Opinion
16991
April 13, 1955.
Messrs. Edens Woodward, of Columbia, for Appellants, cite: As to a declaration in a lease that it is to expire on the happening of a contingency creating, in form at least, such a limitation: 32 Am. Jur. 701, Sec. 825; 118 A.L.R. 283, et seq. As to "removal" having the effect of "restoring the possession of the premises to Lessors": 192 S.C. 429, 7 S.E.2d 63. As to rule that lessor cannot recover rent not due and also have possession of property: 58 A.L.R. 306, 128 A.L.R. 755; 192 S.C. 429, 7 S.E.2d 63. As to alternative contracts being recognized as valid: 3 Williston on Contracts, 2194, Sec. 781; 128 A.L.R. 753. As to measure of damages provided in lease: 192 S.C. 429, 7 S.E.2d 63; 3 Williston on Contracts 2197, Sec. 781 A; 2 K. B. 393 (C.A.), 101 L.J. (N.S.) K.B. 694; 222 S.C. 242, 72 S.E.2d 193, 195.
Fred D. Townsend, Esq., of Columbia, for Respondent, cites: As to the lease provision at issue being a condition subsequent and for the sole benefit of respondent: 32 Am. Jur. 701; (Cal.) 64 P.2d 460; 127 Pa. Super. 286, 193 A. 106; (Ky.) 43 S.W.2d 31; (N.J.) 43 A. 893; 49 N.J.L. 521, 13 A. 39, 40; 51 C.J.S. 680.
The following is the opinion of Judge Brailsford, in the court below.
This action for a declaratory judgment involves the construction of the following paragraph of a lease dated August 8, 1949 between the defendant as Lessor and the plaintiffs as Lessees:
"And, lastly, it is agreed, that should said Lessee assign, transfer, sell, remove or in any manner dispose of the goods and chattels within the above leased premises, then the entire amount of rent that would accrue for * * * one year * * * shall be considered as due and payable, and the Lessor shall be vested with the same rights as though the entire leased term had expired; but payment for the same shall entitle said Lessee, * * * their heirs * * * and assigns, to all Lessee's rights of possession to transfer (as provided in this Lease) for the additional term."
A copy of the full lease is attached to the complaint. It covers certain warehouse property on Lincoln Street in the City of Columbia and is for a term of ten years commencing September 1, 1949, with rent provided of $175.00 per month, payable in advance on the first day of each month. The lease is on a printed form and the paragraph quoted above is among the printed provisions of the form with only the italicized words filed in by typewriter in blanks provided in the form.
It was made to appear at the hearing of this case that at some time around July 1, 1953, the plaintiffs abandoned their occupancy of the defendant's premises and removed their property from them. In the negotiations which ensued the plaintiffs made the claim that under the above quoted paragraph of the lease they had the right to pay the defendant rent for a one-year period with payment of such rent entitling them to possession of the premises for the year paid for and with no further liability under the lease. The defendant-lessor refused to accept this construction of the lease, claiming that the quoted paragraph was inapplicable because it was in the nature of a forfeiture which the Lessor could invoke or not at his option and he had not invoked it.
This action was thereafter brought by the Lessees (pursuant to Section 10-2001 et seq. of the 1952 Code) for a judgment declaring that the rights of the parties in the present situation are determinable solely under the provision of the lease referred to and that upon payment of a year's rent with full right of possession for that year the Lessees will have no further obligation to the Lessor. The matter was heard by me upon the pleadings on March 8, 1954.
The question for determination, as I see the matter, is whether the lease provision relied upon by the plaintiffs has the effect of automatically terminating the lease or is in the nature of a condition subsequent which becomes effective only at the option of the Lessor.
If the construction advocated by the plaintiffs is correct, the effect of the provision is to give the Lessees an unqualified option to terminate the lease at any time although the Lessor is bound for a ten year term. By removing their property from the premises in violation of the lease, the Lessees, under their contention, would establish in themselves the right to avoid their obligations for the remainder of the ten year term, conditioned only upon their paying one year's rent and during which year they would have the exclusive right of possession and could either continue to occupy or assign their possession to another party. If such an option to terminate at the instance of the Lessees had been intended it could certainly have been expressed in simple and unequivocal language. That was not done and it is inconceivable to me that the parties intended to give one and not the other an option to terminate and that because of a default by the party upon whom the option was bestowed.
It is my opinion that the provision under consideration was intended purely for the protection of the Lessor, giving him the right, if he desired to exercise it, of accelerating the rent for a one year period and yet giving the Lessees the right, if such acceleration was called for by the Lessor, of occupying or assigning to others for the period that they were paying for.
From 32 Am. Jur. 701, Section 825:
"Leases may be subject to condition or limitation. Such a condition may be precedent or subsequent. It is precedent where it is one that must happen or be performed before the lease becomes binding and the tenancy comes into existence. It is subsequent where it has no relation to the inception of the lease and the commencement of the tenancy, but, instead, gives the landlord, on its happening or not happening or on its performance or non-performance, a right to re-enter and terminate the lease.
"A lease subject to a limitation or conditional limitation is one that terminates ipso facto upon a certain happening or not happening or performance or omission, irrespective of reentry by the landlord or other act, and in this respect it is to be distinguished from a lease on a condition subsequent. * * *"
The addition of a clause of forfeiture or re-entry to a condition in a lease is indicative of the character of the condition as a condition subsequent rather than a conditional limitation. In the early cases, a provision that a lease should become "void" on the tenant's default in the performance of stipulations was construed as a limitation, ipso facto terminating the estate on the happening of the contingency. It was soon discovered, however, that in practical application this enabled the tenant to nullify the lease merely by taking advantage of his own default, and the great weight of authority now is that whatever the form of language used, whether adapted to the creation of a special limitation or a condition subsequent, the provision will be construed as the latter unless a contrary intent is clearly expressed. Also, where the provision is for the cessation of the lease in case of some contingency dependent on the conduct of the lessee, the courts will construe it not as a special limitation on the term, but as a condition subsequent, vesting in the lessor a waivable option to terminate the lease.
From 32 Am. Jur. 722, Section 849:
"It is the general rule that provisions in leases for their forfeiture upon the breach of the lessee's covenants are for the benefit of the lessor, and he has the election to determine whether he will insist upon the forfeiture or not; he must evidence his election to enforce the forfeiture by some unequivocal act, such as re-entry or declaration of forfeiture. While in some early cases in England and in this country a provision that the lease should become void, or words of similar import, upon the nonperformance by the lessee of his agreements contained therein, were considered in the nature of conditional limitations terminating the lease ipso facto upon the happening of such contingency, it was soon realized that such a construction permitted the lessee to take advantage of his own wrong and thus escape liability on a burdensome lease, and it is now the established rule that such a provision is in the nature of a condition subsequent and entitled the lessor at his election to declare the lease forfeited or not."
In my opinion the provision here for re-entry of the Lessor is, under the above rules, a condition subsequent, which the Lessor has the option of exercising or not as he sees fit. He has refused to exercise it in the present case so the entire provision as to the plaintiff's payment of one year's rent has no present effect. Since the sole purpose of the present suit is to have a certain provision of the lease declared determinative of the full rights of the parties and I have found that the provision in question has no effect between the parties in the present situation, there is no further question before me.
It is therefore ordered:
That the provision of the lease between the parties relied upon by the plaintiffs and quoted above is adjudged and declared to be inapplicable to the matters presently at issue between the parties and of no present force and effect.
April 13, 1955.
The Order of Honorable J.M. Brailsford, Jr., has been carefully considered in the light of the record and the exceptions, and we find no error.