Lincoln Trust Co. v. Nathan

74 S.W. 1007, 175 Mo. 32, 1903 Mo. LEXIS 41

• Court: Supreme Court of Missouri
• Decided: May 27, 1903
• Status: Published

Opinion

MAESHALL, J.

— This is an action, begun May 5, 1900, by the trustees under the will of Joseph J. ‘Mersman, deceased, to recover from the defendants, H. J. and Isaac Nathan, le'ssees, and the People’s House Furnishing Company, a corporation, assignee of the lessees, the sum of twelve hundred dollars rent for the premises numbered 814 and 816 North Broadway, St. Louis, for the months of April and May, 1900.

The answer admits the incorporation' of the trust company, and of the People’s House Furnishing. Company, and denies generally all the other allegations of the petition. By way of cross-bill the defendants then allege that on December 29, 1892, the then trustees under the Mersman will leased to H. J. and Isaac Nathan-the premises aforesaid for a term of ten years, at an annual rental of $7,200, payable in monthly installments of six hundred dollars; that said lease contained the, following clause:

“It is agreed by the said parties hereto that if the building hereby demised and leased shall be either par-, tially or wholly destroyed by fire or other casualty during the term of this lease, the said parties of the first part, or their successors, shall repair or rebuild the same within a reasonable time after said partial or entire destruction, and in case it becomes necessary to' erect a new building by reason of the entire destruction of said leased building, then said new building shall be of the size, dimensions, strength and arrangement of the present leased building, and the said parties of the first part, or their successors, covenant to and with the said parties of the second part, their heirs and assigns, to-erect said new building immediately after the destruction of the present leased building, and under the superintendence and direction of said parties of the second: part, their heirs or assigns; and said parties of the first part, or their successors, covenant and agree to have said new building completed and ready for occupancy by said parties of the second part, their heirs and assigns, as soon as possible after the destruction of the present leased building; and in consideration of the erection of said new building, should the same be erected as aforesaid, and in further consideration of delivery of said new building for occupancy to said parties of the second part, or to their heirs and assigns, for the unexpired term of this lease, the said parties of the second part and their heirs and assigns, agree to and with said parties of the first part, and their successors, to pay to the latter the rent as above reserved for the period of the erection of said new buildings. ’ ’

. It is then alleged that the Nathans assigned the lease to the People’s House Furnishing Company, as they had a right to do under the lease, both lessees and assignee being liable for the rent, however; that the premises were totally destroyed by accidental f|re on February 4, 1900; that plaintiffs violated their contract to erect a new building immediately after the destruction of the leased building, and to- complete the same and have it ready for occupancy as soon as possible after its construction; that although four months had elapsed since the destruction of the leased premises-, which is averred to be more than a reasonable time in which to erect a new building in place of the burned one, the plaintiffs had done substantially nothing looking towards the erection of a new building and had not even commenced the erection of a new building; that said covenant to rebuild went to the entire consideration of said lease, and on which all of the covenants of the defendants depended; that, as plaintiffs well knew, the defendants are retail merchants, and that plaintiffs ’ wrongful conduct deprived defendants of a suitable place for carrying on their business, and that the defendants were forced to- make permanent arrangements for other premises. The defendants therefore prayed a decree cancelling said lease.

The answer and cross-bill of the People’s House Furnishing Company contains substantially the same general averments, and then alleges that it paid to the plaintiffs the rent for the months of February and March, 1900, that for March being paid in consideration that the plaintiffs would erect a new building as soon as possible, and then concludes with a prayer for judgment for $1,120, being the $600 rent for March, and the $600 rent for February less the rent for the first four days thereof.

The reply was a general denial.

The case came on for trial on October 22, 1900, and the plaintiffs demanded a trial by jury, which the court denied, and the plaintiffs duly excepted. Hence the appeal to and jurisdiction of this court.

At the request of both parties the court made a special finding of facts, and stated its conclusions of law separately, the finding and judgment being in favor of the defendants, decreeing a cancellation of the lease and a judgment for the People’s House Furnishing Company for $1,169 on account of the rent paid for February and March, and interest thereon. After proper steps the plaintiffs appealed. The facts shown upon the trial will be stated in the course of the opinion.

