Dixie Fire & Cas. Co. v. Esso Standard Oil Co., 696

• Decision Date: 23 July 1965
• Docket Number: No. 696,696
• Citation: 265 N.C. 121,143 S.E.2d 279
• Court: North Carolina Supreme Court
• Parties: The DIXIE FIRE & CASUALTY COMPANY, Plaintiff, v. ESSO STANDARD OIL COMPANY, Standard Oil Company of New Jersey, Humble Oil and Refining Company, and Esso Division of Humble Oil & Refining Company, Original Defendants, and Julian F. Head, Additional Defendant.

Page 279

143 S.E.2d 279

265 N.C. 121

The DIXIE FIRE & CASUALTY COMPANY, Plaintiff, v. ESSO STANDARD OIL COMPANY, Standard Oil Company of New Jersey, Humble Oil and Refining Company, and Esso Division of Humble Oil & Refining Company, Original Defendants, and Julian F. Head, Additional Defendant.

No. 696.

Supreme Court of North Carolina.

July 23, 1965.

Jordan, Wright, Henson & Nichols, and Karl N. Hill, Jr., Greensboro, for plaintiff.

Smith, Moore, Smith, Schell & Hunter, and Richmond G. Bernhardt, Jr., Greensboro, for original defendant appellees.

MOORE, Justice.

Plaintiff assigns as error the ruling that the facts alleged in the complaint do not constitute as against the original defendants, Esso, a cause of action sounding in tort.

The ultimate facts stated are sufficient, if established, to support a finding that Head, the sublessee, was negligent and his negligence was a proximate cause of the damage to the building. Only the facts which constitute the negligence and the facts which establish such negligence as a proximate cause of the damage need be stated. There is no requirement that the pleader state its conclusions. On demurrer only facts properly pleaded are to be considered; legal inferences and conclusions of the pleader, if stated in the complaint, are to be disregarded. G.S. § 1-122; Gillispie v. Service Stores, 258 N.c. 487, 128 S.E.2d 762; Shives v. Sample, 238 N.C. 724, 79 S.E.2d 193.

It is apparent that the judge below was of the opinion, in consideration of all of the facts alleged, that the lessee, Esso, is not legally responsible to the lessor, Caveness, or his subrogee, plaintiff insurance company, for the damage to the demised property caused by the negligence of the sublessee, Head. Hence, the matter of responsibility on the part of the lessee is the ultimate question for decision.

Formerly a lessee was liable in an action for waste for damage to or destruction of buildings on land covered by the lease, even if the damage or destruction was the result of an accident or of the act of a stranger. See concurring opinion of Barnhill, J., (later C. J.) in Rountree v. Thompson, 226 N.C. 553, 555, 39 S.E.2d 523. Now by statute, G.S. § 42-10, in North Carolina a tenant 'shall not be liable for damage occurring on the demised premises accidentally, and notwithstanding reasonable diligence on his part, unless he so contract.'

The law as it now stands in this jurisdiction is stated in Winkler v. Apalachian Amusement Co., 238 N.C. 589, 79 S.E.2d 185, thus: 'In every lease there is, unless excluded by the operation of some express covenant or agreement, an implied obligation on the part of the lessee to use reasonable diligence to treat the premises demised in such manner that no injury be done to the property, but that the estate may revert to the lessor undeteriorated by the wilful or negligent act of the lessee. The lessee's obligation is based upon the maxim sic utere tuo ut alienum non laedas. The lessee is not liable for accidental damage by fire; but he is liable if the buildings are damaged by his negligence. Moore v. Parker, 91 N.C. 275; Hollar v. Southern Bell Telephone & Telegraph Co., 155 N.C. 229, 71 S.E. 316; U. S. v. Bostwick, 94 U.S. 53, 24 L.Ed. 65; 32 Am.Jur., Landlord and Tenant, 669; 51 C.J.S. Landlord and Tenant § 261 p. 904.'

