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(- Mich. 183 N. W. 24.) ceedings involved here were insti- feitures, are to be given a strict contuted.
struction against those for whose The trial court filed an opinion benefit they are introduced, when of holding that, while inferable Pond questionable import or in any wise "was given an interest in the lease,” open to construction. Upon that he was not shown to be an assignee point, and for illustration covering of the lease, and under the facts the question before us, it is said in stipulated his joint occupation of White v. Huber Drug Company, 190 the premises with Ische Brothers, as Mich. 212, 157 N. W. 60: "It has a partner for conduct of the busi been said, however, that covenants ness carried on there, did not render against assignment or underletting his guilty of unlawful possession of are not favorably regarded by the the premises. Plaintiff's right to courts, and are liberally construed review was preserved by requests, in favor of the lessees. But this objections, and exceptions timely means only that the scope of the made.
term 'assignment' will not be enThe question involved and argued larged by the courts, and that the by counsel is whether taking Pond covenant will not be considered as into partnership, selling him an in- violated by any technical transfer terest in the stock with a propor that is not fairly and substantially tionate share in the profits, and an assignment, as where a tenant, committing to him management of without license from his landlord, the business then being conducted takes a third party into partnership on the leased premises with the oth and lets such party into joint poser members of the firm yet acting in session with him." an advisory capacity, violated the Counsel for plaintiff urge that covenant in the lease against assign this recognition of the rule defending or transferring the same or sub ant contends for was irrelevant to letting the premises, or any part the issue in that case, and mere dicthereof, without written consent of tum, necessarily no stronger than the lessor.
Roosevelt v. Hopkins, 33 N. Y. 81, Appellant's contention is squarely cited as authority for the doctrine, planted in the brief of his counsei, which, it is argued, does not go that upon the proposition that "taking in far, but was decided on the ground a partner to a lease violates the cove that the prohibition against assignnant against assignment," which ment was not intended to interdict it is asserted all authority holds, transactions between partners. that whether it violates a covenant In the White Case the charged against subletting is not involved, violation of a restriction in the lease and cases cited to that point do not under consideration was an assignapply; while counsel for defendant ment by one corporation to another, insists the adjudicated cases hold and it may be conceded what was that, under a similar covenant to said as to partners was only illusthat found in the lease under con trative. It is, however, the intersideration, taking a partner into a pretation of the Roosevelt Case, susbusiness or trading firm, as done tained by recognized authority as here, does not violate a covenant follows: against either assigning or sublet “Where the lessee is a firm, a ting.
mere change in the partners which In approaching the subject we compose it, or the taking in of a new are confronted with the general rule partner, is not a breach of a condithat forfeitures are not favored in tion against an assignment. Nor is law, especially when they devest es such conduct on the part of the lestates, and restrictions in leases see a subletting.” Underhill, Land. against assignments or subleases, as & T. p. 1050. also other conditions in contracts “The covenant [not to assign] is providing for disabilities and for not broken by associating others
with the lessee in the enjoyment of same firm name as before, only with the term; as by changing the mem a new firm partner in joint occupabership of a firm.” McAdam, Land. tion, for conduct of the business. & T. 3d ed. p. 500.
