Burton v. Chesapeake Box & Lumber Corp.

• Decision Date: 13 March 1950
• Docket Number: No. 3616,3616
• Citation: 190 Va. 755,57 S.E.2d 904,18 A.L.R.2d 1044
• Parties: , 18 A.L.R.2d 1044 GEORGE H. BURTON v. CHESAPEAKE BOX AND LUMBER CORPORATION, ETC. Record
• Court: Virginia Supreme Court

Page 904

57 S.E.2d 904

190 Va. 755, 18 A.L.R.2d 1044

GEORGE H. BURTON v. CHESAPEAKE BOX AND LUMBER CORPORATION, ETC.

Record No. 3616.

Supreme Court of Appeals of Virginia

March 13, 1950.

James G. Martin & Sons, for the plaintiff in error.

Savage & Lawrence and T. L. Sawyer, for the defendants in error.

JUDGE: SPRATLEY

SPRATLEY, J., delivered the opinion of the court.

This case presents for our consideration the proper construction of the terms of a lease of land. The facts are without substantial conflict, and the decision depends solely upon questions of law.

On September 15, 1943, George H. Burton, by written lease, demised unto C. L. Burroughs and R. T. Blanchard, trading as Blanchard Box & Crate Company, his building and certain furniture and fixtures therein, located on Wilson Road in South Norfolk, Virginia, for one year, beginning October 1, 1943. The lease provided that in the absence of a written notice from one of the parties of a desire to terminate it, given sixty days prior to the end of a rental year, the lease would continue from year to year.

The lease contained the following covenants and agreements:

'The parties of the second part agree to pay as rental for the above mentioned property and equipment, the sum of $112.50 per month, payable on the first day of each and every month, in advance, to the party of the first part, or to his duly appointed representative, $112.50 is to be paid upon signing of this lease, receipt of which is hereby acknowledged, and said sum is to cover the rent for the month of October, 1943.

'It is further agreed by the parties hereto, that in event that the parties of the second part shall be in default ten days in their rent, as above set forth, that the party of the first part shall at his option have the right to forthwith re-enter upon the said property and declare this lease null and void, and take possession of said property as for breach of contract, either with or without process of law.

'It is further agreed that the parties of the second part shall have issued at their expense, and maintain during the tenure of this lease a fire insurance policy in amount of $5,000.00 to indemnify the party of the first part against any and all loss sustained by fire during the tenure of lease, $4,500.00 of which shall be to cover loss on the building, and $500.00 on the office furniture and fixtures, and in event of loss, this amount shall be paid to the party of the first part.

'It is further agreed, that the parties of the second part shall have the right to alter, change, build and or repair the building and fences, that they will maintain and keep the premises in the same good condition that it was in upon their entry into, and that in the event of their terminating this lease, they will leave the premises in the same good condition that it was in when this lease was signed, that the foundation walls, and roof shall in no way be weakened or damaged.'

By agreement dated April 6, 1944 Burroughs and Blanchard, in consideration of $250 cash, contracted to sell and convey to Forest Land and Development Corporation its rights in the above lease, together with certain office furniture and fixtures, for the sum of $2,018.50. The fourth paragraph of that contract reads as follows:

'All of the right, title and interest of Vendors in and to a certain lease from George H. Burton, demising the above premises to them for a term of one year from October 1, 1943, at a monthly rental of One Hundred Twelve Dollars and Fifty Cents ($112.50) plus an amount equal to the premiums on the fire insurance on said property, which said lease is to be properly assigned to Vendee, and Vendors agree that they will pay all rental accruing thereunder prior to May 1, 1944.'

On April 24, 1944, Burroughs and Blanchard, in consideration of the sum of $2,018.50, executed a deed to the Forest Land and Development Corporation for the rights and property described in its contract above. The deed described the rights in the lease thereby assigned as follows:

'All of the right, title and interest of Vendors in, to and under that certain lease from George H. Burton, as lessor, to Vendors, as lessees, bearing date on the 15th day of September, 1943, demising to Vendors for a term of one year, beginning on the 1st day of October, 1943, and ending on the 30th day of September, 1944, the premises above referred to, situated at Wilson Road and the Norfolk Southern Railroad right of way, in the City of South Norfolk, Virginia, together with certain office furniture, fixtures and equipment described in the said lease, a copy of which said lease is hereto attached and hereby expressly made a part hereof.'

