Opinion
Decided April 1, 1931.
Landlord and tenant — Assignment of lease — Lessee liable for rent — Lessor extended time to lessee's assignee to complete improvement required by lease — Lessee's assignees paid rent, taxes and assessments — Conduct creating new demise between lessor and assignee, necessary to relieve lessee — Alleging assignment, not pleading that lessee complied with assignment provisions.
1. Lessor, by alleging that lessee assigned interest in lease, did not plead, in effect, that lessee had complied with lease provisions regarding assignment releasing lessee from liability.
2. Lessee held not relieved of liability under lease because lessor extended time to lessee's assignee to complete improvement lease required lessee to erect.
3. That lessee's assignees paid rent, taxes, and special assessments did not relieve lessee of liability under lease.
4. Conduct of lessor and lessee's assignee, to relieve lessee of liability under lease, must create in effect new demise between lessor and assignee.
ERROR: Court of Appeals for Stark county.
Messrs. Burt, Kinnison, Carson Shadrach, for plaintiffs in error.
Mr. D.C. Hughes, for defendant in error.
The action was brought by plaintiff, Edgar J. March, to recover damages for alleged breaches of a certain ninety-nine year lease. The amount originally claimed was $26,676.58, but prior to the submission of the cause on its merits this amount was reduced to $6,713.35 by payments made by certain bonding companies and the defendant Russell J. Van Nostrum, as assignee for the benefit of the creditors of the A.H. Slusser Investment Company.
The defendants, the A.H. Slusser Investment Company, and Russell J. Van Nostrum, as assignee, as aforesaid, although duly served with summons, did not plead, and a judgment was taken against them by default for $7,844.40, being the amount prayed for, plus interest.
The defendant Curtis N. Wade demurred to the petition on the following grounds: The facts alleged do not state a cause of action, and there is a misjoinder of parties defendant. The demurrer was overruled. During the pendency of the suit Curtis N. Wade died, and the action was revived against George L. Wade and James M. Miller, as executors of the last will and testament of Curtis N. Wade, deceased.
The executors answered, admitting the execution of the lease by the decedent, Curtis N. Wade, but denying any liability on the part of his estate by reason thereof, and further averring that said estate was relieved of any liability under said lease by reason of an assignment thereof by Curtis N. Wade to the A.H. Slusser Investment Company, the subsequent acceptance of said assignee by plaintiff as sole tenant, and numerous subsequent dealings between plaintiff and said assignee to which Curtis N. Wade was not a party. The new matter pleaded by the executors was denied by plaintiff. Upon trial, without the intervention of a jury, a decision was rendered for plaintiff and against the executors for $7,844.40, upon which a judgment was entered. The executors, as plaintiffs in error, now bring the case into this court upon a petition in error, seeking a reversal of that judgment.
It appears that on October 22, 1922, plaintiff leased certain downtown premises in Canton, Ohio, to the A.H. Slusser Investment Company and Curtis N. Wade for ninety-nine years. The lessees took possession under the terms of the lease on November 1, 1922, and occupied the premises until January 21, 1925, when Curtis N. Wade assigned his interest as lessee to his colessee, the said the A.H. Slusser Investment Company. On April 20, 1925, the A.H. Slusser Investment Company assigned its interest in said lease to one P.O. McCully, who on August 25, 1927, reassigned his interest in the lease to the investment company. The lease contained, among others, the following provisions:
"It is further provided as part of the within lease that the lessees, their heirs, successors and assigns shall within three (3) years from the commencement of the term of the within lease erect or cause to be erected an improvement either by remodeling or by additions thereto to the said improvements now on said premises, the said improvement, remodeling and reconstruction to cost not less than the sum of twenty thousand dollars; and, it is further provided that the lessees are to execute and deliver to the lessor an indemnity bond in the sum of fifteen thousand dollars as guarantee for the remodeling, reconstruction or improvement of the said premises as above provided."
On April 20, 1925, the plaintiff granted to the A.H. Slusser Investment Company and P.O. McCully, a two-year extension for the making of the improvement aforesaid.
It further appears that none of the breaches for which suit was brought was committed prior to January 21, 1925. The breaches, so far as this review is concerned, consisted in failing to pay taxes, special assessments, and rent.
Other facts, of course, appear of record, but they are not controlling and therefore are not mentioned.
