Clark & Stevens v. Gerke

The facts of this case are that the appellees are the owners of the lot of ground and premises in the city of Baltimore mentioned in the proceedings as No. 5 West Lexington street now occupied by the appellants for the purposes of their business, as merchants. On the 30th day of April, 1903, the appellees gave to the appellants an agreement to lease to the latter these premises for the period of ten years with the privilege of an extension of the term of said lease for a further period of four years at a rental of six thousand dollars per year, and on the 31st of October, 1903, accordingly executed a lease containing the stipulations and agreements provided for in the said agreement. Among the stipulations of the lease and agreement was one for the making by the appellants (lessees) of certain repairs and alterations in the premises or the building thereon which were specifically provided for and definitely described in carefully prepared specifications accompanying the lease. These specifications make no provisions for repair of the side walls of the building, and make no reference at all to these walls in that connection other than to require some underpinning at designated places in the cellar. The term of the appellants (lessees) under the lease was to begin on the first of March, 1904, at which time they were to have possession of the leased premises.

In anticipation of their occupancy of the premises, the appellants sought from the proper authorities of the city of Baltimore, a permit, as required by the ordinances of the city, for doing the repairs and making the improvements required by the stipulations of the lease. The attention of these authorities being thus drawn to the premises in question and to the condition of the building thereon they pronounced the side walls unsafe and dangerous; and after making formal inspection of the same sent on February 29th, 1904, to the owners of the building and property (appellees here) a notice, through the Inspector of Buildings, to the effect that the walls in question had been "reported to be a menace to the safety of persons or property;" and that "the said building" was "therefore condemned, and in order to insure the safety of persons and property" the owners were "directed to have the same made safe and secure immediately, as required by sec. 94, Ordinance No. 82, approved July 25th, 1902, or to be removed as per instructions of the Inspector of Buildings * * * to avoid the possibility of danger."

On the 17th of March, 1904, the appellants filed in the Court below their bill of complaint against the appellees in which, and in the exhibits therewith filed, appear the facts which have been stated, and in which it is further alleged that appellees (lessors) "did guarantee the general good condition of the improvements on said premises at the time of the making of said agreement and lease;" that the appellees had not put them (lessees) in possession of the premises under the agreement and lease but were putting "unreasonable obstacles" in the way of the appellants "carrying out the specifications and stipulations" of the lease. The bill then prayed the Court to "take jurisdiction of all the matters aforesaid" and to "specifically enforce and cause to be carried out the contract contained in said agreement and lease and specifications;" that the appellants (lessees) be, by order of Court, forthwith put in possession of the premises in question; and that the appellees be enjoined from disturbing them (the appellants) in the possession of the same; that the appellants might have the protection of the Court, in making the repairs specified in the agreement, lease and specifications and that the same be made under "the direction, control and protection of the Court;" that "the repairs or changes, not contained in said agreement, and lease and specifications, which may be lawfully required by the Inspector of Buildings of Baltimore City" might "also be made under the direction and protection" of the Court; "and the cost thereof * * be charged up in settlement against the lessors;" that the appellants might "have the benefit and protection of the adjudication of the Court" as to the settlement of the same, in set-off against the rent stipulated to be paid under said agreement and lease, in case the defendants will not or do not of their own accord, indemnify the plaintiffs (appellants) under the direction" of the Court; and that the appellants might have "other and further relief." On the same day the bill was filed the Court passed an order that a subpoena issue as prayed; that the appellants be, forthwith, put into possession of the premises in question; that an injunction issue enjoining the appellees (defendants below) from disturbing the appellants (plaintiffs below) in such possession "pending further orders or decrees" of the Court — unless cause to the contrary should be shown before April 1st, 1904.

On the 28th of March the appellees filed an answer to the bill which admitted the lease, agreement and specifications; also the receipt, prior to March 1st, 1904, of the notice from the Inspector of Buildings of the city of Baltimore which has been herein referred to. But the appellees deny that they had not put the appellant in possession of the leased premises under the lease; deny that they warranted the condition of the leased property; deny that they had put "unreasonable obstacles" in the way of the appellants "carrying out the specifications and stipulations" of the lease; and aver that the latter "were not only at liberty to make repairs and alterations, and otherwise comply with the specifications but by a covenant in the lease, were bound" to do so, and the appellees were desirous that the stipulation as to these should be carried out to place the property in a condition to produce revenue.

