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Smith Petroleum, Inc. v. Lamar County School District

Supreme Court of Mississippi

May 30, 2019

SMITH PETROLEUM, INC. f/k/a MISSISSIPPI OIL, INC.
v.
LAMAR COUNTY SCHOOL DISTRICT

          DATE OF JUDGMENT: 02/05/2018

          COURT FROM WHICH APPEALED: LAMAR COUNTY CHANCERY COURT, HON. JOHNNY LEE WILLIAMS

          TRIAL COURT ATTORNEYS: SHIRLEY M. MOORE, CRAIG N. ORR, RICHARD D. NORTON, WILLIAM A. WHITEHEAD, JR

          ATTORNEYS FOR APPELLANT: SHIRLEY M. MOORE, CRAIG N. ORR

          ATTORNEYS FOR APPELLEE: WILLIAM A. WHITEHEAD, JR. RICHARD D. NORTON

          BEFORE RANDOLPH, C.J., COLEMAN AND CHAMBERLIN, JJ.

          RANDOLPH, CHIEF JUSTICE,

         ¶1. The Lamar County School District denied a request by Smith Petroleum to erect and construct an LED advertising billboard on its Sixteenth Section leasehold located on Old Highway 11 in Hattiesburg, Mississippi. Smith Petroleum filed its Notice of Appeal and Bill of Exceptions in the Chancery Court of Lamar County. The chancellor affirmed the School District's denial of Smith Petroleum's request to erect and construct the LED billboard. Finding no error, we affirm the judgment of the chancery court.

         FACTS AND PROCEDURAL HISTORY

         ¶2. The Lamar County Board of Education, N.B. Royals, and Kirk Frazier, as tenants in common, executed a Sixteenth Section Land Lease and Contract for a term of forty years for property located at 4041 Old Highway 11 in Hattiesburg, Mississippi. The lease contained the following provision:

         SUBLEASING OR ASSIGNMENT OF LEASE

Lessee covenants and agrees not to sublease, assign, transfer, or convey by warranty deed, quitclaim deed, or any other conveying instrument the herein described leased property and the leasehold interest therein without the expressed prior consent of the Lessor. In the event the Lessee requests and the Lessor approves any subleasing, transfer, or assignment of this lease or any portion thereof, then the Lessor may, in its discretion, require all parties to the transaction to obtain new leases as to each individual interest.

After obtaining approval from the School District, Frazier and Royals assigned the property to Mississippi Oil, Inc., by quitclaim deed. Subsequently, Mississippi Oil merged with Smith Petroleum.

         ¶3. Smith Petroleum then entered into an exclusive agreement with Busby Outdoor, LLC, to erect and construct an advertising billboard depicted as an "LED Showcase Sign" on 2, 945 square feet (0.07 acres) of the leased property. Under the agreement, Busby was to market advertising and to pay Smith Petroleum royalties for the forty-year term[1] of the agreement. Busby was also granted exclusive rights to construct and erect future billboards on the property, "including necessary supporting structures, devices, illumination facilities and connections, service ladders and other appurtenances thereon." Busby was responsible for all power bills, internet, and insurance expenses, in addition to all maintenance of the physical structure, including the upkeep, painting, and illumination of the billboard.

         ¶4. Busby agreed to cover all initial costs of erecting and constructing the billboard, including all "permitting costs, materials, labor for construction, maintenance, shipping costs, attorney's fees, and any other associated construction costs." Although the parties agreed that Smith Petroleum would be the owner of the billboard, Smith Petroleum could only move the billboard and other improvements at the expiration of the forty-year lease.

         ¶5. Busby, on behalf of Smith Petroleum, sought a sign permit from the City of Hattiesburg. The members of the Hattiesburg ...


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