McLaughlin v. Minnesota Loan & Trust Co.

• Decision Date: 29 June 1934
• Docket Number: No. 29871.,29871.
• Citation: 255 N.W. 839,192 Minn. 203
• Court: Minnesota Supreme Court
• Parties: McLAUGHLIN et al. v. MINNESOTA LOAN & TRUST CO.

255 N.W. 839

192 Minn. 203

McLAUGHLIN et al. v. MINNESOTA LOAN & TRUST CO.

No. 29871.

Supreme Court of Minnesota.

June 29, 1934.

Appeal from District Court, Hennepin County; E. A. Montgomery, Judge.

Action by Jessie L. McLaughlin and others against the Minnesota Loan & Trust Company. From an order denying a determinative change in the findings or a new trial, the plaintiffs appeal.

Order reversed, and cause remanded with directions.

Ueland & Ueland, of Minneapolis, for appellants.

Leonard, Street & Deinard, of Minneapolis, for respondent.

STONE, Justice.

After an adverse decision, plaintiffs appeal from the order denying a determinative change in the findings or a new trial. Plaintiffs sue as owners of the reversion in Minneapolis real property which by the then owners was, in 1916, leased for 100 years. In 1921, Warren F. Short became owner of the leasehold through assignment of the entire term. He died testate in December, 1926. By will, he created a trust of which defendant is the trustee. A part of the trust property bequeathed to defendant in trust and later, July 14, 1930, assigned to it by the final decree of distribution of the Short estate and accepted, was the leasehold above referred to and out of which this action arises.

Plaintiffs declare on the covenants of the lease, running with the land, to pay rent, taxes, and assessments, keep the building on the premises insured and in reasonable repair. The leasehold "came to defendant successively," first as special administrator of the Short estate; then as executor thereof; and, finally, July 14, 1930, as the testamentary trustee. Defendant did not expressly assume or otherwise agree to be bound by any covenant of the lease. But during its administration of the estate, and until July 14, 1930, when it took over as testamentary trustee, it did make good all such covenants, paying rent and taxes, causing some repairs to be made, and keeping up the insurance. Hence, there is no question before us as to its liability either as special administrator or as executor. The only issue presented by the record is whether because of its possession of the property as testamentary trustee, it is liable on the covenants already mentioned to pay rent, taxes, and assessments, running with the land or title. The Short trust is said to be insolvent. The leasehold is of little or no present value.

1. Plaintiffs invoke Mason's Minn. St. 1927, § 8189, reading thus:

"Every person in possession of land out of which any rent is due, whether it was originally demised in fee, or for any other estate of freehold, or for any term of years, shall be liable for the amount or proportion of rent due from the land in his possession, although it be only a part of the land originally demised. Such rent may be recovered in a civil action, and the deed, demise, or other instrument showing the provisions of the lease may be used in evidence by either party to prove the amount due from the defendant. Nothing herein contained shall deprive landlords of any other legal remedy for the recovery of rent, whether secured to them by their leases, or provided by law."

Literally, that language might demand recovery. But it does not add anything to the former law determining when rent is due, or from whom or to whom. When the statute is examined in the light of its common-law antecedents and relations, it at once becomes manifest that it was not intended to create a new liability, but rather and only to make divisible as to amount and apportionable as to time a demand which at the common law was neither. Formerly, if a life tenant leased for a term of years and died between the rent days, the rent for that period was lost. The lessee, even though retaining possession of the land, was under no liability for the rent. Peery v. Fletcher, 93 Or. 43, 182 P. 143; 1 Taylor on Landlord and Tenant (8th Ed.) § 389 (p. 462); Perry v. Aldrich, 13 N. H. 343, 38 Am. Dec. 493.

That rule was abrogated by the Distress for Rent Act, 11 George II, chap. 19, § 15 (1737), and subsequent similar statutes. Bythewood and Jarman on Leases, p. 92. As part of the general statutory law of England when its American colonies took their leave, it probably became American common law. Anyway, our statute came from that of Massachusetts, now found in 6 Annotated Laws of Mass., chap. 186, §§ 4 to 8, inclusive.

