OF JUDGMENT: 05/07/2018
COUNTY CHANCERY COURT HON. JOHNNY LEE WILLIAMS TRIAL JUDGE
COURT ATTORNEYS: WILLIAM A. WHITEHEAD, JR RICHARD D. NORTON
JOHN ALEX FOXWORTH, JR. S. ROBERT HAMMOND, JR.
ATTORNEY FOR APPELLANT: R. ANDREW FOXWORTH
ATTORNEYS FOR APPELLEES: WILLIAM A. WHITEHEAD, JR RICHARD D.
RANDOLPH, C.J., MAXWELL AND BEAM, JJ.
In this interlocutory appeal, the lessee of commercially used
Sixteenth Section Land seeks to prevent the leasing school
board from adjusting the annual rent outside the time
constraints of the lease. While the terms of the lease do
appear to contain a clear time restriction within which the
Board did not act, this time restriction cannot be enforced.
The time restriction runs contrary to the statutory
requirement that rent "shall be adjusted not less than
once every ten (10) years . . . ." Miss. Code Ann.
§ 29-3-69 (Rev. 2010). Further, a school board's
duty as trustee to assure adequate consideration is received
based on current fair market value of the Sixteenth Section
Land cannot be waived, even by mutual agreement in a
For these reasons, the chancellor did not err by denying the
lessee's motion for a declaratory judgment that the
school board was precluded from adjusting the rent based on
the time restrictions in the lease. We affirm and remand.
Facts & Procedural History
On August 5, 2002, Oak Grove Marketplace, LLC (Marketplace),
and the Lamar County School Board (the Board) entered into a
forty-year commercial lease of Sixteenth Section
Land. Marketplace agreed to pay $8, 450.20 a
year in rent. The rent would be paid in advance by August 5th
of each year. Marketplace and the Board also agreed
[t]hat within a sixty (60) day period of the 10th, 20th, and
30th, anniversary dates of this lease, said anniversary dates
being August 5, 2012, August 5, 2022, and August 5, 2032,
respectively, [the Board] shall have the right to conduct a
reappraisal of the subject property for the purpose of
redetermining reasonable ground rentals.
The Board did not reappraise the leased property within sixty
days of August 5, 2012. At that time, the Lamar County School
District had only a part-time land manager. That manager was
responsible for more than five hundred leases covering twelve
different sections. But in 2016, the District hired a
full-time manager. And this manager had the Marketplace
property reappraised in April 2017. On April 11, 2017, the
Board sent Marketplace a letter advising that the lease was
"past due on a rental adjustment." Based on the
appraisal, the Board adjusted the annual rent to $32, 250 to
be paid by August 5, 2017.
By letter, Marketplace objected. It asserted that, under the
terms of the lease, the rental adjustment was unauthorized
and untimely. As Marketplace saw it, the Board had missed its
window of opportunity to reappraise the property and readjust
the rent in the sixty days leading up to August 5, 2012. So
now the Board must wait until within sixty days of August 5,
2022, before it can require more rent.
Based on Marketplace's objection, the Board alternatively
offered to obtain a new appraisal. This appraisal was to be
based on the fair-market value of the property in August
2012. But this option would require Marketplace to pay
retroactively the 2012 appraised value for August 2012 to
August 2017, minus what Marketplace has already paid.
Marketplace rejected this alternative. So the Board decided
to impose the 2017 appraised value. It demanded Marketplace
pay $32, 250 in rent by August 5, 2017, and continue to pay
this new rate until 2027, when the rent would be adjusted
Marketplace paid only $8, 450.20. And on August 4, 2017,
Marketplace filed a complaint against the Board in the Lamar
County Chancery Court. Marketplace asked the chancellor to
declare that the lease did not allow any attempted
reappraisal before August 5, 2022. It also urged that
Marketplace would not be in default if it did not pay $32,
250 by August 5, 2017, because the rent is $8, 450 and would
remain that amount until August 5, 2022. Alternatively, if
the chancellor found the Board was allowed to readjust the
rent before August 2022, Marketplace sought a reappraisal
based on the fair-market value of the property on August 5,
2012. In that event, Marketplace requested court-ordered
application of this rate prospectively for ten years, from
2017 to 2027.
The parties agreed to a bifurcated hearing. At the first
hearing, the court would consider Marketplace's motion
for a judgment declaring, under the terms of the lease, the
Board could not adjust the rent until within sixty-days of
August 5, 2022. Only if the court denied this motion would
the court conduct a second hearing to consider
Marketplace's motion for a judgment declaring that the
adjustment should be based on the 2012 fair-market value and
applied prospectively for ten years starting in 2017. At an
April 9, 2017 hearing, the court considered the single ...