Plaza Investment Company purchased a store and a warehouse building occupied by Peter J. Tomey and Sidney S. Abel, doing business as Abel & Tomey, as tenants, under a written lease with Plaza’s grantor, as landlord.
At the time of conveyance of the property to Plaza the landlord’s interest in the lease was assigned to Plaza. The instrument of assignment did not contain a provision expressing an assumption by Plaza of the landlord’s obligations under the lease.
The lease required the landlord, after receiving written notice from the tenant, to keep the roof in good order and repair.
Shortly after October 1, 1962, the tenant discovered water damage to furniture held in the ware
Plaza acquired the property on May 7, 1963. Plaza asserts it did not learn'of the request to repair the roof or the defects therein until July 1, 1963, during the course of a meeting between representatives of Plaza and of the tenant. The date on which Plaza did in fact receive this information is not consequential as the tenant’s evidence was that the bulk of the damage to its furniture was suffered in the spring of 1963 and, while there was some damage after May 7, 1963, it was not possible to determine the amount allocable to the period subsequent to that date. 1
The tenant vacated the property in June, 1963, claiming, by reason of various circumstances, it was relieved of its obligations under the lease. This action was then commenced by Plaza seeking damages of $1,440. The trial court determined that Plaza was entitled to recover that amount, but also awarded the tenant on its counterclaim $3,061.21 for injury to its merchandise resulting from the defective roof, or a net recovery for the tenant of $1,621.21. Plaza appealed to the circuit court, which affirmed.
On this appeal by Plaza, the tenant neither cross-appealed nor on brief challenged the trial court’s determination that Plaza was entitled to recover
Plaza’s sole contention on this appeal is that as' a matter of law it is not liable for the damages to the tenant’s property suffered before Plaza purchased the property and acquired the landlord’s interest in the lease.
Since Plaza did not assume its grantor’s unperformed obligations, its liability for the damages awarded the tenant must arise, if at all, because of a relationship between Plaza and the tenant created by the bare assignment to Plaza of the landlord’s interest in the lease.
It is, of course, arguable that Plaza, as the purchaser of the property, having acquired the landlord’s interest in the lease and now seeking to enforce the provisions conferring rights on the landlord, should be responsible for the unperformed obligations of the landlord under the lease, and the tenant should not be required to maintain a lawsuit for breach of a landlord’s covenant against the former owner who may have even departed the jurisdiction. However,'we do not write on a clean slate — “the law as to leases is not a matter of logic
in vacuo;
it is a matter of history that has not forgotten Lord Coke.” Per Holmes, J.,
Gardiner
v.
William S. Butler & Company, Inc.
(1917),
In medieval England there were various restrictions on the transferability of rights embodied in documents. It was at one time thought, we are told, that there was some limitation on the right of a voluntary transferee of the reversion to enforce lease covenants. While the extent of these disabilities •
Despite the generality of the language used in the English statute, its operative effect has been limited to certain covenants described in Spencer’s Case, i. e. those that “touch and concern” the property and, thus, run with the land — a covenant to keep in repair is indisputably such a covenant. 4
It is now established that upon a conveyance of the landlord’s entire interest in leased property that the privity of estate formerly existing between the original landlord and the original tenant is at an end, and the benefits and burdens of all covenants running with the land pass to the transferee who, as a result of such transfer, comes into privity of
These principles are so. firmly embedded in the law of this State 6 that it would be academic to consider in this context whether the English statutes of general application are part of the common law of this State, 7 even though some of the cases referred to in this opinion (see, for example, footnote 3) proceed on the assumption that 32 Henry VIII, c 3á is part of the local law.
That a transfer of the landlord’s interest in a lease does impose and confer on the transferee duties and rights formerly those of the transferor is clear, but it does not follow that the transferee must answer for damages resulting from a breach prior to the transfer.
The rule that a transferee of the reversion is not answerable for a breach of a lease covenant committed prior to the tranfer is well supported. 9 Similarly there is ample authority holding that a transferee of the reversion cannot recover for a breach by the tenant committed prior to the transfer. 10
However, the cases above cited for these propositions involve covenants, such as a covenant to construct improvements or to
put
in repair,
11
which are capable of breach but once. It has been suggested
A covenant to keep in repair- throughout the tepm of the lease is- capable of constant or continuous breach and, thus, the fact that damages have been recovered for a breach of such a covenant will not bar a second suit seeking damages suffered from the continuing breach since the last recovery.