It is insisted that the trial court erred in overruling the demurrer to the petition. To this we do not accede. Article 7 of the lease in part provides:
"The lessees will not * * * assign or transfer this lease * * * unless the assignee shall in writing expressly assume and agree to perform all of the conditions herein devolving upon the lessee; and an original copy of such agreement of assignment and acceptance be, at or about the time of the delivery of the same, furnished to the lessor and recorded at the expense of the lessees in the office of the recorder of said county. The assignee shall further be required to furnish to lessor a bond executed by a surety company or by good personal surety to the approval of the lessor in the sum of fifteen thousand dollars, conditioned that for a period of ten years the assignee will pay the rents and perform all of the covenants, agreements and conditions in said lease contained and to be performed by said lessees. Upon any such * * * assignment of this lease, however, by the lessees, made in accordance with the covenants of the agreement, the party so * * * assigning shall be free from all further liability to the lessors thereunder."
Plaintiff in his petition avers:
"On October 22, 1922, plaintiff leased said premises to said The A.H. Slusser Investment Company and Curtis N. Wade for the term of ninety-nine years * * * and that said The A.H. Slusser Investment Company and Curtis N. Wade entered into possession of said premises under said lease, and on the 21st day of January, 1925, said Wade assigned his interest in said lease to said The A.H. Slusser Investment Company."
No other allegations, referable to the assignment by Curtis N. Wade, appear in the petition. The question therefore is: Did plaintiff, by alleging that "on the 21st day of January, 1925, said Wade assigned his interest in said lease to said the A.H. Slusser Investment Company" in effect plead that Wade had complied with the provisions of article 7 of said lease on his part to be kept and performed, and hence was relieved from all further liability to the lessor thereunder?
We answer this question in the negative. No presumption arises that Curtis N. Wade has performed the terms and conditions of article 7 of said lease on his part to be kept and performed, and thereby has protected himself. Manifestly, the plaintiff was not required to aver that Wade had not so protected himself. The law fixes Wade's liability under the lease, and, if relieved therefrom by following the terms and provisions of the lease relating thereto, that should have been pleaded as a defense, which, in passing, we observe was not done either by Wade or his executors. The demurrer was properly overruled.
It is urged, however, that Curtis N. Wade was relieved of any liability under the lease by reason of an extension of time granted by plaintiff to Wade's assignee and P.O. McCully to complete certain improvements specified in the lease. With this contention we do not agree, for the reason that such extension clearly inured to the benefit, rather than to the damage, of Wade. By the express terms of the lease, Wade and his colessee were required to expend $20,000 for improvements. Certain bonding companies, by agreement with the assignee, obligated themselves to and actually did pay to plaintiff $15,000 of this amount. Surely Wade is not prejudiced by reason thereof. Volume 16, Ruling Case Law, page 848, Section 347.
It is contended, however, that Curtis N. Wade is relieved of any liability under the lease by the conduct of the lessor and the assignee. With this contention we are not in accord. True, the record discloses that the assignees paid rents, taxes, and special assessments, but these acts do not in and of themselves relieve Wade of liability under the lease.
In Taylor v. DeBus, 31 Ohio St. 468, our Supreme Court held:
"A lessor may maintain an action for rent against his lessee, on an express covenant to pay rent during the term contained in a lease for ninety-nine years and renewable forever, though the rent accrued after the lessee had assigned all his interest in the leasehold estate and after the lessor had accepted rent from the assignee of the term."
Of like import is the pronouncement in Harmony Lodge v. White, 30 Ohio St. 569, 27 Am. Rep., 492.
The conduct of the lessor and the assignee, in order to relieve Curtis N. Wade of liability under the lease, must be such as to have created in effect a new demise between the plaintiff and the assignee. We quote from volume 35, Corpus Juris, pages 994 and 995:
"An assignment of the term and the acceptance of the assignee as tenant discharges the lessee from all obligations arising from privity of estate, but not from those arising from privity of contract * * * unless there is an agreement by which a new tenancy is created, in which event no further liability attaches to the lessee in the absence of a reservation of such liability."
Obviously, the trial court, who was the trier of the fact, did not find that a new demise was created by the conduct of the lessor and the assignee, and, after a careful examination of the record, we are persuaded that the trial court's finding on this point is abundantly sustained by the evidence. Hence, under the pronouncement enounced in Dean v. King, Pennock King, 22 Ohio St. 118, 134, we must not disturb it.
All other claims of error have been carefully considered by us and found to be without merit.
Holding these views, it follows that the judgment of the court of common pleas should be affirmed.
Judgment affirmed.
LEMERT, P.J., and SHERICK, J., concur.