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IN THE COURT OF APPEALS 03/26/96 OF THE STATE OF MISSISSIPPI
NO. 94-CA-00724 COA PAUL H. JONES APPELLANT v. WILLIAM E. MOREHEAD, CATHY MOREHEAD, LARRY MOREHEAD AND MRS. HARVEY MOORE APPELLEES

THIS OPINION IS NOT DESIGNATED FOR PUBLICATION AND MAY NOT BE CITED, PURSUANT TO M.R.A.P. 35-B

TRIAL JUDGE: HON. JOHN L. HATCHER COURT FROM WHICH APPEALED: COAHOMA COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: DAVID R. HUNT PATRICIA W. BURCHELL ATTORNEY FOR APPELLEES: M. LEE GRAVES NATURE OF THE CASE: SUIT FOR DECLARATORY JUDGMENT ON RIGHTS OF LESSEE IN A LEASE WITH AN OPTION TO RENEW THE LEASE TRIAL COURT DISPOSITION: DENIED PLAINTIFF'S REQUESTED RELIEF BUT GRANTED OTHER FORMS OF RELIEF TO PLAINTIFF

BEFORE THOMAS, P.J., COLEMAN, AND McMILLIN, JJ.

COLEMAN, J., FOR THE COURT:

Paul H. Jones (Jones) filed a complaint for declaratory judgment in the Circuit Court of Coahoma County in which he sought that court's declaration and adjudication of his rights and duties as lessee in a certain Lease Agreement (Lease) executed October 10, 1983, by the Lessor, William Edward Morehead, who was then acting as Conservator of his mother, Mrs. Marion O. Morehead, owner of the land encumbered by the Lease. The Lease terminated December 31, 1993. Jones' objective was to have the trial court declare that under the terms of an option to renew the lease contained in Section I. of the Lease Agreement, the Lessor was obligated to renew the Lease for another ten-year period beginning January 1, 1994. The trial judge, who acted without a jury, found that the option to renew the lease was too vague and uncertain to be specifically performed by Jones as lessee and Morehead as lessor, but he did declare that Jones was entitled to lease the premises encumbered by this Lease for one additional year, which would end December 31, 1994. The trial judge also determined that a certain ferry barge which had been used by the owner for access to the leased property belonged to the lessor but was subject to Jones' use as lessee of the one-year lease which the trial judge awarded Jones. Jones has appealed from this final judgment, but we affirm that final judgment. I. Facts The land which was encumbered by the Lease was an entire island, the name of which was Alcorn Island, located in Moon Lake in Coahoma County. Alcorn Island's area varied from 607 acres at a normal water level to less than 500 acres in times of high water. There was no bridge from the lake shore to the island. The only access to the island was by boat or barge. Marion Owens Morehead owned Alcorn Island and several parcels and lots along the shore of Moon Lake. Prior to 1974, Mrs. Morehead had managed a pecan orchard and a cattle operation on Alcorn Island. One worker helped her manage the island in this fashion. In the fall of 1972, Mrs. Morehead's employee demanded a large percentage of the pecan harvest on the island in addition to his regular salary. Jones, who was the son of Mrs. Morehead's brother and thus her nephew, discussed the worker's demand with his aunt, Mrs. Morehead. After his conversation with Mrs. Morehead, Jones evicted the worker and gathered the pecan crop for his aunt that year. Mrs. Morehead decided to lease the island to some other people. When Jones learned of her decision to lease the island, he told Mrs. Morehead that he was interested in leasing it. After a discussion with Mrs. Morehead and her son, William Morehead, Jones leased Alcorn Island from Mrs. Morehead for a period of ten years. Mrs. Morehead was then seventy eight years old. This ten-year period ended December 31, 1983. According to Jones' testimony at the trial, the terms of the first lease required him to pay Mrs. Morehead one-fifth of the proceeds from the sales of the pecan crop and the calf crop. The first lease required no base rent; neither did it require Jones to plant any pecan trees. In June of 1980, before this first Lease expired, William Edward Morehead, Mrs. Morehead's son, was appointed her conservator. Mrs. Morehead died testate on or about October 4, 1984. She devised the residue of her estate, which included Alcorn Island, as follows: a one-third interest to her son, William E. Morehead, a one-third interest to her daughter, Sarah Morehead Moore, a one-sixth interest to her grandson, Larry Morehead, and a one-sixth interest to her granddaughter, Katherine

