Rhode Island Hosp. Trust Co. v. J. B. Farnum Co., 7685.

• Decision Date: 19 April 1937
• Docket Number: No. 7685.,7685.
• Parties: RHODE ISLAND HOSPITAL TRUST CO. v. J. B. FARNUM CO.
• Court: Rhode Island Supreme Court

191 A. 508

RHODE ISLAND HOSPITAL TRUST CO.

v. J. B. FARNUM CO.

No. 7685.

Supreme Court of Rhode Island.

April 19, 1937.

BAKER and CONDON, JJ., dissenting.

Exceptions from Superior Court, Providence and Bristol Counties; Patrick P. Curran, Judge.

Action by the Rhode Island Hospital Trust Company, trustee under the will of John Johnston, against the J. B. Farnum Company, wherein defendant filed a special plea in set-off. Decision for plaintiff, and defendant brings exception.

Exception sustained.

Tillinghast, Collins & Tanner, Harold E. Staples, and Robert W. Hankins, all of Providence, for plaintiff. John R. Higgins and Sidney Silverstein, both of Woonsocket, for defendant.

MOSS, Justice.

This case is before us on the defendant's exception to the decision of the trial justice in favor of the plaintiff, entered after a trial before him, begun with a jury but completed without one by agreement of the parties. It is an action of assumpsit brought by the plaintiff as trustee under a residuary devise and legacy by the will of John Johnston, late of the city of Woonsocket in this state, deceased. It was brought to recover rent due under an indenture of February 28, 1924, by which John Johnston demised certain real estate in that city to the defendant for a term of years ending December 31, 1931, for certain rentals, which, after December 31, 1926, were $4,920 annually, payable at the rate of $410 for each month, on the first of the next month; and also to recover for the use and occupation of the same premises by the defendant with the consent of the plaintiff from the termination of the lease to April 30, 1932, at an agreed rate of $140 per month.

All the principal facts of the case were set forth in an agreed statement of facts and the others were shown by uncontradicted evidence. The indenture of February 28, 1924, recited four previous instruments between the same contracting parties. The first was a written lease of June 15, 1922, by which Johnston demised to the defendant a part of the same premises for the term of ten years from January 1, 1922, to December 31, 1931. In it he permitted the defendant to make changes in the demised premises, including the installation of an elevator on the outside of the building, provided that such changes should not weaken the structure of the building. The second and third instruments are in evidence in the case only by the following recital in the indenture of February 28, 1924: "Whereas the Lessor and Lessee by two instruments dated November 27th, A. D. 1922 and June 3rd, A. D. 1923 did agree with each other that the Lessee should make certain improvements and affix certain fixtures to the premises and that in certain contingencies the Lessor should pay the Lessee the fair value thereof to be agreed upon by arbitrators."

By the fourth instrument, dated November 21, 1923, Johnston demised to the defendant, for terms ending December 31, 1931, the remainder of the premises covered by the indenture of February 28, 1924, except that it did not include some yards surrounding the building, which were included in the last indenture. It contained the following agreement: "And it is agreed by and between the parties hereto that if the said lessee shall install on the premises hereby demised a steam heating apparatus and/or electric lighting and wiring, then the lessor shall, at the termination of this lease or any renewal thereof, pay to the lessee the fair value of said improvements." It then provided that if the parties should not be able to agree upon the value, it should be determined by arbitration in a manner set forth. The other agreements and provisions in the instrument are not in evidence in the case.

The indenture of February 28, 1924, after referring to and describing these four prior instruments, said: "Whereas it is deemed advisable by the parties hereto that all their agreements in respect of the said premises should be consolidated in one writing." It next said: "Now, Therefore, This Indenture Witnesseth: That the parties in consideration of the mutual covenants and agreements hereinafter contained agree to and with each other as follows. * * *" It then provided that the four prior instruments should be null and void from the date of the execution of the new indenture and it should be substituted for them. After the demise, for the term and at the rentals specified, the indenture set forth the covenant by the lessee to pay the rent at the times and in the manner specified and the provision that in case of the failure by the lessee to pay the rent within fifteen days after it became payable, the lessor should be at liberty to enter upon the premises and declare the lease at an end and to take immediate possession of the premises.