The answer then admits that the appellees, as owners of the property in question, were "responsible to the Inspector of Buildings in his official capacity for the condition of their property;" but denies "that under the terms of the lease they are compelled to establish such new conditions in their property as would allow the improvements and alterations to be made by" the appellants; and avers that on the contrary "by an agreement signed and sealed" by the appellants the latter agreed to save the appellees harmless which agreement is incorporated in the answer and is as follows: "Concurrent with lease of premises No. 5 W. Lexington street, of even date herewith and in consideration thereof, the undersigned lessees (appellants) therein named, as a condition precedent thereto, do hereby promise and agree that the lessors (appellees) therein named * * * are to be put to no cost, directly or indirectly, for the changes in the building recited in the lease, or the making of said changes and the lessees hereby agree to use all diligence to cause said changes to be made as speedily as possible after the 1st day of March, 1904, under penalty of forfeiture of said lease and of all interest therein, or the lessors may for want of such due diligence, cause the same to be done at the lessees' expense; all the rents and profits due and accruing before and up to the 1st day of March, 1904, to belong by right to the lessors. Witness the hands and seals of Clark Stevens, as lessees, this 31st day of October, 1903."

Subsequent to the answer there were other agreements between the parties filed in the cause which have a bearing on the questions to be determined. On the 18th of April, 1904, an agreement was filed in which after some preliminary matter which does not affect such questions it was "agreed by all the parties" that the appellants should "forthwith make actual entry" on the premises "without the hindrance of any of the parties" to the cause and "without prejudice to the rights * * * of any of the parties" thereto; "and in case it should be necessary for the making of said entry "the appellants (lessees) were to have the right" to use the power and authority of any or all of the other parties." It was then further agreed that the lessees on their part and the lessors on their part should "keep memoranda of their several claims under the exhibited agreement and lease and account with each other, and in case of a disagreement between them as to any account, or the rendering or settlement thereof, either party "might apply to the Court" in this cause to state a proper account thereof in due course."

On the same day there appears to have been passed by the Court the following order: "Upon the above bill and exhibits, answer and agreement it is this 18th day of April, 1904, ordered by the Circuit Court for Baltimore City by consent that this Court take jurisdiction in this case and retain the bill for the purpose of carrying out said agreement; and that the plaintiffs (appellants) are hereby authorized and directed to take possession of the premises number 5 West Lexington street under the terms of said agreement."

On the 27th day of May, 1904, an agreement was filed in the cause to the effect that the lessees might "make such other and further changes and repairs in the demised premises as they" might "think reasonable and convenient for their use and enjoyment of said premises over and above those mentioned in said lease — provided they should in the first place make all the repairs and changes stipulated in the lease and expend thereon the full amount specified therein — the lessees to give bond to be approved by the Court if necessary in an amount named "to secure the restoration of said premises at the end of the term of said lease, to the same condition as contemplated by the specifications (if the lessors shall then desire the said restoration); and that upon the execution of the agreement by the lessors the lessees would forthwith pay the rent stipulated monthly, according to the form of said lease, until an account should "be passed by the Court determining the respective rights of the parties as to any claim (if any) to be allowed by way of set-off or damage or cross-claims of the lessors against the lessees, or of the lessees against the lessors; as the case from time to time shall be, and in accordance with the former agreement as explained by this present agreement."

In connection with this last agreement it was further agreed that the lessees should advance the amount due from the lessors for taxes for 1903 and that such advance should be reimbursed to the lessees out of the rent in the mode indicated.

On the first day of February, 1905, the lessees filed in Court a petition in which they allege that they file with the same three accounts marked respectively "Building Account," "Tax Account" and "Rent Account," and ask that the papers in the case be referred to an auditor of the Court to state an account between the parties as to all of the matters involved in the proceedings in the case." The "Building Account" consisted of charges of contractors and architects for expenses incurred by the appellants in making repairs and alterations according to specifications accompanying the lease and in making further improvements under the authority of the subsequent agreement of the 27th of May, 1904; and also for like charges for expenses of tearing down, rebuilding and restoring the part of the building on the leased premises which the Inspector of Buildings had condemned. The Court ordered a reference of the proceedings to the auditor, who upon testimony taken before him stated two accounts on the theory contended for by the appellants (plaintiffs below). In the one designated "Account Rebuilding" the appellants were allowed as against the appellees for expenses incurred in tearing down and rebuilding the condemned building. In the other designated "Improvements" the appellants were charged with certain expenses for alterations and repairs incurred by them, under the contract for doing such contained in the lease, but not for those incurred for tearing down and restoring the condemned building.

