Maiatico v. Hot Shoppes, Inc., 15776.

• Decision Date: 23 February 1961
• Docket Number: No. 15776.,15776.
• Citation: 287 F.2d 349,109 US App. DC 310
• Parties: Jerry MAIATICO, Appellant, v. HOT SHOPPES, INC., Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

109 US App. DC 310, 287 F.2d 349 (1961)

Jerry MAIATICO, Appellant, v. HOT SHOPPES, INC., Appellee.

No. 15776.

United States Court of Appeals District of Columbia Circuit.

Argued November 22, 1960.

Decided February 23, 1961.

Petition for Rehearing Denied March 21, 1961.

Mr. Burton R. Thorman, Washington, D. C., for appellant.

Mr. Jo V. Morgan, Jr., Washington, D. C., with whom Messrs. Roger J. Whiteford and Frank J. Martell, Washington, D. C., were on the brief, for appellee.

Before FAHY, DANAHER and BURGER, Circuit Judges.

Petition for Rehearing En Banc Denied March 21, 1961.

BURGER, Circuit Judge.

This appeal involves the meaning of a provision of a commercial lease between appellant as landlord and appellee as tenant, although it arises in the context of the landlord's suit against the tenant for damages resulting from the tenant's negligence. For convenience the parties will be described as landlord and tenant.

The landlord leased a portion of a building to the tenant for restaurant purposes. The lease provided that the landlord would contribute to the purchase of the restaurant fixtures and equipment on terms not important here. It was "agreed that Landlord assumes no liability or responsibility whatever in respect to the conduct and operation of the business to be conducted * * *." The tenant agreed to carry fire insurance covering the restaurant fixtures and furnishings.

Paragraph 12 states that if the building, of which the restaurant space was a part, is "partially damaged by fire * * * the damages will promptly be repaired by and at the expense of the Landlord * * *." If the entire building were rendered wholly untenantable so that the tenant could not carry on his business as before and the landlord did not repair the damage within 60 days either party could cancel the lease.

On December 4, 1956, a fire originated in the restaurant. The landlord's complaint herein alleged that damage to the leased premises and to other parts of the building was caused by tenant's negligence and in the present posture of the case that must be accepted as true. The District Court held that the provision of paragraph 12 of the lease barred recovery by the landlord; hence the court did not reach the question of negligence.

It is axiomatic that no contract or lease was necessary to make the tenant liable to the landlord for his negligence. The tenant's responsibility for damages caused by his negligent use of the premises arises not from the terms of the contract but by operation of law whether he be tenant, licensee, trespasser or otherwise on the permises. See General Mills, Inc. v. Goldman, etc., 8 Cir., 1950, 184 F.2d 359, 370 (Sanborn, J., dissenting), certiorari denied 1951, 340 U.S. 947, 71 S.Ct. 532, 95 L.Ed. 683.

At one time, as we know, the law did not permit a person to exculpate himself by contract from the legal consequences of his negligence. E. g., Brown v. Postal Tel. Cable Co., 1892, 111 N.C. 187, 16 S.E. 179, 17 L.R.A. 648. Although the modern law allows such exculpation in most circumstances,¹ it is well established that exculpation must be spelled out with such clarity that the intent to negate the usual consequences of tortious conduct is made plain. Chicago & N. W. Ry. Co. v. Chicago Packaged Fuel Co., 7 Cir., 195 F.2d 467, certiorari denied 1952, 344 U.S. 832, 73 S.Ct. 39, 97 L.Ed. 648; Fairfax Gas & Supply Co. v. Hadary, 4 Cir., 1945, 151 F.2d 939, 940; Galante v. Hathaway Bakeries, Inc., 1958, 6 A.D.2d 142, 176 N.Y.S.2d 87.

Can paragraph 12 be read as waiving or contracting away the landlord's right to hold the tenant for his alleged negligence in these circumstances? At the outset we must recognize that the provision in question, which is commonly found in most commercial leases, has a very limited but highly important practical function. The landlord obligates himself to renovate the damaged premises promptly so that the purpose of the lease can be fulfilled. When the premises are damaged so that the tenant temporarily cannot use the premises as intended, good business judgment dictates that the restoration be accomplished without waiting for payment of insurance claims, determination of liability, or other factors. That is the function and purpose of the provision in question.

Here the tenant leased one unit of a multiple unit commercial building. The landlord is plainly the logical party to restore the property, for after all, it is his building. Restoration might well involve repairs on a dozen or more units occupied by as many separate tenants. The provision in question does no more than declare that the landlord is the one to take all steps to repair the building as he wishes, with contractors of his selection, and in whatever manner and style he elects. Of course, if the fire occurred without fault attributable to anyone, the landlord must not only assume the immediate burden of repairs but is also unable to recoup for the damage. When the lease as a whole is read against this background, it becomes plain why there is no mention of "negligence," "tort," or "release from liability" in the paragraph we are concerned with. The parties were not contracting with respect to any subject except the matter of who was to take the steps necessary to render the leased premises usable.

In the recent case of Galante v. Hathaway Bakeries, Inc., 1958, 6 A.D.2d 142, 176 N.Y.S.2d 87, 90, the tenant argued that a covenant to return the premises in good order except for damages caused by fire exempted the lessee from liability for fire damage caused by its negligence. The court said:

"The parties to the agreement assumed certain contract obligations. Apart from these each party was subjected to certain tort liabilities. If there was fire damage or destruction to the premises it was agreed that the tenant was not required to repair. The tenant, however, was charged with legal knowledge that if it intended to exempt itself from its own acts of negligence clear and unequivocal language to that effect was required. In the absence thereof, defendant was only released from its contract obligation to repair in the event of an unavoidable fire. Its tort liability for a fire caused by negligence remained. It may not convert the plain language of the lease into an exemption clause protecting itself from tort liability." 176 N.Y.S.2d at page 95 (Emphasis added.)

Accord, Sears, Roebuck & Co. v. Poling, 1957, 248 Iowa 582, 81 N.W.2d 462. In short, the law requires that any alteration of the "familiar rules visiting liability upon a tortfeasor for the consequences of his negligence"² must be clearly and unambiguously expressed. No particular form or words are needed but the intent to waive negligence must be clear. It should be noted that the insurer is similarly entitled to know that negligence is waived since this obviously affects the underwriter's calculation of rates.

The tenant argues that the provisions of the lease suggest that the landlord is to carry the fire insurance on the building, recovering an appropriate share of the premium cost from each tenant. We need not decide whether this was intended, although we note that no specific provision so states. As a practical matter, it is always more likely that the landlord will carry the insurance on a building of this type. Where the leased property is an entire building leased by a single tenant the lease might well require that the tenant carry the insurance — in which case he is fully protected whether he be negligent or not. But where the tenant is but one of numerous tenants of a large building, the problem of insurance cannot feasibly be handled by having each tenant carry separate fire insurance on his part of the building. Nothing requires either the landlord or tenant to insure unless he contracts to do so. He can, if he is foolish or rich, self-insure. Who carries the insurance, or whether it is carried at all, cannot determine the liability of the tenant for his own acts of negligence. Wichita City Lines, Inc. v. Puckett, 1956, 156 Tex. 456, 295 S.W. 2d 894, 898-899. But see Cerny-Pickas & Co. v. C. R. Jahn Co., 1956, 7 Ill.2d 393, ...