Slane v. Polar Oil Co., 1888

• Decision Date: 18 February 1935
• Docket Number: 1888
• Citation: 48 Wyo. 28,41 P.2d 490
• Parties: SLANE v. POLAR OIL COMPANY
• Court: Wyoming Supreme Court

41 P.2d 490

48 Wyo. 28

SLANE v. POLAR OIL COMPANY

No. 1888

Supreme Court of Wyoming

February 18, 1935

APPEAL from the District Court, Hot Springs County, C. D. MURANE Judge.

Action by W. T. Slane against Polar Oil Company, a corporation, to recover obligations specified in a real estate lease assigned to defendant by the original lessee. From a judgment for defendant, plaintiff appeals.

Affirmed.

For the appellant, there was a brief by Chester Ingle, of Thermopolis.

The assignment passed all the original lessee's right, title claim, interest and possession in and to the premises, making respondent liable on the covenants of the lease. 36 C. J 376. Respondent took possession of the premises on December 13, 1925, and continued in possession until February 23, 1927, thereby assuming liability for rent and damages under the lease. Respondent stood in the relation of a mortgagee in possession and assumed liability upon the covenants of the lease. Eaton v. Jaques, 2 Douglas 455; Levy v. Long Island Breweries, 56 N.Y.S. 242; Spencers Case, 5 Coke 16; Staudt v. Everards Breweries, 127 N.Y.S. 349. The defendant could not hold possession of plaintiff's premises without liability for the use thereof at a rental value. Talley v. Everards Breweries, 116 N.Y.S. 657; Century Company v. Brewing Company, 173 N.Y.S. 49; Company v. Mfg. Co., 150 N.Y.S. 52; Stone v. Auerbach, 117 N.Y.S. 734; Tate v. Neary, 65 N.Y.S. 40; Frank v. Company, 25 N.E. 332; Dosori v. Zorck, 75 N.Y.S. 841; Tolhman v. Bressler, 56 N.W. 635; Underhill on Landlord and Tenant, Sec. 653. When a mortgagee takes possession, he has the estate cum onere and becomes liable upon the covenants of the lease. Thomas on Mortgages, Section 165; Bell & Dunn on Mortgages, p. 144; Beattie v. Parrott Company, 17 P. 451; Sutliff v. Collins, 15 Ohio St. 186. The authorities cited by defendant below do not support its position. While the California and Minnesota cases are against the contention of appellant, it is believed that the great weight of authority is with him, as shown by the decisions cited in 36 C. J. 376. In McKees Store v. Otero, 171 P. 910, it was held that an assignee's liability continues not only during actual possession of the premises but until termination or reassignment of the lease. See also Cockrell v. Packing Company, 147 S.W. 1145; Landsdell v. Woods, 192 S.W. 715.

For the respondent, there was a brief by C. W. Axtell, of Thermopolis. Both sides submitted cause without oral argument.

A mortgage in this jurisdiction is mere security for the debt. We do not deny that a mortgagee in possession, by reason of an assignment of a lease, is liable for rent during his occupancy. The authorities cited by appellant are from jurisdictions where a mortgage transfers the whole title, while in Wyoming the mortgage is a mere security for the debt. Corgill v. Thomas, 59 N.W. 638. The plaintiff's petition showed on its face that all rentals were paid during the period he was in possession. The action is apparently for damages for breach of a written contract. There must be a complete transfer of title as well as possession before damages may be considered. 36 C. J. 375. The equitable assignee of a lease is liable for rent during his occupancy. 36 C. J. 376; Johnson v. Sherman, 76 Am. Dec. 481; Coen v. Todd, 153 N.W. 531, L. R. A. 1915-E 840; Treff v. Gulko, 7 P.2d 697. In the absence of fresh contractual stipulations, there is no privity of contract between the assignees of the lessee and the landlord. Farber v. Greenberg, 98 Cal.App. 675, 277 P. 534; Chase v. Oehlke, (Cal.) 185 P. 425; Bush v. Bastian, 297 P. 976. Defendant had a right to disregard or abandon the security under the wording of the assignment, which is the basis of plaintiff's action. 11 C. J. 690.

RINER, Justice. KIMBALL, Ch. J., and BLUME, J., concur.

OPINION

RINER, Justice.

The district court of Hot Springs County sustained a general demurrer to the amended petition of W. T. Slane, filed in an action brought by him in said county against Polar Oil Company, a corporation. Slane declined to plead further and indicated his determination to stand upon the pleading aforesaid. In consequence, a judgment dismissing the action was entered against him. To review that judgment, the record is brought here by direct appeal. The parties will be referred to as aligned in the court below.

