Shepard Land Co. v. Banigan

• Citation: 87 A. 531,36 R.I. 1
• Parties: SHEPARD LAND CO. v. BANIGAN.
• Decision Date: 12 July 1913
• Court: United States State Supreme Court of Rhode Island

87 A. 531

36 R.I. 1

SHEPARD LAND CO.

v. BANIGAN.

Supreme Court of Rhode Island.

July 12, 1913.

Exceptions from Superior Court, Providence and Bristol Counties; Willard B. Tanner, Presiding Justice.

Action by the Shepard Land Company against Emma T. Banigan, executrix. On exceptions by both plaintiff and defendant to rulings of court and judgment for the plaintiff. Judgment modified, and exceptions overruled.

Comstock & Canning and Gardner, Pirce & Thornley, all of Providence, for plaintiff.

John W. Hogan and Philip S. Knauer, both of Providence, for defendant.

BAKER, J. This is an action of covenant, brought against the defendant, as executrix of the will of William B. Banigan, to recover damages for the breach of a guaranty under seal, dated November 27, 1900, and executed by James E. Johnson, as principal, and by William B. Banigan, Walter Brett, and Richard Lalor, as sureties. In this guaranty it is recited that the plaintiff had executed a certain indenture of lease to James E. Johnson, a copy of which was annexed to the guaranty, and that said Johnson, as principal, and M. R. Downey, H. H. Franklin, Charles A. Franklin, W. H. Morgan, H. B. Winship, and R. W. Burnham, as sureties, had given their written obligation, a copy of which was annexed to the guaranty, in the sum of $50,000, for the payment of all rents covenanted to be paid in and under said lease. Then by the terms of said guaranty the obligors therein named, in consideration of the execution of said lease by said plaintiff to said Johnson and in further consideration of the sum of $1 to each of them paid by the plaintiff, jointly and severally, guaranteed the payment within 90 days of the time when the same should become due and payable of all sums that might become due and payable to the plaintiff under and by virtue of the written obligation aforesaid, provided that their liability on said guaranty should in no case exceed the sum of $25,000.

The instrument referred to in the guaranty as the "written obligation" of James E. Johnson, as principal, and the others named therein, as sureties, is a bond to the plaintiff in the penal sum of $50,000, signed and sealed by them, and conditioned upon the payment by James E. Johnson, his executors, administrators, and assigns, of "all the rent reserved, agreed, and covenanted by him to be paid in and under any of the provisions in said lease contained." The bond also contains this provision: "And the waiver of any breach of any covenant in said lease contained in any case by the said the Shepard Land Company or its assigns shall in no way impair this obligation." The bond recites that said James E. Johnson has entered into with the plaintiff an indenture of lease of the building known as the Providence Athletic Association Building, dated June 1, A. D. 1900, and that a copy of said lease is attached to the bond.

Said indenture of lease between the plaintiff and said Johnson is a long instrument, and it is not necessary for the purposes of this case to quote it in full. It bears date June 1, 1900, and was acknowledged by John Shepard, Jr., as treasurer of the plaintiff company, in its name and behalf, on the 27th day of November, 1900. By it the plaintiff demised and leased to said James E. Johnson "that estate situate in said city of Providence, with the building thereon known as the Providence Athletic Association Building," a description of which estate by metes and bounds is given in said lease, for "the term of fifteen (15) years, commencing the 1st day of June, A. D. 1900, and ending on the 31st day of May, A. D. 1915."

By clause (1) of the "third" paragraph of said lease, the plaintiff, for itself and its assigns, covenanted with said lessee as follows: "That it will and they shall expend sufficient money for the alteration and improvement of the building on said demised premises so as to put the same in good condition for a first-class hotel, according to the plans, and, so far as the same may extend, according to the general specifications prepared by Frederick Pope, architect, 622 Tremont Building, Boston, Mass., which plans and general specifications have been signed by the parties hereto for identification." The amount to be expended by the plaintiff under this clause was to be known and referred to as the "Improvement Fund."

