Opinion
Decided April 3, 1928.
There is no presumption that a party who erects buildings on another's land does so upon any agreement that they may be taken away; it is only where such right of removal exists that the buildings will be treated as distinct from the land.
Though a right of removal of buildings exists in the occupant thereof as against his lessor, a lease thereof by the occupant in the usual form of a lease of real estate confers on his lessee the occupant's right, though it may have been limited to occupancy as tenant at will.
Though no tenant at will can create any estate in another which will avail against the owner, yet any lease by such tenant will be good as between him and his lessee so long as the owner suffers the tenant at will to enjoy the premises.
In the absence of a definite provision to the contrary, a lessee, though at will only, has the right to assign his lease; though such assignment confers no right as against the landowner the transfer is valid as between the parties thereto.
Where a corporation occupies land of another with its building as a tenant at will, the dissolution of the corporation will terminate the tenancy.
But if prior thereto the corporation had leased the premises, then sold the building and the purchaser had accepted such lessee as his tenant, the obligations of the parties inter se, the landowner asserting no rights, are such as have been imposed by the corporation under which each claims.
Where a lessor's right of re-entry is in terms restricted to the breach of specified covenants of the lessee, any right to re-enter for the breach of other covenants is impliedly excluded.
Where no right of re-entry is stipulated upon failure of the lessee to secure the lessor's approval of an underletting of the premises, the provision is a covenant and not a condition and no forfeiture results from such failure.
The benefit of a covenant by the lessor to renew the lease does not inure to the tenant's assignee.
A trustee in bankruptcy takes only the title of the debtor as lessee of premises; but an assignment by the trustee of all the debtor's interest in the demised premises and of all the benefits arising out of the lease is not a violation of the ordinary covenant prohibiting voluntary assignment by the lessee.
Where the plaintiff has misconceived his action but both parties agree that their rights may be determined, the court will treat the case as though the proper action had been brought.
ACTIONS OF TROVER, for two stores. Facts agreed. The A. O. U. W. Building Association, a corporation, erected a building on land of the Great Falls Manufacturing Company in Milton with the consent of that company. On October 7, 1925, the association leased to John Brooks two stores in the building for a period of three years. The lease was drawn on the usual printed form for leases of real estate. A prohibition against underletting the premises without the approbation of the lessor in writing was struck out and the following inserted: "The said John Brooks retains the right to sell and transfer this lease subject to the approval of the A. O. U. W. Building Association." There was no provision for a forfeiture of the lease in case this approval was not obtained; there was such a provision with respect to waste and to the failure to pay rent.
On December 7, 1925, the association, by bill of sale, containing a covenant against incumbrances, sold the building to Walter Young, who accepted Brooks as tenant. At the February term, 1926, the superior court granted the association's petition for dissolution. In June, 1926, Brooks sublet one of the stores by oral agreement to one Smith, who later sold to P. Wellington Bragg. On February 4, 1927, Brooks filed a voluntary petition in bankruptcy. Subsequently his trustee in bankruptcy assigned all Brooks' interest in the demised premises and all the rights and benefits arising out of the lease to Luetta Voudomas. Young did not assent to this assignment, and claims that it is invalid for that reason. Bragg refused to comply with the request of Voudomas to vacate the store occupied by him, and claims that he is entitled to continue his occupancy because of verbal permission granted him by Young. These actions are brought, after service of notices to quit, for the purpose of securing possession of the premises.
The questions of law presented by the foregoing facts were transferred by Oakes, J., without a ruling.
Burt R. Cooper and Gardner S. Hall (Mr. Hall orally), for Voudomas.
Conrad E. Snow (by brief and orally), for Bragg and Young.
The parties have erroneously assumed that personal-property rights alone are involved, and that the law of bailments is applicable. The statement of facts does not disclose the precise terms of the arrangement between the A. O. U. W. Building Association and the Great Falls Manufacturing Company, but since the association occupied the land with the express permission of the owner, it became at the very least a tenant at will. Dame v. Dame, 38 N.H. 429, 434; P. L., c. 213, s. 15. The association had therefore an "estate." 2 Bl. Com. 145; 1 Tiff., L. T., 118.
"There is no presumption that a party who erects buildings on another's land does so upon any agreement that they may be taken away." Bean v. Brackett, 34 N.H. 102, 118. It is true that where such right of removal exists, the buildings may be treated as distinct from the land. Hamlin v. Philbrook, 78 N.H. 144; Ford v. Burleigh, 62 N.H. 388; Laird v. Railroad, 62 N.H. 254; Dame v. Dame, supra; Keyser v. School District, 35 N.H. 477, 480; Aldrich v. Parsons, 6 N.H. 555. But conceding a right of removal in the instant case (a fact which appears only by implication), the lease does not purport to deal solely with the building but includes the lessor's right, limited though it may have been, to occupy the land. It is evident, therefore, that the parties have misconceived their remedy. They desire a determination of their rights, however, and by agreement the case is treated as though possessory actions had been brought.
