Kennerly v. B. F. Avery & Sons Plow Co. , 300 S.W. 159 ( 1927 )

The record in this case discloses that the court, among other things, finds, in substance, that a valid lease contract was made creating the relation of landlord and tenant between the appellants and appellee, at which time Alex Davidson held a valid lien against the leased premises, and of which the appellants knew.

Suit was instituted by Davidson on his lien, judgment against the appellants in this case was had in that suit, and order of sale was issued on said judgment, directing the sale of the property and that the purchaser be put in possession thereof, and, in obedience to the order of sale issued by the court on the judgment, the property was sold at public sale, and Alex Davidson became the purchaser and received a sheriff's deed thereto; that he refused to recognize the lease made to the appellee by appellants, and immediately demanded of appellee possession of the premises; that appellee yielded possession, upon the demand of Davidson, solely because it believed he had the paramount title to the property and was entitled to possession thereof. The appellee was in possession of the property at all times during the foreclosure proceedings and the sale thereunder, out was not a party to the suit.

Do these facts show such an eviction of appellee as authorized it to maintain a suit against the appellants for breach of the implied covenant in the lease contract for quiet enjoyment? Tiffany on Landlord and Tenant (volume 2, par. 186) says:

"An eviction under title paramount occurs when the tenant is deprived of possession by one having a right to such possession not derived from the tenant himself, which takes precedence of the rights of the tenant under the lease. * * * For instance, if the tenant under the lease is dispossessed by one claiming under a valid prior lease made by the same lessor, there is an eviction by title paramount, and there is likewise such an eviction if the tenant is dispossessed by one claiming under a mortgage or other lien created by the landlord before the making of the lease, as when it is by a mortgagee having the legal title, with a right of possession thereunder or by purchase at foreclosure sale. * * * For the purpose of an eviction by title paramount, the tenant may be dispossessed under legal proceedings on the part of the holder of such title, or he may, it seems, be dispossessed by the latter by force exerted directly by himself or his servants without any judicial authority, as when the owner of the paramount title renders the premises untenable by removing part of a structure thereon. But it is not necessary that the tenant be dispossessed by legal proceedings, or by the exercise of force on the part of the holder of the superior title, it being sufficient that upon demand by the holder of the paramount title, the tenant yields possession to him."

Underhill on Landlord and Tenant (volume 2, par. 692) says:

"The tenant is not bound to continue in possession of the premises until the judgment in the action of eviction and an actual expulsion by legal process. He need not submit himself to the trouble, inconvenience, and expense of litigation, to defend his landlord's title, but he may quietly yield possession to him who has or claims he has title paramount to that of the landlord. * * * To constitute an eviction where it is based on a paramount title, there must be either an entry or an ouster of the tenant under or by virtue of the title, or, if he is convinced of the hopelessness of his condition, he must surrender possession and justify his action in doing so as against the landlord. When he learns that a judgment has been rendered in a court of law, he need not wait to be forcibly ousted, but may voluntarily acquiesce in the judgment and obey it."

In Andrews v. Richardson, 21 Tex. 287, in speaking of the rights of a purchaser under execution sale, this language is used:

"Until the sale was avoided at the instance of the defendants, the plaintiff, as the purchaser, was entitled to recover the possession. He might have brought his action against the tenant in possession, but it would seem the tenant was not obliged to defend against the title of the true owner, but might attorn to him."

See, also, Camley v. Stanfield, 10 Tex. 546, 60 Am.Dec. 219; Hartzog et al. v. Seeger Coal Co. (Tex.Civ.App.) 163 S.W. 1055.

In Texas Land Co. v. Turman, 53 Tex. 619, the court says:

"The practical effect, however, of Camley v. Stanfield, is to permit a tenant holding over to defend his possession by showing that subsequent to the lease he purchased his landlord's title under execution sale, and thus indirectly, in such case, to raise the question of title. 10 Tex. 546 [60 Am.Dec. 219]. Subsequent decisions of this court have recognized this doctrine, and it has further been held that the tenant in possession may lawfully attorn to a third party, who had purchased at execution sale the title of the landlord. Andrews v. Richardson, 21 Tex. 297; Gallagher v. Bennett, 38 Tex. 295."

The Supreme Court of the United States, in Merryman v. Bourne et al., 9 Wall. 592, 19 L. Ed. 683, says:

"If the tenant be evicted, he may take a new lease from the party evicting him. It has been held that, if threatened with suit upon a paramount title, the threat, under such circumstances, is equivalent to eviction. He may thereupon submit in good faith, and attorn to the party holding a valid title, to avoid litigation. In such case it is incumbent upon him, and those who have profited by his submission, to show the existence and superiority of the title in question [citing authorities]. * * * In the case under consideration, Woodworth had recovered upon the adverse title against a part of those in possession, and threatened suit against the others. They yielded, to avoid the inevitable adverse consequences of a contest. This they had a right to do."

