Meyer Bros.' Assignee v. Gaertner , 106 Ky. 481 ( 1899 )

JUDGE HOBSON

delivered the opinion op the court.

This case is before us upon an agreed statement of facts. In August, 1895, appellee, Gaertner, executed to one Rosenberg a written lease of a storehouse owned by him in Louisville, which was also signed by Rosenberg, for the term of two years from April 1, 1896. By the lease it was provided that the premises should not be underlet, or the term, in whole or in part, assigned, transferred, or set over, by the act of the lessee, by process or operation of law, or in any other manner, whatever, without the written consent of the lessor, but that the lessee might sublet the building to a responsible party, to be used for <the same or a similar business, who should be acceptable to the lessor, in which event the lessee was to remain liable on the lease until its expiration. In January, 1897, Rosenberg assigned the unexpired portion of his term to Meyer Bros., and delivered his lease to them; and they took possession and occupied the property, claiming as assignees of the term, and remained in possession, paying the rent to Gaertner. On July 21, 1897, they made an assignment for the benefit of their creditors to the Louisville Trust Company. The assignment from Rosenberg to Meyer Bros, was made in parol, and was not evidenced in any writing. It is also agreed that Meyer Bros, were acceptable to the lessor. At the time of the Meyer Bros, assignment the rent for June was due. On July 22, 1897, after the deed of assignment to the trust company, the company, for the purpose of protecting the assigned estate, and of avoiding any future liability for the rent.of the leased property, assigned all its and its assignor’s interest in the unexpired part of the term to one Kling, who accepted the assignment. That assignment is in writing. Gaertner gave no consent, written or oral, to either assignment, but continually looked to Rosenberg as tenant under the lease.

The trust company claims that upon these facts the assigned estate is liable to Gaertner only for the rent due to August 1, 1897, which it has paid him. Gaertner claims that the estate is liable to him, not only for the rent due at the time of the assignment to> the trust company, but for all the rents to become due thereafter, for the ten months to elapse before the expiration of the lease to Rosenberg, and that he has a prior lien upon the assets for all that rent. By a written agreement between Gaertner and the company, made before the sale of the stock of goods assigned, it was agreed that no distress warrant or attachment need issue for the rent of the premises, and that whatever lien Gaertner might have on the personalty should hold good on the proceeds. Gaertner filed proof of his rent claim with the trust company.

The question presented to the court for decision is whether «the assignment by the trust company to Kling of the unexpired portion of the term operated to accomplish the avowed purpose of relieving the assigned estate from Gaertner’s landlord’s lien, which could have been asserted if no assignment had ever been made by the assignee of the term. The question thus presented is one of great interest, and has been elaborately and ably briefed.

It seems clear that the assignment by Rosenberg to Meyer Bros, in violation of the terms of the lease, as it was made without the landlord’s consent, was voidable only, and could be taken advantage of by the landlord only, by re-entry and declaration of forfeiture of the lease. (Taylor’s Landlord & Tenant, sec. 492). It is equally clear from the record that if there be' a difference between an assignment of a term, in whole or in part, and a subletting, this was an assignment; for it is stipulated in the agreed statement of facts that the remainder of the term was assigned. The original lessee had transferred his whole estate, therefore, and had no reversion, though he was still liable upon his covenant to pay the rent.

There was no privity of contract between the assignee of the term and the lessor. It is insisted that, as assignee, he was liable, only because of his possession, and so was only liable.for covenant’s broken while he remained in possession of the property, and for such rents as accrued after he took possesssion.

What effect does the assignment over by the assignee of a term have upon his liability for rents to become due. thereafter? The rule, in the absence of statutory modification, is thus stated by Taylor (volume 2, section 452): “An assignee may always discharge himself from liability for subsequent breaches, in respect to rent as well as to other covenants, by assigning over, though it be done for the express purpose of getting x'id of his responsibility, and although the second assignee neither takes possession nor receives the lease. And he may assign to a beggar, a feme covert, or to a person who is on the eve of quitting the country forever, provided the assignment shall be executed before his departure, and even although the assignee may receive from the assignor a premium as an inducement to accept the transfer. The same result follows-, notwithstanding the assignment of the lease remains in the hands of the solicitor of the assignor, who has a lien for the expenses of preparing it, or the lease contains a covénant not to assign; for the assignment destroys the privity of estate, which was the only ground upon which the assignee was liable, and, though the tenant’s liability on his covenant to pay rent may subsist during the continuance of the lease, there is no personal confidence reposed in the assignee of the lease.”

The question presénted, therefore, is, has this rule been modified by statute, as to the property of the assignee on the premises? The statutes, so far as material to this controversy, are as follows:

“Rent may be recovered from the lessee or other person owning it, or his assignee or under-tenant, or the representative of either, by the same remedies given in the preceding sections. But the liability of the assignee or sub-tenant shall only be for the rent accrued after his interest began.”

