Sentry S.C. Corp. v. B'Dway & 4TH Ave. Realty Co.

• Decision Date: 03 February 1939
• Citation: 276 Ky. 648
• Court: United States State Supreme Court — District of Kentucky
• Parties: Sentry Safety Control Corporation v. Broadway & 4th Avenue Realty Co.

276 Ky. 648

Sentry Safety Control Corporation v. Broadway & 4th Avenue Realty Co.

Court of Appeals of Kentucky. Common Pleas Branch, Third Division.

February 3, 1939.

1. Bailment. — Where lessee of safety devices for projector assigned lease to third party who rented lessee's theater, lessee had been prompt in rental payments on devices and payments thereafter were made by assignee and were late, lessor was charged with notice that payments were made by assignee, as respects questions whether lessor had notice of transfer of lease and whether lessee was relieved from liability for rental.

2. Bailment. — Where lease of safety devices provided that lessee would continue liable for rent upon assignment, required written notice before termination of lease to prevent renewal, and required notice of transfer, lessor, who received rent from lessee's assignee for two years before expiration of lease and knew that lessee was no longer operating theater in which devices were installed, waived requirements as to notice, and lessee was not liable for rent under renewal lease.

3. Notice. — Knowledge, however acquired, of facts which would

operate on a rational businessman's mind, and make him act with reference thereto, constitutes "notice"; actual notice being unnecessary.

Appeal from Jefferson Circuit Court.

ABRAHAM & GUTHERIE for appellant.

MILLARD COX for appellee.

OPINION OF THE COURT BY MORRIS, COMMISSIONER.

Affirming.

Appellee in 1930 owned the Brown Theatre in Louisville, and was then engaged in the business of showing motion pictures therein. Appellant, owner of a patented safety device used in connection with picture projection, entered into a written contract on April 1, 1933, with appellee, for the rental of two of such devices at $2.50 per week each. So much of the contract as is in controversy, follows:

"(a) No charge to be made for any period of four weeks or longer during which motion pictures are not projected.

"(4) Either party may terminate this lease at the expiration of the term hereby created, by giving to the other party, sixty days in advance of such expiration, written intention to do so, but in default of such notice this lease, with all conditions and covenants hereof, shall continue for an additional term, and so on from term to term.

"(5) This lease shall not be assigned by either party without the written acceptance of the assignee and the written consent of the lessors, provided, however, that if the lessee sells or disposes of his interest in any theatre listed in the attached schedule he may assign this lease (insofar as it pertains to such theatre) to the purchaser of such interest without the written consent of lessor, and such assignment shall become effective upon the written acceptance thereof by the assignee; no assignment of this lease, however, shall relieve lessee of liability hereunder, unless lessor consents in writing to release lessee from such liability."

The appellee operated the picture show, using the devices, from April, 1930, to April 1933, at which time it leased the premises and all equipment to J. Schwarz, who operated the picture house, using the appliances, until July, 1936, when he defaulted in payment of rent to his landlord. After April, 1933, he made no payments for the use of the device until about a year after his taking over the picture show and up to the date when he ceased to operate. The original lessee of the devices made no payment therefor after Schwarz took over the place.

On January 8, 1937, appellant sued and by its petition set out the contract, stressing the portions thereof which we have quoted above. The original lease was for a term of five years from April 1, 1930; its first expiration date April, 1935. It is alleged that it had not been given notice of appellee's purpose or intention to cancel, so that there was automatic extension of the lease for another term of five years, on like terms.

Appellant treated the expiration of the second term as of April 1, 1940, and alleged that during the original and renewed term lessee had made certain payments, the last being on May 25, 1936. Its account was exemplified as follows: Rent from April 1, 1930, to April 1, 1935, $1,300. Rent from April 1, 1935, to 1940, $1,300. Less credits and payments, $1,386.06. Balance due to maturity, $1,213.94, for which sum it sought recovery because of the alleged violation of the terms of the contract.

Appellee answered, denying the allegations of the petition, and in another paragraph admitted that it rented and used the safety devices from April 1, 1930, to March 31, 1933, and paid all rentals due by it under the lease. It pleads that on the last above date it ceased to operate, control or manage the picture house, terminating all interest therein, save ownership of the property. That under the terms of said lease with plaintiff it was not obligated to pay rent on the devices during any period after it ceased to operate, and that it did not operate from April 1, 1933, to September 25, 1936. It also asserted that on April 1, 1933, the control and operation of the picture house was taken over by Schwarz, under a lease for a five year period; that under its terms Schwarz assumed and agreed to perform all then existing contracts in connection with the operation of the picture house, "including the lease of said safety devices," and from date of lease Schwarz was in possession of the house as lessee, with all fixtures, furniture and equipment used in connection with picture showing, including safety devices.

It is further stated that appellant was notified by appellee that Schwarz had assumed responsibility under said lease, and it accepted him as assignee of this lease; that Schwarz had possession more than sixty days in advance of the first expiration date, as assignee of the contract with appellant, and having terminated its interest and having assigned said lease to Schwarz it did not attempt to cancel said lease, because no longer bound thereon, and having no interest therein.

Schwarz abandoned the premises about July 10, 1936, and no pictures were shown until September 25, 1936, when appellee resumed operation, and finding the two devices there, requested the lessor to remove them, because they were not currently used by picture houses, and were regarded as useless by the operator of appellee's picture equipment, and not having been removed it shipped them to appellant and they were received by it on November 25, 1936.

A reply controverted the answer, and it was agreed by parties that the case might be, as it was, heard by the court without the intervention of a jury. Proof was heard orally and by deposition, and the court in a comprehensive opinion (made part of the record) separated findings of fact and conclusions of law, which led to the entry of a judgment in defendant's favor. Motion for a new trial was overruled and appeal granted.

There was little testimony, and the only part which seems of pertinence to the issue was directed as to whether or not, during the lease period, there was notice to the appellant that appellee had ceased to operate and had turned over the theatre and equipment, including the safety devices, to Schwarz.

The general manager of the appellant testified, introducing the lease and company's records showing payments. This officer says that neither sixty days before the termination of the first term of the lease,...