Beach
v.
Crain
(1848),
Returning to the facts of this case, it is undisputed that the roof that was in disrepair in the spring of 1963 was not repaired until some time after July 1,1963, and, thus, the disrepair continued well after the date (May 7, 1963) of acquisition of the property by Plaza. Plaza contends, however, that the covenant to keep in repair was not broken by it because the notice to the original landlord was not notice to Plaza, and under the lease the duty of repair does not arise until such notice. In. our view we need not decide whether Plaza was entitled to a new notice or was bound by the- notice to the
Our analysis of the cases convinces us that while a successor may be required to repair a breach that occurs prior to the transfer or assignment to him, a. successor may be held responsible only for damages resulting from his breach and not for damages resulting from any breach by his predecessor. We find no authority holding a successor to the landlord’s or tenant’s interest liable for his predecessor’s breach. When the courts have found a successor liable they have predicated such finding on a determination that the successor himself breached or repeated the existing breach of covenant.
The responsibility of a transferee of the reversion for breach of his transferor’s covenant has been dealt with in various circumstances. It has been held that a transferee of the reversion is not liable on a covenant to put in repair breached prior to the transfer of the reversion; but is liable on a covenant to keep in repair although the property was in disrepair before transfer.
Coward
v.
Gregory
(1866),
■ The Michigan Supreme Court has held that a transferee who purchases leased premises with knowledge that the landlord has not performed and the tenant is insisting on performance of a covenant to remove a certain stairway and repair the surrounding area — which covenant clearly was broken prior to the transfer — could not enforce the lease against the tenant, such transferee not having remedied the breach.
Lynder
v.
S. S. Kresge Company
(1951),
In
Moskin
v.
Goldstein
(1923),
It has been held that a transferee of the reversion takes title to the property subject to an equitable lien in favor of the tenant for damages resulting from the breach of a predecessor’s lease covenant to pay for improvements put on the land by the tenant.
(Ecke
v.
Fetzer
[1886], 65 Wis 55 [
' The scope of the liability of a transferee of the reversion is illuminated by the more numerous cases cbncerning the right of such a transferee to enforce a lessee’s covenant. That the reasoning of cases involving lessee’s covenants is “equally good for covenants by lessors”, see Jones, Landlord and Tenant (1906), § 454, p 518, and Jones v. Parker, supra.
'
It has been held that a transferee of the reversion can recover full damages if the tenant permits premises out of repair prior to the transfer to. continue out of repair after the succession.
Vivian
v.
Champion
(1705), 2 Ld Raym 1123 (92 Eng Rep 245), stating that was a damage after the succession tc the heir of the reversion. Similarly, see
Bennett
v.
Herring
(1857), 3 CB (NS) 371 (140 Eng Rep 784), as to a covenant to complete an improvement and to keep the same in repair, and
Easterby
v.
Sampson
(1830); 6 Bing 644 (130 Eng Rep 1429), where it was held that the transferee could sue the tenant both for failure to build a structure and to keep the
In Hendrix v. Dickson (1897), 69 Mo App 197, it was held that a covenant on the part of a tenant to pay taxes runs with the land and the “substantial breach” 17 occurs when the taxes are paid by the covenantee. The breach was regarded as continuing both in the time of the ancestor and the heir, but since the court found that the substantial breach occurred in the time of the heir it held that the heir could recover the heir’s damages arising from the substantial breach. See 2 Platt on Leases, p 360.
Also relevant are cases concerning the nature of the liability of an assignee of the tenant’s interest.
18
The view has been expressed that an assignee of the tenant’s interest liable only by reason- of privity of estate should not be responsible for dilapidations occurring before the time of his estate, even though continuing during the assignee’s estate. Poa, Landlord and Tenant (5th ed, 1914), p 418. But see, also, at pp 426 and 635 et seq. Haeussler v. Holman Paper-Box Company, supra; Wallace v. Paulus Bros. Packing Co., supra. 19
In contrast, it has been held that the duty to pay assessments was, “like a covenant to repair,” a continuing one and that the assignee was- liable even though the assignor was also liable — “until performance, there is a continual breach, and therefore the assignee is liable, though the first breach happened before the assignment.”