Morehead. These four people became the owners of the island after their mother's and grandmother's death in 1984. These same four people were the defendants named in the complaint for declaratory judgment which Jones filed; and they are the appellees in this appeal. On October 10, 1983, almost one year before his mother died, William Edward Morehead as his mother's conservator executed a new Lease with Jones. No court had authorized him to execute this second Lease on behalf of his mother and ward, Mrs. Morehead. Like the first Lease, the term of this second Lease was for ten years. It terminated on December 31, 1993. Like the first Lease, Jones agreed to pay Lessor as annual rental an amount equal to twenty percentum (20%) of the annual sales of pecans, hay and cattle. Unlike the first Lease, however, this second Lease provided that "[i]n no event shall the rental be less than $12,000.00 annually." Unlike the first Lease, Jones agreed that he would plant one hundred pecan trees each year of the Lease. This second Lease, which is the subject of this appeal, contained the following option to renew the lease: "Lessee shall have an option to renew this lease for an amount and a term of years equal to a bona fide third-party offer." On June 8, 1993, Jones wrote Larry Morehead, then a resident of New York City, to express his interest in continuing to lease the island. He concluded his letter as follows: In any event, please accept this letter as my intention to retain possession of the island to the extent that I am permitted to do so under our contract and agreement.

More than three months later on September 10, 1993, Clarksdale lawyer M. Lee Graves wrote Jones on behalf of the Moreheads. He included the following paragraph in his letter: Enclosed please find a Lease Agreement for the year 1994. If you are interested in leasing the property for the year 1994, please execute the same and return it to me at the address on the letterhead. I will see that it is executed by the heirs of the estate. If I do not hear from you within seven (7) days of the date of this letter, then we will know that you are not interested in leasing the property for the year 1994.

The proposed Lease Agreement which Graves enclosed with his letter was for a term of one year, which began January 1, 1994, and terminated December 31, 1994. Its terms required Jones to pay "as annual rent . . . an amount equal to 30% of the annual sales of pecans . . . .," but its terms further provided that "[i]n no event shall the rental be less than $6,000 annually nor paid later than December 31, 1994." In response to Graves letter, Jones' attorney, David R. Hunt, wrote Graves on September 15, 1993. In his letter Hunt wrote: I am assuming that, in accordance with paragraph I of the Lease Agreement between the Moreheads and Paul [Jones], a third party has made an offer to lease the property for the amount stated in your proposed lease as well as for a one-year period. I would appreciate being furnished a copy of this offer if it was made in writing.

In any event, Paul [Jones] wishes to exercise his option contained in paragraph I of his lease and therefore please accept this letter as Paul's exercise of his option to renew his existing lease on the same terms and conditions contained therein, with the exception that the term of the renewed lease will be for a period ending December 31, 1994, and the rentals to be 30% of the annual sales of pecans but not less than $6,000.00 to be paid no later than December 31, 1994, assuming, of course, that the heirs of Mrs. Morehead have received a bona fide third party offer for that amount and for a period of one year.

Graves replied to Hunt's letter on September 20, 1993. In that letter, Graves advised that "[t]he old lease will terminate on December 31, 1993." He further wrote that his clients, the Moreheads, were tendering Jones a "new lease . . . to be exercised for one (1) year." Jones response to Graves' letter dated September 20, was to file a complaint for declaratory judgment on October 8, in the Coahoma County Circuit Court. II. Litigation In his complaint for declaratory judgment, Jones sought the circuit court's judgment which would: Declar[e] and adjudicat[e] the respective rights and duties of the Plaintiff [Jones] and the Defendants [the Moreheads] under the aforesaid lease, and further declar[e] that the Plaintiff is entitled to possession and occupancy of the aforesaid real property upon the same exact terms, provisions, and conditions of the Lease Agreement . . ., with the exception that the rentals shall be in that amount and the term shall be for that period equal to the bona fide offer of the third party . . . .

