the sale of tobacco.
The court excluded testimony offered by defendants tending to show that the reason plaintiff's enclosure was dismantled in the summer of 1953 was to enable defendants to have the space considered by the Tobacco Board of Trade in calculating the selling time to be allotted to defendants on the tobacco sales market. Defendants owned other tobacco warehouses. The rulings were correct. Even so, some evidence along this line was developed and received without objection. It is irrelevant. It explains why defendants dismantled plaintiff's enclosed storage space but is not a legal justification thereof.
With one minor exception, the only authorities cited in defendants' brief are in support of their assignments of error directed to the court's instructions bearing on the issue of damages. Only these assignments merit further discussion.
In the absence of a provision to the contrary, there is an implied covenant that the lessee shall have the quiet and peaceable possession of the leased premises during the term. Sloan v. Hart, 150 N.C. 269, 63 S.E. 1037, 21 L.R.A.,N.S., 239; Huggins v. City of Goldsboro, 154 N.C. 443, 70 S.E. 842; Smithfield Improvement Co. v. Coley-Bardin, 156 N.C. 255, 72 S.E. 312, 36 L.R.A.,N.S., 907; 32 Am.Jur., Landlord and Tenant, sec. 268; 51 C.J.S., *231 Landlord and Tenant, § 323. Unauthorized entry and repossession of the leased premises by the lessors or those acting under their direction constitutes an invasion of the lessee's rights, in short, a breach of the lease agreement. 51 C.J.S., Landlord and Tenant, § 319. In such case, the lessee, at his election, may sue for damages. 51 C.J. S., Landlord and Tenant, § 320.
What then is the measure of damages when the lessors, during the term the lease is in effect, wrongfully exclude the lessee from the leased premises and deny to the lessee the possession thereof during the unexpired portion of the term?
It was held in Sloan v. Hart, supra, that lessee's cause of action accrues immediately upon such breach. "The measure of damages appears settled, by practically all the authorities, to be the difference between the rent agreed upon and the market value of the term, plus any special damages alleged and proved." "By rental value is meant, not the probable profits that might accrue to the plaintiffs, but the value, as ascertained by proof, of what the premises would rent for, or by evidence of other facts from which the fair rental value may be determined." Quotations are from opinion of Brown, J., in Sloan v. Hart, supra [150 N.C. 269, 63 S.E. 1039]. See Sloan & Sweeney v. Hart, 153 N.C. 183, 69 S.E. 50.
Plaintiff's evidence, accepted by the jury, established that plaintiff had paid the rental for the full term of five years. It is noted that the amount expended by plaintiff in the construction of the enclosure was to be credited against the rent due, which was $30 per thousand square feet or $96 per year for 3200 square feet, a total of $480.
The lessee having paid the rental for the entire term of five years, the measure of damages, in the absence of allegation and proof of special damages, is the fair rental value of the leased premises as enclosed by plaintiff for the 1953 and 1954 seasons, to wit, the portion of the term that had not expired when the breach occurred. At the time of trial, the 1954 season had passed. Hence, there was no need to restrict the recovery to the present value, appropriate when any part of the unexpired term is subsequent to date of trial.
Here plaintiff did not allege nor did he undertake to prove the loss of profits or other special damages. The evidence offered, bearing upon the issue of damages, was directed solely to the fair rental value of the leased premises as enclosed by plaintiff for the 1953 and 1954 seasons. The evidence as to the amount expended by plaintiff in construction of the enclosure was directed solely to the question as to whether plaintiff, in accordance with the terms of the lease, had paid the rent for the full term of five years.
The court gave the jury the basic rule for measuring damages for breach of contract, established law since Hadley v. Baxendale, 9 Exch. 341. Sloan v. Hart, 150 N.C. 269, 63 S.E. 1037, 21 L.R.A.,N.S., 239; Perkins v. Langdon, 237 N.C. 159, 74 S.E.2d 634. While not challenging the correctness of this basic rule, defendants assign as error the court's failure to indicate its precise application to the present case. The assignment is without merit, for the conflicting evidence and the court's array of the conflicting contentions based thereon show clearly that the issue as to damages involved only a determination of what was the fair rental value of the leased premises as enclosed by plaintiff for the 1953 and 1954 seasons.
Defendants further challenge the charge because the court failed to instruct the jury that plaintiff was under the legal duty to show that it had exercised reasonable prudence and diligence to minimize its loss. It is noted that when the rule as to the duty to minimize damages applies, the party who breached the contract has the burden of showing matters in mitigation of damages. Monger v. Lutterloh, 195 N.C. 274, 142 S.E. 12. But apart from this, the rule has no application here.
*232 True, such rule ordinarily applies when special damages are alleged and shown, such as gains prevented and losses incurred, on account of breach of an executory contract. Chesson v. Kieckhefer Container Co., 215 N.C. 112, 1 S.E.2d 357; Perkins v. Langdon, supra. In Monger v. Lutterloh, supra, an entirely different situation was presented. There the lessee refused to accept the leased premises and to pay the rent therefor. The lessor took possession thereof for the benefit of the lessee. In the lessor's action against the lessee for rent, it was held that the lessor must account to the lessee, that is, give him credit against the stipulated rent, either for the fair rental value of the leased premises or for the amount the lessor could have obtained by the exercise of reasonable prudence and diligence in reletting the premises, depending upon whether the lessor did or did not make actual use of the premises for his own purposes. The cases cited in this paragraph, relied on by defendants, are readily distinguishable from this case.
After defendants had dismantled plaintiff's enclosure and sweet potatoes were stored by others in the leased space, (then within a larger enclosure) there was a conversation between an officer of plaintiff (Andrews) and defendant Buck Currin in which they tried to adjust the damages to which plaintiff was entitled. This evidence was received without objection. As defendant Buck Currin put it: "We didn't get together." The jury's verdict, after consideration of conflicting evidence as to the fair rental value of the leased space for the 1953 and 1954 seasons, resolved the uncertainty as to the amount justly due and owing plaintiff on account of defendants' breach of contract.
All assignments of error brought forward in the brief, a total of 51, have been considered. Examination thereof discloses no error of law deemed of sufficient prejudicial effect to warrant a new trial.
No error.