No direct demise or even mention "A condition against subletting or was made of the lease in that conassignment is not broken where the nection, and only by implication tenant takes another into partner from the fact that defendant had ship with him and lets such person purchased an interest in the busiinto joint possession of the prem ness and become a partner in the ises. Nor is such a condition in a firm can an assignment of any inlease to a partnership broken by a terest in the lease be claimed. Dechange in the firm by the admission fendant was undoubtedly interested or withdrawal of partners, or by a in the lease so far as it related to dissolution of the firm and a trans being maintained for the business fer of the possession to one of the conducted
on the partners. But the organization of a premises leased, but Landlord and corporation by the partnership and it does not follow assignment of a transfer of the lease to such cor that he became an
lease--taking poration is a breach.” 24 Cyc. 969. assignee of an in
We think it may fairly be said terest in the lease, in violation of the from an examination of the deci wording of the prohibition against sions touching this question in oth assigning. The provision of the er jurisdictions, both English and prohibiting clause claimed to have American, that the authorities are been violated is that Ische Brothers not entirely harmonious upon the “will not assign nor transfer this subject, and cases are to be found lease.” By the disjunctive “or” on either side of the question. Con- they are further restricted from ceding what was said in the White subletting “said premises, or any Case to be dictum, it may be noted in part thereof,” which is not claimed passing that, so far as this court to have been violated and which is has touched the question, it favored in its essentials a distinct independthe view that taking in a partner ent restriction, which plaintiff addoes not in itself violate a condition mits is not involved here. against assigning a lease. In Tif By the strict construction apfanyon Landlord and Tenant, p. plied in case of restrictions gainst 925, the subject is discussed with ci- demise, a prohibition against assigntation of authorities, and it is said ing a lease does not prohibit asin part: "Upon the question wheth- signing any interest therein, which er a stipulation against an assign- is all that is claimed here. In ment or sublease of the premises Roosevelt v. Hopkins, supra, the lesprecludes an assignment or sub
sees were partners under the firm lease of part of the premises, or an
name of Hopkins & Crow. Their assignment of an undivided interest lease provided they should not “detherein, the cases, though few in
mise, sell, underlet, or assign over number, are not in harmony."
said premises to any person or perIt is unquestioned that the assign
sons whatsoever." Crow retired ing of a lessee's entire interest in a
from the firm, and the business was lease to a partner or to others will
afterwards conducted by a new firm work a forfeiture. In such cases
styled Hopkins & Brothers, which the lessee is no longer interested in
sublet a part of the premises. The the premises, and seeks to put in
court there said: “They neither possession a new tenant to attorn to the landlord. Here the old members demised, sold, underlet, nor assigned of the firm did not, by any written the entire property embraced in the instrument of demise, assign the lease. They were not prohibited lease or withdraw, but remained in from subletting portions of the the same business, conducted in the premises; and the exercise of this
(- Mich. 183 N. W. 24.) right, therefore, gave no cause of here. If Ische Brothers parted with action to the plaintiff."
title to any interest in the lease, "An assignment of a lease is the which is but an inference, they did transfer of a tenant's whole estate not part with their entire interest in therein to some third person.
the leasehold estate which they held If the grantor conveys a shorter in the premises, nor in the business term or a less estate than he him conducted there. They yet were enself had in the premises, or if a les titled to possession as tenants and see for life grants a term of years, bound to attorn to the landlord as provided the life should continue so before. No difference in the authorlong, this is not an assignment of ized kind of business, manner of the freehold, but only a grant of a conducting it, or care of the premterm, and will in neither case ises, is shown or claimed. The stipamount to more than an under ulated facts do not sustain plaintiff's lease.” Taylor, Land. & T. § 426. technical claim of forfeiture for vi
"By the assignment the tenant olating the covenant of the lease parts with his entire interest, and a forbidding its assignment, when new tenant takes his place, with measured by the rule of strict conwhom the landlord must deal as struction applicable to breaches of with his predecessor.” Underhill, conditions working forfeitures of Land. & T. p. 1052.
leasehold estates. No such situation presented itself The judgment is affirmed.
Taking partner or assigning to cotenant as breach of provision in lease against
assignment or subletting.
For assignment of lease as breach of covenant against subletting, see the annotation in 7 A.L.R. 249. Taking partner.
There are but few cases in point.
In the reported case (MILLER V. POND, ante, 179), where a lease ran to "Ische Brothers, Will C. Ische and Charles E. Ische, copartners," and they sold to a third party a two-thirds interest in their stock of goods, giving him a bill of sale, and took him into partnership with them, no mention being made of the lease, it is held that this was no breach of a provision in the lease that "said parties of the second part further covenant that they will not assign or transfer this lease," there being no assignment of the lease and no prohibition against assignment of an interest therein.
