Summary
In Kanes v. Koutras, 1948, 203 Ga. 570, 47 S.E.2d 558, the landlord refused to make 13 structural corrections ordered by city officials.
Summary of this case from Scott v. PrazmaOpinion
16055.
APRIL 16, 1948.
Petition for injunction. Before Judge Pomeroy. Fulton Superior Court. September 30, 1947.
Douglas, Evans Cole and George Carroll, for plaintiff.
Richard T. Nesbitt, for defendant.
The petition filed in the superior court by a tenant seeking to enjoin a distress warrant in a court of law, and to obtain a money judgment for damages alleged to have resulted because of the refusal of the landlord to make structural repairs required by the municipal authorities, failed to set forth a cause of action for either legal or equitable relief.
No. 16055. APRIL 16, 1948.
John Kanes filed in Fulton Superior Court, against James Koutras, a resident of Fulton County, and Lorenz Neuhoff, a nonresident whose present address is Clearwater, Florida, a petition seeking injunctive relief and to obtain a money judgment for $21,900. Neuhoff was not served and did not appear and defend the action. The petitioner alleged substantially the following: Neuhoff is the owner of a three-story building located at the corner of Carnegie Way and Spring Street in Atlanta. On or about September 6, 1946, he leased the real estate to Koutras for a period beginning September 6, 1946, and ending August 30, 1949, for the purpose of operating a hotel, and pursuant thereto Koutras took possession of the property and operated thereon a hotel known as the Charles Hotel. Thereafter, on September 16, 1946, Koutras sold to the petitioner all the personal property owned by Koutras in operating the hotel, and in addition thereto his interest in such lease. The said personal property at the time was of a reasonable market value of $500. A reasonable market value of the leasehold right was $7500. The petitioner agreed to pay Koutras $8000 for all of said property, $6500 of which has been paid, leaving a balance outstanding of $1500. In accordance with the petitioner's bill of sale with Koutras and the transfer of his rights in the lease, the petitioner agreed to pay Koutras $200 per month as rent. All sums for rent were paid promptly when due up to September 1, 1947, at which time the petitioner stopped paying the rent. On September 16, 1946, the date Koutras sold his interest in the lease to the petitioner, and at all times since said time, the following was a valid ordinance: "Any building, structure, enclosure, place or premises is a nuisance, where it is perilous to life or property by reason of its construction, or of the condition or quantity of its contents, or of the use of the building or its contents or the enclosure, or of the overcrowding at any time of persons therein, or of deficiencies in its fire alarm or fire prevention equipment, or of conditions in its construction likely to cause fire or the spreading of fire, or of conditions therein which would hamper or impede the fire department in combating a fire in or about the building; or where the condition of the walls, floors or roof is such that the building is likely to fall on account thereof, thereby endangering the safety of its occupants or of the public." Code, City of Atlanta, § 65-102 (1). The city building inspector, during the month of April, 1947, inspected the building in which the hotel was located, and found thirteen structural defects which constituted a nuisance under the above ordinance. After discovery of the defects, the city inspector notified Neuhoff and Koutras in writing and demanded that they take immediate steps to correct the same. Thereafter, on June 9, 1947, the city inspector gave Neuhoff and Koutras a second notice to correct such structural defects, and for the second time they failed and refused to correct the same. As a result of the defects not being corrected, the city, acting through its Mayor and General Council, on September 2, 1947, revoked the petitioner's license to operate a hotel at said place. At the time the property was sold to the petitioner by Koutras, Neuhoff had full knowledge thereof and consented to the same, and Koutras and Neuhoff knew that the petitioner purchased the property for the purpose of operating a hotel thereon. After the petitioner was notified by the city of the structural defects, he made repeated demands upon both Koutras and Neuhoff to correct the same, and both of them failed and refused to do so. The building is not suitable to be used for a hotel, due to the fact that it is not in conformity with the regulations of the City of Atlanta as hereinbefore set forth, and Koutras and Neuhoff each knew the same. The hotel was a profitable and well-established business, and the petitioner was netting an income of $600 per month, and as a result of his losing the use of the premises for 24 months he has been damaged on this account in the sum of $14,400. As a result of Koutras and Neuhoff failing and refusing to correct the structural defects, the value of the petitioner's leasehold is now worthless, whereas, if they had been corrected, it would be worth $7500. Under the facts hereinbefore set forth, the petitioner has been damaged in the total sum of $21,900, for which he sues. Koutras has sworn out a distress warrant in the Civil Court of Fulton County for the purpose of having the same levied upon the petitioner's property; and unless enjoined, he will have the distress warrant executed, thereby causing the petitioner to suffer further damage in the way of posting a bond, employing counsel to protect his interest, and other needless expenses. In view of the fact that Koutras is indebted to the petitioner in the sum of $21,900, and the further fact that the premises have been rendered untenantable due to structural defects, Koutras is not entitled to prosecute his distress warrant any further, and petitioner asks that he be enjoined. The petitioner does not have a complete and adequate remedy at law, and only a court of equity can grant him the relief to which he is entitled in equity and in good conscience. Copies of the lease from Neuhoff to Koutras, and of the bill of sale from Koutras to the petitioner whereby the former sold all personal property owned by him in operating the hotel and in addition thereto sold his interest in the lease to the petitioner, were attached to the petition as exhibits (a) and (b) respectively. A memorandum of alleged structural defects in the building here involved, and alleged to be attached as exhibit (c) does not, however, appear as an exhibit in the record. The petitioner prayed for: process; permission to file the petition; injunctive relief to restrain Koutras from prosecuting the distress warrant; a rule nisi directing Koutras to show cause why the prayers should not be granted; and a judgment against Neuhoff and Koutras jointly and severally for $21,900.