The lessors (appellees) excepted to both of these accounts. To the "Account Rebuilding" because it charged them with the costs which have been indicated; and to the account "Improvements" because it did not charge to the lessees (appellants) such costs as well as the costs for alterations, repairs and improvements other than those for tearing down and rebuilding the part of the building on the leased premises that was condemned. The Court sustained the exceptions and dismissed the bill. The appeal is from this decree. The evidence before the auditor showed that the appellants had made the contracts and incurred the expenses indicated in their "Building Account" filed with their petition of the first of February, 1905, and as to this there is no dispute.

The foregoing recitals from the pleadings and proceedings make it apparent that at the time of the decree below the only question the Court was called upon to decide was whether the obligation to assume the cost of, and payment for the removal and rebuilding of that portion of the building on the leased premises which was condemned and ordered removed by the Inspector of Buildings devolved upon the appellants or the appellees.

At the end of all of the proceedings in the case which preceded the final decree the appellees filed in the cause a petition in which is the allegation "that there is not now at issue any question between the plaintiffs and defendants in this cause" and that the Court was without jurisdiction therein. It was accordingly prayed that the bill of complaint be dismissed. Looking to the allegations of the bill the Court undoubtedly acquired jurisdiction thereunder. The bill asked for the enforcement of the specific execution of the agreement that was the subject of controversy in the case alleging that the appellees were failing to carry it out. The question presented upon the statement of account between the parties by the auditor was made by the bill and under the peculiar circumstances of the case and in the then attitude of the parties before the Court was necessarily associated with the carrying out of the agreement.

The charter of the city of Baltimore (sec. 6) authorizes the city to provide for "the entry into and examination of all dwellings * * and buildings to ascertain their condition for health, cleanliness and safety; for the taking down and removal of buildings, walls, structures and superstructures that are or may become dangerous, or to require owners to remove them or put them into a safe and sound condition at their own expense;" and "to regulate the height, construction and inspection of all new buildings * *; and the alteration and repairs of any buildings already erected * * or to be erected." And in sec. 79 it provides that the Inspector of Buildings "shall have the supervision of the construction of all buildings erected in the said city, and shall see that the building laws relating to the construction of said buildings shall be complied with." By sec. 82 the duty is imposed upon the Inspector of Buildings "to enforce the execution of all existing or hereafter enacted building regulations and ordinances relating to the construction, alteration and removal of buildings, or other structures, walls, or parts of buildings or other structures."

It was in pursuance of ordinances enacted, and regulations prescribed, by virtue of the powers conferred in the foregoing provisions of the charter of the city of Baltimore that the inspection, condemation and order for removal of the structure upon the leased premises here in question were made, and its rebuilding was regulated. We do not understand that the existence or extent of these powers, or the propriety of the exercise of them in the circumstances appearing is called in question. No more specific reference to the powers or to the regulations in pursuance of them, needs therefore to be made. The appellees admit, as we understand them, that as between themselves and the city authorities the obligation was imposed upon them to remove the part of their structure that was condemned as dangerous and ordered to be removed or made safe; and that when the same had been removed or taken down as ordered, if they elect to rebuild, they would have had to conform to the regulations prescribed by the said authorities in doing such rebuilding.

The evidence shows that the expenses incurred by the appellants in taking down and restoring the building in question were so incurred in doing the said removing and rebuilding in conformity with such regulations. In claiming therefore to be reimbursed by the appellees for such expenses the appellants call upon the appellees to pay only what would have devolved upon them to pay if, in view of their contractual relations with the appellants and of the conditions under which the rebuilding was done, they had undertaken to remove and restore the condemned structure themselves. In support of their exceptions to the account of the auditor which charges them with the expenses incurred in the removal and rebuilding the condemned structure they insist that they are relieved of the obligation to pay such expenses by virtue of their contractual relations with the appellants — that the latter in carrying out their contract with them necessarily and legally incurred the obligation to do and pay for, the removal and rebuilding in question at their own (appellants) expense in order to secure to themselves the use of the premises for which they had obligated themselves to pay rent.

