25 Colo. App. 109 | Colo. Ct. App. | 1913
Lead Opinion
.... Defendants appeal from a judgment against them in ,an-action begun Marcli .23, 1910, by tlie plaintiff, Agnew,
The entire transaction was reduced to writing, and consisted of a lease for ten years, Wilson, lessor, and the Psychic Science Company, lessee; a bond for $3,000 given to the lessor by the lessee as principal and the Empire State Surety Company as surety, to guarantee the keeping of the obligations in the lease; a written agreement was also entered into between the lessor and lessee whereby $5,000 was turned over to the lessor, to be considered, so long as the lessee kept the obligations of the lease, as a loan for ten years at six per cent, evidenced by a note and deed of trnst on the leased property, but with the further provision that if the lessee should fail to keep the obligations of the lease, or any of them, of forfeit the lease, then the said note and deed of trust to be canceled and released; a written option was also given by the lessor to the lessee to purchase the property within one year.
The Rome Realty & Investment Company and F. L. Peters were made defendants because the property was conveyed to the investment company by Wilson after the lease, and prior to the suit, and Peters was the agent of the defendant, Wilson. The Empire State Surety Company was made a defendant because the plaintiff had conveyed to it certain property to indemnify it against loss on account of its suretyship on the bond, and the complaint prayed for a reconveyance of this property to her.
The complaint demands that Wilson pay the $5,000 left with him as a deposit, and that the $3,000 bond given to him be canceled. The defense is that the $5,000 deposit
The lower court gave the plaintiff judgment for the $5,000, except the balance of the rent owing on the last month that the lessee occupied the building; ordered the cancellation of the bond for $3,000, released the surety thereupon, and ordered the surety to reconvey to the plaintiff the real property she had conveyed to it as indemnity; also declared a lien upon the leased property for the amount of the judgment in favor of the plaintiff.
An examination of the various written instruments introduced in evidence and entered into in conjunction with the lease discloses a very 'careful attempt on the part of the lessor to protect himself against loss in case of a forfeiture of the lease.
First, the lease provides for a re-entry-by the lessor in case of a failure to pay the rent.
Second, the agreement whereby the $5,000 was deposited with the lessor as a loan, provided that the note and deed of trust should be canceled and delivered up in case the lease was forfeited.
Third, the bond for $3,000 provided that if the rent was not paid in accordance with the lease, or if any of the obligations of the lease was broken, the.amount of the bond should be forfeited to the lessor, and that the amount should be considered as liquidated damages and not as a penalty.
After these instruments were executed, the lessee took possession, paid the rent as agreed for five or six months, and defaulted, by paying only a part of tiñe Peb
Could he do this, and, at the same time, claim the deposit and the benefit of the bond? The answer, on first impression, would be in the affirmative, but the law is plain between landlord and tenant that, when the lessor re-enters and resumes absolute control of the property, on account of a default of the lessee in the payment of the rent, or as to any other obligation of the lease, or by reason of an abandonment or surrender of property by the lessee and acceptance thereof by the lessor, the lease is thereby canceled, and, by reason thereof, both parties are released from any subsequent obligation or liability under the lease.
“The surrender of the leased premises by the tenant extinguishes the relation of landlord and tenant, and releases him from liability for rent accruing thereafter.*114 * * * Surrender may be had by express agreement of the parties or by operation of law, and in the latter case whether or not a surrender has been effected ordinarily depends upon the intention of the parties.” — 24 Cyc., 1162.
“A landlord is not, on the abandonment of the demised premises by the tenant in violation of his contract, required to relet for the protection of the latter, but may at his election suffer the premises to remain vacant, and recover his rent for the remainder of the term, or, he may on the other hand'elect to enter and determine the contract, and in the event of such re-entry he is entitled to recover only for the rent then due.” — 24 Cyc., 1164, 1165.
“Where a tenant deposits money as security for the payment of rent and the performance of the covenants of the lease, and is dispossessed during the term for failing to pay rent, the deposit is not forfeited; the tenant is entitled to recover thé balance remaining after deducting therefrom the amount of damages suffered by the landlord from the breaches of covenants on his part prior to the dispossession. Even in some cases where the lease recites that the deposit is made as liquidated damages, the tenant has been held to be entitled to the surplus.” — , 24 Cyc., 1143, 1144.
