Opinion
Decided February 1, 1927.
Landlord and tenant — Oral assignment of properly executed lease for more than three years — Assignee, taking possession, paying rent and abandoning premises, liable for balance, when.
An oral assignment of a properly executed written lease for a term of more than three years is enforceable in an action at law by the lessor against the assignee for the recovery of the remainder of the rent due, when the assignee takes possession of the demised property under the lease, pays the rent stipulated therein for a part of the term, and abandons the property without the lessor's consent.
ERROR: Court of Appeals for Summit county.
Messrs. Commins, Brouse, Englebeck McDowell and Mr. J. Fred Smith, for plaintiff in error.
Mr. Donald Gottwald, for defendant in error.
The parties stand in this court in the same relative position as in the court below.
The plaintiff, Frank Abraham, brought an action at law against the defendant, the Akron Sausage Company, a domestic corporation, to recover a sum of money for rent claimed to be due under an alleged contract made between the parties on or about the 22d day of November, 1919. The defendant filed an answer denying liability.
The case came on for hearing, and both parties in open court waived a trial by jury and consented that the issues be tried to and decided by the court.
The court thereupon heard the evidence and found that there was due the plaintiff the sum of $180. The plaintiff, not being satisfied with the amount of the judgment, prosecuted error to this court.
The bill of exceptions shows that on the 29th of September, 1919, the plaintiff leased to the Akron Sausage Company, a partnership, a certain piece of real estate for a period of five years, at an annual rental of $720, payable in monthly installments of $60.
This lease was in writing, signed by both parties, attested by two witnesses and acknowledged before a notary public.
The record also shows that on the 22d day of November, 1919, the plaintiff leased to the defendant, the Akron Sausage Company, a corporation, a part of a building adjacent to the property leased to said partnership.
This lease was in writing, signed by both parties, attested by two witnesses and acknowledged before a notary public.
This company was incorporated in the early part of October, 1919, and it was promoted by the same persons who composed the partnership of the same name.
The record further shows that a short time after the incorporation of said company, the partnership orally assigned its lease to said company, and the company went into the possession of the demised property and paid the rent stipulated in the lease until it abandoned possession of the property in October, 1923. At the same time it also abandoned the possession of the property leased directly to it. The defendant also paid the rent stipulated in both leases for the succeeding month of November, but refused to pay any more, although at the time suit was filed the term of neither lease had expired, the company claiming that, having abandoned said property, it was released from further liability. It is not claimed that plaintiff consented to the abandonment of the property held under either lease, or that the partnership lease was reassigned by said corporation to another.
The trial court held that the corporation was liable to the plaintiff only for the rent due under the lease made directly to it, from the date of the last payment to the time the suit was filed in the court of common pleas — being six months at $30 per month.
This conclusion was partially right, as there was an express contract by the defendant under a properly executed written lease to pay rent for the full term of the lease of five years. Sutliff v. Atwood, 15 Ohio St. 186; Lodge v. White, 30 Ohio St. 569, 27 Am. Rep., 492; Taylor v. De Bus, 31 Ohio St. 468.
The defendant in its answer did not set up the statute of frauds as a defense, but claimed in the trial court, and in this court, that it is not liable under the first lease because the assignment to it was not in writing.
By the statute of frauds, Section 8620, General Code, an assignment of a lease is required to be in writing and signed by the party so assigning or granting it, and it is also provided in another section, Section 8621, General Code, that no action shall be brought whereby to charge a defendant upon a contract for a sale of lands, tenements, or hereditaments, or an interest in or concerning them, unless the agreement is in writing and signed by the party to be charged.
It is admitted in this case that the assignment of the lease was not signed by the lessee, and that defendant did not assume any of the obligations of the assigned lease by a promise in writing.
It has generally been held in equity that part performance of a contract for the sale of lands, in cases where the vendee takes possession of the land under the contract, is sufficient to take the case out of the statute of frauds.