In the background is not only the common-law bar to apportionment of rent, but also that of assumpsit for rent, except upon an express promise contemporary with the demise. Smith v. Stewart, 6 Johns, (N. Y.) 46, 5 Am. Dec. 186. That helps to explain decisions, the writers of which, familiar with origin and purpose of the statute, were of opinion that it created no new right or liability, but only a new remedy for an old demand; with the added incident that the amount due was made apportionable. It did not change the rule that an undertenant, as distinguished from an assignee of a lease, was not liable to the lessor. Campbell v. Stetson, 2 Metc. (43 Mass.) 504. The two sections of the Massachusetts statute there referred to by Mr. Chief Justice Shaw are consolidated in substance in our section 8189. Plaintiffs were after rent from an undertenant, not only for a part of the term of the lease but also for a time during which he held over. Judgment went for defendants because, in the language of the distinguished Chief Justice, "section 22d declares that every person in possession of land, out of which any rent is due, shall be liable for a proportion of the rent, etc. Section 23d gives an action of debt to recover rent. These are part of a series of provisions respecting long terms, where a rent is reserved, and where the lands, out of which such rents are to issue, are to be treated as real estate, and as such may be divided and subdivided, by descent, partition, levy of execution, and otherwise, with various detailed provisions in regard to terms and the apportionment and recovery of rents. But these statutes do not declare when and by what acts a right to rent shall be created, vested, and transferred; but only declare how it may be recovered when it is due; that is, apportioned and recovered in an action of debt. They are intended to prescribe remedies; not to establish rights; and do not affect the question, whether an under-lease, like the present, gives a right to the landlord to recover of the sub-lessee."

Mr. Justice Berry must have entertained the same view when in Dutcher v. Culver, 24 Minn. 584, 589, he referred to the statute as one making the possessor of land liable in a civil action, "for the proportionate amount of rent due from the land in his possession, although it be only a part of what was originally demised."

In Daniels v. Richardson, 22 Pick. (39 Mass.) 565, an executor of a lessee was held liable "on apportionment of the reserved rent." The question was considered "placed beyond doubt" by the revised statute. Again, through Mr. Chief Justice Shaw, the court said:

"And it seems to be equally well settled, that when the estate, out of which the rent issues, is assigned to two or more, the rent shall be apportioned to each part according to its annual value. Indeed this necessarily follows from the general provision, that the assignee shall be liable in debt for the rent; otherwise, and if the rent could not be apportioned, the right of the lessor to the rent could be defeated, by conveying the estate to two or more persons. Montague v. Gay, 17 Mass. 439."

2. We are in the realm of real property law, particularly the province of landlord and tenant and their assigns. Despite all that parliaments and judges have done on the subject, there remain important rules which are direct legacies of feudal law. One, which in broad outline has remained unchanged for centuries, is that of covenants which run with the land and follow the title into the hands of whomsoever it may come. Some operate in favor of the reversioner; others are for the benefit of the lessee and his assigns. As to the latter, the rule is thus stated, 2 Taylor, Landlord and Tenant (8th Ed.) § 437:

"An assignee takes all the interest of the assignor in the thing assigned, whether in possession or expectancy; but he takes it subject to all equities to which the original party is subject, and must therefore perform all covenants which are annexed to the estate so long as he is in possession. For when a covenant relates to, or is to operate upon, a thing in being, parcel of the demise, the thing to be done by force of the covenant forms a part of the demise, and goes with the land, binding the assignee to performance, though not named; and the assignee, by accepting the possession of the land, subjects himself to all such covenants."

The liability of a lessee's assignee, in the absence of circumstances obligating him contractually to the lessor, is based solely upon privity of estate, which comes into being as to him when, having title to the leasehold, he enters upon the demised premises. Thereby is created that successive relationship to the same property and its title which is known as privity of estate, upon which the law bases the resulting liability of both parties. Trask v. Graham, 47 Minn. 571, 573, 50 N. W. 917. In the instant case, the testator, Short, was absolute assignee of the lease. Defendant took from him all the title he had and so can be no otherwise than an absolute assignee itself.

It is argued for defendant, upon the analogy of cases dealing with the liability of executors and administrators (e. g., Becker v. Walworth, 45 Ohio St. 169, 12 N. E. 1; Inches v. Dickinson, 2 Allen (84 Mass.) 71, 79 Am. Dec. 765; Tremeere v. Morrison, 1 Bing. N. C. 89) that defendant, as testamentary trustee, is individually liable only to the extent of the rental actually received by it. Or, at best, counsel say, the trust estate being insolvent, it cannot be liable beyond...