Houlan Kendrix v. James L. Huckaby
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2006-CA-00098-COA
HOULAN KENDRIX
APPELLANT
v.
JAMES L. HUCKABY
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANT:
ATTORNEY FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
APPELLEE
11/22/2005
HON. EDWIN H. ROBERTS, JR.
CALHOUN COUNTY CHANCERY COURT
TERRY T. JAMES
CLIFF R. EASLEY
CIVIL - CONTRACT
JUDGMENT ENTERED IN FAVOR OF
DEFENDANT AND AGAINST PLAINTIFF.
AFFIRMED AS MODIFIED – 05/01/2007
BEFORE MYERS, P.J., IRVING AND BARNES, JJ.
IRVING, J., FOR THE COURT:
¶1.
This appeal arises out of a contract between Houlan Kendrix and James Huckaby. The
Calhoun County Chancery Court found for Huckaby and ordered Kendrix to pay Huckaby a total
of $7,600. Kendrix appeals and asserts that the chancellor erred because his decision was against
the weight of the evidence, because the evidence is insufficient to sustain the chancellor’s judgment,
and because the chancellor failed “to recognize that [Kendrix] did everything he could to attempt
to complete his part of the contract. . . .”
¶2.
We affirm, although we find that the chancellor erred in finding that the four corners of the
contract were sufficient to dispose of this matter. We also find that the sum the chancellor ordered
Kendrix to pay was in error, and we therefore modify the amount of the judgment. We address this
as a separate issue below, as it was not raised by Kendrix on appeal.
FACTS
¶3.
On December 29, 1988, Kendrix and Huckaby entered into a written contract that is titled
“Rental Agreement.” The contract concerns a piece of property in Calhoun County, owned by
Huckaby, that contains a house, a shop, and an old service station. When the contract was signed,
the home was fully furnished, and the shop contained molds and machinery. According to the
written terms of the contract, rental payments of $400 per month were to be made for fifteen years,
with an additional $8,000 due at the end of the fifteen-year period, for a total contract payment of
$80,000. The contract also contains provisions for who would be responsible for the contract in the
event of the death of either party.
¶4.
The contract contains no language indicating that it was actually a rent-to-own contract, nor
does the contract specify which party would be responsible for maintaining insurance on the
property. Despite this, the parties agree that they intended to have a rent-to-own contract, with
Kendrix receiving the property after payment of the $8,000 “balloon” payment. Furthermore, the
parties agree that they originally intended that Kendrix would be responsible for insurance on the
property.
¶5.
Kendrix maintained insurance on the property until some time in the mid-1990s, when he
allowed the insurance to lapse. Kendrix contends that this was because, after he successfully filed
a claim, he was told by the insurance company that he could not continue to pay for the insurance
because title to the land was not in his name. Huckaby took over the payment of insurance, although
the parties dispute the exact circumstances surrounding Huckaby’s assumption of insurance
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payments. At that time, Huckaby changed the language on the monthly receipts he gave Kendrix
from “land and house purchase” to “rent.”
¶6.
In January, 2004, Kendrix alleged that he approached Huckaby to offer the $8,000 balloon
payment, but Huckaby insisted that their contractual fifteen-year period had not yet run. Kendrix
maintains that, as a result, he left without giving the $8,000 to Huckaby. By contrast, Huckaby
contends that Kendrix never approached him with an offer of the $8,000. Both parties agree that
Kendrix continued to make monthly payments of $400 to Huckaby, and Huckaby accepted those
payments. On January 25, 2005, Kendrix’s attorney informed Huckaby by letter that Kendrix
wanted to purchase the property and was ready to pay $3,200, which he maintained was the
remainder of the balloon payment. Huckaby refused to deed the property to Kendrix, and Kendrix
sued Huckaby.
¶7.
Huckaby filed an answer and a cross-complaint against Kendrix, seeking payment for rent
for the period of time Kendrix lived on the property after Huckaby had declared the contract null
and void because of Kendrix’s alleged breach by failing to keep the property insured and by failing
to pay the $8,000 balloon payment. Huckaby also sought possession of the property and attorney’s
fees.
¶8.
The chancellor found that the contract between the parties was an unambiguous rental
contract. The chancellor then went on to find that, even if the contract were ambiguous, looking at
the intent of the parties, it was clear that Kendrix’s payment of the insurance was a necessary
component of the contract, and that Kendrix did not tender the $8,000 balloon payment as he was
required to do at the end of the fifteen-year period. The chancellor noted that this finding would be
the same if he took parol evidence into account. The chancellor further found that the specific
performance requested by Kendrix, the transfer of the property from Huckaby to Kendrix, was
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impossible because Huckaby no longer owned the property.1 Consequently, the court ordered
Kendrix to pay the $3,200 outstanding on the contract, as well as $4,400 in rent for eleven months
when Kendrix lived on the property but tendered no payment to Huckaby. The chancellor also gave
Kendrix thirty days to remove himself from the property. Aggrieved by this ruling, Kendrix
instituted the current appeal.
¶9.
