Sharon v. American Fidelity Co.

• Decision Date: 02 June 1913
• Citation: 157 S.W. 972
• Parties: SHARON v. AMERICAN FIDELITY CO.
• Court: Missouri Court of Appeals

157 S.W. 972

SHARON v. AMERICAN FIDELITY CO.

Kansas City Court of Appeals. Missouri.

June 2, 1913.

Rehearing Denied June 23, 1913.

1. LANDLORD AND TENANT (§ 198) — RE-ENTRY BY LANDLORD — FORFEITURE — RECOVERY OF "RENT."

Where a lessor re-enters and declares a forfeiture for the lessee's failure to pay rent, rent then fully accrued is collectible, but rent which has not fully accrued is not recoverable; "rent" being compensation for the use and occupation of premises.

2. PRINCIPAL AND SURETY (§ 119) — LIABILITY OF SURETY — BREACH OF CONTRACT.

Where within the time allowed for performance of a contract by a party thereto the adverse party makes performance impossible, the surety on the bond of the party conditioned on performance is not liable.

3. PRINCIPAL AND SURETY (§ 119) — NONPERFORMANCE BY TENANT — LIABILITY OF SURETY.

A lessee for a term of years agreeing to pay rent and make improvements within two years gave a bond with surety conditioned for performance stipulating that the surety should be liable for the refusal of the lessee to make the improvements, or his abandonment of the lease. The lessee failed to pay rent and the lessor entered and forfeited the lease. The lessee acquiesced therein. No improvements were made, but the forfeiture occurred six months before the expiration of the time fixed for making the improvements. Held, that the surety was liable for the damages sustained by the lessor for the lessee's failure to make the improvements.

Appeal from Circuit Court, Jackson County; J. E. Goodrich, Judge.

Action by Arthur M. Sharon against the American Fidelity Company. From a judgment for plaintiff, defendant appeals. Affirmed.

Sebree, Conrad & Wendorff, of Kansas City, for appellant. Lathrop, Morrow, Fox & Moore and W. R. Clarke, all of Kansas City, for respondent.

ELLISON, J.

Plaintiff is the lessor of certain real property in Kansas City, and defendant is the surety of the lessee that the latter would perform his obligations for making certain improvements stated in the lease. The lessee failed in performance of portions of his undertaking, and plaintiff instituted this action against defendant as his surety. The judgment in the trial court was for the plaintiff.

It appears that the lease was made to George H. Kersting for the period of 99 years. The following provisions thereof bear upon the present controversy, viz.:

"For the first four months the lessee shall pay only $75.00 per month, and for the first five years of the term of this lease the lessee shall pay only the sum of $1,800.00 per annum, and for the next five years, after the expiration of the first five years the annual rental shall be only $2,100.00 per annum.

"Art. 15. The lessee agrees as part of the consideration of this lease to make additional improvements on the said demised premises to the value of at least four thousand dollars ($4,000.00) within two (2) years from the date of this lease, and an additional four thousand dollars ($4,000.00) within five years from the date of this lease; * * * and the lessee shall give the lessor security and give the same at the time of the execution of this lease, such security to be approved by the lessor, for at least four thousand dollars ($4,000.00) and until the above improvements are made and are clear and free from all judgments and mechanics' liens."

In compliance with the foregoing provision as to security, Kersting procured the defendant as his surety to execute the bond upon which the action is based. The bond makes appropriate reference to the lease, and recites that Kersting had agreed to make improvements on the property to the value of $4,000 within two years, and other improvements of that value within five years. It then contains a contractual clause to which we shall refer further on.

Kersting took possession of the property as lessee and paid rent as agreed for more than one year up to April, 1911, but failed to pay the installment due at that time, and at that time none of the improvements had been made; and no offer of rent, or to make the improvements, was made afterwards. Thereupon plaintiff notified defendant by letter of Kersting's default. Again, on June 2d, plaintiff wrote notifying it of the default and inclosed a copy of a notice which he had served on Kersting notifying him that he, plaintiff, would re-enter the premises and forfeit the lease if the rent was not paid. Plaintiff then, about six months before the two years limited for the first improvements had expired, took possession of the property, no objection appearing to be made by Kersting, and immediately wrote to defendant that he had done so. The improvements contemplated in the lease and bond were not made by either Kersting or defendant. There was testimony showing plaintiff's damage to be $4,000.

It will be noted that a part of the foregoing lease provides that improvements to the value of $4,000 shall be made within two years. This action was brought after the expiration of the two years in which the first improvement was required, though, as has just been stated, plaintiff entered into possession and declared a forfeiture six months before the time expired. On this state of facts, especially as influenced by the last sentence, defendant states the question involved in this language: "Is the lessee, or his surety, liable for the nonperformance by the lessee of an obligation in the lease, which was not required to be performed until a time after the lease had been forfeited and made void by the lessor?" Its claim is that upon default in the payment of rent by the lessee plaintiff, as lessor, had two courses open to him: First, to forfeit the lease for the default and sue for the rent up to that time and enforce any obligation matured at that time; or, second, he could allow the lease to continue until the two years limit for first improvements to be made had expired and then sue the lessee and defendant.

Plaintiff declines to accept defendant's suggestion of the true question and states it in this way: "Can the defendant surety company escape the obligation of its bond and contract to pay the plaintiff $4,000 (one of the considerations of the lease) if the lessee failed to make the improvements on the property within two years, when the sole default is on the part of the lessee himself and when he abandons the lease before the expiration of the two years and thereby puts it out of his power to carry out his agreement; and where, also, the lessor has proceeded at every step strictly in accordance with the terms and...