William I. Mirkil Co. v. Gaylon

285 A.2d 181, 446 Pa. 111, 1971 Pa. LEXIS 608
Supreme Court of Pennsylvania·Decided December 20, 1971·No. Appeal, No. 20·Published·Cited by 3 cases

Opinion

Opinion by

Mr. Justice O’Brien,

In October of 1959, appellant, William I. Mirkil Co., a real estate brokerage firm, secured two tenants to occupy adjoining parcels of land in Ardmore, Pennsylvania, owned by Harry and Millie Ettinger. A one-year lease for the larger parcel (Tract A) was with Scott Smith Cadillac Co. for $500 per month, and another one-vear lease was with Herbert and Evelyn Albany at $100 per month for Tract B.

Each lease contained provisions obliging the Ettingers to pay appellant leasing commissions for its service and assigned unmatured rents to appellant to the extent of the commissions as they accrued.

In February of 1960, Bobert and Ann Gaylon purchased the two parcels from the Ettingers.

From February to April of 1960, appellant continued to collect rentals from the Albanys until the [114] Gaylons notified appellant that it should terminate the lease and obtain possession of the property for them. From February to August, appellant continued to collect the rentals on the Scott Smith Cadillac lease until it was notified by the Gaylons that it should terminate that lease as well. On or about October 31, 1960, the Gaylons entered into a new month-to-month lease directly with Scott Smith Cadillac at a rental of $500 per month. On April 29, 1961, the Gaylons leased for a one-year term all but a small portion of Tracts A and B to Scott Smith Cadillac for $750 a month. Since that time, Scott Smith Cadillac remains a tenant on the two parcels. At issue in this case is whether appellant is entitled to commissions for rents received on the new lease and renewals of that lease.

On November 15, 1963, appellant filed a complaint for commissions. The Gaylons filed preliminary objections seeking a more specific complaint. On February 2, 1969, appellant filed an amended complaint. On February 13, 1969, the Gaylons filed preliminary objections in the nature- of a demurrer. The lower court, sitting en banc, sustained these preliminary objections and dismissed the complaint. The Superior Court affirmed the decision by a per curiam opinion, with Judge Hoffman filing a dissenting opinion in which Judge Montgomery and Judge Ceiicone joined. We granted allocatur and now we reverse.

The court en banc sustained the appellee’s demurrer on the basis of §1 of the Act of June 12, 1878, P. L. 205, 21 P.S.. 655, which provides: “A grantee of real estate which is subject to ground rent or bound by mortgage or other encumbrance shall not be personally liable for the payment of such . . . encumbrance, unless he shall, by an agreement in writing, have expressly assumed a personal liability therefor, or there shall be express words in the deed of conveyance stating that [115] the grant is made on condition of the grantee assuming such personal liability: Provided, That the use of the words 'under and subject to the payment of such . . . encumbrance,’ shall not alone be so construed as to make such grantee personally liable as aforesaid.”

The court held that the leases in question, containing as they do obligations on the part of the lessor to pay real estate commissions, were ''other encumbrances” within the language of the statute, and therefore the Gaylons were not responsible for commissions since they had not assumed in writing personal liability therefor.

We agree with the dissenters in the Superior Court. The statute is inapposite. It was designed to prevent an unwitting purchaser of real estate from being held personally liable on obligations he did not intend to assume but which the law imposed on him by reason of ownership or implication from general words in a deed which might amount to less than an explicit assumption. See Fidelity-Philadelphia T. Co. v. Hale & Kilburn Corp., 24 F. Supp. 3 (Pa. E.D. 1937). Brokerage commissions on leases stand on a different footing. There is no problem about the unwitting assumption of obligations without concomitant benefits. Instead, the law has always been, as we said in Albert J. Grosser Co. v. Rosen, 436 Pa. 311, 317, 259 A. 2d 679, 681 (1969) : “By taking the benefits of the lease and collecting the rents, [the mortgagee in possession] has adopted the lease and must likewise take its burdens.”

A_ppellees deny that they adopted the lease. Instead, they argue that they only took subject to the leases and emphasize that in Grosser, supra, we held that the lease and the broker’s right to commissions were extinguished when the mortgagee actually purchased the property. Although there is a general rule that sheriff’s sales discharge all subsequent junior liens, there [116] is not such an automatic extinguishment of the leases by an ordinary conveyance. Landau v. Western Pennsylvania National Bank, 445 Pa. 217, 282 A. 2d 331 (1971).

Rather, by adopting the benefits of the Scott Smith Cadillac lease, appellees also implicitly assented to the following provisions:

“19. It is understood and agreed that William I. Mirkil Co. is the sole, moving, efficient and procuring cause of this lease, and in consideration of its services Lessor’s principal agrees to pay William I. Mirkil Co. at the time of the execution hereof, commissions in accordance with the Recommended Schedule of. Commissions and Charges of the Philadelphia Real Etate [sic] Board now in effect. Lessor’s principal acknowledges notice of the provisions of the said Schedule. In the event Lessor’s principal fails to make the said payment, William I. Mirkil Co., in addition to any other rights and remedies to enforce payment of said commissions, shall have the right to collect in its name and retain the installments of rental reserved herein until it shall have received, out of the said rentals or otherwise, the said commissions in full, and for that purpose Lessor’s principal hereby assigns, transfers and sets over unto William I. Mirkil Co. the rentals reserved herein up to the amount of the said commissions, and Lessee herein is hereby directed and authorized to pay the said rentals as they become due up to the said aggregate amount to William I. Mirkil Co. in its name and upon its demand.

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William I. Mirkil Co. v. Gaylon, 285 A.2d 181, 446 Pa. 111, 1971 Pa. LEXIS 608 (Pa. 1971).

285 A.2d 181 (William I. Mirkil Co. v. Gaylon) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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