Opinion
No. 28017.
November 21, 1950.
APPEAL FROM THE CIRCUIT COURT OF THE CITY OF ST. LOUIS, WALDO C. MAYFIELD, J.
Barton N. Grant, and Frey Korngold, all of St. Louis, for appellant.
Sam Weber, Albert E. Hausman, St. Louis, for respondent, Lisetta Investment Company.
Milton Napier, St. Louis, for Knost-Bockwinkel Furniture Home.
T. N. Roupas, Chicago, Ill., for Butler Bros.
This is an action for a declaratory judgment brought by Jean R. Garland and Jack N. Rosenberg, copartners doing business as Rosenberg's, seeking a declaration by the court that plaintiffs, as assignees of a lease of certain premises, had the right to sublet the premises. Lisetta Investment Company, a corporation, lessor, Butler Brothers, a corporation, lessee, and Knost-Bockwinkel Furniture Home, Inc., to whom plaintiffs desire to sublet said premises, were made parties defendant to said suit. The trial court in its judgment held that plaintiffs "have no right to re-assign said lease or to re-sublet said premises." From this judgment, plaintiffs have appealed.
The premises involved is a store building situated in the City of St. Louis known and numbered as 5701 Delmar Boulevard. It is owned by Lisetta Investment Company. On May 15, 1944, Lisetta Investment Company leased said premises to Butler Brothers for a term of ten years, beginning June 1, 1944, and ending May 31, 1954, with an option to renew for an additional ten year period.
The provisions of the lease pertinent to the issues herein involved are as follows:
"(m) It is understood that the tenant, Butler Brothers, may not intend permanently to own or operate the store to be located on the demised premises, but that it may wish to transfer and assign this lease to an individual or other person at present unknown, who shall operate such store. Accordingly, the Landlord specifically agrees that the tenant, Butler Brothers, shall have and is hereby given the unqualified right and privilege, at its option, of assigning this lease at any time, together with all the rights and obligations thereunder, to such an individual or person adjudged by the credit department of Butler Brothers to be amply financed for the purpose of operating a store of such character, and that from and after the date of such assignment, the tenant, Butler Brothers, shall forthwith be relieved of and from all liability or responsibility under this lease or any of its provisions. It is understood, however, that in the event of the termination for any cause of the Federated Stores Franchise Contract, which shall be issued to said unknown tenant, Butler Brothers shall have the option of reassuming this lease together with all rights and obligations thereunder, but shall not be under obligation so to do.
"(n) It is agreed between the parties hereto that the tenant, Butler Brothers, shall have and is hereby given the unqualified right and privilege, at its option, of subletting the demised premises, subject to all the terms and conditions respecting occupancy and use herein contained, provided that the tenant shall remain liable hereunder.
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"(c) This lease and demise and the covenants and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns."
On July 23, 1948, Butler Brothers assigned its interest in said lease to appellants, who assumed liability thereon and thereafter paid direct to the original lessor all rental due under the terms of the lease. Appellants conducted a general merchandise business on said premises.
In September of 1948 appellants subleased a portion of the premises to Alvin M. Spector, and in March 1949, made a sublease of a part of the building to Cream-A-Ret Manufacturing Company. In neither instance did appellants attempt to secure the consent of Lisetta Investment Company for entering into these sublease agreements. Jean Garland testified that Mr. Lubke, President of Lisetta Investment Company, knew that appellants had sublet portions of the premises to Spector and to Cream-A-Ret but never voiced any objection.
At the time appellants entered into possession of the premises under the assignment of the lease they had an agreement with Butler Brothers known as a "Federated Franchise Agreement." By this agreement, Butler Brothers, for a consideration, agreed to furnish certain services not necessary to detail here. This franchise was terminated by Butler Brothers sometime during the year 1949 — several months before the trial of this case. Butler Brothers at no time thereafter elected to reassume the lease as it had a right to do under the terms, paragraph (m), of the original lease.
