Maryland Theatrical Corp. v. Manayunk Trust Co.

• Decision Date: 12 July 1929
• Docket Number: 38.
• Citation: 146 A. 805,157 Md. 602
• Parties: MARYLAND THEATRICAL CORPORATION v. MANAYUNK TRUST CO., ET AL.
• Court: Maryland Court of Appeals

146 A. 805

157 Md. 602

MARYLAND THEATRICAL CORPORATION v. MANAYUNK TRUST CO., ET AL.

No. 38.

Court of Appeals of Maryland

July 12, 1929

Appeal from Circuit Court of Baltimore City; Duke Bond, Judge.

Suit by the Maryland Theatrical Corporation against the Manayunk Trust Company and another. From a decree dismissing the bill plaintiff appeals. Reversed and remanded.

Argued before BOND, C.J., and URNER, ADKINS, OFFUTT, DIGGES, PARKE and SLOAN, JJ.

Joseph C. France and Abram C. Joseph, both of Baltimore (Daniel C Joseph, of Baltimore, on the brief), for appellant.

Vernon Cook and S. Ralph Warnken, both of Baltimore, for appellees.

DIGGES J.

The question presented by this appeal is whether or not a lease entered into by the predecessor in title of the appellant as lessee and the predecessor in title of the appellees as lessor, is redeemable. This lease was dated May 29, 1914, and covered a a lot located in Baltimore City known as 114 West Lexington street. This lot had a frontage of 22 1/2 feet on Lexington street, an irregular depth of 107 feet, and contained 2,534 square feet. It was leased for the purpose of and is now being used as the entrance to a theater belonging to the appellant. The lease was "for a term of six years, commencing on the 1st day of October, 1914, and ending on the 30th day of September, 1920; at the end of said term of six years the tenant, its successors and assigns, shall have the right to renew this lease for a further term of eight years, commencing on the 1st day of October, 1920, and ending on the 30th day of September, 1928; at the end of said term of eight years said tenant shall have the right to renew this lease for a further term of ten years, commencing on the 1st day of October, 1928, and ending on the 30th day of September, 1938." The tenant, for itself, its successors and assigns, convenanted and agreed to pay to the landlord, her personal representatives and assigns, the sum of $6,500 per year for the said term of six years; the sum of $7,500 per year for the said term of eight years; and for the said term of ten years the sum of $7,500 per year, together with such other amount per year, in addition to said $7,500, as may be fixed in the method later prescribed in said lease; the payments of rent to be made in equal monthly installments in advance, accounting from the first day of each of the said terms.

It was further provided that, if the amount of rent for the aforesaid term of ten years, in addition to the aforesaid sum of $7,500 could not be agreed upon by the landlord and the tenant, then the landlord and the tenant should each appoint one arbitrator on or before the 1st day of May, 1928, and said two arbitrators should fix said additional amount, and, if they could not agree, they should appoint a third arbitrator, and the majority of the three should fix said additional amount, which said additional amount fixed in either method should bind the parties; and if said two arbitrators could not agree on said additional amount, or could not agree on the third arbitrator, on or before June 1, 1928, or if, having agreed on the third arbitrator, the majority could not agree on said additional amount on or before July 1, 1928, then said appointment should be void, and the tenant agreed to pay a reasonable rent per annum for said property for said term of ten years, said reasonable rent to be determined in a suit instituted in one of the courts of Baltimore City to recover the rent for the month of October, 1928, to be tried before the court, without a jury, and if in said suit the judgment should be for $625 or less, exclusive of costs, then the said rent for the ten-year term should be $625 per month, and if said judgment should be for a sum, exclusive of costs, more than $625, then the monthly rent for the said ten-year term should be that sum.