I.

The first error assigned is the denial of a trial by jury.

The plaintiffs contend that the suit is an action at law for two months’ rent, and that the equitable defenses- in the answer can not convert the case into one in equity, but that the utmost effect that such defenses could liave would be to require the court to hear the equitable defenses first, and then to proceed with the case at law.

... s .The infirmity underlying this position is that the answer does not simply interpose an equitable defense, but it is a cross-bill in equity, ashing affirmative relief, which if granted, as it was, would cut out the foundations upon which the plaintiffs’ right to recover depended, aud therefore destroyed the plaintiffs’ case. This accentuates the difference between a mere equitable defense and a cross-bill in equity ashing affirmative relief, which, if granted, destroys the plaintiffs case. This being true, the answer and cross-bill converted this case into one in equity, and a trial by jury was properly denied. [Allen v. Logan, 96 Mo. 591; Swon v. Stevens, 143 Mo. 384; Dunn v. McCoy, 150 Mo. 548; Courtney v. Blackwell, 150 Mo. 245; Martin v. Turnbaugh, 153 Mo. 172; Beland v. Brewing Association, 157 Mo. 593; Baldwin v. Dalton, 168 Mo. 20.]

II.

The plaintiffs ’ second contention is that the fire did not terminate the lease or relieve the defendants of their obligation to pay the rent; that the covenant of the defendants to pay rent and the covenant of the plaintiffs to rebuild as speedily as possible, are independent covenants, and that in a suit to recover the rent, the defendants can not be heard to defend on the ground that the plaintiffs had violated their covenant to rebuild, nor can any damage the defendant may have suffered in consequence of a failure to rebuild be set off against the rent, but that if the plaintiffs have violated their covenant to rebuild, the defendants’ damages are measurable and can be recovered- only in a direct action at law therefor, and that a court of equity never lends its aid to. declare or enforce a forfeiture.

■ It is true that the fire did not, ex vi terminir terminate the lease. It is also equally true that the destruction of the leased premises does not as a matter of law terminate the lease or relieve the lessee from his obligation to pay the rent. This is pnt on the ground that the right to recover the rent rests upon the contract of the lessee to pay it, and not upon the enjoyment of the possession, and that this obligation is absolute and can only be avoided by the insertion of a proper clause ini the lease, relieving the lessee from the payment of subsequent installments of rent in case the premises are destroyed, and in the absence of such a provision the lessee must pay the rent ¿ven if the premises are destroyed by the act of God or of the public enemy, or by any cause except an act of the lessor himself which amounts to an eviction.^ This has been the rule of law so long that it were idle to attempt to change it how, but it may be doubted if it is a reasonable or humane rule, or a rule that can be reconciled with other equally well-settled rules of law. For it may be said that the consideration to the tenant to pay the rent was based upon the benefits flowing from the occupancy and enjoyment of the premises, and that if he never got possession or if the premises were destroyed or became untenantable, the consideration for the promise to pay the rent failed. And'it might well have been held that both parties understood and intended the contract to mean this, and that neither intended that the contract should be binding upon the other if he was prevented from carrying it out by the act of God or the public enemy. This is the common sense of such a contract. But the trouble is the law as it stands and is enforced to-day in such cases, comes to us from a system and a time when the lords of the.realm were accorded all possible advantages over the terre-tenants. For' myself I do not hesitate to say that it would have been better, and wiser and more humane, and' more conscionable, if no such harsh rule had ever been permitted to find a resting place in the jurisprudence of a free people. But it would be almost a herculean and possibly an impossible attempt to change it now. The rule may be found stated in Taylor on Landlord and Tenant (7 Ed.), secs.-369, 375 and 331. Some States have refused to follow such a rule, upon much the same grounds as here expressed. [7 Am. and Eng.,Ency. Law (2 Ed.), p. 147.]

. But it must be observed that the defendants did not dispute this rule, nor did' the court below proceed in contravention of it. So that .nothing further need be said of it in this case.

