Winshall v. Ampco Auto Parks, Inc., Civ. A. No. 4-72997.

• Citation: 417 F. Supp. 334
• Decision Date: 19 July 1976
• Docket Number: Civ. A. No. 4-72997.
• Parties: William A. WINSHALL, Plaintiff, v. AMPCO AUTO PARKS, INC., and American Building Maintenance Industries, Defendants.
• Court: U.S. District Court — Western District of Michigan

417 F. Supp. 334

William A. WINSHALL, Plaintiff, v. AMPCO AUTO PARKS, INC., and American Building Maintenance Industries, Defendants.

Civ. A. No. 4-72997.

United States District Court, E. D. Michigan, S. D.

July 19, 1976.

Robert J. Harris, Harris, Lax, Goldman & Gregg, Ann Arbor, Mich., for plaintiff.

Robert H. Janover, Freud, Markus, Slavin, Toohey & Galgan, Troy, Mich., for defendants.

Carl H. von Ende, Miller, Canfield, Paddock & Stone, Birmingham, Mich., for intervenor, Detroit Bank and Trust Co.

MEMORANDUM OPINION AND ORDER

JOINER, District Judge.

This is an action for breach of contract by the lessor of a parking garage against the lessee. The lessee stopped paying rent, repudiated the lease, and surrendered the keys to the lessor. It contends, however, that certain acts of the lessor released it from liability.

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In this case, the court established a schedule for the development of facts and stipulation, and cross motions for summary judgment were filed.¹ The question to be decided on defendants' motion is whether the lessor's re-entry onto the garage premises and resumption of business released the lessee from liability from the time of re-entry. * * *

Factual Background

On June 23, 1972, a 15-year lease agreement was signed between the Winshall Real Estate Trust, as lessor, and Ampco Auto Parks, Inc., as lessee. The leased property, located at 1776 Randolph Street in down-town Detroit, is a 320-car parking structure known as the Grand Circus Garage.

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By letter dated February 27, 1974, Ampco repudiated the lease and terminated as of April 1, 1974. * * * Winshall accepted the key to the premises, and he immediately began operating the business there. He rejected Ampco's offer to continue its tenancy on a month-by-month basis, being unwilling to relet except by a long-term lease agreement. Winshall did not protest Ampco's repudiation of the lease until September 30, 1974.

Acceptance of Surrender by Operation of Law

Relying on the uncontested facts that Winshall accepted possession of the Grand Circus Garage on April 1, 1974, refused a month-by-month tenancy with Ampco, re-entered and operated the business himself continuously thereafter, failed to protest Ampco's abandonment immediately, and was interested only in reselling or reletting on a long-term basis — all in the context of a lease agreement having no survival clause⁴ — Ampco argues that Winshall accepted surrender of the leasehold by operation of law, releasing Ampco from any liability for rent.

The concept of acceptance of surrender by operation of law may be traced back to the requirement, under the statute of frauds, that interests in real property could not be transferred except by signed writing or by operation of law. It allows a parol transfer by the lessee of real property to operate as a surrender of the lease if it has the consent of the lessor. Logan v. Anderson, 2 Doug. (Mich.) 101 (1845). It is a property concept, appropriately raised as a defense in an action for rent by a landlord against a tenant who has surrendered the premises back to his landlord.

Were this an action for rent, it is doubtful that the facts on record would show Ampco accepted surrender by operation of law.⁵ Winshall, however, has not sued for rent, but for damages flowing from breach of the lease agreement. At the heart of Ampco's defense is its argument that a defense based on the landlord's acceptance of surrender is applicable to an action for damages. The court holds that it is not.

An action for damages flowing from breach of contract ought not to be confused with an action for rent. In a contract action, the landlord may collect only actual damages flowing from the breach, and he has a duty to mitigate those damages. In an action for rent, the landlord has no duty to mitigate, and, unless he accepts the surrender of the premises, he has a right to collect the full amount of the rents due under the breached lease.

A prudent landlord will take affirmative steps to reduce his losses from abandoned premises. If he proceeds by way of an action for rent, however, he stands in a precarious position:

"If the landlord simply stands aside when the tenant abandons possession, the lease relation, and hence the tenant's liability for rent properly so-called, continues, but if the landlord, as a man of prudence, attempts to utilize the premises by resuming possession or re-letting them, he will, unless he is exceedingly careful, incur the risk of terminating that relation and with it the liability of the tenant for rent, either upon the theory of (1) surrender, or (2) exercise of power of forfeiture, where that is reserved in the lease, or (3) eviction." McCormick, supra note 5, at 216.⁶

A landlord seeking to recover his losses in an action for rent is therefore permitted "to stand idly by the vacant, abandoned premises and treat them as the property of the tenant and recover full rent." Id. 222. In an action for damages, on the other hand, the landlord must assume legal obligations which do not burden him in an action for rent; but he may rely upon his right to recover his actual losses that could not be reduced by his own reasonable efforts.

Thus, there are substantial differences between the two forms of action, in the burden of proving losses, in the potential recovery, and in the duties imposed by law upon the parties. Ampco seeks to obscure those differences and to engraft the cumbersome doctrine of surrender onto the body of...