Additional facts, as necessary, will be related during our analysis and discussion of the
issues.
ANALYSIS AND DISCUSSION OF THE ISSUES
¶10.
There is a three-tiered approach that courts use in interpreting a contract: the “four corners”
of the document, the “‘canons’ of contract construction,” and extrinsic or parol evidence. Tupelo
Redevelopment Agency v. Abernathy, 913 So. 2d 278, 284 (¶13) (Miss. 2005) (citations omitted).
The four corners approach looks only at the language used in the contract. Id. The canons are to
be used only if the four corners of the document are insufficient to interpret the contract, and
extrinsic or parol evidence is to be used only if the contract remains ambiguous after application of
the four corners and the canons. Id.
¶11.
In this case, the chancellor found that the meaning of the contract could be ascertained from
simply applying the four corners test. Having done so, the chancellor found in favor of Huckaby
on the basis that the contract was a simple rental agreement. We find that this determination was
incorrect, as Huckaby freely admitted in his sworn answer to Kendrix’s complaint that the contract
was a rent-to-own contract, rather than a rental agreement. Essentially, the chancellor’s finding that
the document was an unambiguous rental agreement contradicts the sworn filings of both parties.
Regardless, as we explain below, we find that the chancellor correctly ruled in favor of Huckaby.
1
Sometime in 2004, Huckaby conveyed all the property he owned to his children, subject
to a life estate which he retained for himself.
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1. Weight of the Evidence
¶12.
Kendrix contends that the chancellor’s decision was against the overwhelming weight of the
evidence. Although he frames this argument in terms of the denial of his motions for a new trial and
judgment notwithstanding the verdict, we note that only his motion for a new trial challenges the
weight of the evidence, as both a motion for a directed verdict and a motion for a judgment
notwithstanding the verdict (JNOV) challenge the sufficiency of the evidence at trial.2 See Coho
Res., Inc. v. Chapman, 913 So. 2d 899, 904-08 (¶¶12-28) (Miss. 2005).
¶13.
Rule 59 authorizes new trials in actions tried without a jury. “On a motion for a new trial
in an action without a jury, the court may open the judgment if one has been entered, take additional
testimony, amend findings of fact and conclusions of law or make new findings and conclusions,
and direct the entry of a new judgment.” M.R.C.P. 59(a)(2). Additionally, a chancellor’s factual
findings are given great deference, and we “will not disturb a chancellor’s findings unless [the
findings were] manifestly erroneous.” Stockstill v. Gammill, 943 So. 2d 35, 40 (¶8) (Miss. 2006)
(citing Rice v. Pritchard, 611 So. 2d 869, 872 (Miss. 1992)).
¶14.
After reviewing all the evidence, we cannot say that the chancellor erred in refusing to grant
a new trial. The undisputed facts reveal that Kendrix and Huckaby entered into a contract whose
terms included monthly payments and a final balloon payment,3 at which time Huckaby would
transfer the property to Kendrix’s possession. However, Kendrix and Huckaby disagree as to
2
Although Kendrick framed his posttrial motion as a motion for judgment notwithstanding
the verdict, this was procedurally incorrect, as a verdict is rendered by a jury. Here, the chancellor
decided the case without the aid of a jury. The proper request would have been a motion to alter or
amend the judgment, or for a new trial pursuant to Rule 59 of Mississippi Rules of Civil Procedure.
3
It is not clear what the parties intended for the $8,000 balloon payment to represent.
However, as stated by the chancellor, the $400 monthly rent appeared to be more than reasonable.
Huckaby testified that the monthly payment was so low because he was supposed to live on the
property with Kendrix, although he did not.
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whether the balloon payment was tendered in a timely fashion. Although Kendrix contends that he
offered the payment and Huckaby refused to accept it, Huckaby testified that Kendrix never offered
to pay the $8,000, and that the conversation referenced by Kendrix actually concerned a check that
had been rejected for insufficient funds. Given this conflicting evidence, the chancellor was entitled
to accept whichever version of events he found more credible. We cannot say that the chancellor’s
findings were manifestly erroneous.
¶15.
Furthermore, Kendrix admitted during his testimony that the maintenance of insurance was
part of the original contract:
Q.
At the time y’all entered into that [the contract], you also had an oral
agreement, did you not, that you would pay the insurance on the house?
A.
Yes, sir, we did.
Kendrix then went on to testify that he was told by the insurance company that he would not be able
to pay for the insurance directly because he did not own the property. Kendrix maintained, however,
that he offered to reimburse Huckaby for the cost of the insurance premiums. Posed against this is
Huckaby’s testimony that Kendrix failed to pay the insurance for a year before Huckaby discovered
the lack of insurance. Huckaby also testified that the insurance did not lapse as a result of the
insurance company refusing to allow Kendrix to pay for the insurance, but because Kendrix ceased
paying voluntarily. Huckaby maintains that their rent-to-own contract changed to a rental only
contract after Kendrix stopped paying for insurance. Supporting this contention is Kendrix’s
admission that the wording on the receipts he received from Huckaby changed in December of 1995
to indicate that the payments received were for “rent” rather than for “house and land.” Under these
circumstances, the chancellor is not manifestly in error for finding that Kendrix’s payment of
insurance was an essential term of the contract that Kendrix failed to meet.