In their answer, the Moreheads sought "a declaratory judgment setting forth that the purported lease agreement . . . is void, and they asked that "[c]omplete discovery be required of [Jones], and that an accounting be made as to the matters requested in this Answer . . . ." Nowhere in their answer did the Moreheads mention any personal property nor ask the circuit court to adjudicate the ownership of any personal property as between them and Jones, the plaintiff. The Moreheads concluded their answer with a request for "such other general and more specific relief as the Court deems proper and is reflected by the accounting and discovery herein." We reserve our recitation of the course of the trial, which would include the testimony and exhibits, for our discussion of the two issues which Jones presents for our consideration and adjudication. We conclude this portion of the opinion by reciting briefly from the trial court's opinion and the final judgment which the trial court entered pursuant to its opinion. The trial court opined in part: One of the reasons that [Jones' right of renewal] gave me concern was in trying to formulate how I would enforce this provision so as to bring about a third party bona fide offer. Whose responsibility is it to get the offer? Is it the lessee's responsibility to get one,

or is it the lessor's responsibility to get one? In this case, none was obtained by either party. (Emphasis added.)

....

I believe also submitted to me for a decision was the ownership of the barge. The barge was not specifically mentioned in either the bill of sale or the lease. I don't believe the repairs to the barge are sufficient to transfer title, no matter how extensive they were, and I am going to hold that the barge goes with the lease and it goes with the island, so to speak, rather than the plaintiff [Jones].

In accordance with its opinion, the trial court on June 23, 1994, entered its final judgment in which it ordered the following: IT IS, THEREFORE, ORDERED AND ADJUDGED: .... 2. The provision of the lease granting the option to renew the lease for the rentals and for the term contained in a bona fide third party offer is too vague and uncertain to be specifically performed by the parties but the plaintiff [Jones] is entitled to lease the premises for an additional term of one year ending December 31, 1994, and for annual rentals of 30% of the sale of pecans, but in no event to be less than $6,000.00, which rentals shall be paid no later than December 31, 1994, all as set forth in Exhibit A attached hereto.

3. The 24' x 3' x 40' ferry barge is the property of the Defendants but is included in and subject to the lease of the real property and therefore the use and occupancy of the Plaintiff [Jones] under the lease to which the Court has declared the Plaintiff [Jones] to be entitled.

After the trial court's entry of its final judgment, Jones' attorney, David Hunt, wrote the trial judge on June 9, 1994, to inform him "that of the courses of action available to [Jones] under the Court's ruling, he chooses the lease of the premises for the year 1994 as set forth in the lease proposed by the Defendants in September, 1993." However, a copy of this letter has not been included in the record of this case. Instead, appellees, the Moreheads, included a copy of the letter as an exhibit in their brief. Now, the Moreheads argue that Jones is precluded from appealing the case sub judice because he exercised the election to accept the renewal lease for the additional year.

III. Issues and the Law These are the two issues that Jones asks this Court to resolve. We state them as he did in his brief: 1. Whether the Court erred in ruling that the subject lease agreement, which contains a renewal clause "for an amount and a term of years equal to a bona fide third party offer," is too uncertain and indefinite to require performance by the Appellees [the Moreheads]?

2. Whether the Court erred in ruling on the disposition of a certain ferry barge. The Moreheads counter with a third issue which we previously noted. In their brief, they state it in the following language: Whether the Appellant is precluded from an appeal for exercising the election to accept the renewal lease for the additional year.

We now consider these issues in the order in which we have listed them.