"The common law has always thrown the burden of repairs upon the tenant, though it imposes no obligation on him to make them unless he covenants to do so * * *. A covenant is never implied that a lessor will make them." Gluck v. Mayor C.C. of Balt., 81 Md. 315-326, and authorities there cited. It is also laid down in previous adjudications of this Court that "although when a lease contains no express contract of warranty that the property is or shall be fit for the purpose for which it may be rented, there is no implied warranty to that effect, and in case the property falls down in consequence of some inherent defect, the lessor is not bound to repair, and yet the lessee will be compelled to pay the rent; nevertheless the lessee will not be bound to repair in such a case, if there be a covenant to repair and to return the property in the same condition he received it, natural wear and tear excepted; provided that at the time of the loss the lessee was using the property in a reasonable and suitable manner according to the object and design of the parties when the contract was made."Hess v. Newcomer, 7 Md. 325, 337.

Such being the law, there was here no implied obligation on the part of either the lessors or lessees arising out of their relations as such to do the rebuilding which is the subject of controversy. Their respective obligations in this regard must be sought in the express covenants they have made. It is not pretended that the lessors (appellees) in this case were by the terms of their lease under express covenant to do the rebuilding which is here the subject of dispute, and the evidence in the case discloses no support of the allegation of appellants bill of a warranty by the lessors of "the general good condition of the improvements" on the leased premises. The inquiry now is, did the agreement or contract of the parties impose upon the lessees (appellants) the obligation to incur and pay the cost of removing the condemned structure and rebuilding the same?

The memorandum of agreement for a lease which preceded the formal lease after providing for the renting and the term and making reference to repairs thereinafter stipulated for contained the following provisions: "the repairs stipulated to be according to specifications and drawings of Mr. Cassell, now in the hands of the parties hereto (copy whereof to be annexed hereto, when signed); and to make the front of the house to conform with the back when finished, if not so already included in above specifiations, said specifications to be modified accordingly; this will make basement, first and second floors, complete under one roof as agreed; no other changes of a permanent character to be made without consent of the owners or their authorized agent or attorney; the cost of all the changes hereinbefore stipulated not to exceed ten thousand dollars ($10,000) is to be paid by the said Clark Stevens in consideration of the full term and privilege of renewal hereinabove specified; and the lessors are to be at no cost at all for said improvements." The specifications here referred to and which accompanied this agreement, and the lease thereafter executed, as part of the same, as has already been said, carefully described the work to be done in repairing without containing any reference at all to the defective walls; and the evidence shows that the repairs done according to these specifications cost a trifle over $10,000.

It appears therefore that the preliminary agreement between the parties and the specifications for which it provided contained no provision for repair of these defective walls. The lease refers to the memorandum of agreement as being there-unto annexed and recites that it is made in accordance with the stipulations contained in the memorandum and among other things provides that the lessees "will keep the premises in good order, and surrender the peaceable and quiet possession of the same at the expiration of the above term in as good condition as when received subject to the changes stipulated in said written memorandum, the natural wear and tear and decay of the property and unavoidable accidents excepted * * * and that whatever alterations or repairs said parties hereto of the second part shall be permitted to make and put upon said premises shall be done at their own expense; and previous to quitting said premises they will put them in the same condition in which they received them, subject to the changes stipulated in said written memorandum, unless otherwise and subsequently agreed upon by the parties hereto or their representatives, in writing; and that all improvements when made shall become the property of the lessors as fully and beneficially as if made by them at their own cost and expense." There is then this further provision "that the standard of good order and good condition for the said premises, under the terms of this lease, shall be the condition substantially of said premises when the same shall have been made to conform to the specifications and memorandum (hereunto annexed); and the tenants shall keep the said premises, with all the rights and appurtenances thereto belonging, up to that standard of good order and good condition (without this, the natural wear and tear and decay of the property and unavoidable accidents excepted)."