"But it is equally well settled that to have that effect the possession must be connected with and in consequence of the contract; it must be in pursuance to its terms and in part execution of them. In other words, the possession must pursue and substantiate the contract." Myers v. Croswell, 45 Ohio St. 543, at page 547, 15 N.E. 866, 868.
So, do the oral assignment of the partnership lease to the corporation, the occupation of the leased property by said corporation, and payment of rent to the lessor by said corporation, take the contract out of the statute of frauds in an action at law?
At an early date in the jurisprudence of this state it was held, in an action at law for the recovery of rent under an oral lease for a year, that part performance took the case out of the statutes of fraud, the Supreme Court in the case of Moore v. Beasley, 3 Ohio, 294, at page 296, saying:
"The second error relied on, depends on the construction of the statute for the prevention of frauds and perjuries. This court has decided, as often as the question has been made, that part performance may take a case out of that statute, and that delivery of possession, on a parol lease, is sufficient for that purpose.
"There was, in this case, not only a delivery of possession to Moore, but an enjoyment by him of everything for which he contracted. On the part of Beasley, the contract was fully performed; it does not, therefore, come within the design of the act.
"The case of Wilber v. Paine, 1 Ohio, 252, may be considered as settling this point."
And it was later held, in another action at law for the recovery of rent, in the case of Grant v. Ramsey, 7 Ohio St. 158, that: "A parol lease of lands for more than one year, but less than three, will, by the taking possession under it, and the payment of rent according to its terms, be withdrawn wholly from the operation of the statute of frauds."
These cases and the principles of law announced therein are authority for the statement that, as between the lessor and lessee of a piece of property, delivered into the possession of the lessee under an oral lease, and payment of rent therefor, in cases where the term is not more than three years, the case is taken out of the statute of frauds in an action at law for rent between the lessor and lessee.
In this state leases for more than three years are by another statute, Section 8510, General Code, required to be in writing, signed by the lessor, attested by two witnesses, and acknowledged before a notary public or other officer named therein. It has therefore been decided by the Supreme Court in the case of Baltimore Ohio Railroad Co. v. West, 57 Ohio St. 161, 49 N.E. 344, in reference to a lease for five years, which was defectively executed: "1. An entry under a lease for a term of years at an annual rent, void for any cause, and payment of rent under it, creates a tenancy from year to year upon the terms of the lease, except as to its duration."
It was also held in the case of Richardson v. Bates, 8 Ohio St. 257, at page 264, that in an action at law a landlord could not recover for rent after the lessee abandoned the premises, when the right to recover was predicated solely upon a defectively executed lease for a term of five years. The facts in the foregoing case show that the lessee was in possession of the demised premises at the time of the execution of the lease relied upon, and "that the plaintiff, by his petition, predicated his right to recover solely upon the indenture set forth in his petition. He did not aver a part performance, and ask to have the instrument reformed, and then enforced. Nor does the petition state a delivery of possession by the plaintiff, or an occupancy by the defendants; but the right of action is placed solely upon the obligations imposed upon defendants by the instrument set forth."
But we think it is equally well settled that an oral assignment of a written lease for less than three years, and an oral assignment of an oral lease for less than three years, are equally good and binding where the assignees of these kinds of leases enter into the possession of the property under the lease, and pay the rental specified therein.
The case of Sutliff v. Atwood, 15 Ohio St. 186, was a written lease for a term of three years, where the lessee made an oral assignment to another, and the assignment was held good in an action at law.
The case of Lodge v. White, 30 Ohio St. 569, 27 Am. Rep., 492, was an oral lease where the lessee entered the possession of the demised property under a contract for a year, and held over from year to year, and during the last year orally assigned the lease to another, and the court there held the assignment good in an action at law.
These cases, then, are authority for the proposition that an oral assignment of either an oral or written lease for a term not exceeding three years is good, where the assignee takes possession of the leased premises and pays the rent stipulated in the lease.
But said Section 8510 of the Code relates only to the execution of a lease, in the first instance, and does not expressly or by implication relate to the assignment of a lease, or provide a method by which it shall be done. So, the only section of the Ohio Code which applies to an assignment of a lease is the statute of frauds, Section 8620.
