Consumers' Ice Co. v. William H. H. Bixler & Co. , 84 Md. 437 ( 1896 )

Boyd, J.,

delivered the opinion of the Court.

The questions presented by this appeal were raised by a demurrer to the declaration, which was overruled by the Court below, and judgment entered for the appellees, the plaintiffs in the case. The facts are set forth in full in the declaration and we are called upon to determine the liability of the defendant under the following circumstances. On December 31, 1889, the appellees leased to Jacob Frederick & Sons a lot of ground in the city of Baltimore for the term of ten years beginning on the first day of January, 1890, “subject to the annual rental of three thousand dollars, payable in quarterly instalments on the first day of April, July, October and January.” On December 21, 1892, Frederick & Sons executed an assignment of the lease to Charles W. Morse, who on the next day assigned it to the defendant. On the 30th day of December, 1892, an agreement was entered into between Bixler & Co. of the first part, Frederick & Sons of the second part, and the appellant of the third part, wherein after reciting the original lease and the above mentioned assignments the following provisions and agreements were made: “ Now, therefore, these presents witness that, for and in consideration of the premises and the mutual covenants and agreements herein contained and the further sum of one dollar to the parties of the first part by the party of the third part in hand paid, the said parties of the first part do hereby assent to the said two assignments of said leasehold interest above referred to, to Charles W. Morse and to the Consumers’ Ice Company of Baltimore, respectively.

“And it is further agreed between the parties of the first part and the party of the third part that all the covenants and agreements in the original lease of William H. H. Bixler el al., trading as aforesaid, to William T. Frederick et al., trading as aforesaid, shall be and remain in full force and effect between the parties of the first part and the party of the third part hereto.

“It is however expressly agreed as stipulated, that the parties of the second part, in consideration of one dollar paid them by the parties of the first part, shall also remain bound by all the covenants and agreements contained in said original lease.”

Prior to this the lessors had not given their consent to the assignments and they were made without their knowledge. The defendant accepted the assignment, entered into possession of the premises, and on December 13, 1895, assigned the lease to Anthony G. Hamburger, who accepted it without the knowledge or consent of the plaintiffs. This suit was brought to recover the quarter’s rent falling due January 1st, 1896—which was after the defendant assigned the premises to Hamburger.

The liability of an assignee of a term to the lessor rests upon the privity of estate, unless he enters into some contract with him, and only continues so long as that exists. As the defendant assigned the premises before the rent sued for was due, its liability as a mere assignee of the term had ceased, Hintze v. Thomas, 7 Md. 346; Donelson v. Polk, 64 Md. 501, and if the agreement of December 30, 1892, had not been executed, the case would be free from doubt. But as we have seen it was agreed that all the covenants and agreements in the original lease should remain in full force and eifect between the appellant and appellees. It therefore becomes necessary to ascertain the extent of the liability of the original lessees.

A lessee may be responsible for rent either by virtue of an express covenant to pay it, or by reason o#the privity of estate. If there be no such covenant, then the liability of the lessee rests upon privity of estate alone. Where there is such a covenant the lessee cannot terminate his liability by an assignment of the lease, although the lessor may accept rent of the assignee or give his consent to the assignment. If, however, there be no express contract to pay the rent the lessee’s liability will cease if the lessor consents to an assignment, and such assent may be inferred by his accepting rent of the assignee or other act recognizing him as his tenant. That is because the privity of estate is destroyed, and as there is no privity of contract between them there is no longer any obligation, express or implied, on the lessee. But in order to destroy this privity of estate between lessor and lessee there must be the concurrence of the landlord. It is not correct to state, as a rule of law, that a lessee, who has not made an express covenant to pay rent, may discharge himself of all future responsibility by assigning the lease. Take the lease before us, for example, and let us assume that there is no express contract in it to pay rent. The lessors have undoubtedly bound themselves for ten years, if there be no default on the part of the lessees. They could not rent the property to any other tenant during that term and could not interfere with the possession of the lessees so long as they do what the agreement or the law demands of them. When they executed and delivered the lease the law held them liable on certain implied covenants, that the lessees should have the quiet enjoyment of the premises during the term, &c. Baugher v. Wilkins, 16 Md. 25. And there was also an implied covenant on the part of the lessees that they would pay the rent at the times named in the lease. That implied covenant only continues so long as they hold the estáte, and depends upon the privity of estate, but they cannot destroy that privity of estate without the consent of the lessors, because by the lease the lessors were entitled to have it continue for ten years.