A. Standard of Review The case sub judice was filed in the circuit court as a matter of declaratory relief. Nonetheless, it is appropriate to begin our consideration of what standard of review is appropriate in this case with a recitation of the standard of review for matters which are resolved in chancery court where the chancellor almost always finds the facts and applies the law and/or equity to those facts. Madden v. Rhodes, 626 So. 2d 608, 616 (Miss. 1993), contains a succinct explanation of the standard of review appropriate in matters of chancery: On appeal this Court will not reverse a Chancery Court's findings, be they of ultimate fact or of evidentiary fact, where there is substantial evidence supporting those findings. We must consider the entire record before us and accept all those facts and reasonable inferences therefrom which support the chancellor's findings. The findings will not be disturbed unless the chancellor abused his discretion, was manifestly wrong or clearly erroneous, or an erroneous legal standard was applied. And the chancellor, being the only one to hear the testimony of witnesses and observe their demeanor, is to judge their credibility. He is best able to determine the veracity of their testimony, and this Court will not undermine the chancellor's authority by replacing his judgment with its own. (citations omitted).

In Kight v. Sheppard Building. Supply, Inc ., 537 So. 2d 1355, 1358 (Miss. 1989), a case which involved the trial judge's construction of a contract, the Mississippi Supreme Court wrote that "a circuit judge sitting without a jury is accorded the same deference with regard to these factual

findings as is a chancellor." The supreme court further noted, "[a]s regards our standard of appellate review, the interpretation of an ambiguous writing by resort to extrinsic evidence presents a question of fact." Kight, 537 So. 2d at 1358 (quoting Dennis v. Searle, 457 So. 2d 941, 945 (Miss.1984)). B. Appellant Jones' First Issue 1. Whether the Court erred in ruling that the subject lease agreement, which contains a renewal clause "for an amount and a term of years equal to a bona fide third party offer," is too uncertain and indefinite to require performance by the Appellees [the Moreheads]?

The Lease contained no specific terms in its option to renew. Neither the price for the new lease nor its length were specified in the option to renew. We again recite the only provision in the Lease which in any way pertained to Jones' option to renew the Lease: Lessee shall have an option to renew this lease for an amount and a term of years equal to a bona fide third-party offer.

In McGee v. Clark, 343 So. 2d 486 (Miss. 1977), the Mississippi Supreme Court considered the chancellor's denial of specific performance of an option contract. In its opinion, the supreme court discussed the requirements of definiteness which were needed to support a decree for specific performance: A contract is sufficiently definite if it contains matter which will enable the court under proper rules of construction to ascertain its terms, including consideration of the general circumstances of the parties and if necessary relevant extrinsic evidence. Having found a contract to have been made, an agreement should not be frustrated where it is possible to reach a reasonable and fair result.

McGee, 343 So. 2d at 489 (quoting Jones v. McGahey, 187 So. 2d 579, 584 (Miss. 1966)).

More recently, in Duke v. Whatley, 580 So. 2d 1267 (Miss. 1991), the Mississippi Supreme Court considered an action brought by lessees for the specific performance of an alleged option to purchase the land which was the subject of the lease. The chancellor denied lessees' claim for specific performance of the option to purchase, and on lessees' appeal, the supreme court affirmed the chancellor's denial of specific performance. Id. at 1268. The Mississippi Supreme Court affirmed the chancellor's denial of specific performance because the purchase price was not specified in the option to purchase. Id. About the absence of a purchase price in the option, the supreme court wrote: If any essential term is left unresolved, there is simply no contract and no obligation on the parties. Busching v. Griffin I, 465 So. 2d 1037, 1040 (Miss. 1985) (citing Etheridge v. Ramzy, 276 So.2d 451 (Miss.1973)). See Knight v. Sharif, 875 F.2d 516, 525 (5th

Cir.1989)(when preliminary agreement leaves open material term, there can be no implication of what parties will agree upon).

Duke, 580 So. 2d. at 1274. See Sturm v. Dent, 141 Miss. 648, 107 So. 277 (1926) (under Hemingway Code provision

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