No tenant at will can create "any estate in another which will avail against the owner of the land," yet any lease which he undertakes to make "will be good between him and his lessee so long as he is suffered to enjoy the premises." 1 Washb., Real Prop. (6th ed.), s. 765; Holbrook v. Young, 108 Mass. 83, 85; Meier v. Thiemann, 15 Mo. App. 307. In the absence of a definite provision to the contrary, a lessee has the right to assign his lease. Machinist v. Koorkanian, 82 N.H. 249, 252; Spear v. Fuller, 8 N.H. 174. This right Brooks expressly retained subject only to the approval of his lessor. In this situation there is some ground for argument that a reasonable rather than a capricious approval was contemplated.
Young's title is derived from a bill of sale, which presumably conveyed to him all the association's interest in the premises. While there is no doubt that a tenancy at will is not transferable (Austin v. Thomson, 45 N.H. 113, 120; Whittemore v. Gibbs, 24 N.H. 484, 488, 489), this is because the transfer gives the purchaser no right which he can hold against the landowner, and not because of any inherent incapacity in the tenant to assign. 1 Underhill, L. T., s. 160. Consequently an attempted transfer is valid as between the parties. 23 A.L.R. 145, 146; Landon v. Townshend, 129 N.Y. 166, 178.
Although the dissolution of the association terminated the original tenancy (1 Tiff., L. T., 115), certain rights had been granted in the meantime to Brooks and Young. It is true that these rights are unenforceable so far as the Great Falls Manufacturing Company is concerned, but until that company, as landowner, sees fit to interfere, the obligations of the parties to each other are such as the association, under which each claims, has imposed.
It is stated that the bill of sale contained a covenant against incumbrances, but no copy of the bill of sale has been furnished, and it does not appear whether the lease was referred to or not. This is of no importance, however, for Young took the premises subject to the lease, and recognized that fact not only by accepting rent from Brooks but by bargaining with the trustee for the purchase of the lease. It is upon the alleged breach of a restriction contained in the lease that he relies.
Since in a strict sense the lessor's tenancy was not assignable and since the association is mentioned by name with no accompanying reference to assigns, the restriction might well be construed as merely a personal one. Young is no better off, however, if the opposite construction is adopted.
The provision is at most a covenant, not a condition. No right of re-entry is given the association for a failure to secure the stipulated approval. This right is given only for failure to pay rent and for waste. And "where the lessor's right of re-entry is in terms restricted to the breach of specified covenants of the lessee, this impliedly excludes the right to re-enter for the breach of other covenants." 16 R. C. L. 1116, 1117; Spear v. Fuller, 8 N.H. 174, 176.
It follows that the breach here (if it be deemed such) did not work a forfeiture so far as Brooks or his trustee in bankruptcy was concerned, and Voudomas to whom their interests were assigned can defend her possession against Young and maintain her action against Bragg, who relies on Young's oral permission to occupy. Hague v. Ahrens, 53 Fed. Rep. 58. "Neither the lease nor the assignment is avoided by reason of the breach of covenant." Den v. Post, 25 N. J. Law, 285, 292; In re Pennewell, 119 Fed. Rep. 139, 142.
This result is not inconsistent with the cases which deny an assignee the benefit of a covenant by the lessor to renew the lease (Upton v. Hosmer, 70 N.H. 493; Emery v. Hill, 67 N.H. 330), since these cases appear to be "based only on the theory that the covenant for renewal is to be construed with reference to the covenant against assignment, and as consequently providing for renewal only in behalf of the lessee himself, or in behalf of an assignee who has become such in accordance with the terms of the lease." 1 Tiff., L. T., 940.
But even if such an assignment might be held invalid in the ordinary instance, it could not be so held here. The trustee in bankruptcy obtained his title to the lease by operation of law. There is no provision in the lease covering such a situation (In re Frazin Oppenheim, 174 Fed. Rep. 713, 715) and no suggestion in the statement of facts that bankruptcy proceedings were resorted to for the purpose of avoiding the restriction. By the weight of modern authority a transfer of this nature is not deemed a violation of the ordinary covenant against assignment. Gazlay v. Williams, 210 U.S. 41; In re Levinson, 295 Fed. Rep. 146; Peacock v. Lovejoy, 5 Haw. 231; Farnum v. Hefner, 79 Cal. 575, 580; Clifford v. Railroad, 121 Me. 15, 18; Bemis v. Wilder, 100 Mass. 446; Pappas v. Company (N. J.), 137 Atl. Rep. 417, 418; Liquidation of Citizens S. T. Co., 171 Wis. 601, 604; Miller v. Fredeking, 101 W. Va. 643. A more complete collection of authorities will be found in 46 A.L.R. 847.
The statement in English v. Richardson, 80 N.H. 364, 366, that a trustee in bankruptcy "takes the leasehold in the same plight as the debtor held it" has no reference to covenants prohibiting voluntary assignment by the lessee.
In accordance with the agreement made during oral argument the writs are considered as properly amended, and the order in each case is
Judgment for Voudomas.
SNOW, J., did not sit: the others concurred.