Washington & Devonshire Realty Co.  v. Lewis Diamond Co.

• Decision Date: 04 June 1928
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: WASHINGTON & DEVONSHIRE REALTY CO., Inc., v. LEWIS DIAMOND CO., Inc.

263 Mass. 554

161 N.E. 883

WASHINGTON & DEVONSHIRE REALTY CO., Inc.,

v.LEWIS DIAMOND CO., Inc.

Supreme Judicial Court of Massachusetts, Suffolk.

June 4, 1928.

Exceptions from Superior Court, Suffolk County; George A. Flynn, Judge.

Action by the Washington & Devonshire Realty Company, Inc., against the Lewis Diamond Company, Inc., and trustee. Judgment for plaintiff, and defendant brings exceptions. Exceptions overruled.J. M. Hogan, of Boston, for plaintiff.

M. M. Horblit and R. Harpel, both of Boston, for defendant.

SANDERSON, J.

The plaintiff in this action in separate counts seeks to recover sums alleged to be due for occupation by the defendant corporation of premises in Boston, for electricity furnished by the plaintiff to the defendant corporation, and for certain accrued rent and charges for electricity which one Louis Freedman owed the plaintiff on November 15, 1925, and which, it is alleged, the defendant corporation for a consideration assumed and agreed to pay. This corporation contends that the premises were occupied by it as a sublessee of Freedman and that it owes the plaintiff nothing; and that the promise to pay the debt of Freedman if made is unenforceable because of the statute of frauds.

Freedman, a dealer in jewelry and other merchandise doing business under the name Lewis Diamond Company, had been a tenant of the plaintiff under a written lease which by its terms would terminate December 1, 1927, and which contained an agreement on the part of the lessee to pay the lessor for all electricity used on the premises, and also a covenant not to assign or sublet without the consent in writing of the lessor. In November, 1925, Freedman made an assignment for the benefit of creditors and thereafter the defendant corporation was organized to carry on the same kind of business as that which had been done by him. The certificate of incorporation was issued February 16, 1926. All of the stock of this corporation was owned by Freedman, his wife, who held more than one half of it, and his brother. These three also constituted the board of directors. The jury could have found that after the corporationwas formed Freedman, purporting to act for it, made an agreement with the plaintiff that it would pay rent and take care of back rent and go along on the same terms as those made with Freedman when he was occupying individually. Thereafter when rent was in arrears Freedman promised that the corporation would pay it if given time. The trustees, to whom Freedman's estate was assigned for the benefit of creditors, sold to the defendant corporation all the stock in trade, furniture and fixtures held by them. The jury found for the plaintiff on each of the items already referred to and it was agreed that if the defendant corporation is liable the amounts found to be due are correct.

The original lease provides that it be terminated by the lessee's bankruptcy. There is no statement in the summary of evidence that a bankruptcy petition had been filed, but the judge stated in this charge that it appeared that Freedman went into bankruptcy. If that statement be assumed to be a fact in the case, the lease was terminated by the bankruptcy. But we need not rest this part of the case on that ground, because the jury could have found that Freedman, in the conversation with the plaintiff's agent, induced the plaintiff to accept the defendant corporation as a tenant in his place, thereby surrendering his interest in the lease. Such a substitution of tenants by agreement would be a surrender of the lease by operation of law. G. L. c. 183, § 3. Amory v. Kannoffsky, 117 Mass. 351, 19 Am. Rep. 416. Thomas v. Cook, 2 B. & Ald. 119. See Carlton Chambers Co. v. Trask (Mass.) 158 N. E. 786.

The trial judge ruled without objection that the defendant corporation was not liable to the plaintiff under the written lease. It was not disputed that the corporation had occupied the premises and used the electricity for which the charges were made. Eleven checks of the corporation which could have been found to be payments for rent were introduced in evidence, the earliest being dated April 2, 1926, and the latest November 23, 1926. Under the counts for use and occupation and for electricity used during the period of occupation, the jury could find that, even if Freedman was not authorized to make the agreement in behalf of the corporationit had accepted the benefits of and ratified the agreement made by him in its behalf; the liability of the defendant corporation on these counts was properly submitted to them. North Anson Lumber Co. v. Smith, 209 Mass. 333, 338, 95 N. E. 838;McNeil v. Boston Chamber of Commerce, 154 Mass. 277, 28 N. E. 245,13 L. R. A. 559;Commissioner of Banks v. Tremont Trust Co., 259 Mass. 162, 179, 180, 156 N. E. 7.

The verdict for the plaintiff, based upon the alleged...