In the case of Carson v. Arvantes, 10 Colo. App., 382, 387, 50 Pac., 1080, the court said:
“An agreement by the tenant to abandon possession of the demised premises and one by the landlord to resume his occupancy and the execution of this agreement in law amount to a surrender of the term. Whenever this happens the lease is terminated and the obligation of the tenant to occupy or to pay rent is thereupon determined. This is familiar law with reference to leasehold rights and is thoroughly well settled. — Talbot et al. v. Whipple, 96 Mass. (14 Allen), 177; Kneeland v. Schmidt, 78 Wis., 345, 47 N. W., 438, 11 L. R. A., 498; Hegeman v. McAr*115 thur, 1 E. D. Smith (N. Y.), 147; Rice v. Dudley, 65 Ala., 68; Buffalo County National Bank v. Hanson, 34 Neb., 455, 51 N. W., 1035. Under this rule the landlord, of course, has his election between one of two remedies. He may-leave the premises vacant, sue for the rent for the balance of the term and enforce any security which the lessee gave to insure performance. If he chooses he may likewise terminate' the contracts and enter a claim for rent up to the date of the abandonment and the acceptance of possession. He is not at liberty to take possession of the premises, and at the same time insist that the contract is in force and recover rent for the balance of the term.”
Our supreme court, in the same ease, appealed to it, 27 Colo., 77, 83, 59 Pac., 737, said:
“Any agreement between landlord and tenant manifesting the intention of both to terminate a lease, which is unequivocally acted upon by each, effects its cancellation, and Hallet being released from all liability under the lease, it follows that the security pledged for the performance of his contract was discharged; and, therefore, appellants could'no longer insisl upon holding a deposit for the performance of a contract which by their own act they had canceled. — Buffalo County Bank v. Hansen, 34 Neb., 455, 51 N. W., 1055; Taylor on Landlord and Tenant, sec. 507; Talbot v. Whipple, 96 Mass., 177.”
See also Rauer’s Law & Collection Co. v. Third Street Improvement Co. et al. (Cal. App.), 131 Pac., 77; D’Appuzo v. Albright (Sup.), 76 N. Y. Supp., 654; Cunningham v. Stockon, 81 Kan., 780, 106 Pac., 1057,19 Ann. Cas., 212; Chaude v. Shepard, 122 N. Y., 397, 25 N. E., 358; Baxter v. Heimann, 134 Mo. App., 260, 113 S. W., 1152; Brigham Young Trust Co. v. Wagener, 13 Utah, 236, 44 Pac., 1030.
ít makes but little difference in what way the lease was terminated, whether by re-entry and a resumption of possession by the lessor, or whether by a surrender on the part of the lessee and an acceptance thereof by the
In view of the decision of the supreme court in the case of Carson v. Arvantes, 27 Colo., on page 81, it is unnecessary for us to determine whether the deposit made in this case by the contract, or the indemnity of the bond, should be considered as liquidated damages or as a penalty. The court of appeals held, in that case, where the lessee deposited with the lessor $250 and took a receipt which thereafter formed the security contract, that said contract provided for a penalty, and' not for liquidated damages. The contract, so the court said, “in general terms recited the receipt of $250 as security that the lessee would remain in the store until the end of the lease, paying rent in advance, and provided that if they moved out and did not pay the rent according to the agreement, the deposit should be forfeited and become the property of the lessor.” But the supreme court, in the same case, said:
“The only question presented is, did the court of appeals determine the cause on correct principles of law applicable to the facts? In determining this question, however, we do not deem it necessary to decide whether the agreement with respect to the deposit was one of liquidated damages, in case of a breach of the contract of lease, or whether it was security for damages which appellants might sustain in case the terms of that agreement were not complied with, for it could make no difference how it should be treated in this respect, if, as a matter of fact, the lease was terminated by the acts of the parties, and the rent paid up to the date when it was so canceled.”
There is no conflict in the testimony as to the lessor’s declaration of a forfeiture and that he demanded and re
An examination of the lease and the other instruments accompanying it authorizes the conclusive presumption that the parties never contemplated any damages that would accrue upon any breach except that of a forfeiture of the lease and the consequent vacation and abandonment of the premises. The lessor was amply secured for such breach and would have been fully protected if he had not resumed possession, and thus elected to save himself, in this way, rather than rest upon the right he had to refuse to accept the surrender of the property, and to rely upon the deposits for his security or damages. He had two means provided: one, by the terms of the lease under which he could declare a forfeiture and resume possession; the other, by refusing to accept the surrender, and resorting to the deposits; he chose the former, and this debarred him from any claim under the latter. — Carson v. Arvantes, supra.