Neither do defendants question the rule that equity never lends its aid to- declare or enforce a forfeiture, and that rule is not properly in this case.

The cross-bill and the judgment rest upon the well-known rule of equity jurisprudence, that a court of equity will, in a proper casé, declare a rescission of a contract for a violation of the covenants therein contained, because it would be against conscience to permit one party to violate the contract on his part and still hold the other party to a compliance with it. This is very different, however, from a forfeiture, such as is meant when it is said a court of equity does not- favor forfeitures nor lend its aid. to declare or enforce them.

The pivotal legal question in this case is, whether the covenants to pay rent and to rebuild are dependent covenants, for if they are and if the plaintiffs did not comply with their covenant to rebuild, the defendants are not only entitled to be relieved from the payment of the two months ’ rent sued for herein but are entitled to be relieved from the whole obligation of the lease and to have the lease cgncelled.

The two covenants in question are respectively as follows: The covenant of the plaintiffsrebuild is:

“It is agreed by the said parties hereto that if the building hereby demised and leased shall be either partially or wholly destroyed by fire or other casualty during the term of this lease, the said parties of the first part or their successors shall repair or rebuild the same within a reasonable time after such .partial or entire destruction, and in case it becomes necessary to erect a new building by reason of the entire destruction of the said leased building, then such new building shall be of thé size, dimensions, strength and arrangement of the present leased building, and the said parties of the first part, or their successors, covenant to and with said parties of the second part, their heirs and assigns, to erect said new building immediately after the destruction of the present leased building and under the superintendence and direction of said parties of the second part, their heirs or assigns. And said parties of the first part or their successors covenant and agree to have said new building completed and ready for occupancy by said parties of the second part, their heirs and assigns, as soon as possible after the destruction of the present leased building.”

The covenant of the defendants to pay rent after the premises may be destroyed is:

“And in consideration of the erection of such new building should the same be erected as aforesaid, and in further consideration of the delivery of said new building for occupancy to said parties of the second part, or to their heirs or assigns, for the unexpired term of this, lease, the said parties of the second part and their heirs, and assigns agree to and with said parties of the first part and their successors to pay to the latter the rent as above reserved for the period of the erection of said new building; and said parties of the second part, their heirs and assigns, further agree to and with said parties of the first part and their successors to pay unto the latter during the period of any repairing of the present demised premises, necessitated by a partial destruction thereof as aforesaid, the rent as above reserved during the term of the repairing of said demised building. ’ ’

The general agreement of the defendants to pay rent is as follows: “The said parties of the second part further agree to pay unto said parties of the first part as rent for said premises, during the continuance of the. term of this lease, the sum of seventy-two hundollars per annum, in monthly installments of six hundred dollars, payable in advance,” etc.

The general rules of law applicable to the determination of the question of whether covenants in a lease are dependent or Independent is well stated in 18 Am. and Eng. Ency. Law (2 Ed.), p. 619, as follows,:

“"Whether covenants and agreements in leases on the part of the lessor and lessee are to be construed as dependent of independent depends upon the fair intention of the parties to be collected from the lease, and technical words should give way to that intention; and the courts should lean to a construction which holds the covenants independent rather than dependent, especially when' some benefit has already been derived by the covenantor. Where a covenant goes only to a part of the consideration on both sides, and a breach of such covenant may be compensated for in damages, it is generally considered independent. Where the covenants are independent, each party may sue upon the covenant of the other, without reference to whether he has performed his own covenant, whereas if the covenants are dependent the performance by each of his own covenant is a condition precedent to his right to recover on the covenant of the other party. The covenant on the part of the lessor is independent of the lessee’s covenant to pay rent or keep in repair. So also the covenant of the landlord to repair or make improvements, and of the lessee to pay rent, are independent. It has likewise •been held that the covenant of the lessee to pay rent, and the covenant of the lessor to board the lessee, were independent, as were also the covenant to pay rent and the lessor’s covenant to heat the premises. -The covenant of the lessor to give possession and of the lessee to pay rent are, however, dependent; but if the" lessee enters into possession of a part of the demised premises, he will be deemed to have waived the full’performance of the lessor’s covenant to give possession, so as'to entitle the lessor to recover a pm rata, rent.” '

But where there is a penalty prescribed for a violation of covenants they will be construed to be independent, and the party wronged will be reverted to the collection of the penalty. [Freeland v. Mitchell, 8 Mo. 488.]

