Western Rebuilders & Tractor Parts, Inc. v. Felmley

391 P.2d 383, 386 P.2d 813, 237 Or. 191, 1964 Ore. LEXIS 346

• Court: Oregon Supreme Court
• Decided: April 15, 1964
• Status: Published

Opinions

PERRY, J.

This is an action for unlawful eviction from a leasehold brought by a former tenant against his landlord. Trial was had without a jury before the Circuit Court of Multnomah County. From a judgment awarding plaintiff $15,000 in damages, defendant appeals.

Plaintiff is a corporation engaged in the repair and sale of tractor parts. The parties entered into the lease here involved for a one-year period terminating March 31, 1958. By the terms of this lease plaintiff agreed to pay a rental of $225 per month plus “3% on all gross collections over $2,000.00 and not exceeding $10,000.00, and 1% on the next $5,000.00 and one-half of 1% on all over $15,000.00 of gross collections during the preceding calendar month.” The $225 monthly rental together with the percentages on gross collections were to be paid “on or before the 1st day of each calendar month.” An initial deposit of $675 was to be “applied in meeting the minimum monthly payments of $225 per month during the last three months of the leasehold period,” but was to be forfeited in case the lease was terminated before March 31, 1958.

It appears that plaintiff always promptly paid the $225 monthly rental but was consistently late in paying the percentages on gross collections. Defendant acquiesced without complaint to this practice of belated percentage payments until January 20, 1958 when he sent a notice of termination of the lease to plaintiff for “failure to account for the percentages on gross collections for the months of November and December.”

Defendant refused plaintiff’s tender of payment for the November and December percentages two days later on the ground that it might be construed as a waiver of his right to terminate, but subsequently did accept payment. Defendant also accepted plaintiff’s check dated February 5, 1958 covering the percentage rental for the period from January 1 to January 20, 1958.

There can be no doubt but that defendant had the right to terminate the lease on January 20, 1958. His acquiescence in late payment for earlier months could not amount to a waiver of his right to strictly enforce the terms of the lease in later months. Rainey v. Quigley, 180 Or 554, 178 P2d 148; Title & Trust Co. v. Durkheimer Investment Co., 155 Or 427, 63 P2d 909, 64 P2d 834. The plaintiff, however, does not attack defendant’s initial right to terminate the lease, but rather whether this right subsisted after defendant accepted payment of the overdue rent for which he declared the forfeiture. It is argued that such an acceptance of payment is a waiver of defendant’s right to terminate the lease and therefore makes the termination a wrongful eviction. The question presented therefore is whether a landlord’s acceptance of accrued rent subsequent to notice of termination constitutes a reinstatement of the lease.

At common law a sharp distinction was drawn between a landlord’s acceptance of rent accruing before and after the date of notice to quit. Accrued rent could be accepted without waiving the forfeiture since if did not involve any recognition of the continuance ,of the tenancy, but acceptance of later accruing rent was deemed a reinstatement of the lease. See, 2 Tiffany, Landlord and Tenant, § 194 i (1) (b); 120 ALR 557; 109 ALR 1267; 51 CJS, Landlord and Tenant, § 117(2). This distinction has been abolished in Oregon by statute. OES 91.090 provides as follows:

“The failure of a tenant to pay the rent reserved by the terms of his lease for the period of 10 days, unless a different period is stipulated in the lease, after it becomes due and payable, operates to terminate his tenancy. No notice to .quit or pay the rent is required to render the holding of such tenant thereafter wrongful; however, if the landlord, after such default of rent, accepts payment thereof, the lease is reinstated for the full period fixed by its terms, subject to termination by subsequent defaults in payment of rent.”

This statute accomplishes several things. On the one hand it makes it unnecessary for the landlord to declare a forfeiture for nonpayment of rent; on the other, it prevents a forfeiture where the landlord accepts the delinquent tenant’s tender of the overdue rent. Thus, though the landlord need not now show a notice to quit or pay in order to terminate the lease, he must show that he has not subsequently accepted the rent for which he declared the forfeiture. Baker v. Lehrer, 210 Or 635, 312 P2d 1072; Neitsch v. Tyrrell, 25 Wash2d 303, 171 P2d 241. This seems to be a codification of the equitable rule that since a forfeiture in a lease for failure to pay rent is designed to secure payment, the court will relieve against a forfeiture for such cause upon payment of the sum secured. Rainey v. Quigley, supra, at 180 Or 565.

Defendant’s cause is not aided from the fact that he carefully attempted to avoid reinstating the lease in accepting the past-due rent. Defendant’s words cannot change the fact that by his actions he accepted the rent and reinstated the lease. As in Miller v. Reidy, 85 Cal App 757, 260 P 358, this is but a bald attempt to eat his cake and have it too. By accepting payment for the overdue rent defendant fell within the ambit of OB.S 91.090 whether or not he so desired. Having reinstated the lease for its full term, it follows that defendant’s eviction of plaintiff was wrongful.

Defendant’s last two assignments of error relate to certain exclusionary action taken by the trial judge during the course of the trial. It is first contended that in determining the proper amount of damages the court committed error in not admitting evidence of a certain settlement and release executed by plaintiff corporation and one Williams, a former president. This release is said to have arisen out of an alleged conspiracy between defendant and Williams to evict plaintiff. Though it is highly questionable whether evidence of such a release is relevant to the case at bar, we need not decide that issue since defendant never specially pleaded the release as an affirmative defense. Having failed to plead the new matter, it was well within the discretion of the trial judge to exclude this evidence when offered. ORS 16.290; Beter v. Chevalier, 121 Mont 337, 193 P2d 374; Baker v. Farrel, 78 Cal App2d 578, 177 P2d 973; Pearson v. Butts, 224 Iowa 376, 276 NW 65; Curran v. Matson, 32 NYS2d 12, 177 Misc 861; Arnold v. Brotherhood of Locomotive Firemen and Enginemen, 231 Mo App 508, 101 SW2d 729; 45 Am Jur, Release, §40.

It is further argued that the trial court committed reversible error in limiting defendant’s pleading and proof of overdue rent to the months of November and December, 1957. Though no evidence of nonpayment for prior rental periods was ever offered, defendant claims the trial could not limit inquiry into past delinquencies to those months. There is no merit to this contention. A trial judge should limit the scope of inquiry to the material issues.

Since the forfeiture and eviction was based solely on a failure to account for the months of November and December, evidence of other defaults was not within the issues presented.

There is no merit in defendant’s contention that the evidence as to damages would not support the judgment entered.

The judgment is affirmed.