In his opinion in the case of Grant v. Ramsey, supra, at page 166, Judge Scott says: "No distinction is made by the terms of the statute, between leases for years, estates for life, or in fee simple; nor between leases for a term not exceeding one year, and those for a longer term. All estates or interests in lands, are placed on the same footing, and it is certain that contracts for the absolute sale of lands, in fee simple, are constantly held by our courts to be taken out of the operation of the statute by part performance, and that a change of possession and part payment will constitute a sufficient part performance for this purpose. The clauses of our statute relied upon in this case, are but a reenactment of the English statute upon the same subject, and the courts of that country have always regarded leases, without regard to their duration, as taken out of the statute by part performance. In the Earl of Aylesford's case, 2 Strange, 783, there was a parol agreement for a lease of twenty-one years. The lessee had entered and enjoyed for a part of the term, and then the earl brought a bill to oblige him to execute a counterpart for the residue of the term. The lessee pleaded the statute of frauds, which was overruled, the agreement being in part executed. So also under a similar statute in Pennsylvania, in the case of Jones v. Peterman [3 Serg. R., 543, 8 Am. Dec., 672], where the question was, whether part performance of a parol lease for seven years would take the case out of the statute, it was held that it would, where the possession relied on as part performance was directly referable to the lease."
We are therefore of the opinion that an oral assignment of a properly executed written lease for a term of more than three years is enforceable in an action at law against the assignee for the recovery of the balance of the rent due, when the assignee takes possession of the demised property under the lease and pays the rent stipulated in the lease for a part of the term.
But the defendant claims that, though this may be true, it is relieved from further liability because of having abandoned the demised property.
There are two kinds of obligations which are created between a lessor and lessee, to wit, those which arise by the express terms of the contract and those which are implied.
The implied relation arises by operation of law, through privity of estate, and not through privity of contract, as it is a covenant running with the land. The implied obligation is discharged when the privity of estate is destroyed, for then the reason for the obligation is taken away and the implied duty terminated. Sutliff v. Atwood, 15 Ohio State, at page 194; Taylor v. De Bus, 31 Ohio State, at page 471.
The evidence in this case shows that the defendant abandoned the property and did not attempt to reassign the lease to another with the consent of the lessor. It is generally held that mere abandonment of the leased property will not discharge the assignee from liability, as liability is based on privity of estate and not by occupancy of the property. In this state it has been held that, in a case where the obligation of a tenant to pay rent is implied by law, his assignment of the lease to another must be accompanied by the delivery of possession of the property and the assent of the lessor: "2. But where the obligation of the lessee to pay rent is only that which is implied by law from his occupation of the premises, his assignment of the lease and surrender of possession to the assignee, with the assent of the lessor, extinguishes the privity of estate between the lessor and lessee, and the consequent implied liability of the lessee to pay rent." Lodge v. White, 30 Ohio St. 569, 27 Am. Rep., 492.
The foregoing principle is supported by the case of Sutliff v. Atwood, supra. See, also, Ann. Cas., 1916E, 788 (note).
Of course, if an assignment of a lease requires the assent of the lessor before the assignee is relieved of liability, it necessarily follows that an abandonment of the leased property without the assent of the lessor will not relieve the assignee of liability.
We are therefore unanimously of the opinion that the abandonment of the leased premises by the defendant, without the assent of the landlord, did not relieve it of its implied obligation to pay rent for the remainder of the term of the lease.
The defendant claims that there is a variance between the allegations of the plaintiff's petition and the proof, as to the date the assignment of the lease was made, but we do not think this variance is substantial, or material, or that the defendant was prejudiced in any way thereby.
For the reasons stated, the judgment of the trial court will be reversed; and, it clearly appearing from the record that the defendant is liable as a matter of law to the plaintiff for six months rent for both parcels of land, at the rate of $90 per month, final judgment may be entered in favor of the plaintiff for $540.
Judgment accordingly.
WASHBURN and FUNK, JJ., concur.