Perhaps the most frequently cited American case this subject is Roosevelt v. Hopkins (1865) 33 N. Y. 81, referred to in the reported case (MILLER V. POND). The first headnote in the Roosevelt Case is follows: "A provision in a lease
against subletting the demised property, without the consent of the lessor, does not apply to a mere change in the business firm of the lessees, incident to the admission of a new partner or the withdrawal of an old one." It appears from the report of the case that the lessor in a lease to Hopkins & Crow, a firm consisting of the two defendants, sued them for a breach of covenants in the lease; that the lease provided “that the said party of the second part should not, during the continuance of the term, demise, sell, underlet, or assign over the said premises to any person or persons whatsoever, or for any term or time whatsoever,” etc.; that a clause prohibiting underletting any part of the premises had been stricken out before the lease was executed by the lessee; that "the firm of Hopkins & Crow, the second party, was dissolved in the early part of the term, the defendant Crow retiring from the firm, and business was afterwards conducted by a new firm styled Hopkins & Prothers. This new firm sublet the part of the
premises used in the business of Hop In Maloney v. Smith (1918) 16 Ala. kins & Crow, but continued in posses App. 595, 80 So. 169, it was held that sion of the residue." The court, in the taking of a partner is not a breach affirming a judgment for the defend of a condition against subletting in a ants, said, inter alia; "The dissolution lease of the premises where the partof the partnership of the defendants nership business is carried on. was not a breach of their cove Where a lease from A to B, “and nant, and subjected them to no new those whom he may associate with liabilities to the plaintiff (Hoffman v. him for the purpose" of mining, conEtna F. Ins. Co. (1865) 32 N. Y. 405, tained a clause “the said B not to sell 88 Am. Dec. 337). They neither de or assign this lease, under forfeiture mised, sold, underlet, nor assigned of the same, without consulting said the entire property embraced in the A," it was held that B would not inlease. They
not prohibited cur a forfeiture by recognizing by from subletting portions of the prem conveyance his associates, on behalf ises; and the exercise of this right, of whom and himself he procured the therefore, gave no cause of action to lease, and that, therefore, a bill by the plaintiff." It appears from a them to require him to do so was not copy of the printed appeal papers in demurrable. Hargrave v. King (1848) the case that the original lease was to 40 N. C. (5 Ired. Eq.) 430, 8 Mor. "Hopkins & Crow,” which was a firm Min. Rep. 408. composed of Francis Hopkins and In Boyd v. Fraternity Hall Asso. James N. Crow (the two defendants); (1885) 16 Ill. App. 574, where a hotel that on its dissolution said Hopkins was leased to husband and wife, and became the owner of Crow's estate the husband, with the knowledge and and interest in the lease; that the sub implied assent of the wife, carried on letting referred to in the report as a saloon business in one of the rooms, by the new firm was done, not by the of which he had exclusive possession new firm, but by Francis Hopkins, for that purpose, and later took in a and was of a part of the part of the partner in the business of keeping a premises used by the old firm; that saloon in such room, it was held that the new firm was in existence before there was no breach of the provision the dissolution of the old one, and in the lease that “it is further agreed consisted of said Francis, and of John by the party of the second part, that and Frederick Hopkins; and that the neither they nor their legal representcomplaint of the plaintiff was dis atives will underlet said premises or missed. The plaintiff, in his “Points" any part thereof, or assign this lease.” in the court of appeals, states that the But in Roe ex dem. Dingley v. Sales new firm took the premises by agree (1813) 1 Maule & S. 297, 105 Eng. ment between the old and new firm, Reprint, 111, the taking of a partner but there seems to be no foundation by a lessee, and agreeing that he in the papers for this statement. The should have the exclusive use of part earlier papers do not indicate any of the premises and the joint use of contest by reason of the change in the rest of them, was held to breach the firm, but the plaintiff's said a provision in the lease for re-entry "Points" made the above statement of in case the lessee, his executors, etc., fact, and also argued that "the dis should demise, lease, grant, or let the solution of the partnership of the de said demised premises, or any part or fendants, and transfer by them to the parcel thereof, or convey, alien, asnew firm of Hopkins & Brothers of sign, or set over the indenture or his the lease, being entirely voluntary, or their estate therein, or any part was a breach of the covenant not to thereof, to any person or persons assign the lease, and made them lia whomsoever, for all or any part of the ble for damages." (The Hoffman said term, etc. Case cited by the court as aforesaid Varley v. Coppard (1872) L. R. 7 C. related to the construction of an in P. (Eng.) 505, 26 L. T. N. S. 882, 20 surance policy.)