By clause 9 it was provided that if the lessee, at the end of the term, should desire a renewal of the lease for a further term of five years and should have given to the lessor one month's previous notice in writing, and should pay the rent reserved and perform its covenants and agreements up to the end of the term, the lessor would renew the lease for a further term of five years. Clause 10, upon which the decision of this case must largely depend, was as follows: "In case the renewal above provided for shall not be made and this lease terminate the 31st day of December A. D. 1931, then the Lessor covenants and agrees to pay the Lessee the sum of $4,984.00 in full payment for all improvements made and fixtures attached to the demised premises, including heating apparatus, elevator and electrical wiring and fixtures."

Clause 11, which also throws some light on our problem, provided that in case the lease should be renewed as above provided, then "upon the termination of the renewal, to-wit, on the 31st day of December, 1926" (evidently a mistake for 1936), the lessor should make to the lessee a corresponding payment of $3,764. Then followed the twelfth and final clause, which is also of great importance in the case: "This Indenture shall be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns, and all covenants herein contained shall be taken to be made by and with the heirs, executors, administrators, successors and assigns of the respective parties hereof."

Evidently extensive improvements were made and fixtures attached to the premises, before the execution of this indenture, and for them the lessor was obligated under prior instruments, to pay at the end of the term the agreed or appraised valuations.

It appears that the defendant performed all its obligations under this indenture of February 28, 1924, until November 1, 1931, including the payment to the plaintiff of the monthly installment of rent payable October 1, 1931, for the last preceding month. Meantime Johnston died on February 12, 1928, being then still the owner of the leased premises. There was a long contest as to the probating of another instrument offered for probate as his last will, but finally the will under which the plaintiff received title to these premises, subject to the lease set forth in the indenture of February 28, 1924, was admitted to probate and the plaintiff was appointed executor thereof on October 27, 1931, and was duly qualified, and continued to be executor, at least to the time of the hearing of this case in the superior court. It was stated in the agreed statement of facts that at the time of the appointment the estate was insolvent and had continued to be, though no declaration of insolvency had been filed in the probate court because of the hope that the estate would become solvent by appreciation of the real estate, which formed the greater part of it.

The defendant did not pay the installment of rent payable November 1, 1931, for the month of October, but entered the amount of it, $410, on its books to the credit of the plaintiff against the item of $4,984, which it debited to the plaintiff as being payable to the defendant on January 1, 1932, under the above clause 10 of the indenture of February 28, 1924. It did not pay the installments of rent payable on December 1, 1931, and January 1, 1932, but credited them in the same way upon its books. No notice of any of these credits was then given to the plaintiff. The defendant did not try to get a renewal of the lease by giving to the plaintiff a month's previous notice in accordance with clause 9 of the indenture. On November 5, 1931, it filed in the probate court its claim against the estate of Johnston for $4,984 under clause 10 of the indenture, and this claim was disallowed. On April 8, 1932, it filed an action on this claim, but apparently the action is still pending without having been tried.

On November 27, 1931, the plaintiff notified the defendant in writing that by reason of the latter's failure to pay the installment of rent which was payable November 1, 1931, it, the plaintiff, declared the lease broken and no longer binding and that it terminated and canceled the lease. It also, by a representative, entered on the premises with a declared intention of taking possession thereof and ending the tenancy of the defendant under the lease. The defendant, however, refused to admit that the lease was terminated, and continued in occupation of the premises, without any further attempt by the plaintiff to eject it. The defendant, a short time before, had called the plaintiff's attention to the fact that $4,984 would be payable to the defendant at the termination of the lease and that the Johnston estate was probably insolvent; but it received no assurance that the money would be paid. It has since contended that, by reason of the insolvency of the estate, the defendant was not in default under the indenture in not paying the rent due November 1, 1931, since it had a right to withhold payment on account of the $4,984, which would be payable to it on January 1, 1932, and probably could not be paid.,

The defendant,...