Under these authorities, if a tenant should attorn to a party acquiring a title paramount to that of the landlord, at an execution sale, and the landlord should sue such tenant, for rent or for possession of the premises, the tenant would be charged with the burden of showing that the title to which he had attorned, and under which he held possession, was superior to the title of the landlord, and also that he acted in good faith. If he succeeded in establishing this, the landlord could not recover possession of the premises and evict the tenant, nor collect the rents, because the purchaser at a valid execution sale acquires the paramount title, and all of the possessory rights which follow a valid title. If the tenant is permitted to defend against the landlord's claim for possession or rent by urging the paramount title of a purchaser in execution sale against his landlord, without being evicted by force or by ejectment against him, in my opinion he is entitled to assert a cause of action against his landlord for a breach of the lease contract, based on an eviction by a paramount title acquired by purchaser at execution sale, though the tenant was not a party to such suit, and no action had been instituted against him to evict him.

In this case, the appellee pleaded that he had been evicted by a paramount title to that held by his landlord, and the appellants answered by general denial. This presented to the court, for his determination, the isue as to whether Alex Davidson had acquired the paramount title, and this issue the court decided in favor of appellee. Neither the superiority of the title of Alex Davidson to appellee's landlord, nor the good faith of appellee in yielding possession to the paramount title, is questioned.

The appellee had the right to retain possession of the premises until ousted by suit against it for possession; but, under this record, the result of such suit is certain, and it is fair to conclude, as did the trial court, that it yielded "to avoid the inevitable adverse consequences of a contest." It had the right to pay off the lien held by Davidson, aggregating the sum of $109,757.34, and regain the entire property of the appellants, a part of which it was renting for $200 per month. However, it was not required, in my judgment, to exercise either of such rights before it could maintain a suit against the appellants for the breach of the lease contract, and the general demurrer urged to appellee's petition was correctly overruled.

Article 5237, R. O. S. 1925, prohibits a tenant from leasing, subletting, or assigning his lease without the written consent of his landlord. This would prohibit the tenant from selling his lease on the market without such written consent, and hence the lease could have no market value, for which reason the market value could not be the measure of appellee's damages.

"Market values are created and controlled by the condition of the market with reference to supply and demand. So market value is ordinarily arrived at by conclusions deduced from transactions in commodities or property of the same or like character. But such transactions must occur under ordinary and normal conditions in the market, generally in open market, on fair competition, for cash, or on such time and terms as would be equivalent to cash, unaffected by elements which enter into transactions made outside the usual course of business, irrespective of peculiar circumstances." 38 C. J. p. 1262, par. 18.

Inasmuch as the appellee could not sell his lease without the consent of his landlord, such a sale or transaction would not occur under ordinary normal conditions, in an open market, on fair competition, "unaffected by elements which enter into transactions made outside the usual course of business." Speaking of the sale of a lease under execution of certain premises on the market, the Supreme Court, in Moser et al. v. Tucker et al., 87 Tex. 94, 26 S.W. 1044, says:

"It would not bring a fair price, and competitive bidding would be practically cut off by consent of the landlord that some particular bidder might take and hold under assignment so made, while the same right was denied to all other persons who might desire to purchase."

In Steger et al. v. Barrett, 58 Tex. Civ. App. 331, 124 S.W. 174, in which a writ of error was denied, it is said:

"The lease contract in evidence expressly provided that the leasehold should not be assigned or sublet. As a matter of law, a leasehold cannot be sold without the consent of the landlord, and consequently has no market value."

"Appellant's measure of damages, if any, was not the expense of performing his contract, but the profits, if any, which he would have realized therefrom. Orange Hotel Co. v. Townsend, 62 Tex. Civ. App. 1,130 S.W. 701; 8 Rawle C. L. 454, § 24. ``The measure of damages in case of a breach of a contract is the amount which will compensate the injured person for the loss which a fulfillment of the contract would have prevented or the breach of it entailed.' 17 Corpus Juris, 847, § 168. But he is not entitled to recover more by reason of the breach than he would have made by a performance of the contract. Id." Minney v. Scharbauer (Tex.Civ.App.) 286 S.W. 557.

In the case at bar, the statute inhibited the sale of the leasehold estate of the appellee without the consent of the appellants, and hence it could have no such market value as would be the measure of appellee's damages, and hence I concur in the opinion of Associate Justice RANDOLPH.