Manifold v. Schuster ( 1990 )

I respectfully dissent. In applying the Statute of Frauds to the oral agreement of the parties, the trial court found in essence that appellants were mere tenants at will, subject to removal at the appellee's whim. As stated by the Supreme Court of North Carolina in Kent v. Humphries (1981), 303 N.C. 675,281 S.E.2d 43, "it seems patently unfair to us that a tenant who takes under a lease void by operation of the statute of frauds, but who then pays rent as it comes due periodically, should have only the barest of legal rights as a tenant at will." I agree. Most modern authorities would find a periodic tenancy where entry is made under a lease void by the statute of frauds when the tenant tenders and a landlord accepts rental payments without objection.

The Restatement of Law 2d, Property (1976), Section 2.3, Effect of an Invalid Lease, provides:

"A lease made invalid by the statute of frauds will be given no effect unless:

"(1) possession is taken, in which case a tenancy at will is created;

"(2) possession is taken and rent is paid and accepted as provided under the lease, in which case, without more, a periodic tenancy is created with all the terms of the lease except duration; or

"(3) the parties to the lease undertake substantial performances which are clearly referable to the terms of the lease, in which case the lease is given full effect."

While not in full accord with the Restatement, the Ohio Supreme Court in Lithograph Bldg. Co. v. Watt (1917), 96 Ohio St. 74,88, 117 N.E. 25, 29, held that "[p]ossession taken and rent paid under a parol lease for years creates a tenancy from year to year." See, also, Moore v. Harter (1902), 67 Ohio St. 250,255, 65 N.E. 883, 885, and Wineburgh v. Toledo Corp. (1932),125 Ohio St. 219, 222, 181 N.E. 20, 21. I am aware of the holding in Walnut Hills Investment Corp. v. Goodman (1958),109 Ohio App. 106, 10 O.O.2d 266, 163 N.E.2d 801, stating that such a situation creates a tenancy at will. However, I would not adopt its holding, finding the earlier cases to be controlling and the Restatement's position to be more persuasive.

It is clear in this case that appellants took possession of the house and farmland under an oral agreement for three years, notwithstanding the fact that house rental was due in monthly installments. Rental payments for both the house and the farmland were tendered and accepted. Appellants erected a greenhouse with appellee's knowledge and consent. Appellants planted their 1988 wheat crop prior to receiving notice that the farmland had been rented to someone else.

Under these circumstances neither the statute of conveyances nor the statute of frauds should be applied to the effect that a tenancy at will is created. Under the circumstances of this case and the holding in Lithograph, supra, a periodic tenancy was created. The period of the tenancy is determined by the interval between rental payments. Since the proceeds from farming on the halves were paid on an annual basis, I would hold that the tenancy was from year to year. It makes no legal or economic sense to find that the farmland was leased on a month-to-month basis, notwithstanding monthly payments for the residence.

Accordingly, judgment in favor of plaintiff-appellee was error as a matter of law and should be reversed.