Snyder v. Sperry & Hutchinson Co.

• Decision Date: 01 August 1975
• Citation: 368 Mass. 433,333 N.E.2d 421
• Parties: Myron SNYDER v. The SPERRY AND HUTCHINSON COMPANY et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 421

333 N.E.2d 421

368 Mass. 433

Myron SNYDER

v. The SPERRY AND HUTCHINSON COMPANY et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 6, 1975.

Decided Aug. 1, 1975.

Sydney Berkman, Boston (Carl K. King, Boston, with him), for plaintiff.

Richard H. Steinberg, Boston, for the Sperry and Hutchinson Co.

Herbert D. Lewis, Boston, for Brookline Masonic Building Ass'n, Inc.

Before TAURO, C.J., and REARDON, QUIRICO, KAPLAN and WILKINS, JJ.

REARDON, Justice.

This bill of complaint was entered in 1969 by a general partner of the Harvard Medical Building Associates (buyer) seeking declaratory relief as to his right to possession of certain property which he had purchased. This right was alleged against The Sperry and Hutchinson Company (S & H), a tenant then in possession of the property. He also sought damages agains the Brookline Masonic Building Association (seller) by reason of the continuing occupancy of S & H beyond April 30, 1970. The case was referred to a master who, after hearing evidence, filed a report in which he referred two questions of law to a judge of the Superior Court. The judge made rulings on the reported questions, denied motions to recommit and to modify the master's report, and entered judgments for the defendants. ¹ This court granted an application for direct appellate review. This facts as found by the master, to which reference is made in the master, of the judge, are as follows.

In 1961, S & H leased property at 209 Harvard Street, Brookline, from the Marion Trust, then the owner of the property. The lease ran for a term of five years from May 1, 1961, to April 30, 1966, and S & H was given therein an option to extend the lease for an additional five years until April 30, 1971. A notice of the lease, executed by the parties on June 17, 1961, was recorded.

In 1964, the seller purchased the premises subject to the lease. In June of 1965 the seller and S & H entered into an agreement of the effect that on the expiration of the original five-year term the lease would be extended for a period of two years expiring on April 30, 1968, and S & H would have an option to extend it further to April 30, 1970. This agreement was not recorded.

In October, 1967, the seller and S & H agreed on still another modification whereby the lease was extended from May 1, 1968, to April 30, 1970, S & H having an option to extend it for an additional two years from May 1, 1970, to April 30, 1972, by giving notice on or before October 31, 1969. The seller had the right by giving S & H written notice by April 30, 1969, to cancel this option. Here again the agreement was not recorded.

On May 11, 1968, Harvard Medical Building Associates, as the buyer, executed an agreement with the seller to purchase the premises subject to the lease to S & H described as 'for a term of years expiring April 30, 1970.' Title passed on July 10, 1968, and the deed noted that '(t)his conveyance is made subject to and with the benefit of a Lease of said premises to The Sperry and Hutchinson Company, dated March 16, 1961 (together with Amendments) a Notice of which is recorded with said Deeds in Book 3921, Page 404, which Lease and Amendments are hereby assigned to the Grantee.' Thereafter all rent payments and amounts due under a tax escalation clause were paid by S & H to the buyer. S & H notified the buyer on May 28, 1969, that in accordance with the 1967 amendments to the lease it was exercising its option to extend the lease for two years from May 1, 1970, to April 30, 1972. This was timely notice under the lease as amended in 1967. On September 25, 1969, counsel for the buyer wrote to S & H alleging that changes in the lease providing for its extension to 1972 had not been recorded, although the buyer had taken the property with knowledge of the extension to April 30, 1970. He requested S & H to vacate by April 30, 1970. S & H, however, did not vacate until July 31, 1971. Prior to that date, and in the face of the claim by the buyer that the lease and all options to extend expired on April 30, 1970, S & H paid, and the buyer received, monthly rent as stipulated by the lease, and additional amounts due under its tax escalation clause.

1. With respect to the buyer's rights against S & H, the buyer contends that because the 1967 lease modification was not recorded S & H had no right to possession of the premises beyond April 30, 1970. The argument is that the original 1961 lease was required to be recorded under G.L. c. 183, § 4, and that consequently any modification of that lease must also be recorded in order to protect the lessee against a bona fide purchaser without actual notice of the modification. This issue was reported by the master to the judge who rejected the buyer's position. We affirm the judge's ruling on this point.

