Indian Refining Company v. Roberts
| Decision Date | 20 May 1932 |
| Docket Number | 14,347 |
| Citation | 181 N.E. 283,97 Ind.App. 615 |
| Parties | INDIAN REFINING COMPANY v. MARY G. ROBERTS |
| Court | Indiana Appellate Court |
Rehearing denied December 16, 1932.
Transfer denied November 24, 1933.
From Parke Circuit Court; Howard L. Hancock, Judge.
Action by Mary G. Roberts against Indian Refining Company. From a judgment for plaintiff, defendant appealed.
Reversed.
McFaddin & McFaddin and Cooper, Royse, Gambill & Crawford, for appellant.
Hunter J. Von Leer and J. M. Jones, for appellee.
Mary G. Roberts (appellee herein) brought this action against the Indian Refining Company (appellant herein) to recover rent and for an injunction to prevent appellant from removing certain gasoline tanks, etc., from certain described real estate owned by appellee. From a judgment in favor of appellee, appellant appeals and assigns as its only error the overruling of its motion for a new trial.
The parties entered into a stipulation, the substance of which is as follows: On March 12, 1929, appellee was and still is the owner of certain described real estate and on said date, by an instrument in writing, leased said premises to her husband, Donn M. Roberts, for "the term of three years, commencing November 1, 1929," at a rental of $ 4,800 to be paid on the 1st day of each month commencing at a rate of $ 125 for the first month and increasing the monthly payment at the rate of $ 5 each year, until the monthly sum of $ 135 was reached and then at that rate for the balance of the term. The lease further provided that the premises were to be used as an oil and gasoline filling station; that the "lessee and/or his assigns will pay all taxes, that may become due during the terms of this lease on improvements, if any, on said premises." This lease also provided for attorney fees. On September 24, 1929, Donn M. Roberts as lessee, in writing leased to appellant the premises owned by appellee along with certain adjoining real estate owned by himself, for a "period of three years from November 1, 1929" at a rental fee of $ 960 per annum payable in advance in equal monthly installments beginning November 1, 1929. The lease provided that
It was further stipulated that on November 15, 1929, appellant and Donn M. Roberts entered into a written contract designated as a "gasoline equipment agreement" whereby Donn M. Roberts became the dealer of appellant's products and appellant agreed to furnish certain equipment such as gasoline tanks, gasoline pumps, etc. On September 24, 1929, appellant and Donn M. Roberts entered into a written agreement designated an "agency agreement" by the terms of which said Roberts was appointed appellant's agent to operate a filling station located on said premises so leased by appellant from said Roberts.
The parties further stipulated that appellant, on January 4, 1930, served on Donn M. Roberts a written notice of cancellation of said lease entered into by and between appellant and said Roberts; that said Roberts ran and operated said filling station in pursuance to the written lease until January 15, 1930; that appellant continued to sell gasoline to said Roberts at the regular discount prices until February 4, 1930; that said Roberts used none other than Indian Refining Company's products at such filling station during the period from January 15, 1930, to February 4, 1930; that during the period from November 1, 1929, to February 4, 1930, Donn M. Roberts paid appellee only $ 80 rental, which was the only rent received by her during said period.
It was further stipulated that the Indian Refining Company has removed all the equipment from the real estate in question that it intends to remove and that is practical to remove; that to remove any more of its equipment would substantially injure the free hold. It was also stipulated that should the court find in appellee's favor $ 150 should be allowed appellee for attorney fee.
The court found that the lease agreement between Donn M. Roberts and appellant transferred "the entire term of a lease between the plaintiff . . . (appellee herein) as lessor and the said Donn M. Roberts as lessee and that the said Donn M. Roberts, did not retain any reversionary interest in himself and that the taking of all of Donn M. Roberts interest and entire term by the defendant (appellant herein) created privity of estate between the defendant and the plaintiff and made the defendant an assignee of the term and liable to Mary G. Roberts for the rent specified in her lease so long as the defendant occupied and used her real estate" and that the removal of certain tanks belonging to appellant would greatly and permanently damage appellee's real estate and she could not be compensated therefor in damages and that she is entitled to a perpetual injunction preventing their removal by appellant; that appellee is entitled to $ 420 rent money and $ 150 attorney fee.
The court rendered judgment for $ 420 together with $ 150 attorney fee and a permanent injunction forever enjoining appellant from removing their tanks from appellee's real estate.
Appellant and appellee agree that the principal question presented herein is whether the instrument under which appellant occupied the premises in question was merely a sub-lease or whether or not it has the effect in law of an assignment of the lease executed by appellee to Donn M. Roberts. If it be treated merely as a sublease, appellant would not be liable to appellee and the judgment should be reversed but if it has the effect in law of being an assignment, appellant would be liable to appellee and the judgment must be affirmed.
It is appellant's contention that where a lease reserves a right of re-entry upon conditions broken that there is such a contingent reversionary interest reserved in the grantor so as to prevent the instrument from being an assignment and cites authorities to sustain this view. Appellant also contends that the agreement in the instrument between appellant and Donn M. Roberts whereby appellant could terminate the lease by giving its lessor a ten day notice left within Donn M. Roberts at least such a contingent reversionary interest as to create a new estate and prevent the instrument from being an assignment. Appellee takes the contrary view and says that the instrument in question did not contain any provision whereby Donn M. Roberts retained a right of re-entry upon conditions broken by appellant.
Section 7, Acts 1881, p. 563, being § 9545, Burns 1926 (§ 10177, Baldwin's 1934), inter alia, provides that ". . . where, by the express terms of the contract, the rent is to be paid in advance, and the tenant has entered and refuses or neglects to pay rent; and, in any case, where the relation of landlord and tenant does not exist, no notice to quit shall be necessary." Donn M. Roberts, by the terms of this statute, is given the right of re-entry upon appellant's failure to pay the rent in advance each month as stipulated in the contract. The principal question before us, therefore, is, did appellant occupy the premises in question under and by means of an assignment of the original lease from appellee to Donn M. Roberts or was it merely a subletting?
The general principle as held by all the authorities is that where the lessee transfers his whole estate, without reserving to himself a reversion therein, a privity of estate is at once created between his transferee and the original lessor and the instrument is in law an assignment and the latter then has a right of action directly against the transferee on covenants running with the land, one of which is that to pay rent; but, if the lessee transfers the premises reserving or retaining any reversionary interest, however small, the privity of estate between the transferee and the original landlord is not established and the transferee occupies then as a sub-tenant. In such a case the original landlord has no right of action against the transferee of the lessee, there being neither privity of contract nor privity of estate between them. Sexton v. Chicago Storage Co. (1889), 129 Ill. 318, 21 N.E. 920; 2 Thompson on Real Property, p. 491, § 1372. The conflict of authorities arises in deciding whether or not the lessee, in making a transfer, parts with his entire interest in the term.
The authorities are not in accord with respect to the effect of the reservation of a power of re-entry as the retention of a reversionary interest sufficient to render the transaction of a sub-lease rather than an assignment. One line of authorities is to the effect that if the instrument contains a power of re-entry for breach of the covenants and conditions therein, though it is for the full unexpired period of the original lease, it is a sublease and not an assignment. This view...
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