The allegations of the amended petition essential to be considered in deciding the case are in substance as follows:

After setting out the corporate existence of the defendant under Wyoming law, the pleading in question states that on or about September 2, 1925, the plaintiff demised to C. A. Mulock and Mary Mulock, Lots Twenty-one in Block Two in the Town of Thermopolis, Wyoming, together with all buildings and improvements thereon, for the term commencing September 2nd, 1925, and until September 1st, 1940, at the monthly rental of Two Hundred Dollars per month, payable in advance; that the said lessees covenanted with the plaintiff to make such rental payments, and also to pay the general county and city taxes upon said premises during the lease period; that the lessees, on or about the 2nd day of September, 1925, took possession of the demised premises and "continued in possession there of until about December 30th, 1925, and for some time thereafter with the said defendant"; that on the day last mentioned, said lessees assigned the lease aforesaid to the defendant, which accepted the same and immediately entered into possession thereof, its possession continuing up to February 23, 1927, and the assignment being duly recorded in the office of the county clerk of Hot Springs County, Wyoming.

This alleged assignment is attached to and made a part of plaintiff's pleading, and, omitting the attestation of the witnesses and the acknowledgment by the signers thereof as well as the lease form attached thereto and above described reads:

"KNOW ALL MEN BY THESE PRESENTS, That we, C. A. Mulock and Mary Mulock, of the County of Hot Springs in the State of Wyoming for and in consideration of the sum of Ten Thousand and no/100th Dollars ($ 10,000.00), to us in hand paid, the receipt whereof is hereby confessed and acknowledged, do grant, bargain sell and deliver unto Polar Oil Company, a Corporation, duly organized and existing under the laws of the State of Wyoming and unto its successors and assigns, all our right, title, claim, interest and possession in and to a certain Indenture of Lease between one W. T. Slane and us of date the 3rd of September, 1925, and as the same appears of record in the office of the County Clerk and Ex-Officio Register of Deeds of Hot Springs County, Wyoming being filed therein at 2:30 o'clock P. M. September 4th, 1925 and is recorded in Book 13 of Miscellaneous Records on page 10 thereof hereto attached and made a part of this Assignment.

"TO HAVE AND TO HOLD the above and foregoing Lease and all thereof until there is fully paid to said Polar Oil Company, its successors or assigns the sum of Ten Thousand and No/100 Dollars ($ 10,000.00), together with interest therein at the rate of Eight (8%) percent per annum according to the condition of a certain promissory note given this day and date by us to the said Polar Oil Company.

"WHEREUPON and upon said payments of principal and interest this said Assignment is to become null and void and not otherwise.

"IN WITNESS WHEREOF we have hereunto set our hands and seals this 30th day of December 1925.

C. A. Mulock

Mary Mulock"

Plaintiff's pleading then avers that the lessees aforesaid have not paid to the defendant any sum whatsoever upon the note mentioned in the alleged assignment, that no reassignment of said lease has been accepted by C. A. Mulock and Mary Mulock or made with the latter's knowledge or consent, the defendant having made no valid assignment of its interest in said lease; that by reason of the said assignment, the defendant became liable to pay the rent due under the lease aforesaid, and the taxes, but that "since the 1st day of February, 1927, the said defendant abandoned said premises and has failed and refused to pay any rental falling due and owing under said lease since said time"; that it has not paid the taxes for the years 1926 and 1927, and that on account of the balance of rental money due under said lease between February 1st, 1927 and March 23rd, 1928, the taxes unpaid as aforesaid, and the damages alleged as Fifty Dollars per month for the balance of the term, the reasonable rental of the premises for that period being alleged as not to exceed One Hundred Fifty Dollars per month, it is asked that judgment be given against the defendant for the sum of $ 10,975.51, which the defendant has failed and refused to pay.

A mortgage, says 19 R. C. L. 243, § 4, "may be generally defined as a conveyance of property to secure the performance of some obligation, the conveyance to be void on the due performance thereof. But while it is in form a conveyance, and is for some purposes regarded as such in a number of jurisdictions, it is in essence a pledge of property as security. Recognition of this fact has always been made in equity, and of late years in the courts of law of some jurisdictions. Accordingly, the declaration is frequently made that a mortgage is a security or lien for the performance of an obligation." Tested by this statement it is apparent that the instrument referred to in plaintiff's amended petition as an "assignment" is nothing more than a mortgage to the defendant of the leasehold interest held by the Mulocks. Indeed, both parties to this controversy seem to regard the instrument as of that character, as the briefs of their respective arguments indicate. Accordingly, the question arises upon the...