Carpenter v. Wilson , 100 Md. 13 ( 1904 )

This is an action of ejectment brought by E. Butler Carpenter, the assignee of the lessor, against Harvey Wilson, the lessee, to recover a lot of ground and the improvements thereon, situated in the city of Cumberland, this State.

On the 28th of February, 1900, Catherine Smith, the then owner in fee of the lot in question, leased it to Wilson, the appellee, for the term of five years from that date, in consideration of the payment of twenty-five dollars per month, payable monthly on the first day of each month. The tenant covenanted to pay the rent and to keep the premises in as good repair as they were when he took them and further agreed that if the rent was not paid when due, or upon any other violation of the contract and such non-payment of rent and violation of contract shall continue for the space of thirty days the lessor could re-enter the said premises without demand or notice and upon such re-entry the tenancy should cease. The tenant also agreed to pay all water rent, and the lessor covenanted for herself, her heirs and assigns, at the end of said term of five years to sell and assign to him in fee-simple, clear of all incumbrances, the aforesaid premises, c., for the sum of four thousand dollars — with a proviso that if the tenant should not exercise his option of purchase, he shall have the right to remove such trade fixtures as he may have placed on said property during the lease.

From the date of this lease, viz, 28th of February, 1900, until December, 1903, the appellee as tenant held the premises in question and paid the rent. The rent, however, was not paid on the first day of each month as required by the lease, but from the tenth to the fourteenth of the month following the month when it accrued. Nor was the water rent paid at all.

Under these circumstances the appellant became the owner of the premises, and for several months the rent was paid to him as it had been paid to his predecessor in title, that is to say the rent for the month of August was paid to and accepted by him on the 10th of September, 1903, for the month of September on the 10th of October, for the month of October on the 14th of November and for the month of November on the 9th of December. However, on the 2nd of January, 1904, before the usual and customary time for the payment of the rent of preceding month, the appellant brought this action.

The narr. is in the usual forms. Three pleas (amended) were filed on the 10th May, 1904. There was a demurrer filed to the pleas. The Court below overruled this demurrer and the trial proceeded before the Court without a jury. Considerable testimony was taken by both sides, but the only exception we find in the record is that taken by the appellant to the rejection of his three prayers. By reason of the overruling of his demurrer and the rejection of his prayers the plaintiff below has appealed, the judgment below having been in favor of the appellee.

But inasmuch as we are of the opinion that the question involved in the demurrer to the pleas controls this case, we will proceed to discuss that question without adverting to the ruling upon the prayers.

The plea which we will consider is the first of the three amended pleas filed on the 10th of May, 1904, which is a plea for defense on equitable grounds.

It will be observed that the lease not only grants to the lessee a term of five years but it gives to him an option to purchase the premises upon the expiration of that term for the sum of four thousand dollars, and further provides that if such option should not be exercised the tenant shall have the right to remove such trade fixtures as he may have placed upon the property during his tenancy. After alleging that the appellee went into possession of the premises under the said lease, the plea sets out the lease in full and alleges that relying upon the provisions of said lease and the covenant of the lessor for the sale of said property at the end of the said term, he placed large and valuable improvements upon said property, consisting of an oven for the baking of bread and placed in said property expensive machinery and engines and boilers and made many permanent and substantial repairs and improvements to the various buildings thereon, amounting in all to the sum of eleven hundred dollars, so as to fit the same for the uses and purposes of a steam bakery, for the manufacture and making of bread, all of which improvements were made with the expectation that he would become the purchaser of the property at the end of five years; that the appellant became the owner of said premises in July, 1903, subject to the said lease; that during the three years of the term before the appellant became the owner of the premises the rent was always paid to the original lessor and also to the appellant after he became the owner, as follows: the rent for each month was paid between the first and fourteenth of the succeeding month; that this habit or custom of so paying rent was continued until December 9th, 1903, when the rent for the preceding month was paid and accepted by the appellant without objection. The plea further alleges that the appellee according to and relying upon the custom which had arisen and been maintained between himself and the appellant, did not pay the December, 1903, rent during the month and the appellant brought this suit 2nd January, 1904, before the usual and customary time for the payment thereof; and that before any re-entry had been made on said premises and before the customary time for paying the same the appellee tendered said rent but the appellant refused to accept it and claimed that the lease was forfeited and that the water rent had not been paid as provided thereby; that by reason of said dealings between the appellant and appellee the appellant is estopped to contend that said rent was payable in any other manner than the manner in which he had been accustomed to accept and receive the same; that the appellee has always since the first of December, 1903, been ready and willing to pay said rent when due and demandable whether in advance or according to the custom which was established between the appellee and appellant but that the appellant has refused, c.; that the appellee has always been ready and is now willing to do and perform all the conditions of said lease and that he is also ready and willing to pay all bills for water rent but none have ever been presented to him by the appellant or by any body else and that to allow the appellant now to insist upon a forfeiture would be a fraud upon the appellee and work irreparable injury, destroy his business, and deprive him of the benefit of his improvements which he has made in contemplation of the purchase of said property at the end of the lease.