When the case came on for an interlocutory hearing, the plaintiff offered in evidence the sworn petition with its exhibits. Counsel for the defendant Koutras offered no evidence, but made an oral motion to dismiss the action as to him upon the ground that no right to any relief was shown. The exception is to an order sustaining the motion to dismiss.
The question, in an oral motion to dismiss, is not whether any particular allegation has been defectively pleaded, but whether the petition in its entirety fails to set out a cause of action. Capps v. Edwards, 130 Ga. 146 (1) ( 60 S.E. 455). It thus appears that an oral motion to dismiss is in the nature of a general demurrer and, since the passage of the Uniform Procedure Act, where a suit is filed in a superior court, which has general jurisdiction both in law and in equity, the petition should not be dismissed on general demurrer if it states a cause of action for either legal or equitable relief. Pardue Medicine Co. v. Pardue, 194 Ga. 516 (1) ( 22 S.E.2d 143).
"Equity will not enjoin the proceedings and processes of a court of law, unless there shall be some intervening equity or other proper defense of which the party, without fault on his part, can not avail himself at law." Code, § 55-103. The defendant in a distress warrant does not need the aid of a court of equity for the assertion of such defenses as, (a) that the tenant has been damaged by the failure of the landlord to make necessary repairs; or (b) that the tenant was forced to vacate because the building became untenantable. Botatoles v. Hill, 180 Ga. 739 (2) ( 180 S.E. 491); Speed Oil Co. v. Draper-Owens Company, 183 Ga. 788 ( 190 S.E. 22).
In the present case the petitioner, in addition to seeking to enjoin the distress-warrant proceeding, sought also to recover a money judgment for damages alleged to have resulted from the refusal of the landlord to make structural repairs required by the city. The facts of the case under review are somewhat similar to those involved in Hanson v. Williams, 170 Ga. 779 ( 154 S.E. 240), where the petition was held to set forth a cause of action. However, the case here presented does not involve affirmative equitable relief, as did the Hanson case, and subsequently to that decision the General Assembly passed the amendatory act of 1946 (Ga. L. 1946, pp. 287, 289), purporting to enlarge the jurisdiction of the Civil Court of Fulton County. Therefore, while the Civil Court of Fulton County would have had jurisdiction to determine whether the petitioner was entitled to recover a judgment for $21,900, yet since the superior court has concurrent jurisdiction with the Civil Court of Fulton County, the action should not have been dismissed if it stated a cause of action for any of the substantial relief prayed for. Arteaga v. Arteaga, 169 Ga. 595 ( 151 S.E. 5). It thus becomes necessary to determine whether the petition alleged a cause of action for legal relief.
Service was not perfected on the owner of the hotel, and for that reason he is not a party defendant. Therefore, for the purposes of this case the original lessee will be regarded as any other lessor.
In the early case of Lewis Co. v. Chisholm, 68 Ga. 40, this court said: "The common law has always thrown the burden of repairs on the tenant. Our statute changes this rule." See Code, § 61-111. In cases involving a tenant for years the statute is otherwise. § 85-805.
The lease under consideration contained among others the following stipulations: The building was to be used for "hotel and restaurant business." The lessee agreed to repair any damage to water or steam pipes caused by freezing, or any neglect on his part. The lessee was to make no changes of any nature in the premises without first obtaining the written consent of the lessor, and the lessor reserved the right to enter the premises, examine the same and make such repairs, additions, or alterations as might be deemed necessary for the safety, comfort, and preservation of the building. The lessee agreed to comply with all rules, orders, ordinances, and regulations of the city authorities. It was finally stipulated that the "lessee accepts property `as is.' No repairs either to exterior or interior to be made by the lessor during the life of this lease." The bill of sale executed by the original lessee subletting the hotel building to the petitioner made no reference to repairs.
It is plain from the above stipulations that the intention of the parties was to relieve the original lessor from making ordinary repairs which, under the Code, § 61-111, he would otherwise have been required to make. However, in view of the further stipulations that the lessee was to make no changes of any nature in the premises without the consent of the lessor, and the reservation giving the lessor the right to enter the premises for the purpose of making such alterations as might be deemed necessary for the preservation of the building, was the agreement on the part of the lessee to accept the property "as is" sufficient to relieve the lessor from correcting structural defects when ordered by the city so to do?