Week. Rep. 972, herewith referred to,
seems to be taken as authority for the obiter statement in Emery v. Hill (1892) 67 N. H. 330, 39 Atl. 266, that if a lessee firm admits new members, and transfers to the new partnership their interest in the lease, the transaction would be an assignment of "the lease" or "an interest therein," within a restrictive covenant. But it appears from mems. on pp. 332 & 80 of 67 N. H. that this was in one of certain opinions, which, while approved by a member of the court, were prepared by someone else from the deceased chief justice's notes, etc., which were often brief.
In Blessing v. Fetters (1919) 40 Cal. App. 471, 181 Pac. 108, where it was held that there had been a waiver, a lessee of hotel premises, under a covenant not to assign the lease without the written consent of the landlord, took in a partner and assigned to him without the landlord's written consent a half interest in the lease and moneys deposited under its terms, and the court said: “Though the assignment of the half interest in the lease to banks and its use by the partnership were without the written consent of the landlord and in violation of the covenant in the lease, they did not create a forfeiture of the lease, especially after the landlord had accepted the rent with knowledge of the assignment."
While this annotation does not include the question whether or not a contract by the lessee with a third person, who is to have a share of the profits of the business conducted on the leased premises, makes the third person a partner, it may be permissible to refer to Boston Elev. R. Co. v. Grace & H. Co. (1901) 50 C. A. 239, 112 Fed. 279, where the lessee of premises, upon which it had, in the lease, agreed to erect and maintain a chute and other amusement structures, contracted with a thirdparty corporation to build a chute, agreeing that the said third party should have a lien upon the enterprise and its income, and exclusive possession until the amount owing to it under the contract was paid, whereupon it should have a one-third in
terest in the chute enterprise and its incidents. It was held that the third party was the agent of the lessee, which had not by the contract breached the provision in the lease against subletting, and that, upon the completion of the contract as to building and payment, so that the third party became equitably entitled to an assignment of one third of the lessee's interest in the enterprise and lease, there would be no breach of the aforesaid provision until there had been a delivery of such an assignment. It may be noted also, in this connection, that in Markowitz v. Greenwall Theatrical Circuit Co. (1903) Tex. Civ. App. —, 75 S. W. 74, it was held that the employment by the lessee of an opera house, of a person as business manager of the opera house during the term of the lease, and an agreement to pay him a share of the profits, was not a subletting or an assignment, and not a transgression of a statutory prohibition against subletting without the landlord's consent. Assignment to a cotenant.
Perhaps the real explanation of the conflict in the cases is in general that some construe the restriction strictly against the lessor, and others do not.
The leading English authority on the point is Varley v. Coppard (Eng.) supra, where a lessee had, with the lessor's consent, assigned his estate in the premises to two persons who were partners in trade, and on the dissolution of the partnership one of the assignees assigned his estate and interest in the premises to the other without the lessor's consent.
It was held that this second assignment was a breach of the provision in the original lcase, that neither the lessee nor his assigns, etc., should assign the demised premises without the consent of the lessor. The court said: “The covenant, though it relates to the estate of the two, necessarily involves the interest of each; it means that neither of them shall assign the whole or any part of his interest without consent; otherwise, a tenant might assign all but a sixty-fourth part."
While in Bristol v. Westcott (1879)