Neither the contract nor the deed was signed by either of the defendants. The lease was not attached to the deed, and other than the recital therein there was no evidence that it had been actually attached thereto. In neither instrument did the Forest Land and Development Corporation assume the obligations of the lease.

Forest Land and Development Corporation took possession of the property and conducted business under its own name and sometimes as Chesapeake Box and Lumber Company. It was recognized by plaintiff as his tenant, and as such paid plaintiff a monthly rental of $112.50 up to September 30, 1947, the date of the termination of the lease. However, while in possession of Forest Land and Development Corporation, the demised building and some of its chattels were seriously damaged by a fire on May 2, 1945. There was then no fire insurance on the property.

Chesapeake Box and Lumber Corporation, one of the defendants, as distinguished from Chesapeake Box and Lumber Company, was not chartered until 1946, and consequently it was not in possession of the premises at the time of the fire.

Burton instituted this action in assumpsit against the Chesapeake Box and Lumber Corporation and Forest Land and Development Corporation on March 23, 1948, to recover damages in the sum of $5,000 for loss occasioned by the fire. He alleged that his loss was caused by the failure of the defendants to procure fire insurance as agreed and to return the leased premises at the termination of the lease in the same condition they were in upon their entry thereon.

A jury was waived and all matters of law and fact were submitted to the court. The court, upon consideration of the law and the evidence, dismissed the action as to the Chesapeake Box and Lumber Corporation. To this ruling there is no assignment of error.

The court being further of opinion that the Forest Land and Development Corporation did not assume the obligation of the lease and that the covenant to insure the premises was a mere personal covenant of the original lessees, and not a covenant running with the land, held that the Forest Land and Development Corporation was not liable for the damage, and entered judgment accordingly.

The sole assignment of error is that the judgment of the court is contrary to the law and the evidence and plainly wrong. Four grounds are asserted in support of this assignment. The first ground is that the agreement in the lease to insure the property was a covenant running with the land. The second and third grounds are that the covenants to maintain and keep the premises in good condition, and to leave them in the same condition that they were in when the lease was signed, imposed upon the defendants the duty to repair the fire damage. Under the fourth ground, it is claimed that Forest Land and Development Corporation having accepted an assignment of the lease, the plaintiff had the right under Virginia Code, 1942 (Michie), section 5143; Code of Virginia, 1950, section 55-22, to hold it liable in the event of failure of the performance of its provisions.

In addition to the facts which we have heretofore stated, the following evidence was presented to the court:

Julius Heller, president of the corporation, testified that prior to the fire, he had not seen the lease referred to in the deed to his corporation. He said that the recital in the contract, the 'monthly rental of $112.50 plus an amount equal to the premiums of the fire insurance on said property,' was the only intimation he had about any insurance, and he was not informed until long after the fire had occurred that the original lease contained a covenant requiring the lessees to furnish an insurance policy. He declared that his corporation had not agreed, at any time, to insure the property against loss by fire. There is no evidence in the record that it assumed any of the covenants of the lease.

On July 30, 1945, Burroughs and Blanchard wrote Burton that they had sold their business, with their rights to the lease on his property, to Forest Land and Development Corporation as of May 1, 1944, and that they were therewith 'concluding any obligation of this lease at the expiration of its present term. ' That term expired on September 30, 1945.

Upon receipt of this notice, Burton prepared and submitted to the defendant a new lease to become effective on October 1, 1945. The defendant refused to enter into this lease because it contained a provision which would have required it to restore the premises to the condition they were in prior to the fire. Heller thought the new proposal was an unfair scheme or trick to impose a liability on his company which did not exist under its...