Branner v. Kaplan ( 1924 )

Prentis, J.,

delivered the opinion of the court.

The plaintiffs in error, Branner & Company, hereinafter called the vendors, complain of a judgment for $400.00 against them in favor of defendants in error, hereinafter called the vendees.

The pertinent facts appear to be these: The vendors were the proprietors of a business conducted on property leased from the Virginian Railway Company, and agreed to sell it to the vendees for the consideration of $400.00 cash, $4,400.00 for lockers installed on the second floor of the leased building, and the business conducted therein at its inventory value, the vendees to pay a rental of $400.00 a month in advance, and the vendors to give a lease of the property in which such business was conducted for four' years and six months from November, 1921, the rent to begin December 1, 1921. The lease from the railway company contained a clause forbidding the subrenting of the property without written permission from the railway company; and it was agreed that their contract was subject to the company’s approval of the assignment of the lease, and that in the event that this consent could not be obtained the $400.00 paid should be returned to the vendees. It was testified to and not denied that the original lease from the railway company was not exhibited to the vendees.

The original contract between these litigants of November 12, 1921, contained this provision: “It is further agreed that the parties of the first part will give the parties of the second part a lease for four years and six months from November 18, 1921, and rent to start December 1, 1921.” A more formal contract, dated November 17, 1921, was drawn by the attorneys of the vendors and substituted for the original. This substituted contract contained this provision: “It is further understood and agreed that the said G. R. Branner & Company are to lease the said building, or so much thereof as is now utilized by them, to the said Kaplan and Schiff for the term of four years and six months, commencing on the 18th day of November, 1921.”

When the time came for settlement of the second cash payment, $2,400.00, dne thereunder November 30, 1921, the vendees declined to comply with the contract unless the vendors would expressly agree that they might sell on the premises sandwiches known as “frankfurters,” but the vendors refused to embody this in the agreement, and said they were only selling them the business as conducted by C. R. Branner & Company; that they had sold sandwiches from the place and the plaintiffs might be able to do so. However, they would not put in the agreement that they could do this as they might not be allowed to do so. The reason for this is made perfectly apparent by reference to the original lease from the railway company, for it is there expressly provided that the tenant can only use the property for conducting a “drug store,- ship supply store, and lockers over the store.” The vendees then failed or refused to comply with the contract. As the probable explanation of this failure to consummate th¿ agreement, it is shown that a profitable part of the business there conducted was the renting of lockers to the énlisted men of the United States Navy, who were stationed at the Naval Base in the immediate vicinity, ' and that about that time the number of men stationed there was greatly reduced, so that lockers, the aggregate rentals of which had theretofore been about $450.00 per month, did not thereafter aggregate more than half that amount.

This litigation ensued by notice of motion of the vendees to recover of the vendors the $400.00 which had been paid in cash at the inception of the agreement. There was a jury trial, a verdict in favor of the vendors, which the trial court set aside and entered judgment for the $400.00 in favor of the vendees, and to this judgment a writ of error has been allowed.

The vendors assign three errors — that is, the judgment of the court in setting aside the verdict and entering judgment for the vendees, the granting of an instruction upon the motion of the vendees, and the refusal to grant an instruction offered by the vendors; but each of these assignments presents substantially the same question. That question is, whether the vendors have a right to retain the $400.00 paid on account, as damages for breach of the contract by the vendees, or whether the vendees have the right to recover it, as the trial court held.

It may be assumed that if the vendors were ready, able and willing to comply with their contract, and the refusal of the vendees was without justification or excuse, the judgment complained of is erroneous; while, on the other hand, if the vendors were in fault or unable to comply with their agreement, the vendees are entitled to recover, and the judgment is without error.

This leads us to the written contracts, and to observe that the duty of construing these contracts, under the issues presented, rests with the court and not with the jury.

That both of these written contracts expressly provide for a general renting of the premises to the vendees, without condition or restriction, except that the assent of the Virginian Railway Company to the assignment of the lease was to bé obtained, is manifest from the language used therein which has been herein-before quoted.

The customary legal rules for construing contracts .apply. This is said in 5 Elliott on Contracts, section 4662: “Unless restricted by the terms of the lease, a tenant may use the premises for any lawful purpose consistent with the character of the premises, and not amounting to waste.”