In all cases, however, the question must be decided “according to the intention and meaning of the parties, and the good sense of the case,” as Judge Nap-ton said in Freeland v. Mitchell, supra, 'or it must “be determined in each particular case by inferring, with as much certainty as possible, the meaning and purpose of the parties; from a full survey, the rational interpretation of'the whole contract,” as Judge Wagner, said in Wellman’s Admr. v. Dismukes, 42 Mo. l. c. 105.

Applying these rules to the case at bar the solution of this case is easy. The general agreement ,of the defendants was to pay six hundred dollars a month rent for the premises, during the continuance of the term of the lease, which expired December 31, 1902. - If this had been all that was said about the payment of rent, the doctrine invoked by the plaintiffs would apply, and under the barsh rule aforesaid, tbe plaintiffs would be entitled to recover the rent for the whole term, even if the premises were destroyed by the act of God the next-day after the lease was executed.

But this is'not all that the lease said about the payment of rent. The parties evidently considered the possibility of the premises being destroyed by fire or other casualty, before the expiration of the term, and they evidently knew that unless they put into the lease some qualification upon the absolute liability to pay six hundred dollars a month rent during the whole term, the rule-of law relied on now by the plaintiffs wbuld be invoked, and they would have to pay rent even if the premises were destroyed. They did not insert the usual ;fire-clause in the lease, that if the premises were destroyed by'fire the rent should cease until the buildings were rebuilt, and if the lessor did not elect to- rebuild the lease should become void, but instead thereof it was agreed' that if the building was either partially or wholly destroyed by fire or other casualty, the lessor ■should repair or rebuild a similar building within a reasonable time “and have it ready for occupancy” by the lessees “as.soon as possible after the destruction,” etc., and then in the same paragraph of the lease, and separated from the said covenant of the lessors to- rebuild by only a semicolon, the lessees agreed that in consideration of the erection of such new building and of its delivery for occupancy to the lessees, for the unexpired term of the lease, the lessees agreed to pay the rent “for the period of the erection of said new building,” or in case of only a partial destruction to pay the- rent during “the term of the repairing of said demised premises. ”

Thus the consideration to the lessees to pay the rent during the time the building was not fit for occupancy by reason of partial or total destruction, was the covenant of the lessors to repair or rebuild the- building “within a reasonable- time” and deliver the same to the lessees for occupancy “as soon as possible after the destruction,” etc.

The purpose of these covenants is manifest. It entitled the lessor to six hundred dollars a month rent for his premises while the building was untenantable, provided he repaired or rebuilt it within a reasonable time, and it entitled the lessee to the right to have his business continued at the same stand after the rebuilding-of the premises, provided he- paid the rent during the time the building could not be- used or the premises enjoyed.

The object of putting such covenants in the lease was clearly tó limit the otherwise absolute liability of the lessees to pay the rent during the whole term, even if the building was destroyed, and to bring themselves within the requirements of the rule invoked by plaintiff to avoid such absolute liability.

The' character of the two covenants can not be doubted. They constitute parts of the same paragraph, and are separated only by a semicolon in the lease. They constitute the parts which go to make up the respective and mutual obligation of the contracting parties. The obligation of the lessors to rebuild is stated first, and the performance is required as a primary and precedent duty to any liability on the lessees ’ part, and the lessees’ obligation to pay rent during such time is based upon the express consideration that the premises shall be rebuilt in a reasonable time and the lessees put into occupancy as soon as possible. The covenants are, therefore, as clearly dependent as if they had been declared to be so in so many words, and the lessees’ liability to pay the rent depends upon the prior liability of the lessors to rebuild.

III.

This leaves only the question of fact as to whether the lessors rebuilt the premises within a reasonable time.

