Tenbusch v. L. K. N. Realty Co.

• Decision Date: 26 March 1958
• Citation: 107 Ohio App. 133,149 N.E.2d 42,8 O.O.2d 19
• Parties: , 78 Ohio Law Abs. 82, 8 O.O.2d 19 Francis L. TENBUSCH and Charles E. Doty, Plaintiffs-Appellees, v. The L. K. N. REALTY CO., Defendant-Appellant.
• Court: Ohio Court of Appeals

Page 133

107 Ohio App. 133

149 N.E.2d 42, 78 Ohio Law Abs. 82, 8 O.O.2d 19

Francis L. TENBUSCH and Charles E. Doty, Plaintiffs-Appellees, v. The L. K. N. REALTY CO., Defendant-Appellant.

Court of Appeals of Ohio, Cuyahoga County.

March 26, 1958.

Clarence J. Oviatt, Cleveland, for defendant-appellant.

Henderson, Quail, Schneider & Pierce, Cleveland, for plaintiffs-appellees.

HURD, Judge.

This appeal comes to this court on questions of law from the Court of Common Pleas of Cuyahoga County wherein judgment was entered on a jury verdict for plaintiffs-appellees in the sum of $5,750 against defendant-appellant. The parties will hereinafter be designated as plaintiffs and defendant as they appeared in the trial court.

The plaintiffs filed their petition alleging in substance that they were duly licensed real estate brokers under the laws of Ohio and that on or about July 26, 1951, they entered into an oral agreement with defendant whereby they were authorized to find a purchaser at the agreed price of $115,000 for certain property owned by the defendant located at 211-215 St. Clair Avenue in the City of Cleveland, which property is improved by a two-story building, and that defendant agreed to pay therefor a commission of five per cent; that they procured a purchaser ready, willing and able to purchase the property at the price stated, by reason whereof they were entitled to the commission stated.

The answer of the defendant admitted the qualifications of the plaintiffs as real estate brokers, the ownership of the property in question and denied each and every other allegation contained in the plaintiffs' petition.

There is no question that plaintiffs sought the listing of defendant's property but the only evidence in the record as to the terms of such listing is plaintiffs' testimony as to the price of the property and the discussions as to the rate of commission. There is no testimony in the record as to any other terms of the alleged listing, the length of time of the listing or whether it was to be an open or exclusive listing, although the latter is not claimed by the plaintiffs. The record also shows that the property was actually sold through the services of another broker for the sum of $250,000.

The defendant's president and principal stockholder, with whom plaintiffs negotiated in an effort to sell the property, denied that the property was ever listed with the plaintiffs at $115,000 or at any other price.

Plaintiffs' claim is predicated upon a written offer to purchase signed by one William E. Malm. It provides, in part, as follows:

'* * * (a) Conveyance to the Purchaser, or his nominee, shall be made by good and sufficient Warranty Deed in the form customarily used in Cuyahoga County, Ohio, and the Seller shall upon delivery of such Deed furnish title guarantee satisfactory to the Purchaser in the amount of One Hundred and Fifteen Thousand Dollars ($115,000.00) guaranteeing title to said premises to be free from all encumbrances, except taxes and special assessments, zoning and other ordinances, and other restrictions of record.' (Emphasis ours.)

The evidence shows that Malm's offer to purchase was never accepted by defendant. The evidence further shows that defendant's property was encumbered with two leases duly recorded with the County Recorder, being Defendant's Exhibits B and D, which at the time of the offer to purchase had unexpired terms of approximately four years each. One of such leases was with the Charles Bruning Company, Inc., and provided for a term commencing October 1, 1949 and expiring May 31, 1955, at a yearly rental of $8,100 to be paid at the rate of $675 per month. The other lease was with the Murray Company of Texas, Inc., and provided for a term commencing October 1, 1949 and expiring May 31, 1955, with a total rental of $18,700, payable at the rate of $275 per month. In addition to the foregoing, the property was encumbered with two other leases, making a total of four.

In this connection, it is important to observe that there is no reference whatsoever in the written offer to purchase that the property was then subject to these unexpired leases. The record also shows that Malm and the plaintiffs had knowledge of all of these leases, but on cross-examination, the plaintiffs admitted they did not know why the offer of Malm to purchase did not include them.

The assignments of error are as follows:

1. The court erred in giving special request to charge before argument requested by plaintiff and objected to by defendant.