In the lease in the instant case 'Lessor agrees at Lessor's own cost and expense to * * * make promptly any and all repairs to the demised property.' If Esso is otherwise responsible to Lessor for the fire damage, this provision of the lease imposing upon Lessor the duty to make repairs at his own expense does not relieve Esso of its responsibility for the damage. As stated in Winkler v. Apalachian Amusement Co., supra: 'Contracts for exemption from liability for negligence are not favored by the law, and are strictly construed against the party asserting it. The contract will never be so interpreted in the absence of clear and explicit words that such was the intent of the parties. Hill v. Carolina Freight Carriers Corp., 235 N.C. 705, 71 S.E.2d 133, where the authorities are cited.' It is not reasonable to construe the covenant of the lessor to make repairs as meaning that the parties intended that lessor should repair damages caused by negligence for which lessee is responsible. We find no express covenant or agreement in the lease which excludes therefrom the implied obligation on the part of lessee to treat the demised premises in such manner that no injury be done to the property, and this obligation must be considered an effective provision of the lease.

The demised property was sublet by Esso to Head. * * * the sublessees (sic) liability runs only to the lessee who in turn is responsible to the lessor. * * * There is no privity of contract between the lessor and sublessee.' 3A Thompson on Real Property, s. 1210, pp. 52, 53; Dunn v. Barton and Hazelton, 16 Fla. 765; Garbutt & Donovan v. Barksdale-Pruitt Junk Co., 37 Ga.App. 210, 139 S.E. 357. 'A subletting, although assented to by the lessor, does not in any way affect the liability of the original lessee on the covenants of the lease unless there is a surrender and substitution of tenants. * * * The original lessee is responsible for any violation of the covenants of the lease by the sublessee, whether or not he knew of such violation * * *.' 51 C.J.S. Landlord and Tenant § 47, p. 578; Burke v. Bryant, 283 Pa. 114, 128 A. 821; Rourke v. Bozarth, 103 Okl. 133, 229 P. 495.

In McGaff v. Schrimshire, Tex.Civ.App., 155 S.W. 976, lessee sublet property. There was no agreement by lessor that lessee should be released. The property was damaged by the sublessee. It was held that lessee was liable to lessor for the damages.

In Barkhaus v. Producers' Fruit Co., 192 Cal. 200, 219 P. 435, plaintiff leased to defendant an orchard; defendant-lessee covenanted to keep the trees in healthy condition and plaintiff-lessor reserved the right to supervise the care of the orchard. The property was subleased, and defendant retained the right of control and supervision. The trees were damaged by neglect and improper methods and procedures. Held: 'The defendant (lessee) * * * continued to be obligated to the plaintiff (lessor) upon the covenants of the original lease.'

Bishop v. Associated Transport, Inc., 46 Tenn.App. 644, 332 S.W.2d 696, is in most material respects legally and factually analogous to the case at bar. The sublessee deliberately set fire to and destroyed the buildings on the demised premises. Lessor sued lessee to recover damages for the burning. The original lease provided that lessee might sublet the property 'provided that the Lessee shall nevertheless remain liable to Lessor for the performance of all of the terms and conditions on Lessee's part to be pefformed' under the lease. Lessee 'had no knowledge of the unlawful act of Jess Wilson (sublessee) and such act was not permitted by defendant (lessee).' The court declared that 'the question of responsibility on the part of lessee is the ultimate question for decision here,' and addressing itself to certain aspects of the case said:

'When the lessee subleased to Jess Wilson, the second covenant of the lease (dealing with subletting--quoted above) operated to render the lessee liable to the lessor for the performance of all the terms and conditions of the contract in the hands of the sub-lessee, and we think that the fact that Wilson, the sub-lessee, may have acted without the permission of the lessee in destroying the property, is not determinative of the questions here involved.' Parentheses added.

'We think that where the leased premises were destroyed by fire which was deliberately set by the lessee or by one for whose violation of the covenants of the lease the lessee is liable, there was a breach of the covenant to return the premises in good repair * * *.

'As is stated in 32 Am.Jur. 339 and in many cases, a subletting does not in any manner affect the liability of the lessee to his lessor for the performance of the covenants of the lease, and especially is this true where the lease, as in the case at bar, provides that the lessee shall remain...