As we construe the recording act, the 1967 lease modification, including the option to renew, was valid without recordation. The pertinent language of the statute is as follows: 'A conveyance of an estate in fee simple, fee tail or for life, or a lease for more than seven years from the making thereof, shall not be valid as against any person, except the grantor or lessor, his heirs and devisees and persons having actual notice of it, unless it, . . . or, with respect to such a lease, a notice of lease . . . is recorded.' G.L. c. 183, § 4, as appearing in St.1941, c. 85. ² It is settled law that the seven-year period pertaining to leases includes any options to extend or renew the lease where the lessee has the sole power to determine whether the option is to be exercised. Toupin v. Peabody, 162 Mass. 473, 476--477, 39 N.E. 280 (1895); Leominster Gas Light Co. v. Hillery, 197 Mass. 267, 268, 83 N.E. 870 (1908); South Street Inn, Inc. v. Muehsam, 323 Mass. 310, 312, 81 N.E.2d 821 (1948); Cf. Fanger v. Leeder, 327 Mass. 501, 506--507, 99 N.E.2d 533 (1951). Were the law otherwise, the salutary purpose of the recording act could be defeated, for '(i)n fixing upon seven years from the making of the lease as the length of a term which might be valid, as against a bona fide purchaser without actual notice, the Legislature intended that to be the utmost which a lessee for years, under an unrecorded instrument, could claim as against such a purchaser, whether the instrument demised directly a longer term, or provided for its indirect creation by an agreement for renewal at the lessee's option.' Toupin v. Peabody, supra, 162 Mass. at 477, 39 N.E. at 281. Thus, although the original 1961 lease was for a term of only five years, it was recordable because it gave the lessee an option to renew for a second five-year term.

The agreements entered into by S & H and the seller in 1965 and 1967 were not, however, of this character. The period from the making of the instrument in 1965 to the expiration of the maximum term under the renewal option was something less than five years. When the lease was renegotiated in 1967, the maximum term, including the option to renew, was likewise less than five years. ³ Clearly the utmost which the lessee could claim under these agreements was less than the statutory seven-year period. On these facts we are of opinion that recordation was not required. By its terms the statute sets the date of the making of the lease agreement as the critical date, and we do not construe the statute as requiring a different result when the agreement is in fact an amendment to, or a renegotiation of, an earlier lease. See Schwartz, Lease Drafting in Massachusetts, § 5.12 (1961). Certainly if the subsequent lease was entered into with a different tenant the existence of an earlier lease would be irrelevant, and we are not persuaded that the existance of a prior lease with the same tenant, even though recorded, is a compelling ground of distinction under the statute as written. ⁴ In neither case can an unrecorded agreement give the lessee a right to possession for more than seven years. And in both cases the buyer can adequately protect himself against a right to possession for less than seven years by consulting the seller and the present lessee to asertain the contents of any outstanding unrecorded lease agreement. See Cunningham v. Pattee, 99 Mass. 248, 252 (1868), as explained in Toupin v. Peabody, 162 Mass. 473, 478, 39 N.E. 280 (1895); Davis, Massachusetts Conveyancers' Handbook (2d ed. 1967) § 22. We are not impressed with the argument that the recording of the 1961 lease entitled the buyer to look no further than what appeared of record, for it is conceded that the buyer had actual notice of the unrecorded 1965 agreement which itself changed the terms of the lease from those contained in the recorded 1961 lease. See Note, 22 U.Cinn.L.Rev. 469, 470 (1953).

There is a second answer to the buyer's claims against S & H, apart from whether the 1967 lease agreement was recordable or not. We do not deal here with anything purporting to be a conveyance of the fee but rather there is involved a conveyance of property expressly made subject to 'a Lease of said premises to . . . (S & H) dated March 16, 1961 (together with Amendments).' The court faced a similar situation in Leominster Gas Light Co. v. Hillery, 197 Mass. 267, 269, 83 N.E. 870, 871 (1908), where the deed of conveyance made the premises subject to 'a lease of part of the premises to the Leominster Gas Light Company.' The court observed that the purchaser took only the reversion after expiration of the lease, and as the reversioner he was bound by all covenants in the lease running with the land, including a covenant giving the lessee an option to renew for a further five-year term. Consequently, the purchaser was bound by the lease even if it were a lease for more than seven years which had not been recorded. See Judkins v. Charette, 255 Mass. 76, 81, 151 N.E. 81 (1926); Bickford v. Dillon, 321 Mass. 82, 83, 71 N.E.2d 611 (1947); Park, Conveyancing, § 478 (1968). The facts of the instant case fall...