2. The court erred in its general charge to the jury.

3. The court erred in the admission of evidence offered by the plaintiff and objected to by the defendant.

4. The court erred in overruling defendant's motion for judgment for the defendant made at the close of plaintiffs' case and renewed after all the evidence was in.

5. The court erred in overruling defendant's motion for new trial and defendant's motion for judgment notwithstanding the verdict.

Considering assignment of error number one, a question is presented as to whether the trial court erred in instructing the jury that the leases constituted 'restrictions of record.'

The record shows that the trial court gave before argument the plaintiffs' request in writing to charge as follows:

'The jury is instructed that the four leases introduced in evidence by the defendant, which were recorded, constitute 'restrictions of record' within the meaning of that phrase as used in the 'Offer and Agreement to Purchase Real Estate,' Plaintiffs' Exhibit 2, and such Offer and Agreement was therefore an offer and agreement to purchase the defendant's real estate subject to those four leases.'

First let us consider the nature of a lease. In Brenner v. Spiegle, 116 Ohio St. 631, syllabus 1, 157 N.E. 491, the Supreme Court defined a lease as follows:

'A lease of real estate is a conveyance by the owner of an estate in land of a portion of the owner's interest therein to the lessee for a term less than the owner's own, and it passes a present interest in the land. Such a conveyance for a consideration constitutes a sale of an 'interest in real estate."

To the same effect, see also Abraham v. Fioramonte, 158 Ohio St. 213, 222, 107 N.E.2d 321, 325, 33 A.L.R.2d 1267. That unexpired leases on land are encumbrances is well-settled.

In 15 Oh.Jur.2d 45, Section 45, we find a definition of an encumbrance as follows:

'An encumbrance is a right or interest in land which may subsist in third persons to the diminution of the value of the land but which is nonetheless consistent with the passing of the fee by conveyance. A covenant against encumbrances in a conveyance is a stipulation by the covenantor that no such interests exist as to the estate conveyed * * *.'

Stambaugh v. Smith, 23 Ohio St. 584; Newcomb v. Fiedler, 24 Ohio St. 463; People's Sav. Bank Co. v. Parisette, 68 Ohio St. 450, 67 N.E. 896, 96 Am.St.Rep. 672; Gardner v. Letson, 5 Ohio, N.P., 112, 8 Ohio Dec. 256; Shell v. Evans, 6 Ohio, N.P., 230, 7 Ohio Dec. 501, are cited as authority for this proposition.

That encumbrances include unexpired leases is also well-settled. See 15 Oh.Jur. 58, Section 64, which states:

'Among the more common examples of encumbrances within the meaning of a covenant against encumbrances are mortgages or judgments, dower rights, taxes and assessments, easements, and unexpired leases. A contract for the sale of the land may constitute an encumbrance.' (Emphasis ours.)

Hall v. Plaine, 14 Ohio St. 417; Stambaugh v. Smith, 23 Ohio St. 584; 15 Mor.Min.Rep. 82; McKenzie v. Buchamann, 5 Ohio App. 270, 25 Ohio Cir.Ct.R., N.S., 529, 37 Ohio Cir.Dec. 303, are cited as authority for this proposition. To the same effect, see also 7 Thompson on Real Property, (Perm.Ed.) 192, Section 3715, et seq., and numerous authorities there cited.

On the other hand, a restriction is defined in relation to real estate as 'A limitation on the free use of land.' Webster's Dictionary, Second Edition, Unabridged. See also, 26 C.J.S. Deeds § 141, et seq., p. 1028, where at page 1039, paragraph (f) numerous examples of restrictions are set forth. While the chapter referred to deals with conditions and restrictions, there is no question, upon a review of the authorities cited, that a restriction is something which cannot be equated with a lease for a term of years, which lease is undoubtedly an encumbrance which grants to the lessee an interest in land something less than the fee, whereas a restriction is a mere limitation of use.

We hold, therefore, that the word 'restriction' in an offer to purchase realty subject to all existing 'restrictions' of record definitely does not include 'leases of record' with unexpired terms. Such leases constitute encumbrances of record.

Thus the court committed error prejudicial to the rights of the defendant when it instructed the jury in its charge in writing before argument that the four leases introduced in evidence by the defendant constituted 'restrictions of record' within the meaning of that phrase as used in the Offer and Agreement to Purchase Real Estate...