In 16 R. C. L. 556, section 26, this is stated: “The terms of a lease are of course governed by the provisions of the agreement, and where specific terms are not provided for by the agreement, the lease is to contain what is termed the usual and only the usual provisions.” So that, as we construe these contracts, the vendors were under obligation to assure to the vendees an assignment of a lease, for a definite term, with no restriction whatever as to the use of the premises, except such as are implied by law. This, then, requires a consideration of the original lease from the Virginian Railway Company to the vendors, for that is the only lease which they held themselves ready to assign.

When we read that lease, we find a number of restrictions, but it is only necessary to consider two of them. One of these reads thus: “The party of the second part agrees to use the above-described land for the following purposes only: Drug store, ship supply store; and lockers over the stores.” Another provides that should the party of the first part (the railway company) during the said five year term of this lease, or any yearly renewal period, require the said property, or any part thereof, for railroad purposes, it shall, upon four months’ notice in writing to the party of the second part, have the right to cancel this lease and take possession of said property, without any liability for damages to the party of the second part.”

The provisions of the contract for the sale of the business and the assignment of the lease for the premises on which it was conducted are interdependent and indivisible.^ The language of the agreement of .the vendors certainly purports to give an unrestricted lease of the property for a specified term, and it seems clear that they have no right to claim the benefit of this contract, or damages for its breach, unless they were themselves prepared to comply with it. When they came into court with their defense to the action of the vendees, they exhibited their lease from the Virginian Railway Company, which clearly demonstrated that at no time were they ever in a position to comply with their own contract, and all that' they were at any time able to do, or can be considered as having offered to do, was to assign a lease, by the terms of which the use of the property was greatly restricted, and which could be terminated by the owner after four months’ notice.-

The trial court gave the jury an instruction which reads thus: “The court instructs the jury that if you believe from the evidence that, by a written agreement entered into between the plaintiffs and the defendants, the plaintiffs agreed to buy from the defendants, for the price and upon the terms and conditions set out in said agreement, the business conducted by the defendants at Pine Beach, in Norfolk county, Virginia, including a lease for four and one-half years for the premises wherein said business was conducted; that the plaintiffs paid to the defendants the sum of $400.00 on account of the aggregate purchase price of said business and lease, which lease was to be free from all restrictions, that the defendants refused, or were unable, .to give the plaintiffs a lease-on the above premises.free from restrictions, then the plaintiffs had the right to rescind this agreement and to recover back from the defendants the amount paid, as aforesaid; and if the plaintiffs did rescind said agreement, and the defendants retained the money paid them, as aforesaid, by the plaintiffs, then you must find for the plaintiffs.”

This instruction properly construed these contracts, and the jury were thereby told that the plaintiffs were entitled to recover, unless the defendants were able to assign them a lease free from restriction. As it is shown by the evidence that the vendees were never in a position to do this, it is manifest that the jury failed to obey this instruction when they found a verdict in favor of the defendants.

The contrary view, which is relied upon by the vendors, is indicated by this instruction, which was refused: “The court instructs the jury that if you believe from the evidence that the plaintiffs entered into a contract to purchase the defendants’ business, and that they knew what kind of business they could and could not carry on at the time of the signing of the second contract, and they knew what restrictions were in the lease, then you must find for the defendants.”

The court properly refused this instruction, because there is no evidence upon which the jury could have concluded that the vendees ever had any such knowledge, or that they were ever bound by anything except the written contracts to which we have, referred, and it is shown that they never saw the original lease until it was introduced in evidence by the vendors. These contracts for sale of the business and for the assignment of a lease, without any restrictions expressed in such contracts, bind both parties, and control the determination of the issues here presented.

In Scott v. Albemarle Horse Show, 128 Va. 517, 104 S. E. 842, a suit for specific performance, it was held that where the contract for the sale of land calls for a deed with general warranty and covenants of title, knowledge by the vendee of the existence of onerous building restrictions in the deed under which the vendor holds, will not bar the vendee from setting up such restrictions as a defense in a suit for specific performance by the vendor. Many cases are there carefully reviewed, and the principle applied to that contract applies to this.

Our conclusion accords with that of the trial judge, namely, that, as the vendors show by their own evidence that they were never able to comply with their contract to assure to the vendees an unrestricted lease of the property for the term specified, therefore they have no right to retain the amount received by them as damages for violation of a contract which they themselves were never able on their part to perform.

Affirmed.