Wilder v. McDonald
| Decision Date | 27 November 1900 |
| Citation | 63 Ohio St. 383,59 N.E. 106 |
| Parties | WILDER et al. v. McDONALD et al. |
| Court | Ohio Supreme Court |
Error to circuit court, Hamilton county.
Action by one Wilder and others against Alexander McDonald and others. Judgment for defendants was affirmed by the circuit court, and plaintiffs bring error. Affirmed.
On the 16th day of October, 1890, the plaintiffs in error, who were then the owners of a tract of about six acres of land in Hamilton county, known as ‘Block No. 7,’ demised the same, by lease duly executed and acknowledged, to William H. Neff, his administrators and assigns, for the term of five years then next ensuing. The lessee agreed to pay an annual rental of $930 for the premises, in equal monthly installments of $77.50 on the 14th day of each month during the term, commencing with the month following the execution of the lease, and it was also provided in the lease that, on default in the payment of any installment of the rent for 30 days after its maturity, the lessors might reenter and terminate the lease. The lessee further covenanted to pay all taxes, charges, and assessments that should be levied on the premises during the term. The lease contained a clause giving the lessee, his heirs and assigns, an option to purchase the premises, at any time before the expiration of the lease, for the sum of $15,500; and, on his election to make the purchase, the lessors covenanted to convey by general warranty deed. The lessee took possession, and paid the rent as it accrued until February, 1892, since which time no rent has been paid, nor have the taxes, assessments, or charges levied on the premises during the term been paid. On the 10th day of May, 1892, Neff, the lessee, made an assignment, in due form of law, of all his property, real and personal, for the benefit of his creditors, to Alexander McDonald, William J. Breed, and William M. Ramsey, each of whom, except McDonald, qualified and entered upon the execution of the trust. Ramsey, however, resigned in the following June, his resignation was accepted, and Robert M. Ramsey was appointed and qualified as his successor in the trust. In August, 1896 the lease having then expired without an election to purchase, the lessors brought the action below against the defendants in error to charge them individually, as assignees of the lease, with the unpaid rent, and the taxes and assessments laid on the premises during the term of the lease, amounting, in the aggregate, to something over $3,000. The petition alleges that the defendants accepted the assignment of the lease, received all of its benefits and privileges, and owned and enjoyed the same and the leasehold estate during the remainder of the term ensuing after the 10th day of May, 1892. These allegations of the petition were denied by answer, and the defendants pleaded in bar an adjudication of the court of insolvency of Hamilton county upon an application of the plaintiffs to that court to require the defendants, as assignees of Neff, to pay the taxes and assessments which became a charge on the leased premises during the term, by which adjudication, the plea avers, it was determined that the lease was not accepted by the assignees or trustees of Neff's estate. The plaintiffs demurred to the plea, on the ground that the parties and subject-matter involved in the proceeding in the insolvency court were different from those in this suit. The demurrer was overruled, and, without further pleadings, the cause was tried to the court, which, at the request of the plaintiffs, made a finding of the facts, wherein, in addition to those already stated, the court found that the leasehold property in question was vacant land without improvements of any kind, that neither of the assignees of Neff took possession of it, and that soon after the assignment was made they notified the plaintiffs, in writing, that they did not intend to take possession. The plaintiffs, however, did not re-enter, nor do any act to prevent the assignees from holding, occupying, and enjoying the leasehold during the term of the lease, or any of the privileges it conferred. On these facts the court held that the defendants did not accept the assignment of the lease, nor become liable for the rent reserved, or the taxes, or other charges for which the lessee was bound. The final judgment which followed was affirmed by the circuit court.
1. An assignee for the benefit of creditors, by accepting the trust, does not become the assignee of a lease belonging to his assignor, nor personally liable on the covenants of the lessee; nor is he bound to accept the assignment of the lease, if in his opinion it will be unprofitable to the creditors to do so, and he is entitled to a reasonable time to elect whether to adopt or reject the lease.
2. The assignment, however, does not terminate the lease, nor discharge the obligations of the lessee. The lessor is entitled to have his claim for rent allowed by the assignee so that it may participate, in its proper order, in the trust fund; and it is not a valid objection to such allowance or participation that the rent, or any part of it, is not then due.
S. T. Crawford, for plaintiffs in error.
Maxwell & Ramsey and Wm. W. Ramsey, for defendants in error.
WILLIAMS, J. (after stating the facts).
It is a general rule that one who accepts the transfer of a leasehold estate takes it subject to the terms and conditions of the lease, and becomes bound for the performance of all the covenants of the lessee, and he is therefore liable directly to the lessor for the rent. The question here is how far, if at all, that rule is applicable where, as in this case, the lessee holding an unexpired term makes an assignment, under our statute, of all his property for the benefit of his creditors. It would probably not be controverted that whatever beneficial interest Neff held by virtue of his lease was a property right which was included in, and passed under, the general assignment, and which the assignees,...
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