Walker v. Rednalloh Co.

• Decision Date: 03 March 1938
• Citation: 299 Mass. 591,13 N.E.2d 394
• Parties: WALKER et al. v. REDNALLOH CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

299 Mass. 591

13 N.E.2d 394

WALKER et al.

v.REDNALLOH CO.

Supreme Judicial Court of Massachusetts, Suffolk.

March 3, 1938.

Report from Superior Court, Suffolk County; Williams, Judge.

Action of contract by Joseph Walker, trustee, and others, against the Rednalloh Company to recover rent, taxes, insurance premiums, and other items claimed to be due under a written lease.On report from the Superior Court.

Judgment for defendant.J. Wiggin, J. A. Plummer, and F. W. Campbell, all of Boston, for plaintiffs.

H. S. Davis and T. M. Banks, Jr., both of Boston, for defendant.

DOLAN, Justice.

This is an action of contract to recover rent, taxes, insurance premiums and other items claimed to be due under a written lease.The case was submitted in the superior court upon an agreement as to all the material facts in the form of a case stated, and was reported without decision below.G.L.(Ter. Ed.)c. 231, § 111.

The material facts presented by the agreed statement of facts are as follows: On February 1, 1923, the plaintiffs' predecessors who were the then owners of premises numbered 210-212 Boylston street in Boston leased the premises to the defendant corporation which at that time was known as L. P. Hollander Company.The defendant occupied the premises for the retail sale of merchandise.In carrying on its business the defendant also occupied premises of other owners on each side of the premises here in question under lease considered respectively in Talbot v. Rednalloh Co., 283 Mass. 225, 186 N.E. 273, andHamlen v. Rednalloh Co., 291 Mass. 119, 197 N.E. 149, 99 A.L.R. 1230.

On March 30, 1929, a new corporation, L. P. Hollander Company, Inc., purchased the business and took assignments of the leases covering the three buildings occupied until that time by the defendant lessee.Before consenting to the assignment here in question the then owners of the premises required the establishment of a trust fund of $50,000 for the benefit of themselves and their successors, which trust fund of $50,000 was established by Theodore C. Hollander who was then and has since been president and treasurer of the defendant corporation, the owner of substantially all its capital stock, and in control of its management and policies.These facts as to Theodore C. Hollander's ownership of stock were not known to the then owners of the premises until February 19, 1932, though they knew that he controlled the defendant corporation and directed its policies.

At the time of the assignment, the defendant lessee, the assignee, and Theodore C. Hollander entered into an agreement providing for the indemnification of the defendant for defaults of the assignee.

On June 4, 1929, the assignee obtained consent from the lessors to make and shortly thereafter did make extensive alterations in the premises.Before the lessors gave their assent they required an agreement by the trustee of the trust set up as described above.Certain other alterations, not expressly consented to by the lessors, were also made, but the lessors knew they were being made and interposed no objections thereto.The defendant was not a party to these agreements and had no knowledge of the alterations unless it was chargeable with notice in the circumstances referred to hereinafter.

L. P. Hollander Company, Inc., occupied the premises from the time of the assignment of the lease until February 19, 1932, when it was adjudicated a bankrupt.Up to that time it had paid rent, taxes and other items due under the lease.From February 19, 1932, to April 8, 1932, the receiver and the trustee in bankruptcy successively occupied the premises and paid for use and occupation.After April 8, 1932, the plaintiffs received from the trust fund rent and other sums accruing until the trust fund became substantially exhausted.Certain schedules annexed to the plaintiffs' declaration correctly set forth rent and other items which had accrued prior to the date of the writ in this action.Each of the instruments mentioned above is appended to the agreed facts as an exhibit.

The defendant resists recovery on the grounds that it did not expressly covenant to pay rent, and hence was discharged by the valid assignment of the lease; and, in any event, that it was released from its obligations under the lease by the agreement between the lessors and the assignee whereunder permission was granted to the assignee to make substantial alterations in the premises which were in fact made, and by the making of other alterations with the knowledge of the lessors and without objection on their part, the said agreement and alterations having been made without the knowledge or consent of the defendant.

As we think that the defendant's latter contentions are decisive of the case, in their consideration, we assume without deciding that under the language of the lease read as a whole, the defendant was bound by express covenants to perform its terms including the payment of the rent for the period of the lease; and that the defendant was not relieved of its obligations under the lease merely by its valid assignment.SeeWall v. Hinds, 4 Gray, 256, 266, 64 Am.Dec. 64;Newcomb v. Presbrey, 8 Metc. 406, 410;Gibbs v. Thayer, 6 Cush. 30, 32;Pittsfield & North Adams Railroad v. Boston & Albany Railroad, 260 Mass. 390, 396, 157 N.E. 611;Samuels v. Ottinger, 169 Cal. 209, 213, 214, 146 P. 638, Ann.Cas.1916E, 830;Consumers' Ice Co. v. Wm. H. H. Bixler & Co., 84 Md. 437, 449, 450, 35 A. 1086;Huston v. Graham, 169 Wash. 521, 524, 525, 14 P.2d 44;Bussman v. Ganster, 72 Pa. 285;Hallett v. Wylie, 3 Johns., N.Y., 44, 3 Am.Dec. 457.

The question whether the lessee is freed from obligations arising under the lease after the assignment is a question of fact.CompareGolding v. Brennan, 183 Mass. 286, 289, 67 N.E. 239.Facts such as the assignment itself, the assent of the lessors thereto, the assumption of the covenants of the lease by the assignee, the collection of rent from the assignee by the lessors, and even the procuring by the assignee of a surety for his performance are not sufficient either separately or taken together to show a release of the lessee.Pfaff v. Golden, 126 Mass. 402, 403;Greenleaf v. Allen.127 Mass. 248, 253;Hamlen v. Rednalloh Co., 291 Mass. 119, 122, 197 N.E. 149, 99 A.L.R. 1230.

In determining whether the facts are sufficient to show a release of the lessee there are two possible approaches.Apart from showing an express release, the lessee may show that the lessor accepted a surrender of the old lease, or he may show that the lessor or the assignee with the consent of the lessor and without consent of the lessee materially varied the obligations under the lease so as to discharge the lessee on principles analogous to those of suretyship.

As to surrender, it has been said that while the lessee may be relieved of obligations under a lease upon assignment thereof, the intent of the lessor to release the lessee must be clearly shown.Carlton Chambers Co. v. Trask, 261 Mass. 264, 267, 158 N.E. 786.A surrender by operation of law may result from the acts of the lessor and lessee.Talbot v. Whipple, 14 Allen, 177, 180.Such a surrender by operation of law may result where the lessor enters into an agreement with the assignee containing materially different provisions from the old lease or amounting to a new lease.T. A. D. Jones Co. v. Winchester Repeating Arms Co., D.C., 55 F.2d 944, 948, affirmed, 2 Cir., 61 F.2d 774, certiorari denied, sub nomine Southeastern Inv. Co. v. Tobler, 288 U.S. 609, 53 S.Ct. 401, 77 L.Ed. 983.

Similarly on principles of suretyship, the lessee may be discharged by an agreement between the lessor and the assignee, the effect of which is to vary the lessee's obligations under the original lease, since the lessee for many purposes is considered after an assignment to be surety for the assignee's...