Millison v. Clarke

• Decision Date: 14 April 1980
• Docket Number: No. 77,77
• Citation: 413 A.2d 198,287 Md. 420
• Parties: J. Laurence MILLISON v. Joseph Abel CLARKE et ux.
• Court: Maryland Court of Appeals

Page 420

287 Md. 420

413 A.2d 198

J. Laurence MILLISON v. Joseph Abel CLARKE et ux.

No. 77.

Court of Appeals of Maryland.

April 14, 1980.

David M. Williams, Chestertown, for appellant.

Thomas P. Smith, Hyattsville (Baskin & Sears, Hyattsville, on the brief), for appellees.

Argued before MURPHY, C. J., and SMITH, DIGGES, ^* ELDRIDGE, COLE, DAVIDSON and RODOWSKY, JJ.

RODOWSKY, Judge.

This landlord's action for rent under a commercial lease involves the defense of surrender by operation of law on which a summary judgment in favor of the tenant was based. The principal question presented is whether the legal consequence of a reletting by a landlord to a new tenant, for a term extending beyond the expiration of the lease to the original, defaulting tenant, is the acceptance of a surrender, without regard to factors indicating the landlord's intent to the contrary. Phrased another way, the question presented is whether reletting beyond the original term is a factor of such overriding significance on the facts of this case as to have effected a surrender by operation of law as a matter of law. We hold that such a reletting does not inevitably have that legal result and that it was improper to grant summary judgment here.

The premises are located on State Route 232 in California, St. Mary's County, Maryland. Appellant, J. Laurence Millison ("Landlord"), by lease bearing the date of June 22, 1972, let the premises to Joseph Abel Clarke and Judith A. Clarke ("Tenants") for a term of ten years beginning September 1, 1972 and ending August 31, 1982. Rent was payable on the first of each month at an annual rate of $6,000 for each of the first two years of the term, $9,000 for each of the next three years and $12,900 for each of the last five years. Tenants covenanted not to use the premises for purposes other than a restaurant and food carryout. The lease provisions directly describing Landlord's rights upon default by Tenants are as follows:

(I)f the rent shall be Ten (10) days in arrear the Landlord shall have the right to distrain for the same, and to re-enter and take possession; and if the Tenant shall violate any of the foregoing covenants on their part herein made, the Landlord shall have the right without formal notice to re-enter and take possession . . . .

The first phase of what thereafter transpired has been the subject of prior litigation. In summary, Tenants never paid any rent as such, the premises were not finished as a restaurant and food carryout, and the parties disputed the existence and extent of obligations to make the premises ready. ¹ On January 2, 1973 Tenants ² wrote to Landlord asserting certain work had not been completed, requesting a return of a $1,000 security deposit and expressing a willingness to negotiate another lease "(w)hen, and if, the building is ever completed . . . ."

There followed an exchange of five additional letters through February 2, 1973, which concludes:

Again I must remind you that Mr. Millison intends to hold your client responsible for damages in full . . . . Hopefully he will find a new tenant under the same or substantially the same terms so that the damages assessed to Mr. & Mrs. Clarke will not be too excessive.

On May 10, 1973 Landlord leased the premises to Vernon Miles and Peggy Miles for a term July 1, 1973 through June 30, 1976 (the "Miles Lease"). Rent under the Miles Lease was less than the rent under Tenants' lease. Landlord advised Tenants of the Miles Lease by letter of January 14, 1974, stated that the rent paid under the Miles Lease would be credited to Tenants and suggested re-entry by Tenants since the Landlord had been informed that the Miles were "unable to make it in this location . . . ." Tenants replied that they "will not enter the premises" allegedly leased to them.

On February 5, 1974 Landlord sued Tenants claiming rent accrued from lease commencement on September 1, 1972 less credit. Landlord wrote Tenants on May 14, 1974 to advise of an assignment of the Miles Lease and stated:

Please keep in mind that we have also apprised you that we intend to help to mitigate the damages of Mr. and Mrs. Clarke by constantly searching for interim tenants during the period of the original lease obligation of your clients. It has not been in the past, it is not now, and it will not in the future be our intention to release your clients from the lease agreement obligations as contained in the lease dated June 22, 1972.

The prior action was tried in May of 1975, after Landlord had amended to claim through April 30, 1975. Judgment was in favor of Landlord, but in an amount unsatisfactory to him. On Landlord's appeal, that judgment was affirmed. Millison v. Clarke, 32 Md.App. 140, 359 A.2d 127, decided June 28, 1976. The Miles Lease, as written, expired two days later.

