Shanahan v. Collins

• Decision Date: 21 July 1975
• Docket Number: No. C--531,C--531
• Parties: William M. SHANAHAN, and Ellen C. Shanahan, Petitioners, v. Margarethe COLLINS, Respondent.
• Court: Colorado Supreme Court

Page 1261

539 P.2d 1261

189 Colo. 169

William M. SHANAHAN, and Ellen C. Shanahan, Petitioners, v. Margarethe COLLINS, Respondent.

No. C--531.

Supreme Court of Colorado, En Banc.

July 21, 1975.

Clark, Martin & Pringle, Bruce D. Pringle, Denver, for petitioners.

Vranesic, Right & Linn, G. F. Linn, Denver, for respondent.

Legal Aid Society of Metro. Denver, Michael L. Gilbert, Denver, for amicus curiae.

KELLEY, Justice.

In this proceeding certiorari was granted to review the decision of the Court of Appeals in Collins v. Shanahan, 34 Colo.App. 82, 523 P.2d 999.

On February 4, 1972, Margarethe Collins, the plaintiff in the trial court and respondent here, filed a complaint for unlawful detainer and damages. William M. Shanahan and Ellen C. Shanahan, the defendants in the trial court and petitioners here, answered denying that they were unlawfully in possession of the premises and also denied that plaintiff was entitled to damages. The parties will be referred to by their respective trial court designations.

As to the issue before us, the facts giving rise to this action are not in serious dispute. Originally, the defendants were the owners of the Penn VII Apartment House. The defendants resided in the penthouse of this apartment house and the defendant, Dr. Shanahan, maintained his office for the practice of psychiatry in these premises as well. After negotiations involving the defendants' retention of a tenancy to the penthouse, the plaintiff purchased the Penn VII Apartment House in August, 1968. As partial consideration for the sale of the building, two weeks prior to consummation of the sale transaction, the parties entered into a rental agreement whereby the defendants retained a life estate in the penthouse. One covenant of the lease stated that the '(l) andlord and tenant hereby agree that landlord will cause the subject premises to be painted once every three (3) years.'

On October 9, 1971, the respondent notified the petitioners that their tenancy would be terminated as of November 1, 1971. The petitioners did not vacate and in November, 1971, made a demand upon the respondent that the penthouse be repainted according to the covenant to repaint. The respondent refused to repaint the premises thereby prompting the petitioners to contract on their own to have the penthouse painted at a cost of $1,808. The petitioners withheld rent for January, February, March and part of April for the purported purpose of setting off the expense incurred in having the penthouse repainted against the rent.

Two basic questions have been present since the outset of this action. First, whether the defendants possessed a life estate in the premises in question. Second, whether the defendants' failure to pay rent constituted a forefeiture, thereby entitling the plaintiff to possession of the premises. The trial court, relying on Edmundson v. Preville, 12 Colo.App. 73, 54 P. 394 (1898), answered the first question in the negative and concluded that the tenancy was month to month. As to the second issue, the trial court concluded that by withholding rental payments for the ostensible purpose of covering the expense of repainting the premises, the defendants were in default which resulted in a forfeiture. The court entered judgment for the plaintiff for possession, for $1,833, the amount of rent withheld, and for attorney fees in the sum of $750.

The Court of Appeals affirmed the judgment of the trial court 'with regard to the granting of possession and rents due to plaintiff' and reversed as to the award of attorney fees. In so diciding, the Court of Appeals concluded that the defendants were holders of a tenancy for life, but that the defendants' covenant to pay rent was independent of the plaintiff's covenant to repaint. From the latter conclusion followed the result that the defendants' obligation to pay rent continued despite the plaintiff's refusal to perform her covenant.

We agree with the conclusion of the Court of Appeals regarding the nature of the tenancy in issue and approve that portion of their opinion pertaining thereto. However, we disagree with the approach employed and the conclusion reached with respect to the issue evolving from the defendants' default in rental payments. Therefore, we reverse the judgment.

As were the courts below, we are concerned herein with the issue of whether the defendants' failure to pay rent in the form of a monthly monetary payment constituted a forfeiture of the tenancy. However, in this case we chose not to resort to the concept of covenant independency which governed the lower courts but to resolve the issue of termination by the application of the law of contracts which comports with precedent. C. F. Ruston v. Centennial Real Estate Investment Co., 166 Colo. 377, 445 P.2d 64 (1968); Leach, Sr. v. La Guardia, 163 Colo. 225, 429 P.2d 623 (1967); Denver Plastics v. Snyder, 160 Colo. 232, 416 P.2d 370 (1966); Fern v. Crandell, 79 Colo. 403, 246 P. 270 (1926); See also 1 American Law of Property, (Casner ed. 1952) 3.11 p. 202.

At common law the real estate lease developed in the field of real property rather than contract law. Green v. Superior Ct. of City and County of San Francisco, 10 Cal.3d 616, 111 Cal.Rptr. 704, 517 P.2d 1168 (1974) and cases cited therein. Under this concept a lease was considered to be a conveyance of an interest in real estate. Thus, the duties and obligations of the parties, implied as well as express, were dealt with according to the law of property rather than the law of contracts. Marini v. Ireland, 56 N.J. 130, 265 A.2d 526 (1970). This led to the conclusion that the covenants of the respective parties were independent. We do not consider this to be the proper approach to the problem presented here.

In the numerous jurisdictions which have considered the problem before this court today, it has long been the general rule that a tenant may set off against the rent the costs and expenses incurred in performing the landlord's covenant to make improvements or repair. E.g. McAlester v. Landers, 70 Cal. 79, 11 P. 505 (1886); Johns v. Gibson, 60 Ga.App. 585, 4 S.E.2d 480 (1939); Miller v. Sullivan, 77 Kan. 252, 94 P. 266 (1908); Hendry v. Squire, 126 Ind. 19, 25 N.E....