Holly Farm Foods, Inc. v. Kuykendall, No. 9323SC206

• Docket Nº: No. 9323SC206
• Citation: 442 S.E.2d 94, 114 N.C.App. 412
• Case Date: April 19, 1994
• Court: Court of Appeal of North Carolina (US)

Page 94

442 S.E.2d 94 114 N.C.App. 412 HOLLY FARM FOODS, INC., Plaintiff,
v.
Henry R. KUYKENDALL, John R. Kuykendall, and Louann Coulter,
Defendants. No. 9323SC206. Court of Appeals of North Carolina. April 19, 1994.

Page 95

[114 N.C.App. 413] John N. Ogburn, Jr., Asheboro, for defendants-appellants.

McElwee, McElwee & Warden by William C. Warden, Jr., North Wilkesboro, for plaintiff-appellee.

WYNN, Judge.

On 28 June 1976, John E. Chapman, Jr. (Chapman), as lessor, and HTL Enterprises, Inc. (HTL), as lessee, entered into a lease agreement for a commercial property in Randolph County. The lease ran for a term of twenty years from April 1977 to March 1997 and rent was established at $1,350.00 per month. Plaintiff Holly Farms Foods, Inc., which owned HTL, executed a written guaranty covering HTL's rental obligation. On 13 January 1987 HTL assigned the lease to defendants Henry R. Kuykendall, John [114 N.C.App. 414] R. Kuykendall, and Louann Coulter to use the property as a restaurant and plaintiff continued its guaranty. Defendants failed to pay rent from May 1987 through July 1988. Chapman then instituted a summary ejectment proceeding against defendants pursuant to N.C.Gen.Stat. § 42-26 and on 2 May

Page 96

1988 the magistrate ordered defendants removed from the premises and that Chapman be placed in possession.

Plaintiff, as guarantor, then brought a civil action in district court against defendants for the rent from May 1987 through July 1988 which plaintiff had paid to Chapman as provided by the guaranty. Plaintiff obtained a default judgment in the amount of $20,250 and a declaratory judgment that:

defendants are hereby adjudged to be jointly and severally liable for any additional sums paid by the plaintiff to the landlord, John E. Chapman, Jr., for rental due upon the premises leased by the defendants, except this sum is to be reduced by any future rentals received by the plaintiff or John E. Chapman, Jr., from any new tenants of the leased premises.

On 30 July 1991 plaintiff brought this action for rent plaintiff paid to Chapman from August 1988 through July 1991. After a hearing, the trial court entered judgment for plaintiff in the amount of $31,500.00. From this judgment, defendants appeal.

I.

Defendants first argue that summary ejectment terminates the lease and relieves the tenant of liability for future rent absent a contrary provision in the lease. We agree.

The summary ejectment statute, N.C.Gen.Stat. § 42-26, provides three separate remedies for the lessor: "(i) possession of the premises; (ii) an award of unpaid rent; and (iii) an award for the tenant's occupation of the premises after the cessation of the estate." Chrisalis Properties, Inc. v. Separate Quarters, Inc., 101 N.C.App. 81, 86, 398 S.E.2d 628, 632 (1990), disc. rev. denied, 328 N.C. 570, 403 S.E.2d 509 (1991). A breach of the lease, such as the failure to pay rent, cannot be the basis of summary ejectment unless the lease provides for termination by such breach or reserves a right of reentry for the breach. Stanley v. Harvey, 90 N.C.App. 535, 537, 369 S.E.2d 382, 384 (1988). "A successful summary ejectment action terminates a lease and a tenant's obligation to pay future rent. Consequently, if a landlord does not want this result, [114 N.C.App. 415] he should file a suit for rent instead." Janice L. Mills, North Carolina Landlord and Tenant Breaches and Remedies § 6-1, at 107 (1991); see also Nylen v. Park Doral Apartments, 535 N.E.2d 178, 181 (Ind.App.1989) ("It is a general rule that a tenant will be relieved of any obligation to pay further rent if the landlord deprives the tenant of possession and beneficial use and enjoyment of any part of the demised premises by an actual eviction."); McArthur v. Rostek, 483 P.2d 1351, 1352 (Colo.App.1971) ("[T]ermination of the lease agreement or eviction of the tenant by the landlord relieves the tenant from all liabilities to accrue in the future, including rent, except where the parties, by express agreement, have contracted to the contrary."); 50 Am.Jur.2d Landlord and Tenant § 1224 (1990) ("After the dispossession of a tenant in summary proceedings for nonpayment of rent, the lease is at an end, and his liability thereafter is for damages, and not for rent.").

After the lease is terminated, the former tenant is no longer liable for rent but rather for damages from his breach of contract. United States Rubber Co. v. White Tire Co., 231 S.C. 84, 95, 97 S.E.2d 403, 407 (1956); Schneiker v. Gordon, 732 P.2d 603, 608 (Colo.1987); 51C C.J.S. Landlord and Tenant § 250(2) (1968); see Chrisalis, 101 N.C.App. at 88, 398 S.E.2d at 633 (holding that damages for future rents could be ascertained at the summary ejectment proceeding). The measure of damages is the amount of rent the lessor would have received in rent for the remainder of the term, less the amount received from the new tenant. White Tire, 231 S.C. at 95, 97 S.E.2d at 409; see Isbey v. Crews, 55 N.C.App. 47, 284 S.E.2d 534 (1981). The lessor has a duty to mitigate his damages. Isbey...