Sharon v. American Fidelity Company

• Citation: 157 S.W. 972,172 Mo.App. 309
• Parties: ARTHUR M. SHARON, Respondent, v. AMERICAN FIDELITY COMPANY, Appellant
• Decision Date: 02 June 1913
• Court: Kansas Court of Appeals

157 S.W. 972

172 Mo.App. 309

ARTHUR M. SHARON, Respondent, v. AMERICAN FIDELITY COMPANY, Appellant

Court of Appeals of Missouri, Kansas City

June 2, 1913

Appeal from Jackson Circuit Court.--Hon. Jas. E. Goodrich, Judge.

Judgment affirmed.

Sebree Conrad & Wendorff for appellant.

The lessor re-entered and took the premises from the lessee and declared the lease forfeited and void about six months before the time provided in the lease for making the improvements had expired. By these acts he released the lessee from all liabilities under the lease which had not been incurred including the obligation to make the improvements, and consequently there is no right of action against the defendant as surety on the bond, and the lower court committed error in refusing the demurrer to the evidence, and in giving judgment against the defendant. Baxter v Heimann, 134 Mo. 260; Lamson Service Co. v. Bowland, 114 F. 639; American Bonding Co. v. Pueblo Investment Co., 150 F. 17; 1 Tiffany on Landlord and Tenant, 774; Geddis v. Folliett, 94 N.W. 431; Chipman v. Eric, 5 Cal. 49; Herboth v. Radiator Co., 145 Mo.App. 484; Trustees v. Miller, 3 Ohio 261; 1 Brandt on Suretyship and Guaranty, 274; Kramer v. Amberg, 53 Hun (N. Y.), 427, 60 S.Ct. 427; Campbell v. Nixon, 2 Ind.App. 463; Kane v. Davies, 2 Kan.App. 634; Ex parte Houghten, 12 Fed. Cas. 6725; Grownes v. Trust Co., 147 Ill. 634; Watson v. Merrill, 136 F. 359; Given v. Caudle, 34 La. Ann. 1025; Boyd v. Gore, 143 Wis. 531; Palethrop v. Bergner, 52 Pa. St. 149; People of Porto Rico v. Title Guarantee & Surety Co., 180 F. 641; Reed v. Snowbill, 51 N. J. L. 162; Cage v. Cassidy, 23 (U.S.), 109, L.Ed. 430.

Lathrop, Morrow, Fox & Moore and W. R. Clarke for respondent.

(1) The lessee defaulted in the performance of an obligation which was one of the considerations of the lease. The default was due entirely to the fault of the lessee. The lessor was in no way to blame therefor. Consequently the surety is liable, although the lessee would have had a longer time for performance of this contract had he kept the other covenants of the lease. Bonding Co. v. Inv. Co., 150 F. 17; Shelton v. Durham, 76 Mo. 234; Davis v. Clark, 41 N.Y.S. 835.

OPINION

ELLISON, P. 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 ninety-nine years. The following provisions thereof bear upon the present controversy, viz.:

"For the first four months the lessee shall pay only $ 75 per month, and for the first five years of the term of this lease the lessee shall pay only the sum of $ 1800 per annum, and for the next five years, after the expiration of the first five years, the annual rental shall be only $ 2100 per annum.

Article 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 ($ 4000) within two (2) years from the date of this lease, and an additional four thousand dollars ($ 4000) 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 ($ 4000) and until the above improvements are made and are clear and free from all judgments and mechanics' liens."

In compliance with the foregoing provisions 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 $ 4000 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 2nd, plaintiff wrote notifying it of the default and enclosed 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 four thousand dollars.

It will be noted that a part of the foregoing lease provides that improvements to the value of $ 4000 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 the 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 $ 4000 (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 provisions of the lease and of the bond or contract which the Surety Company entered into guaranteeing performance of this part of the lease."

The law seems to be clear that if a lessor enters the premises and declares a forfeiture for a failure of the lessee to pay rent, all rent then fully accrued is collectible by the lessor, but for the rent which has not fully accrued at the time of entry and forfeiture an action cannot be maintained. In American Bonding Co. v. Pueblo Inv. Co., 150 F. 17, it is said, and we think rightly, that "a surrender, re-entry, or eviction between rent days, or at any time before the rent has fully accrued, releases the lessee from liability therefor and defeats an action for its recovery." In Smith v. Shepard, 15 Pick. 147, 150, the rent was payable quarterly in advance, and an eviction was made on the first day of the quarter. Chief Justice SHAW said: "As to the quarter's rent due by covenant in advance, the defendant had the whole day to make the payment in advance. But during the day the mortgagee entered and ousted him, and this was a good excuse."

In Curtiss v. Miller, 17 Barb. 477, 479, action was brought for the rent of a half year...