Mutual Drug Co. v. Sewall

• Decision Date: 05 September 1944
• Docket Number: 38918
• Citation: 182 S.W.2d 575,353 Mo. 375
• Parties: Mutual Drug Company, a Corporation, v. Ruby F. Sewall et al., Appellants
• Court: Missouri Supreme Court

182 S.W.2d 575

353 Mo. 375

Mutual Drug Company, a Corporation, v. Ruby F. Sewall et al., Appellants

No. 38918

Supreme Court of Missouri

September 5, 1944

Rehearing Denied October 9, 1944.

Appeal from Jackson Circuit Court; Hon. Brown Harris Judge.

Reversed and remanded (with directions).

Langworthy Matz & Linde for Ruby F. Sewall; Howard W. Grant for William F. Fisher et al., appellants.

(1) This case was tried as an equity case and involves purely equitable principles. The entire evidence in the case was documentary except oral evidence to the effect that the rent had been paid and the covenants of the lease performed to the date of suit and that no default existed. (2) Whether the ninety-nine year sublease be a lease or an assignment, privity of contract was thereby created between the plaintiff and Quapaw Realty Company, and the defendants, as assignees of Quapaw Realty Company have succeeded to those contract rights; and no assignment by the plaintiff will free it from liability upon its covenants to pay rent and taxes during the entire term of the lease and to perform the other terms thereof. Stewart v. Long Island Railroad Co., 102 N.Y. 601, 8 N.E. 200; Potts-Thompson Liquor Co. v. Potts, 135 Ga. 451, 69 S.E. 734; 2 Thompson on Real Property, sec. 1373; Tiffany, Real Property (3 Ed.), sec. 123; Davidson v. Minnesota Loan & Trust Co., 158 Minn. 411, 197 N.W. 833, 32 A.L.R. 1418. (3) By the agreement of July 15, 1925, between Fitch and Quapaw Realty Company, Fitch acquired all rights of Quapaw in the sublease, and such instrument was not intended to, and could not and did not, affect the Mutual Drug Company's rights under the sublease; and was not intended to, and did not, discharge plaintiff from its covenants and obligations under the indenture of November 14, 1919, executed by it, whether such instrument be deemed a sublease or an assignment of the first or main lease. Eten v. Luyster, 60 N.Y. 252; McDonald v. May, 96 Mo.App. 236, 69 S.W. 1059; 2 Thompson on Real Property, sec. 1353; Sec. 3015, R.S. 1939; Metropolitan Life Ins. Co. v. Hellinger, 272 N.Y. 24, 3 N.E.2d 621; Latta v. Weis, 131 Mo. 230, 32 S.W. 1005. (4) Mutual Drug Company has its common law right, as restricted by the sublease, to assign its sublease, but even after its assignment, Mutual Drug Company will remain liable on its contract to pay rent and perform the other terms and conditions of the sublease. Whetstone v. McCartney, 32 Mo.App. 430; Charless v. Froebel, 47 Mo.App. 45; Jones v. Barnes, 45 Mo.App. 590; Holliday v. Noland, 93 Mo.App. 403; Jenkins v. John Taylor Dry Goods Co., 352 Mo. 660; Geyer v. Denham, 231 S.W. 61; Taylor v. DeBus, 31 Ohio St. 468; Halbe v. Adams, 158 N.Y.S. 380; Kresge v. Sears, 87 F.2d 135; 1 Cook on Corporations (8 Ed.), sec. 6. (5) This case does not present a "justiciable controversy" in that it does not present issues ripe for determination by declaratory judgment. City of Joplin v. Jasper County, 349 Mo. 441, 161 S.W.2d 411.

Thompson, Hine & Flory, Dwight M. Smith and Harvey E. Hartz for respondent.