The building was destroyed on February 3, 1900. This suit was begun on May 5, 1900. The permit for the erection of the new building was not issued until June 11, 1900. The- new bulding was not completed and tendered to the defendant until October 2, 1900. Between the date of the fire and the institution of this suit, the lessors had done nothing but enter into a contract, on March 22, for the removal of the debris, which was completed on April 7th, and made a new agreement with the Hamilton heirs for a new party-wall between their respective premises.

The evidence for the defendants tends to -show that the premises could have been cleaned up and a new building erected, within four and a half months after the fire. In fact it was not completed until eight months, less two days, after the fire. The evidence for the plaintiffs shows that they had the work doné as rapidly as they conld, but that they were delayed in getting the insurance adjusted, and in getting the adjoining owners to enter into new agreements .a.s to party-walls which had to be built, because under the new building ordinances of the city the old party-walls could not be used. But how much time all this took is not shown. • The new party-wall agreements w;ere dated May 3d, 8th, and 12th, but it is not shown how much of the time between February 4th and those dates was consumed in getting the parties to agree.

The defendants also showed how many men were employed from time to time on the work and on how many days no work was done.

Upon the face of the record, therefore, the preponderance of the evidence supports the finding of the lower court that the lessors did.not rebuild within a reasonable time, and that in consequence thereof the defendants were obliged to' lease another building in which to carry on their business, first, for six- months, and afterwards, for a term of four and a half years.

The trial court entered a decree cancelling the lease because of the plaintiffs’ failure to comply with the covenant to rebuild, and that decree was right and will not be disturbed.

IV.

But the plaintiffs contend that the defendants must do equity if- they ask equity, and that before they can have a rescission of the contract they must turn over to the plaintiffs the sum of-four thousand dollars they received from the insurance on the elevator, boiler, lighting and heating plant, which they were required by the lease to put into the building and to keep insured for that sum, and which was to beco-me.'the property of the lessors at the termination of the lease, or if the building was destroyed, the lessors were to have the insurance; and also to turn over to the plaintiffs the sum of three thousand dollars which the lessees had collected from the insurance company on account of a policy against loss of rent in case of a destruction of the building.

Neither of these contentions is tenable in this case. The first, because no such issue is raised by the pleadings in the case, and-therefore the rights of the parties to the four thousand dollars insurance could not be determined by any judgment that could be rendered in this case. The second, because the plaintiffs have no manner of right, title, interest or claim to the three thousand ■dollars. The defendants were prudent enough to guard against loss in having to pay rent while the building was destroyed, by insuring against such loss. Their money bought the indemnity. The plaintiffs had nothing to do with it. It is immaterial in this case whether the insurance company acted wisely or not in paying the three thousand dollars before the defendants had been •compelled to pay rent, but whether it was wisely done nr not it gives the plaintiffs no right to that money.

Y.

Lastly, it is contended that the judgment in favor •of the People’s House Furnishing Company for the rent paid for March and the proportionate part of the month of February is erroneous, because the payments therefor were voluntary.

That for February was paid before the fire. That for March was paid upon the assurances of the lessors that they were pushing the work of rebuilding. According to the strict reading of the lease, the defend-ants might not have been liable to pay the rent for March until and 'unless the lessors complied with their ■covenant and rebuilt within a reasonable time, and therefore the payment by the defendants of that month’s rent was premature. .

But if this is true the same logic would cut off the plaintiffs’ right to recover rent in this case for the months of April and May, for the same conditions as to rebuilding existed when this suit was begun.

This, together with the fact that the rent for February had been paid before the fire, might be enough to dispose of this contention. But it does not lie in the mouth of the plaintiffs to make any such contention. This is a suit in equity — made so by the cross-bill, and when the court decreed a cancellation of the lease it did the right thing, at the proper time, when it compelled the plaintiffs to return the rent they were not, in good conscience, entitled to retain, because they had not complied with the covenant of their lease, upon the performance of which their right to the rent depended^ [6 Am. and Eng. Ency. of Law (2 Ed.), p. 976.]

The judgment of the circuit court is right and it iff 'affirmed.

All concur, except Robinson, J., absent.