The foregoing provisions of the lease have been fully set out because they have been made conspicuous in the argument and briefs on both sides and are apparently regarded as having a significance to affect the question which has been defined as the one here presented for decision. It would seem to be obvious however that they can have no such effect. That question has reference to a present obligation. The covenannts in the lease which have been set out and which impose on the lessees the obligation in respect to the condition of the property leased, which is therein expressed, relate to the condition thereof at the expiration of the lease. The covenant will be gratified if the property be then surrendered to the lessors in the condition required by its terms. Its effect is not to impose a present obligation to put the property in an improved condition or a changed or particular condition but to keep and surrender it in the condition in which the lessees received it subject to its natural deterioration from "wear and tear and decay." This is the effect which the law gives to a covenant of the character of that here under consideration. Hess v. Newcomer, 7 Md. supra;Stultz v. Locke, 47 Md. 562; Middlekauff v. Smith,1 Md. 329. But more than this, the parties here by the express terms of their covenant, which were emphasized by repetition, gave to it the effect which has been expressed and which the law imputes to it.

Much significance has been attached by the appellees to the agreement incorporated in their answer and which bears date on the same day as the lease. It is not perceived that this agreement has any force to support a contention that the appellants imposed upon themselves the obligation to incur and pay the expense for the removal and rebuilding of the structure which was condemned by the city authorities. This agreement created no obligation at all as respects the parties thereto as to costs named beyond such as existed by virtue of the lease. It left the parties just where the lease and the law placed them as to their contractual obligations in this regard. As respects the lessors it only negatived any obligation on their part to incur or be chargeable with the costs referred to. As respects the lessees it imposed no new affirmative obligation in regard to such costs. These the lessees had already contracted to bear and pay; and if such contract was carried out in good faith the lessors would be protected from becoming chargeable for costs for the changes in the building, recited in the lease, or the making of said changes; and these are the only costs to which the agreement makes any reference.

The result is that in the contract of lease here in question there is no provision which imposes upon the appellants (lessees) an obligation to repair or rebuild the defective walls or structure which the city authorities condemned as heretofore mentioned. It is made evident from the proofs in the cause, documentary and otherwise, that at the time of the lease the condition of the walls in question was unknown to both parties; and in the making of the contract of lease it was not in the contemplation of the parties thereto that the condition would transpire that made it necessary to remove and rebuild these walls in order to enable the lessees to effectuate their purpose in leasing the premises. When confronted with such condition upon the attempt of the lessees to enter upon their lease, and as preparatory thereto, to undertake the alterations and repairs they had contracted to do the question under consideration for the first time presented itself in the transaction between the parties. Upon the case as it then stood the appellees filed their bill in which among other things they referred this question, which had provoked opposing contentions between the parties, to the Court.

Now under the notice from the city authorities, through the Building Inspector, to the lessors, which herein appears, in reference to removal of the building upon the leased premises or the making of the same safe, it is conceded that the obligation was imposed upon the lessors to comply therewith or be visited with the consequences of default. The lessors contend that under this notice they were obliged to remove the building but the city authorities could not require the rebuilding. Let that be conceded. Upon that assumption they had an election as to their action in the circumstances and they elected that the dangerous walls should be removed and safe walls built in their place. As to this they made no question. The only question made was whether the expense of such removal and rebuilding should be borne by themselves or the lessees. They also elected that the rebuilding should be done in such a way as to enable the lessees to carry out their contract for adding the repairs covered by the specifications which accompanied the lease. This appears from their answer to lessee's bill in which it appears, from reference thereto and recitals therefrom already made, they admit the agreement, lease and specifications as the appellants alleged these and deny that they prevented or sought to prevent the carrying out of the contract but on the contrary aver that the appellants "were not only at liberty to make repairs and alterations, and otherwise comply with the specifications;" but under their covenant "were bound so to do;" and further that "their desire has been to see the property placed in a condition where it would immediately produce revenue."

In addition to this, the answer after reciting the agreement incorporated therein which has already been set out averred "that by a fair and proper construction of this agreement the lessees are bound to make all changes and repairs in the building specified in the specifications, or otherwise; and are to conform to their covenant to deliver the premises in the same order as when received, the degree of order being defined by lease." This answer was filed under conditions from which it appeared that the appellants could not carry out the contract for doing the repairs covenanted for in their lease nor enjoy the benefits of the lease without the rebuilding of the condemned part of the structure on the leased premises under the building regulations of the city of Baltimore. Notwithstanding this, the appellees held them to the performance of their part of the contract; indicated that they required the rebuilding to be done; but raised the issue upon the pleadings whether by a fair construction of the contract between them it did not devolve upon the appellants to do the same.