By clause (2) of said "third" paragraph the plaintiff covenanted and agreed to "purchase furniture, carpets, and bedsprings necessary for the equipment and furnishing of said hotel * * * of such character, quality, and kinds as shall be suitable for a first-class hotel." The cost of said furniture, carpets, and bedsprings in no event was to exceed $45,000. They were to be delivered and placed in said hotel by the plaintiff as soon as said improvements and alterations had been completed, and were to be purchased at such time as might be agreed upon by the parties to the lease. The amount to be expended by the plaintiff under this clause (2) was to be known and referred to as the "Furniture Fund."

The said lessee by the "first" paragraph of said lease covenanted for himself, his executors, administrators, and assigns, that he and they should pay "as and for rent of said demised premises, all the amounts specified at the times and in the manner specified in the clauses lettered 'a,' 'b,' and 'c'" of those paragraphs.

By clause (a) aforesaid the lessee was to pay for the period of five years from June 1, 1900, the sum of $1,000 each on the last business day of each and every calendar month, provided that the monthly amounts that should accrue from said June 1, 1900, to such time as the improvements and alterations aforesaid should be completed and the building on said demised premises be ready for occupancy should be paid in fifteen equal installments, the first to be paid May 31, A. D. 1901, and thereafterwards one installment on the 31st day of May in each and every year until said amount is paid. By a proviso in said clause (1) of said "third" paragraph the plaintiff was to rebate such sums as were payable under said clause (a) of said "first" paragraph from November 1, 1900, to such time as said improvements and alterations should be completed and said building be ready for occupancy. The amount of the monthly payments for rent after the first five years of the lease were to be agreed upon by the parties, or, on their failing to agree, by arbitration.

By clause (b) of the "first" paragraph of the said lease the lessee was to pay for 15 years beginning with May 31, 1901, on May 31st of each year, one-fifteenth of the "Improvement Fund," provided that, if said fund should exceed $50,000, only one-fifteenth of $50,000 should be so payable annually; the excess over $50,000 being payable in twelve equal annual installments beginning May 31, 1904. By this clause (b) interest on the "Improvement Fund" at the rate of 6 per cent. per annum from the dates of payment of the expenditures included in that fund to the time when the improvements and alterations should be completed and the building be ready for occupancy was to be paid by the lessee at that time, and after that time the interest on this fund, or the unpaid balance thereof, was to be paid monthly on the last business day of each calendar month.

By clause (c) of said "first" paragraph of said lease the lessee was to pay for 10 years on the 31st day of May, beginning with May 31, 1901, one-tenth of the "Furniture Fund," and was to pay interest on that fund, or the unpaid balance thereof, at the rate of 6 per cent. per annum, to be reckoned from the time of the payment of any money for the purchase of furniture, carpets and bed-springs, the final payment to be made at the time when the improvements and alterations should be completed and the building be ready for occupancy, and thereafterwards on the last business day of each and every calendar month.

The "second" paragraph of said lease provides "that if default shall be made in the payment of any of the amounts hereinbefore covenanted and agreed to be paid" by said lessee, "or default shall be made in any part of them," or any other default in respect of any of the covenants of the lease should be made by the lessee, and such default should continue for 30 days after demand for payment or performance, whether the demand should be made upon the day and upon the premises or not, then it should be lawful for the lessor thereupon, or at any time thereafter, so long as such default should continue, and with or without process of law, to re-enter upon said demised premises and to terminate said lease, without prejudice, however, to any claim for damages or right of action or remedy which it might otherwise have or use for breach of such covenants or agreements.

The lease also contained the covenant by the lessee that he would not assign said lease or underlet said premises without the previous consent in writing of the lessor.

The plaintiff in its declaration sets out the making of said lease and makes profert thereof, and among other things in substance recites the covenants of said lease hereinbefore recited. It also avers the making of said bond, of which it makes profert, and sets it out substantially, if not verbatim. It then alleges the giving of the guaranty sued on, of which it makes profert, and in substance sets out. It also avers that at various and sundry times between the 1st day of June, A. D. 1900, and the 12th day of October, 1901, it (the lessor) expended money for the improvements and alterations of the building on said demised premises according to the plans and specifications referred to in said lease, and did put said building into good condition for a first-class hotel according to said plans and specifications, expending for the purpose a large sum of money, to wit, the sum of $105,171.38, and at the time agreed upon between the parties to said lease purchased furniture, carpets, and bedsprings for the furnishing of said hotel, as...