“A distress warrant or attachment for rent shall bind, and may be levied upon any personal property of the original tenant found in the county; and upon the personal property of the assignee or under-tenant found on the leased premises, and if the tenant has removed his property to another county the distress or attachment may be directed to such county.”

“If after the commencement of any tenancy, a lien be created upon the property upon the leased premises liable for rent, the party making or acquiring such lien may remove the property from the premises upon the following terms, and 'not otherwise; that is, by paying to the person entitled to the rent so much as is in arrear, and securing to him so' much as is to become due; what is so paid and secured not being more altogether than a year’s rent.”

“All valid liens upon the personal property of a lessee, assignee, or under-tenant, created before the property was carried upon the leased premises, shall prevail against a distress warrant or attachment for rent. If such lien be created whilst the property is on the leased premises, and on property upon which the landlord hath a superior lien, for his rent, then to the extent of one year’s rent, whether the same accrued before or after the creation of the lien, a distress or attachment shall have preference, and be first satisfied, provided the same is sued out is one hundred and twenty days from the time the rent was due.”

“A • landlord shall have a superior' lien on the produce of the farm or premises rented, on the fixtures, on the household furniture, and other personal property of the tenant or under-tenant, owned by him after possession is taken under the lease; but such lien shall not. be for more than 'one year’s rent due or to become due, nor for any rent which has been due for more than one hundred and twenty days.” [Kentucky Statutes, sections 2305, 2307, 2314, 2316, 2317.]

Our statutes also provide as follows:

“The rule of the common law, that statutes in derogation thereof are to be strictly construed, is not to apply to this revision; on the contrary its provisions are to be liberally construed with a view to promote its objects.” Ky. St., sec. 460.

Construing tlie sections above quoted under this rule, with a view to promote their object, we think it clear that they give the landlord a superior lien, for not exceeding one year’s rent, due or to become due, on all the property of the tenant, sub-tenant, or assignee on the premises, subject to execution, the liability of the assignee or sub-tenant being only for the rent accrued after his interest began. Appellee, therefore, had a superior lien on all the property of appellant, as assignee of Meyer Bros., on the premises, for one year’s rent, due or to become due, at the time it executed the assignment of the balance of the term to Kling. They had no right to make any assignment of the lease without the written consent of the appellee, and it certainly was not the intention of the statute that the tenant could, by a violátion of the lease, and without the consent of the landlord, divest him of his lien on the tenant’s property for his rent, and thus defeat the entire purpose of the statute.

Rosenberg had no right to assign his lease to Meyer Bros., but only the lessor could complain of this, and, he acquiescing in the assignment, Meyer Bros, became his tenants. An assignee of a lease, accepting the assignment of it, takes it subject to all the covenants contained in it; and so Meyer Bros., or appellant, as their representative, had no right to assign -this lease to another. The law suffers no man to profit by the violation of his own contract, and it would be a plain denial of the purpose of these statutes to allow an assignee of a lease to defeat the lien secured by it •to the landlord by a wrongful act of his own, and' without the concurrence of the landlord.

If, on the day before the assignment to Kling was made, appellee had taken out an attachment for the rent due or to become due under this lease, would it be contended that his attachment might be defeated by the assignment made to Kling on the following day? The plaintiff may defeat the lien of his attachment by his acts, but nothing that the'defendant can do alone can have this effect. But an attachment, if taken out, would have added nothing to the efficacy of the landlord’s lien. The statute gave him a lien, with or without the attachment, and the property subject to the lien could as well be withdrawn from the operation of the attachment as from the operation of the lien given by the statute, by the act alone of the assignee or sub-tenant.

The doctrine that a lien is only an incident to a debt, and that where the personal liability is terminated the lien is gone, has no application to a statutory right like this. The landlord might be perfectly satisfied where his tenant assigned his term to another who filled the storehouse with goods, thus securing the rent; for, without regard to personal liabilities, he is given by the statute a superior lien on the goods for his rent, and it was never intended that after this was; done the assignee could move out his goods at any time he pleased, and, by assigning the lease to a beggar, throw upon the landlord the entire loss of his rent.

Appellee’s lien on the personal property of the assignee or under-tenant on the premises is simply a right in rem conferred by statute. Such rights often exist when there is no personal liability, as on the get of a stud for the services of the horse, or on the property of a married woman in favor of a mechanic before our enabling acts.

On the day that . Meyer Bros, made the deed of assignment to appellant, appellee had a lien on the stock of goods for a year’s rent, due or to become due. By that deed Meyer Bros, created a lien on the property in favor of all their creditors. But this lien so created on the property in the hands of appellant was by the express provisions of section 2316, quoted above, subject to the lien of appellee; and appellant who was trustee for the creditors, and charged by law (Kentucky Statutes, section 74) with the duty of applying the proceeds of the property first to the discharge of the liens on it, could not by its sole act, without his consent, destroy appellee’s lien, when the statute required it to be paid before other claims. Judgment affirmed.

The whole court considered this case.

The CHIEF JUSTICE and JUDGES GUFFY and DuRELLE dissenting.