Landlord again leased the premises on September 10, 1976 to C.E.L., Inc. That lease commenced November 1, 1976 for a term of fifteen years, or well beyond the August 31, 1982 expiration date of the lease to Tenants. The rent was $400 per month for the first 12 months, $500 per month for the second 12 months, and $600 per month for the third 12 months. Real estate taxes were made additional rent. In the fourth year and thereafter the "annual rental" was increased proportionately in relation to the "cost of living index as published by the United States Department of Labor . . . ." ³

In the present action, filed May 20, 1977, Landlord claimed:

1. For rent payable under the lease to Tenants from May 1, 1975 (the rent day immediately following the cut-off of the period for which damages were claimed in the prior action) through October 31, 1976 (the day preceding the commencement of the lease to C.E.L., Inc.), less credit for rent received under the Miles Lease; and

2. For rent payable from November 1, 1976 (the beginning of the C.E.L. lease) through August 31, 1982 (the termination of the lease to Tenants), less credit for rent paid and projected to be paid under the lease to C.E.L., Inc. ⁴

Each of the parties filed a motion for summary judgment. By Orders entered July 31, 1978, based upon a written opinion, the trial court granted Landlord's motion as to the issue of liability only, for the period May 1, 1975 through October 31, 1976. ⁵ Tenants' motion was granted as to the period extending from November 1, 1976. It was held "as a matter of law, that the offer of surrender by the Clarkes was accepted by the landlord, Millison, at the time the C.E.L., Inc. lease was entered into." The trial court reasoned that the reletting by Landlord, for a term longer than that of the lease to Tenants "is inconsistent with the continuing operation of the original lease and is of an unequivocal nature demonstrating that the landlord has accepted the offer of surrender." This conclusion was strongly influenced by language in Eidelman v. Walker & Dunlop, Inc., 265 Md. 538, 544, 290 A.2d 780, 784 (1972) and in Wilson v. Ruhl, 277 Md. 607, 611, 356 A.2d 544, 548 (1976), which will be discussed, infra.

The open issue of damages from May 1, 1975 through October 31, 1976 was tried non-jury. Cross-examination of Landlord developed that after the lease to C.E.L., Inc. was signed on or about September 10, 1976, Landlord permitted C.E.L., Inc. personnel to go into the premises to do the "different things" that they found "desirable." Landlord did not "think there was that much renovation to be done." Damages were awarded Landlord based on the full rent payable by Tenants less credits of two types:

1. Payments realized under the Miles Lease; and

2. An amount equal to the rent reserved under Tenants' lease apportioned for the period from the signing of the lease between Landlord and C.E.L., Inc. and its commencement date. This latter credit was allowed on the following analysis by the trial court:

I also find that Mr. Clarke is entitled to a credit of $1,250, being the denial of the usage of the premises between September 10 through October 31st. I don't like doing that, the reason Mr. Millison did that, being Mr. Nice Guy and he has to get charged for it, but I believe for the sake of justice I must do that. ⁶

Landlord perfected his appeal to the Court of Special Appeals, Millison v. Clarke, 43 Md.App. 75, 403 A.2d 384 (1979), which reached the following conclusions on the three issues involved:

Issue No. 1 entry of summary judgment in favor of Tenants for the period November 1, 1976 through August 31, 1982: Reversed and remanded for retrial.

Issue No. 2 denial of Landlord's Motion for Summary Judgment as to the liability of Tenants for the period November 1, 1976 through August 31, 1982: Affirmed.

Issue No. 3 the amount of Landlord's damages for the period May 1, 1975 through October 31, 1976: Affirmed.

The Writ of Certiorari embraced each of these issues.

Issues Nos. 1 & 2

Effect of the Lease To C.E.L., Inc.

The essence of the rationale of the Court of Special Appeals was that acceptance of a surrender, which a tenant tenders by abandoning the premises, is a matter of the intention of the landlord, that reletting beyond the original term is evidence of an intent to accept the surrender but is not conclusive of that intent, as a matter of law, in the face of other evidence from which a contrary intent can be inferred, and that the language in the Wilson and Eidelman decisions was strong dicta but was short of a holding that such a reletting effects a surrender as a matter of law.

It is clear that the acceptance of a surrender is a matter of intention. Oldewurtel v. Wiesenfeld, 97 Md. 165, 176, 54 A. 969 (1903). ⁷

Oldewurtel also rejected a line of cases, illustrated by Gray v. Kaufman Dairy & Ice Cream Co., 162 N.Y. 388, 56 N.E. 903 (1900), "to the effect that a re-entry and reletting of abandoned premises by the landlord without the consent of the tenant, would create a surrender, by operation of law." 97 Md. at 176, 54 A. at 970 (Emphasis added).

We have previously been presented...