Counsel for the plaintiff in error insist that the refusal of the lessor to make the repairs amounted to a constructive eviction of the lessee, and further that, where material alterations and structural changes are ordered by municipal authorities, these substantial changes in the building fall upon the landlord and not on the tenant, even though there is a provision in the lease that the lessee accepts the building "as is," and binds himself to comply with all rules, regulations, and ordinances passed by a city government. In support of their insistence, they cite 52 C.J.S. 171, § 455; City of New York v. The U.S. Trust Co., 116 App. Div. 349 ( 101 N.Y. Supp. 574); Younger v. Campbell, 177 App. Div. 403 ( 163 N.Y. Supp. 609); Knapp v. Guerin, 144 Louisiana, 754 (81 So. 302). For a further discussion on the question of who, as between landlord and tenant, must make alterations ordered by public authorities, see 51 C.J.S. 1071, § 366; 32 Am. Jur. 211, § 229; Borden v. Hirsh, 249 Mass. 205 ( 143 N.E. 912), and annotation thereon in 33 A.L.R. 526, 530.
The city is not a party in the present case, and no question is before the court involving the right of government authorities to abate a nuisance. The controversy is between the original lessee and his subtenant. It is possible that the expense of making the thirteen structural repairs called for by the city would be so great as to cause the lessor to prefer to allow the building to remain idle rather than to be put to such expense. A landlord in many instances does not desire to make any repairs to a building either before he rents it to a tenant, or during the tenant's occupancy. This apparently was true in the present case, where in addition thereto the tenant was willing to accept the building under these circumstances and a stipulation to that effect was included in the lease contract. However, accepting a building "as is" does not necessarily mean that thereafter, if structural changes and material alterations are ordered so that a building will conform to an existing city ordinance, the tenant should be required to make these structural changes and material alterations. Especially would this be true where the lease was for a short term and where the expenditures necessary to make the building conform to the ordinance would exceed the value of the building. Certainly, under a reasonable construction, this was not what the parties contemplated by the insertion of the clause that the building was accepted "as is." Though in law each of the parties was charged with knowledge at the time the lease was executed that the building could be abated as a nuisance under the existing city ordinance, yet it is reasonable to conclude that, inasmuch as the lessor did not desire to go to any expense in making repairs, and as the lessee was willing to take the building as it was, the parties as between themselves merely intended to take a chance that the city would not abate the building as a nuisance. In these circumstances, where both parties were not entirely free from fault, the lessor in leasing and the lessee in renting from him a building which under the city ordinance was an existing nuisance, it would be a great hardship on the lessor if he should be held to be liable for damages alleged to have resulted on account of his refusal to make the structural changes. On the other hand, it would be an even greater injustice, under the allegations of the petition, to require the lessee to continue paying rent while the lessor, because of the unusual hardship on him, was being relieved from liability for damages caused by his failure to make the repairs. The hotel building was not rendered untenantable by fire, and for this reason the Code, § 61-113, which declares that the destruction of a tenement by fire shall not abate the rent contracted to be paid, is not applicable. The allegation on this phase of the case is that all sums for rent were paid promptly when due up to September 1, 1947, the date the city revoked the license to operate a hotel in the building, at which time the lessee stopped paying the rent.
In the light of what has been said, the allegations of the petition setting forth the refusal of the lessor to make the structural repairs, together with the prohibition against using the building for hotel purposes and the revocation of the petitioner's license to operate a hotel therein, were sufficient to authorize the tenant to discontinue the payment of rent and thus to terminate the lease. Since the allegations of the petition show that the tenant elected thus to terminate the lease, both parties should be relieved from further liability under the contract. It follows that, under the allegations of the petition, the lessor should not be held liable for damages caused by his refusal to correct the thirteen structural defects.
All questions as to what the rights and liabilities of the parties would have been had the tenant elected to continue paying rent, or had he offered to make the alterations ordered by the city, are expressly left open.
Accordingly, the allegations of the petition instituted by the subtenant did not set forth a cause of action for damages claimed as a result of the lessor's refusal to make the repairs. Nor do the allegations as to damages based upon the insistence that the refusal of the lessor to make the repairs caused the petitioner's leasehold right to become worthless require a different result. In the absence of any administrative ruling requiring the lessor to correct the defects, the operation of the hotel in question was a lawful enterprise at the time the original lease contract was entered into, and also at the time the original lessee conveyed his interest in the lease to the petitioner. See Western Atlantic Railroad Co. v. Atlanta, 113 Ga. 537 (1) ( 38 S.E. 996, 54 L.R.A. 294). If a person desires to buy a leasehold right under the circumstances of this case, he necessarily takes the risk of having a city restrict the use of the property.
The instant case is distinguished by its facts from Brunswick-Balke-Collender Co. v. Bailey, 31 Ga. App. 704 ( 121 S.E. 705), where the elevation of a street by municipal authorities rendered the premises untenantable.
It follows that the petition failed to set forth a cause of action either in law or in equity, and the trial court did not err in dismissing the case on oral motion.
Judgment affirmed. All the Justices concur. Duckworth, P. J., and Bell, J., concur in the judgment only.