Hamlen v. Rednalloh Co.

• Decision Date: 28 June 1935
• Citation: 197 N.E. 149,291 Mass. 119
• Parties: HAMLEN v. REDNALLOH CO. et al. (two cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

291 Mass. 119

197 N.E. 149

HAMLEN v. REDNALLOH CO. et al.(two cases).

Supreme Judicial Court of Massachusetts, Suffolk.

June 28, 1935

Two actions of contract, heard together on a case stated, by Paul M. Hamlen against the Rednalloh Company and another.From an order of judgment for defendant in each case, plaintiff appeals.

Affirmed.

Appeal from Superior Court, Suffolk County Walsh, Judge.

R. W Hale, of Boston, for appellant.

R. G. Dodge, of Boston, for appellee.

DONAHUE, Justice.

The plaintiff in these actions seeks to recover rent alleged to be due for a part of the month of February and for the month of May, 1932, under the covenants of a lease dated July 23, 1926, in which the plaintiff was lessor and the defendant, then called L. P. Hollander Company, was lessee.After that lease was executed the defendant occupied the demised premises until March 29, 1929, when it sold the business which it had conducted in part on those premises to L. P. Hollander, Inc., a new corporation which was under a different management.On that date the plaintiff, the defendant, and the newly formed corporation entered into a sealed indenture which included an assignment of the lease by the defendant to the new corporation, the consent thereto of the plaintiff lessor and a covenant of the new corporation both with the plaintiff and with the defendant to pay rent according to the terms of the lease and to perform all its covenants and stipulations.The indenture also stated that the lessor knew of no existing default on the part of the original lessee but did not waive any such default and that the lessor did not waive the obligation of the defendant under the lease to restore the leased premises prior to the expiration of the lease.

As a condition to his giving consent to the assignment the plaintiff required that a trust fund should be created to insure the payment of the rent and the performance of the other conditions of the lease.Accordingly such a trust fund was then created by Theodore C. Hollander who controlled the defendant corporation by virtue of his ownership of by far the greater part, although not all, its capital stock.He deposited securities of the value of $50,000 with a bank as trustee under a written agreement of trust signed by himself and the bank.

The new corporation took possession and remained in occupation of the demised premises until February 19, 1932, when it was adjudicated a bankrupt.On March 16, 1932, the plaintiff brought the first of the two actions here being considered, the declaration claiming the difference between the rent for the month of February under the lease and a sum paid by the receiver in bankruptcy for occupancy from February 20 to February 29, inclusive.The trustee under the trust agreement, on May 24, 1932, tendered to the plaintiff the amount of the unpaid balance of rent for the month of February with interest thereon and the taxable costs in the first of the present actions.The plaintiff accepted all of the amount tendered except $49.08, which exceeded the amount of the taxable costs in that action.

The second action was brought on June 2, 1932, to recover the rent for the month of May.The trustee under the trust agreement, on July 8, 1932, tendered to the plaintiff the full amount of the rent for that month with interest and the taxable costs in that action which amounted to $9.80.The plaintiff accepted all of the amount tendered except $9.80.

Both of the tenders were made by the trustee at the request of Hollander the creator of the trust.It appears in the record that the unaccepted tenders of $49.08 in one case and $9.80 in the other have been kept good and that the defendant on April 11, 1933, obtained these amounts from the trustee and paid them into court.

The cases were tried together on a case stated, before a judge of the Superior Court.He ordered judgment for the defendant in each case and the plaintiff appealed.

