Riggs v. Murdock

• Decision Date: 02 September 1969
• Docket Number: CA-CIV,No. 1,1
• Citation: 10 Ariz.App. 248,458 P.2d 115
• Parties: Rockford R. RIGGS, Appellant, v. David H. MURDOCK, dba David H. Murdock Development Company, Appellee. 823.
• Court: Arizona Court of Appeals

Page 115

458 P.2d 115

10 Ariz.App. 248

Rockford R. RIGGS, Appellant, v. David H. MURDOCK, dba David H. Murdock Development Company, Appellee.

No. 1 CA-CIV 823.

Court of Appeals of Arizona, Division 1, Department B.

Sept. 2, 1969.

Rehearing Denied Sept. 29, 1969.

Review Denied Nov. 12, 1969.

Leven B. Ferrin, Phoenix, for appellant.

Gust, Rosenfeld & Divelbess, by Richard A. Segal, Phoenix, for appellee.

JACOBSON, Judge.

The confusion in nomenclature shown by the defendant's pleadings in this action points up the confusion existing in the law of landlord and tenant. In this field, the law of property rights have been blended with the law of contracts to such an extent that, depending upon what court is speaking, the practitioner is left in a quandary as to what law applies.

This quandary arose in an action by DAVID H. MURDOCK, dba DAVID A. MURDOCK DEVELOPMENT COMPANY, Plaintiff-appellee, against ROCKFORD R. RIGGS, Defendant-appellant, and JULIA W. RIGGS, his wife, for rentals due and owing under the terms of a lease executed by Appellant ROCKFORD R. RIGGS for office space located in the Guaranty Bank Building located in Phoenix, Arizona.

The trial court, sitting without a jury, entered judgment against Defendant ROCKFORD R. RIGGS for the sum of $8,097.16, together with attorney's fees in the sum of $600.00. The court found in favor of Defendant, JULIA W. RIGGS, wife of ROCKFORD R. RIGGS, and no cross-appeal has been taken from this judgment.

The Defendant by his amended answer in Superior Court raised the defense of 'actual or constructive eviction.' In this court he defends on the theory of 'surrender or extinguishment' of the lease. What the defendant is saying, both in the trial court and here, is 'Mr. Landlord, you did some acts in connection with my lease which were inconsistent with my rights as a tenant and therefore I don't have to pay you rents.' We are called upon to determine whether under the following facts such a defense is applicable here.

On May 7, 1963, the Defendant signed a lease with Plaintiff on Suite 910 in the Guaranty Bank Bldg. to be used as a real estate office, for a term of five years beginning on June 1, 1963, at a monthly rental of $359.95 payable on the first day of each month in advance. The lease by addendum contained an 'escape clause,' which provided that the lessee was granted an option to cancel the lease at the end of the third year upon sixty days' written notice and the payment of $600.00.

The Defendant occupied the suite until July 27, 1963, when he vacated the premises. There is no contention that the vacating of the premises by the Defendant at this time operated as an abandonment by the Defendant of the lease. The subsequent actions of the Defendant bear this out. On September 17, 1963, Defendant through his own efforts, obtained a subtenant, Mr. Kelly of Executive Properties, Inc., to occupy the premises and advised the Plaintiff by letter dated September 17, 1963, that Mr. Kelly would occupy the suite on a month-to-month basis; and that Mr. Kelly was to pay the same rental as Defendant had agreed and these sums were to be paid in advance. The letter further provided:

'You are hereby authorized and directed to collect said sum from Mr. Kelly or his associates and To apply the same toward the amount due under the lease of said space.' (Emphasis supplied.)

The letter concluded with the statement 'if there is any problem with this arrangement, please notify me immediately, or this will serve as a memorandum of the agreement.' There was no further correspondence or contact between Plaintiff and Defendant concerning this lease until December 10, 1964, at which time Defendant was notified by letter from the Plaintiff that 'your subtenant in Suite 910 has been locked out as of December 9, 1964, for non-payment of back rent in the amount of $1,713.21 * * *. Should we not recover the entire amount and deem the remainder uncollectible, we will immediately notify you of the amount due. * * *. Please let us know whether you are planning to use the office yourself or find another subtenant. We will, of course, do everything possible to locate a subtenant for you.'

In the interim between the Defendant's letter of September 17, 1963, and Plaintiff's letter of December 10, 1964, various difficulties arose in the collection by Plaintiff of the rent from Mr. Kelly, the rental being in arrears on several occasions by one or two months. The last valid rental payment made by Mr. Kelly was on August 10, 1964 for the months of June and July, 1964. No rental was received from Mr. Kelly for the months of August, September, October, November and December, 1964, although a check was received by Plaintiff on November 6, 1964, from Mr. Kelly for $800.00, but was returned by the bank sometime later as being drawn on a nonexistent branch. Plaintiff at the time of the delivery of the $800.00 check, but prior to its return, advised Mr. Kelly that he would have to bring the rental arrearage current by December 7, 1964. Mr. Kelly failed to pay the arrearage by that date, whereupon, Plaintiff locked Kelly out of the premises, claimed a landlord's lien on his furniture, and subsequently sold the same, applying the proceeds to the rental arrearage. In May, 1964, Kelly as subtenant, submitted to Plaintiff another subtenant who was rejected by Plaintiff because of his poor payment record and difficulties with the law. Plaintiff voluntarily canceled the lease as of June 30, 1966, under the 'escape clause' provision of the lease set forth above and charged the Defendant an additional $600 as provided.

Suit was brought by Plaintiff for rents due from August 1, 1964, to June 1, 1966, less the amount obtained by sale of Mr. Kelly's furnishings together with the $600 penalty and attorneys fees as provided under the terms of the lease.

As we have indicated, the theories of 'constructive eviction' and 'surrender by operation of law' were raised by defendant. The rule of law applicable to both of these theories is: Where the parties to a lease do some act so inconsistent with the relationship of landlord and tenant as to imply that they both agree to consider the lease at an end and to yield up the estate, a cancellation of the lease under the principles of estoppel occur. 3A G. Thompson, Real Property Sec. 1344 (repl. ed. 1959); Annot., 78 A.L.R.2d 933 (1961).

This defense can arise under two separate and distinct fact situations:

(1) An initial act by the landlord which renders the lease unavailing to the tenant or deprives him of the beneficial enjoyment of the premises and by reason of the acts of the landlord the tenant vacates the premises. (This has been defined as 'constructive evidence'. Automobile Supply Company v. Scene-In-Action Corp., 340 Ill. 196, 172 N.E. 35, 69 A.L.R. 1085 (1930); Kulawitz v. Pacific Woodenware & Paper Co., 25 Cal.2d 664, 155 P.2d 24 (1944).)

(2) An initial abandonment of the leased premises by the tenant and an unqualified retaking of possession of the property by the landlord. (This generally has been referred to as 'surrender by operation of law'. Dorcich v. Time Oil Co., 103 Cal.App.2d 677, 230 P.2d 10 (1957); 4 H. Tiffany, Real Property Sec. 962 (3d ed. 1939).)

The legal problems most frequently arise under the second set of circumstances set forth above, dealing primarily with what constitutes an abandonment by the tenant and what constitutes an unqualified retaking of possession or reentry by the landlord, in absence of lease provisions dealing with the problems.

The courts have differed as to the test in determining legal principles to be applied in these cases. These differences arise primarily from whether the court considers the action one for breach of contract or one of interference with real property rights. We believe the best rule, and the one based upon the soundest reasoning, is that the question of the tenant's abandonment and the intent of the...