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FEBRUARY 20, 1985





This action by a Lessee charges a Lessor with breach of a covenant of quiet enjoyment and several varieties of fraud. The problems arose because Jackson city zoning restrictions prevented Lessee from using the premises as he had intended. Lessee says Lessor should have told him of the zoning problems

 in advance.

 As a result of the problems he encountered after entering the premises, Lessee was out of pocket some $5,450.35. By today's judgment we allow him recovery of that sum of and from Lessor. The evidence falls short of establishing gross or malicious conduct on the part of Lessor and, accordingly, we reverse the assessment of punitive damages and attorneys fees made against Lessor.



 The evidence adduced at trial reflects that Gardner Land Co., Inc., one of the Defendants below and one of the Appellants here, owns the property commonly known by street number as 106 Lockwood Circle in Jackson, Mississippi. This property includes three lots denominated Lots 3, 4 and 5, Block F, Alemeda First Addition, a subdivision within the First Judicial District of Hinds County, Mississippi. Lots 3 and 4 adjoin each other end on end and together they adjoin Lot 5. Lots 3 and 4 together are the same size as Lot 5. A building is situated on Lots 3 and 4, while Lot 5 is vacant.

 Lots 3 and 4 have been classified C-2, limited commercial, pursuant to the 1974 City of Jackson Zoning Ordinance. Lot 5 is zoned R-1-A, single family residential, and is also subject to restrictive covenants permitting residential use only.

 Before August of 1979, Johnny N. Jones, the Plaintiff/Lessee here, operated a mobile home sales, repair and service business in Jackson. His business activities included buying and selling used mobile homes, repairing mobile homes and selling a variety of mobile home related inventory. These activities often required that mobile homes be parked at his place of business.

 In August of 1979, Jones telephoned Jackie Gardner, President of Gardner Land Company, Inc. *fn1 to express interest in leasing the property and moving his entire business to it. In that conversation, Jones informed Gardner that he needed office facilities, a storage area and a place to park mobile homes. Gardner responded that the property at 106 Lockwood Circle was suitable for Jones' purposes.

 Later, Jones and Gardner went to view the property. Jones measured the lots to determine how many mobile homes could be parked there. Jones mentioned that the building

 needed repairs and that the lot would have to be cleared of debris before the property would be suitable for his business. In addition, Jones offered to make several improvements to the building in consideration for a reduction in monthly rent.

 The subject of zoning or other land use restrictions was never discussed between the parties. Gardner made the representation that the property was "suitable" for Jones' purposes, but there is no evidence in the record reflecting any clear understanding on the part of anyone as to whether "suitability" referred to the physical dimensions and capabilities of the property, land use restrictions imposed by law, or just what. Gardner testified that he never thought about zoning in connection with the negotiation of the lease, although as will be explained below, there is good reason why he should have. In any event, Jones never asked nor does it appear that he made any independent inquiry regarding the zoning classification of the property.

 On August 14, 1979, Jones entered into a lease contract with the Gardner corporation for the lease of the property in question. The lease term was three years. Significantly, nothing in the lease specifies the use of the property contemplated by the parties, nor does any provision in the lease limit or restrict use on the part of lessee Jones. Gardner does guarantee in Paragraph 9 of the lease that Jones shall have

 the quiet, peaceful and uninterrupted possession of the leased premises during the entire term of this lease and any extension thereof.

 In an addendum to the lease, Jones agreed to make numerous repairs and improvements to the property. In return, the lease payments were reduced from $500 per month to $350 per month for the first year.

 As soon as the agreement was reached, Jones began clearing the lot and repairing and renovating the building. Office space was expanded, carpet was laid, windows were repaired, locks were installed, and electrical wiring modified. Mobile homes and other inventory were moved onto the property. There is no question but that all of this was done by Jones in good faith reliance on the assumption that he would be able to operate his business on the leased premises.

 After Jones had incurred these expenses, a field inspector from the Jackson zoning department informed Jones that his use of the property violated the city zoning ordinance, that his business could only be operated from

 property with a light industrial zoning classification, and that he would have to move the mobile homes from the property immediately.

 Thereafter, a meeting was arranged between Jones, Gardner and a number of city officials. At this meeting, the City again informed Jones and Gardner that Jones' use of the property was illegal and must cease. After the meeting, Jones vacated the property and notified the City that he was no longer in violation of City zoning laws.

 There is some evidence that Gardner subsequently attempted to obtain a permit for a nonconforming use under which Jones might have been permitted to continue his business on the premises. Gardner contends that Jones vacated the premises without giving him the opportunity to obtain the permit. The fact is clear, however, that no such nonconforming use permit sufficient to allow Jones to continue was ever issued ...

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