1.Under the construction which we think must be given to the instrument of assignment the liability of the defendant lessee to pay rent to the lessor was not terminated.The mere assignment of a lease with the consent of the lessor who takes a covenant from the assignee to pay rent or thereafter collects rent from the assignee does not relieve the original lessee from his contract to pay rent expressed in the covenants of the lease.Carlton Chambers Co. v. Trask,261 Mass. 264, 267, 158 N.E. 786;Talbot v. Rednalloh Co.,283 Mass. 225, 235, 186 N.E. 273.The defendant contends that since the assignment recites that two described covenants are not waived, the intention is manifested that other unmentioned covenants, including the covenant to pay rent, were waived.The principle of construction invoked, namely, that the expression by the parties in a written instrument of certain things indicates their intention to exclude other unmentioned things, applies where it may reasonably be inferred that if the parties intended to include subjects to which no reference is made in the instrument they would have done so by the addition of appropriate words.This, of course, is not an arbitrary rule to be applied, without consideration of the language of an instrument read as a whole, to bar reasonable inferences of a contrary intention.Gage v. Tirrell, 9 Allen, 299, 305;Leonard v. Stickney,131 Mass. 541, 543.Simmons v. County of Suffolk,230 Mass. 236, 119 N.E. 751.Where, as here, an instrument recites the non-waiver of a few of many existing obligations not created by its terms, and those referred to differ in class and kind from those unmentioned and there appears to have been reasonable occasion for specific reference to the few, little basis is afforded for an inference of intended waiver of obligations of which no mention is made.Neither of the two obligations here referred to has any direct or necessary connection with the obligation to pay rent.In view of the advent of the assignee as occupant of the premises in place of the lessee it was natural and prudent on the part of the lessor to require mention in the instrument of these two matters.It was thus made plain to the assignee that if any serious, unknown past default of the lessee should later come to light the lessor might enter, take possession and terminate the lease notwithstanding the occupancy of the assignee.The other obligation was the restoration of the premises to their original condition before the expiration of the lease in the somewhat distant future.The performance of such an obligation is ordinarily associated with the possession of demised premises.The statement of the non-waiver of that obligation is reasonably attributable to the desire of the lessor to negative any contention that the lessee who at the time of performance would not be in possession was thereby free from obligation of that covenant.

The intent of the parties that the defendant should continue to be liable under the covenants of the lease is manifested by the express covenant of the assignee with the lessee to pay the rent which should thereafter become due and to perform all the lessee's covenants and stipulations in the lease.Such a covenant would be unnecessary and without apparent purpose unless it was intended that the liability of the original lessee under the lease continued.Way v. Reed, 6 Allen, 364, 369.The only reasonable construction of the instruments of assignment and of creation of the trust fund is that the lessee continued to be liable for the rent under his covenant in the lease.

2.When, under the terms of the lease, an instalment came due, on the first day of each month, a debt for the payment of that instalment came into existence.We are here concerned with the relationship of the assignee, the original lessee and the trust fund to the debt for the balance of the rent for the month of February and the debt for the rent for the month of May in the year 1932.After the assignment of the lease the assignee became the debtor of the lessor for successive monthly instalments of rent thereafter falling due.That relationship of debtor and creditor would result from the privity of estate which the assignment created.Kacavas v. Toothacker,278 Mass. 302, 304, 179 N.E. 727.It also existed by reason of the assignee's express covenant in the written assignment to pay rent to the lessor according to the terms of the lease.68 Beacon Street, Inc., v. Sohier(Mass.)194 N.E. 303.

Although the liability of the defendant lessee to pay rent under his covenant in the lease was not terminated by reason of the assignment, one effect of the execution of that instrument, to which the lessor was a party, was, as between assignee and lessee, the creation of the relationship of principal and surety as to the debts for rent thereafter coming due under the lease.Collins v. Pratt,181 Mass. 345, 347, 63 N.E. 946.

The trust fund which was required by the lessor as a condition to his giving consent to the assignment also provided security for the payment of the rent.The terms on which the fund was to be held, the obligations of the trustee representing it, the occasions when payments from it should be made, the extent and the character of the suretyship which it provided were set forth in a formal carefully drawn instrument signed by the creator of the trust and by the trustee.It provided for payments to the lessor out of the trust fund in three contingencies, namely, upon notice from the lessor of defaults in any of the lessee's obligations under the lease, upon the termination of the lease by reason of any such default and upon the bankruptcy of the assignee.In the first contingency mentioned there was no obligation on the trustee to make payments out of the trust fund until he...