We have thus set out at length the equitable grounds upon which the appellee relies in this case — and the only inquiry is whether they constitute a good defense.

The demurrer, of course, admits the facts, but besides this the case having been tried upon this plea, the Court below sitting as a jury must have found them to have been proved by the testimony, otherwise a judgment for the defendant would not have been entered. But assuming that the facts alleged in the plea are true it follows that from the time the lease was entered into by the appellee and the original lessor the rent was paid for over three years as set forth in the plea. No objection was ever made to this mode of payment. The same method was adopted by the appellee and the appellant, until suddenly, without any complaint and without any demand, the appellant resorted to the harsh provisions of the lease by which he expected to be able to have the lease forfeited and the premises with all the valuable repairs and improvements confiscated for his own use without any compensation to the appellee. No Court of equity would tolerate such a course of action. A very different case would be presented if the landlord had not for a long time accepted the rent without objection after it had accrued, and had on the first attempted payment of the rent in arrear refused it and claimed a forfeiture. We do not mean to say that the fact alone of the long continued receipt of rent by the appellant when it was overdue constitutes an equitable defense, for it was just such a situation which we said in Morrison v. Smith, 90 Md. 84, might be offered in evidence in a suit at law as tending to show a waiver of forfeiture. But this fact in connection with the allegations of the plea in regard to improvements made by the appellee and with those relating to the provisions of the lease by which the lessee was enabled to acquire the property in fee present just such a case as a Court of equity would and should entertain. It cannot be questioned we think, that if the appellant instead of putting his defense in the shape of an equitable plea had filed a bill in a Court of equity setting forth the same facts, an injunction would have issued prohibiting the appellant from prosecuting his ejectment.

In 2 Story's Equity Jurisprudence, sec. 1321, it is said that it is admitted that where the condition or forfeiture is merely a security for the non-payment of money (such as the right of re-entry upon non-payment of rent) there it is to be treated as a mere security and in the nature of a penalty and is accordingly relievable in equity. See also 18 Am. Eng. Encyl., p. 389. Especially would this relief be granted to this appellee who tenders himself ready not only to pay all the accrued rent but also to pay all the overdue water rent. While it is true that a breach to pay water rent is also a cause of forfeiture, and the plea admits that the appellee has failed to pay such rent, yet in our opinion the appellant should have demanded its payment and having failed so to do it would not be equitable under the facts alleged in the plea to allow him to enforce a forfeiture for such non-payment. 18 Am. Eng. Encyl. (Landlord and Tenant), p. 373. And especially should this view prevail when the appellee offers to pay the amount of the water rent into Court or whenever he can ascertain the amount due. We are unable to see any distinction between the effect of the non-payment of the rent of the premises and that of the water rent. In the first case it is admitted that equity has jurisdiction. Thus JUDGE STORY says, sec. 1322, 2 Equity Jurisprudence, that in other cases of covenant beside covenants to pay rent if the damages are capable of being ascertained and will in a legal or equitable sense be an adequate compensation the reason is not very clear why under such circumstances the forfeiture may not be equally treated as a security for such damages, and a forfeiture prevented by the payment of the money, the rent in one case and the water rent in the other with interest. But aside from this view we are of opinion that the rule which has been adopted in regard to taxes should be applied to the failure to pay such a public charge as a water rent. The rule is this "To entitle the landlord to enforce a forfeiture for the breach of a covenant to pay taxes he must make a demand on the tenant to pay the same." 18 Am. Eng. Encyl. (Landlord and Tenant), p. 375, note 9.

The third and remaining ground of forfeiture relied on by the appellant is the alleged failure of the appellee to repair. But is there in this respect any violation of the covenants of the lease? The plea alleges that the appellee has made many permanent and substantial repairs to the premises, and that as to all the other conditions, provisions and undertakings on his part reserved to be done in said lease, he has performed the same or been relieved from performance by said appellant. These allegations we are to assume to be true, and if so, there would not seem to be a violation of the covenant to repair. But if, as the case is now presented on demurrer, we were permitted to examine the testimony adduced on this subject during the course of the trial we should be obliged, as doubtless did the learned Judge below, to come to the conclusion that there was a complete failure to show any violation of the lease in this respect.

Affirmed with costs to the appellee, above and below.

(Decided November 16th, 1904.)