Tage II Corp. v. Ducas (U.S.) Realty Corp.

• Decision Date: 29 March 1984
• Citation: 17 Mass.App.Ct. 664,461 N.E.2d 1222
• Parties: TAGE II CORPORATION v. DUCAS (U.S.) REALTY CORP. et al. 1
• Court: Appeals Court of Massachusetts

Page 1222

461 N.E.2d 1222

17 Mass.App.Ct. 664

TAGE II CORPORATION v. DUCAS (U.S.) REALTY CORP. et al. ¹

Appeals Court of Massachusetts Suffolk.

Argued March 9, 1984.

Decided March 29, 1984.

Daniel C. Crane, Cambridge, for plaintiff.

Susan S. Dunn, Boston, for defendants.

Before KASS, ROSE and SMITH, JJ.

KASS, Justice.

As executed on August 14, 1972, the lease in issue, which was of commercial space at 150 Tremont Street, Boston, ran to Tage Corporation ("Tage I") as tenant. A notice of lease dated November 6, 1978, (the lease had a term of fifteen years and three five-year renewal options) identified the same corporation, i.e., Tage I, as tenant. The action in this case, on behalf of the tenant of the space described in the lease and notice of lease, was brought in the name of Tage II Corporation. Tage II was organized in 1973, i.e., after the lease was executed, with directors, officers, and stock ownership identical to those of Tage I (the principal in each was Joseph P. Tagliente).

Tage II claims standing to maintain its action (which, so far as material to the appeal, is for transitory diminution in the value of the leasehold by reason of the landlord's renovation work) on the basis of an assignment in 1973 of the lease by Tage I to Tage II. No writing memorialized the purported assignment, nor did Tage I trouble to share with its landlord that it had made an assignment of the lease. Indeed, the notice of lease executed and recorded five years later was signed on behalf of Tage I. To the extent that Tage I assigned its lease to Tage II it was in breach of § 23 of the lease, which prohibited an assignment or subletting "without the Lessor's prior written consent, which consent shall not be unreasonably withheld or delayed." The landlord, in its answer, denied the assignment and set up the failure by Tage I to secure consent to the assignment as a defense to the action by Tage II.

After a trial without jury, a judge in the Superior Court found and ruled: that the landlord had not consented to the assignment of the lease, if any, to Tage II; that "the alleged assignment ... constitutes a breach of ... the lease"; and that Tage II stood in no better relationship to the landlord than as a tenant at will. The judge also found that the landlord's renovation work, on 150 Tremont Street, Boston, did not interfere materially with the tenant's use of the leased premises on the ground floor of that building as a Burger King restaurant. Accordingly, the landlord committed no breach of the covenant of quiet enjoyment.

There is no merit to the contention of Tage I and Tage II, that the landlord, by accepting checks for rent from Tage II, acknowledged the assignment of the lease and is estopped to deny it. The appearance of a roman numeral two after "Tage" on the rent check is too subtle a hint of a change in identity of the corporate tenant to charge the landlord with notice of the substitution of Tage II for Tage I. The roman numeral could well be taken as the earmark of a particular bank account maintained by Tage I. Thus, although the receipt of rent after breach of a lease is a waiver of the breach if received with knowledge of the breach and without reservation, the judge rightly concluded the landlord did not have knowledge of the assignment. Compare Nelson Theatre Co. v. Nelson, 216 Mass. 30, 34, 102 N.E. 926 (1913); Saxeney v. Panis, 239 Mass. 207, 210, 131 N.E. 331 (1921); Maybury Shoe Co. v. Izenstatt, 320 Mass. 397, 402, 69 N.E.2d 666 (1946); Schwartz, Lease Drafting in Massachusetts § 9.8 n. 1 (1961). See also Ames v. B.C. Ames Co., 335 Mass. 511, 513, 140 N.E.2d 654 (1957) (mere payment of rent for another does not create assignment of the lease).

The landlord was entitled to the tenant's compliance with the terms of the written lease, which precluded an assignment without written consent. In view of the similarities in structure and personalities between Tage I and Tage II and the status of their principal, Joseph P. Tagliente, as a guarantor (under a writing immediately following the signature block of the original lease and signed on the same date) of...