In June, 1949, appellants entered into negotiations with Knost-Bockwinkel Furniture Home, Inc., looking toward an assignment of the lease or subletting of the premises to the furniture company. An agreement was reached and a contract prepared. This instrument was designated by the parties as a sublease. By its terms it conveyed the entire premises to Knost-Bockwinkel Furniture Company for the entire term of the original lease. It provided for a monthly rental of four hundred and fifty dollars payable to appellants. It was also provided that Knost-Bockwinkel Furniture Company would pay the Lisetta Investment Company three per cent (3%) on gross sales in excess of one hundred thousand dollars ($100,000) in the manner and form as provided in the original lease, and perform and observe all the covenants and conditions of the original lease, except it would not be required to restore walls and block up openings as set out in paragraph H of Article A of the original lease. (By paragraph H of Article A of the original lease the tenant was given the right to make alterations, improvements and additions to the premises. It was further provided that if in making such alterations said tenant should break through exterior walls of the demised premises to connect same with adjacent premises, the tenant should, on termination of the lease, restore said walls and block up said openings if the lessor should so require.) Knost-Bockwinkel agreed it would pay for all electricity, water and gas used by it in the demised premises. It was further provided in said proposed contract that Knost-Bockwinkel Furniture Company would operate a furniture store in said premises and sell furniture, floor coverings, electrical appliances, and all other items ordinarily and regularly handled in a retail furniture store. By said proposed contract appellants agreed that they would not remove from the building the heating system, blower and flourescent lights during the term of the lease; that Knost-Bockwinkel might sublet all or any part of the premises; and warranted that appellants had full authority to make this sublease and bound themselves to obtain any approval necessary in law for same from Lisetta Investment Company and Butler Brothers. There was also a covenant for quiet enjoyment of the premises by the furniture company, and an agreement that appellants pay the rent due to Lisetta Investment Company under the original lease and keep the said sublessee and assigns indemnified against all actions, expenses, claims and demands on account of the nonpayment of said rent, provided the sublessee is not in default in paying appellants the rent due under the contract.
A right of re-entry was reserved for any breach of covenants imposed on the lessee.
After the terms of the proposed contract were agreed to, Knost-Bockwinkel requested that appellants obtain the written consent of the Lisetta Investment Company to said contract. Jack Rosenberg took up the matter with Mr. Lubke, President of Lisetta Investment Company, and was informed by Mr. Lubke that his company would not give its consent to the transaction. This suit followed.
It is the contention of respondent Lisetta Investment Company that the lease from it to Butler Brothers, by necessary intendment, applying the maxim "Expressio Unius Est Exclusio Alterius," as an aid to construction, confines the right to assign, to Butler Brothers, and that no assignee of Butler Brothers has the right to reassign the lease or to sublet any part of the premises.
A landlord has the undoubted right by stipulation in a lease to restrict the right of assignment or forbid subletting of the premises, but such covenants are not favored by the courts and will be construed strictly against the lessor. Nor should covenants dealing with such rights be extended by implication. 51 C.J.S., Landlord and Tenant, § 33, page 540.
If it was the purpose of the parties to the original lease in the case at bar to restrict the right of assignment or the subletting to Butler Brothers, no apt words were chosen to express it. There are no express restrictions against further assignments or sublettings, and we are unwilling to construe the language used in paragraphs (m) and (n) of the original lease as creating such a restraint upon alienation. Such was not, in our opinion, the intent of the parties. It is apparent that the purpose the parties had in mind in drafting paragraph (m) was to reserve to Butler Brothers the right to reassume the lease in the event of the termination of the Federated Stores Franchise Contract between Butler Brothers and its assignee, and not to restrict the right of an assignee of Butler Brothers to make a further assignment. Nor can an intent to restrain a subletting by an assignee of the lessee be read into paragraph (n), when considered in connection with the further provision, under paragraph (c) supra, that "the covenants and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns."
The judgment appealed from is reversed and the cause remanded with directions to enter a new judgment in harmony with the views herein expressed.
McCULLEN and BENNICK, JJ., concur.