(1) This is an action for a declaratory judgment to declare the rights of plaintiff in a leasehold estate. It is a statutory action and is properly brought under the statutes of this State. Secs. 1126, 1127, 1130, R.S. 1939. (2) The so-called sublease of the Quapaw Realty Company to plaintiff, and under which plaintiff entered into the possession of said real estate, notwithstanding its name, was an assignment of the original lease, and not a sublease. It covered all of the leasehold estate, and was for the entire term of the original lease. It left no reversionary interest in the original leasehold estate in the original lessee, Quapaw Realty Company, and was therefore an assignment of the original lease, and not a sublease. St. Joseph & St. L.R. Co. v. St. Louis, I.M. & S. Ry. Co., 135 Mo. 173; 35 C.J., p. 988; 16 R.C.L., p. 832, sec. 329; Stewart v. Railroad, 102 N.Y. 601; 2 Underhill on Landlord and Tenant, pp. 1047-49; 1 Tiffany on Landlord and Tenant, p. 907; 32 Am. Jur., p. 298, sec. 330; Wilson v. Cornbrooks, 140 A. 292; Entroth Shoe Co. v. Johnson, 85 S.W.2d 686; Weller v. Comm. Int. Rev., 40 F.2d 892; Williams v. Hinckley, 293 P. 644; Weander v. Claussen Brewing Assn., 42 Wash. 226, 84 P. 735, 114 Am. St. Rep. 110. (3) The Quapaw Realty Company as lessee had the right to sublet with lessor's consent said leased premises or any part thereof before or after the erection of the building called for in said lease. This provision allowed a legal sublease but did not permit an assignment under the pretense of executing a sublease. Ebbs v. Neff, 282 S.W. 74; Bauserman v. Blount, 147 U.S. 647. (4) Assignment of original lease made in violation of and contrary to its terms together with possession created a privity of estate only in plaintiff, assignee, and not any privity of contract. Plaintiff is obligated to pay the rent only while it remains in possession of said leasehold. Dean v. Lee, 227 Mo.App. 206, 52 S.W.2d 426; Bauer v. White, 29 S.W.2d 176; St. Joseph & St. L.R. Co. v. St. Louis, I.M. & S. Ry. Co., 135 Mo. 173; Entroth Shoe Co. v. Johnson, 85 S.W.2d 686; Crow v. Kaupp, 50 S.W.2d 995; Treff v. Gulko, 7 P.2d 697; George Realty Co. v. Gulf Refining Co., 266 N.W. 411. (5) Parties to the original ninety-nine year lease reserved the right in said lease to terminate it by forfeiture or otherwise and on such termination, without plaintiff's consent supported by a consideration, all contractual obligations, if any, of plaintiff under its assignment sublease, were likewise terminated. Lynch v. Murphy, 119 Mo. 163; Crow v. Kaupp, 50 S.W.2d 995; Robertson v. Winslow, 74 S.W. 442. (6) Under its so-called assignment by the lessee, Quapaw Realty Company, to the lessor, Fitch, of all of its interest in the so-called ninety-nine year sublease, it conveyed to the original lessor, Fitch, no claim or obligation against plaintiff under said so-called sublease. Motorport v. Freeman, 62 S.W.2d 479. (7) Also the same rule of law applies if, as appellants contend, the so-called ninety-nine year sublease was in truth and in fact a sublease. A sublessee acquires no greater rights than the original lessee and cancellation of the original lease cancels both the lease and the sublease. Rodier v. Kline's, Inc., 47 S.W.2d 230; Hawley Corp. v. West Virginia Corp., 197 S.E. 628; Caswell v. Gardner, 55 P.2d 1222; Poledor v. Mayerfield, 173 N.E. 292; Willard v. Campbell, 11 P.2d 782; Shannon v. Grindstaff, 40 P. 123. (8) Defendants admitted the weakness of their grantor's title to any claims under the so-called sublease by requiring a conveyance, before taking title, of the defunct ninety-nine year lease which had been terminated and rescinded by the agreement of July 25, 1925. If contract is void in the hands of the assignor it is also void in the hands of the assignee. United Shoe Machinery Co. v. Ramlose, 109 S.W. 567; Stewart v. Kane, 111 S.W.2d 971; City of St. Charles v. Becker, 83 S.W.2d 583; Loots v. Clancy, 228 N.W. 77; Hoogestraat v. Danner, 228 N.W. 632. (9) The evidence amply supports that part of the finding of the trial court to the effect that it was the intention of all of the parties to said original lease and of its assignment to plaintiff, that after plaintiff should have erected the building called for in its so-called sublease, that any assignment made by plaintiff in accordance with the circumstances, form and manner set forth in said lease and possession delivered, should release plaintiff from any and all obligations under said leases to pay rent for said premises to any person. Jenkins v. John Taylor Dry Goods Co., 352 Mo. 660. (10) Appellants' contention that even though the original lessee assign his whole term, nevertheless, if the assignor and his transferee intend a lease, the relation of landlord and tenant will arise between them, is not the law in this state. Our Supreme Court has held that such a transaction, even as between parties, is an assignment if the entire interest of the lessee in the term is transferred and that the respective rights of the parties are determined upon the basis of an assignment, though it be in the form of a lease. St. Joseph & St. L.R. Co. v. St. Louis, I.M. & S. Ry. Co., 135 Mo. 173; Mann v. Ferdinand Munch Brewing Co., 121 N.E. 746, 225 N.Y. 189; Goldberg Corp. v. Levi, 9 N.Y.S. (2d) 304; Rourke v. Bozarth, 229 P. 495.

Bradley, C. Dalton and Van Osdol, CC., concur.

OPINION

BRADLEY

Action for declaratory judgment, under Secs. 1126 et seq., R.S. 1939, Mo. R.S.A., Secs. 1126 et seq., to determine plaintiff's liability under what was termed by the draftsman a "ninety-nine year sublease", executed November 14, 1919. Relief by declaratory judgment is sui generis, and while not either strictly legal or equitable, yet its historical affinity is equitable. Connell et al. v. Jersey Realty & Investment Co., 352 Mo. 1122, 180 S.W.2d 49, 54, and cases there cited. The present cause was tried as one in equity. Plaintiff claimed that, under the facts obtaining and absent default in the terms of the so-called sublease at the time of any future assignment, plaintiff could assign all its interest therein and thereafter be free from further liability thereunder. The trial court agreed with plaintiff's contention, entered such declaratory judgment, and defendants appealed. The amount involved gives the supreme court jurisdiction of the appeal.

November 14, 1919, Fred H. Fitch, the fee owner, executed a lease, to run 99 years from November 1, 1919, to Quapaw Realty Company a Missouri corporation, upon lots 6 and 7, Union Station Addition, Kansas City. On the same day, November 14, 1919, and immediately after the execution of the Fitch lease, Quapaw Realty Company, by a so-called "ninety-nine...