Although it is said in Taylor's Landlord and Tenant, section 371, that a lessee or an assignee may discharge himself of all future responsibility by assigning over, an examination of the authorities cited to sustain that position will show that they were applicable to cases of assignees and not to those of lessees. The same author in section 438 says, “nor can a lessee discharge himself from the implied covenants by an assignment without the consent of the lessor, since the original privity of estate existing between them cannot be destroyed without the landlord’s concurrence, but a consent may be inferred from the lessor’s receiving rent from the assignee, or recognizing him in some other way as his tenant.” To the same effect are 1 Wash, on Real Prop. 493; Sutliff v. Atwood, 15 Ohio St. 194; Lodge v. White, 30 Ohio St. 569; Shine v. Dillon, 1 Ir. C. L. Rep. 277; Smith Landlord and Tenant, (292)-(293).

If then it be true that Frederick & Sons were liable for rent for the whole term, does it not follow that the appellant became so by the execution of the agreement of December 30, .1892? After reciting the lease'and the assignments previously made, the lessors, in consideration of the mutual covenants and agreements therein contained and of the sum of one dollar paid to him, gave their consent to the two assignments. The appellees and the appellant then agreed that all the covenants and agreements in the original lease should-be and remain in full force and effect between them. Remembering then that the most valuable part of the lease to the lessors was the payment of the rent, and that the original lessees were bound for it, we are forced to the conclusion that it was the intention of the parties to place the appellant under the same obligation that the lessees were under, which among other things was the payment of the rent during the term. The appellant and the lessors then stood in the same relation to each other as they would have done had the appellant been the original lessee, and hence by assigning to Hamburger without the consent or ratification of the appellees, it did not relieve itself from liability for rent. The cases of Adreon v. Hawkins, 4 H. & J. 319; Rawlings v. Duvall, 4 H. & McH. 1; Iggulden v. May, 9 Ves. 330 are somewhat in point, but without reference to them the meaning of the parties to the agreement seems to us clear and conclusive of the question.

But although we assumed above, ex gratia argumenti, that there was no express covenant to pay the rent during the term, we are of opinion that by a proper construction of the whole lease there is what amounts to an express covenant. By that we do not mean to say that the lessees in so many words entered into a formal covenant to pay the rent in terms usual in leases, but that from the language of the whole instrument a covenant or agreement to pay the rent is fairly inferrible. The property was leased “ for the term of ten years * * subject to the annual rental of three thousand dollars, payable in quarterly instalments, ” etc. The Fredericks were to have uninterrupted use of the wharf front for the purposes of their business with the privilege of extending a vessel through the pier. At ' the expiration of the lease they are to have the privilege of removing all their machinery, ice-houses and fixtures, but are to replace the pier as it existed when they cut through it. Bixler & Co. agreed to repair the wharf front thoroughly, “ after which the said Fredericks are to keep the property in like good condition at their own expense during the term hereby created, excepting natural wear and tear”. In the event of the wharf being damaged by any vessel other than those employed by the Fredericks, Bixler & Co. agreed to repair it with as little delay as possible, ‘ ‘ during which time, however; no abatement of the rent shall be allowed.” It was agreed that in the event of a condemnation of the property, as was contemplated, to such an extent as to render it unfit for their business, the Fredericks “ may cancel the lease, paying the proportionate rent up to the time of actual dispossession.” When we read these provisions together the conclusion seems irresistible that it was contemplated, understood and intended to be agreed between the parties that the Fredericks should hold the property during the whole term. They agreed to keep it in repair, not while they occupied it, but “during the term hereby created.” At the expiration of the lease they are required to replace the pier which they are authorized to cut through. In the event of the condemnation of the property to an extent that will render it unfit for their business, they are authorized to cancel the lease, but are required to pay the rent to the time of actual dispossession. Now without meaning to say that the use of the words “subject to the annual rental of three thousand dollars, payable in quarterly instalments,” was of itself sufficient to make an express covenant to pay, yet when they are taken in connection with the other provisions we think it was evidently the meaning and intention of the parties to bind the lessees for the rent during the term, and as the lease was signed and sealed by the lessees an action of covenant will lie. That being our opinion as to the liability of the lessees, what we have said above will sufficiently indicate our views as to the liability of the appellant—not as assignee, but by reason of the agreement under seal entered into by it with the original lessors and lessees. It follows that the judgment must be affirmed.

(Decided December 3rd, 1896.)

Judgmejit affirmed with costs to the appellee.