## Facts

- Mesilla Valley Mall Company (landlord) leased retail space in its Las Cruces mall to Crown Industries, doing business as Lemon Tree (tenant), under a long-term commercial lease.
- Lemon Tree sought to renegotiate the lease terms, but the landlord refused to make adjustments.
- Lemon Tree notified the landlord it would vacate and abandoned the premises on January 20, 1989.
- Lemon Tree paid rent only through February 1, 1989; the unpaid rent claimed for the unexpired lease term totaled $35,056.58.
- Beginning February 1, 1989, the landlord repossessed the premises and allowed the Las Cruces Museum of Natural History to occupy the space rent-free to maintain good community relations and attract mall visitors.
- The museum remodeled the premises for its own use and occupied the space continuously, with an understanding it would immediately vacate if the landlord requested the space for a rent-paying tenant.
- In April 1989, the landlord sued Crown Industries for rent allegedly due for the remainder of the lease term.
- The tenant raised surrender and acceptance as an affirmative defense, arguing the landlord’s conduct terminated the lease.
- After trial, the court found the museum’s rent-free occupancy benefited the landlord rather than the tenant and was inconsistent with the tenant’s rights; the court concluded the landlord accepted surrender by operation of law, ending the lease and cutting off future rent liability.
- The landlord appealed, arguing the evidence did not support a finding of acceptance of surrender.

## Issues

1. Whether substantial evidence supported the trial court’s finding that the landlord accepted the tenant’s surrender of the leasehold by repossessing the premises and installing a rent-free occupant for the landlord’s benefit, thereby terminating the lease and relieving the tenant of liability for future rent.

## Decision

- The Supreme Court of New Mexico affirmed.
- The court held there was substantial evidence supporting the trial court’s factual finding that the landlord accepted the tenant’s surrender.
- Because the lease was treated as terminated upon acceptance of surrender (here, no later than February 1, 1989), the tenant was relieved of obligations for rent accruing after that date.

## Legal Principles

- When a tenant abandons leased premises, the landlord generally may (1) leave the premises vacant and sue for rent as it accrues, (2) reenter and relet for the tenant’s account, or (3) accept the tenant’s surrender, terminating the lease and limiting the tenant’s liability to rent accrued before acceptance.
- Acceptance of surrender is a question of fact turning on the landlord’s intent as shown by the landlord’s conduct; intent may be inferred from actions inconsistent with continuation of the tenant’s estate.
- A landlord’s use of the premises for the landlord’s own benefit, rather than reletting for the tenant’s account, can support a finding of acceptance of surrender by operation of law.
- On appeal, the reviewing court does not reweigh the evidence; it asks only whether substantial evidence supports the trial court’s findings and resulting judgment.

## Conclusion

The New Mexico Supreme Court affirmed the judgment for the tenant because the record supported the trial court’s finding that the landlord accepted surrender by taking back the premises and giving a museum rent-free possession for the landlord’s own purposes, conduct inconsistent with preserving the lease for the tenant’s account; therefore, the tenant owed no rent beyond what had already accrued and been paid through February 1, 1989.


Mesilla Valley Mall Co. v. Crown Industries, 808 P.2d 633 (1991)