Astor v. Hoyt
(1830), 5 Wend (NY) 603, 618. See, also,
Martyn
v.
Clue,
18 QB 661 (118 Eng Rep 249), holding an assignee of the original tenant liable on a covenant to build and repair even though money was paid to the assignor therefor — the. court said the covenant was continuing and ran with the land to the end of the
It will be noted that in all the cited cases, the party held liable was found liable for an omission that he could yet correct by performance. 20 Despite this thread of consistency, it is apparent there is not complete uniformity in the eases, and that grantees or assignees have been held liable under circumstances very much like those where others have been freed of liability. The results in cases where successors have been held not liable have sometimes been rationalized in statements that, upon breach, the covenant ceases to run and becomes a chose in action, 21 that “the fact that there may be continuing damage arising from one complete breach does not make the cause of action out of which the damage flows a continuing Cause of action,” and that , “the breach does not run with the land.” Morris v. Kennedy, [1896] 2 IR 247, 263, 264.
But the inconsistency in the cases as to whether and when a covenant has been broken or is susceptible of further breach does not negate the precedential uniformity on the precise question before us. Where liability has been found, the holding has been predicated on the breach of the party held liable rather than on the breach of his predecessor.
22
In our view, the question before us is not whether a breach can run with the land or whether the covenant is capable of continuous breach. It is apparent that
It is enough to say that we have found no case holding a transferee liable as to acts or omissions all of which occurred before the transfer, none of the damage flowing from the breach having been sustained after the transfer. All the cases that have held transferees or assignees responsible have pointed to some act or omission of the party so held liable found by the court to have occurred after his estate began. 23 In this case, it is not asserted that any act or omission of Plaza subsequent to its purchase of the property caused damage to the tenant-— indeed, it is not even asserted that any damage flowing from the breach by Plaza’s grantor was suffered by the tenant after Plaza’s purchase of the property. We are satisfied that Plaza has no obligation to pay for the damages resulting from the breach or breaches by its grantor, and we so hold.
Eeversed. Costs to appellant.
Notes
We have, therefore, proceeded on the assumption that the judgment in favor of the tenant on its counterclaim was for damages suffered by the tenant prior to the time of conveyance and assignment to Plaza. We also note that at the oral argument of this appeal counsel for the tenant conceded that no damages were suffered by the tenant after the transfer of the property to Plaza.
Sims, The Law of Real Covenants: Exceptions to the Restatement of the Subject by the American Law Institute; 30 Cornell Law Quarterly 1, 9 (1944); 2 Platt on Leases, p 382 et seq. Por another discussion of the early history of the law, see Holmes, The Common Law (1881), p 371 et seq., especially beginning at p 388.
See 2 Powell on Real Property, § 246 [2], p 372.90; 32 Am Jur, Landlord and Tenant, §97;
Willcox
v.
Kehoe
(1905), 124 Ga 484 (
See Coke’s report of
Spencer’s Case
(1584) (5 Co Rep 16a, 17b [77 Eng Rep 72, 15 Eng Rul Cases 233, Co Abridge 135]). It was there held that a covenant to repair property during the term of a lease “is appurtenant, and goeth with the land.” The rule in
Spencer’s Case
was followed in America from the beginning.
Pollard
v.
Shaaffer,
Sup Ct of Pa (1787),
1 American Law of Property, § 3.63, p 314; 2 MeAdam, Landlord and Tenant (5th ed, 1934), p 1010;
Jones
v.
Parker
(1895), 163 Mass 564 (
It has been held that the transferee of the reversion may enforce covenants of the tenant
(Perrin
v.
Lepper
[1876],
See discussion of
Trask
v.
Green
(1861),
32 Am Jur, Landlord and Tenant, §100, p 107, § 373, p 320, § 716, p 591, and § 798, p 680; 51 CJS, Landlord and Tenant, § 44, p 571, § 258, p 897; 2 MeAdam, Landlord and Tenant, op ait, p 1007: The grantee’s “liability extends only to covenants broken during the time when he is possessed of the estate.” See, also, at p 1012 regarding'assignees of the term.
Gerzebek
v. Lord (1869), 33 NJL 240, 244;
Mirick
v.
Bashford
(1862), 38 Barb (NY) 191;
Coffin
v.
Tolman
(1853),
Michael
v.