It is further provided: "In addition to the aforesaid sums the tenant for itself, its successors and assigns agrees to pay to the landlord, her personal representatives and assigns as rent during the continuance of this lease the following sums when due after demand by the landlord, to wit, one-half of any increase in taxes on the leased premises over the taxes for the year 1914 arising not from an increased rate, but solely from an increased assessment on said leased premises, the present assessment being $40,125; also any water rent on said leased premises in excess of $13; also any fire insurance premiums paid by the landlord in excess of the rate of $50 per annum." And further: "This lease shall be deemed renewed for the aforesaid term of eight years and for the aforesaid term of ten years unless the tenant, its successor or assigns shall give notice to the landlord and her personal representatives or assigns to the contrary on or before the first day of April, 1920, or the 1st day of April, 1928, respectively, and unless this lease be terminated in any manner prior to the 30th day of September, 1938, then and in that event the tenant, its successors and assigns, shall have the right on the 29th or 30th day of September, 1938, to purchase the leased premises at and for the sum of $125,000 and the landlord, her personal representatives and assigns, covenants upon the payment to her, him, or them of the said sum of $125,000 to convey the leased premises to the tenant, its successors or assigns hereunder by a good and sufficient deed free from all incumbrances except an annual ground rent of $240."

The foregoing is a statement of such portions of the lease as are necessary for the determination of the questions here involved. The record shows that the tenant entered into possession under the lease and paid the rent therein specified for the first six-year period, which ended September 30, 1920, and after that date continued, for the additional period of eight years, paying the increased rent specified for that period, which would expire September 30, 1928; that about March 15, 1928, the appellant gave verbal notice to the defendant of its intention to redeem the property affected by the lease, and on or about April 30, 1928, gave formal notice in writing of its intention so to do. The appellees denied the right of the appellant to redeem the lease, whereupon the appellant filed its bill in the circuit court of Baltimore City, in which it alleged that it was entitled to redeem the lease; that it was ready, able, and willing to pay the redemption price fixed by law; that the defendant denied the redeemability of said rent, and refused to execute a deed redeeming the same upon payment or tender to them by the appellant of "a sum of money equal to the capitalization of the rent reserved at the rate of 6 per cent., together with any and all rent accruing to the day of such tender."

The bill prayed that the defendant be required by decree, upon payment or tender of the redemption price, to execute and deliver to the appellant a deed redeeming the rent reserved on the property referred to in the aforesaid lease in accordance with the provisions of section 95 of article 21 and section 25 of article 53 of Code Pub. Gen. Laws 1924, to the end that said annual rent reserved in said lease may be merged and extinguished, and that the appellant may hold said property clear and discharged from said lease. After testimony and hearing, the chancellor, on March 28, 1929, passed a decree dismissing the bill of complaint, from which decree the appeal here was taken.

The statute under which the appellant claims the right to redeem this lease is section 95 of article 21 of Code Pub. Gen. Laws 1924, and reads as follows: "All rents reserved by leases or sub-leases of land hereafter made in this State for a longer period than fifteen years shall be redeemable at any time after expiration of five years from date of such leases or sub-leases, at the option of the tenant, after a notice of one month to the landlord, for a sum of money equal to the capitalization of the rent reserved at a rate not exceeding six per centum." The appellees (defendants below) contended before the chancellor, as they do now: First, that, even if the lease is considered to be for a 24-year term, it is not redeemable, because the redemption statutes were not intended to apply and cannot be applied to a rent so fluctuating and uncertain as it is in this lease; second, that the lease is for a period less than fifteen years, i. e., a lease for 6 years, with successive rights of renewal for 8 and 10 years, respectively; third, Acts 1914, c. 371, which became effective April 10, 1914, prior to the execution of the lease under discussion, excludes this lease from the operation of the redemption laws, because the term of the lease, including all renewals, does not exceed 25 years. We will consider these questions in reverse order.

The lease was dated May 29, 1914. Acts 1914, c. 371, was approved and became effective on April 10, 1914; it declares that the provisions of chapter 485 of the Acts of 1884, chapter 395 of the Acts of 1888, and chapter 207 of the Acts of 1900 "were not intended to apply and do not apply to leases or subleases of property leased for business purposes, when such leases or subleases contain a clause prohibiting assigning or subleasing all or any part or parts of the property leased, without the written consent of the landlord and where the term of such lease or subleases, including all renewals provided for therein, shall not exceed twenty-five years." The effect of this act was to make irredeemable certain leases which under the previous statutes were redeemable. It prescribed a class of leases which should be irredeemable, and set out the requisites necessary to entitle a lease to be placed in said irredeemable class. These requirements were three: First, that...