Funk v. Funk

BAKES, Chief Justice,

dissenting:

I must dissent from the majority’s decision to rewrite the lease provision in question. The lessee’s right to assign or sublease the premises was unambiguous and unconditional in its requirement that the lessor consent. For the members of this Court to inject a new requirement that “the consent of the lessor may not be unreasonably withheld” is in effect to say that this Court may at any time disregard the intentions of the parties as expressed in their unambiguous agreement and rewrite the contract because a majority of this Court is of the opinion that it should be altered. The action of the majority constitutes not only a severe encroachment upon the right of persons to freely contract and to maintain control over their own property, but is also a serious intrusion into the province of the legislature.

In support of its action, the majority adopts a minority rule which it implies is the trend of the future. However, the majority’s own citations manifest no such trend. Clearly, in the last year jurisdictions have split on the issue. Compare B & R Oil Co., Inc. v. Ray’s Mobile Homes, Inc., 422 A.2d 1267 (Vt.1980) (permitting arbitrary refusal of consent) with Warmack v. Merchants Nat. Bank of Fort Smith, 612 S.W.2d 733 (Ark.1981) (prohibiting unreasonable withholding of consent). The majority cites only three states which have adopted the majority rule. However, there are at least five other recent cases not cited by the majority which in some manner either recognize the continuing validity or apply the majority rule. Carleno v. Vollmert Tire Co., 36 Colo.App. 446, 540 P.2d 1149, 1151 (1975); Robinson v. Weitz, 171 Conn. 545, 370 A.2d 1066, 1068 (1976); Kruger v. Page Management Co., 105 Misc.2d 14, 432 N.Y.S.2d 295, 300 (1980) (recognizing rule absent applicability of statute governing residential leases); Herlou Card Shop, Inc. v. Prudential Ins. Co. of America, 73 A.D.2d 562, 422 N.Y.S.2d 708 (1979). See also Dutch Inns of America, Inc. v. United Virginia Leasing Corp., 134 Ga.App. 525, 215 S.E.2d 290, 291 (1975); Moritz v. S & H Shopping Centers, 197 Neb. 206, 247 N.W.2d 454, 456 (1976) (both cases applying the rule that lessee has no authority to assign the lease without consent of the lessor, but not addressing issue of unreasonable withholding of consent). Including the majority’s citation to Food Pantry v. Waikiki Business Plaza, Inc., 58 Hawaii 606, 575 P.2d 869 (1978), it appears that even in recent years the majority rule of allowing freedom in contracting continues to far'outdistance the minority view.

More important than numbers, however, are the reasons behind the rules. The majority opinion states that “the minority position [is] based on more solid policy rationale than is the traditional orthodox majority’s position,” and that “no desirable public policy is served by upholding a landlord’s arbitrary refusal to consent.” I disagree. Upholding contracts and deeds voluntarily entered into between two parties is certainly a “desirable public policy.” We said so unanimously in Mollendorf v. Derry, 95 Idaho 1, 501 P.2d 199 (1972). “The policy of the law is not to defeat a grantor’s intent.” 95 Idaho at 3, 501 P.2d 199.

The rationale behind the majority rule is supported by several basic concepts of property law.

“The reasons expressed in support of this rule are that, since the lessor has exercised a personal choice in the selection of a tenant for a definite term and has expressly provided that no substitute shall be acceptable without his written consent, no obligation rests upon him to look to anyone but the lessee for his rent .. .; that a lease is a conveyance of an interest in real property and, when a lessor has delivered the premises to his lessee, the latter is bound to him by privity of estate as well as by privity of contract . . .; that a lessor’s right to reenter the premises upon lessee’s default or abandonment thereof is at the lessor’s option and not the lessee’s .. .; and that a lessee’s unilateral action in abandoning leased premises, unless accepted by his lessor, does not terminate the lease or forfeit the estate conveyed thereby, nor the lessee’s right to use and possess the leased premises and, by the same token, his obligation to pay the rent due therefor.” Gruman v. Investors Diversified Services, 247 Minn. 502, 78 N.W.2d 377, 380 (1956) (citations omitted, emphasis in original).