Mitchell, supra; Haeussler v. Holman Paper-Box Company
(1892), 49 Mo App 631, 637;
Wallace
v.
Paulus Bros. Packing Co.
(1951),
See
810 West End Avenue, Inc.,
v.
Frankel
(1920),
“Not only is the transferee of the reversion ordinarily unable to recover for a breaeh of the lessee’s covenant occurring before the transfer, but he is as well exempt from liability for a breaeh of a covenant by the lessor, occurring before the transfer, provided the breach is not to be regarded as continuous in its nature. The transferor not the transferee violated the covenant, and consequently he is the one to be made liable.” 1 Tiffany, Landlord and Tenant (1910), § 149 b (9), p 899. See, also Faweett’s Landlord and Tenant (3d ed, 1905), p 449. But see 32 Am Jur, Landlord and Tenant, § 100, p 108.
See Fred Whitaker Co. v. Cohen (1955), 7 Pa D & C 2d 105, 109, stating (dictum) that a transferee of the reversion is entitled to such notice. See, also, Hewitt v. Rowlands (1921), 93 LJKB NS 1080.
Our view of the matter also makes it unnecessary for us to decido whether Plaza was or should have been aware of the extent of the disrepair of the roof and of the possibility of injury to the tenant of t}ie kind in fact sustained,
This.case is diseussed in a note, Landlord and Tenant — Deposit —Recoupment, 24 Colum L Rev 432 (1924), and in Security Deposits and Guaranties under Leases, 1 Real Property, Probate and Trust Journal 405, 420.
Tlie matter is also diseussed in
Coffin
v.
Tolman, supra
(accepting as a general principle the rule establishing such transferee liability, but finding that the convenant tliere before the court was not a continuing one and that it was breached before the transfer of the reversion), and in Jones, Landlord and Tenant (1906), § 332, p 351,
Purvis
v.
Shuman
(1916), 273 Ill 286 (
In
Willcox
v.
Kehoe
(1905), 124 Ga 484 (
Discussed in Eoa, Landlord and Tenant (5th ed, 1914), p 424..
The “substantial breach” concept may have been borrowed from Kingdon v. Bottle (1815), 4 M & S 54 (105 Eng Rep 755, 756), where the devisee was permitted to sue the covenantor for breach of a covenant of title.
That the principles applicable to deed covenants are not necessarily pertinent in a ease concerning lease covenants, see scope note to part 3, provisions respecting the use of land, Division V (Servitudes), 5 Restatement of Property, p 3147.
The nature of the liability of one not contractually liable is illustrated by .holdings and statements that a tenant liable only by reason of privity of estate may relieve himself of further liability for the payment of rent or otherwise under the lease by vacating the premises and assigning the term, even to an irresponsible p'arty (not his agent), thereby terminating the assignor’s estate.
George Realty Co.
v.
Gulf Refining Co.
(1936),
in Foss v. Stanton (1904), 76 Vt 365 (57 A 942), it was held that the original tenant’s repair duty to a grantee of the reversion is to be measured by the condition of the property at the time of the transfer. This ease is referred to in 1 Tiffany, Landlord and Tenant (1910), § 116, p 772. See, also, Jones, Landlord and Tenant (1906), § 402, p 444.
However, in a ease where the breach could not be corrected — the tenant having prior to the transfer of the reversion violated a covenant against assignment and subletting — the transferee was not permitted to asser-t the breach notwithstanding the court’s view that the covenant was süs'eeptible of breaeh on more than one occasion. Cohen v. Tannar, [1900] 2 QB 609.
2 Taylor, Landlord and Tenant (9th ed, 1904), § 445, p 26; Wallace v. Paulus Bros. Packing Co., supra; Mirick v. Bashford, supra.
In those cases where a grantee of the reversion was held liable to pay a sum of money (e.g., return of security deposit or for improvements put in by the tenant), the landlord’s obligation to do so was expressed in the lease itself,
In Churchwardens of St. Saviour’s Southwark v. Smith (1762), 3 Burr 1272 (97 Eng Rep 827), the action was against the assignee of the term. The following appears in the report of the case:
“Lord Mansfield said, the single question was, ‘whether, an assignee is liable for a breach which he never committed.’ And it is certain ‘that he is not.’ ” See analysis of this case in Astor v. Hoyt, supra.