Last v. Puehler

• Decision Date: 05 March 1963
• Citation: 19 Wis.2d 291,120 N.W.2d 120
• Parties: David LAST, Plaintiff-Appellant, v. Arthur H. PUEHLER and Alma A. Puehler, his wife, and Harvey Daniels, Defendants-Respondents.
• Court: Wisconsin Supreme Court

Page 120

120 N.W.2d 120

19 Wis.2d 291

David LAST, Plaintiff-Appellant, v. Arthur H. PUEHLER and Alma A. Puehler, his wife, and Harvey Daniels, Defendants-Respondents.

Supreme Court of Wisconsin.

March 5, 1963.

Henry P. Hughes, Oshkosh, for appellant.

Williams, Williams & Meyer, Oshkosh, for respondents.

HALLOWS, Justice.

The order sustaining the demurrer and dismissing the complaint amounts to a final determination of the rights of the parties to the action and therefore is in effect a judgment and appealable. Sec. 270.53(1), Stats. An order dismissing the complaint may be treated by this court as a judgment. State v. Donohue (1960), 11 Wis.2d 517, 105 N.W.2d 844. See Russell v. Johnson (1961), 14 Wis.2d 406, at p. 412, footnote 7, 111 N.W.2d 193, at p. 196; State v. Eigel (1933), 210 Wis. 275, 246 N.W. 417. On appeal from a judgment this court can review an order sustaining the demurrer. Sec. 274.34, Stats. Leibowitz v. Leibowitz (1944), 245 Wis. 218, 14 N.W.2d 2. See Walther, Wis.Sup.Ct. Practice--Appealability of Orders & Judgments, Oct. 1962 Wis. Contin. Legal Education, p. 23 and pp. 51-52.

Defendants contend the complaint does not state a cause of action because it does not allege they elected to consider the plaintiff as a holdover tenant from year to year and therefore the provisions of sec. 234.07, Stats., do not apply. The complaint alleges the acceptance of rent by the defendants after the termination of the lease. The acceptance of rent from a holdover tenant raises a rebuttable presumption the landlord has elected to consider the tenant from year to year upon the terms of the original lease. See Rottman v. Bluebird Bakery, Inc. (1958), 3 Wis.2d 309, 311, 88 N.W.2d 374; Hog v. Johnson (1932), 209 Wis. 581, 245 N.W. 650; Peehl v. Bumbalek (1898), 99 Wis. 62, 74 N.W. 545. The earlier cases held the acceptance of rent was an election. See Brown, Ex'x, etc. v. Kayser and others (1884), 60 Wis. 1, 18 N.W. 523. The allegation is sufficient against a demurrer, and if there are facts qualifying or indicating a different intention on the part of the landlord and sufficient to rebut the presumption of election, such facts should be pleaded in an answer.

The main question presented on appeal is the construction of sec. 234.07, Stats., ¹ i. e., does the right of first refusal to purchase the leased property given to a tenant for years survive by operation of this section the expiration of the lease term? Although this section has existed in the laws since 1858, this precise question has never been presented to this court. Originally, the first sentence of the section providing if a tanant for a year or more shall hold over after the expiration of his term, he may at the election of his landlord be considered a tenant from year to year upon the terms of the original lease was a proviso to a section which dealt with the termination of the tenancies at will or by sufferance. In 1884, Brown, Ex'x, etc. v. Kayser and others, supra, held the tenancy from year to year required the common law six months' notice of termination. The following year by amendment (ch. 109, Laws of 1885), this decision was rejected. The amendment provided such tenancy may be terminated by either party to the lease at the end of any year upon a prior 30-day-written notice to terminate such lease. The statute has remained substantially the same to date. See 3 Wis.Law Review 37. In construing this statute a distinction in an analogous question, though to be somewhat artificial by some commentators, must be recognized, i. e., whether an option to purchase contained in a lease survives in the renewal period when the lease is renewed or the term thereof is extended. On this question a split of authority exists. 32 Am.Jur., Landlord and Tenant, pp. 285-286, sec. 308, Annos.: 37 A.L.R. 1245, and 163 A.L.R. 711: Extension of Lease--Option to Purchase. Wisconsin took the position in Seefeldt v. Keske (1961), 14 Wis.2d 438, 111 N.W.2d 574, that where a lease contained an option for an extension, as opposed to a renewal, of the lease, an option to purchase contained in the original lease survived in the extension period and could be exercised by the tenant during that period. To the same effect is Raffensperger v. Van Kooy (1952), 260 Wis. 589, 51 N.W.2d 488, in which a lease contained an option to purchase also contained an 'option for an additional four years at the same rental.' See also Link Wholesale Grocery, Inc. v. Krause (1950), 257 Wis. 207, 43 N.W.2d 25.

As we construe sec. 234.07, Stats., it gives the landlord the election to treat the holdover tenant as a tenant from year to year under the lease and gives both the landlord and the tenant the right to terminate such lease at the end of any year upon 30-days-written notice. In effect, once the landlord has made the election, the lease is extended rather than renewed from year to year. The language, 'upon the terms of the original lease' and of the election 'to terminate such lease,' indicates a common law tenancy is not created but the original lease is extended. We find no basis in the section for restricting 'the terms of the original lease' to only those terms traditionally constituting the minimal essentials of a tenancy relationship. In Helbig v. Bonsness (1938), 227 Wis. 52, 277 N.W. 634, 115 A.L.R. 373, we construed a separate sealed document containing an option to purchase leased premises as part of the lease of the farm, and held the option could not be exercised when the tenant was in default in the payment of rent. Additionally, an option to purchase in a lease is a covenant running with the leasehold estate. This militates against considering such option as separate and distinct from the terms of the lease. 32 Am.Jur., Landlord and Tenant, p. 280, sec. 301; 45 A.L.R.2d 1034, 1040-1041.

We consider an option to purchase or right of a first refusal to be an integral part of the lease and one of its terms within the meaning of this section. It is not an uncommon practice to insert an option to purchase or a right of first refusal in a lease. In many cases no lease would be entered into by the tenant without...