The reasons given in the Gruman case are supported by the fundamental principle that the owner of property may transfer as much or as little control over his property as he sees fit. Freedom of ownership and control over one’s own property forms the very basis of our social system. If that is to change, the proper forum for such changes is the legislature and not this Court.

The unsettling nature of the majority opinion is magnified when one realizes that the effect of the decision is to potentially subject every denial of consent to litigation and approval by a judge. Rather than the lessor being sure of his right to control his property by retaining an unrestricted right to deny consent to assign or sublease, by its decision today this Court has destroyed that right and vested in the courts the power to determine what the lessor should have intended and award control of the property based upon that determination. Certainly, as evidenced by this case, the parties will rarely agree on what is reasonable under particular circumstances. Is there any assurance that judges will be unified in their opinions on what is reasonable? The only assurance to be gained by the rule adopted by the majority today is that the parties’ attempt to write their lease to avoid litigation will be frustrated. Had the parties wished or bargained to place a question mark on the lessor’s right to withhold consent, they would have provided in the agreement that consent would not be arbitrarily or unreasonably withheld. See An-not., 54 A.L.R.3d 681 (1973). This Court should not foist that uncertainty off on them.

It is not clear from the majority opinion whether lessors in the future will have the right to contract for “an absolute right to withhold consent.” The Restatement (Second) of Property, § 15.2, and Warmack v. Merchants Nat. Bank of Fort Smith, supra, the most recent case cited by the majority in support of its position, both so provide when they state: “The landlord’s consent to an alienation by the tenant cannot be withheld unreasonably, unless a freely negotiated provision in the lease gives the landlord an absolute right to withhold consent.” The broad language of the majority opinion suggests that even that provision would violate its “public policy.” The Court’s decision today will no doubt disrupt, dislocate and confuse thousands of existing contractual leasehold relationships which have provisions limiting the right to assign the lessee’s interest.

When a court injects a new requirement that “the consent of the lessor may not be unreasonably withheld,” as the majority has done in this case, it not only constitutes an interference with the right of persons to freely contract, but also interferes with the traditional rules for conveyancing real property. If, as the majority holds, it is against public policy for a lessor to provide in his lease that the lessee cannot assign his interest without the lessor’s consent which may be denied for any reasons the lessor may give, including those which the majority concludes are arbitrary, the effect of such a rule is to modify the nature of the estate conveyed by the lessor. One wonders what the majority of this Court will do when faced with the conveyance of a fee conditional, the condition being an event which the majority might conclude is arbitrary or unreasonable. As an example, it is not uncommon for a benefactor to convey real property to a city in fee conditional, the condition being that the property be used perpetually for a park to be named after the benefactor, e. g., In re Hart’s Estate, 151 Cal.App. 271, 311 P.2d 605 (1957), and in the event that any part of the park is not used for that purpose then the property reverts to the heirs of the benefactor. If this Court, as it has done today, can modify the conditions of a grant of a lease, then it is only a short step to stating that it can also modify the terms of a grant of a fee conditional estate. The decision of the Court today will have a tremendously unsettling effect not only upon the conveyancing of real property but also upon the execution of contracts in this state. It is for this reason that the court in Gruman v. Investors Diversified Services, supra, in deciding to adhere to the majority rule, stated:

“[W]e are motivated by the fact that the language of the assignment provision is clear and unambiguous and that many leases now in effect covering a substantial amount of real property and creating valuable property rights were carefully prepared by competent counsel in reliance upon the majority viewpoint. It would seem clear from the language adopted in all such cases that the lessors therein are entitled to place full reliance upon the responsibility of their respective lessees for the rentals they have contracted to pay. Should a lessee desirp the right to assign or sublet to a suitable tenant, a clause might readily be inserted in the lease similar to those now included in many leases to the effect that the lessor’s written consent to the assignment or subletting of the leased premises should not be unreasonably withheld. There being no clause in the present lease to such effect, we are compelled to give its terms their full force and effect as have the courts of a majority of other jurisdictions.” 78 N.W.2d at 381-82.

I would vote to carry out the contract as the parties negotiated it, and not as the majority of this Court thinks they should have negotiated it.