Weinsklar Realty Co. v. Dooley

• Decision Date: 07 January 1930
• Citation: 200 Wis. 412,228 N.W. 515
• Parties: WEINSKLAR REALTY CO. v. DOOLEY ET AL.
• Court: Wisconsin Supreme Court

200 Wis. 412

228 N.W. 515

WEINSKLAR REALTY CO.

v.DOOLEY ET AL.

Supreme Court of Wisconsin.

Jan. 7, 1930.

Appeal from a judgment of the County Court for Waukesha County; David W. Agnew, Judge. Reversed.

Action begun August 14, 1928. Judgment entered May 23, 1929.

Action to recover from the defendants Dooley and Driscoll, as lessees, and from the defendant Clarke, as a guarantor of the lessees' obligations under a lease, rent due for the months of July and August, 1928. Driscoll was not served with process in the action. After a trial without a jury, the court made findings of fact and conclusions of law, upon which judgment was entered against Dooley for the rent for the month of July, and the complaint against Clarke was dismissed. Plaintiff appealed from that judgment.A. L. Skolnik, of Milwaukee (S. G. Skolnik, of Milwaukee, of counsel), for appellant.

Harold J. McGrath, of Milwaukee (Harry A. Kovenock, of Milwaukee, of counsel), for respondents.

FRITZ, J.

On October 16, 1926, the plaintiff, as lessor, and the defendants Dooley and Driscoll, as lessees, executed a lease for a term of five years from December 1, 1926. The lessees, as copartners, conducted a drug store in the premises until June 1, 1927, when they organized a corporation, which then continued the business in the premises, under an assignment of the lease from the lessees. There was a provision in the lease that the lessees agreed not to assign the lease “without the consent of the lessor in writing first had and obtained.” However, the evidence established and the court found that that assignment was made with the knowledge and consent of the plaintiff, and that plaintiff accepted checks of the assignee in payment of rent. In that connection the court also found that the defendant Clarke had no knowledge of the assignment of the lease, or the existence of the assignee as a corporation.

On July 28, 1928, the assignee of the lease made an assignment for the benefit of creditors, and a trustee was appointed, who removed the stock and on that date turned the key over to plaintiff, without paying the rent for July, 1928. The court found that the plaintiff “then and there accepted such key and that plaintiff thereafter placed ‘For Rent’ signs and advertising matter in the windows of the demised premises”; and also that plaintiff did not, prior to the commencement of this action, give any notice to the defendants, including the guarantor Clarke, of plaintiff's intention to relet the premises for or on account of the defendant lessees, or to hold or relet said premises for the defendants. The plaintiff succeeded in reletting the premises by September, 1928, and brought this action to recover the rent for July and August, from the defendants.

As to the defendant Dooley, the court held that he was liable only for the July rent, because the acceptance of the key and the overt acts of plaintiff in placing signs and advertising matter in the windows showed that plaintiff took possession. However, upon a review of the record, it does not appear that, aside from retaining the key for the purpose of placing the “For Rent” signs in the window, and letting in a new tenant as soon as plaintiff could procure one, there is any proof that could be construed as evidence of an intention on the part of the plaintiff to accept a surrender of the premises so as to relieve those liable under the lease.

[1][2] Under the rule of Lincoln Fireproof Warehouse Co. v. Greusel (Wis.) 227 N. W. 6, 7, where a tenant vacates or abandons the leased premises before the end of the term, the landlord has a right to elect to accept the surrender and terminate the lease or to enter and take possession for the purpose of mitigating the damages for which the tenant is liable because of his breach of the lease. The election to enter for the purpose of mitigating damages may be evidenced by formal notice or by other proper means constituting such unequivocal act as would amount to an election of remedies in a proper case.

[3] The mere entry and taking possession of the premises for the purpose of leasing the same does not constitute such an election, because it is an equivocal act--something to be done by the landlord regardless of whether his purpose be to terminate the lease or merely to perform his legal duty to mitigate damages.

[4][5] The right to elect which course he will pursue remains with the landlord until he makes his election by taking some step which clearly evidences an intent to make a choice between the two inconsistent remedies that are open to him. Such a choice was made in this case when the plaintiff began this action. That act clearly evidenced an election on the part of the landlord to hold the tenant liable on the covenants of the lease, and established the fact that the landlord took possession for the purpose of reletting the premises in order to mitigate the damages which he sustained through the tenants' breach of the lease. The lease expressly gave the lessor the option, upon the lessees abandoning or vacating the premises before the expiration of the term, to relet the same and apply the rents reserved from such reletting upon the lessees' obligation for rents due or to accrue. Consequently, the lessor's retention of the key, the placing of “For Rent” signs, and the reletting, were merely in exercise of the option which the lessees gave the lessor. At best, those acts might be considered of merely an equivocal nature, capable of being construed as indicating either an intention on the part of the landlord to relet for the benefit of the lessees, in order to mitigate the damages for which the lessees are liable because of their breach of the lease, or as indicating an intention to permit the lessees to surrender the premises and terminate the lease. As stated in Thompson on Real Property, § 1470:

“Too much importance should not be attached to a delivery of the keys to the landlord and his attempt to re-let the premises. The legal effect of these acts depends largely on the intent with which the keys were delivered and for what purpose they were accepted.”

For the reasons stated, there was no accepted surrender and termination of the lessees' obligations, and they were liable to plaintiff for the unpaid rent for July and August, 1928, amounting to $350.

[6] As to the guarantor, Clarke, the court held that he was relieved from all obligations under the lease, because the assignment thereof by the lessees on June 1, 1927, was without Clarke's knowledge or consent. However, there was in the lease an express provision on the subject of the assignment thereof by the lessees, and that contemplated that there could be an assignment by the lessees, provided the lessor duly consented thereto. As to such a provision, it is said in Thompson on Real Property, § 1386:

“If the lease provides that the lessee shall not assign or sub-let without written consent, there is an implied understanding that with such consent there may be an assignment or sub-letting, and the sureties are bound to know this when they execute their guaranty. Hence it would not operate to discharge them from their liability that the lessors should give such a written consent.”

See, also, 28 C. J. 996; Grommes v. St. Paul Trust Co., 147 Ill. 634, 35 N. E. 820, 37 Am. St. Rep. 248;Gilbert v....