The appellant, however, offered to prove that there was another damage accrued prior to the forfeiture, on
‘ ‘ Such is the complexity of circumstance and the variety of documentary phraseology, and so minute the indicia of intent, that one ruling can seldom be of controlling authority or even of utility for a subsequent one. -The opinions of judges are cumbered with citations of cases which serve no purpose there except to prove what is not disputed — the general principle. Other than in relation to some of the foregoing topics which have broad and uniform bearings, individual rulings can have little value as precedents unless the entire detail of the documents and circumstánces is set forth; and an abbreviation of them is therefore more likely to mislead than to profit. The application of the rule should in almost all instances be left to.the trial judge’s determination.” — 4 Wigmore on Evidence, sec. 2442, p. 3443.
A careful examination of these instruments discloses that the lessor, through his counsel, deliberately concluded and believed that the provision, in the lease, and in the other instruments, for a forfeiture on account of non-payment of rents, for the term, would fully protect the lessor in all respects, including damages by reason of alterations of the building, if such damages were contemplated. This conclusion of the lessor and his counsel was a correct one, because it was no doubt so concluded with the understanding and intention that the lessor should*120 stand upon the terms thus provided for in case of a forfeiture, and not resume possession of the property and cut himself out of any right to rely upon the deposits. If this testimony were admitted to prove that the alteration of the building was 'one of the items of damage provided against, then the parol testimony rule would be wholly abrogated, because if there is any one of its restrictions more inviolate than another, it' is the one that a party may not add to the terms of a written agreement by parol evidence, and, especially, to add another obligation to those already in the writing as an addition to the burden upon the opposing party. Furthermore, this rejected testimony would prove nothing more than that the lessor intended to provide for a forfeiture of a sufficient sum to pay him for remodelling the building; but when the contracts were drawn, all mention of the remodelling was omitted, and purposely so omitted, no doubt, because it was intended that the forfeiture itself would cover all damages incurred in remodelling. Mr. Mel E. Peters, who drew these instruments, and who testified for the lessor, stated, in his testimony, in answer to the question, “But you never incorporated iii the contract which you prepared, that language, did you?” (meaning the language as to remodelling). A. “The intention in drawing the contract was to draw it so in casé of a forfeiture of the lease that this should be paid as liquidated ■ damages, whenever the covenants of the lease or a fracture of the covenants of the lease should end in a forfeiture of the lease — would result in a forfeiture of the lease, then the money should be paid. ’ ’
All of Mr. Peters’ testimony goes to show that he believed, when the contracts were drawn, that a1 forfeiture for non-payment of rent would entitle the lessor to claim the deposits as liquidated damages, or at least as security for the damages incurred; but as the lessor took possession of the property, and thereby elected to protect him
Furthermore, the moment this evidence is considered, so easily and readily reducing the damages to an exact sum, the contention of appellants as to liquidated damages is destroyed; because the courts, ever astute to discover a reason for disallowing a forfeiture, have held that, if there is a doubt, and the damage is easily computed or readily reduced to an exact amount, the parties, never intended anything more than a penalty. — Bilz v. Powell, 50 Colo., 482.
Both parties in this case rely upon the harsh effect of two recognized rules that have been frequently enforced: one, forfeiting as liquidated damages a certain sum of money agreed upon regardless of what the damages may be. in fact; the other, a rule peculiar to the law of landlord and tenant whereby the landlord may forfeit his right to claim a forfeiture against his tenant; and, while these rules are neither absolute nor of immaculate or miraculous conception, but merely applied in many adjudicated cases as a means to arrive at justice between the parties, it is not found necessary to disturb them in the conclusion reached.
The judgment of the lower court is therefore affirmed, except, in so far as it affects the bond for $3,000, the lower court having denied an appeal as to that part of its judgment.
Dissenting Opinion
dissenting:
Enough appears in the majority opinion to make it plain that in the judgment of the writer of the majority opinion, it is based upon authority, rather than upon reason, for he says, in effect, that on first impression the conclusions therein arrived at do not comport with reason. One’s first impressions are not infrequently his best impressions. It must be conceded that our courts