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¶16.
The chancellor’s ruling is not against the overwhelming weight of the evidence, and he did
not err in refusing to grant Kendrix a new trial.
2. Sufficiency of the Evidence
¶17.
While a motion for a new trial challenges the weight of the evidence, “[a] motion for a JNOV
tests the legal sufficiency of the evidence supporting the verdict. . . .” McFarland v. Entergy Miss.,
Inc., 919 So. 2d 894, 899-900 (¶15) (Miss. 2005) (quoting White v. Yellow Freight Sys., Inc., 905
So. 2d 506, 510 (¶6) (Miss. 2004)). When reviewing the sufficiency of the evidence supporting a
chancellor’s decision, we “will not disturb the factual findings of a chancellor when supported by
substantial evidence unless . . . the chancellor abused his discretion, was manifestly wrong, clearly
erroneous or applied an erroneous legal standard.” Gulf Coast Research Lab. v. Amaraneni, 877 So.
2d 1250, 1252 (¶8) (Miss. 2004) (quoting Gannett River States Publ’g Corp. v. City of Jackson, 866
So. 2d 462, 465 (¶11) (Miss. 2004). We will reverse only “if the chancellor’s findings are
unsupported by substantial credible evidence. . . .” Id. (quoting Frierson v. Delta Outdoor, Inc., 794
So. 2d 220, 223 (¶6) (Miss. 2001)).
¶18.
After reviewing the record, we find that substantial evidence supports the chancellor’s
decision. There was a bevy of conflicting evidence that we have already reviewed in our discussion
of the weight of the evidence supporting the chancellor’s decision. We also find that there is
sufficient evidence to support the chancellor’s verdict, and the chancellor did not err in refusing to
grant a directed verdict or motion for a judgment notwithstanding the verdict.
3. Kendrix’s Attempts to Satisfy the Contract
¶19.
In this contention, Kendrix claims that Huckaby admitted on the stand that Kendrix “had
done everything he should have done except pay for insurance upon the property.” Although
Huckaby did admit during questioning by Kendrix’s attorney that he would have transferred the
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property to Kendrix if Kendrix had paid the insurance, this admission was immediately corrected
upon questioning by Huckaby’s own attorney:
Q.
No. I said – listen to me. I said he asked you a question that if he had paid
the insurance on the house, like he was supposed to, if you would have
conveyed it to him?
A.
Sure would.
Q.
Well, all right.
A.
If he’d done everything he promised.
Q.
If he’d abided by the contract, if he had paid you the $8,000 on the end and
all this?
A.
(Witness nods head up and down.)
****
Q.
But what I’m saying, it was more than just insurance that he had to do?
A.
Right.
This exchange and other testimony by Huckaby made it clear that he believed not only that Kendrix
had failed to maintain insurance, as required by the contract, but also that he had never received the
$8,000 from Kendrix. Specifically, Huckaby testified that Kendrix had never offered to tender
payment of the $8,000.
¶20.
Kendrix claims that he has not defaulted on the contract and that the lower court, as a court
of equity, should have required Huckaby to transfer ownership of the property to him. As we have
already found, the chancellor’s decision was not against the weight of the evidence and sufficient
evidence undergirds the decision. Furthermore, as noted throughout this opinion, whether Kendrix
defaulted under the terms of the contract was strongly contested at trial. In the face of such
conflicting testimony, the chancellor did not err in finding that Kendrix defaulted on the contract.
4. Amount of Judgment
8
¶21.
The court ordered Kendrix to pay the outstanding balance of the balloon payment, $3,200,
as well as eleven months of rental payments, totaling $4,400. The $3,200 was derived by
subtracting the extra year of rental payments made by Kendrix, $4,800, from the $8,000 balloon
payment, which the court indicated was part of the rental agreement between Kendrix and Huckaby.
Since we find that the chancellor erred in treating the agreement as a rental contract, with a $8,000
balloon payment, we find it necessary to adjust the amount which the court should have ordered
Kendrick to pay. Consistent with our finding that this was a rent-to own contract, which was
breached by Kendrick, the chancellor should have simply ordered Kendrick to pay the additional
eleven months of rental payments, which amount, when added to the $4,800 already paid by
Kendrick, would constitute full rental payments for the period of time in which Kendrick lived on
the property after breaching the contract. Therefore, the court should have ordered Kendrix to pay
Huckaby $4,400, not $7,600. We therefore affirm, but modify the court’s order to reduce the total
amount of the judgment entered against Kendrix from $7,600 to $4,400.
¶22. THE JUDGMENT OF THE CHANCERY COURT OF CALHOUN COUNTY IS
AFFIRMED AS MODIFIED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANT.
KING, C.J., LEE AND MYERS, P.JJ., CHANDLER, GRIFFIS, BARNES, ISHEE
AND CARLTON, JJ., CONCUR. ROBERTS, J., NOT PARTICIPATING.
9
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