Adams, Harkness & Hill, Inc. v. Northeast Realty Corp.

• Decision Date: 07 April 1972
• Parties: , 54 A.L.R.3d 673 ADAMS, HARKNESS & HILL, INC., et al. v. NORTHEAST REALTY CORPORATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 262

281 N.E.2d 262

361 Mass. 552, 54 A.L.R.3d 673

ADAMS, HARKNESS & HILL, INC., et al. v. NORTHEAST REALTY CORPORATION.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Jan. 11, 1972.

Decided April 7, 1972.

Leslie H. Rudnick, Boston (Jordan L. Ring, Boston, with him), for defendant.

Daniel H. Kelleher, Boston, for plaintiffs.

Before TAURO, C.J., and CUTTER, QUIRICO and HENNESSEY, JJ.

HENNESSEY, Justice.

This bill for declaratory relief was brought by the lessee, Adams, Harkness & Hill, Inc. (Harkness), against the lessor, Northeast Realty Corporation (Northeast), to determine the rights of the parties under a written lease dated July 3, 1967. Northeast appeals from a final decree declaring that it is not entitled to recover any rent from Harkness under the lease and permanently enjoining it from commencing any new actions for rent under the lease. We have before us a report of material facts and a transcript of the evidence.

The facts are here set forth. On July 3, 1967, Northeast entered into a written lease with Weston W. Adams & Co., a limited partnership engaged in the stock brokerage business. The lease was for a term of five years commencing on September 1, 1967, and related to certain office space in a building located in Boston. The annual rental of $12,690 was payable in equal monthly amounts of $1,057.50. The terms of the lease provided that the demised premises were 'to be used solely and continuously as a stock brokerage office.' It also stated that '(t)he Lessee further covenants and agrees with the Lessor that, during this Lease and for such further time as the Lessee shall hold the demised premises or any part thereof, the Lessee . . . will not assign this Lease nor underlet the whole or any part of the demised premises without first obtaining on each occasion the written consent of the Lessor, which consent the Lessor will not unreasonably withhold.'

In late 1968, Weston W. Adams & Co. and Harkness & Hill, Inc., merged under a plan of reorganization whereby the latter changed its name to Adams, Harkness & Hill, Inc., and acquired the partnership assets and assumed the liabilities of Weston W. Adams & Co., including 'as an organizational expense to the corporation, any expense of terminating the presently effective lease.' By letter dated January 14, 1969, Harkness notified Northeast of the merger and stated that it would shortly submit to Northeast for its approval a subtenant for the premises covered by the lease. From January, 1969, to August of that year Northeast accepted rent payments due under the lease from Harkness and from May to August of that year Northeast addressed all rent bills to Harkness.

On April 14, 1969, Harkness submitted the name of Reclamations Systems, Inc., to Northeast for approval as subtenant. By letter dated April 25, 1969, Northeast informed Harkness that it would not accept the proposed subtenant because 'your space is to be used solely and continuously as a stockbroker's office.' Subsequently, Harkness submitted for approval the name of Mann & Company (Mann), a stockbrokerage house registered in Massachusetts. Northeast responded by requesting Harkness to submit a complete financial statement of Mann in order to assist Northeast in determining whether the proposed subtenant would be able to meet the rental obligations. Harkness then forwarded a statement which showed that Mann had a profit for the month of January of $18,945.26 and a net worth in excess of $120,000 as of January 31, 1969. Also, in May and June, 1969, Harkness had assured Northeast that it would agree to be responsible for the payment of rent if Mann was accepted as the subtenant. Nevertheless, Northeast refused to accept Mann and informed Harkness on August 20, 1969, that in Northeast's opinion Mann was not financially qualified. Thereafter, Harkness vacated the premises and notified Northeast that its action in rejecting the proposed subtenant was a breach of the lease.

Northeast brought an action against Harkness in the Municipal Court of the City of Boston to recover the rent due under the lease for the month of September. The Municipal Court judge entered detailed subsidiary findings in which he found, among other things, that Mann was not of adequate financial means and that Northeast did not unreasonably withhold its assent to allowing Mann to occupy the premises as a subtenant. Consequently, he awarded Northeast the rent for September. On motion of Harkness and pursuant to G.L. c. 231, §§ 104, 102C, both as amended, the case was removed to the Superior Court for a trial de novo. However, before any trial was had in the matter, Harkness brought this present bill in equity seeking a declaration of its rights under the lease. The Superior Court judge found, among other things, that Northeast was arbitrary and unreasonable in its refusal to accept Mann as a subtenant and declared that Northeast was not entitled to recover any rent under the lease from Harkness. In so concluding, the judge excluded the detailed subsidiary findings of the Municipal Court judge, 'nothing only that the decision of the lower court was in a specified amount and was in favor of Northeast.'

1. Northeast argues that the findings of the Municipal Court judge were conclusive and...