Evershed v. Berry

436 P.2d 438, 20 Utah 2d 203, 1968 Utah LEXIS 685

• Court: Utah Supreme Court
• Decided: January 15, 1968
• Docket: 10889
• Status: Published

Opinions

CALLISTER, Justice.

This appeal involves the validity of a five-year written lease between a contract purchaser, Berry, as a lessor and his lessee, Conley, after the lessor’s interest has been terminated by court decree.

The plaintiffs-respondents, hereinafter referred to as Evershed, owned commercial property in Murray, Utah. On October 20, 1965, Evershed sold his real estate to the Berrys under a real estate contract, which provided that no assignment or transfer of an interest in the property shall be valid unless made with the written consent of the seller. This contract was recorded.

On July 2, 1966, the Berrys entered into a five-year written lease for a portion of the premises with defendant-appellant, Conley, doing business as the Hickory Pit, without the written consent of Evershed. Appellant took possession and expended a considerable sum of money on equipment and improvements, both on the interior and exterior of the premises, which were alleged to be observable and known to respondent.

The Berrys defaulted on their purchase contract, and Evershed initiated this action, joining Berrys and their tenants, to enforce the forfeiture provisions of the contract and to gain possession of the premises. On January 13, 1967, the trial court granted summary judgment terminating the interest of Berrys as contract purchasers of the property. Previously, default judgments had been entered against the other tenants of Berrys. In a supplementary hearing on March 30, 1967, the court granted a summary judgment, determining that the lease was not binding upon the contract seller, Evershed, and the lessee’s right to possession of the premises was terminated. Appellant opposed respondent’s motion for summary judgment, and by affidavit asserted certain representations, which it is claimed have established a triable issue of fact as to whether the lease has been terminated. Is there any basis upon which the appellant, Conley, could make out an agreement with the respondent, which would make the lease binding ?

There is such a basis, if there were an attornment by the lessee to the paramount title of Evershed. The interest of the Berrys, the lessors, was terminated by court decree on January 13, 1967. The appellant in his brief relates that he was served on the 15th of December, 1966, and that right after such service he was led to believe that he could remain on the premises. On the 31st day of January, 1967, appellant received a Notice To Pay or Quit the Premises, he delivered a certified check to respondents which was accepted and retained. Respondent, Evershed, states in his brief that such acts as may be set forth by Conley are admitted by Evershed, and the dispute is as to the legal consequences of these acts.

These facts are sufficient to indicate a genuine issue for trial, and summary judgment should not be granted. There is a genuine issue as to whether after the interest of the Berrys was terminated, there was an express or implied agreement by Conley to become the tenant of Evershed for the balance of the term and consent by Evershed to accept him under such terms.¹

In certain aspects the relationship between the Berrys and Evershed was that of a mortgagor-mortgagee.²

* * * The rights and liabilities of the parties under a lease made after the mortgage are very different from those which exist when the mortgage is made after the lease. There is then no privity of contract between the mortgagee and lessee of mortgaged land. The mortgagee may treat a lessee holding under a lease from the mortgagor as a trespasser, and eject him; but unless the tenant has attorned to him, he cannot distrain or bring an action for rent, as there is no relation of landlord and tenant between them. A mortgagor cannot make a lease of the mortgaged premises which will be binding upon the mortgagee. * * * In order to create the relationship of landlord and tenant between the mortgagee and lessee there must be an attornment of the tenant or some action on his part which will operate as an attornment; * * *³ (Emphasis added.)

In the instant action, there is no explanation as to the basis upon which Evershed demanded and accepted rent from Conley, if he were not his tenant. If Conley were his tenant, what were the terms of the tenancy ?

A comprehensive opinion involving similar issues to those in the instant case is found In re O’Donnell,⁴ where the court stated:

We are thus brought to a consideration of the effect of an attornment when made to title paramount. * * * * * * Attornment may also mean the acknowledgment by a tenant that he holds under a new lord who claims by title paramount, and not by grant of the reversion or as privy to the reversioner.1 In such a situation, “the new tenancy thus constituted, though popularly spoken of as a continuing tenancy,” is “in fact a new contract and a new demise.” [Citations omitted.] Ratification of the old demise, at least in any proper sense,' there obviously is none, for he who made the demise has not assumed to act for anyone except himself, and least of all for one whose claim is paramount and hostile. [Citations omitted.] It is possible, of course, to incorporate in the new demise, expressly or by implication, the provisions of the old one, including the term of its duration. * * *

If nothing more is shown than payment and receipt of rent, the result at common law is the creation either of a tenancy at will or at most of one from year to year. [Citation omitted.]

The question remains whether payment and receipt are sitpplemented here by declarations and circumstances sufficient to justify a finding of the prolongation of the term in accordance ivith the first demise. We shall assume in favor of the respondents that such declarations and circumstances may sometimes be sufficient, though there is no writing to be interpreted, and though the term is in excess of a year, the usual limit for oral leases. In so doing we pass the question by whether there is need, to avoid the operation of the statute of frauds, that the case be brought under some recognized head either of estoppel⁵ or fraud, and of the equitable jurisdiction appropriate thereto. * * * (Emphasis added.)

The O’Donnell case considers the domin-nant factual issue to be resolved is whether there has been “a definitive election that the tenancy previously existing shall be kept alive until the end,” or whether viewing the events in their totality there is discoverable “the clear and unequivocal tokens of an intention to accept an at-tornment effective for a term of years.”

In the instant action, appellant has submitted facts which in effect indicate an attornment. These facts are sufficient to constitute a triable issue as to whether Conley’s payment of rent and Evershed’s receipt thereof are supplemented by declarations and circumstances sufficient to justify a finding of prolongation of the term in' accordance with Conley’s lease with Berry.

The summary judgment should be reversed and the case remanded for trial in accordance with this opinion.

TUCKETT, J. concurs.

1 . Geo. Benz & Sons v. Willar, 198 Minn. 311, 269 N.W. 840, 109 A.L.R. 443 (1936).

2 . Pearce v. Shurtz, 2 Utah 2d 124, 127, 270 P.2d 442 (1954).

3 . 3 Thompson on Real Property (1959 Replacement) § 1078, pp. 285-286.

4 . 240 N.Y. 99, 147 N.E. 541, 543, 544 (1925).

5 . There is within the record a possible basis for invoking an estoppel; Evershed, with knowledge of the use of the property for business purposes, stood by silently and allowed Conley to expend sums in excess of $8,000 for improvements,-in- - eluding paving of the parking lot.