With the issue thus made in the case there was filed therein on the 18th day of April, 1904, the agreement already referred to in which, as has been seen, after agreement as to certain subject-matter of allegation in the bill, the lessees were authorized to "make actual entry" upon the leased premises and thus were put in position to proceed with the carrying out of the contract. And in which it was further agreed as follows that lessees and lessors should "keep memoranda of their several claims under the exhibited agreement and lease and account with each other; and in case of a disagreement between them as to any account, or the rendering or settlement thereof, either party may apply to this Court in this cause to state a proper account thereof." The same day the order of the Court which has been recited was passed in which the Court took jurisdiction in the case "by consent" for the purpose of carrying out the agreement and directed the lessees to take possession of the leased premises "under the terms of said agreement." Then followed the agreement filed in the proceedings on the 27th of May, 1904, in which after permission given to the lessees to make such other and further changes and repairs in the demised premises as they may think reasonable and convenient for their use and enjoyment "of the same;" and providing "that upon the execution of this agreement by the lessors the lessees will forthwith pay the rent stipulated for the month of April," it is agreed that the lessees shall "continue to pay the rent stipulated monthly according to the form of the lease, until an account shall be passed by the Court determining the respective rights of the parties as to any claims (if any) to be allowed by way of set-off or damage or cross-claims of the lessors against the lessees, or of the lessees against the lessors," c., and that the lessees will advance the taxes for 1903 for the lessors.

There is significance in this agreement in its provision for the payment of the rent regularly until an account could be had as therein provided because the plaintiff's bill had asked that the repairs lawfully required by the Inspector of Buildings might be made under the protection of the Court; that an account be stated "from time to time" between the parties and that they might have the benefit of set-off on account of said repairs against the rent agreed to be paid. The agreement for advance of taxes also showed a consideration for the arrangement that was provided. Upon the face of it, in connection with the considerations referred to, this agreement bears evidence of being an accommodation between the parties pending the question of whose was the legal liability for the repairs required by the proceedings of the Inspector of Buildings; and this is strengthened by the further consideration that that was the only matter open for an account between the parties at the time.

From the state of case here presented it appears that the appellees (lessors) exacted of the appellants (lessees) the removal and rebuilding of the condemned part of the leased premises upon the claim that the obligation to do this resulted from the contractual relations between them; that the appellants were compelled to do such rebuilding in order to avoid delay and complication in securing the benefit of their contract with the appellees; that they however did the same protesting against their liability therefor, and in seeking the relief prayed for by their bill in this case, among other things, they referred the question raised by the appellees, in the regard mentioned, to the Court, and invoked its jurisdiction to determine the same; that the Court, by its express order, on consent of parties, retained jurisdiction over such question; and that in this the appellees acquiesced as shown by the agreements of the 19th of April and 27th of May, 1904, and upon the considerations appearing in those agreements.

We have seen that there was no obligation implied by law or created by contract requiring the appellants to do the repairs and rebuilding here in dispute and it has been argued that in doing the same they were in the position of volunteers and so disentitled to recover the claim they here make on that ground. Under the circumstances here appearing in would seem to be clear that the appellants are not in the position of volunteers. They are rather in the position, in effect, of having incurred the expenses in dispute at the request of the appellees and the liability of the parties ought to be determined accordingly.

The allowance by the auditor of the expenses incurred by the appellants as against the appellees in doing the removal and rebuilding in question, including employment of contractors and architects, made necessary and proper in the case, in complying with the municipal building regulations, was proper; but beyond this the allowance ought not to go. Things done at the discretion of the appellants, if done without previous consultation with the appellees or their agent, or their subsequent ratification, are not proper to be allowed. For that reason the allowance for fire shutters in the auditor's account in question seems not to be a proper allowance as the testimony shows that these were not required by the building regulations; but, as expressed in the testimony were supplied as "a matter of insurance."

The decree of the Court below will be reversed and the cuuse be remanded to be proceeded with in accordance with the views of this Court.

Decree reversed with costs to the appellants and causeremanded for proceedings in conformity with the opinion of thisCourt.