BEFORE PATTERSON, HAWKINS AND DAN LEE
DAN LEE, JUSTICE, FOR THE COURT:
This is an appeal from the Chancery Court of Hinds County wherein the chancellor found that the appellant, the Mississippi State Department of Public Welfare, was a holdover tenant on certain properties leased to it by the appellee, Homer Lee Howie. The chancellor ruled that by holding over, the Department had extended the lease for a period of one year and that Howie was entitled to rent payments for that period. The chancellor also assessed attorneys fees and a 5% late fee required under the lease. From that decision the State Department of Public Welfare brings this appeal, assigning numerous errors, many of which are repetitious. Because this cause must be reversed, we address only those issues which have some bearing on our decision.
On September 30, 1980, Homer Lee Howie filed a bill of complaint in the Chancery Court of Hinds County. Through his bill he charged the State Department of Public Welfare with holding over as a tenant. The bill sought specific performance of a lease renewal and rent in arrears based on the renewal of that lease. The Department of Public Welfare answered this complaint by filing a demurrer on February 10, 1981. At a hearing on this demurrer, the Department argued the defense of sovereign immunity and took the position that it could not be sued on the lease. Following the hearing the chancellor issued an opinion overruling the demurrer and holding that the doctrine of sovereign immunity is not a defense to a claim based on breach of contract.
Eventually the parties came to trial at which most of the facts were stipulated to in a document entitled" Undisputed Facts. "In essence, those facts are as follows:
1. Homer Lee Howie was the owner of the land and office building in question.
2. On June 18, 1979, Howie and the Department of Public Welfare entered into a lease agreement whereby the Department of Public Welfare agreed to lease office space from Howie.
3. Prior to the execution of the lease agreement the State Capitol Commission had reviewed the lease and authorized the Department of Public Welfare to enter into the agreement.
4. The lease was executed on behalf of the Department of Public Welfare by Jack Byars in his official capacity as Commissioner of the Department.
5. Between May 12, 1980, and June 30, 1980, there was an exchange of correspondence between Howie and Donald B. Roark, the Commissioner of the State Department of Public Welfare who succeeded Jack Byars. Each of these letters appear in the record. The sum and substance of these letters is as follows:
A. On May 12, 1980, Howie wrote to Roark and attached two copies of a proposed lease which in essence was identical to the lease under which the Department of Public Welfare and Howie had been operating. This lease was intended to replace the one the parties were currently operating under when it expired. The sole change in terms was an increase in the amount of rent.
B. On June 5, 1980, Howie sent a letter to Roark to inform him that the lease under which they were operating expired on June 30, 1980, and the premises were demanded to be surrendered on that date.
C. On June 5, 1980, Roark wrote to Howie and acknowledged that the lease under which they were operating expired on June 30 1980. Roark stated that the Department would be moving to new facilities in downtown Jackson in early August, 1980. Therefore, he stated it was not the intent of the Department of Public Welfare to renew their lease but that they would like to negotiate terms for the Department to remain in the leased premises for a maximum of 60 days following the expiration of the lease. This was to be in order to facilitate the moving to new offices.
D. On June 23, 1980, Howie wrote to Roark. In this letter he submitted an attached lease proposal and expressly withdrew any previous proposal or negotiation. The attached lease was for a one month carryover under the same terms and conditions as the lease they were then operating under. Howie notified Roark that should Roark fail to execute and deliver this lease prior to 5:00 p.m. on June 30th and fail to vacate the premises by midnight June 30th, Howie would consider him a holdover tenant under the present lease. Howie notified Roark that
should the Department fail to vacate the premises by 12:00 o'clock p.m." By operation of law the present lease will be renewed for a one year term under the same terms and conditions as contained in the present lease. "
E. On June 27, 1980, Roark responded to Howie's last letter by stating it was a physical impossibility for him to deliver an executed lease prior to 5:00 o'clock on June 30th as the next scheduled meeting of the Capitol Commission was tentatively scheduled for July 8th. Roark informed Howie that he did not have the authority to enter into a new lease for any period of time without the specific approval of the Capitol Commission. Roark did indicate that he intended to request authority from the Capitol Commission for a one month holdover for the entire space and a 31 month lease of a smaller portion of that space. Roark again emphasized that there were no facilities in which the Department would be able to move by June 30th and that it would be necessary for them to remain in the subject property for a period of approximately 60 days in order to move all of their personnel and equipment.
6. The Department of Public Welfare did not vacate the leased premises prior to the end of the term of the lease on June 30, 1980 and continued to use and occupy the leased property until July 31, 1980, at which time the premises were vacated.
7. Between the dates of July 1, 1980 and September 24, 1980, there was a further exchange of correspondence between the parties. The sum and substance of those letters is as follows:
A. On July 2, 1980, Howie wrote to Roark and stated that he took the position that the Department of Public Welfare, by remaining in the premises beyond the termination of the lease period, had by operation of law, renewed the previous lease on the entire space for a period of one year under the same terms and conditions as the lease dated June 18, 1979. Howie did offer to accept a lease on a portion of the office space then occupied by the Department and release the Department from any obligations
on the remaining portion of the lease. As a condition to this offer Howie demanded that the Department vacate all of the office space not contemplated by the proposed new lease and that the new lease be executed and delivered prior to July 10, 1980. Howie took the position that should the Department fail to meet these conditions the previous lease would remain in effect by operation of law for a period of one year.
B. On July 9, 1980, Roark wrote to Howie in response to Howie's letter of July 2nd. Roark informed Howie that at the scheduled meeting of the State Capitol Commission the Commission failed to approve the proposed amended lease. Roark informed Howie that the Commission had approved a continued occupancy of the entire office space for a one month period from July 1, 1980 through July 31, 1980 at a monthly rent equal to that under the expired lease. Roark also stated that the Capitol Commission would not approve the proposed lease of a portion of the office space. The Commission directed Roark to continue to negotiate for office space in Jackson as they considered the lease of a portion of the premises a new and separate lease requiring the submission of additional comparative property prospects.
C. On July 18, 1980, Roark wrote to Howie confirming that the entire office space would be vacated before midnight on August 1, 1980.
D. A second letter dated July 18, 1980, from Roark to Howie informed Howie whom the Department had selected as a mover to ...